NEW YORK, Jan.13, 2013 -- STEPHANOPOULOS: Good morning and welcome to "This Week."
STEPHANOPOULOS: America and the world. Debating a new chief for the Pentagon.
OBAMA: Chuck Hagel is the leader that our troops deserve.
GRAHAM: This is an in your face nomination.
STEPHANOPOULOS: Ending the war in Afghanistan.
OBAMA: Our troops will have a different mission.
STEPHANOPOULOS: And starting one with Iran. That conversation with Senators Jack Reed for the Democrats and Republican Bob Corker, plus ABC's chief global affairs correspondent, Martha Raddatz, and the president of the Council on Foreign Relations, Richard Haass.
Then with the White House set to act on guns --
BIDEN: There's got to be some common ground here.
STEPHANOPOULOS: We join the search for solutions with the new leaders of No Labels. Plus, the short strange life of that trillion-dollar coin.
STEPHEN COLBERT: We should have known a coin was Obama's solution to everything. It was right there in his slogan, change.
That and all the week's politics on our powerhouse roundtable with Nobel Prize winner Paul Krugman, the Wall Street Journal's Peggy Noonan, America's last comptroller general David Walker, Judy Woodruff from PBS and Bloomberg View's Al Hunt.
STEPHANOPOULOS: Hello again. Lots to get to this morning, including the Treasury Department's decision late yesterday to bury the idea that a trillion-dollar platinum coin could solve the debt limit stalemate. Advocate Paul Krugman and our roundtable ready to weigh in on that, but first the national security debate, with our panel of experts and policymakers including the senior Republican on the Foreign Relations Committee, Bob Corker, Democratic Senator Jack Reed, who just returned from his 14th trip to Afghanistan, Council on Foreign Relations President Richard Haass, author of the forthcoming book, "Foreign Policy Begins at Home," and ABC chief global affairs correspondent Martha Raddatz.
And, Martha, let me begin with you. We saw that announcement from the president on Friday, speeding up the withdrawal of American troops out of Afghanistan. That's a little faster than the military wanted, but he was silent on how many troops would be left behind. What's behind the decision and where do you expect it will end up?
RADDATZ: I think all through the election season, I thought all they ever talk about is leaving Afghanistan, but this is real. This was a very big deal this week and a very big change. U.S. troops will be in an advise and train -- that's all they'll be doing come spring.
STEPHANOPOULOS: Pulling back from the front lines.
RADDATZ: Pulling back from the front lines. They will be with Afghan forces. The president has not announced how fast they'll draw down, but I suspect by the end of this year, we could be down to 30,000 troops. We're 66,000 troops now, possibly down to 30,000. And when we really draw down in 2014, when we are no longer doing combat missions, I think you'll see anywhere from only 6,000 to 9,000, and the important thing to remember about that, George, is tooth to tail. Tail means the enablers, the support. We would really have, if we had 3,000 troops there, we would really only have about 800 trigger pullers. You're going to see a lot of counterterrorism action, all of those things Joe Biden talked about a long time ago. I think that's all we'll have there in the future.
STEPHANOPOULOS: Senator Corker, are you comfortable with that?
CORKER: Well, I think the decision about the number of troops we have on the ground after 2014 is something that ought to be weighed as we move along. I realize we're going to be moving down to about 30,000 troops. I'm relatively comfortable with that, but I think as far as what we -- the contingent we have after 2014, I would wait, and I don't know of any reason why we would make that decision today. It seems that we'd want to see what the state of Afghanistan is. We'd want to see what's happening in the electoral process. All of those things are obviously big factors. My sense is there's no reason to decide whether 6,000, 9,000, 15,000 troops until we get to that point.
STEPHANOPOULOS: But, Senator Reed, how about this decision to pull back to simply training and support by the spring? Last month's Pentagon report said that only one of 23 Afghan battalions is now capable of operating on its own.
REED: Well, I was down in the (inaudible) Paktika Province, and essentially 83 percent of the operations in the eastern part are initiated and conducted by Afghan forces, so we are already seeing a transition, and by next spring the Afghani forces will be in the lead. That's what our military has been doing in preparing for the last several months, so I think we're making great progress.
There are issues ahead in terms of the election, but ultimately this has to be an Afghan-led effort. President Karzai recognizes that. I think the military leaders I met, both American and Afghan commanders, recognize it also. And there's something about a deadline that would coalesce and to spear action, and actions taking place dramatically in Afghanistan today.
STEPHANOPOULOS: Richard Haass, the president also addressed our overall success in Afghanistan on Friday. He said it was less than ideal and went on to say this --
(BEGIN VIDEO CLIP)
OBAMA: Have we been able, I think, to shape a strong relationship with a responsible Afghan government that is willing to cooperate with us to make sure that it is not a launching pad for future attacks against the United States, we have achieved that goal. We are in the process of achieving that goal.
(END VIDEO CLIP)
STEPHANOPOULOS: (inaudible) in the process of achieving that goal. Is he right about that and is it sustainable after 2014?
HAASS: The short answer is no. What we started in Afghanistan after 9/11 was a warranted war of necessity. We expanded it over the years, particularly under President Obama in 2009, when we tripled our forces, we decided to go after the Taliban, essentially join Afghanistan's civil war and nation build.
The idea that we're going to be able to leave behind a self-sustaining, capable Afghanistan able to -- or a government that's able to keep control of its territory, we are not going to be able to do it. It was a mistake to try. We are not going to achieve that result. Essentially what we're going to fall back to I would think is what we could have fallen back to years ago, a limited counterterrorism mission with trainers and advisers on the ground. And when we have to, we'll send in special forces or drones to deal with if there are, for example, remnants of al Qaeda to ever come back into the country.
