'This Week' Transcript: Jacob Lew and Jon Kyl

PHOTO: Lew and Kyl: Differences Over Taxes, Spending Still Hold Back Budget TalksABC News
White House budget director Jacob Lew says he believes an agreement will be reached before the country is at risk of defaulting on its debt obligations while Senate Minority Whip Jon Kyl (R-Ariz.) maintained the Republican position that raising taxes should not be part of the final deal, and that spending remains the larger problem.

CHRISTIANE AMANPOUR: This week, stalemate in the debt talks as tensions sore and the clock ticks. (Begin video clip.)

PRESIDENT BARACK OBAMA: I do not see a path to a deal if they don't budge, period.

SPEAKER OF THE HOUSE JOHN BOEHNER (R-OH): Where's the president's plan? When is he going to lay his cards on the table?

(End video clip.)

MS. AMANPOUR: Wall Street sounds the alarm, but the tea party remains defiant.

(Begin video clip.)

REPRESENTATIVE MICHELE BACHMANN (R-MN), 2012 PRESIDENTIAL CANDIDATE: We cannot go on scaring the American people.

(End video clip.)

MS. AMANPOUR: Is a deal possible in this climate of partisan paralysis? Two men actually at the bargaining table join us this week, White House Budget Director Jack Lew and Republican Senator Jon Kyl. And the roundtable debates the bitter politics of the debt divide. Plus Rupert Murdoch under fire; heads roll at his media empire, but will that be enough to save it?

And in Africa, a cry for help, millions threatened by an epic drought, the worst in 60 years. We'll take you there. Then, we're live from Germany where the American women's soccer team has a shot at making history.

ANNOUNCER: Live from the Newseum in Washington, "This Week with Christiane Amanpour" starts right now.

MS. AMANPOUR: Welcome to the program. We've got lots to get to this morning but, first, some headlines since your morning papers. There is breaking news to report in London. The BBC has learned that Rebekah Brooks, until just days ago Rupert Murdock's top lieutenant in the U.K., has been arrested on suspicion of corruption. Earlier this week, Brooks resigned from her position as chief executive of News International in the wake of the phone hacking scandal that's rocking the Murdock empire. Much more on this developing story later in the program.

Casey Anthony is a free woman this morning. She walked out of jail just after midnight 12 days after she was acquitted of the murder of her daughter, Caylee. Anthony was met by jeering crowds and spirited off on a private jet to parts unknown.

And Tripoli, Libya, was rocked by explosions before dawn after a heavy round of NATO bombing. It's been four months since NATO launched attacks to force Moammar Gadhafi from power and still he hangs on defiant as ever still refusing to surrender while earlier this week, the U.S. government formally recognized the chief rebel group as Libya's legitimate government.

But first, we turn to the drama that has Washington tied up in knots, the battle over raising the debt ceiling. No White House meetings this weekend as the president and congressional Republicans retreated to their respective corners, but behind the scenes, furious strategizing is afoot in a bid to stave off economic catastrophe. This morning, there are reports of a resurrected grand bargain. So is a breakthrough on the horizon?

Joining me now, a man at the heart of these tense negotiations, White House Budget Director Jack Lew. Thank you for joining me.

JACK LEW: Good to be here, Christiane.

MS. AMANPOUR: How worried should the American people be? Is the country going to default? Is a deal at hand?

MR. LEW: I do not believe that responsible leaders in Washington will force us to default. I think that all the leaders of Congress and the president have acknowledged that we must raise the debt limit and the question is how.

I think the question is do we do more than that. Do we also do as much as we can to reduce the deficit and provide some assurance that we're taking seriously the fiscal problems this country faces.

MS. AMANPOUR: So is there a grand bargain still on the table?

MR. LEW: Well, I think that there is multiple tracks that are being discussed. It's not a given how we get to raising the debt limit. There are some extreme voices that are saying we should push it over the edge. I think the risk of taking that path is just enormous. The president referred to it as an Armageddon.

It would mean higher interest rates which are a tax on all Americans. It would undermine our standing in the world, and it could have a cloud for a long time over the United States. I think the question how we get there -- Senator McConnell and Senator Reid have been working on a path that, you know, would, in fact, give Congress perhaps a way to get that done.

