Now, I want to emphasize I say this knowing full well we face a very difficult fiscal situation. I'm looking at the books back in Washington, and folks weren't doing a real good job with their math for the last decade. (Applause.) So now that the threat of a depression has passed, and a recovery is beginning to take hold, reducing our long-term deficit has to be a priority. And in the long run, we won't be able to compete with countries like China if we keep borrowing from countries like China. (Applause.) We won't be able to do it. (Applause.)

So we've already started making some tough decisions. And they’re unpopular and people get mad, but we’ve got to make some decisions. I've proposed a three-year freeze in all spending that doesn't have to do with national security. And I proposed a two-year freeze in the pay for federal workers. That’s why we’re currently studying recommendations of the bipartisan deficit reduction panel that I commissioned. We're going to have to be bold and courageous in eliminating spending and programs that we don't need and we can't afford.

But here's where there's going to be a debate in Washington over the next year and over the next couple of years and maybe over the next five years, because I will argue and insist that we cannot cut back on those investments that have the biggest impact on our economic growth ... (applause.)