'This Week' Transcript: Stephanie Cutter and Kevin Madden

PHOTO: Sundays "This Week" panel, in partnership with the University of Virginias Miller Center, tackles the question "Is the U.S. Headed Toward Bankruptcy?"


TAPPER (voice-over): Good morning. Welcome to "This Week."

It's getting personal.

OBAMA: You can't drive a car with a windmill on it. I mean, maybe he's tried it. He's put other things on the roof.

ROMNEY: He's intellectually exhausted, out of ideas and out of energy.

TAPPER: A vicious week with some tough accusations.

BIDEN: Look at their budget and what they're proposing. They're going to put you all back in chains.

ROMNEY: This is what an angry and desperate presidency looks like.

TAPPER: And ugly ads.

(UNKNOWN): If I had one piece of advice for this administration, shut the (bleep) up.

TAPPER: So, the big questions: Why are the candidates and campaigns going for the jugular? Will they pay a price? And will the country? And if this is what it's like in August, what are we in for come October? We'll ask our headliners, for the Romney campaign, senior adviser Kevin Madden, and Obama deputy campaign manager Stephanie Cutter.

Then, how can we get the nation's finances under control? Is Paul Ryan's budget the answer? Is the U.S. headed towards bankruptcy? We'll ask our all-star panel of experts, along with our partners at the University of Virginia's Miller Center.

ANNOUNCER: From ABC News, "This Week" with George Stephanopoulos. It's your voice, your vote. Reporting from the Newseum in Washington, Jake Tapper.


TAPPER: Good morning, everyone. George Stephanopoulos has the morning off.

After Mitt Romney's selection of Paul Ryan as his running mate last weekend, there was a brief moment where it looked as though the tone of this increasingly tough campaign might be elevated with a complete focus on critical issues, such as fixing the nation's finances. That lasted about a day or two.

Now the attacks are back with each side blaming the other, so let's begin right there. Joining us now is Obama deputy campaign manager Stephanie Cutter and Romney senior adviser Kevin Madden.

Stephanie and Kevin, thanks so much for joining us.

MADDEN: Great to be with you.

CUTTER: Good morning.

TAPPER: So, Kevin, let me start right with you. The race did not let up this weekend. Here is President Obama in battleground state New Hampshire.


OBAMA: His new running mate, Congressman Ryan, he put forward...


He -- he put forward a plan that would let Governor Romney pay less than 1 percent in taxes each year. Now -- and here's the kicker. He expects you to pick up the tab.


TAPPER: Now, Kevin, I know that Governor Romney does not support reducing his 13.5 percent tax rate to less than 1 percent. But on its face, that statement is correct. Congressman Ryan did propose eliminating all capital gains taxes, which would mean a less than 1 percent tax rate for Governor Romney, right?

MADDEN: Well, no. I think Governor Romney and Congressman Ryan are running on a shared vision, shared principles, and shared ideals, as it relates to tax reform, and the tax reform that Governor Romney is proposing would be much broader. It would -- it would actually lower the rates for middle-class Americans. It would actually incentivize middle-class Americans to save more and invest more by reducing their capital gains and dividends down to zero under $250,000 a year, and then ultimately help broaden the base of the tax -- help broaden the tax base by also reforming the corporate rate.

Look, this is a -- a campaign that's very focused on the middle class. Governor Romney has made -- made very clear that what he's doing is putting forth an economic vision, an economic plan, along with Congressman Ryan, that's focused on helping the middle class, so that we have more jobs and more take-home pay. And that's the focus.

TAPPER: Stephanie?

CUTTER: Well, you know, I find that statement slightly incredulous, because the tax plan that is on the table -- even if Congressman Ryan is now agreeing with Mitt Romney on his tax plan -- it's a $5 trillion tax cut, mostly geared toward the wealthy, that independent analysts have said in order to pay for it, they're going to have to increase taxes on the middle class. For middle-class families, middle-class taxpayers with families, that is on average about $2,000 more for -- for taxpayers.

