'This Week' Transcript: Judy Smith, Jack Lew

PHOTO: Dick Durban and Saxby Chambliss on This Week

A rush transcript of "This Week with George Stephanopoulos" airing on Sunday morning, July 28, 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.

Sexting scandal.

(BEGIN VIDEO CLIP)

UNIDENTIFIED FEMALE: How many women were there?

ANTHONY WEINER, NEW YORK CITY MAYORAL CANDIDATE: Six to 10, I suppose.

(END VIDEO CLIP)

STEPHANOPOULOS: Breaking overnight, Anthony Weiner's campaign manager steps down.

Is his wife's support enough to save his candidate?

This morning, exclusive insight from Judy Smith.

(BEGIN VIDEO CLIP)

UNIDENTIFIED FEMALE: It's a dirty little secret. And dirty little secrets always come out.

(END VIDEO CLIP)

STEPHANOPOULOS: The crisis expert who inspired the hit show "Scandal."

Plus, there they go again.

(BEGIN VIDEO CLIP)

BARACK OBAMA, PRESIDENT OF THE UNITED STATES: That's just being a dead beat.

REP. JOHN BOEHNER, (R) OHIO: The speech turned out to be all sizzle and no steak.

(END VIDEO CLIP)

STEPHANOPOULOS: Is Washington set to take America back to the brink of the fall? We take that on with Treasury Secretary Jack Lew and our powerhouse roundtable.

And George Will and Jeremy Schaap from ESPN on baseball's black eye.

All that ahead this Sunday morning.

ANNOUNCER: From ABC News, This Week with George Stephanopoulos starts now.

STEPHANOPOULOS: Hello again. Let's get right to that breaking news in New York Mayor's race. Anthony Weiner's campaign manager has quit after those new revelations that Weiner's sexting continued even as he plotted his comeback run for mayor.

ABC's Jeff Zeleny is here with all the latest. And Jeff, campaign manager is gone, but Weiner still seems determined to stay in this race.

JEFF ZELENY, ABC NEWS CORRESPONDENT: Good morning, George.

That's right, but despite this latest setback, Anthony Weiner just taped a new campaign commercial and insists he's staying in the race, even as the humiliation threatens to consume his candidacy.

(BEGIN VIDEO CLIP)

ZELENY: The resignation of Anthony Weiner's campaign manager just the latest blow for a campaign that looks like it's on the brink.

WEINER: I'm going to have to hope that sooner or later we get back to talking about issues that people care about.

ZELENY: The famously brash New Yorker still struggling to halt an unending barrage.

Mocked by late night comics.

DAVID LETTERMAN, LATE NIGHT WITH DAVID LETTERMAN: He's out on the campaign trail now, or as he calls it, the tour de pants.

ZELENY: Ridiculed by magazines.

Check out the latest cover of the New Yorker.

His former colleagues also taking shots.

REP NANCY PELOSI, (D) CALIFORNIA: It is so disrespectful of women. And what's really stunning about it is they don't even realize it. They don't have a clue.

ZELENY: Everyone, it seems, is piling on.

WEINER: Let me finish my thought - madam.

ZELENY: Even at his own campaign events.

This confrontation came at his most recent stop.

UNIDENTIFIED FEMALE: If I conducted myself in the manner in which you conducted yours, my job would have been gone.

ZELENY: Others only showed up just to tell the candidate to drop out.

UNIDENTIFIED FEMALE: Degrading women. And I wouldn't vote for him either.

ZELENY: It can't seem to get much worse for Weiner, all sparked by his stunning and sometimes bizarre second revelation of sexting.

WEINER: It's not dozens and dozens, it is six to 10, I suppose.

ZELENY: Then there was his wife Huma Abedin's uncomfortable defense.

HUMA ABEDIN, ANTHONY WEINER'S WIFE: I love him. I have forgiven him. I believe in him.

ZELENY: And capped off by one of his sexting partners going public with steamy photos on TMZ.

SYDNEY LEATHERS, ACCUSER: Anthony Weiner is responsible for his downfall.

