'This Week' Transcript: Two Powerhouse Roundtables

PHOTO: Intelligence Committee Chair Representative Mike Rogers, (R) Michigan, Foreign Affairs Committee Ranking Member Representative Eliot Engel (D) New York, ABC News George Will, and ABC News Global Affairs Anchor Christiane Amanpour on This Week

A rush transcript of "This Week with George Stephanopoulos" airing on Sunday morning, February 24, 2013 on ABC News is below. This copy may not be in its final form and may be updated.

STEPHANOPOULOS: Good morning and welcome to This week.

A new cliff is here.

(BEGIN VIDEO CLIP)

BARACK OBAMA, PRESIDENT OF THE UNITED STATES: These cuts are not smart.

UNIDENTIFIED MALE: It's a stupid way to govern.

(END VIDEO CLIP)

STEPHANOPOULOS: Across the board spending cuts just five days away.

(BEGIN VIDEO CLIP)

UNIDENTIFIED MALE: This is going to have a real impact.

SEN. RAND PAUL, (R) KENTUCKY: Balderdash. The president is making stuff up.

(END VIDEO CLIP)

STEPHANOPOULOS: Will they hit too hard? Are the warnings too hyped? What will this stalemate really mean for you and your family.

Plus, Chinese hackers target American companies.

(BEGIN VIDEO CLIP)

UNIDENTIFIED MALE: This is not movie stuff. This is real. It's happening thousands of times a day.

(END VIDEO CLIP)

STEPHANOPOULOS: Joe Biden targets the NRA.

(BEGIN VIDEO CLIP)

JOE BIDEN, VICE PRESIDENT OF THE UNITED STATES: You don't need an AR-15. Buy a shotgun.

(END VIDEO CLIP)

STEPHANOPOULOS: And the Oscars hit Washington.

(BEGIN VIDEO CLIP)

UNIDENTIFIED MALE: It's a rat's nest in there.

(END VIDEO CLIP)

STEPHANOPOULOS: We take on all of the week's politics right now.

ANNOUNCER: From ABC News, This Week with George Stephanopoulos. Reporting from ABC News headquarters George Stephanopoulos.

STEPHANOPOULOS: Hello again.

18 months ago, the White House and congress agreed to a doomsday plan across the board spending cuts so unpalatable they would force Washington to find a better fix to our budget mess. No dice. No last minute deal no matter what, that sequester will start on Friday.

The battle over what it mean and who is to blame has already begun. We're going to debate all that on our powerhouse round table. But first some facts, the Pentagon will take the biggest hit from the cuts. Take a look at the breakdown. About half the cuts this year come from defense.

And President Obama warned of dire consequences yesterday.

(BEGIN VIDEO CLIP)

OBAMA: The threat of these cuts has forced the navy to delay the deployment of an aircraft carrier to the Persian Gulf affecting our ability to respond to threats in an unstable part of the world.

And just this week, the Pentagon announced that if these cuts go through, almost 800,000 defense employees, the equivalent of every person in Miami and Cleveland combined will be forced to take an unpaid leave.

(END VIDEO CLIP)

STEPHANOPOULOS: And with that, let's take the debate to our first roundtable headlined by the chairman of the House intelligence committee Mike Rogers of Michigan, the lead Democrat on the House foreign affairs committee Eliot Engel and our own George Will and Christiane Amanpour.

Welcome to all of you. And Congressman Rogers let's begin. Are the -- is the harm as great as the president suggests?

ROGERS: Well, there will be impact on national security, there is no doubt. And I think there's some misnomers. So it's really only 2 cents on the dollar over the whole federal budget, but they've scrunched that down into seven months and highlighted, or at least put most of the burden on the Defense Department. So that is going to have an impact. That's a 13 percent cut.

The best way to get through this, I mean we can point fingers. We can get all through this. The best way to do it is just allow flexibility. If you allow flexibility you don't have to shut down the carrier...

STEPHANOPOULOS: I wanted to bring that to Congressman Engel, because the White House has been resisting having this flexibility.

ENGEL: Well, you know, I think the sequester was a stupid thing. I voted against it when it first time came up. Congress keeps kicking the can down the road. It's really a ridiculous thing to do.

The fact is that we need to do things that are smart, not take a meat cleaver and just hack cuts.

STEPHANOPOULOS: So should the White House accept this call from Republicans in congress to have more flexibility over where to hit with the cuts and when?

ENGEL: I think congress should sit down and avoid the sequester. And if the sequester kicks in, for a week or go, we should then fix it so it doesn't become a permanent thing.

GEORGE WILL, COLUMNIST: The Navy insists that they really did have no choice but to delay the deployment from Norfolk to the Persian Gulf of the aircraft carrier Truman. If so, if they have no wiggle room at all in that enormous budget to shift funds from one to another, that suggests to me that flexibility is what the administration does not want them to have, because they want to maximize the pain. They want disruptions in air travel and all the rest to push pressure on the Republicans to unravel the sequester.

STEPHANOPOULOS: But one thing that is certain to happen, Congressman Rogers, is that right now, at least, within a month, you're going to have these furloughs on the civilian employees of the Defense Department. That's a 20 percent pay cut.

ROGERS: Well, again, if we had flexibility, there's a big difference from a sailor on the Eisenhower out in the Mediterranean and the travel coordinator at the EPA. You can't treat them the same. And the way this is structured it treats everyone the same. You can't do that.

If you give them this flexibility, they can make the determination, yes, that second carrier group ought to steam to the Mediterranean, that's a national defense issue, I argue.

We have intelligence operations that could get slowed down or stopped. That's a problem. But if you sit down and talk to these folks and say if you had the flexibility can you find 2 cents on the dollar of efficiencies other than cutting the bone? They'll tell you yes we can.

STEPHANOPOULOS: And Christiane, I know you talked to a lot of sources overseas. They kind of scratch their heads...

AMANPOUR: They really do, George, honestly. It's here we go again. Government by crisis, lurching from left to right. And the military is sacrosanct in the United States is now in play as you are discussing. And it's not just the aircraft carrier and intelligence and the navy, it is also flight hours. You know, they're having to cut down what the air force personnel can do, what pilots can do. They might not be ready once they're allowed to go back to work. And even deployments for troops overseas. Unable to sort of, perhaps, transfer and transfer personnel out there. People would have to have longer deployments.