STEPHANOPOULOS: Let me move on to the man the president wants to run the Pentagon through this process, Chuck Hagel, former senator. Here was the president announcing that pick earlier this week.
(BEGIN VIDEO CLIP)
OBAMA: I came to admire his courage and his judgment, his willingness to speak his mind even if it wasn't popular, even if it defied the conventional wisdom. And that's exactly the spirit I want on my national security team.
(END VIDEO CLIP)
STEPHANOPOULOS: Senator Corker, you had some positive things to say about Senator Hagel last month when his name was first floated. You said you had good relations on the Senate Foreign Relations Committee. Do you see anything out there now that should disqualify him from the Pentagon post?
CORKER: Well, I think like a lot of people, the hearings are going to have a huge effect on me. I know I talked to Chuck this week. He's coming in to see me next week. But I think the hearings, this is going to be a real hearing process, unlike many of the people who end up being confirmed or not confirmed.
You know, I have a lot of questions about just this whole nuclear posture views. Those are things that haven't really been discussed yet. Obviously people have concerned about his stance towards Iran and Israel.
But I think another thing, George, that's going to come up is just his overall temperament, and is he suited to run a department or a big agency or a big entity like the Pentagon, and so look --
STEPHANOPOULOS: Do you have questions about his temperament?
CORKER: -- forward to sitting down -- I -- what's that?
STEPHANOPOULOS: Do you have questions about his temperament?
CORKER: I think -- I think there are numbers of staffers who are coming forth now just talking about the way he has dealt with them. I have certainly questions about a lot of things. I begin all of these confirmation processes with an open mind. I did have a good relationship with him. I had a good conversation with him this week. But I think this is one where people are going to be listening to what he has to say, me in particular about the things I just mentioned, but especially some of the positions he's taken generally speaking about our nuclear posture.
I think you know that I affirmed the new START Treaty. A lot of modernization was supposed to take place as a result of that on our nuclear arsenal. That's not happening at the pace that it should. The Pentagon is going to have a big effect on that, and for me, that is going to be a very big issue.
STEPHANOPOULOS: Senator Reed, I had not heard those questions about Senator Hagel's temperament before. I wonder if you had heard anything like that, have any concerns like that? I did note this week that your Democratic colleague, Senator Chuck Schumer, said he's not yet convinced that Senator Hagel will be confirmed. Do you agree with that?
REED: Well, I believe (inaudible) confirmed, I think Bob is right. I think this confirmation process will be a thorough evaluation of Chuck's positions, and Chuck's very capable explaining those positions. I think he brings some unique quality to this job. He is someone who has been involved in issues of national security as a United States senator. He is someone who has been involved as a leader of the Atlantic Council. But I think one thing that's terribly compelling -- and it goes to his credibility with the forces -- he's been a combat soldier. He's fought. He has literally walked in their boots. That, I think, will inspire great confidence in the military officers and enlisted men that he deals with, and women.
REED: So I think this situation where he's going to have to answer questions, he's prepared to do it, and I think he'll come out of this with strong support.
STEPHANOPOULOS: Martha, the president emphasized that Senator Hagel will also be the first enlisted soldier at the head of the Pentagon. You talk to the military every day, have embedded with the troops. How much of a difference do you think that will make, that he served as an enlisted soldier?
RADDATZ: You know, I was in touch with a lot of soldiers and Marines last night via Facebook and email and asked them that very question. And they all said it's great that he has combat service, but that's not what we're looking at, and this is a military that has so much combat experience, and really far more than Chuck Hagel, so I think they appreciate it, but it doesn't make an enormous difference.
The one thing I think is really important here is the next two years, we are going to be bringing a lot of veterans home. That matters. Chuck Hagel understands that. He understands what it's like to be wounded, and he would probably pay very close attention to those veterans.
STEPHANOPOULOS: Richard Haass, the questions are coming at Senator Hagel from so many different directions, questions about his views on gay rights, his views on Israel, his views on Iran. We just heard Senator Corker talk about questions coming from staff on his temperament. You served in the administration, you are head of the Council on Foreign Relations -- what should be relevant here?
HAASS: The only thing that should be relevant, George, I would say, is his ability to run the Pentagon and his views on policy. And I think there is a space and there should be a space for the hearings, and more broadly, to ask Chuck Hagel what is he prepared to do about Iran, what does he think the right mix, say, is of sanctions or possible use of military force? What should we be doing about cutting the Pentagon budget or Senator Corker said about nuclear issues? All totally legitimate.
Where I think people are going over the line is with ad hominem attacks -- questioning for example whether he's an anti-Semite. I've known Chuck Hagel for more 20 years. For what it's worth, I think that's preposterous. I also don't think that has a place in the public space. We often ask why aren't public debates bitter? Why aren't sometimes the best people going into public life? This is one of the reasons. I think there is a legitimate place here, and the Senate offers it, for questioning Senator Hagel or Senator Kerry or anyone else about their policies. I really don't think there's a legitimate place in American political life for ad hominem attacks. These are loaded words that are being cast about, and I think they re simply beyond the pale.
STEPHANOPOULOS: Let's move to the question of his views on Iran, because he did address that in his -- in an interview with his home paper. And I want to show what he said about that. He was responding to the questions that he opposed unilateral sanctions in the past. He went on to say, "I have not supported unilateral sanctions because when it is us alone, they don't work, and they just isolate the United States. United Nations sanctions are working. When we just decree something, that doesn't work."
Senator Corker, let me bring that question to you, because I was struck by an article in "Foreign Affairs" magazine this month by Robert Jarvis (ph), where he pointed out that the U.S. experience with coercive diplomacy and sanctions in places like Panama and Serbia and Afghanistan and Iraq, indeed, did not succeed. So does Senator Hagel have a point there?
