'This Week' Transcript: Senate Minority Leader Mitch McConnell

Senate Minority Leader Mitch McConnell is interviewed on 'This Week.'

ByABC News
January 4, 2013, 2:36 PM

NEW YORK, Jan.6, 2012— -- (BEGIN VIDEO CLIP)

STEPHANOPOULOS (voice-over): Good morning, and welcome to "This Week." Fiscal cliff deal.

(UNKNOWN): The motion is adopted.


(UNKNOWN): It's December the 31st!

STEPHANOPOULOS: Less than hoped for.

DURBIN: There are parts of it that many of us disagree with.

STEPHANOPOULOS: And the looming battles look even worse.

OBAMA: I will not have another debate with this Congress over whether or not they should pay the bills.

MCCONNELL: It settled the revenue debate for good.

STEPHANOPOULOS: Will Washington hurdle off a higher cliff in just weeks? What can stop this cycle of brinksmanship? We'll ask our headliner, the senator at the center of this compromise, Republican Leader Mitch McConnell.

Then, as Speaker Boehner survives a close vote, fresh faces flood the Capitol. How will they change Congress? Will Congress change them? We introduce the rising stars of 2013.

Plus, a health scare for Hillary and that political storm over Hurricane Sandy.

CHRISTIE: Sixty-six days and counting. Shame on Congress.

STEPHANOPOULOS: Plenty to debate on our powerhouse roundtable, with George Will, Robert Reich, Greta Van Susteren from Fox News, Gwen Ifill of PBS, and ABC's chief White House correspondent Jonathan Karl.

ANNOUNCER: From ABC News, "This Week" with George Stephanopoulos. Reporting from ABC News headquarters, George Stephanopoulos.


STEPHANOPOULOS: Hello again. Happy new year.

Even before President Obama's auto-pen signed this week's deal into law, it was clear that any cease-fire in Washington's battles over taxes and spending would be painfully brief.

Three new deadlines loom. By the end of February, the Treasury will lose the power to borrow more to pay America's bills. Across-the-board spending cuts to every federal program kick in on March 1st. And the government will run out of all congressional funding by the end of March. One fiscal cliff averted, three more coming fast.

And with that, let me turn to the man who negotiated last week's compromise with the White House, Senate Republican Leader Mitch McConnell.

Thank you for joining us, Senator.

MCCONNELL: Good morning, George.

STEPHANOPOULOS: So I know you think that the deal you negotiated is imperfect, so -- and you want to fix it, as we approach the debt limit. But I want to get to the bottom of this, because you say no increase in the debt limit without major cuts in spending. The president says he won't even negotiate over that. So to borrow General David Petraeus' famous quote from the Iraq war, how does this end?

MCCONNELL: Well, first, let me say these last-minute deals are no way to run the government. We've known all of these deadlines are coming. Why we end up in these last-minute discussions is beyond me. We need to function.

I mean, the House of Representatives, for example, passed a budget every year. They've passed appropriation bills. The Senate Democratic majority and the president seem to like these last-minute deals. Now, we know these three issues are coming up, the sequester, the debt ceiling, and the continuing resolution to operate the government. Why don't we sit down now and not wait until the last minute to get these matters resolved?

Look, the biggest problem confronting the country is not taxes. It's -- it's spending. We don't have this problem because we tax too little; we have it because we spend too much. We now have a $16.4 trillion national debt, as big as our economy. That alone makes us look a lot like Greece. This administration has driven spending from 21 percent of our economy up to almost 25 percent of our economy. We've got to stop using the credit card. And any opportunity we have to engage the other side in a discussion about quitting the spending spree, we're going to engage in.

STEPHANOPOULOS: And the question is, how will you follow through on your strategy? And, you know, there are -- a lot of your allies are worried about the -- about that prospect. The Wall Street Journal editorial page said the political result will be far worse if Republicans start this fight only to cave in the end. You can't take a hostage you aren't prepared to shoot. Do the two GOP leaders have a better strategy today than they did in 2011?

And I guess, you know, you're hearing that phrase more and more now, shoot the hostage. Are you prepared to do it, to see the country default, if the president won't sign the spending cuts you demand?

MCCONNELL: Well, look, it's not even necessary to get to that point. Why aren't we trying to settle the problem? Why aren't we trying to do something about reducing spending? We know we need to do it. When are we going to do it? We don't need to use the deadline. We could go through the regular order. Congress could pass bills. They could have conferences between the House and Senate. The president could be engaged. I mean, he's good at campaigning...

STEPHANOPOULOS: By the end of February?