So the whole thing doesn't make sense when viewed from outside.

STEPHANOPOULOS: I want to get to more on this in our second roundtable, but now, another big headline from this week, we saw a report coming out, detailing Chinese attacks, Chinese military cyber attacks on U.S. targets, 140 targets. Look at this from the New York Times. It said that there had been increasingly the focus is on companies involved in the critical infrastructure of the United States, it's electrical power grid, gas lines and waterworks. According to the security researchers, one target was a company with remote access to more than 60 percent of oil and gas pipelines in North America.

A serious threat over several years. It drew the attention of the former head of the CIA Mike Hayden.

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MIKE HAYDEN, FRM. CIA DIRECTOR: With all the advice my dad gave me when I came home at nine years of age after losing a fight in which he said quit whining, act like a man, and defend yourself. There are a lots of way we can make this relationship less comfortable to them. If this is important, and I think you and I agree that it is, then you got to start taking some actions.

(END VIDEO CLIP)

STEPHANOPOULOS: And Congressman Rogers, you're the chairman of the House intelligence Committee, you say this is a war, a war we're losing.

ROGERS: We are losing. And 141 targets pales in comparison. That's probably every day. We get every single day by a whole series of levels of types of attacks, everything from criminals trying to get into your bank account or steal your identity, to nation states like China who are investing billions hiring thousands.

STEPHANOPOULOS: You believe that Chinese -- the Chinese government, the Chinese military is behind this?

ROGERS: Beyond a shadow of a doubt. They use their military and intelligence structure to intellectual property from American businesses, and European businesses, and Asian businesses, repurpose it and then compete in the international market against the United States. It is unprecedented. We've never -- this has never happened in the history of the world, where one nation steals the intellectual property to repurpose it -- to illegally compete against the country. And I'll tell you, it is as bad as I've ever seen it and exponentially getting worse. Why? There's no consequence for it.

AMANPOUR: And the Times report which quoted this Mandiant troop, traced this latest outbreak of cyber warfare to this building in Shanghai, a 12 story building. I mean, they traced it to the doorstep. Building 61398. You know, out of a spy novel, but that is a building and a unit owned by the PLA.

STEPHANOPOULOS: And one of the things we've seen is that companies have been unwilling to talk about this even though they've been getting hit every day. That is changing now.

WILL: It is. And they're dealing with a very difficult, frankly a gangster regime in China right now. And no one wants to make them unhappy. But George, last June David Sanger and the New York Times ran a story. From his first months in Office, President Obama secretly ordered sophisticated attacks on the computer systems that run Iran's main nuclear enrichment facilities. It began under the Bush administration.

We have participated in cyber sabotage.

AMANPOUR: And that's what the Chinese are saying.

WILL: And it turns out what if China is thinking, look, we can try and compete with the United States. Build a big blue water Navy and aircraft carriers and all the rest, or maybe we can just learn how to disable the massive infrastructure of our potential ally -- adversary.

ROGERS: This is a big difference. The United States does not participate, use its military intelligence services for economic espionage. We do not do it. It's prohibited.

Now we have -- to say as the chairman of the intelligence committee it would be crazy to say that we don't conduct espionage operations. We've done it since George Washington sent Nathan Hale to New York City to find out what the British were doing. It is a longstanding tradition between nations.

This is very, very different, very different.

ENGEL: I think this gets to a fundamental relationship with the Chinese. I think we have to make it very clear to them that they -- this cannot be business as usual. If they're going to continue to do this to the extent that they're doing it. There's a price to pay.

I was just in Beijing with the chairman of the foreign affairs committee, Congressman Royce, and we raised this with the Chinese, top Chinese officials. And they just let it roll off their back. They pooh- pooh it. They don't admit to it.

STEPHANOPOULOS: Is the White House pressuring hard enough?

ENGEL: Well, I think they can always do it more. I think they are doing it hard enough. I think they're making it clear. But I think it's got to be a fundamental stand that we need to take with the Chinese. It can't be business as usual and everything else if they're going to continue to do this.

AMANPOUR: Well, what is the way to fight back? Is it sanctions? Is it some kind of trade...

ROGERS: Yes, yes, and yes. I argue you need to start indicting back actors. You need to start impacting individual's ability who are participating in this activity in China to get visas, their families to get visas. It needs to be a direct bilateral discussion point one, two, and three. It's that serious.

We have one American manufacturing company, a very large well known company who was hacked, had their blue prints stolen, if you will, that estimates 25,000 American manufacturing jobs lost.

AMANPOUR: Leon Panetta called it cyber Pearl Harbor. It could be cyber Pearl Harbor.

WILL: But again there's an intellectual blank slate right now on which the international community needs to write rules and laws about a new form of weapons. Again David Sanger last June, "it appears to be the first time the United States has repeatedly used cyber weapons to cripple another country's infrastructure."

I take your point it's different, but we are now--

ROGERS: You can't believe everything you read in the press, George, about ascribing who might be the author of that--

AMANPOUR: Are you saying (inaudible) he's not?

ROGERS: I'm just saying I would be very cautious about ascribing authorship of that particular event--

STEPHANOPOULOS: Well, would there be anything wrong if the United States was trying to sabotage the Iranian nuclear program?

ROGERS: If it's the same type of activity that we would engage in to prevent a nuclear disaster anywhere in the world that would harm either our allies or the United States. So those kind of things happen.

Now, here's the difference. If someone comes into your office and steals your sensitive intellectual property and walks out the door with it, that's a crime. What difference does it make if I do it in person or I do it through my computer? There shouldn't be any difference, and that's why we're -- I'm arguing let's start the indictment process, even in absentia, to send a message to China that you cannot -- if you want to be an international player, you can't act like a thief in the night.

STEPHANOPOULOS: One more question on this. If you're talking about mostly economic espionage here, how serious in the future is the threat that this would be -- actually be a military--

ROGERS: Huge. Here's the scary part of this. It's already part of military planning for the Russians, for the Chinese, and here's where it gets interesting. Now, the Iranians.