So if this is a campaign about the middle class, then they need to be honest with the middle class about what's ahead of them with that tax plan.

And, you know, Jake, I agree that the central question in this campaign is how we're going to strength the middle class. We've got plans on the table to do that. You know, just after Congressman Ryan was picked, he said that they were going to hold back on putting any details on the table until after the election, and Romney advisers were saying it would be political suicide to talk about those details. So we'd like to have a substantive debate about, you know, the central question on the table about how to strengthen the middle class, but to do that, they're going to have to tell us what their plans are.


MADDEN: Well, just real quickly, though, Stephanie, on that, I mean, the president's main tax proposal would be a tax hike on millions of small businesses. Now you know that -- that that tax on millions of small businesses is going to hurt the job-creators, it's going to hurt so many people across the country, and it's not going to be -- it's not going to do what we need to do in this economy right now, which is create more jobs and provide more incentives for people to hire.

TAPPER: Stephanie, you can have the last word on this. Go ahead.

CUTTER: OK. I'm not sure what you're talking about, but I think you're talking about the extension of the Bush tax cut for upper-income Americans. We all know that it has nothing to do with small-business growth. Ninety-seven percent -- or 98 percent of small businesses are below $250,000. And if that tax cut for the wealthy was so important to growth, then why did we retract as an economy under the Bush administration? We had the lowest growth in the century under the Bush administration with those tax cuts, so those facts just don't hold up.

TAPPER: OK, let me -- let me just change subjects for one second. Stephanie, you heard in the open Governor Romney this week saying that President Obama's conduct is unbecoming of the presidency. One of the items that the Romney team specifically objects to is that this week there was one day in Iowa when President Obama made three references to Governor Romney in 1983 putting his dog in a kennel on the roof of his car. Is this one of the big policy debates that the Obama campaign wants to have, whether or not it was appropriate for Governor Romney to put his dog on the top of a car in 1983?

CUTTER: Well, I'll leave it for others to decide whether it was appropriate, but, you know, it was a light-handed remark. What you didn't cover is what the president was actually saying in Iowa. You know, on Monday, he talked about the historic drought facing Iowa farmers and what we needed to do about it. We needed Congress to pass the farm bill so they could get the aid that they needed.

On Tuesday, he talked about the enormous impact clean energy is having on creating jobs in Iowa, thousands of jobs from the wind energy tax credit, the wind energy tax credit that Mitt Romney doesn't want to extend, which would mean the loss of many, many jobs on the ground in Iowa.

So that's what the president was actually saying; that's what Iowa voters heard. So the president is out there every single day talking about where he wants to take this country. Just yesterday in New Hampshire, he absolutely contrasted his plan for Medicare with Mitt Romney and Paul Ryan's plan for Medicare. But that's the central question on the table for this election, how we're going to strengthen Medicare, whether we're going to protect seniors or we're going to shift all the costs to seniors. So, you know, we're happy to have a substantive debate, but we need some substance on the other side.

MADDEN: I mean, you know, if I could just respond to that, Jake, look, let's look at the contrast of these two campaigns. Vice -- I'm sorry, Congressman Ryan was down in Florida yesterday talking about Medicare, which is a very important issue, it's a very important cost-of-living issue for millions of seniors across this country. At the same time this week, Vice President Biden was in Virginia talking about people being put back in chains. All right?

You take -- you take Governor Romney who is actually talking about coal and how the coal industry is vital for -- for those people in Ohio whose jobs depend on it, but also is part of an above-all energy policy in this country, and also talking about Medicare and also talking about putting people back to work in this country. And at the same time, President Obama is talking to disc jockeys in New Mexico about what his favorite chili is.

I mean, this is an election about big things, and this -- this administration is focused on very small things. It's focused on dividing the country. So I think, come November, we're going to be in a better position with the American electorate, because we're talking about the big issues that matter to people every single day.

TAPPER: Well, Kevin, one of the points that Stephanie repeatedly makes on the trail when asked about the tone of the Obama campaign is that Mitt Romney is not exactly as pure as Caesar's wife when it comes to attacks on President Obama. Take a look at this video that the Obama campaign put together.