I think the challenge is doing more. It's not enough for us just to do what we have to do. We have to do as much as we possibly can to deal with the fiscal challenges.

MS. AMANPOUR: But sitting here today with the time ticking away, what do you think is going to be the realistic one? Will it be the McConnell sort of last-ditch effort which allows the president to raise the debt ceiling and allows Republicans or anybody to register their disapproval of it?

MR. LEW: I think that what we face now is not a challenge of do we have time. It's a question of do we have the will. The president has shown through his leadership that we must take action and we must take it now. And he's known to the issue in his State of the Union, in his budget. He spoke to it over the last few days to the public.

He is pressing these discussions forward that we should do as much as we can, and he's willing to take on some very, very difficult issues that will require for both sides to move into areas that make them uncomfortable to get this done.

MS. AMANPOUR: Well, let's talk about entitlements. The Democrats -- you've heard Nancy Pelosi. You've heard Senator Reid talk about not touching entitlements. Is that just a public posture, or will that be part of a deal?

MR. LEW: I think it's very, very hard for Democrats to make these changes in entitlement programs, and for good reason. They have an effect on people that's really very significant. We are concerned, first and foremost, about the stability of Medicare as a system to provide for the medical needs of our elderly. It does contribute to the problems we face in terms of rising costs over the years.

The challenge is can we get a balanced package together. It's not fair to ask, you know, senior citizens to pay a price, to ask families paying for their college educations for their children to pay a price but to leave the most privileged out of the bargain.

MS. AMANPOUR: But would it be part of a big deal, entitlements cuts, correct?

MR. LEW: I think the president made clear that, depending on the size of the package, there would be different kinds of things that could be done on entitlements. There are some relatively small technical changes, and there are structural changes.

In order to get the kinds of structural reforms that will be needed in the long run, there has to be a balanced package that puts taxes -- revenues as well as spending -- on the table.

MS. AMANPOUR: Does the president have his own plan? What is on the table? You saw Speaker Boehner saying where are the president's cards.

MR. LEW: I think the speaker knows quite well how far the president is willing to go. There have been detailed conversations on many, many subjects. And I think the president has shown that he's willing to move into a space that is a very hard place for Democrats to go. And the challenge is can we find a place where there will be some kind of fairness and balance.

And, you know, leadership takes partnership as well. The president has shown a willingness to go there. We need a partner to work with.

MS. AMANPOUR: If it gets down to that, would the president, as Representative Cantor suggests, do a one-year extension to save the country from going into default?

MR. LEW: The president's been very clear on that subject. It would be a very unacceptable outcome to have a one-year --

MS. AMANPOUR: But would he do it?

MR. LEW: He's made clear that he will not --

MS. AMANPOUR: That's still his position?

MR. LEW: -- have this debate over should we raise the national debt a year from now. It will be a bad thing for the economy and a bad thing for the country.

MS. AMANPOUR: So to be clear, the country could be pushed into default then?

MR. LEW: No. I do not believe the country will be pushed into default. I think Congress know what it has to do. It's got time to do it. The president's made clear what he's prepared to do. And the parties are going to have to come together. It's kind of unfortunate that things always have to get to the last minute.

Sometimes, there are no consequences. Right now, we're in a place where the world is watching, and we should get our business done. Congress should get its job done, and the president's been working every day for the last month trying to work with them to get it done.

MS. AMANPOUR: And some kind of a deal -- whether it's the grand bargain or the Mitch McConnell last-ditch effort plus whatever it might be, would the president agree to any deal that does not include revenue raising?

MR. LEW: I think the president made clear that there are reasonable steps that can be made to reduce spending. We've already made many, many deep cuts in spending. There's more restraint that we think is in order. He's made it clear that, for a big deal, there will have to be balance between revenue and spending. The question is how much can we get done.

And the president's view is clear. We should get as much done as we possibly can to give assurance to the market and to the American people that we've got our fiscal house in order.

MS. AMANPOUR: So if you had to predict right now, what would be the deal that will get done to avoid this deadline, this potential catastrophe, as you're calling it?

