'This Week' Transcript: Tax Deal

WASHINGTON, Dec 5, 2010 — -- AMANPOUR (voice-over): Welcome to viewers here and around the world. I'm Christiane Amanpour. And at the top of the news this week, deal...

OBAMA: My job is to do whatever I can to get this economy moving.

AMANPOUR: ... or no deal?

SANDERS: Do we really need to give tax breaks to the rich?

(UNKNOWN): Our caucus will not submit to hostage-taking. We will not submit to this deal.

AMANPOUR: Democrats rebel against the president's tax cut plan, and he calls in reinforcements.

B. CLINTON: If I were in office now, I would have done what the president has done.

AMANPOUR: Can Obama get Democrats on side? Our headliner this morning, the president's top political adviser, David Axelrod.

Then, roadblock to peace.

H. CLINTON: I regret that we have not gotten farther faster.

AMANPOUR: As talks falter, the Palestinian prime minister, Salam Fayyad, and Israeli opposition leader Tzipi Livni in a rare joint television interview only on "This Week." Can they map out a path to peace?

Plus, in the line of fire, royals caught up in riots over drastic spending cut.

(UNKNOWN): Hey, Charles, how are you doing tonight?

AMANPOUR: I'll talk exclusively to former British Prime Minister Gordon Brown. Is today's U.K. tomorrow's USA?

And analysis of all the week's politics on our roundtable, with George Will, Nobel Prize-winning economist Paul Krugman, political strategist Matthew Dowd, and ABC's Cokie Roberts. Plus, the Sunday funnies.

LENO: The worst drivers in the country in Washington, D.C. Well, yeah, Republicans can only turn right, Democrats can only turn left, and Obama weaving all over the place.

(END VIDEO CLIP)

ANNOUNCER: From all across our world to the heart of our nation's capital, ABC "This Week" with Christiane Amanpour starts now.

AMANPOUR: Hello again. The Senate is expected to begin voting on the president's $860 billion tax cut plan on Monday. In the House, Democrats say not so fast. They want to make significant changes to the bill.

The president is pressuring those in his own party to vote for the deal. And on Friday, he even brought former President Clinton into the briefing room to sell the plan.

Joining me now, White House senior adviser David Axelrod.

Thank you for joining me.

AXELROD: Good to be here.

AMANPOUR: You heard, as we started, that some of your congressional Democrats are saying they're not going to be held hostage to this and that they will not submit to it. Will they?

AXELROD: Well, look, I don't put it in those terms. I think every single person in that building does not want taxes to go up on January 1st, does not want to see 2 million people lose their unemployment insurance. Everybody understands what the implications for the economy would be -- every economist has spoken to it -- if that package doesn't move forward. So I believe that there will be a coming together around it.

AMANPOUR: Where is the room to negotiate? What can you offer them?

AXELROD: I'm not -- first of all, I'm not here to negotiate. And, secondly, we have a framework, we have an agreement, and I don't anticipate that it's going to change greatly.

There have been some changes that folks in the House were concerned about, the absence of an extension of an energy -- renewable energy tax credit. That is now included in the package. But in the main, I don't see major changes.

AMANPOUR: So not on the -- the estate tax?

AXELROD: Look, Christiane, the nature of compromise is that you have to accept things that you don't like in order to get things that are very important. There are -- this is a good package for the middle class. This is a good package for the economy. In addition to extending middle-class tax cuts that were there, we're going to have a payroll tax cut, we're going to have business tax cuts that are going to spur hiring and growth in 2011.

AMANPOUR: But you also...

AXELROD: So this is an important step forward, and it would be terribly difficult if -- if it didn't.

AMANPOUR: All right. But you're also having to sell something that the president said he would never do during the campaign, tax breaks for the very wealthy, and you've seen...

AXELROD: Well, let me just correct you for a second. What the president said -- what the Republican plan was, was a permanent tax cut for the wealthy, and the president would not have accepted a permanent tax cut for the wealthy. That would have had budget implications into the future that we could not tolerate. It wouldn't have been right; it wouldn't have been fair. It would have been $700 billion that we couldn't afford, that we would have to borrow from China and other countries. He refused to do that.

This is a temporary tax cut. And this was part of a compromise that -- that includes tremendous help for families with children, for people who want to send their kids to college, the Earned Income Tax Credit, the payroll tax. This is going to mean thousands of dollars in pockets of the average American.

AMANPOUR: You say it's not going to be a permanent tax cut, but look into your crystal ball, because certainly there are economists who believe this is the first step to making it permanent. It's a two-year deal. That's going to be right in the middle of when you are going to go back and trying to get this president re-elected. Are you going to have this fight again?

AXELROD: Well, you say there are economists who say that. This is fundamentally a political issue. And in 2012, we're going to have a big debate about -- about this issue.

We do not believe that we can extend these tax cuts for the wealthy permanently, and we're going to fight very hard, and we're going to let the American people, who agree with us on this issue, have a say.

But at the same time, right now, we face a situation where everyone's taxes would go up on January 1st. I think we're going to be in a fundamentally different position in 2012. The economy will be stronger. We'll have gone through a big debate on -- on how we have to -- what we have to cut and give up. I don't think people are going to make that tradeoff in 2012.

AMANPOUR: Do you think that the Democrats in the House should have been brought in on these negotiations? They say they feel, presumably, they have been completely blindsided.

AXELROD: Well, look, these came together -- these discussions came together very quickly. They were prompted by the looming deadline. We felt a sense of urgency.

We brought them in when there was -- to begin that process. It just accelerated very quickly, and we felt that we had to seize the moment, because if we didn't, the American people would pay the price, the economy would pay the price.

