(voice-over): He slashed state spending and turned a budget deficit into a surplus, and that's what made him so attractive to his party faithful.
M. DANIELS: The state was broke, for no good reason, except that it had simply overspent its income seven straight years, and so we -- we turned that around.
AMANPOUR (on-screen): It's been said that for you, if you were running, if you became president, your agenda would be deficit, deficit, deficit, cut it, attack it.
M. DANIELS: Yes, reduce the debt, the long-term debt facing the country before it crushes the American dream, limits our influence in the world, and, you know, possibly even worse consequences, and -- but that -- to me, that is the challenge of this time.
AMANPOUR: Well, Paul Ryan has tried to put across his own budget proposal, and it's quite controversial, particularly the Medicare aspect of it, because clearly this one is causing people to run away from it, not just politicians, but also people. The polls say that people do not want their Medicare or their Medicaid touched.
M. DANIELS: Well, I'm not running away from it. I think it is the best way.
AMANPOUR: Do you think it will be the litmus test, though, in these -- the election coming up?
M. DANIELS: I hope so. I think it is the central dilemma. I think it ought, therefore, to be the centerpiece of the next election, and we ought to test the proposition -- and I have faith that the answer will be yes -- that Americans are absolutely up to the job of making changes necessary once they understand the facts.
AMANPOUR: Is there a way to do this in a way that does not put so much of a burden on the individual, on the seniors?
M. DANIELS: There's a way to do it that protects the most vulnerable seniors more. I mean, another, I think, important and positive point to be made is that our current system is brutally unfair. It is tilted toward higher-income people in many, many ways. There's no reason on Earth that we should be sending Warren Buffett a pension check or paying for Bill Gates' health care or mine, for that matter. And in the 2.0 system of Medicare and Social Security, for the next generation, not this one, we ought to heavily devote the resources to those who need them most.
AMANPOUR: You've also said that tackling debt, debt, debt and absolutely having to get that done is paramount to the survival of the republic and that perhaps there should be a truce on some of the very, very divisive social issues that tend to take up so much of the oxygen. Do you still believe that?
M. DANIELS: Yes, I do. You know, not that anybody changes their mind, not that anybody retreats one foot, just that temporarily we address the issue that threatens us all. If this country goes broke, we will all pay the price, black and white, gay and straight, male and female. We are all in this together.
AMANPOUR: So there's a lot of politics to talk about this weekend, and that's exactly what we're going to do with our roundtable when we return.
AMANPOUR: Today, Republican presidential candidates are re-learning a tough lesson: No one steals a show like Sarah Palin. The former vice presidential candidate with a fondness for holiday weekend political theater is launching a new round of speculation with her "One Nation" bus tour.