Transcript: Sebelius, Pawlenty

STEPHANOPOULOS: Recessions don't last forever, David Brooks, but I think one of the things the administration is counting on, that, in part because unemployment is going to stay high for a while, because growth is not likely to bounce back to a high level, that will put off some of the pressure in the short term to deal with the deficit in a big way. BROOKS: But they're fully seized with the need to deal with the deficit. If you go out to 2019, if you want a second term, that will be the final year. You'd have public debt up to 83 percent of GDP. That's unprecedented in peace time and headed in the wrong direction. One of things I find talking to the people in the administration is, they are fully seized with this. After we get done with health care, they're going to take a shot at cap-and-trade, and then they are going to go on to tax reform. And tax reform will not be revenue-neutral. It will be about raising revenue. I don't know how they're going to do it without raising revenue on the middle class, but they're going to raise revenue. (CROSSTALK)

DONALDSON: ... raising revenue from the middle class. That's where the money is.

ROBERTS: ... is the deficit, and this week we had new numbers showing the deficit being the highest ever in history. And that has gotten the attention of the voters, definitely. I mean, it is the issue that the president is...

STEPHANOPOULOS: Highest disapproval.

ROBERTS: That's right, scoring the worst on. STEPHANOPOULOS: I mean, I think that's exactly right. There's going to be a big fight, Sam, coming up in October, where Congress is going to have to increase the debt limit again. This is always a fight that somehow gets resolved. But I think you can see a lot of gamesmanship ...

DONALDSON: But it gets resolved, George, because you have to do it. If you didn't do it, we couldn't pay our bills. I mean, it won't work around the world. I mean, people who finance our debt will start pulling their money back. So it will happen, but it will be a talking point. I said earlier and I meant it, we have to find some way to pay for the money that we've expended and the national debt that we are running up. And David is quite right with his figures. But, my point was, it was necessary to spend that money. And having done it, now we have to pay for it. And people who are on the streets here, I come back to it, a broken record, who complained about spending that money, would they rather be in a barrel, would they rather have lost everything? Maybe so. STEPHANOPOULOS: Are you as confident that the administration is going to go after tax reform in a big way, with a relatively radical change? WILL: No, I don't think they will. I think our tax code is now so complicated, four million words, something like it, seven million to explicate the four million words. It's so complicated, and everyone has a stake in every complexity -- it's there because a muscular interest group put it in there or a muscular interest group was created by it and now will die in the last ditch to defend it, that it is now systematically unreformable. DONALDSON: You're right. Reagan reformed taxes, and the next day, the next day after that, the loopholes began right back. WILL: Rostenkowski and Reagan and Bradley and the rest simplified the tax code. Since then, 1986, it has been recomplicated 15,000 times. That's more than...

(CROSSTALK)

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