MCCONNELL: ... we know that. Sure. Yeah. I mean, we can do things very quickly. Look, these are not new issues. These are not new issues. We know -- and we've known for quite some time -- that we had all of these issues in front of us. Waiting until the last minute is no way to run the government. We ought to be engaging in it now.

STEPHANOPOULOS: Well, but -- but the deadlines are approaching. And I think the president has said he's willing to engage in more discussions over the sequester and the government shutdown, but that would also include new revenues. You say that the tax debate is over.

MCCONNELL: Oh, yeah, the tax -- the revenue -- the tax issue is finished, over, completed. That's behind us. Now the question is, what are we going to do about the biggest problem confronting our country and our future? And that's our spending addiction. It's time to confront it. The president surely knows that. I mean, he has mentioned it both publicly and privately. The time to confront it is now.

STEPHANOPOULOS: But in the last year, Senator...

MCCONNELL: And we ought to engage...

STEPHANOPOULOS: Let me -- let me just interrupt you there. In the last year under the Budget Control Act, the Congress actually cut $1.5 trillion in spending. That's more than was raised in revenue over this last fiscal cliff deal. So are you saying that any discussion of revenue is completely off the table going forward? You will not accept any new revenues in any new deal?

MCCONNELL: Yeah, absolutely. The tax issue is behind us. Now the question is, what are we going to do about the real problem? We didn't have this problem because we weren't taxing enough. Fortunately, as a result of the agreement that was reached, 99 percent of Americans will not see their taxes go up, 500,000 small businesses will not see their taxes go up. The president got $1 trillion less in revenue than he wanted. That means that money stays in the pockets of the American people.

Now it's time to pivot and turn to the real issue, which is our spending addiction. And we ought to do it together now. We all know we've got to quit spending so much.

STEPHANOPOULOS: Well, then it seems like the divide is as deep as ever if you're completely ruling out revenues and saying spending is the only answer. Some of your colleagues in the Senate have raised the prospect -- Senator John Cornyn and others -- of what they call a partial government shutdown. Here was Senator Cornyn in the Houston Chronicle just this week. He said, "It may be necessary to partially shut down the government in order to secure the long-term fiscal well-being of our country, rather than plod along the path of Greece, Italy and Spain."

What exactly does that mean, a partial shutdown of the government? And do you endorse it?

MCCONNELL: Well, look, it -- it only -- the only reason we're even having these discussions is because of the president and the Democratic majority in the Senate's unwillingness to cut spending. We don't need to have these crises. We need to cut spending. It doesn't -- it shouldn't require a crisis to get the president and the Democratic majority in the Senate to start focusing on the real problem, which is that we spend too much.

STEPHANOPOULOS: I accept that that's your point of view, but the division still seems to be there. So I'll go back to my original question. How far are you willing to take this strategy? Is -- is it acceptable to you that the government default if the president won't agree to discuss spending cuts over the debt limit?

MCCONNELL: My answer is, hopefully we don't need to get to that point. The president surely must know we're spending way too much. So why don't we do something about reducing spending?

The only reason these deadlines become significant, George, is because the Democratic majority in the Senate and the president of the United States don't want to cut any spending of any consequence. They don't want to do anything on the entitlement side.

You know, 60 percent of what we spend every year is interest on the national debt and very popular entitlement programs. Until we address the entitlement programs and make the eligibility for entitlements meet the demographics of our country, we can't ever solve this problem.

If we want to have the kind of country for our children and grandchildren that our -- that our parents left behind for us, the time to do that is now. Ironically, divided government is the perfect time to do it, because you can pull both sides together and do things that need to be done for the future, and the American people will understand, since you did it together, it was absolutely necessary.

STEPHANOPOULOS: It does seem difficult. I want to turn to another issue. There were reports this week that President Obama may nominate your former colleague, Chuck Hagel, for defense secretary as early as tomorrow. When Senator Hagel left the Senate in 2008, you praised his clear voice and stature on foreign policy and national security. Do you stand by that praise?

MCCONNELL: Well, whoever's nominated for secretary of defense is going to have to have a full understanding of our close relationship with our Israeli allies, the Iranian threat, and the importance of having a robust military. So whoever that is, I think, will be given a thorough vetting. And if Senator Hagel's nominated, he'll be subjected to the same kinds of review of his credentials as anyone else.

STEPHANOPOULOS: Several of your colleagues have come out against his appointment, saying he's not sufficiently supportive of Israel or tough enough on Iran, among other issues. Do you share their concerns?