So there's a company called Aramco in Saudi Arabia, a very sophisticated attack. It basically killed 30,000 machines, meaning you're not going to reboot that computer of yours. You've lost everything on it. It manipulated data, changed data, and destroyed data. Very, very serious to the functioning of that company.

Now, here in the United States, it's been ascribed to the Iranians, that they were probing our financial institutions with it's called a denial of service attack, which is very low on the sophistication scale. Aramco very high on the sophistication scale, which means they're probing, looking for vulnerabilities. They're already looking to disrupt. China would be a rational actor. Wouldn't pay for them to use a military-style disruption attack. Same with the Russians. You can't say about the Iranians.

WILL: And will there be a regime of deterrence here, just as we've deterred with conventional forces, deterred with nuclear forces. Can we have deterrence with cyber warfare?

ROGERS: You can accept -- if you're going to punch your neighbor in the nose, best to hit the weight room for a couple of months. We cannot protect our private sector--

STEPHANOPOULOS: We're not ready yet?

ROGERS: We're not ready yet, we are completely vulnerable to this.

STEPHANOPOULOS: I want to move to another subject. Syria, the situation seemed to have deteriorated this week. Our own Terry Moran spent the week in Syria, was there for that massive bombing, and we talked to him earlier this morning about the options the U.S.A. has right now.

(BEGIN VIDEO CLIP)

MORAN: George, we just got out of Syria, and the first thing to say, it looks like the situation there is going to go from worse to worse. You got rising sectarian hatred. Radical jihadists, including Al Qaida, taking a lead role in the fight and now staking their claim to the future in Syria. Massive war crimes, rising violence and criminality, and we could find no evidence that Bashar Assad or his army is about to break. Quite the contrary. Many people told us, at the beginning of the revolution, they wanted to change the government. Now, given the chaos, they don't.

The United States has a choice. Arm the rebels, engage even more deeply in what is becoming a chaotic and dangerous war for this region, or broker a peace, probably with Russia. Give the Syrian people an opportunity to determine their future, and at least in the first stages, Bashar Assad is likely to be a part of that process. George.

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STEPHANOPOULOS: Congressman Engel, is that the choice?

ENGEL: I think it is the choice. And I will be introducing legislation to allow the president to arm the rebels. I think it's time to do that. I think the Free Syrian Army needs help. We know who they are. And I think it's time that we make that move.

STEPHANOPOULOS: I spoke with White House officials about this, and they make two arguments against precipitously arming the rebels. They say, one, you don't want them to have shoulder-fired missiles, because of the threat to commercial aircraft. And two, the argument that the opposition is getting about what it needs right now from the Gulf states.

ENGEL: Well, shoulder-fired weapons, I'm not talking about that, but I certainly think that there are other things that we can get to them.

It's never the right time. It's -- there is always a time that could be better. But I think we run the risk of seeing Assad hang on for a long time. He's a bad player. You know, back in 1979, when his father was in power, the State Department promulgated a list of countries which aid and abet terrorism. Syria was a chartered member of that list. In 2004, I wrote the Syria Accountability Act, which slapped sanctions on Syria, passed the Congress and the Senate, signed into law by President Bush. Nothing has changed in Syria. This has been a regime that governs with an iron fist. They have murdered tens of thousands of their own people. There's almost a million people displaced. It has the potential to disrupt other countries like Jordan all around, and I think it's time that the United States take a firm stand by arming the rebels.

STEPHANOPOULOS: You agree?

ROGERS: Listen, the best we can hope for now is the best of the worst outcomes. So, the United States doesn't have credibility with the opposition now. So, any diplomatic negotiated settlement here, the United States can't play an important role, because they don't have the faith and confidence of the opposition. Clearly, Russia is playing a game here that could be helpful. I do agree we ought to engage them.

Here's what I think we should do. I think we need to, right now, the Qataris, the Jordanians, the Saudis, the Turks are all putting weapons systems into Syria to aid the opposition. The Islamists have attached themselves to most of the secular units. Almost every unit now has Islamists as some of their main fighters. They are well financed, they will fight to the death. And opposition planners (ph) tell us that they need them and count on them for the fight. That's a huge problem for the United States. We have all of those weapons systems, including conventional weapons, that will awash the Levant, across the Middle East, if we don't get this right. It's time that we take a more affirmative leadership role at this table, with all of the Arab League. I would have a no-fly zone in the north, a safe zone in the north, and coordinate all of the weapons systems that are going in so that at least we have the credibility for a negotiated settlement. We don't have that.

STEPHANOPOULOS: Congressman, talks about credibility is Secretary Kerry, going over this week to the Middle East, but will not be meeting with the opposition.

AMANPOUR: That's absolutely true. In Rome, where they were meant to be meeting, the opposition is actually boycotting because of what they say is an unacceptable U.S. and international response to the Syria.

But look, there is so much that's complicated. You say the White House talks about not precipitously -- well that's, really, you know, precipitously. This has been two years now. And all the reasons for not intervening have actually come true because of not intervening.

If you look at the front of "The Economist" this week, it says "Syria, death of a country." Why is that important, beyond the tens of thousands of Syrians and all the things you've just outlined, friends of the United States around (ph) being destabilized, the massive amount of weapons that could be loose, just like happened in Libya and is now threatening West Africa with Al Qaida popping up. And beyond that, do we want to see Syria become Somalia? Do we not remember what Somalia was and the danger Somalia was for the United States and for that whole region? And so the options, as far as I can see, is the U.S. does what you're suggesting, tries to have skin in the game, tries to have some credibility on the ground, some influence on the ground, and turns what is a war anyway into a shorter war rather than a longer war that's leading to Somalia.

STEPHANOPOULOS: (inaudible) consensus around the table, George.

WILL: Well, let me try and disrupt the harmony.

(LAUGHTER)

(CROSSTALK)

WILL: We have two objections. The humanitarian objective of economizing violence. And the strategic objective of controlling the outcome. And they may be in conflict.