MR. LEW: So I think the minimum is I believe the debt will be extended. I think notwithstanding the voices of a few who are willing to play with Armageddon, responsible leaders in Washington are not.

Our efforts over these next days will be to, in addition to that, do as much as we possibly can to make the tough decisions. This is a question of leaders coming together and saying we're going to do hard things on both sides and the time is now. As the president said, if not now, when.

MS. AMANPOUR: On that note, Jack Lew, thank you so much, indeed, for joining us.

MR. LEW: Thank you.

MS. AMANPOUR: Thank you, indeed.

And the parties are in a bit of a cooling-off period after a contentious series of White House meetings. At one point, tempers flared between President Obama and the number-two House Republican, Eric Cantor. Witness to it all leaders of both parties including House Speaker John Boehner and his Democratic counterpart Nancy Pelosi, Senate Majority Leader Harry Reid and Minority Leader Mitch McConnell were also at the table. And so was my next guest today, Minority Whip Senator Jon Kyl of Arizona.

Thank you very much for joining us.

SENATOR JON KYL (R-AZ): Thank you, Christiane.

MS. AMANPOUR: You just heard the budget director, Jack Lew, saying absolutely a deal will be done and this country will not default. Are you there as well with that?

SEN. KYL: The country will not default. Whether or not there are savings achieved in the process remains open to question.

MS. AMANPOUR: What kind of a deal do you think is going to be done? We've heard a resurrection of the grand bargain. Do you think that's possible?

SEN. KYL: Unless the president gets off of his absolute obsession with raising taxes, Republicans are not going to agree to do anything that will harm our economy. And job-killing taxes will harm our economy.

So there will not be a default, but as to whether or not we can achieve savings in the process, again, depends on the president.

MS. AMANPOUR: Let me quickly ask you first then how will there not be a default? What do you believe will be the outcome? You're at that table.

SEN. KYL: Right.

Republican leaders have made it clear that, if all else fails, if our efforts to adopt legislation to cut the deficit, put a straightjacket on it and balance the budget -- the so-called, cut, cap and balance -- I think that passes the House. But if that doesn't pass the Senate and if there is no other way to reach some kind of savings agreement then, at the end of the day, Republican leaders have made it clear that we will not be the ones who put the government into default.

MS. AMANPOUR: So that would be the Mitch McConnell last-ditch effort?

SEN. KYL: Well, it's McConnell-Reid effort.

MS. AMANPOUR: Yes. So that will be what you will agree to if all else fails?

SEN. KYL: That's what the Senate is proceeding with. Now, the House of Representatives has to make its decision about what it will do. But I'm simply answering your question, at the end of the day, I don't think there will be a default.

MS. AMANPOUR: All right. You talk about taxes and, obviously, the Republicans have made that a line in the sand; no new taxes. And yet poll after poll recently have basically said that the American people are not with you on that issue. The majority actually says that there should be a balanced approach, whether it's the Quinnipiac, even including not even a majority of Republicans say there should be no new taxes.

So do you think that you're out of step with the American people on this?

SEN. KYL: Christiane, I haven't seen the polls you're referring to. The last poll -- in fact, I looked for polls that backed up the president, didn't find any. The last poll, if I could, just three days ago -- this is the Rasmussen poll -- the question was do you think that a tax hike should be included in any legislation to raise the debt ceiling; 55 percent say no, 34 percent say yes. And even independents, a majority of independent, say no.

MS. AMANPOUR: OK. Well, let me just -- we could play polls all the time, but quite a lot of the established ones like the Quinnipiac says that 67 percent of Americans say debt reform should involve a balance of cuts and tax increases, especially for the corporations and the wealthy. And, indeed, as I said, not even a majority of Republicans say that there shouldn't be any tax increases.

So you have said that you don't want to do anything to jeopardize the country's standing and that there won't be a default. You said that the House may have a different attitude to this. Can we just play what Michele Bachmann has been saying? And she is a leading member, as we all know, of the Republicans and is a presidential contender.

(Start video clip.)

REP. BACHMANN: I'm no on raising the debt ceiling right now because I've been here long enough that I've seen a lot of smoke and mirrors in the time that I've been here. But I haven't been here long enough to forget who I serve or where I come from. People across America are saying the spending is what has to be addressed. It's too much. It's got to be limited.

