Major Garrett Questions Presidential Adviser Valerie Jarrett

Fox News Senior White House Correspondent Major Garrett talked with President Obama's Senior Adviser Valerie Jarrett on the economy, Thursday's health care summit with Congress, and when the President plans to gear up for the 2012 election cycle.  The full transcript is posted below.

MAJOR GARRETT, HOST: Valerie, thank you so much for joining us on Fox.


My pleasure.

Thank you.

GARRETT: I read a couple of paragraphs from the president's speech today to John Boehner, because I wanted his reaction. Apparently -- especially the parts where the president said it's not about liberal ideas or conservative ideas, pro-labor, pro-business, it's about prosperity and the economy.

John Boehner said: "I couldn't agree more. That's a great speech."

JARRETT: It's a great start.

GARRETT: And he said -- exactly. And he said: "But that's not what's happening on Capitol Hill."

His complaint is the uncertainty with Cap-and-Trade, the uncertainty with health care, the uncertainty about future tax policy -- the Bush tax cuts, particularly -- is creating an environment where small businesses, in his opinion, feel they can't add jobs right now because they don't know what's coming.

How do you respond to that?

And put it in the context of today's address.

JARRETT: Well, I think today presented an excellent opportunity for the president to set the record straight.

What we've done just in this year's budget is reduce taxes $70 billion for corporations. That's a 10 percent reduction in the corporate tax rate. We have credits in there for small businesses.

Just today, a bill was passed through Congress to try to help create payroll taxes to induce small businesses to get going again.

And health care reform is designed to help small businesses. Right now, small businesses are seeing their costs of health care escalating at dramatic paces. Just recently, a few days ago, we saw a California insurer raising their rates 39 percent.

A small business needs more certainty than that. Nobody can prepare for that. Large businesses can't prepare for that.

And so today, the president really said, look, this is about an alignment of interests between business, the business sector, government and the workers. And we should all be working together. We're just pulling ourselves from, really, the brink of an economic collapse in our country. We all should have learned from that experience.

And what we need to do, work together, is to put in place the kind of -- foster the kind of environment where businesses of all sizes -- small, medium or large -- want to invest, want to do the innovative things that our businesses here in America are known for doing, want to grow our economy and want to create the kind of jobs that will bring -- reduce that unemployment rate that it still lagging right now.

GARRETT: In the California case, you would concede that was for individual policyholders who don't work for a company and are not covered. That's -- that is a separate part of the health care debate.

JARRETT: Well, another whole reason why we need to make sure that people who aren't covered can participate in a pool that will bring down the cost of insurance, so they don't have to bear that burden. But right now, small businesses are choosing between covering their employees -- and many of them are dropping coverage for their employees.

So they're -- they're the ones who are -- who are suffering from that increase in the policy -- in the -- in the premium. And so many small businesses can't add to their workforce because of a lot of the uncertainty.

So what the president said today very clear is he's very mindful of that. He is looking to foster the kind of economy where businesses can grow. And we have to do that working together.

The Business Roundtable is a good example of an organization that has worked with us very closely. They supported The Recovery Act. They point to that as a way of jump-starting our economy until the private sector has a chance to keep up -- catch up. And what the president said today is, look, long-term sustainable growth comes from the private sector. And what government should do is what (INAUDIBLE) to foster an environment where the private sector wants to expand and grow. And that was really his message today.

GARRETT: Speaking of the Business Roundtable, I want to read you something the president said to them last year: "Throughout our history, there have been times when the market has fallen out of balance. There have been moments of economic transformation and upheaval when prosperity, even basic financial security, have escaped far too many of our citizens. And at these moments, government has stepped in not to supplant private enterprise, but to catalyze it."

Is there a different message this year or is it the same?

Because some at the White House have described today's speech to me as a recasting or a simplifying of the president's message to make it sound, to a public who's grown somewhat skeptical, that he is more -- more pro-business.

JARRETT: It's the same message. I think last year, at the time that he gave his speech, we were losing 700,000 jobs a month. We've now reduced that down to just barely losing any jobs and some months we've been positive. We made a lot of progress since last month. Last month is when he was proposing The Recovery Act. We're now -- we've now created over two million jobs since this time last year. And so this...

GARRETT: Saved or created.

JARRETT: Saved or created. And so the jump start that The Recovery Act was designed to do, we're well on our way. We still have half the funds to expend. So we still are well on -- well on our way on that.

But I think right now, what the president is saying, at this moment in time -- and it was passed today through Congress, in one of the houses -- is we need targeted investment. There's still a very important role for -- because the economy is still so fragile, there's still an important role for government to play.

So, small businesses, you started by mentioning them. Now we have a job tax cut that will allow them to hire people who have been unemployed. We need to think of ways of reducing the costs of health care for the small businesses.

The president has been very aggressive in putting pressure on the banks to start lending again, because the ones who really need that money the most are small businesses, and they're seeing their access to capital is still not opening back up, notwithstanding the fact that the banks have now returned to -- to better health.

And so all of these steps are designed to create again this atmosphere where companies can thrive, can grow. But what they do need

-- small, medium or large companies -- rules of the road. And so that's why the president is supporting financial regulatory reform, so that with the memory of last year's disaster so fresh, don't we all want to make sure that doesn't happen again?