No analogy is perfect, but go back to the Spanish civil war that began in 1936. By the time it got in full-blown proportions, there was no happy choice. It was going to be the communists who were going to control Spain or Franco was going to control Spain. And we may be at that point in Syria. Now, you say, Congressman, we know who the rebels are. How do we know?

(CROSSTALK)

ENGEL: We know -- we know the Free Army. But let me just say one other thing, there's another thing that's very important here. It's a blow to Iran if Assad falls. Assad has been the best ally of Iran, of Hezbollah, a terrorist organization, by the way. The Europeans should designate Hezbollah as a terrorist organization. But Iran would be dealt a blow. They're fighting. They have their soldiers in Syria. Hezbollah is fighting in Syria. This would be a strategic blow to Iran if Assad falls.

STEPHANOPOULOS: And I want to get to Iran right now, because David Muir, our David Muir spent a week there as well to look at -- spent some time in Tehran, around the country, and took a look at how hard these sanctions, these international sanctions are hitting.

MUIR: George, good morning. There's really no question that the economic sanctions, the tightening sanctions led by the U.S., are truly being felt here in Iran. So many people we talked with talked about the prices going up dramatically here. Inflation at rates of 40 percent in some places.

So there's no question that people are feeling these sanctions. The question is whether or not the leadership is feeling it and whether they're going to do anything about it? The supreme leader here saying that America needs to prove its good will. The president saying they're not going to go to the negotiating table with a gun to their head by America. All of that alluding to the economic sanctions. So the people here are feeling it, but whether or not that's going to press leaders as they head to that negotiating table next week is the big question this morning, George.

STEPHANOPOULOS: That is the question, Christiane, and overnight, President Ahmadinejad did say, though, did conceded, however, that it's been a very difficult year for the Iranian economy.

AMANPOUR: Oh, it's been catastrophic. I mean, all our reporting, just talking to individuals in Iran, it's been catastrophic for the people, but as David says it is less affected the regime. And what it has done is militarized Iran. In other words, now everything is viewed in the parameter of war.

So this is why the revolutionary guard in Iran are taking over -- it's yet another excuse -- for them to take over so many of the institutions. Everything from the press, to information, to everything is being looked at through the parameter of war.

But I think what's interesting is that there was a very interesting conversation with the Iranian ambassador here, the only senior Iranian ambassador or official here, who said that we can have talks, we don't want to with a gun to our heads, that's what they always say, but we don't have red lines except that the United States has to accept our rights under the NPT, the nuclear nonproliferation treaty, which is to enrich.

So the question really is, will the congress, will the political sphere here in the United States allow real diplomacy, allow the administration to conduct a diplomacy which is not just sticks and has some painful, maybe, but carrots, to have a real diplomatic negotiation.

STEPHANOPOULOS: Intention, there, though, congressman I want to bring this to you, that the fear that these talks are just a stalling tactic?

ROGERS: Well, the most productive thing we've gotten with talks so far is an agreement for more talks. That stalling, that time has cost us in their development of their nuclear weapons program. They just recently put in more sophisticated centrifuges to spin up highly enriched uranium that could be weapons grade.

STEPHANOPOULOS: At the same time, though, they agreed to limit on the enriched uranium.

ROGERS: But here's the problem, this is -- think about the consequence of a nuclear Iran, this isn't France, this isn't Great Britain, this isn't rational actors. These folks have committed acts of terror. They killed as many as 600, or contributed to the killing of 600 U.S. soldiers in Iraq and Afghanistan by introducing weapon systems and training and money.

Bulgaria is now going to the EU to try to get at least some tougher sanctions on Hezbollah through Iran because of their attempt -- they attempted to kill the Saudi ambassador in Washington, D.C.

Imagine what a nuclear Iran looks like. A nuclear arms race in the Middle East, I guarantee you, will start. That's very destabilizing.

WILL: If the president means what he has said repeatedly and clearly, nuclear Iran means war with the United States. The president has said that he does not endorse containment of Iran. They will not have, he said, nuclear weapons. So if they can cross that threshold, there must be some red line somewhere that means not a nuclear Iran, but war with Iran.

ROGERS: I mean, there are other options to war.

ENGEL: I think the worst possible scenario would be a nuclear-armed Iran. I think that has to be stopped by any and all measures.

WILL: Which the president has pledged to do.

ENGEL: Well, I'm glad he has. I think it's a good thing that he's said that and done that. And I think that we need to work in consultation with our European allies to make sure that that doesn't happen.

I was going to say they have been bad players straight-on. They're not negotiating in my opinion in good faith. And I think we have to understand that.

AMANPOUR: The real question is, what to do? We can talk about this until we're blue in the face, which we have done for decades now. The most painful sanctions imposed on Iran are under way right now. And as you see they're not affecting necessarily their continued desire to enrich and other such things.

So the real question is, what does one do? And you say irrational, but the chairman of the joint chiefs, General Dempsey, has said publicly that he believes Iran is a rational actor.

So really this is not an argument, it's really a...

ROGERS: In terms of direct and indirect military conflict with the United States, that isn't being rational, it's being sane. They're going to lose that fight.

AMANPOUR: Correct.

ROGERS: But they've committed acts of terrorism around the world is not rational. The fact that they're trying to get after our financial institutions here through cyber attacks is not a rational act.

AMANPOUR: But the real issue is what does one do beyond the sanctions.

STEPHANOPOULOS: And I want to get to that, because we have to move on. I just want to ask you a very quick question, yes or no. Will there a be a military conflict with Iran this year or do you believe there's another way to block their program?

ROGERS: I think there are other ways to block their program and we should pursue them vigorously.

STEPHANOPOULOS: OK.

Congressman, thank you very much. Thanks to you, Christiane. I know you're going to stick around for our web extra. And coming up here, George Will joins a new roundtable on the politics of those automatic spending cuts. Plus we have the man behind the Time cover story sending shockwaves through America's hospitals.

(BEGIN VIDEO CLIP)

JON STEWART, THE DAILY SHOW: I don't think I've ever said this before, go out and get Time magazine.

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ANNOUNCER: This Week with George Stephanopoulos brought to you by National Car Rental.