ROMNEY: He does not understand in his heart the passion of freedom.

I'm not sure which is worse, him listening to Reverend Wright or him -- him saying we must be a less Christian nation.

The president has adopted an appeasement strategy.

This president spends a lot of time apologizing for America. He should be apologizing to America.


TAPPER: And, Kevin, that's some tough rhetoric from Governor Romney. I mean, the offense, the Claude Rains-esque offense that we hear from Boston sometimes these days seems rather insincere, because you guys -- you have some pretty tough hits, too.

MADDEN: Well, we're very focused on the big differences in these campaigns. And I think one of the big differences that we refer to in a lot of our campaign events is that essentially we have a -- we have a world view where we believe that the -- we need to put our faith in the American people, we need to put our faith in the entrepreneurs, the risk-takers who help create jobs in this country.

And President Obama has a different worldview. His is that we need to put faith in government. And I think if you look at all of those little hits that you've compiled there, that's the big difference. That's the point that -- that Governor Romney is trying to make, which is that we need to have a much more aspirational worldview on our economy, a much more aspirational worldview about how we help individuals succeed in this economy, whereas President Obama feels that the government is the engine of both job creation and the engine for the economy. And that's just a simple difference that we're going to have, and it's one that we're going to litigate before the public, and we feel very strongly that the American public agrees with us.

TAPPER: Stephanie, Kevin earlier brought up the questionable comments that -- or the controversial comments, I should say, that Vice President Biden made to an audience with many African-Americans in it, about how they want y'all back in chains. Former Virginia Governor Doug Wilder, a Democrat, called the comments divisive and certainly uncalled for, and this is what former New York City Mayor Rudy Giuliani had to say.


GIULIANI: I mean, there's a real fear is, God forbid, he ever had to be entrusted with the presidency whether he really has the mental capacity to handle it. I mean, this guy just isn't bright.


TAPPER: I'm sure you disagree with the idea that Vice President Biden isn't bright.


TAPPER: But isn't the fact that these remarks are being attacked by both Democrats and Republicans, doesn't that suggest that Vice President Biden to a degree has become something of a liability?

CUTTER: Absolutely not. And, you know, on Mr. Giuliani's remarks, I would like to point back to his glowing introduction of Sarah Palin during the 2008 convention. So if he wants to criticize the capacity of a vice president to take hold of this country, he should go back and look at those remarks and whether he still believes that they're true.

The vice president is a critical partner to the president of the United States. Joe Biden is out there every single day talking about our vision of where we want to take this country.

Now, let's address that remark. You know, I'll say what the president said. They're using that one word as a distraction, but the larger point is an important point. You know, Kevin was talking about believing in free-enterprise system. The president absolutely believes in the free-enterprise system, but we also believe that everybody should play by the same set of rules.

And what Mitt Romney has promised is the deregulation of Wall Street, the deregulation of the private sector. We saw how that turned out. Taxpayers ended up having to bail out the private sector because of the reckless behavior. So we don't want to go back there.

But that's what Mr. Romney's promising to do. People like Speaker Boehner and even Paul Ryan talk all the time about unshackling the private sector, unshackling the financial industry. So the vice president was playing off of that word.

But the central point of what the vice president was saying is absolutely critical in this election: Do we want to have everybody playing by the same set of rules, whether you're on Main Street or Wall Street? Or do we want to unshackle the financial sector and let them do what they did in the last decade and have taxpayers spend billions of dollars bailing them out again?

TAPPER: I want to talk about Medicare now, Kevin. Medicare has become a huge issue in the race, and obviously Congressman Paul Ryan was in his battleground state Florida yesterday. Here's a clip from that appearance.


RYAN: The president raids $716 billion from the Medicare program to pay for the Obamacare program.


Here is what Mitt Romney and I will do: We will end the raid of Medicare.