CORKER: Well, there's no question that multilateral sanctions are far more effective. When we began the process with Iran, one of the amendments that I actually put into that process was to ensure that the sanctions we put in place were multilateral. And what we didn't do was really hurt those people who are our friends, the very companies and countries that are our allies. So there's no question that when we put sanctions in place, we need to do everything we can to make sure that they are multilateral.
One of the reasons I want to spend time with Chuck Hagel is I think, as Richard Haass has pointed out, there's been a lot of one-liners, if you will, that have been looked at, and I want to dig in and find out whether that really is Chuck Hagel's view of the world, or whether we're taking these things out of context. But certainly I have concerns as we move forward. They're not disqualifying concerns, and, again, I think the meetings that I had with him, the hearings that will take place are going to be very, very important in his case.
STEPHANOPOULOS: Senator Reed, are you confident we can avoid an armed conflict with Iran this year over their nuclear program, and what's it going to take to prevent that?
REED: It's going to take increased pressure, economically, and that's why the issue of multilateral sanctions is so critical. Up until we -- basically enlisted under President Obama, the entire world or significant parts of it in putting pressure on the Iranians, they were not at all responsive. We have to continue that pressure. We also have to begin to look very closely at what is developing inside Iran. They have elections scheduled for June. That is going to perhaps shape their direction, we hope we it will shape it in a positive way, that they will back down from their aspirations for nuclear technology and nuclear weapons.
But the first issue is keep the pressure on. As the president has said and as Chuck Hagel will say, we need every option on the table. We have to assess all those options. And one of the things interesting about this issue of temperament there, I know there's a close relationship between the president and Chuck Hagel. I've traveled with them. I understand it, but I also understand that Chuck has the wherewithal and the ability to speak truth to power. He's demonstrated that throughout his entire career. That is a value that is extraordinarily important to the president, and I think he recognizes that, and I think that will be one of his virtues of secretary of defense.
STEPHANOPOULOS: On this issue of Iran, Senator Reed emphasizes pressure, but one of the points that Robert Jarvis makes is you also have to get a lot more creative on what you're going to -- the carrots you're going to offer to Iran so that there might be some way to have a resolution without a conflict.
HAASS: And that's teed up right now. I think these economic sanctions are having far more impact than any of us imagined. There's a really interesting debate going on right now in Iran, George, one that we haven't seen before. The Supreme Leader is allowing a debate to take place about the nuclear policy, about the economy. So this suggests to me the administration can and will go forward with the big negotiation, with the big proposal, and the real question is can we come up with an approach that's enough for the Iranians, and not too much for the United States and the Israelis? Can we, if you will, park the Iranian program out of place that sufficiently far from nuclear weapons status that we can live with it? I don't know, but we want to find out, because either of the alternatives -- going to war against Iran or living within Iran that has nuclear weapons -- are extraordinary unattractive and costly alternatives. So we want to do everything we can to see whether we can come up with a solution through negotiations.
STEPHANOPOULOS: Martha, we're just about out of time, but as we are talking about Iran's nuclear program, we're also learning that North Korea may be planning another nuclear attack.
RADDATZ: Yes, there are a lot of signs. I spoke to a U.S. official there, a lot of signs that North Korea is planning another test. There are trucks in the area. But one of the baffling things is they're doing this very conspicuously. Our satellites can see it. They are aware of when our satellites are around, so they are a little baffled by this and think it must be just some sort of negotiating tactic of some sort.
STEPHANOPOULOS: One more, OK, Martha Raddatz, gentlemen, thank you all for your time.
Up next, we introduce the new leaders of No Labels. Can they break Washington's gridlock? Plus, our powerhouse roundtable on all the week's politics. We'll be back in 60 seconds.
(BEGIN VIDEO CLIP)
UNIDENTIFIED MALE: I'm voting yes.
I don't care. You shoot me dead. Just shoot me dead. I am voting yes.
UNIDENTIFIED MALE: Mr. Edwin F. Leclerc (ph).
UNIDENTIFIED MALE: No. Oh, to hell with it. Shoot me dead too. Yes.
(END VIDEO CLIP)
STEPHANOPOULOS: Scene there from "Lincoln" that earned a dozen Oscar nominations this week shows Congressman Clay Hawkins and others breaking with their party to oppose slavery, inspiration perhaps for our next guests, the new chairs of the No Labels movement, Democratic Senator Joe Manchin and former Republican presidential candidate Jon Huntsman. Thank you both for joining us this morning, gentlemen.
And Senator Manchin, let me begin with you. The motto of No Labels -- stop fighting, start fixing. Admirable goal, but what's your specific goal and how do you intend to get there?
MANCHIN: Well, George, basically Jon and I were talking about this earlier, that, you know, I've been there two years in the Senate, and I've yet to had a bipartisan meeting where it's been organized, where Republicans and Democrats in the Senate sat down and worked through their problems.
Think about just in the Senate we don't have that type of dialogue going on from Democrats and Republicans, we don't even know our colleagues over in the House. No Labels gives us that venue.
STEPHANOPOULOS: And Ambassador Huntsman, there's going to be a test of that strategy on so many issues this year, including this issue of preventing gun violence one month after Newtown. I was surprised to see there was no mention of that issue at all on the No Labels web site, pretty conspicuous in its absence. Is that a punt?
HUNTSMAN: Well, this is not about finding the endpoint for a specific policy issue. This is about creating a pathway that speaks to problem solving. So the whole attempt here, George, is to create a new attitude that speaks to problem solving. It's not about ideology, it's about extreme partisanship. That's the problem today, so Joe and I have come together. We both have a background as governors. We know what it means to make progress for the people you represent, what it means to be problem solvers.