ZELENY: Despite calls to step aside, this weekend the former Democratic congressman insisted he's staying in the race hoping New Yorkers simply grow tired of it all.

WEINER: It's not up to you to decide, it's not up to me to decide, voters I want to make this decision.

(END VIDEOTAPE)

ZELENY: Weiner's biggest challenge is that forgiving and forgetting takes time. He's already fallen sharply in the polls and there are just 44 days left until the primary. And now with his campaign manager throwing in the towel, Weiner is left to call his own shots -- George.

STEPHANOPOULOS: OK. Jeff, thanks. We'll have more on that in the roundtable.

But now to breaking news in the NSA spy case. With fugitive Edward Snowden in limbo at a Russian airport, we are joined by the journalist who broke his story, Glenn Greenwald. He's here today with new reporting on the domestic surveillance program. Glenn, thanks for joining us. And your new reporting zeroes in on one of the most explosive claims made by Snowden a few weeks back. Let's take a look.

(BEGIN VIDEO CLIP)

EDWARD SNOWDEN, NSA LEAKER: I, sitting at my desk, certainly had the authority to wiretap anyone, from you or your accountant to a federal judge to even the president if I had a personal email.

(END VIDEO CLIP)

STEPHANOPOULOS: Now, that claim was denied by intelligence officials, and the chair of the House Intelligence Committee, Mike Rogers, said that he was actually lying. But your new reporting, you say, bolsters Snowden's claim.

GLENN GREENWALD, JOURNALIST: Right, George. One of the most amazing parts of this entire episode has been that top-level national security officials like James Clapper really did get caught red-handed lying to the American Congress, which everyone now acknowledges, about what the NSA is doing, and it's amazing that he not only hasn't been prosecuted but still has his job. And what that does is it lets national security officials continue to lie to the public, which is what happened in that exchange you just referenced.

The way that I know exactly what analysts have the capability to do when spying on Americans is the story I've been working on for the last month that we're publishing this week very clearly sets forth what these programs are, that NSA analysts, low-level ones, not just ones who work for the NSA but private contractors like Mr. Snowden, are able to do. The NSA has trillions of telephone calls and emails in their databases that they've collected over the last several years. And what these programs are, are very simple screens, like the ones that supermarket clerks or shipping and receiving clerks use, where all an analyst has to do is enter an email address or an IP address, and it does two things. It searches that database and lets them listen to the calls or read the emails of everything that the NSA has stored, or look at the browsing histories or Google search terms that you've entered, and it also alerts them to any further activity that people connected to that email address or that IP address do in the future. And it's all done with no need to go to a court, with no need to even get supervisor approval on the part of the analyst.

There are legal constraints for how you can spy on Americans. You can't target them without going to the FISA court, but these systems allow analysts to listen to whatever emails they want, whatever telephone calls, browsing histories, Microsoft Word documents. It's an incredibly powerful and invasive tool, exactly of the type that Mr. Snowden described, and NSA officials are going to be testifying before the Senate on Wednesday, and I defy them to deny that these programs work exactly as I just said.

STEPHANOPOULOS: But do we have any evidence that this capability, pretty explosive capability, any evidence that it was used?

GREENWALD: Well, there's lots of evidence that there has been abuse on the part of the NSA. There was a report actually by your network, ABC News and Brian Ross, from several years ago, where NSA analysts, low-level ones, got caught eavesdropping on the telephone conversations between soldiers and their girlfriends who were stationed in Iraq and America. There have been reports in the New York Times that the NSA has wildly exceeded the scope of the legal limits that the law allows. There are all sorts of admissions, including this week in a letter to Senator Wyden by James Clapper, that the NSA has exceeded even the legal authority that it acknowledges it has, and they write it off to inadvertent keystrokes or technological confusion.

The real issue here is that what the NSA does is done in complete secrecy. Nobody really monitors who they are eavesdropping on, and so the question of abuse is one that the Congress ought to be investigating much more aggressively.

STEPHANOPOULOS: Finally, I know you've been in some contact with Edward Snowden, and it seems like he is prepared to stay in Russia for some time. Anything new on whether that will be possible, and what Russia will decide?