(End video clip.)

MS. AMANPOUR: Do you agree with her that it is all smoke and mirrors, the warnings from economists, from the Treasury secretary, from the chairman of the Fed?

SEN. KYL: I don't agree with that, but I do agree with her that spending is the problem. Let me just show you this chart. The very end here where the spending goes way up demonstrates that it's spending that's the problem. And that's why Republicans are so insistent on addressing the cause of the problem, namely, too much spending.

MS. AMANPOUR: So you should be pleased then that your negotiating and your position has actually moved the president towards necessary significant proposals --

SEN. KYL: I wish I could say --

MS. AMANPOUR: -- on spending cuts.

SEN. KYL: I wish I could say that's true. Did you notice that Jack Lew did not answer your question? The president did not answer Jake Tapper's question, the question first question at his news conference; what exactly would you do with regard to Medicare to effectuate savings?

We've identified over a hundred billion dollars a year in savings just from Medicare, Medicaid and unemployment compensation overpayments. This isn't hurting anyone who's entitled to it. These are payments that shouldn't be made and yet all the president would say is he was willing to look at unspecified reforms.

MS. AMANPOUR: You also heard what Jack Lew said if there was part of a big deal, it would involve entitlements -- SEN. KYL: But we have no idea what he's talking about. That's the problem. Republicans are not willing to make a deal based upon some vague commitment that, sometime in the future, the president might be willing to look at something that he won't identify.

MS. AMANPOUR: So, right now, as both parties are in this, I guess, stalemate, critical impasse, you've also heard Senator McConnell say just this week, in fact, to a radio interviewer that this, politically, could jeopardize the Republicans; that being sort of blamed -- which they could be -- for a bad economy could, quote, "destroy the brand." And it wouldn't be good going into an election.

Do you agree with that?

SEN. KYL: I don't really look at the politics of it. What we're looking at is what's good for the country. We know that raising taxes on a weak economy is not good for economic recovery and for job creation. And our first thought is, first, let's do no harm to economic growth and to putting Americans back to work again. That's why we're insistent that we should focus on the real problem, the spike in spending, and not this phony problem of taxes.

MS. AMANPOUR: So do you have a prediction as to how many in the House would be against, at all cost, raising the debt ceiling, for instance, as Michele Bachmann said?

SEN. KYL: No, I don't. I simply was answering your question about what I thought would ultimately happen, and I don't think Republican leaders will allow the country to go into default.

MS. AMANPOUR: Senator Kyl, thank you very much, indeed, for joining us.

SEN. KYL: Thank you.

MS. AMANPOUR: And coming up, while the markets warn of the dangers of a default, a freshman tea party congressman makes his case for holding out, and he joins our roundtable next.


(Begin audio clip.)

SENATOR MITCH MCCONNELL (R-KY): I refuse to help Barack Obama get re-elected by marching Republicans into a position where we have co-ownership of a bad economy. If we go into default, he will -- he will say that Republicans are making the economy worse. It's an argument he could, you know, have a good chance at winning. And all of a sudden, we are co-ownership -- we have co-ownership of a bad economy. That is very bad positioning going into an election.

(End audio clip.)

MS. AMANPOUR: Blunt words from Senator Minority Leader Mitch McConnell warning that a debt default could, quote, "destroy the Republican brand.

" McConnell, of course, an old hand of Washington brinkmanship but, for many new GOP Congress members these days, compromise equals capitulation. They could very well hold the cards in the debt talks, and the big question is how will they play their hand.

So joining me now to make sense of all of this is George Will; Cokie Roberts; Congressman Raul Labrador, a Republican tea party freshman from Idaho; Matthew Dowd, former campaign strategist for George W. Bush; and ABC's senior political correspondent, Jon Karl.

So you heard what we just played from Mitch McConnell, George, do you take him at that? Is it bad for the Republicans right now? Do you take his warning?

GEORGE WILL: I do. I think what the president would like -- let's go back four months. The president was clear and emphatic on what he wanted, a clean lifting of the ceiling, which is to say, so restraint on the spending merry-go-round. Now, he suddenly wants $4 trillion in deficit reduction.

