"Face the Nation" transcript: July 24, 2011
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.
BOB SCHIEFFER: Well, in-- in other words, what you're saying and it-- it looks to me like that what Speaker Boehner is about to do here is sort of call the President's bluff. He's just-- it just sounds like he's going to come out with something this afternoon, whether Democrats in the Senate or-- or in the House agree with it or not, he is going to lay out a plan to raise the debt ceiling at least toward the end of the year. Is that what's about to happen here?
SENATOR JON KYL: Maybe. I think he wants to make it clear to the markets that we're going to extend the debt ceiling. So we don't have to worry about default. But I also know that the democratic leader in the Senate Harry Reid has been talking a lot with Speaker Boehner. And both of them want to find a bipartisan way to move this thing forward.
BOB SCHIEFFER: Well, do you think what might happen here is they'll go back to the so-called McConnell-Reid option which would call for the President to lift the debt ceiling, give him the sole responsibility of lifting the debt ceiling and then the Congress could vote to disapprove it if they so chose, which basically is just kind of a cover story that people won't-- who don't want to vote for raising the debt ceiling. Is that what is going to happen here?
SENATOR JON KYL: It remains to be seen. And I think that's primarily between Speaker Boehner Majority Leader Reid and the other two leaders in the Congress. The key here is Boehner's formulation, which I think is-- is quite-- quite good. That we should extend the debt ceiling for as long as we reduce spending, in other words, a dollar for dollar. If we can reduce spending by a trillion dollars, then we extend the debt ceiling a trillion dollars worth. And that would take it at least through the end of this year.
BOB SCHIEFFER (overlapping): But-- but what if that won't pass the Senate? Mister Reid says they won't pass the Senate. So what do you do there?
SENATOR JON KYL: Well, the President then would have to answer the tough question. Is my re-election more important to me than the potential for default of the United States? And as the leader of the United States he's got to be first and foremost concerned with our credit worthiness. I can't imagine that he would sacrifice the credit worthiness of the United States just because he doesn't want to deal with this during his election campaign.
BOB SCHIEFFER: Let me ask you this, senator, do you think that Republicans particularly those in the freshman class over in the House understand just how serious this debt limit crisis is because so many of them ran for and were elected on a platform of I promise no way, no how will I ever raise taxes. So that puts them in a really tough spot. Do you think they understand what might happen if you can't raise this debt limit here?
SENATOR JON KYL: Not sure. A part of the problem is, as you point out is, if you look at the public opinion surveys the majority of Americans don't want us to raise the debt ceiling. What the Republican leadership has said is, look, it's got to be raised but perhaps we can satisfy the large majority of American public by accompanying that with large reductions in spending. Spending is our problem here. And if we can show them that we can substantially reduce spending then maybe we can go ahead and-- and make this debt ceiling extension without too much political repercussion.
BOB SCHIEFFER: Is there a problem for Republicans that might emerge as just the party no, the party that can't say yes to anything? Do you see that as a political problem?
SENATOR JON KYL: Bob, I-- I would just put it the other way. I-- the first thing I pointed out was that twice Congress has passed something. They've said yes to something and gotten strongly criticized. Did you know when the Ryan budget was passed the President a lot of his folks came out and savaged it? But they've never put on a budget on the table, so twice Republicans have said yes. The only thing we haven't said yes to is job-killing tax increases.
BOB SCHIEFFER: The Democrats are having a hard time, a lot of them, with talking about reforming Social Security and Medicare. Republicans, as you point out are having a hard time with anything that looks like a-- a tax increase, could you tell me something that Republicans would-- would be willing to compromise on in the way of revenues? I know you want to bring the tax rates down by eliminating some of the deductions. What would be some of the deductions that you might get Republicans to go along with?
SENATOR JON KYL: Let me just back up one stage. I was part of the so-called Biden talks and we agreed to at least a hundred and fifty billion dollars in increased revenues. Now they weren't tax increases.
