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Senate Minority Leader McConnell & Senator Schumer

By Face the Nation, Face the Nation - July 31, 2011

Below is a rush transcript of "Face the Nation" on July 31, 2011, hosted by CBS News chief Washington correspondent Bob Schieffer. The guests are Senator Mitch McConnell, R-Ky., and Sen. Chuck Schumer, D-N.Y.

You can watch the full show by clicking on the video player above.

Bob Schieffer: Good morning again and welcome to Face the Nation. Well, here's what it looks like is taking shape. A deal that would extend the debt limit through 2012 and would cut up to $3 trillion in spending over the next 10 years. The first wave of cuts would total $1 trillion and a bipartisan Super Congressional Committee would have to determine the additional cuts by Thanksgiving of this year. OR If they can't agree Congress doesn't act on their recommendations, there would be automatic cuts to defense spending and entitlements.

Senator Mitch McConnell, who has emerged as the KEY player in this deal is here with us in the studio, Senator thank you so much for joining us, how close are you?

Senator Mitch McConnell: Well, I think we are very close Bob, to being in a position where I think I can recommend to my members I think this is something I hope they will support. We've come a long way since April. Back in April, the President was asking us to raise the debt ceiling with no spending reductions at all, now I think the potential agreement that you just outlined, is within our reach. We avoid default, avoid raising taxes, and begin to get the federal government's house in order by dealing with our biggest problem, which is we've been spending entirely too much.

Schieffer: The Republicans in the House wanted more than this, It seems to me, if they wanted more, why would they be willing to go with this now?

McConnell: Well you know, my party controls over a portion of the government, we control the House of Representatives, we have a pretty robust minority in the Senate, but we are not in the majority. And we have a democratic President, there is only so much you can achieve when you don't have the leverage of power. My view is, and I think it's the view of the majority of Republicans in both the House and the Senate, let's get as much spending reduction as we can possibly get out of a government that we don't control. And I think we are heading the direction to reassure the American people that we are going to deal with our biggest problem which is our spending has been completely and totally out of control.

Schieffer: Now, this deal as I understand it, does not have any revenue increases in it, any closing of loopholes, or tax reform, or any of that, it's just spending cuts. Democrats have said before they've got to have some revenue increases, but as I understand it, this super committee that you're putting together that once you get these goals outlined, they will get together and they will decide how and when they cut these programs. Will they have the authority to consider revenue increases, as well as spending cuts?

McConnell: Well, they are going to have a broad mandate to look across the federal government, including tax reform, which virtually every Republican I know thinks is a good idea, to tackle tax reform. The president also wants to tackle tax reform. They can do that. We fully expect them to deal with entitlement reform. Bob, the trustees of President's own social security and Medicare, the trustees of the system that he appointed have said repeatedly, including this year, that both programs have serious problems. They simply are not sustainable for the next generation. So that has to obviously be part of what the joint committee comes back and recommends to the Congress. Let me also make the point, this is not another commission. You know, no outsiders on this. This is a joint committee of Congress, dead even between Republicans and Democrats. They will come back with a report of legislation, a piece of legislation that will be voted on up or down In the House and Senate. If you're looking for an analogy, think of the base closing legislation of a few years ago.

Schieffer: And let's just talk about that just for a second so people understand. The way the base closure thing works now is it used to be Congress would vote whether to close this base or whether to close this base individually. It got to where that was just almost unworkable. And so what they did was they drew up a list, a committee draws up a list of bases that have to be closed and then the congress votes on it up or down.

McConnell: Right.

Schieffer: and if they vote it down, it goes back and they put in a new list. That's what you're talking about here. You're talking about spending cuts. You're talking about tax reform that would all be in one package, the Congress would then vote on it up or down.

McConnell: Yes.

Schieffer: And that's how this would work.

McConnell: The committee would have a broad look at the most serious problems, the ones that have been the most intractable, the ones most difficult to pass, put together a package in a thoughtful way, and I believe all four of the leaders will appoint individuals to this joint committee that are serious about dealing with the nation's biggest problems. We're not talking about kicking the can down the road. We're talking about this calendar year before the year is out, Congress would be voting on this recommendation.

Schieffer: But it would, if the Congress... this committee in its wisdom decided to include some tax increases in that package, they would have the authority to do that.