What he would do though in getting that was have the Republicans sign onto tax increases which would demoralize the Republican base and fracture the party and enable him to run as a born-again deficit reducer. So my feeling is that the House will have its say and the Senate will reject it. The Senate will have its say and the House will reject it. And the last proposal standing will be McConnell-Reid, and something like that will be passed.

MS. AMANPOUR: Well, let me just then go straight to you. You've said that you would not vote to raise the debt ceiling under any circumstances. You heard what Senator Kyl said. There will not be a default. Are you willing to push it that far?

REPRESENTATIVE RAUL LABRADOR (R-ID): I never said I would not raise it under any circumstance. I said that I would not raise it unless we make long-term systemic changes to the way things are done in Washington, D.C.

We just had an election in 2010 where the American people asked us to change the way things are -- the way things are being done here in Washington, D.C. And that's what we came here to do.

I want three things. They're simple. And the president claims that he agrees with them. I want to make sure that we cut spending here in Washington. I want to make sure that we have a cap on the amount of spending that we do. And I want to have a balanced budget amendment.

You were talking about polls just a little while ago. Eighty percent of the American people want us to have a balanced budget amendment. I'm not sure why the president is standing in the way of that.

MS. AMANPOUR: Jon, what are your sources saying about where the deal is? You heard both Jacob Lew and Senator Kyl talk about what might be possible, but where are the talks?

JONATHAN KARL: Right now, the simple truth is there is not a single plan that can pass both chambers. Nothing can pass; not the president's original idea of a clean debt ceiling, not the Republican idea of cut, cap and balance, nothing, and certainly not this plan, the triumph of politics over policy, that Mitch McConnell has outlined which basic the gives the authority to the president but allows Republicans to score political points. I see virtually no chance, in its current form, of that passing in the House.

COKIE ROBERTS: But something has to.

MR. KARL: Something has to, but, you know, I don't know that something will by August 2nd. I think it's less than -- MS. ROBERTS: Well, if something doesn't by August 2nd, then I think we are in real trouble. And people who say that they're concerned about the deficit, nothing could be worse for the deficit than not raising the debt limit. I mean, you would then have interest rates go up, they compound and the deficit would climb dramatically.

So how you can get to that point of going to default and say that you're for deficit reduction just doesn't make any sense logically.

MATTHEW DOWD: Politically, both sides, I think, absolutely know they have to pass something politically because the risk of not passing something is much greater than passing something that some part of the constituency doesn't want.

So I think, in the end, they're going to go this up against this deadline and crisis which I think actually has been important because most of the time Congress won't do anything unless there's a deadline, and then -- unless there's accountability. But I think, in the end, the politics of this will force something, whatever it happens to be, some small combination of cuts with raising the debt ceiling.

But politically, the president and the Congress both know they have to pass something.

MS. ROBERTS: Congressman, I'm curious though. How does it work politically to say that we won't raise taxes on billionaires as the president keeps saying?

REP. LABRADOR: Let's talk about this. The House majority, the House Republicans passed a budget that actually talked about reforming the tax system. We already agreed to that. We said that we want to make sure that we broaden the base, which means getting rid of all those loopholes, and we want to lower the rates.

The difference between the Republicans and Democrats is that the president wants to get rid of all these loopholes just to increase spending. That's all he's wanting to do. Everybody gives him credit right now for being the adult at the table. This is the man who came to Congress and asked us to raise the debt ceiling without any spending cuts. This is the man who gave us a budget that didn't even get a single vote in the Senate.

And now he's saying that he's serious -- a serious deficit hawk. I think that's a joke. He has never been a deficit hawk.

MS. AMANPOUR: George, though, you think the president and the speaker have played this about as well as they can, right?

MR. WILL: Well, given their two constituencies, I mean, the tea party movement -- which I happen to think is the best thing that's happened in American politics since the Goldwater insurgency -- (laughter) -- the tea party --

(Cross talk.)