GREENWALD: Well, I think that what has happened there is the United States is applying lots of pressure. It's probably at this point just pending and will pend for at least a few more days, maybe a couple more weeks before he gets the papers he needs. But I think at this point, he's actually happy that there is no news coming out of Russia, because that allows the focus to be where he wants it to be, which is on the revelations about what the NSA is doing, the incredible debate that took place in the House of Representatives this week, where liberals and conservatives joined together to oppose NSA abuses. And so I think he's content with having nothing happen, so that the focus isn't on him, but is on the substance of the revelations that he came forward to shine light on.

STEPHANOPOULOS: OK, Glenn Greenwald, thanks very much.

GREENWALD: Thanks, George.

STEPHANOPOULOS: And let's get more on this now from two of the top intelligence officials in the Senate, Democrat Dick Durbin, Republican Saxby Chambliss.

And Senator Chambliss, let me begin with you. You're the vice chair of the intelligence committee right now.

Would it surprise you if it turns out that what Mr. Greenwald is reporting there is true, that low level officials have that kind of capability to read e-mails, internet traffic, listen to phone calls?

CHAMBLISS: George, it wouldn't just surprise me, it would shock me. I was back out at NSA just last week, spent a couple hours out there with high and low level NSA officials. And what I have been assured of is that there is no capability at NSA for anyone without a court order to listen to any telephone conversation or to monitor any e-mail. In fact we don't monitor e-mails, that's what kind of assures me that what the reporting is is not correct, because no e-mails are monitored now. They used to be, but that stopped two or three years ago.

So I feel confident that there may have been some abuse, but if it was it was pure accidental.

STEPHANOPOULOS: Senator, first of all do you agree with that? And secondly, you also want to talk about that vote referenced by Glenn Greenwald, that close vote in the House this week where the NSA bulk collection program did survive, but some of your Democratic colleagues are going to be pushing to end it in the Senate as well. Where do you stand on that?

DURBIN: I can tell you, George, that this was an amazing vote. We came within six votes of challenging an intelligence operation. That doesn't happen very often, hardly at all. It's an indication of a healthy democracy where the oversight of congress on even security issues is important.

The last time I called this same issue for a vote, an amendment I offered the Senate judiciary committee, Senator Mike Lee, a Republican of Utah and I co-sponsored it, only one other senator joined us in that vote.

It's clear that the sentiment is growing for oversight. And I think that the efforts by Senators Wyden and Mark Udall as well as Jeff Merkley is going to increase that effort for oversight. That's a healthy thing.

STEPHANOPOULOS: Will you vote for their amendment?

DURBIN: Oh yes, I will. In fact I sponsored it.

I really believe that we should limit this meta data collection. The notion that we're going to collect all of the phone records of everyone in an area code on the off chance someone in that area code may be a suspect at a later time goes way too far.

And there should be another step here, these FISA courts, there should be a real court proceeding. In this case, it's fixed in a way, it's loaded. There's only one case coming before the FISA, the government's case. Let's have an advocate for someone standing up for civil liberties to speak up about the privacy of Americans when they make each of these decisions. And let's release some of the transcripts, redacted, carefully redacted so that people understand the debate that's going on in these FISA courts.

STEPHANOPOULOS: So Senator Chambliss, Democratic support for (inaudible) program seems to be growing. Can you defeat the amendment, number one and, number two, what kind of reforms can you support?

CHAMBLISS: Well, certainly it's good to have a healthy debate on this issue, George. I agree with Dick that the right kind of oversight is absolutely necessary. And we have got oversight now of this program, both by the Department of Justice, by NSA, by the FISA court, by the intelligence committees, by the Judiciary Committee.

Let me tell you, there is no other program in the intelligence community that has as much oversight as this one, because people deserve to have their privacy protected. And I do think that we're going to have to make some changes to make things more transparent.

Whether we should go as far as what Dick's just alluded to, I'm not sure but what that jeopardizes the program.

And let's don't forget, we have got to reach the right kind of balance, George, between protecting Americans and giving 100 percent protection on the privacy side. We should never invade any American citizen's privacy.