TAPPER: So, Kevin, that is Paul Ryan promising to end the raid of Medicare, but here is one of your most prominent surrogates, former New Hampshire Governor John Sununu, describing the difference between what Ryan has proposed for Medicare and what Romney has.


SUNUNU: When Obama gutted Medicare by taking $717 billion out of it, the Romney plan does not do that. The Ryan plan mimics part of the Obama package there. The Romney plan does not. That's a big difference.


TAPPER: How can you -- how can you guys be attacking President Obama for cuts to Medicare that Paul Ryan himself proposed, according to your own surrogate, John Sununu?

MADDEN: Well, look, starting on Saturday, what you saw was a Romney-Ryan ticket come together with shared values and shared principles about how we would restore those cuts to Medicare and how we would make it more solvent. What President Obama did actually weakens Medicare. It takes $700 billion out of it and uses it to spend on a new entitlement, which is part of Obamacare. So it actually takes the money away from Medicare and spends it in a new way, and that's -- that's the wrong approach. That's actually going to hurt current beneficiaries right now.

What Romney-Ryan does is actually restore those cuts, puts it back into Medicare to make it more solvent, because that's what we need to do, and then it actually looks at other ways which we can continue to make Medicare solvent for future generations. And it doesn't affect any of the beneficiaries that are currently in Medicare. So those are very big differences.

TAPPER: OK. I only have a couple of minutes left, I want to get both of your thoughts on some independent groups and questions about them. Stephanie, if you could clear something up for me, when pro-Obama super PAC Priorities USA Action introduced an ad that suggested Mitt Romney was responsible in some way for the death of a steelworker's wife, you said, quote, "I don't know the facts about when this individual's wife got sick or the facts about his health insurance," but in actuality you were on a conference call where that steelworker himself told his story. Can you explain why you said you didn't know the facts about the situation?

CUTTER: Because I didn't. I didn't know the facts of when Mr. Soptic's got sick, and I only recently learned that through all of the hysteria over that ad. But, Jake, what I do know is what Mr. Soptic's experience was with GST Steel, after Mitt Romney bought it, loaded it up with debt, overleveraged it, paid himself excess profits and fees, but then forced that company into bankruptcy, leaving Mr. Soptic without a job, without health care, and without his pension. And the federal government had to come and bail out those pensions because of Mr. Romney's actions.

So clearly, this is a very painful story for Mr. Soptic, and that's the story that I know. And, you know, there are stories like that all over the country because of Mr. Romney's profit-at-any-cost style of business. So that's -- you know, and I've looked at that ad. I don't think that ad blames Mr. Romney for Mr. Soptic's wife death. If it did, it would be unfair. But I don't think that that's what it did.

It's talking about what happened when Bain came in, bought GST Steel, overleveraged it, forced it into bankruptcy, and left Mr. Soptic with nothing, Mr. Soptic and all of his colleagues with nothing, while Mr. Romney walked away with a pretty hefty profit. So that's a legitimate discussion to have, and that's a discussion we're going to have all through this election, because Mr. Romney has put his business experience at the center of his rationale for his candidacy. So it's important for people to understand exactly what that business experience would mean. Is that the type of business experience you want in the Oval Office, profit at any cost? Because it comes with real consequences for people's lives.

TAPPER: All right, Kevin, one question for you about this new web video circulating from a group called the Special Operations OPSEC Education Fund Group that has some strong Republican ties, no apparent ties to the Romney campaign, but it attacks President Obama very, very harshly for the president's reaction to the Osama bin Laden killing and for national security leaks that have come from the White House or from the Obama administration. Let's take a look.


OBAMA: At my direction, I directed -- I directed -- I directed.

(UNKNOWN): Mr. President, you did not kill Osama bin Laden. America did. The work that the America military has done killed Osama bin Laden. You did not.

(UNKNOWN): So for someone to sit around in a support position and say we killed Osama bin Laden, no, you didn't. You had nothing to do with it.


TAPPER: Kevin, very quickly, the Obama campaign calls this a Swift Boat-style attack. Do you? Does the Romney campaign disavow this attack?