So our attempt here -- and you ask the specific question about what to do about it -- well, you can't do anything about problem solving unless you get a group of people together on Capitol Hill who are dedicated to putting country first and making decisions that are right for the future as opposed to the next election.
STEPHANOPOULOS: Senator Manchin, what does it mean to put the country first on this issue of guns? We're going to hear from Vice President Biden this week. Early on, right after Newtown, you said you hoped to get the NRA on board for the effort of trying to come up with a solution. We know that Vice President Biden is going to talk about universal background checks. We know he's going to talk about some kind of limits on high-capacity gun magazines. How far are you prepared to go and can you bring the NRA along?
MANCHIN: George, basically we have a cultural -- we have to change the culture of mass violence we have. If you think it's only about guns and that would change the culture, you'd be wrong. If you think it's only about the lack of mental illness coverage that we give, and you would be wrong there. And if you think it's only about the media with the video games -- it takes an all-in approach.
I have linked up with and I will be with John McCain introducing a bill that Joe Lieberman, our dear friend, has been championing for a long time, which basically puts a commission about mass violence together. You bring experts from all different fields. You bring people such as myself that are NRA members that have been sportsmen all of our lives, and look for a commonsense approach to how we change the culture of violence in America. And that's what needs to be done.
STEPHANOPOULOS: Are universal background checks common sense?
MANCHIN: All of these things need to be looked at that. But if it's all in one piece of legislation and one piece of legislation only, then you get something that's much broader. If you just pinpoint, George, on one and say it's guns, whether it's the magazines or whatever, you're going to have a harder time getting through the political process we have right today.
STEPHANOPOULOS: So are you saying no action until after this commission reports?
MANCHIN: I'm saying that basically, you have to have an all-in approach. Right now, I don't know if you have the professionals from the standpoint sitting down people like myself, who have been using guns all of our lives, people that are in the health care arena that are professionals with mental illness and the lack of care for mental illness, then also the video, the media. I would tell all of my friends in NRA, I will work extremely hard and I will guarantee you there will not be an encroachment on your Second Amendment rights, the same that I would guarantee that for the First Amendment rights.
But, you know, in this atmosphere that we have in Washington today, there used to be guilt by association. It's almost guilt by conversation.
STEPHANOPOULOS: Ambassador Huntsman, you tried to take on your party's orthodoxy last year during the presidential race when you tried to run for president. And I think a lot of people looked at it and said, boy, it just can't be done inside the Republican Party.
Do you get any sense that members of your party are going to be receptive to the kind of message you have right now? And if you run for president again, can it be as a Republican or will it have to be as an independent or no (ph) third party?
HUNTSMAN: I'm not worried about myself. I'm worried about my country. We have politics of right and left and center, but we forgot the most -- forgotten the most important thing for the American people, and that's the politics of problem solving.
So getting a block of can-do problem solvers as we're beginning to do on Capitol Hill, who begin to sit down, whether it's around gun control, which is a very complicated issue -- Joe and I were just talking about this. I mean, we've been shooting since we were 5 or 6 years old. We come from cultures of guns, Utah and West Virginia. And within five minutes, we put together some -- some ideas that probably would represent a good compromise package between Republicans and Democrats. There's a deal to be had --
STEPHANOPOULOS: Which includes?
HUNTSMAN: But you got to get problem -- well, you've got to get problem solvers around the table.
STEPHANOPOULOS: Gentlemen, thanks very much for your time this morning. Good luck with No Labels.
MANCHIN: Thank you.
HUNTSMAN: Thank you, George.
STEPHANOPOULOS: Roundtable coming up. So long to the trillion-dollar coin, Paul Krugman and company weigh in next.
(BEGIN VIDEO CLIP)
JACK LEW, TREASURY SECRETARY NOMINEE: You've been a friend and a colleague for many years. It was only yesterday that I discovered that we both share a common challenge with penmanship.
OBAMA: I had never noticed Jack's signature. And when this was highlighted yesterday in the press, I considered rescinding my offer to appoint him. Jack assures me that he is going to work to make at least one letter legible.
OBAMA: In order not to debase our currency.
(END VIDEO CLIP)
STEPHANOPOULOS: President Obama having some fun with his new pick for treasury secretary, Jack Lew. Let's talk about that and the serious issues he's going to deal with now on our roundtable, joined by Peggy Noonan from the Wall Street Journal. Judy Woodruff from PBS. (inaudible) Al Hunt from Bloomberg View. Also, David Walker, the former comptroller general of the United States, and Paul Krugman of the New York Times and Princeton.
And I'm going to take a stab at trying to explain this trillion dollar platinum coin issue right at the beginning so that we can then debate it.
It's rooted in a 1997 law. You see the law right there that gave the president the ability to -- the mint the ability to do commemorative platinum coins. What they didn't do is set a limit on how much the platinum coin could be worth. So the idea was you get a coin like this, this a mock-up right there. Deposit it in the federal reserve. Say it's worth a trillion dollars. That would extend the debt limit for about a year and the government would be able to go on.
The White House earlier in the week did not close the door on this. It bubbled up through the blogosphere. But Paul Krugman you really got everybody's attention on Friday when you wrote in The New York Times, and I'll get this right here, "what we all hope of course is that the prospect of the coin or some equivalent strategy will simply take the debt ceiling off the table. But if not, mint the darned coin."
Not 24 hour later, the Treasury Department said absolutely no way. It's finally not going to happen. They closed the door.
But make the case for why you were for it.
PAUL KRUGMAN, NEW YORK TIMES: OK. The thing you have to understand is that the debt ceiling is a fundamentally stupid, but dangerous thing. We have congress that tells the president how much he must spend, tells him how much he's allowed to collect in taxes. He says OK, there's a difference there, I've got to borrow it. And they say, no, you can't borrow them.