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STEPHANOPOULOS: Next roundtable is ready to go, but first the Sunday funnies.

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JIMMY KIMMEL, JIMMY KIMMEL LIVE: The U.S. Postal Service is launching a clothing line. They're going to sell post office clothes, which makes sense, because you know every time I go into a post office I think, man, it's like a European fashion show in here. Where can I get some of that stuff?

JIMMY FALLON, LATE NIGHT WITH JIMMY FALLON: A new report shows that Chinese hackers could one day take out America's power supply, or as that's also known pulling a Beyonce.

(END VIDEO CLIP)

ANNOUNCER: Catch This Week online all week at ABCNews.com, on Facebook and Twitter.

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UNIDENTIFIED MALE: Why tarnish your invaluable luster with a battle in House. It's a rat's nest in there? It's the same bang of talentless hicks and hacks who rejected the amendment 10 months ago. We'll lose.

DANIEL DAY-LEWIS, ACTOR: I like our chances now.

UNIDENTIFIED MALE: Then you're going to sneak 007 over here into a country that wants CIA blood on their breakfast cereal and you're going to walk the Brady Bunch out of the most watched city in the world.

BEN AFFLECK, ACTOR: Past about 100 (inaudible) at the airport. That's right.

UNIDENTIFIED MALE: We did suicide missions in the army that had better odds than this.

UNIDENTIFIED MALE: I'd like to know what Maya thinks. We're all incorporating her assessment, Doris.

JESSICA CHASTAIN, ACTRESS: 100 percent is there. OK, fine, 95 percent, because I know certainty freaks you guys out, but it's 100.

(END VIDEO CLIP)

STEPHANOPOULOS: Zero Dark Thirty, Argo, and Lincoln, a lot politics up for best picture this year. And we're going to talk about that in a little bit.

Here with our second roundtable, joined by George Will again, democratic strategist, ABC News contributor Donna Brazile, Steven Brill, the author of a new Time cover story that's getting an awful lot of attention this week on health care costs. We're going to talk about that as well, "Why Medical Bills are Killing Us" is the title. Steven Rattner, late of the Obama administration, also Kim Strassel of the Wall Street Journal.

I want to start talking about this sequester. It is hitting on Friday. The public doesn't seem to mind all that much, yet doesn't seem to be paying too much attention. Pew poll out this week, about 49 percent of the public say they wanted to delay the cuts, but 40 say let them go into effect. Most of the blame, at least right now, seems to be heading towards the GOP. 49 percent say they should bare the blame for this. Only 30 percent for President Obama.

But Kim, you argued in the Wall Street Journal this week that Republicans are actually in a strong political position. You say the sequester isn't some GOP fallback position, it's a proactive strategy, their way of busting out of the Groundhog Day cycle, changing the Washington spending debate. They aren't bluffing.

KIM STRASSEL, WALL STREET JOURNAL: No. This is where they want the debate to be on government spending. You go back two months ago, all the focus was on the lack of unity in the party, how they were going to lose on the tax question. Now, they brought those back to the issue that they think matters, which is size of government, whether or not we're spending too much, what the drag of federal spending is on the private economy and increasingly, they're bringing it back to this one central question which is the only question in this debate which is to the White House. And it is are you honestly saying that you can't cut $85 billion out of a 3.7 trillion-dollar budget?

DONNA BRAZILE, DEMOCRATIC STRATEGIST: Well, the sequester was always meant to force a compromise, a compromise and a balanced way of spending cuts as well as revenues. It was not intended to shut down the government or to have one side win an argument when both sides agreed that we need to have a more robust economic growth and a plan to solve this problem, not just in the short term but in the long term as well.

WILL: The $85 billion number itself is the wrong number, that's budget authority. The CBO says, Congressional Budget Office, says actual spending cut would be $44 billion in this fiscal year, that's less congress shoveled out the door ostensibly to help the victims of superstorm Sandy, but actually to get around the appropriations process.

STEPHANOPOULOS: But, George, it is on top of a billion-and-a-half dollars in cuts that have come over the last year-and-half.

WILL: Trillion.

STEPHANOPOULOS: Trillion. Excuse me.

WILL: Well, still, let's look at this. Because we're being told by the president that these are severe, brutal, eviscerating, meat cleaver, those are all his words, approaches. 2.4 percent of spending, one half percent of GDP, about half of what we spent bailing out AIG. The domestic agencies that would receive on average a 5 percent cut, received from Mr. Obama in the last five years, 17 percent increases. So the president's position has to be, the logic of it is, the government right now is the minimal government that spends between us and misery and chaos.

STEVEN RATTNER, FORMER COUNSELOR TO THE TREASURY SECRETARY: That's not the president's position. But let's start with some facts, because it's not a 2 percent cut, you kind of slid in there what is a fact, which is that these cuts are focused heavily on what we call domestic discretionary spending: education, transportation, R&D, things that actually matter, and these are 5 percent cuts. It's a $1.2 trillion with that and Defense over the next 10 years. As George said, on top $1.7 trillion of cuts that have been voted in the last two years, all on these same programs.

I don't think the president is opposed to talking about spending. I'm certainly not opposed to talk about it, but let's talk about it, as somebody said in the previous panel, let's use a scalpel not a meat ax. Let's put everything on the table, including entitlements, and including revenues.

Revenues were increased at the end of last year, but only by a small amount relative to amount of spending cutting that you guys are talking about. So it needs to be a balanced approach.

STRASSEL: But this is the point, it doesn't have to be that way. I mean, this is up to the White House. You could fix this tomorrow.

RATTNER: It's not up to the White House.

STRASSEL: You can fix this tomorrow, just move the $85 billion -- are you saying subsidies to crony companies, slush funds, duplicated programs? There's plenty of ways to move that money into something that actually makes sense. All you have to do is ask, as Chairman Rogers was talking in the last panel, for the flexibility to do so. Or put over their own proposals for where you move it to.

RATTNER: Absolutely. The president has proposal to where to move it to. The Republicans are not interested...

STRASSEL: Tax hikes.

