'This Week' Transcript: Senators Charles Schumer and Jon Kyl

KYL: I don't disagree with Chuck. And I also would say that the way you opened the program does not under- or overstate the consequences. If we are not able to reach an agreement, it will be dire. And that's from everybody from the Congressional Budget Office, which is nonpartisan, as you know, to the Fed chairman, probably at least another million jobs lost, an unemployment rate over 9 percent, and putting us back into recession. So responsible people on both sides of the aisle do need to try to come together, and there is a significant effort underway right now.

KARL: But let's understand what we're talking about. What kind of a deal? This is a -- the bare minimum, as the president said. What would this deal include?

SCHUMER: Well, obviously, I think all of us would have preferred the grand bargain, so to speak, of a $4 trillion deal. That can't happen at the last minute. But to avoid going over the fiscal cliff, to avoid taxes being raised on middle-class folks and on 98 percent of America, to avoid, in my view, a sequestration that would be very damaging to the defense and non-defense sides, there's an agreement that's possible.

And, you know, there are four issues that are outstanding. Each of them is bridgeable in a certain way. They are -- we believe that the Bush tax cuts should go up for people above $250,000 income a year. There's a disagreement on estate tax. We prefer the 2009 levels; Jon would prefer something else.

Whether unemployment insurance is included in, we feel that's very important. And then whether you use some -- a small portion of the revenues you gain from the tax increases to pay down sequestration for a year, those would be the four areas that they have to come to agreement on.

There are some areas I think there is agreement, dealing with the AMT patch so that middle-class people don't go up, the SGR, the Medicare, and some tax extenders on both the business and middle-class sides.

KARL: Let's be clear here. You're talking about extending some tax cuts for most Americans. You're talking about some more spending. This would be extending unemployment benefits. You're not talking about any of the hard stuff. I mean, this doesn't do anything -- as a matter of fact, the Wall Street Journal looked at the outlines of this potential deal and projected you'd actually add to the deficit as a result of a mini-deal over the next year.

KYL: Yeah, Jonathan, some people have tried to talk about the reductions in spending that are necessary to get our fiscal house in order. That would be the Republican side. The president and a lot of folks in his party have shied away from those discussions, and I think Chuck is accurate in saying that that's not going to happen in this conversation, but it should. You are right.

I can quote from the Washington Post editorial of just a few days ago in which they chastised the president for not following through on his campaign promises to talk about a balanced solution, one that would involve both tax revenue and savings. Ironically, the revenue that's produced in the president's proposals is about the same amount of money we're going to be spending just to provide disaster relief because of the hurricane to some of the folks on the East Coast.

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