So the whole debt ceiling thing itself is a crazy thing. It actually forces the president to do something illegal, either to defy congress on what it told him to spend or to defy congress and borrow when it told him not to. And then we have this weird loophole, which everyone agrees is crazy, but it happens to be there -- but is a loophole -- that says that the Secretary of the Treasury can mint a coin for any amount which is supposed to be for commemorative pieces, but it does avoid -- it does offer a way to bypass this.
And all that's really doing is just a way to bypass the debt ceiling. It's not even actually printing money, it's simply saying, hey, we're going to say that we minted the coin. You don't even have to mint the thing, right, you just say that you did, right?
Well, you would have to but -- nobody ever has to see it. They all have to do is say we did it and the Federal Reserve says, OK, you now have a $1 trillion bank account which we will, when you withdraw funds from that we will sell off some of our government bonds which is just a way of borrowing through the back door but gets you past this craziness of the debt ceiling.
STEPHANOPOULOS: Apparently, that's not going is apparently Ben Bernanke, the fed chairman, really did weighed in hard against this. David Walker, you've been around it for awhile.
DAVID WALKER, FRM. U.S. COMPTROLLER: Well, the debt ceiling is a dumb idea. We're the only country on earth that has a debt ceiling. We need to reform that. We don't want to use it as a political tool.
But, you know, the trillion dollar coin is a dumb idea too. Two dumb ideas don't make a good one.
By the way, why would you spend it on buying platinum? You know, I have a few trillion dollar bills here. You know, why would we want to waste money...
STEPHANOPOULOS: The only legal way to do it.
KRUGMAN: You're legally allowed to to platinum. You're not allowed to do that.
WALKER: You're not allowed to pass it, that's right.
STEPHANOPOULOS: But now it gets you, Peggy Noonan, back to the drawing board. And this is what the White House was saying this week. Apparently this platinum coin is not going to happen.
PEGGY NOONAN, WALL STREET JOURNAL: Yeah.
STEPHANOPOULOS: The Democrats in the senate want the president to examine all kinds of ways around facing this question head on, but it appears that the president has ruled all or most of them out.
NOONAN: Yeah, nobody actually knows what's going to happen. This is about the third -- this is the second debt ceiling crisis we've had in the past few years. We just got through the fiscal cliff thing. It is very strange to live in a great sophisticated wealthy modern democracy and have this herky-jerky crisis cliffhanger thing that is going on and that has been for awhile.
Look, I am always hopeful for something like a grand bargain but I think that won't happen now. I think we have more loggerheads, more brinksmanship ahead of us.
KRUGMAN: The White House position, which is right, is that there should be no bargaining over this. If the Republican majority in the House wants to cut spending, let them propose legislation that cuts spending and pass it, not hold America hostage. And -- I've got calls, you know, -- saying we -- this rejecting...
STEPHANOPOULOS: From the White House.
KRUGMAN: Was a sign of strength, not weakness, that we are not bargaining, we are not going to give in. We just want to make sure that the onus for this rests firmly on the Republicans. And they think they mean it, whether they actually mean it we'll find out.
STEPHANOPOULOS: We're going to find out in about month.
Al Hunt, in "The Wall Street Journal," this week Karl Rove actually laid out a strategy for House Republicans saying they should do exactly that, pass a bill which actually cuts spending by as much as they want to extend the debt limit for. What a lot of people point out is if you are going to extend it for a year, a trillion dollars, that's very hard to get 218 votes for.
AL HUNT, BLOOMBERG VIEW: Karl is about as good on that as he was in Ohio on election night. I think Peggy's advice was much better than Karl Rove's, to Republicans. What -- they can talk all they want to. You know, years ago, George, I had a young -- I was a young reporter. There was a veteran congressman named Jimmy Burke from Massachusetts who said kid, you know, my success here? I said what is it? I said, I vote for every tax cut. I vote for every appropriations. And I always vote against the debt ceiling.
And I said if everyone did that, it would be anarchy. He said, what do you think this place is on the level? And that's what these guys are doing. It's not on the level. It's a total, complete fraud.
And in the end Republicans are not going to want to say we'll put the full faith and credit in the United States at risk, so we can cut Medicare. That just won't happen.
STEPHANOPOULOS: And that's exactly what the White House is betting on.
JUDY WOODRUFF, PBS: But, George, that's exactly what Republicans are saying. I mean, they are saying, look, we went to the well. We let the president get what he wanted on the fiscal cliff. But when it comes to the debt ceiling, he's going to have to cough up some spending cuts. And they are saying, they are prepared to go to the brink on this, even if it means, you know, questioning the full faith and credit of the American government.
WALKER: Look, the Republicans need to wake up and get real. We're the only country on earth that has a debt ceiling limit. Ultimately as part of a grand bargain we ought to get rid of it. We ought to substitute statutory budget controls and a constitutional credit card limit, debt to GDP. But in the interim, if the Republicans want to use leverage, they ought to use it on the sequester and the continuing resolution.
STEPHANOPOULOS: Which is right on the heels...
KRUGMAN: We should not allow this to become thought of as a legitimate or normal budget strategy. This is hostage taking. This is saying walk into a room saying I've got a bomb give me what I want or I'll blow up this room. This is not something -- this has never happened before and should not be allowed to happen.
STEPHANOPOULOS: But doesn't that mean, then, that it's very likely to happen now for the first time given the positions that each side has taken and what -- let me ask you, Paul Krugman, what are the economic consequences of that?
