RENEE MONTAGNE, HOST:
President Obama will use his State of the Union speech to press for higher taxes. Those would be higher taxes on the wealthy.
STEVE INSKEEP, HOST:
The president would use the money to finance infrastructure and tax cuts for the middle class if the new Republican Congress approved, which many Republicans already say they will not. That last point is where we start our talk with Denis McDonough. He is President Obama's chief of staff, and he's on the line. Welcome to the program, sir.
DENIS MCDONOUGH: Thanks so much, Steve. It's good to be with you.
INSKEEP: A Democrat for tax hikes can, from the outside, sound a little bit like Republicans voting again against Obamacare - seems like it's going nowhere. What makes you think this Congress would embrace higher taxes?
MCDONOUGH: Well, I think that one of the things the president wants to do in the speech tonight is just underscore that our economy works best when it's growing from the middle out. And he'll outline a series of things that now that we've come through the crisis that we've come through, we have an opportunity to really focus on the kind of opportunities, like education, that will increase wages in this country for the first time in some time.
So the question the president will be asking for the Republicans is these are our ideas, this is how we would do it, and we'd like to hear their ideas if these are not the ones that they would support. What exactly will they put on the table to make sure that we as a country are focused on the middle-class families and the wages that they need?
INSKEEP: Would you see this then as the start of a negotiation over tax reform, which Republicans have talked about? Some taxes would go up; some would go down.
MCDONOUGH: We do, in fact, and what we're saying is that let's be serious about tax reform. And let's make sure that the middle class benefits from it for the first time in some time, and that's a bottom line for us.
INSKEEP: Let me just ask you, Mr. McDonough. Many Republicans in and out of Congress have said they want to focus more on people who are struggling. Mitt Romney, the former presidential candidate, pointed out correctly the other day - correctly - that income inequality has actually increased during this presidency. Are you ready - is the president ready to have a meaningful debate with Republicans over what to do about that?
MCDONOUGH: Look, I think what we've seen is some very good progress - unemployment going from 10 percent, which it was at the end of the Bush administration, down to 5.6 percent. We've reduced the deficit by two-thirds. More than 10 million Americans now have health care coverage for the first time. And we've reduced $60 billion in needless subsidies to big banks, so we're making up a series of very important gains here. But the challenge for us now is are we going to use this time we have now in this positive period to focus on middle-class families and the wages that they need? So we welcome that debate.
If Governor Romney has some new ideas in that space, we'll welcome his ideas on that as well and that the bottom line for the president is we have to take this opportunity to focus on making sure that the economy works for the middle class, it grows from the middle out, not with a kind of trickle-down economics that we've seen from Governor Romney and from the Republicans on Capitol Hill.
INSKEEP: Is part of the bottom line also the 2016 - the presidential election is looming, and if deals are not made now, the president is setting the debate for the campaign to follow at least the Democratic side of that debate?
MCDONOUGH: Well, we've - the president said he's run his last campaign. This is about focusing on middle-class families and making sure that they have the access that they need to the kind of wages that they deserve and the kind of opportunities - education and training - that will boost those wages. And the kinds of things that he talked about last week to include paid sick leave. And you heard him talk, too, about the challenges that working families face with two spouses in the workforce. So we're going to do everything that we can to help them succeed.
This has nothing to do with the campaign. This has to do with making sure that Washington gets out of these back-and-forth political games and focus on the next campaign and get them focused on middle-class families.
INSKEEP: We're talking with Denis McDonough. He is President Obama's chief of staff. And, Mr. McDonough, I want to ask about Iran. The president, of course, will be speaking to Republicans as well as many Democrats who have said they want new sanctions on Iran. Of course, the president has said he would veto those sanctions while talks over Iran's nuclear program are still going on. But given that people in both parties want to act, is there anything Congress can do that the president would accept?
MCDONOUGH: I think what Congress should do is give us some time to see if these negotiations can work. I think in looking back at the last year under the agreement - the temporary agreement that we and the rest of the world struck with the Iranians - we've seen their program frozen in important ways and even rolled back in very important ways. So we've seen good progress against an elicit Iranian nuclear program as a result of these negotiations. So if Congress wants to act later in the year, we could consider that. But at the moment, they ought to give us the space to let these negotiations work.
INSKEEP: In an interview that we broadcast on New Year's Day, Senator Marco Rubio, a Republican of Florida, talked of something less dramatic than immediate sections on Iran. He talked about passing a bill that might, for example, impose sanctions on Iran if they back away from negotiations. Is there something like that Congress could do that would actually help you and strengthen your hand?
MCDONOUGH: We think that the most important thing Congress can do now is give us some space to see if these negotiations can work. We have a lot of audiences who are watching how the United States acts in this effort. And if we give the Iranians a reason to walk away from these negotiations, it will splinter the international coalition that we built and that has been very effective on putting pressure on the Iranians. We think it's a mistake for Congress to do that. And we'll continue to ask them to hold off.
INSKEEP: Well, that leads to another thing. You've mentioned time; you've mentioned needing space. We spoke with a reporter from Tehran the other day who pointed out that Iran's president, President Rouhani, may be seen as running out of time because he's under pressure from his own domestic political constituencies. As you think about the possibility for a nuclear deal with Iran, is President Obama also running short of time here?
MCDONOUGH: I think that the important thing is for us to focus on what the national interest demands. What we do not want to see is a nuclear-armed Iran that would lead to an arms race in the heart of the world's most volatile region. So that's what we're focused on. We ought not lose the time that we have to make that happen. The president's very focused on that now.
INSKEEP: But do you think it's weeks? Is it weeks? Is it months? Is time getting short here? That's what I'm wondering.
MCDONOUGH: Yeah, there's no question that time is getting short, Steve, and this is why we've been focused on this since day one of this administration. We've seen now, as a result of these negotiations over the last year, an actual freeze in the program, if not a rollback of several key parts of that program for the first time in the last decade. That's good progress, and we ought to let it continue to work.
INSKEEP: Denis McDonough, White House chief of staff. Thanks very much for taking the time this morning.
MCDONOUGH: Thanks for having me, Steve. Transcript provided by NPR, Copyright NPR.