MCCONNELL: Well, I'm going to take a look at all the things that Chuck has said over the years and review that, and in terms of his qualifications to lead our nation's military.

STEPHANOPOULOS: But do you still believe he has the stature on foreign policy and national security to be secretary of defense?

MCCONNELL: Well, he's certainly been outspoken in foreign policy and defense over the years. The question we will be answering, if he's the nominee, is do his views make sense for that particular job? I think he ought to be given a fair hearing, like any other nominee, and he will be.

STEPHANOPOULOS: So you still have an open mind?

MCCONNELL: I'm going to wait and see how the hearings go and see whether Chuck's views square with the job he would be nominated to do.

STEPHANOPOULOS: Finally, on the issue of guns, clear that the president wants to move fast on the issue of gun control coming out of the Sandy Hook shooting. Vice President Biden's task force was likely to make recommendations before the inaugural, and he told Boston's Mayor Tom Menino that they would be passed by the end of January. Is that optimism on his part justified? And are you open to the kind of reforms the president has already talked about, like a limit on high-capacity gun magazines and background checks for buyers at gun shows?

MCCONNELL: Well, first, we need to concentrate on Joe Biden's group, and what are they going to recommend? And after they do that, we'll decide what, if anything, is appropriate to do in this area.

But the biggest problem we have at the moment is spending and debt. That's going to dominate the Congress between now and the end of March. None of these issues, I think, will have the kind of priority that spending and debt are going to have over the next two or three months.

STEPHANOPOULOS: So you're not going to address this until after you address these three deadlines that we talked about at the top of the program?

MCCONNELL: Yeah, the single biggest issue confronting the country is spending and debt. That's going to dominate the discussion in Congress for the next three months, at least.

STEPHANOPOULOS: OK. Senator McConnell, thanks very much for your time this morning.

MCCONNELL: Thank you, George.

STEPHANOPOULOS: We'll be back in 60 seconds with the new faces ready to shake up Washington. And our powerhouse roundtable takes on all the week's politics. That is coming right up.



BIDEN: Would you take a picture of this quickly?

How old you are?

(UNKNOWN): Fifteen.

BIDEN: Fifteen. Remember, no serious guys until you're 30.

If you need any help on your pecs, let me know. Look at that guy. He's been working out.

Anybody else want to be sworn in as a senator today?

Look, look. That's a Democrat, I know, but it's OK.

Spread your legs, you're going to be frisked.


STEPHANOPOULOS: Vice President Biden having some fun there, swearing in the new senators on Capitol Hill, and we are joined now by three rising stars of this new Congress, Democratic Senator Heidi Heitkamp, who surprised so many in the political world by winning in North Dakota, a state where Mitt Romney beat President Obama by almost 20 points; Republican Congressman Tom Cotton from Arkansas, who volunteered for the 101st Airborne in Iraq and Afghanistan after getting degrees from Harvard and Harvard Law; and Joaquin Castro of Texas, just named president of the House freshmen Democrats. You might remember his twin brother, the major of San Antonio, keynoted this year's Democratic convention.

Welcome to all of you. And, Senator Heitkamp, let me begin with you. You're one of 20 women now in the Senate. We saw all of you talking with Diane Sawyer just the other day, talking about how women are better at working together than men.

And during the campaign, that was actually your biggest criticism of President Obama. I want to show everybody what you said during the campaign. "I think President Obama's failed in the one test America had for him, which was to unite the country. I think he needed to be more hands-on. I don't think he's done enough to think broadly and come up with solutions that would engage both sides in a reasonable dialogue."

So how specifically does he fix that right now? And how can you help him?

HEITKAMP: I think the first thing -- and in the last segment, you saw Leader -- the minority leader talk in ultimatums. We all need to stop talking in ultimatums and say only these -- you know, narrowing the debate, put everything on the table, start working together, that's what you do in America in every small town and every business in America. You don't rule out anything until you've actually had a dialogue.

STEPHANOPOULOS: But the president's got an ultimatum. He says he's not even going to talk about spending cuts over the debt limit.

HEITKAMP: I think -- I think what we need to do is stop talking in ultimatums and start talking about how we resolve the issue, with -- with a sense of urgency. And so that's what the American people sent us here to do, and that's why I think I got elected, because I talked about results. You know, there's people who've run for these jobs who want the job and then there's people who want to do the job. And we just need to get to work.

STEPHANOPOULOS: Congressman Castro, a lot of your Democratic allies think the president hasn't been tough enough.

