Below is an unproofed transcript of "Face the Nation" on July 24, 2011, hosted by CBS News chief Washington correspondent Bob Schieffer. The guests are Senator Jon Kyl, R-Ariz.; Senator Richard Durbin, D-Ill.; Senator Mark Warner, D-Va.; Senator Saxby Chambliss, R-Ga.; and White House Chief of Staff Bill Daley.
You can watch the full show by clicking on the video player above.
BOB SCHIEFFER: Today on FACE THE NATION, can the gridlock be broken before Washington stumbles for the first time into financial default.
REPRESENTATIVE JOHN BOEHNER: White House won't get serious, we will.
PRESIDENT BARACK OBAMA: We have now run out of time.
BOB SCHIEFFER: We'll bring in the key players to try to answer those questions. White House Chief of Staff Bill Daley, Senate negotiators Democrat Dick Durbin and Republican Jon Kyl and two members of the so-called Gang of Six who forged one of the first plans, Senator Mark Warner and Saxby Chambliss.
It's all ahead on FACE THE NATION.
ANNOUNCER: FACE THE NATION with CBS News chief Washington correspondent Bob Schieffer. And now from Washington, Bob Schieffer.
BOB SCHIEFFER: And, good morning again. We start with White House Chief of Staff Bill Daley. Mister Daley, the Republican Speaker John Boehner now seems to be thinking of a two-part plan here. First, Congress would agree to cut spending over the next ten years by a trillion dollars and raise the debt limit enough to meet the country's financial obligations for the end of the year. Then a twelve person bipartisan committee would be formed to find three trillion dollars more in savings by making significant cuts in Medicare and Social Security and overhauling the tax code. Congress would then take another vote to raise the debt limit before the 2012 election. Democrats and the White House have already said there will be no short-term increase. You said that yourself. But Speaker Boehner just now appeared on Fox News Sunday and said it had to be two stages. Here's what he said.
REPRESENTATIVE JOHN BOEHNER (Fox News): There is going to be a-- a two-stage process. It's not physically possible to do all of this in one step. And having said that, Chris, I know the President's worried about his next election. But my god, shouldn't we be worried about the country?
BOB SCHIEFFER: So there you are, Mister Daley. Your turn.
WILLIAM DALEY (White House Chief of Staff): Well, I think the two steps process, because the Congress could not deal with serious budget deficit action, Speaker Boehner had walked away twice from a deal with the President which would have finally begun a serious attempt to cut spending and address the deficit. The President's position is, yes, let's move forward. If there's two steps, fine. But do not have a step in the second part that lets the political system once again show its dysfunction. Get this deficit ceiling put off till after the election in thirteen. But more importantly than putting that off and giving certainty and lifting the cloud of default is begin a serious discussion and action on the deficit. That's what the American people want to see.
BOB SCHIEFFER: So, no short-term vote on this? That-- that part is out. Let me just-- yes--
WILLIAM DALEY: Mm-Hm. Yeah.
BOB SCHIEFFER: --right-- let me just ask you this.
WILLIAM DALEY: The Senate-- let me just say, Bob. Senator Reid has said that's not the way to move forward and the Senate does not want that system with that-- that proposal. What they want is, yes, they want deficit reduction, yes--
BOB SCHIEFFER: Yes.
WILLIAM DALEY: --they want to get to the end of the year. But then they want a system that gets this into--
BOB SCHIEFFER (overlapping): Let me-- let me just ask you this.
WILLIAM DALEY (overlapping): --serious points of deficit.
BOB SCHIEFFER: Would you really allow the nation to slide into default and potentially really hurt the nation in the world's economy if you can't come to some agreement?
WILLIAM DALEY: I-- I--
BOB SCHIEFFER (overlapping): Aren't you going to have to find some way to do this.
WILLIAM DALEY (overlapping): The leaders have all said they do not want default, okay? There is a way that they can we can avoid default and give certainty to this-- to this economy for a longer period than five months. The American people do not-- well, the markets of the world do not want to watch this show again in six months if this commission that's being recommended or committee does not act in-- in a mere six months. We've been at this for a lot longer than six months and the Congress cannot seem to get its act together in order to do serious budget reform.
