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Guests: Representatives Pence, Van Hollen

By This Week, This Week - April 10, 2011

AMANPOUR: Welcome to the program. The government is up and running today, after a frantic 11th-hour round of let's make a deal. National parks are open, federal workers will get paid on time, and so will the troops. It's a big relief to people here in Washington and of course around the country.

But the budget showdown that drove Congress to the brink of the shutdown is puny compared to the battles that lie ahead. As one Republican senator is warning, prepare for Armageddon.

Where this fight was about billions of dollars, the next one will be about trillions. This week, we saw President Obama assume the role of mediator in chief. The big question now, will he build consensus around reforming huge budget-busting programs like Medicare, Medicaid and Social Security? And does he have the will and the stomach for that fight?

Joining me now, the president's senior adviser, David Plouffe. He was the president's campaign manager in 2008 and now advises Mr. Obama on politics and policy from inside the White House. Thank you for joining us.

PLOUFFE: Good to be with you, Christiane.

AMANPOUR: So the president started this whole process a while back talking about spending increases. Friday night, he came out and called it a historic deal. But this cut so many billions, that must be a disappointment, a historic cut.

PLOUFFE: No, the president has been very clear that we need to reduce the deficit. And obviously because the last two years, we were on the brink of a great depression, that had profound impact not just on the economy and our people, most importantly, but also our fiscal situation.

So in order to -- because the president believes we still have to invest in things like education, research and development, technology, the only way to do that in this fiscal situation is to live within our means and to cut spending.

So it was a huge spending cut, as the president said Friday night, in some programs that he cares deeply about. But if we're going to compromise -- and by the way, compromise cannot be a dirty word, it's the way we're going to move forward in this country.

AMANPOUR: Right. But since he really was looking to, as you say, invest, and increase spending, why is he taking sort of a victory lap when this is something he didn't want to do in the first place, cut?

PLOUFFE: Well, if you look at his budget for 2012, which he announced around the State of the Union, it actually would reduce the deficit over a trillion dollars in the next 10 years. It would bring spending down to the lowest levels since Dwight Eisenhower.

So the president's commitment to spending cuts and deficit reduction is absolutely firm. But while we do that, we've got to make sure that we are not hurting our ability for our people to get the education they need to compete with people in Beijing and Bangalore, that we are investing in research and development, that we're investing in infrastructure.

So that's going to be his approach going forward. And I'll tell you, the president later this week is going to lay out in detail his approach for deficit reduction going forward. And I think his belief that it has to be a balanced approach, it has to be serious, it has got to put us on a firm fiscal trajectory that the country needs to grow economically.

AMANPOUR: We'll talk about that in just a second. But, again, quickly, the Senate majority leader, Harry Reid, called what the speaker was asking for just in February, $32 billion, he called it "draconian" and very painful. And now it's being called historic.

I mean, which is it? Is it draconian yesterday and historic today?

PLOUFFE: Well, some of the cuts were draconian, because it's not just the number. It's what composes the number. So in this budget deal, the president, Senator Reid, you know, we protected medical research, community health centers, kids on Head Start. We were not going to sign off on a deal that cut those things.

So the president was comfortable with the composition of this deal. That, again, you know, there were some tough cuts in there, things he believes in. But in these fiscal times everyone is going to have to make tough decisions.

So it was a historic deal for the American people. But here's the important thing, the president has spoken often about his plan to win the future for America economically. And what this budget does is preserve our ability to do that through education and innovation.

AMANPOUR: So many economists have said that at this particular time when you've got a fragile recovery, cuts in any way could harm that. Are you worried about this setting back the recovery?

PLOUFFE: I think if they're not careful cuts, yes, it could. And that's what the president said, listen, we can't take a machete, we have to take a scalpel, and we're going to have to cut, we're going to have to look carefully.

What you have to do is go line by line. It can't be some macro argument about big numbers. You've got to look at the details and make a judgment on each one, in terms of the impact on people, in terms of the impact on the economy.

And that's the approach of the president, we carefully approached it so that we can cut spending, we can reduce the deficit in the short and long term, but without jeopardizing our economic growth and without jeopardizing those things like education and innovation.

AMANPOUR: Big, huge battles coming ahead, and we asked in our intro to you whether the president has the stomach and the will for the huge fight ahead. Already in this budget showdown, he was perceived as coming in at the last moment. And many in his own party have talked about a lack of leadership.

Listen to what Senator Manchin just said about that.

(BEGIN VIDEO CLIP)

SEN. JOE MANCHIN III, D-W.V.: Why are we doing all of this when the most powerful person in these negotiations, our president, has failed to lead this debate or offer a serious proposal for spending and cuts that he would be willing to fight for? How does that make sense?

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