CASTRO: Well, sure. You know, he has gotten some criticism on the left, but, you know, whenever you come to a compromise with the other party, you're going to get criticism from your own party, too, because it's not a perfect deal.

And the president has worked in earnest with Republicans to try to reduce the debt. He's going to continue to do that. But I agree with the senator, it can't be about ultimatums.

The Republicans -- you know, a lot of what you just heard Senator McConnell say was the same thing that Republicans have been saying for the last few years. It's as if the election never happened and we never learned any lessons from it.

STEPHANOPOULOS: What's your response to that, Congressman Cotton?

COTTON: Well, we have a debt crisis in this country, and it's clearly caused by too much spending and too little growth. And we have an opportunity over the next 60 to 90 days in the new Congress to face the most consequential questions that we will face in the next two years, and that's to get our economy growing by reforming our tax code, cutting spending. The president has said he wants three dollars of spending cuts for every one dollars of tax increases. He just got $600 billion of tax increase, so I hope we see $1.8 trillion at least in spending cuts.

STEPHANOPOULOS: Let me also ask you about the other big news this morning. It looks like...

CASTRO: And, George...

STEPHANOPOULOS: Let me go to another issue right now, and we can come back to that in a minute, Congressman Castro.

CASTRO: Sure. Sure.

STEPHANOPOULOS: Because it does appear now that President Obama about to nominate Chuck Hagel to be secretary of defense. And you, Congressman Cotton, have actually already come out against the nomination. You wrote in the Wall Street Journal a soldier's-eye view of Chuck Hagel, "His record on Iraq alone should disqualify the former senator from leading U.S. troops in a time of war." So if you were in the Senate, you would vote against him?

COTTON: I would vote against him. I'm disappointed the president's nominated Mr. Hagel, and I've urged the Senate to oppose that nomination. Mr. Hagel came out against the surge the week that I returned from Iraq in 2006, said the war couldn't be won. No one had told us that when we were fighting it in 2006. He delayed emergency funding for the troops in 2007. Even after the surge succeeded in 2008, he still said that it wasn't because of the troops addition.

When you add that to his dangerous views on Iran and Hezbollah and Hamas and terrorism, as well as his strange hostility towards Israel, I think the Senate should oppose Mr. Hagel as secretary of defense. There are many other qualified Democratic defense professionals who the president could nominate.

STEPHANOPOULOS: Senator Heitkamp, this is going to be your first vote for defense secretary. What do you make of that argument? And do you think that Senator Hagel's the right choice?

HEITKAMP: Well, this is -- this is, again, the Washington view of things. Chuck Hagel is a tremendous patriot and statesman, served incredibly in Vietnam, served this country as a United States senator. He hasn't had a chance to speak for himself. And so why all the prejudging? I don't know.

I mean, to me, in America, you give everybody a chance to speak for themselves and then we'll decide. And so it just, again, is this -- this kind of fight is the fight that the people of this country get so frustrated about and with. Let Chuck Hagel get nominated, if he's going to be nominated, and let's hear what the senator has to say.

STEPHANOPOULOS: Congressman Castro, I want to bring up another issue I brought up with Senator McConnell with you. It's pretty clear from talking to Senator McConnell that he doesn't believe that the Senate should take up gun control measures until after these fiscal issues are dealt with the first part of this year. He says three months at least.

CASTRO: Well, you know, there's no question that the debt is an important issue, but immigration reform and gun control are also important issues that the American people, quite frankly, have asked the Congress to deal with. So I am giving him the benefit of the doubt that he's sincere in wanting to deal with the debt first, but I hope that it's not a stalling tactic.

And I wanted to say also, with regard to the situation with the debt ceiling limit, the worst thing that we can do as a nation is create another self-inflicted wound the way we did last time. The best thing that we can do is cooperate, work together in a bipartisan spirit to get this economy back and working. That's one of the ways that we're going to be able to reduce this debt and get things moving again.

STEPHANOPOULOS: Senator Heitkamp, you're a proud NRA member in the state of North Dakota. Are you willing to sign on to some of the reforms that Vice President Biden and President Obama are already talking about?

HEITKAMP: You know, it's unclear. I mean, you read Washington Post stories and you listen to what the administration says, and so I think what we need to do is we need to take a look at what happened at Sandy Hook. When I was attorney general, I was tasked with a national task force on school violence. We made a number of recommendations which, in fact, were adopted at Sandy Hook to help keep schools safer. They weren't adequate.

Let's start addressing the problem. And to me, one of the issues that I think comes -- screams out of this is the issue of mental health and the care for the mentally ill in our country, especially the dangerously mentally ill. And so we need to have a broad discussion before we start talking about gun control.