But we've also got a responsibility as policymakers to make sure that our intelligence community and our law enforcement community has the tools with which to provide the kind of protection that we've had since 9/11.

If we'd had this program pre-9/11, we now know that there's a good chance we would have intercepted the phone calls between one of the 9/11 hijackers in San Diego, al-Midhar (ph), in a safe house that he was calling in Yemen.

And we were monitoring the safe house, but we weren't monitoring the calls coming out of the United States; Section 215 would have picked those phone calls up. Who knows what might have -- not have happened on 9/11, if that had been the case.

STEPHANOPOULOS: I want to get to another story breaking over the weekend, that violence in Egypt, up to 80 people dead right now after the military has cracked down on those protesters in the Muslim Brotherhood.

Senator Durbin, is it time for the administration to take a different tack, to take a tougher tack now with the military regime? Maybe even threaten more penalties or economic sanctions?

DURBIN: This is a very delicate time in Egypt. Clearly they are searching for leadership and stability. The events over the weekend don't help at all.

We've had a positive relationship between the United States and the Egyptian military, I want to maintain that, but we should make it clear in Egypt, as we made it clear in Libya and in Syria, that firing on your own people is unacceptable by any government.

And in this situation, if it's established that this came from government sources -- it appears it did -- then we have got to make it clear to the Egyptians that's unacceptable conduct.

STEPHANOPOULOS: Senator Chambliss?

CHAMBLISS: It's further proof, George, that going from a dictatorship to a democracy is very, very hard.

And we do need to make sure that there is some sort of peaceful stability in Egypt; exactly what the role of the United States should be there is difficult to determine. They have been our ally for decades. And here all of a sudden we are seeing a move in the right direction, a move towards democracy.

But we have got to be careful that we don't inject ourselves too much into the situation, because it will probably make it worse. But we also need to send a very clear and very strong message to the Egyptian military that we're not going to tolerate, from a friendly-nation relationship standpoint, the kind of violence that we saw over the weekend.

But it is a very, very delicate, sensitive situation that's ongoing there.

STEPHANOPOULOS: Senator Chambliss, Senator Durbin, thanks very much for your time.

DURBIN: Thanks, George.STEPHANOPOULOS: Up next, government shutdown, default; the threats are back.

Will they stop the economy's slow recovery? Treasury Secretary Jack Lew and our powerhouse roundtable are next. Plus:

(BEGIN VIDEO CLIP, "SCANDAL")

KERRY WASHINGTON, ACTRESS, "OLIVIA POPE": Whatever happens, there's always another move. Whatever happens, I do not give up.

STEPHANOPOULOS (voice-over): Anthony Weiner seems to be taking that advice from the hit show "Scandal."

And coming up, the crisis expert who inspired the show, Judy Smith joins our powerhouse roundtable.

(COMMERCIAL BREAK)

(BEGIN VIDEO CLIP)

BARACK OBAMA, PRESIDENT OF THE UNITED STATES: Now is the time to jump start job creation. It's an agenda that begins with jobs. It's time to rebuild our economy on a new foundation so that we've got real and sustained growth. Our focus has to be on the basic economic issues that matter most to you.

(END VIDEO CLIP)

STEPHANOPOULOS: In White House shorthand it's called the pivot. President Obama did it again this week with big speeches designed to get the country behind him on the economic debates dividing Washington; a government shutdown and the prospect of default are looming again. Treasury Secretary Jack Lew and our roundtable here to weigh in on that.

First, ABC's chief economics correspondent Rebecca Jarvis takes a look at where things stand on the road to recovery.

REBECCA JARVIS, ABC CHIEF ECONOMICS CORRESPONDENT (voice-over): It's a tale of two economies.

UNIDENTIFIED MALE: So what brings you in?

UNIDENTIFIED MALE: Looking for-

UNIDENTIFIED MALE: (inaudible) looking for a car?

(CROSSTALK)

UNIDENTIFIED MALE: Two cars, actually.

UNIDENTIFIED MALE: Excellent.

JARVIS (voice-over): Nissan dealership manager Michael Monisterski says business is booming. He's seen a big increase in sales since the start of May.