MR. WILL: The problem is the tea party movement -- which doesn't understand the fundamental paradox which is that, if Washington were as easy to turn around as they seem to think it is, we wouldn't need the tea party movement which we do. The president did not get elected to cut entitlement programs, to cut anything for that matter. He has proposed -- you know what he's been specific about? $2 billion of spending cuts in 2012. That's a rounding error on the --

MR. KARL: George, what I don't understand here, the big mystery to me is why the Republicans didn't, to use the president's phrase, call his bluff. The president was talking about cuts to Social Security and Medicare. Why -- and I mean, the Republicans pulled out on taxes.

The initial reaction to the leaks on those stories were Democrats on Capitol Hill screaming bloody murder saying that they were not going to let the president and John Boehner touch Medicare. And before that fight could play out, Republicans walked away on taxes.

MR. DOWD: What I think is going on here is how broken the process here in Washington is, how badly poisoned it is and how neither side really trusts each other. And even if they were going to call each other, the lack of trust is so big that they can't even reach agreement on some small thing.

Each side, in 2010, the Republican getting elected and a Barack Obama in 2008, basically, the message was fix Washington.

MS. ROBERTS: That's right.

MR. DOWD: It's broken; fix Washington.

And right now, no matter what happens, nobody is going to win in this.

MS. AMANPOUR: So you're right because you see majority say they want to see the parties compromise and reach some kind of an agreement over these big issues.

MS. ROBERTS: When Congressman Labrador says, we were elected to do something, what I think the American people keep saying is you were elected to do something, to come together, to make compromises and make government work. And why isn't that a message that you hear?

REP. LABRADOR: But why is it that compromise always means increasing taxes today and doing cuts in 10 years from now. I think that's the problem that the American people -- the American people will not stand for that. I think we can do something -- we can come on the table and actually work together, but it is pretty clear that the president is unwilling to not increase taxes. He's unwilling to do something serious.

I want to know what his plan is. So far, we have no idea what his plan is. He has not put anything on the table. All he talks -- they have all used the same phrase, grand compromise, because what's poll tested. Apparently, the people like that but it doesn't mean anything.

MS. ROBERTS: But in all of those -- in the meetings with Vice President Biden, lots of specifics were talked about. They have -- what is the number, Jon, 1.4 trillion (dollars) in --

MR. KARL: But as George points out, it's only $2 billion in cuts in 2012, which will never fly.

MS. AMANPOUR: But can we be clear on the tax issue? Are they proposing raising the marginal rates? Or are they talking about closing loopholes and other such corporate --

MR. KARL: Right now, the talk of raising the marginal rate is absolutely dead.

MS. AMANPOUR: Exactly.

MR. KARL: So it's a question of what you do in tax reform and do you have a net increase in tax revenues by closing these rates, or do you, as the Republicans want to do, simply lower the rates with that additional revenue.

MS. AMANPOUR: And, you know, again, we keep talking about polls, but this week there have been a lot of polls saying that the majority of Americans want the so-called balanced approach.

REP. LABRADOR: And what does that mean?

MS. AMANPOUR: Well, revenues and cuts.

REP. LABRADOR: And I don't agree that there's been a lot of polls that say that the majority of Americans -- actually, most of the polls have said that the majority of Americans don't want to increase taxes. If you look at the Gallup poll, it said that 51 percent of people do not want to increase taxes. So I actually disagree with you there.

I think there's been some polls that -- when you use the phrase "balanced approach," everyone wants a balanced approach. I would have answered yes to that question. I want a balanced approach because my definition of balance is different than the president's definition.

MS. ROBERTS: But I still think politically -- politically, you're in a very risky place because I do think that the president is getting through by saying over and over again that Republicans want people with corporate jets not to have to pay taxes, people who make a billion dollars not to have to pay taxes. That's not a politically good spot to be in --

(Cross talk.)

MR. KARL: But you can't balance the budget by raising the taxes on corporate jets.

MS. ROBERTS: But, of course, that's right. But I'm talking about the politics of it.

MR. DOWD: I think part of the problem is is that the premise of both parties right now is actually not true. The premise of the Democratic Party is you can't cut -- in the middle of an economic downturn, you can't make cuts in the budget because it'll make it worse. That's actually not been demonstrated to be true historically.

Republicans say you can't raise taxes in the midst of an economic downturn because it's going to make it worse. And that's not been demonstrated true historically. So both sides' talking points aren't really true.