MADDEN: I haven't actually seen this -- this particular ad. I think it makes an important point, actually, about whether or not some of the national security decisions that the president made were actually helped by some of the policies that were put in place before he was there.

But, you know, I think that our campaign is focused on making the arguments about national security leaks, about how that would hurt our national security posture. But that's where our campaign is focused, and those are the kind of arguments that we're going to continue to contrast with the Obama campaign.

TAPPER: Kevin and Stephanie, thank you so much for getting up early on a Sunday and sharing your views with us. We appreciate it. When we come back, the nation's finances have the presidential candidates looking everywhere for savings.


FALLON: Mitt Romney says he wants to cut funding for PBS. When he heard that, Oscar the Grouch was like, "Seriously? I already live in a garbage can. How much worse can my life get? What is -- you got to be kidding."

TAPPER: Can Washington get spending under control? Will taxes have to rise? And if we can't solve the problem, is the U.S. headed toward bankruptcy? We'll ask our all-star panel of experts. Our special discussion is up next.



MITT ROMNEY (R), PRESIDENTIAL CANDIDATE: We will cut spending, shrink deficits and put America on track to have a balanced budget.




BARACK OBAMA, PRESIDENT OF THE UNITED STATES: They have tried to sell us this trickle-down theory before. It won't create jobs. It won't lower our deficit. It is not a plan to move our economy forward.



REP. PAUL RYAN (R-WI), VICE PRESIDENTIAL CANDIDATE: We find ourselves in a nation facing debt, doubt and despair. It is our duty to save the American dream for our children and theirs.



JOSEPH BIDEN, VICE PRESIDENT OF THE UNITED STATES: If you want to know what's outrageous, it's their policies and the effect of their policies on middle class Americans. That's what's outrageous.


JAKE TAPPER, HOST: And we're back now at the Newseum to discuss the great debate -- can we restore the nation's finances, or is the U.S. headed toward bankruptcy, an issue at the forefront of the presidential debate, especially since Mitt Romney's selection of Congressman Paul Ryan.

Thanks to our partners at the Miller Center at the University of Virginia, we have assembled an all star panel of experts.

To my right, "Wall Street Journal" columnist Kim Strassal; Senator Pat Toomey of Pennsylvania, who was part of the super committee that tried, but failed, last year, to resolve these budget issues; and Grover Norquist, founder and president of Americans for Tax Reform.

TAPPER: And to my left, Austan Goolsbee, former chair of President Obama's Council of Economic Advisers and University of Chicago professor; Congressman Chris Van Hollen of Maryland, the ranking member of the House Budget Committee and also a former member of the super committee; and Neil Barofsky, the former inspector general of TARP, the Troubled Asset Relief Program and the author of the new book, "Bailout." Welcome to all of you.

Thanks so much.

and also, I should say, welcome to our great audience here at the Knight Studio at The Newseum.

You can clap for yourselves.


TAPPER: But be -- before we begin our discussion, let's take a quick look at what the stakes are.



TAPPER: Do you hear that in the distance?

Two ticking time bombs threatening to send the economy back into recession or worse.

The first, just over four months until it detonates. It's that fiscal cliff you've heard about. Unless Washington gets its act together...

From Clip: Let's get the job done and let's not play political games.

TAPPER: A big if, as we ring in 2013, the ball will also drop on the economy -- huge automatic government spending cuts, $110 billion total. That's like wiping out the economy of both the Dakotas and Montana overnight. Good-bye Mount Rushmore.

Simultaneously, tax increases will kick in for everyone -- the Bush income tax cuts, gone. The same with the payroll tax cuts. For a middle class family of four, a tax bill more than $2,000 higher. And that's just the short-term challenge.

The long-term picture even worse.

And that brings us to the second time bomb. As the baby boomers retire, the commitments we've made to seniors will balloon. Over the next 75 years, Medicare will run a deficit of more than $30 trillion. That's two times the entire size of the United States economy.

Social Security will run out of money in just 20 years.

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