AMANPOUR: Do you think it's -- I want to know what the strategy is. You heard -- you saw the -- the funny we had up there, Jay Leno saying the left is going -- the liberals are going left, the conservatives are going right, and everybody else is going through the middle. Is this a strategy? Is the president ditching the liberal base? Is he trying to be pragmatic? What is happening here?

AXELROD: First of all, I think we should be less focused on the political equations here and more on the economic equations.

AMANPOUR: Well, I just want to ask you about the pragmatism here.

AXELROD: And that's what we're doing -- but this is -- this is important, because the president's focus was one, which is, what do we do to keep this economy moving forward? What do we do to make sure that middle-class people in this country do not see their taxes go up?

And what we got here was a package that prevented their taxes from going up and added additional tax cuts that are going to make a difference for them and the economy. And that is -- and that's a win for the American people.

AMANPOUR: OK, but clearly he hasn't been able to convince them, because they're still, as they say, mad as hell, and he had to bring in President -- former President Bill Clinton into the White House..

AXELROD: When you say "them," you're talking about members of Congress?

AMANPOUR: Yes.

AXELROD: Because the one public poll I saw showed very, very strong support for this compromise.

AMANPOUR: But still...

AXELROD: The American people count, too.

AXELROD: Of course, they do, but he had to bring into the briefing room, presumably to speak to the American people, the former president, Bill Clinton. And let's just put out what he said at the briefing room just this weekend.

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B. CLINTON: The agreement taken as a whole is, I believe, the best bipartisan agreement we can reach to help the largest number of Americans and to maximize the chances that the economic recovery will accelerate and create more jobs and to minimize the chances that it will slip back.

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AMANPOUR: So that's pretty succinct. I mean, don't really like it, but this is the reason to have to do it. Do you think the president -- he's got many tools at his disposal. He's commander-in-chief. He's all sorts of things, including he owns the bully pulpit. Do you think he's using it in the way that he needs to, to sell these programs?

AXELROD: Oh, I think that he's been very -- he's been out there every day this week doing that, and I think that's one of the reasons why there's strong public support for it. So, yes, I think he has.

AMANPOUR: Let me talk about the stakes. Your outgoing top economic adviser, Larry Summers, he caused quite a stir this week, and said if this deal didn't pass, then the United States is headed for a double-dip recession.

AXELROD: Well, that's not quite what he said. I was there when he spoke. He said it would raise the possibility -- materially raise the possibility of a...

AMANPOUR: A double-dip.

AXELROD: ... a double-dip recession.

AMANPOUR: OK, well, he -- he raised that word...

AXELROD: But he didn't say we were headed for it.

AMANPOUR: All right. Well, he raised that word again.

AXELROD: But -- but there's -- but there's no doubt that what -- that it would be deleterious to the economy. Every economist has said -- look, almost every economist has raised their estimation of what our growth will be in 2011 based on this package.

AMANPOUR: So what will this package do?

AXELROD: Well, what it'll do is, in addition to putting money in the pockets of middle-class people that -- that they will spend and accelerate our economy, it includes some business tax cuts like one that will allow corporations and -- and small businesses to buy equipment in the next year and to further taxes on it. And that will spur investment and get some of -- there's $1.8 trillion sitting on the books of -- of corporations across this country. We want to get them in the game. This will help get them in the game.

AMANPOUR: And on the key issue of employment, unemployment, you've said that it's going to create millions of jobs.

AXELROD: Well, I haven't said it, but outside consultants, Mark Zandi, others, have said that, and there's -- there's no doubt that when you create economic growth, you also create hiring, and that -- that's our goal.

AMANPOUR: OK. And what about the big issue that appears to be on everybody's mind -- certainly the midterm elections spoke to it -- and that is the deficit and the debt? This is going to add another trillion dollars. So how do people take the administration seriously when they talk about trying to reduce the debt?

AXELROD: Christiane, first of all, understand that much of this was baked into people's computations because it's an extension of tax cuts that were already on the books. There were about $350 billion in new tax cuts, but they're all temporary.

AMANPOUR: But it adds more.

AXELROD: They're all temporary. And the biggest thing we can do to help right ourselves is to get robust economic growth. Without that, our -- our -- our deficit situation is going to be materially worse. So in the long term, these are not going to have impacts on our deficits. For the next few years, it will.

AMANPOUR: And the U.S. can live with that?

AXELROD: Well, I think that what the U.S. can't live without is robust economic growth, and that's what we're after. We want to see growth. We want to see hiring. We want to see people back to work.

AMANPOUR: Do you think you'll get the majority of Democrats on side?

AXELROD: I think we're going to get strong support on both sides of the aisle. I respect people who are unhappy. We share their view on the upper-income tax cuts, on the estate tax. That was a part of the deal, odious though it may be, in order to accept in order to get all the good things that come along with -- that's the nature of compromise.

So I'm sure there will be some who will have a hard time getting over that hump. Others will -- will see that this is extraordinarily important for our economy and for people across this country that we not let this get to a Washington-style standoff.

AMANPOUR: We'll be watching.

AXELROD: Thank you.

AMANPOUR: Thank you very much, indeed, David Axelrod.

AMANPOUR: And now to one of the Administration's top foreign policy priorities: Middle East peace. But after two years of haggling, haranguing, and hoping, the Obama administration has little to show for its effort.

This week, direct peace talks between Israeli and Palestinian negotiators collapsed, and the United States has given up trying to get Israel to freeze settlements as a condition for talks, a disappointing turn of events for President Obama, who from the first days of his administration was determined to get both sides directly talking to each other.