STEPHANOPOULOS: Well, the White House is talking about that, but are you willing to talk about gun control, as well?

HEITKAMP: Well, I think you need to put everything on the table, but what I hear from the administration -- and if the Washington Post is to be believed -- that's way -- way in extreme of what I think is necessary or even should be talked about. And it's not going to pass.

CASTRO: Well, but, George...

HEITKAMP: See, that's the other thing.

CASTRO: Can I point out also to the senator -- and I agree. And many folks who have said that mental health and mental illness is an issue, I agree with that. But at the same time, many of those folks -- and not to speak to the senator's position -- but many of those folks have also slashed funding for mental health care for mental illness and they're unwilling to close the gun show loophole, which would allow anyone, whether they're in a gang, whether they're mentally ill, to go in and buy a gun with no background check at all, including the Bushmaster and the AR-15, which we know have caused problems.

STEPHANOPOULOS: So there's going to be some debates among Democrats here, as well. Let me bring in Congressman Cotton for another question now, because I want to put up, as I -- as I bring this to you, Congressman, a new poll, a USA Today-Gallup poll from December, showing the congressional approval rating coming into this year, 18 percent. Now, that's actually higher than it was a few months before. It had actually gotten as low as 9 percent at some point, I believe.

So you're part of this new class, and you've been touted by so many as a possible star of the freshman Republican class. How do you fix that? What do you think is the source of that disapproval? And how do you fix it?

COTTON: George, it reminds me of one of my very first events on the campaign trail. An elderly woman came up to me and said, "You were in the Army, right?" And I said, "Yes, ma'am, I was. I was in Iraq and Afghanistan." And she said, "Now you want to go to Congress, correct?" And I said, "Yes, ma'am, I do." And she said, "Why would you want to leave the country's most respected institution for the country's least respected institution?"

And I think one of the reasons why the Army and the military more broadly is respected is the character they display, and not just the actions they take, the willingness to confront hard problems head on, a sense of purpose and mission and teamwork to deal with ambiguous difficult circumstances and make hard decisions under the highest of stakes. I think if we showed a little bit more of that character in the Congress and in Washington more broadly, then Congress in Washington might be a little bit more respected than they are now.

STEPHANOPOULOS: Well, I see your colleagues smiling and nodding their heads. I'm afraid that's all we have time for today, but I hope you'll all come back very soon. Congratulations on your election and swearing-in this week.

HEITKAMP: Thank you, George.

CASTRO: Thank you.

COTTON: Thanks.

STEPHANOPOULOS: We'll be right back with our powerhouse roundtable. Who won? Who lost? What's next on the fiscal cliff? Greta Van Susteren weighs in on the questions about Hillary's health, and everyone takes on what could be the president's next big fight. We've heard it over Chuck Hagel. Is the president up for it?


STEPHANOPOULOS: Roundtable coming right up. What's their take on the new Congress? The late-night comics have already had their first say.


FALLON: Today, members of the 113th Congress were sworn in at the Capitol, after which they were like, "Well, that's enough work for the year."

LENO: How many are in favor of this deal?


How many -- how many against this deal?


How many are happy you don't have to hear the stupid phrase "fiscal cliff" anymore?





PELOSI: I present the people's gavel to the speaker of the House, John Boehner.


BOEHNER: So if you've come here to see your name in the lights or to pass off a political victory as some accomplishment, you've come to the wrong place. If you come here humbled by the opportunity to serve, if you've come here to be the determined voice of the people, then you've come to the right place.


STEPHANOPOULOS: Speaker John Boehner getting a little emotional after accepting the gavel after a surprisingly close vote, one of the things we're going to talk about this morning on our roundtable. Joined by George Will -- happy new year to you -- Gwen Ifill of PBS, ABC's new chief White House correspondent Jonathan Karl, Greta Van Susteren of Fox News, former Labor Secretary Bob Reich and now the chancellor professor at U Cal Berkeley.

Thanks, all, for coming in. We've got to start out with this detail. I think, George, it was the first time that Congress was in on January 1st since the Korean War. And you say the deal -- and this is kind of a contrarian view -- was actually a triumph.

WILL: In this sense, I think people will look back on this deal as where liberalism passed an apogee and went into decline for the following reason. In the Bush tax rates were passed in two tranches, 2001 and 2003. In 2001, only 28 Democratic members of the House voted for them. In 2003, only 7 did. And they did it to make for only 10 years, they were to expire.

