'This Week' Transcript: Jacob Lew and Jon Kyl

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.

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