BOB SCHIEFFER (overlapping): Yes.
SENATOR JON KYL: But they were user fees, user fee increases, sale of assets and so and so. It's not as if we're against revenues. It's just that we don't like to see the tax increases. But on the-- on the tax side, we have uniformly said we need tax reform. And-- and the President, we believe, is correct when he said on the corporate tax rate, for example, in order to be more competitive around the world. We need to bring our corporate rate down. We're by far and away the highest in the world. And we could do that by eliminating some of the deductions and credits and then with that savings reducing the rate. So that's the way we would prefer to deal with that.
BOB SCHIEFFER: Well, just say, for example, would you be willing to eliminate the deduction on mortgage interest rates?
SENATOR JON KYL: Well, I'll listen to my constituents on that. They'll have a lot to say about it. I think it can be reduced somewhat but that's something that's very important to a lot of Americans. And so I think the President should be careful about proposing to eliminate. And charitable contributions, I don't want to provide a disincentive for people to contribute to charity. I-- I-- these are the kinds of things you've got to be very, very careful about saying. It's easy to reduce when in fact the American people will have something to say about it.
BOB SCHIEFFER: Senator Kyl, thank you very much.
SENATOR JON KYL (overlapping): Thank you, Bob.
BOB SCHIEFFER: Thank you for giving your side of the story. I'm going to go now to his sort of counterpart in these negotiations, the number two Democrat in the Senate, Dick Durbin who joins us from Chicago. Senator Durbin, Speaker Boehner is working on a plan that he hopes can be supported in the House. But Democrats have already said no way. And that is this short-term extension of the debt limit. Could something like that possibly pass the Senate?
SENATOR RICHARD DURBIN (D-Illinois/Majority Whip): Bob, let me tell you what the problem is. Those who give us a rating, our credit rating for the United States of America, Moody's, Fitch, Standard & Poor's have told us don't do that. A short-term extension of the debt ceiling is going to jeopardize our economy. At a time when the global economy is so weak, when we facing a downgrade of America's credit rating, they have warned us not to do it. And Speaker Boehner is ignoring that warning. We can't do that. I'll tell you what will happen. We know that Majority Leader Cantor walked out of the negotiations with Vice President Biden. We know that Speaker Boehner walked out of negotiations with the President not once but twice. And now, the reality is if we fail to extend the debt ceiling of the United States, we will be imposing a new tax on working families and businesses across America. They'll see it in their credit cards. They'll see it in-- in their home loans and their automobile loans. This is a tax which will be imposed because Speaker Boehner refuses to consider a tax on the wealthiest people in America.
BOB SCHIEFFER: All right. But I take your point on all of that. But wouldn't it be better to pass a short-term extension to raise the debt limit than just letting this thing go?
SENATOR RICHARD DURBIN: Well, we absolutely do not want to default. But this notion that we're going to replay this movie in four or five months, that we're going to face this whole thing all over again, the American economy is too fragile at this point in recovery for us to allow that to happen. We've been warned not by political advisers. I hear the Republicans. They want to make this a campaign issue. Ignore the political advisors for a moment. Listen to the economists who are telling us, all of them together, do not lurch from one five-month period to another when it comes to the credit rating of the United States of America. Not at this moment in history. It's going to hurt us. It's going to stall our recovery. And I might say to Speaker Boehner he should remember six words--if you break it, you own it.
BOB SCHIEFFER (overlapping): Well, I--
SENATOR RICHARD DURBIN: In this situation he has the responsibility to lead his Republican caucus and to help this nation move forward in a stronger economy.
BOB SCHIEFFER: Have you talked Senator Reid? What's-- what's his thinking here at-- at this hour?