BOB SCHIEFFER: Do you think, Mister Daley, that while the leaders might be able to come together, the President on your side and-- and the Republicans on their side might-- I sense they are all ready to make a deal but it's the followers that are the problem. Are we in a situation here where the leaders on both sides can't deliver the votes to get an agreement?
WILLIAM DALEY: In my opinion, the democratic leaders have made a serious commitment to deliver the votes for real serious budget deficit reduction. What you're seeing in the House, in my opinion, is a caucus that wants it their way or the highway. This-- the American people elected divided government not dysfunctional government.
BOB SCHIEFFER: The President says he has agreed to speaking-- to spending cuts and all of that. He says he's been left at the altar twice by the speaker. The Speaker says the President keeps moving the goalpost. I mean it-- it doesn't look like they're any closer to anything to me.
WILLIAM DALEY: Well, the truth is we were probably eighty-five percent there. And the issues that were being discussed were just that. Negotiations are not over till they're actually over and peop-- people sign a piece of document, a piece of paper. The President and the speaker were extremely close. There were different options on different items, much of it related to what would be the best strategy to get the needed votes to pass this because it was going to be very hard for Democrats with the amount of-- of entitlement cuts and the am-- amount of reform that went-- was being done by the President to strengthen Medicare and strengthen the system to help the least able to defend themselves. And at the same time, the speaker was going to have to go to his caucus and say there may-- is a need for revenue to solve our problem. And that's where the breakdown will happen.
BOB SCHIEFFER: Both sides have been saying that something needs to be done this afternoon before the Asian markets open on the other side of the world, at the beginning of Monday morning over there. What happens if you don't get something done that looks significant before dark today?
WILLIAM DALEY: Well, I-- I-- I think it remains an uncertain situation to be frank with you to try to guess what the markets are going to do. And this is the responsibility of Congress. In the end, the Congress must pass this. It is their responsibility to extend the debt ceiling. And so, my sense is that in the end they will act. We only-- we may have a few stressful days coming up and stressful for the markets of the world and the American people. But in the end, there's no question in my mind the government of America will not default.
BOB SCHIEFFER: If the-- if nothing else works and the Republicans send a last-ditch emergency raising of the debt ceiling and nothing else, would the President sign that?
WILLIAM DALEY: But-- but-- but see, Bob, it's the Republicans not sending, there should be a bipartisan agreement. The Democrats, Harry Reid, has said that what the speaker has spoken about so far will not pass the Senate. So they must sit down and work out a compromise. It is not my way or the highway. This is not the way we run a government that's-- that's divided. But we should prove to the American people it's not dysfunctional.
BOB SCHIEFFER: All right. Mister-- Mister Daley, thank you so much.
WILLIAM DALEY: Thanks, Bob.
BOB SCHIEFFER: And we taped that about a half hour ago. Now we're going to get the Republican take on this stand-off with the number two Republican in the Senate, one of the negotiators Jon Kyl. Well, Senator, what do you make about what Mister Daley just said? He said, you know, no way here that they're going to do it in two steps.
SENATOR JON KYL (R-Arizona/Minority Whip): Right. He said, no way. Now who's saying my way or the highway? The House of Representatives twice now has passed budgets. And the second time this cut, cap and balance would have extended the debt ceiling and twice the Senate Democrats voted no. So the question is what can we do now? And I think given the fact that the President did move the goalposts, they've acknowledged that they demanded another four hundred billion dollars in taxes and that's when Speaker Boehner said it's like negotiating with Jell-O down there and-- and we're not going to do that. So this weekend, he and the other congressional leaders are working on a plan which would provide for a temporary extension of the debt ceiling. Daley is right that nobody wants the credit of the United States to be called into question. And I'm confident that-- that-- that will not occur, that we will pass an extension of the debt ceiling. And the only question is for how long. It's interesting that since 1972, Congress has raised the debt ceiling for six months or less, thirty-eight times. So we can surely extend it for five or six months to have this Committee of Congress come back and report on the-- on the way to continue to reduce our deficit. And in that way avert the disaster and make forward progress. The problem I think is that the single most important thing to President Obama is extending this beyond his re-election campaign. He just doesn't want to have to deal with it again.