'This Week' Transcript: WH Senior Advisor David Axelrod and Sen. Lindsey Graham

AXELROD: Well, look, what happened there was an affront. It was an insult, but that's not the most important thing. What it did was it made more difficult a very difficult process. We've just gotten proximity, so-called proximity talks going between the Palestinians and the Israelis, and this seemed calculated to undermine that, and that was -- that was distressing to everyone who is promoting the idea of peace and security in the region.

Israel is a strong and special ally. The bonds run deep. But for just that very reason, this was not the right way to behave. That was expressed by the secretary of state, as well as the vice president. I am not going to discuss what diplomatic talks we've had underneath that, but I think the Israelis understand clearly why we were upset and what, you know, what we want moving forward.

TAPPER: I hate to say this, but yes or no, David, does the intransigence of the Israeli government on the housing issue, yes or no, does it put U.S. troops lives at risk?

AXELROD: I believe that that region and that issue is a flare point throughout the region, and so I'm not going to put it in those terms. But I do believe that it is absolutely imperative, not just for the security of Israel and the Palestinian people, who were, remember, at war just a year ago, but it is important for our own security that we move forward and resolve this very difficult issue.

TAPPER: All right, David Axelrod, senior adviser to President Obama, thanks so much for joining us.

AXELROD: Good to be with you, Jake.

TAPPER: And joining me now from Clemson, South Carolina is Republican Senator Lindsey Graham. Senator Graham, thanks so much for joining us.

GRAHAM: Thank you, Jake. Good to be with you.

TAPPER: Now you have said that if the Democrats use reconciliation to pass the fixes to the Senate bill, it will be catastrophic to attempts to have any sort of bipartisan cooperation. But you have voted for reconciliation in the past when Republicans were in the majority, the 2003 Bush tax cuts, more than $300 billion worth in the Deficit Reduction Act of 2005 which slowed the growth of Medicare.

Those votes seemed to pass without catastrophe. So why has this changed?

GRAHAM: Well, number one, they related to income and spending. And this is one-sixth of the economy about to be affected here. Under reconciliation, you can't make any changes to Social Security because Senator Byrd understood it was never meant to be used for a purpose like this.

Senator Byrd said you couldn't pass Senator -- President Clinton's health care plan through reconciliation. It was never meant -- and you can repeal the Bush tax cuts if you don't like it. If they use this device called reconciliation to deal out Republicans, it will open up Pandora's box.

And the interview I just heard is spin, campaigning. I thought the campaigning was over. Are you trying to tell me and the American people that Scott Brown got elected campaigning against a Washington bill that really is just like the Massachusetts bill?

The American people are getting tired of this crap. No way in the world is what they did in Massachusetts like what we're about to do in Washington. We didn't cut Medicare -- they didn't cut Medicare when they passed the bill in Massachusetts. They didn't raise $500 billion on the American people when they passed the bill in Massachusetts.

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