'This Week' Transcript: Jacob Lew and Jon Kyl

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.

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