RATTNER: No, not just tax hikes. He has proposed $600 billion of spending cuts as part of his $1.2 trillion deficit reduction package. So he has spending cuts in it. He's prepared to do that. The Republicans would rather say, sequester is the president's idea. But we're not going to allow anything to happen to it, because we want it to go into effect so everybody will see that it was the president's idea, even though it will have a very material effect on the economy.

STEVEN BRILL, TIME CONTRIBUTOR: Let me ask you something as an outsider. What I don't understand about this, is everybody says it's a terrible idea, an awful idea, and yet everybody voted for it. And the White House keeps repeating that they want a balanced approach and the president has all of these cuts in mind including cuts to entitlements. But I haven't seen anything specific that he's proposed.

RATTNER: The president has put at least two specific entitlement cuts on the table. He's proposed on the consumer price index on Social Security, he's proposed limiting that. He's proposed to raise the age for Medicare eligibility.

(CROSSTALK)

BRAZILE: The president has come up with three different plans at various times post the sequester to try to force the Republicans to come back to the table to bring revenues into the equation.

BRILL: When has he put out a statement saying let's raise the Medicare raise to X. I haven't heard that.

RATTNER: Well, look, a couple of things. First of all, the president has talked about raising the Medicare age.

BRILL: To what?

RATTNER: To 67.

But wait a minute, in fairness I think he has also backed off that a little bit for reasons that we can talk about, but the fact is, the president has a plan. This is his plan. $1.4 trillion cuts over the next 10 years, balanced between revenues and spending. He's ready to have a dialogue. The Republicans, you guys are saying you actually like the sequester. You think it's fine that the government can cut this amount of money. So, OK, that's your position. Now let's let it happen and we'll see who is right.

WILL: I want to go back to what you said, Mr. Rattner, about this is knock the economy sideways. $44 billion, or $85 billion out of a $1.6 trillion economy?

At the end of the Second War World, with predictions that this was going to cause chaos and pain all over the -- we cut federal spending 40 percent in one year. And what resulted was what we call the post war boom.

RATTNER: I did not say it was going to knock the economy sideways. I said it was going to have an effect -- OK, well I said it was going to have an effect on the economy. In the macro sense I think economists were talking about a few tenths of a percent off GDP. It might not sound like a lot. In a fragile economy it is a certain amount.

But there are specific programs that are going to be affected. What every unemployed person gets is going to be reduced by 11 percent once the sequester goes into effect.

There are going to be fewer agriculture inspectors to stand in food processing plants, which means those plants can't process food. This is all going to happen.

STEPHANOPOULOS: I think the Democrats are counting on is that some time in April or May when this all starts to kick in, the Republicans are going to break again.

STRASSEL: They're not going to because they have put this central to their strategy. They chose to do this. They want to have this debate.

Again, it's not a fallback.

Because I mean, look, I think there a are a couple of dangers here for the White House. They are warning of doom and gloom. How bad is it actually going to be when it happens? That's a big question that has not yet been answered.

STEPHANOPOULOS: We just don't know, do we?

STRASSEL: We don't. And we don't also know -- a lot of people are not paying attention. How many American -- this is not a government shutdown, OK. People are still going to get their passports, they're still going to visit national parks. They're still going to do all the things they're used to doing.

How many Americans are paying attention? And how many are going to decide that this is the Armageddon that the president building it up to.

BRAZILE: It's the government slowdown. A shutdown might occur in March 27 when the CR, the continuing resolution runs out.

But this is going to have a real impact on the regional economies all across the country whether it's the threat of furloughs to federal employees. George, we have to brace for it in the Washington region, of course. Don't be so giddy George.

But the truth is, is that it's going to have an impact on children in Head Starts, teachers, firefighters, first responders, people who live in subsidized housing will see their checks drop. So this is going to hurt the economy at a time when people are finally getting their sea legs back.

STEPHANOPOULOS: And George, the economy doing fairly well right now, was on track for about 3 percent growth. But if the add the effect of the sequester if it holds, along with what the tax increase that came at the begin of the year, economists now saying that could take over 1 percent off of the economic growth this year.

WILL: Some economists.

Other economists deny that you can have a discernible effect on, again, a $16.4 trillion with $44 billion.

STRASSEL: Also, couldn't you maybe have a positive effect?

Look, what markets are worried about is the size of the deficit, the size of the debt. They actually want some proof that Washington is making the start of fixing this problem. You do this, you let this go into effect, hopefully you do it in a more targeted and intelligent and flexible way, but you do this, you send a signal to the markets that Washington is making a start. That could help the economy

RATTNER: But what every poll also shows is that what the American people want is a balanced approach. They want it balanced between spending and taxes. As we said earlier, we've cut $1.7 trillion out of this relatively small part of the budget. We're eating our seed corn. Our spending on R&D and infrastructure as a percent of our economy has gone down by half over the last 20 or 30 years. We're not investing in the future. And these kind of cuts are the worst possible kinds of cuts.

STEPHANOPOULOS: But the American public wants health care they can afford, and health care that works for them. And that gets to the subject of Steve Brill's cover story in Time magazine this week, as I said, sending shockwaves to hospitals across the country.

Let's put up the cover right there, "Bitter Pill: Why Medical Bills Are Killing Us." And you had some shocking details here, Steve, You talk about sky-high medical bills for going to the emergency room for a fall in the face, people paying 1.50 for an aspirin, $300 for an x-ray that costs Medicare $20.

But that's just the beginning.

BRILL: Right. And it actually that bares on the conversation we're having, because a chunk of that money is paid by Medicare. Medicare is I point out in the article is very efficient at most things. It buys health care really efficiently, which is a great irony, because it's supposed to be the big government of bureaucracy.

Where Medicare is not efficient is where congress, because of lobbyists have handcuffed Medicare. Medicare can't negotiate what it pays for any kind of drugs. It can't negotiate what it pays for wheelchairs, diabetes testing equipment. And if congress took those handcuffs off of Medicare, you could get about half of the spending cuts that we're sitting around here talking about.

STEPHANOPOULOS: Is that true?

RATTNER: You could get a fair amount. Look, if Medicare were simply able to get the same prices for prescription drugs that Medicaid gets, it would save $120 billion over 10 years. So that's roughly...