KRUGMAN: It's incredibly scary. This is much scarier than the fiscal cliff, much scarier than any of the other things out there because we don't know what it does. But we do know is that U.S. government debt is the global safe asset. It is what every financial transaction relies on as the ultimate. This is what value consists of and better than gold, better than anything. U.S. Treasury bills are the thing. And if they are no longer, if they're called into question, nobody knows what happens.
STEPHANOPOULOS: This is something I agree on?
WALKER: Yes, here's the issue. I used to be a trustee of Social Security and Medicare. Social Security is now negative cash flow. If you hit the debt ceiling limit, you can be at the point where at the beginning of the month you can't send out Social Security checks on time. The last tame we got Social Security reform was 1983. Why? Because we weren't going to send the checks out on time. Let's get real.
HUNT: They are going to back down. That's why in the end they can't -- sounds great now.
STEPHANOPOULOS: You just think they're definitely going to...
HUNT: Oh, I think they'll go right up to the brink and then they'll get cold feet and they'll go to the sequester which comes up right afterward. I think the battle will be waged over that.
This is a losing proposition.
NOONAN: I think it should be noted that we have a president. I think it should be noted that he should be sitting down and talking with those who would move -- attempt to move forward...
KRUGMAN: No, but that's the point...
NOONAN: ...on spending.
I consider it unusual that this president can never make a deal with those folks.
KRUGMAN: But this is not something you negotiate over. You do not negotiate with hostage-takers. That's the White House position. They're right about that. You just don't negotiate on this. You can negotiate on the sequester, you can negotiate on taxes, but not on someone who is threatening to blow up the world economy if he doesn't get his way.
NOONAN: My goodness. That appeared to be the White House attitude on the fiscal cliff just a month or two ago.
KRUGMAN: It's very different.
NOONAN: Why can nothing ever be worked out? We do have a president. We do have legislative leaders. We do what should be noted, have a spending crisis in America. It is not an eccentric thing to worry about the amount of spending that America does. The income, the outcome and the long-term promises.
KRUGMAN: This is really -- this is a doomsday -- this is really saying I will blow up the world unless you give me what I want. And you don't negotiate on that.
WOODRUFF: And, again, the White House position is, look, congress passed these bills. They're the ones that appropriated this money that we're talking now about cutting back. We're talking about cutting spending and they're saying it's in their yard, they are the ones who need to bite the bullet.
STEPHANOPOULOS: Meanwhile, I don't see as the broader question of the Republican strategy. Peggy Noonan, I was struck by your Wall Street Journal column yesterday, which may be a little of odds with sitting down. I'm not sure. You say pirate time for the GOP, wave a sword, grab a rope and swing aboard the enemy's galleon. Take the president's issues, steal them. They never belonged to him. They are yours. Elaborate.
NOONAN: Go for it.
First of all, don't be the depressed gray-suited gaggle that comes forward in the halls of the House once a day to speak in a sort of a almost furtive and sad manner about what's going on. No great themes ever emerge, nothing ever seems to get said.
Look, this is a time to remember in a way the joy of politics. The Republicans are in a bad position right now. They just lost a big election. They are a bunch of folks in Washington, the president is one man with a mike. That man, the president, can always overpower them. My feeling is this is a wonderful time to be daring and surprising. Go to the populist right on economic issues, on things issues like breaking up the banks and the carried interest loopholes. Go for immigration, don't wait for the president.
I know. I'm just here to amuse, Paul.
KRUGMAN: ...party these days?
NOONAN: I have a sense of who funds politics and maybe that's not a good thing.
KRUGMAN: It's not just politics. It's what you do after you leave politics is the problem.
Why don't we face that? I mean just when it's pirate time, I mean remember you're there for the people. Try to do good stuff. Do not giggle. It's no time to be cynical.
HUNT: I thought it was a brilliant -- a brilliant, provocative column. There's not a chance it'll happen because it's a good applause point -- some but Tea Parties members ran in 2010. We are anti-Wall Street. We are against the banks. They got in there. They got in the financial services committee and guess what, they started getting money from JP Morgan, from Morgan Stanley, from -- and not a single one of them voted against the banks.
Immigration, why did Mitt Romney turn into immigration basher? He never was before. Because he went to Iowa in 2007, the base, the core, they are going to have a terrible problem with this because their base does not want immigration reform.
STEPHANOPOULOS: Except (inaudible) isn't hard-boiled politics going to push the Republicans in the direction of working with the president in some fashion on immigration. I noted that Marco Rubio, he's starting to talk about laying out a step-by-step immigration.
WOODRUFF: For sure on immigration. Marco Rubio, there are other Republicans who say look at the -- look at what happened in election 2012. The president got 70 percent of -- 71 percent of the Latino vote. The handwriting is more than on the wall. A significant number of Republicans want to move but, George, there are also a lot of Republicans who are not ready to move. They can't abide the idea of a pathway to citizenship for those illegal immigrants to get in the country.
STEPHANOPOULOS: And he president is saying it's got to be there.
NOONAN: Can I note, by the way, the Republican base, what you say fairly about the Republican base in 2007, 2008, 2012 true. But that base -- not only the party establishment, but base just experienced a big loss. There's a lot of thinking on the Republican side about the meaning of this and how to go forward.
STEPHANOPOULOS: I know you want to weigh in on these big financial issues. How is a pirate strategy consistent with a get real strategy?
WALKER: First, the biggest deficit this country has right now is a leadership deficit. And the truth is the wings of both parties don't represent America. We have a republic that is not representative of or responsive to the public. That's one of the reasons that I'm one of the national co-founders of No Labels to promote progress over partisanship, results over rhetoric.
We do need more leadership from the president. And the Republicans ought to get out there and have a plan and push forward with regard to a grand bargain strategy because we desperately need one. We need one in 2013.