McConnell: The committee has a broad mandate to look at the entire spectrum of concerns and certainly tax reform is something both Democrats and Republicans think is long overdue.

Schieffer: But they would have the authority to say eliminate a deduction on say people's interest that they pay on their mortgage. If they chose to do that, they would have that.

McConnell: The whole idea behind tax reform is to lower the rates and remove a lot of the preferences. And I think there's a pretty strong bipartisan feeling that that would be a very good thing for the country. It would be good for economic growth. The president himself has talked about our corporate tax rate is now about to be the highest in the world. It makes us uncompetitive. We've got a jobs problem in this country. We need to have a competitive country and tax reform would be a big part of that. We also need to have entitlements still there for our children and our grandchildren, and at the rate they're going, Bob, they're not going to be there.

Schieffer: I mean, obviously there are going to be some in the tea party, especially in the house, that are not going to go for what you have just talked about there, I noticed this morning Lindsey Graham, Senator Graham of South Carolina is saying he thinks the deal as he understands it now may be moving in the wrong direction. Are you convinced you can sell enough Republicans just in the senate on this to get it passed?

McConnell: Well, I'm sure there will be both Democrats and Republicans who in the end find the agreement wanting in one way or another. But I believe there will be a strong bipartisan support for this. Again, this deal has not been finalized yet, but I think we're very, very close to something that I could comfortably recommend to my members and I believe the Democratic leadership will be doing the same.

Schieffer: Do you think that Speaker Boehner, he's going to have to depend on Nancy Pelosi to get him some Democratic votes over there in the house to get this passed.

McConnell: We'll we're going to have to get Democratic votes in the Senate. Well, neither party has a hammer lock on the entire Congress. And we're going to have to work together to get this job done for the American people.

Schieffer: I understand there's also a provision in here that calls for a vote on the balanced budget amendment. It doesn't say the balanced budget amendment has to be passed by both house, as the republican version did. Why are you putting that in there? You know it can't pass.

McConnell: We hope it would pass. I mean, it's the best kind of long-term straitjacket. Our government has certainly demonstrated in the last few decades that it's not very good as controlling its appetite for spending. And the balanced budget amendment would be a good kind of long-term mechanism to put this kind of financial straitjacket on our country that desperately needs it.

Schieffer: The Wall Street Journal, not exactly a liberal newspaper, took a pretty tough go at you Republicans yesterday on their editorial page. One of the things they said was "The debt limit hobbits should also realize that at this point the Washington fracas they are prolonging isn't helping their cause. Republicans are not looking like adults to whom voters can entrust the government." How much do you think the Republican Party has been hurt by all this?

McConnell: I don't think we've been hurt at all. The American people wanted us to do something about out-of-control spending and the opportunity presented by the President's request of us to raise the debt ceiling is going to produce what many people will believe is a complete change in the trajectory of the federal government, beginning to get spending under control.

Schieffer: What do you think has caused this to be prolonged so long? It seems to me now that every major issue that the congress has to confront, it develops into something like this. Is it just the divide in the country that's wider than maybe even many of us thought it was and Congress just reflects that? It just seems that Congress just doesn't work very well anymore.

McConnell: You know, Bob, we've always had robust political debate in this country. I mean, what we've got going on now kind of pales in comparison to what Adams and Jefferson used to say about each other and what Adams and Hamilton said about each other. We've got a history of robust political debate, but this country has always come together at critical moments, and we're at one of those critical moments right now. And we're going to come together and we're going to get the job done for the American people. We're not going to default for the first time in our 235-year history. We're not going to engage in job-killing tax increases in the middle of one of our toughest economic times ever. We're going to begin to reduce spending and get our books in order and head America in the right direction so we have a great country for our kids just like our parents left behind for us.

Schieffer: Some people say the Republican Party has been held hostage by the tea party. One of our Facebook followers sent in an interesting analogy and said, "Why are republicans allowing freshman congressmen to control this debate", and this person said, "it's like letting the teenager in the family run the family budget." I mean, there's some truth in that.

McConnell: Look, we don't have any more internal differences in the Republican conference in the House and Senate than they do in the Democratic conference in the House and Senate. There are different points of view. We come from different parts of the country. We have different philosophies. One thing Republicans all have in common, they want a smaller government and they don't want to raise taxes. On that issue I think Republicans are broadly united.

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