Under this deal, 172 House Democrats voted to make the Bush rates permanent for all but 0.5 percent of American taxpayers. What that means is, is that they can no longer tax the middle class. And we have here an endangered species...


REICH: He's pointing to me. I don't know why.

WILL: I'll tell you why. There are only about three liberals in the country -- and you're one -- who aren't actively hostile to arithmetic. And therefore, you know that you cannot fund a state that liberals want, the entitlement state, without taxing the middle class at least. And now you've given up that -- with the locking-in as permanent law the Bush tax rates, that's off the table.

REICH: Well, let me first...


Let me, first of all, say in a slightly more -- more nonpartisan approach, I think that the problem really with the deal is that what we needed most from an economic standpoint is, number one, a stimulus in the short term, number two, serious deficit reduction in the long term, and, number three, some stability and some certainty about the future. And we got none of this.

And that really is a major problem. We are going to be up against continuous trench warfare, and we have not dealt really at all with the deficit, the long-term deficit problem, and in the short term, we've got a huge employment issue. I mean, jobs should be the number-one issue right now in the country. It's still is -- we saw that unemployment report -- it still is a terrible jobs picture. And yet we have virtually no stimulus. In fact, you know, the Social Security taxes are going up.

STEPHANOPOULOS: And, Jon Karl, clear from when I was talking to Senator McConnell that even though he doesn't want to accept the possibility of another massive confrontation over the debt limit in February, that it's coming, the divisions are as wide as they ever were.

KARL: We are absolutely on a collision course. You have this amazing situation, George, where the White House is saying they will not negotiate on the issue of the debt limit. That's just something Congress has to do, period, no negotiations. They're not scheduling meetings on it. It's not going to happen.

And the speaker of the House, John Boehner, is now saying he's through with negotiations, that they're going to go through, they're going to pass in the House what they're going to do and move on, but there are going to be none of this long...

STEPHANOPOULOS: So Mitch McConnell is talking to himself?

KARL: Yeah, so Mitch McConnell is basically talking to himself.

IFILL: And so's President Obama, because President Obama came out and said I believe that there are loopholes which still must be closed, other -- basically fees and taxes which still can be raised, and you heard the speaker -- the Senate majority leader, Minority Leader Mitch McConnell, say, oh, no, no, no, we're done with taxes, taxes are off the table. So there is a collision coming, and it's coming really soon. I'm not sure anybody has the appetite for it.

VAN SUSTEREN: And it shows that everyone really -- you know, really no success stories in this. Everyone was a big, fat loser. It's disgusting. From the White House on down, this whole fiscal cliff resolution that took 18 months to get to where we are, even Simpson-Bowles said it was a missed opportunity. And you talk about we need some short-term stimulus. Actually, there was short-term stimulus in this fiscal bill. Goldman Sachs, NASCAR, Hollywood, they all got some short-term stimulus.

STEPHANOPOULOS: Through tax extenders.

VAN SUSTEREN: Yeah, yeah. So why did they get the short-term stimulus? And so the big...


IFILL: The Puerto Rican rum industry, as well.

VAN SUSTEREN: Right. And so the big losers are, you know -- is from top down. I blame the White House. I blame Capitol Hill. And the American people saw how the sausage is made, and once again, they were had again, because they don't do their work, and they just -- all they do is take advantage of the American people.

WILL: Don't neglect electric scooters, because this really tells you how Washington works. The fiscal cliff deal -- scooters are made in Oregon. Senator Wyden of Oregon said it is unfair that the federal government uses tax credits to bribe people to by electric cars. That's discrimination. Therefore, we ought to have a tax credit to bribe people to buy electric scooters, which we now do.

VAN SUSTEREN: But so -- but the point is that this fiscal cliff is a big, fat lie. It did have some stimulus for its special interests, its little sort of -- its pets. Its -- Congress's and the White House's pets. And that's disgraceful.

And they didn't do their job. They've known about this for a long time. If you don't do your job, you don't do your job, you don't -- none of us, we'd be out of jobs, and instead -- and the media lets them off the hook, saying that's the way it's always been done. Well, maybe it should stop being that way.

REICH: Well, the real question -- a practical question is, what are they going to do now, faced with not only another fiscal cliff, but also this debt ceiling? I mean, I think that the showdown over the debt ceiling could be much, much worse than anything we've seen so far, because they're just dug in. Both sides are dug in.