SENATOR RICHARD DURBIN: I called Harry Reid this morning in Washington. He's been working nonstop as everyone has. They've all put a lot of time into it. But an agreement has not been reached yet. It needs to be reached today. I know that Tim Geithner, our secretary of the Treasury, has warned us at that some moment there's a tipping point here. These political negotiations will go on too long and people will start paying the price. And it won't be just the politicians. It's going to be the average working family in America, the average business that'll face this new burden from this failure to reach an agreement that they are going to sense and feel. They're going to see it in their savings, a-- a reduction in value I'm afraid if we don't extend the debt ceiling. That's why it's critical for us to reach an agreement today.
BOB SCHIEFFER: So exactly. So what happens if you don't reach the agreement today?
SENATOR RICHARD DURBIN: Well, it becomes problematic, Bob, as you know in the Senate. It takes a time, a long time to move legislation through the Senate. Under the best of circumstances, a controversial bill will take you a week to go through the Senate and so we need to have an understanding today and move forward. I would just say to Speaker Boehner, the President negotiated directly with you in good faith twice. And you walked away from it. At some point the Speaker has to accept the responsibility beyond his caucus to this nation. I met with a business leader here in Chicago yesterday who was in a meeting with Speaker Boehner where the speaker was saying, "Well, not extending the debt ceiling is not that serious a thing." Yes, it is.
BOB SCHIEFFER: All right.
SENATOR RICHARD DURBIN: It means that people will not be receiving their Social Security checks at least on time, that we'll have to make a decision about whether we're going to pay those who work in the military. These are critical decisions that'll have to be made if we fail to extend the debt ceiling.
BOB SCHIEFFER: All right. We've got a critical decision here. I have to break it off there. The time is running out. Thank you so much, senator.
We'll be back in one minute with more perspective on this.
SENATOR RICHARD DURBIN: Thanks, Bob.
BOB SCHIEFFER: Thank you, sir
(ANNOUNCEMENTS)
BOB SCHIEFFER: Joining us now are two leaders of the so-called Gang of Six--Senators Mark Warner and Saxby Chambliss. They started in early on trying to resolve this problem. Senator Chambliss, it looks to me like that the Speaker has decided to call the President's bluff. It looks to me like he's going out today with some sort of a plan, whether he gets any kind of an agreement with the-- with the Democrats or not. Where do you see this going?
SENATOR SAXBY CHAMBLISS (R-Georgia): Well, I think that's probably a good move on Speaker Boehner's part because here-- here's where we are, Bob. In my opinion, the President came in late in the game, even though this scenario has been very predictable for months and months now. And it's time for the real leadership in a bipartisan way in the House and Senate to get together and come up with some proposal that can pass the House and the Senate. And they go to the President and say, Mister President, this is it.
BOB SCHIEFFER (overlapping): Well, do you think Senator Warner--
SENATOR SAXBY CHAMBLISS (overlapping): --and put the ball in his court.
BOB SCHIEFFER (overlapping): --that what Speaker Boehner is talking about here, is there a way this could pass the Senate.
SENATOR MARK WARNER (D-Virginia): Well, my feeling has been we're still the only bipartisan effort in this town. Over a third of the Senate has agreed to try to move forward with our 3.7 trillion-dollar-deficit-reduction plan.
BOB SCHIEFFER: Mm-Hm.
SENATOR MARK WARNER: One way out might be if this so-called new commission come-- doesn't come up with a solution, let's have a vote on our plan. We built upon the Simpson-Bowles approach. We've got over a third of the Senate saying this is a way forward. Why should we turn away from-- again, the only effort that says let's have a comprehensive bipartisan approach which is what the Gang of Six has proposed.
BOB SCHIEFFER (overlapping): Well, would you all agree with the statements today that you need to get-- basically, get something done before dark around here--
SENATOR MARK WARNER (overlapping): You've got to get some--
BOB SCHIEFFER (overlapping): --or the Asian markets are going to be in--
SENATOR MARK WARNER (overlapping): You've got to get something done or what we will have is indirectly a tax increase on every American family with increased interest rates.
