'This Week' Transcript: Jacob Lew and Jon Kyl

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.

(Announcements.)

(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.

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