Don't we all want to know that we have the certainty, so that everybody knows what the rules are, everybody plays by those rules and those rules are designed very specifically not to squelch innovation and growth, but to create an atmosphere of predictability where companies can grow but cannot take advantage of the -- the taxpayer to come in and bail them out if they start to gamble.

So we want to reduce the gambling. We want to reduce the risk to the taxpayers so that they never again have to step in and take the extraordinarily unpopular but necessary steps that were taken last year.

GARRETT: Is part of the takeaway that without health care this year and without regulatory reform this year, the economy simply can't recover?

JARRETT: Well, I think that if you look -- if you're an average business trying to figure out what is -- what is the uncertainty, knowing that they can't predict what their health care costs are going to be, knowing going they are on a trajectory upwards is a huge disincentive to growing. So I think when you talk about health care and you talk about the importance of investing in education. We have to prepare our workforce so that they can compete in this global atmosphere.

We don't want to fall behind. The president said very clearly in the State of the Union Address, the United States doesn't want to come in second to anyone.

So there are a whole host of issues that we need to tackle aggressively in order to create jobs, in order to create the sustainable growth that will come from the private sector, in order to create rules of the road so everybody knows -- everybody knows to play by the right set of rules and -- and live well within those lines.

GARRETT: But there is an expectation or a feeling right now that both financial regulatory reform and health care are in jeopardy.

Are they both necessary this year and is that the goal -- the absolute...

JARRETT: Well, the goal is...

GARRETT: -- the absolute legislative goal of the White House?

JARRETT: The goal is absolutely to get them both done as quickly as absolutely possible. And I think that what we have to look at is really look around at the average kitchen table and -- and talk to people who are out there struggling, trying to make ends meet.

What they're talking about is the fact that they are stretched thin. And so talk to someone who has a pre-existing condition and that has to come out of pocket to pay for an illness. Talk to somebody whose premiums are going up or whose out of pocket expenses are going up, who are worried about their homes being foreclosed, who are worried about whether or not they're going to be able to keep their job.

Those are the things that keep us up late at night. Those are the issues that we're expecting Congress to work with us to try to solve as quickly as possible. The American people shouldn't have to wait.

GARRETT: One specific legislative question on health care. Kent Conrad said today if the House doesn't pass the Senate bill, there can be no reconciliation. It's over. It's dead. It's not even worth discussing. That would seem to suggest that the president's proposal on the Web site is not really the center of gravity. The center of gravity is what it's always been -- the Senate bill and the House Democrats'

willingness to vote for and pass it and move it along.

Is that possible?

JARRETT: Look, what I think the president has said very clearly is he's put up on the Web what he thinks is a very sound idea. This has been a very long process. It's challenging. It's hard. Seven presidents have tried to get health insurance reform through and they haven't been able to do it. We are so close right now. So much hard work has been done by both the House and the Senate.

But we're not there yet. And so what the president said is, look, this is my idea. I'm open to your idea. Come tomorrow with your best ideas for how we can achieve what we all know has to be done. We've got to make health care more affordable. We've got to cover people with pre-existing conditions. We've got to cover people who have never been covered and who are -- who we are paying for indirectly anyway. We've got to do whatever we can to bring down the costs, because if you look at our federal deficit, the single biggest issue we have is our -- these escalating health care costs.

We want to -- we want everyone to feel the same sense of urgency here in Washington that people around the country feel each and every day. We want them to feel that intensity.

And so we are optimistic. That doesn't mean it's going to be easy.

It's going to be hard. But if people come tomorrow prepared to really roll up their sleeves and work hard on behalf of the American people, the people who elected them here, we're confident that we can make progress.

GARRETT: Do you disagree with Senator Conrad's procedural analysis?

JARRETT: You know what?

I think that the American people aren't interested in the procedural analysis. I think what they want is an up and down vote. They deserve an up and down vote on health care. And we are determined to make sure that happens.

GARRETT: Before I let you go, Mike Allen, somebody I know and respect, somebody I know and respect, someone I know you know, has a piece in Politico today saying that conversations and plans, though, incremental, have begun for the 2012 campaign. He mentioned your name and several others who were prominent in the 2008 campaign.

At what stage is the reelection campaign, if at all, underway?

JARRETT: Not at all. Not at all. And I actually said that to Mike Allen yesterday. You just -- we just spent the first part of this interview talking about health care and regulatory reform and job creation and all of the challenges that we're facing here in government. We aren't even beginning to think about the election.

We're thinking about tomorrow.

GARRETT: You're not even planning for it?

JARRETT: Not at all...

GARRETT: Because most presidents, in a first term, at least initially, plan for their reelection, because it's something that you can't not think about once you're here in this building.

JARRETT: With the magnitude of challenges facing our country right now, I can assure you that the very last thing President Obama is thinking about is planning an election campaign. That's not what he was elected to do. He has plenty on his plate and he is determined -- he wakes up every morning focusing on the American people, not an election that's two years off. My goodness.

GARRETT: Valerie, thank you very much for your time.

JARRETT: You're welcome.