STEPHANOPOULOS: And, George, there does seem to be a division inside the Republican Party right now. You do have some voices saying, you know, that phrase the Wall Street Journal used, shoot the hostage, you should be willing to shoot the hostage, go over and default if you have to. Senator Cornyn calling about a partial government shutdown. Others, like Newt Gingrich, saying that would be crazy, that is a losing strategy.

WILL: Well, first of all, the default itself doesn't scare some people, because the big loser in the conflict last August was Standard & Poor's. Standard & Poor's said we are appalled and we're going to lower your credit rating. They did, and the money flowed in, not out of this. We're borrowing today at about 40 percent less cost than we were before our debt was downgraded.

STEPHANOPOULOS: But you don't you...


WILL: ... default -- the question is, do you have to default? Pat Toomey says, look, our interest charges are about $300 billion a year, our tax revenues are 10 times that much. We can pay the interest charges if we prioritize and don't pay something else.

STEPHANOPOULOS: Meanwhile, Jon Karl, some Democrats on Capitol Hill -- the president says he's not going to do it -- say he should go to the 14th Amendment and simply not allow the United States to default and keep on borrowing.

KARL: And it's hard to imagine that they're not going to be tempted to look at that again, given how adamant...

STEPHANOPOULOS: Even though they've ruled it out so far.

KARL: They have ruled it out. The White House has said they are not going to do this, that Congress must act on this. But they are saying no negotiations on this.

I would say, on Standard & Poor's, it's interesting to look at what their guidance is now. They're saying the risk is not that Congress won't act to raise the debt limit. They're saying the risk is that Congress may undermine what little deficit reduction is already put in place. They're worried about the underlying problem, which is that we have an exploding deficit problem.

REICH: I think...

IFILL: The American people are worried about an underlying problem, too. We just heard Mitch McConnell say something everyone can agree with, which is it's beyond me how we got to this point, where we were right at this deadline on New Year's Eve. The president has said it's beyond me that people can't just do their jobs. And American people are saying it's beyond me that they were there doing this. What -- that is the underlying question.


STEPHANOPOULOS: ... didn't the American people vote for it? If you look at that -- and let me bring this to you, Greta...

IFILL: Did they?

STEPHANOPOULOS: ... Van Susteren, I mean, that's what they voted for. You voted for -- a lot of people believe this is not going to get solved until either Republicans win the White House or Democrats take control of the House.

VAN SUSTEREN: Well, maybe the strategy shouldn't be, how do you win? Maybe the strategy should be, how do you have sort of a sense of decency in your job and responsibility? Maybe they shouldn't take the long vacations that they do. I mean, look at the -- look at the debt ceiling, August 2011 is when they set the sequestration. The super-committee didn't make a decision by November. So what did they do? They did absolutely nothing, December, January, February, going all the way up to August. They all took the month off in August.

Then in September, they all started campaigning, and we paid their salaries to campaign. Maybe they ought to have a personal sense of decency and stop worrying about winning and trying to at least begin thinking about solving it.

REICH: Look, George, I think that the only way that the president can win on the debt ceiling is by mobilizing the business community, mobilizing Wall Street, putting huge pressure on Republicans in Congress right now. It's got to be done right now. It can't wait. The economy really will suffer if we go right up to that deadline, because it's not like the fiscal cliff. We're talking about the full faith and credit of the United States.

STEPHANOPOULOS: And if that doesn't work, Bob, I mean, does the president really -- can he really sustain this notion that he's not going to negotiate?

REICH: He can't. That's why he needs Wall Street...



REICH: ... and the business community behind him saying, don't jeopardize the full faith and credit of the United States. It is an abuse of power to subject the United States to that kind of potential danger.

VAN SUSTEREN: But how much negotiating is he doing? Last week, he had to outsource it to Vice President Biden, because he doesn't have the relationships, he hasn't spent the years, whether as president or a senator, developing the relationships so he can negotiate. He actually had to outsource it to Vice President Biden to go up to see his old friend, Senator McConnell. I mean, Washington is so dysfunctional that...


IFILL: But what -- but what negotiations start with someone saying, "OK, I'll give you this"? They never start that way. They start with, "This is my line." And that's where you begin to talk.


VAN SUSTEREN: But you've got to -- but you've got to trust each other. In order to negotiate, you have to have some sense of trust. It hasn't just to be about winning. And there's absolutely no...


STEPHANOPOULOS: But it can't just be leaders, it has to be followers, and that's why I want to come to Jon Karl on this. Speaker Boehner couldn't -- couldn't move his caucus along. And you were on the floor during his -- the vote for his new speakership, and it was a lot closer than anyone really expected.