BOB SCHIEFFER: Senator.
SENATOR SAXBY CHAMBLISS: And frankly, we don't know what's going to happen for sure. But one thing will be guaranteed. That's exactly what Mark just said. We know that every household in America is be-- going to be affected in a negative way just by virtue of the fact that credit card interest, interest on commercial loans is going to increase. And this is not the time to see an increase like that, whether you consider interest increase or tax increase, which is right, indirectly it is.
BOB SCHIEFFER: Why is the President so against a two-step plan, Senator Warner?
SENATOR MARK WARNER: Well, I think we all don't want to see a repeat of this kind of political posturing and back-and-forth with this kind of deadline. I agree with the President. We ought to move this out as far as we possibly can. And it looks like the leaders have come together on some process. What we're saying is if this new commission and Lord knows we've had plenty of commissions.
BOB SCHIEFFER: Mm-Hm.
SENATOR MARK WARNER: They all end up basically within the same twenty percent of each other. If this commission can't come up with a solution, why don't we turn back to something that actually has got some bipartisan support? We've taken some arrows from both the left and the right now. My fear is any new commission will try to wall off that kind of choices we've already made. Our plan at 3.7 trillion is actually relatively meager. If this is going to come under assault, how we're going to really get to the fourteen and half trillion dollars that our-- our nation faces in debt.
BOB SCHIEFFER: Senator Chambliss, let me ask you this. I mean this is a question that I think a child might ask. Why has it come to this? What has happened to our Congress here? I mean it appears to be totally dysfunctional. It can't seem to address any serious issue head-on anymore. What happened?
SENATOR SAXBY CHAMBLISS: You know the atmosphere has gotten worse and worse. It seems like, Bob, every year that I've been here. And today is just very, very difficult to get Republicans and Democrats to sit down together and have serious conversations about these complex problems. But it's absolutely necessary now, particularly. We got to divided government and-- and previous administrations like Reagan administration where Reagan and O'Neill got together, reformed Social Security, cut taxes, instantly, exactly like we're proposing to do. In the Clinton administration, we reformed welfare, we-- we balanced the budget in a bipartisan way with a divided government. And we do have an opportunity right now but there's simply in my opinion, there's a lack of leadership at the top. And a President can't come out and show anger towards the people he's negotiating with in the hope--
BOB SCHIEFFER (overlapping): Ten seconds left.
SENATOR SAXBY CHAMBLISS (overlapping): --to get something accomplished.
SENATOR MARK WARNER: Bob, I would agree there's a lot of dysfunction. But something remarkable happened this week. Tuesday morning, we had half the Senate in, we laid out our plan, and as opposed to people saying no we want to punt some more, they said sign me up, including Republican and Democratic leaders.
BOB SCHIEFFER: All right, we'll see what happens today. I'll be back in a moment with final thoughts.
(ANNOUNCEMENTS)
BOB SCHIEFFER: Finally today, in the furor are over this latest Washington standoff. Let us not overlook this outrage. The Federal Aviation Administration, which keeps our planes flying safely, was forced to begin a partial shutdown this weekend because Congress can't agree on legislation to fund it. So the agency is furloughing more than four thousand workers, including those who collect the two hundred million dollars a week in taxes that help to pay for it. Air traffic controllers will remain on the job for now. So the planes will keep flying but airport construction and FAA funds for state and local airports will stop. If it were not so inconvenient to the rest of us, I sort of-- we say it shut down the whole thing and grounded the planes. That way, members of Congress could ride the bus to their home districts. A nice long bus ride would give them time to reflect on why they were elected in the first place. Their way or the highway then would take on a whole new meaning.
Back in a minute.
(ANNOUNCEMENTS)
BOB SCHIEFFER: And we'll see you next week right here on FACE THE NATION.
ANNOUNCER: This broadcast was produced by CBS News, which is solely responsible for the selection of today's guests and topics. It originated in Washington, DC.