'This Week' Transcript: Stephanie Cutter and Kevin Madden

Pat Toomey: -- exclusion alone, you add in a...

(CROSSTALK)

TOOMEY: The various other big categories, it is much more than enough to lower marginal rates by 20 percent. And they chose to assume that Mitt Romney will take whole categories of deductions off the table and then discovered, oh, lo and behold, you can't get...

Neil Barofsky: We're never going to get the deficits under control and the debt under control without eventually raising taxes. The question is, is when are we going to do that. And I agree that we shouldn't do it now. Right now, we're in a terrible, terrible economic situation.

But ultimately, like, it's not realistic from a mathematical perspective to think that we're going to stay at these tax rates forever, and somehow the debt's going to magically come down.

TAPPER: Our third topic, of course, is defense spending. Can we fix the nation's finances without cutting defense spending at the end of this year, as the New Year's Eve ball drops?

Because the super committee could not agree on $1.2 trillion in budget cuts, automatic spending cuts called the sequester will kick in, including $55 billion in defense cuts. I asked Defense Secretary Leon Panetta about this in May. What would this mean for the nation, I asked him?

(BEGIN VIDEO CLIP)

LEON PANETTA, SECRETARY OF DEFENSE: Obviously, Defense has to play a role in trying to be able to achieve fiscal responsibility. The thing that does concern me is the sequester, which involves another $500 billion in defense cuts.

TAPPER: That's these automatic cuts I'm talking about --

PANETTA: These automatic cuts that would take place that I think would be disastrous in terms of our national defense.

(END VIDEO CLIP)

TAPPER: Congressman Van Hollen, we've seen Democrats -- Sen. Patty Murray, Howard Dean and others, say if we're not -- the Republicans don't come on board with a deal, that's OK. The defense cuts will happen. Doesn't that put the national security of the country at risk?

REP. CHRIS VAN HOLLEN (D), MD, RANKING MEMBER, HOUSE BUDGET COMMITTEE; MEMBER, 2011 JOINT SELECT COMMITTEE ON DEFICIT REDUCTION: Well, what the president and Patty Murray have said is we should act right now to avoid it.

Look, during the negotiations deciding that, Republicans were given the opportunity to avoid defense cuts by eliminating a lot of special interest tax breaks. They decided to protect special interest tax breaks and put defense on the chopping block.

At the end of the day, we hear a lot of talk about defense spending. But once again, not a willingness to pay for it. It's like putting the two wars on our national credit card.

TAPPER: Kim, I want to talk to you about these potential defense cuts, because these are not just defense cuts. These are jobs.

STRASSEL: Yes. This whole issue has migrated from a fiscal issue to a jobs thing. And I think that this is actually why the president is in a very vulnerable position, because the reality is, if you're Lockheed Martin, if you're Boeing, if you're Pratt & Whitney, you may not know exactly what is coming, because the White House has not specified it yet.

But you have a pretty good idea, given the way this sequester was written. It says these things have to be cut equally. Under federal law, these companies actually have to give 60 days of notice out there to any big -- for any big layoffs.

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