MS. AMANPOUR: So, George, when it comes to the Republicans presidential contenders, they've been curiously quiet, well, certainly the frontrunner, Mitt Romney. What's all that about?

MR. WILL: Well, getting involved in this is optional folly because they can't control what's going to be said by people who will then soon be their surrogates. It's very clear that, if you're going to win the Republican presidential nomination, you're not going to be in favor of raising taxes at all. This is not just, Matt, about what's good for the economy in the next six months. This is a vision of what we want to have in the way of a government.

And this, by the way, is why we have elections and we are teeing up the 2012 election which is going to settle this -- not this action-forcing moment on the debt ceiling.

MS. ROBERTS: Well, that's exactly right. So let the 2012 election settle it and, now, let's get off of this precipice and go ahead and act like grownups in Washington.

MR. DOWD: But the problem with that -- to me, the problem with that is I think this is going to unfold and bleed out all over the Republican nomination process. But the problem with that is that's what we've been doing for 20 years. Every time we say we're going to settle this out, we're going to settle this out, we're going to have another commission, we're going to do this, and we get to the point, we have this crisis, we have a deadline just like everybody has in their lives, whether their work or their relationships or their kids, they set a deadline and, if they don't meet the deadline, there's accountability.

Washington doesn't seem to have the capacity to, when they don't meet a deadline, to have accountability for their actions. I think this -- people on both sides ought to -- leadership -- they ought to get something done whether it's small or whether it's big and not just punt the ball again to another election because that's what we've been doing.

MR. KARL: It's actually maddening to think you would go through another election to solve this. Right? (Laughter.)

MS. AMANPOUR: Well, let me talk about another issue. We played a little bit of what Michele Bachmann has said, you know, it's time to stop scaring the American people; I'm not going to raise the debt ceiling, et cetera. But she's also -- and she's making that the focus of her campaign.

But she's also been talking about other things -- or at least a lot of other things have been talked about this week. A lot of attention on Michele Bachmann's husband and whether this has clinic advocates the controversial therapy to turn gay people straight. But what hasn't got much scrutiny yet is the candidate's own past comments on homosexuality where Michele Bachmann has called it personal bondage, personal despair, personal enslavement.

Do you think, George, Matt, that this issue she's going to have to start talking about more, that it's going to start becoming a big issue as people put more scrutiny on her?

MR. WILL: What she said several years ago is, A, of dubious relevance at this point I think but, B, will not hurt her in the Iowa caucuses.


MR. DOWD: Well, first of all, if we really -- I mean, she's prejudiced against homosexuals. From her statements, with her actions and all, that's absolutely true. She believes it's somehow some bad behavior or something, whatever she thinks. So that's the truth.

It may not hurt her in the Republican primary. As an issue, I think it hurts her because people are looking -- the first thing Republicans are looking for is somebody that can beat Barack Obama, and whenever these things come up, it makes it less likely that they're going to vote for, and not because they disagree with her on this issue, but they think it's less likely that she could win a general election which, actually, I think helps potential candidate, Governor Perry.

MS. AMANPOUR: Well, I was just going to ask you about that. Do we think he's going to get in?

MR. KARL: Yes.


MR. DOWD: If I were betting in Vegas, I'd put a large amount on it. (Laughter.)

MS. AMANPOUR: So, Representative, the last question to you. How will the dynamic then be affected between a Perry and a Bachmann?

REP. LABRADOR: I think it should be interesting. I have kept my powder dry. I have not endorsed any candidate yet. I want to make sure -- I was hoping that a couple of other people got in. One is not going to get in, Chris Christie. Rick Perry will probably get in, and then I'm going to wait a couple of months to see how he does and how he performs.

MS. AMANPOUR: All right. On that punt -- (laughter) -- coming up --

MS. ROBERTS: Women's soccer.

MS. AMANPOUR: We have that coming up, women's soccer, exactly, and also Rupert Murdock on the ropes. His two top executives have resigned. Others have been arrested, including this morning. Will the media titan be next to fall as the phone hacking scandal engulfs his empire? He's going to be called before a parliamentary commission next week, and we have special insight from the top media reporter who's covered Murdock for years.