BRILL: It's actually a little more.

RATTNER: But there's a fundamental point here, Stephen, I think your piece was great. And I think you're points are right, but I also don't want people to be confused. I don't believe that we can cut our way, change the pricing, do all the things you're talking about and still save Medicare. The average person who's at Medicare retirement age has paid in some like $122,000 in the system. They'll get back $387,000 back in benefits. That's three times. You're not going to reduce that $387,000 by hospital cuts and this and that. We have to still have fundamental Medicare reforms to make those numbers work.

BRILL: Well, if you put Medicare in the context of the larger health care system, and this is something that everybody at this table is going to think that I should go to a mental hospital when I get finished saying this, the government and all of us would actually save money if you lowered -- I said lowered the age for Medicare. If the Medicare age were 60 instead of 65, the economy and the taxpayers would actually save money. And George, please don't look at me like that.

RATTNER: You're potentially right. And part of the argument -- you're taking people out of the Medicare age to 67 is you're taking people out of the Medicare system.

BRILL: Right. And what you would be doing, is you would be putting the most efficient player, which is Medicare -- Medicare spends 80 or 90 cents to process a claim and the health insurance companies spend $18 or $20 or $25 to process a claim. Health insurance companies pay two, three, four times what Medicare pays for various services. So if you lowered the age, you would put more people into the bucket of much more efficient health care.

And the worst part about it is, the reforms that we have now, with the president's plan, are actually going to raise the costs because all of the people who are 60, or 62, or 63, who can't afford the premiums that they're going to have now, are going to be subsidized by the taxpayer.

STEPHANOPOULOS: George, well that becomes an argument for a single payer system.

WILL: That is one argument.

Here's an argument against that, for a different kind of reform, all the big numbers, billions and trillions, 12 cents is the most important number. 12 cents is the portion of every health care dollar paid by the person receiving the health care. Someone else is paying the rest. It was 47 cents 50 years ago when Jack Kennedy was president.

Now, let me ask the five of you a question, you go to the doctor and he or she says they say I want to give you the following test? How many of you five say, how much does that going to cost?

BRILL: Give me two.

WILL: Don't bother, because the doctor can't tell you anyway.

BRILL: George, you're completely wrong. We have tried that experiment with 30 million to 50 million Americans who don't have health insurance and have to pay 100 percent right now. And they have no choice, they are powerless consumers. If you go to an emergency room and a doctor says you need a CA Scan, and the doctor may not even say it, they may just do it, you're not sitting there as a consumer saying, gee, I wonder if this is the most efficient emergency room. I wonder if I really need that CAT scan.

STRASSEL: No, we haven't, because we only have a small group of Americans who are doing that. We have a much larger group of Americans, like George says, who are getting their health care through their companies and it's largely paid for them and they have no skin in the game.

The important part about your piece was that you mentioned that this is a seller's market. There's no transparency in the market. There's no competition. There's no ability for consumers to look around. We spend hours deciding which toaster we're going to buy. We put no such thought or work into where we're going to get our health care. And you have had companies like Safeway who worked with their employees to introduce some transparency. And you've seen a big reduction in health care costs.

BRILL: There's a difference between buying a toaster and buying a CAT scan.

RATTNER: This is a huge moral question for the country, because I agree with George, that right now, most Americans do not see price in deciding whether to use health care. You see price in toasters, you see price in cars and homes, everything else. In health care, you don't see price. And therefore, I have to believe, and I think your piece eluded to this, that when people go on Medicare, they really don't see price, they tend to consume more than they otherwise would.

26 percent of all Medicare spending is last year of life. We don't know how much of that is really efficacious spending. These are really tough moral questions for the country. But we're going to have to deal with them if we're really going to get health care under control.

STRASSEL: What you're getting to, though, is the fundamental question, are you going to let consumers make those choices about end of life decisions or are you going to have Medicare about what procedures you can have and how much they'll pay and government make those choices?

BRILL: That's a great though if the consumers you have in mind have the money, because you're saying they're not going to have insurance, have the money to make those decisions the way my friend Mr. Rattner can. And that is not the world we live in. They're making decisions now, those consumers who don't have insurance, because they don't have the money, they can't write the checks. They're being sued for their bills. This world you describe...

RATTNER: But once you go on Medicare, they're in a different position once they go on it.

BRILL: Once they're 65. But there are 64...

RATTNER: The point all of us are trying to make is that people who have either private insurance or Medicare, probably almost certainly consume more medical service than they need because they don't see price.

WILL: The uninsured is not the germane cohort here, the germane cohort are people with high deductible insurance, that is no one expects your automobile insurance to cover your windshield wipers, or your oil changes. Insurance is for large, unpredictable events.

People who buy high-deductible insurance, we now have enough of them that we have real data. Two things, they use the health care system less and there's no discernible health cost to it.

STEPHANOPOULOS: I want to get to one more issue before we take a break, and is it seems like so much of the rest of the agenda has been bogged down in the face of all these budget fights, especially this gun control which was so much a part of the president's pitch at the beginning of the year.

Last night, Wayne LaPierre of the NRA coming out hard against universal background checks.

(BEGIN VIDEO CLIP)

WAYNE LAPIERRE, NRA: Background checks, it all sounds so reasonable. But don't you be fooled, it's aimed at registering your guns. And when another tragic opportunity presents itself, that registry will be used to confiscate your guns.

(END VIDEO CLIP)

STEPHANOPOULOS: Donna Brazile, it does seem as if this whole effort has slowed down.

BRAZILE: No, it hasn't. It has gone on. Joe Biden is the public face of it. He's out there meeting -- he was in Newtown last week. He's traveling all across the country meeting with law enforcement officials. This -- Patrick Leahy will be putting together some proposals -- the Senate judiciary chairman, to try to advance this at the end of the month. Gun safety laws are still topic A across the country from Tucson to Colorado, in Maryland. State lawmakers are taking the initiative. And I think Mr. Wayne LaPierre is on the wrong side of history.