We may not have until 2015. I'm confident we don't have to 2017.
STEPHANOPOULOS: Coming off the fiscal cliff negotiations and the whole experience with that, is that realistic at all in 2013?
WALKER: I think it is realistic if you do three things. One, the president has to demonstrate much more leadership. He's the only one elected by all the people. He's the chief executive officer. He's got the bully pulpit.
Secondly, we need to engage the people with the facts, the truth, the tough choices and a way forward. I've done it all over the country, all 50 states. They're way ahead of the politicians. They can handle the truth, they're willing to accept tough choices.
And thirdly, you need to have people work with the president on a constructive basis recognizing that the people want this done.
STEPHANOPOULOS: Let's talk about the president's team right now. Because the president did appoint Jack Lew treasury secretary this week leaving a big vacancy as chief of staff. And that plus this photo that appeared in The New York Times earlier this week showing the president meeting with his economic advisers, seemed like a lot of men, all men.
Actually Valerie Jarrett is right in front of the desk. You can see her ankle, I believe. But that, plus the appointment of Lew raises a lot of questions about the president's team, whether there's sufficient diversity in his cabinet and in his White House, including from Congressman Charles Rangel.
(BEGIN VIDEO CLIP)
REP. CHARLES RANGEL, (D) NEW YORK: It's embarrassing as hell. We've been through all this with Mitt Romney. And we were very hard on Mitt Romney with his women binder and a variety of things. And I kind of think there's no excuse when this is the second term.
(END VIDEO CLIP)
STEPHANOPOULOS: And Judy Woodruff, the president and his team points out that 43 percent of his administration is still women, which is much more than George W. Bush, about where President Clinton was. But the appearance of having all white men in those big jobs and Eric Holder as attorney general did rankle.
WOODRUFF: Well, and the fact that the president got double-digit support among women, second election in a row. He did very well with the women's vote. People look at this administration -- and it's not just optics which I think you said -- you were talking about something else, it's not just the optics, it's the reality of the administration. Their argument is, hey, we didn't do a great job of getting it done early. We've been distracted by things like the fiscal cliff, but when all is said and done this is an administration that will look like America. Having said that, George, maybe they ought to take a line from Mitt Romney, binders full of women. They need to get moving.
I mean, there are some jobs that are open. And we'll see who they pick. I think we're all watching.
NOONAN: What happened in the past few days with the woman story in the White House is all fair. If that had been a Republican White House I think we can all agree they would be clobbered for not having enough women. I think the message has probably been received by the Obama White House. I think at the end of the day, it's always good to have more women in the room, I suspect they will.
STEPHANOPOULOS: And Al Hunt, one of the other strains of criticism, the president -- and I guess you want people who agree with you for the most part -- but that the president is choosing from a relatively small pool. Pretty interesting that the president, the vice president, the secretary of defense designee, and the secretary of state designee all served together on the senate foreign relations committee.
HUNT: He's turned upside down that team of rivals concept of four years ago. But let me -- I think the people he's picked are very capable, but let me take the economic team for a second in my worry. I think Jack Lew is an enormously capable person as are other people. But you know something, George, these people are tired. They are exhausted. They have been through one battle after another.
I mean, you talk about Hillary Clinton being spent, being exhausted so are these people and they're not bringing in any infusion of new people with new ideas. Not necessarily as replacements, but just to sit at that table and say how about this?
It really is -- and they're now talking about putting Denis McDonough, whose sole experience is in foreign policy, as the White House chief of staff. There has never been a successful White House chief of staff who did not have Washington political experience.
STEPHANOPOULOS: Denis McDonough served on President Obama's senate staff, has been a deputy national security adviser.
HUNT: And solely on foreign policy. And he doesn't know political Washington. And if they do that, I think it raises questions about...
KRUGMAN: I think it's frightening that at no point in this administration have there been any serious representation of what you might call the progressive economist wing which is a pretty big part of Obama's support.
STEPHANOPOULOS: Maybe Jared Bernstein.
KRUGMAN: You've now exhausted the list. And that's a little surprising both given who brought him to the party, and also the fact that that wing has been right about everything so far, right? It's been right about interest rates. It's been right about monetary policy.
So it is odd.
And I don't have a problem with Jack Lew who seems like he's a tough negotiator, which is what you need in the Secretary of Treasury job.
STEPHANOPOULOS: Raised some questions of Republican senators...
WOODRUFF: When you bring this up with the White House, what they say is we do have vigorous debates on the inside. It may look, you know, monolithic from the outside like we're all -- but there are differences.
KRUGMAN: They talk to people outside.
WOODRUFF: They do. And they say the president is talking to more people on the outside than he's...
KRUGMAN: But it's still surprising...
HUNT: But who is at the table is what matters. And I think Paul's point is right. They also promised to bring in a corporate CEO. They haven't done that. I mean, I think an eclectic group of people who can inject -- maybe some -- we're having the same familiar faces.
STEPHANOPOULOS: My guess it's been hard to convince someone to take that job.
WALKER: I think Al is right. You need to get some new blood in there. Sitting at the table makes a big difference. Jack Lew is clearly qualified for that job. I believe he is going to get confirmed, but he doesn't have good relations with Republicans. And if you want to get a...
HUNT: But no Democrat does these days...
WALKER: If you want to make progress -- no, no, there's differing degrees.
If you want to make progress, you've got to think about that.
STEPHANOPOULOS: One Democrat who may is Vice President Biden who negotiated that deal with Senator McConnell. He is going to issue his report on gun control, preventing gun violence this week. And there's a remarkable series of state of the state speeches this week, including this one from Governor Dan Malloy in Connecticut.