MICHAEL MONISTERSKI, MANAGER, NISSAN OF MANHATTAN: We have a lot more customers coming in, a lot more traffic and a lot more real buyers.

JARVIS (voice-over): Then there's the other story: 11.8 million Americans without work, more than 4 million for six months or longer.

JARVIS: On a scale of 1-10, how difficult is it to find a job?

UNIDENTIFIED FEMALE: I would say right now it's about an 8.

JARVIS (voice-over): Yet again triggering a Washington blame game.

OBAMA: With this endless parade of distractions and political posturing and phony scandals, Washington's taken its eye off the ball.

JOHN BOEHNER, SPEAKER OF THE HOUSE: Our country has fallen into the new normal of slow growth, high unemployment and stagnant wages.

JARVIS (voice-over): There are some signs of improvement. Stocks are near all-time high, corporate America turning out record profits, and home sales are up.

But unemployment remains stubbornly high, and Americans overall are skeptical about the recovery: 82 percent say the economy is in just fair or poor condition.

UNIDENTIFIED FEMALE: If Washington can't get it together this fall, then what?

MARK ZANDI, CHIEF ECONOMIST, MOODY'S ANALYTICS: If they can't raise the debt ceiling, if they can't fund the government into the next fiscal year, then it's going to be a mess. And the risks to the economy are quite significant, easily go back into recession.

JARVIS (voice-over): For THIS WEEK, Rebecca Jarvis, ABC News, New York.

(END VIDEOTAPE)

STEPHANOPOULOS: All right. Thanks to Rebecca for that.

Now let's turn to the Treasury secretary, Jack Lew. Mr. Lew, thank you so much for joining us.

We heard Mark Zandi, in her piece, say that Washington can hurt the recovery if it mishandles these fall showdowns. The first one is going to be over the funding of the government. The president has said that he's going to veto bills that fail to roll back the sequester. House Republicans are going to insist on those spending cuts.

So are we headed to a government shutdown?

LEW: You know, George, I think, though, it is imperative that Washington be part of the solution, not part of the problem. Uh, we can't afford self-inflicted wounds and we can't have these kinds of self-created crises month after month, year after year.

STEPHANOPOULOS: But isn't that where we're headed?

LEW: We saw how bad that was for the economy in 2011. And I hope that Congress learned that this is not a good way to do business.

What the president said is when we do our business this year, we have to remember what we're here to do. We're here to build an economy with opportunity for the American middle class.

He is trying to remind everyone in Washington what the people of America know, which is this is about their future. And we really need to roll up our sleeves and get the work done.

STEPHANOPOULOS: I know that's what he's trying to do. But how does he break this gridlock? And is he going to insist that any government funding bills roll back the sequester?

LEW: Look, George, he's made clear that, um, he is not going to sign appropriations bills that fix defense at the expense of domestic priorities. He's made it clear that when Congress does its work in the fall, he is going to be looking to see is it building a better future for the American middle class?

I think that those are values that are shared by the American people. And I think those are values that are shared by a majority in Congress. And I think we're going to be able to work through these issues. And I certainly hope that Congress isn't looking to create confrontations and false crises because we did see, in 2011, how bad that is for the American economy.

STEPHANOPOULOS: You cited the crisis back in 2011 and the economic harm it did. It -- there certainly seems to be another stand-off. The president says he's not going to negotiate. Speaker Boehner says he's going to insist on more spending cuts.

So how do you come together on that?

LEW: You know, George, I think it's important to remember how much we've done since 2011. You know, when we had these debates in 2011, uh, we hadn't enacted any of the savings or revenue measures that we've now put in place.

We have, on multiple occasions, come together in a bipartisan way. Through the Budget Control Act we reduced spending. At the beginning of this year, we acted to remove the tax breaks for the very wealthy.

What we need to do now is get the composition right. We need to remember that this isn't just about cutting budgets. Obviously, we need to have our fiscal house in order. It's -- what it's about is building the foundation for a strong economy.

I think that there's a basis to work together on that. If the debate is just about abstract numbers, frankly, it misses the point.

STEPHANOPOULOS: I understand...

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