STRASSEL: It has slowed down, but the reason it has showed down is because the president's own party is divided on this issue. And so when you look in the Senate, there's a lot of disagreement among Democrats themselves over most of the president's agenda, in particular the ban on semiautomatics, known as the assault weapons ban, things like magazine restrictions.

And so, there's going to be a lot of fights. But it's going to be between Democrats. And that has put them in an unusual spot. And we're leaving...

BRAZILE: Only those six Democrats who are running for reelection. And we keep focusing on those six.

STRASSEL: It's an important number.

BRAZILE: It's not about -- the democrats support the second amendment right. It's no Democrats, it's about assault weapons rifles and these military-style weapons. And should we get them off the streets. And many Americans believe we should.

WILL: Get them off the streets precisely.

The president went to Chicago this week. Chicago has more gun homicides than New York, although New York has three times the population, what's the difference? The difference is different police measures. And New York, with at lot of controversy, has stop and frisk. And it's had a measurable effect on gun violence.

It's not sexy. It's not a federal program. It's at the local level and it works.

STEPHANOPOULOS: It did appear, though, that there was going to be a consensus on background checks, even that, though, now appears to be fraying just a bit?

RATTNER: Yeah. I think the polls show 93 percent of Americans are in favor of background checks. And so you see Wayne LaPierre and you wonder about it.

But I think the problem here is that, what history would tell us, is time is not your friend on something like this.

If you go back to 1968, when Lyndon Johnson was trying to pass gun control -- he'd been trying to pass it since President Kennedy's assassination after RFK and Martin Luther King, it seemed like a no-brainer. It was going to get passed and then it just slowly, slowly, slowly, got in the mud and we got a very --

(CROSSTALK)

STEPHANOPOULOS: (Inaudible). OK. We're going to take one more quick break. Don't go anywhere, we have more roundtable coming up. Our picks for tonight's Oscars.

(COMMERCIAL BREAK)

STEPHANOPOULOS: Big Oscar show tonight on ABC. So who's the favorite for Best Picture? Intrade says it's a runaway, 82 percent for "Argo." We're going to weigh in with our favorites in just a minute.

But first, check out the first lady doing a mom dance with Jimmy Fallon.

(COMMERCIAL BREAK)

STEPHANOPOULOS: That is coming up Tuesday. Tomorrow, we'll all be live in Hollywood with the Oscar winners. Let's get some Oscar predictions and preferences from our roundtable.

Well, I'll stick with preferences.

So many political themes as we were talking about before.

So, George, let me start with you. Who's the -- your pick for Best Picture and best performance?

WILL: Best performance is Daniel Day-Lewis as Lincoln, going away -- and his makeup artist, whoever it was.

The best picture, I think, for three reasons, would be "Zero Dark Thirty." First, it's a challenge to make a suspense movie when everyone knows the outcome, which they did.

Second, it's a genuine contribution to public education about the hard choices that are --

(CROSSTALK)

WILL: -- did start a useful debate.

But third, sufficient reason for voting for it is a rebukes to Senators Levin, Feinstein and McCain, who have enough to do without being movie critics and falsely accusing that movie of taking a stand on torture it does not take.

(CROSSTALK)

BRAZILE: "Lincoln." A year we celebrate 150th anniversary of the Emancipation Proclamation, the 50th anniversary of the march on Washington. It was an emotional movie. It was a masterpiece. Daniel Day-Lewis deserves an Oscar.

STEPHANOPOULOS: (Inaudible) OK.

BRILL: Daniel Day-Lewis, and then I find myself agreeing with 100 percent with George, on each point he made, especially --

STEPHANOPOULOS: On "Zero Dark Thirty"?

BRILL: Yes, "Zero Dark Thirty" and (inaudible) ought to be dealing with the stuff we don't look at the beginning of this discussion, not with movies.

(LAUGHTER)

RATTNER: You know, I got to go with George, I do agree with that "Zero Dark Thirty," although as a creature of markets, I have to go with Intrade.

(LAUGHTER)

RATTNER: And I have to go with Intrade and the fact that it's not going to win.

But on the best performance, I'm actually going to get out of my comfort zone and go with Anne Hathaway in "Les Mis."

STEPHANOPOULOS: That was something, that was a very raw performance. It seems almost certain she's going to win on the Best Supporting Actress.

STRASSEL: Well, George and Steve and I can be movie buddies because I'm also going for "Zero Dark Thirty." I would add to the point, too, it was actually just a great moment of some (ph) American triumph to it, really got you excited to go and see it.

And Daniel Day-Lewis, as well, too. He's just -- it's magic to be able to embody in a character like that. You watched it and you really did think you were watching Lincoln.

(CROSSTALK)

STEPHANOPOULOS: Simply astonishing, I have to agree, Daniel Day-Lewis, I think, gets (inaudible).

(CROSSTALK)

BRILL: The idea that you could go to "Zero Dark Thirty" and be in suspense watching a movie when, as George points out, the whole planet knows the ending of the movie.

STEPHANOPOULOS: Well, the same -- the same, you know, goes for "Argo," which is why I loved "Argo" as well.

(CROSSTALK)

STRASSEL: Well, the same thing goes for "Lincoln." I mean, you're sitting there, saying are they going to pass the 13th Amendment?

BRAZILE: Let me give a shoutout to Q. Wallis and "Beasts of the Southern Wild." I thought she had an exceptional performance. This is a young lady with a bright future.

STEPHANOPOULOS: There is no question about that. I actually talked to her on "GOOD MORNING AMERICA." She is a darling little girl, just infectious.

Thank you all. We'll see who's right, coming up, tonight on the Oscars.

And now, we're going to take a break and honor our fellow Americans who serve and sacrifice.

(BEGIN VIDEO CLIP)

STEPHANOPOULOS (voice-over): After the longest gap without a casualty in Afghanistan since 2007, we learned that one American service member was killed there this week. The Pentagon has not yet released a name.

(END VIDEO CLIP)

STEPHANOPOULOS: And that is all for us today. Thanks for sharing part of your Sunday with us. Check out "WORLD NEWS" with David Muir tonight. And I'll see you tomorrow on "GMA," live from the Oscars.

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