(BEGIN VIDEO CLIP)
DAN MALLOY, GOVERNOR OF CONNECTICUT: In the midst of one of the worst days in our history, we also saw the best of our state. Teachers and a therapist that sacrificed their lives protecting students. And when it comes to preventing future acts of violence in our schools, let me say this, more guns are not the answer.
(END VIDEO CLIP)
STEPHANOPOULOS: Peggy Noonan, Newtown happened one month ago tomorrow. We're going to see -- hear from Vice President Biden on Tuesday. But we've been talking about this the last few weeks on the program. Every time I talk to a group of senators, it does seem that there is not a lot of sharing of the president's sense of urgency on this issue.
NOONAN: On Capitol Hill, you mean?
Look, guns are a very tough topic in America. I do think that if the vice president comes forward with some -- with his report on Tuesday, that looks at the whole violence problem in a way that includes guns and extended magazines and such, but also how we deal with the mentally ill in America, what to do if you have a 17-year-old kid who appears to be unstable and violent, there's a cultural angle to this and we all know what it is, we all go through the motions on it. We have for 25 years. But a Democratic president addressing the cultural part of this would be a little like Nixon to China.
So if Biden has something to say that touches on all those things, I think it would be good.
STEPHANOPOULOS: I think he is going to address all of it.
WOODRUFF: What I am told they are going to put out -- what they call a comprehensive package that's going to include legislation, it's going to include executive -- things -- executive branch do on its own. It's going to include the assault weapons ban, steps on back -- comprehensive background checks. They're going to look at the mentally ill and other steps.
They understand they're not going to get all of that, but they feel -- I mean, I had one person close to the White House say, how can we not try for the assault weapons ban? How can we have another mass shooting come and not do this?
And by the way, George, I talked to a southern senator just yesterday who said his son, grown son, happened to be in Jacksonville, Florida, middle of last week, a Wednesday morning at 10:00, went into a gun shop to buy his wife a shotgun, 10:00 in the morning, middle of the week.
He said the store was filled, five deep with people, stood in line with 20 people or more to buy -- he said ever since Sandy Hook, there has just been this burst of...
STEPHANOPOULOS: All of this showed that huge, huge spike in sales of assault weapons.
We have to take a quick break, another round straight ahead. We're going to talk about what will Lance Armstrong confess to Oprah in tomorrow's big interview? We're back right after this.
STEPHANOPOULOS: That is all coming up next week. I'm back with our "Roundtable." calling a little audible here. We're going to move on to Lance Armstrong, but everyone had so much more to say about with guns, let's stick with that.
And, Peggy Noonan, just as we were going to commercial, you were saying -- warning the president against something.
NOONAN: Yes, two things I'd like to say, one is that people are buying guns like crazy now. Not because they're nutty, not enough because they're angry, but because I really think they fear their country is falling apart.
It's defensive and it's something that I think we all have to be talking about. There's so much anxiety out in America. And they also fear their government.
Second thing, I guess connected to that, leave gun control and gun reform issues in the Congress of the United States, the president should not be issuing executive orders in this area. It would really be unwise and it will cause great problems, I would think.
WALKER: George, among other things, I'm a member of the Sons of the American Revolution, so I obviously support the Second Amendment, but we do need to take some action here. We do need to look at this comprehensively with regard to the mentally ill. We need eliminate the loopholes with regard to checks. We need to look at large magazine ammunition.
And, you know, it's hard for me to see how a sportsman needs to go hunting with an assault rifle, OK? But we need to move prudently here. I do agree that this is a charged issue and that the president will need to be very, very careful about anything he would try to do...
STEPHANOPOULOS: It seems that the White House believes that if the president doesn't move quickly, nothing is going to happen.
KRUGMAN: That's right. This is the moment. And he certainly has to be seen to be doing something. And by the way, it is crazy to be out there buying guns right now. People are afraid, you know, the reality of life in America is that it's safer than it has been in decades.
If we walk out of this studio and walk through Manhattan, your chance of getting mugged are less than they have been since, I don't know, 1960. I mean, this is a -- so this is an odd thing, this is a mental state, not about the reality of America.
NOONAN: No, no, no...
KRUGMAN: The big revelation here has been we've realized -- I didn't know, that the NRA is no longer about gun owners. It's actually representing the firearms industry. And that's something we've learned. So...
STEPHANOPOULOS: Because the gun owners are supporting -- a lot of these proposals coming from Vice President Biden, 20 seconds left.
HUNT: You know, it's always safe to bet against gun control. The passions disappear, the NRA is always there. There's something that may be different this time. I think Gabby Giffords, this started. She's going to raise a lot of money. The principal owner of my company, Mr. Bloomberg, has got deep pockets. I am told they are going to spend a lot of money.
You have to wage a campaign. And you have to take on the NRA. And that could happen this time.
STEPHANOPOULOS: And the Newtown families are coming out tomorrow with a proposal, as well. Thank you all very much. That was terrific.
And now we honor our fellow Americans who served and sacrificed.
This week the pentagon released the name of one soldier killed in Afghanistan.
And finally, "Your Voice THIS WEEK," Tina Jo Evans asks: "George, no updates on Robin. Sure do miss that girl. Any idea when she's coming back yet?"
We are praying it will be real soon, Tina. Robin has been getting stronger every day. She passed that 100-day mark from her bone barrow transplant with flying colors, and we're going to have some news about her recovery straight from Robin herself live on "GMA" tomorrow. Keep your fingers crossed.
If you have a question, send it in on Twitter, @gstephanopoulos. And Paul Krugman is sticking around to answer your tweets for this week's "Web Extra." That's all for us today. Thanks for sharing part of your Sunday with us. Check out "World News" with David Muir tonight and I'll see you tomorrow on "GMA."