KARL: Look, there were only 12 Republicans who did not support him, right? But it was incredibly dramatic, because 17 was the number that would force it to go to another ballot, and then who knows what would happen? And there was a moment during that vote, as I was watching it on the floor, where there were more than 17 that were still, you know, still out there, so -- let their names go by without voting the first time, and you could see the speaker's staff on the floor, you could see the staffer for the whip, McCarthy on the floor, keeping -- keeping vote tallies and worried this was going to go the wrong way. This was -- this was a real shot across the bow for Boehner.

STEPHANOPOULOS: And those House Republicans who are worried about Speaker Boehner do -- did not vote for the deal, are doing exactly what they -- they believe their constituents elected them to do.

WILL: They are dissenting from the great American consensus. I, again, think the journalistic narrative about Washington today is 180 degrees wrong. The problem in the country is a consensus that is broad. Republicans subscribe to it, too, which is that we should have a large, generous welfare state and not pay for it. That's the point about extending all the Bush tax rates for all except 0.5 percent of the country, is that we have now put off-limits the source of money in this country, which is the middle class, so we're not going to pay for the welfare state.


KARL: They're coming back for more tax increases...


REICH: That narrative is fundamentally wrong. I think what the public does not fully grasp is that it's health care costs in the future combined with aging Baby Boomers that are driving these out-year deficits. It is not Social Security. It is not Medicare or Medicaid. It is the underlying dysfunctionality of our health care system. And the Affordable Care Act did not do enough to control long-term health care costs. That's what everybody in Washington ought to be focusing on right now.

WILL: But 10 years from now, 20 years from now, we're going to see two big changes in American life, much more reliance on private savings and means-testing of entitlement programs. I don't care who's president, I don't care who runs Congress. We're going to have both of these.

STEPHANOPOULOS: And as early as tomorrow, we're likely to see a new nominee -- I'm going to switch subjects right now -- for secretary of defense, Chuck Hagel. The White House saying the phone call has not been made to former Senator Hagel yet, but it is almost certain to happen. And one of the things we've seen, Gwen Ifill, right here is an extraordinary amount of politicking before an appointment is made, trying to force the president to change his mind.

IFILL: There are so many trial balloons floating around, it like blocks the sun at this point. We saw a trial balloon for secretary of state. We've seen trial balloons for chief of staff. We've seen trial balloons for treasury secretary, even though it looks like it's going to be the same people we hear all along.

And what I don't understand about the trial balloons is why you don't just pull the trigger and do something about it. In this case, that's -- that did not happen with Susan Rice. That has not happened with other nominees, partly because of the distraction of this debt -- I mean, this fiscal cliff debate.

But I think in the case of Senator Hagel, with everyone coming from different sides, the left and the right, and the pro-Israel caucus, and you name it, coming down on him, you know, gay rights supporters all coming down on him at once, the White House sounds like they're not prepared to actually do something about it and make people put their money where their mouth is. You saw Senator McConnell, who's praised Chuck Hagel in the past, suddenly saying, well, let's wait and see. We saw Chuck Schumer, who's praised him in the past, saying let's wait and see.

STEPHANOPOULOS: Well, Chuck Schumer, that's important...


STEPHANOPOULOS: ... because there's so much concern among these people who've raised the questions that they say that Chuck Hagel is not sufficiently pro-Israel. There's already been an ad against him -- look at this -- from the Emergency Committee for Israel.


(UNKNOWN): And while President Obama says all options are on the table for preventing a nuclear Iran, Hagel says military action is not a viable, feasible, responsible option. President Obama, for secretary of defense, Chuck Hagel is not a responsible option.


STEPHANOPOULOS: Jon Karl, that's caused some concern about Democrats, as well as Gwen mentioned Chuck Schumer, so I guess it gets to the question is, why is the president so determined to go forward with this?

KARL: Well, he thinks he's the right guy for the job. He thinks having an enlisted Vietnam veteran running the Pentagon who agreed with him when it came to Iraq and on Afghanistan, he's the right guy to do it.

But I've got to tell you, there's going to be a big problem in the Senate on this. I mean, I talked this morning to a top Democratic staffer in the Senate who said this is not a guarantee that he will get confirmed, that there are enough Democrats that are concerned about Hagel to put him well short of 50 until he makes the case. I mean, I think ultimately he gets confirmed, but this will be a real battle in the Senate.

REICH: There is a puzzle here. With all of the fights that the president has coming up, why is he doing this? I mean, there are a lot of other people he could be putting up, but why is he expending political capital in this way? I don't understand.

KARL: Well, one thing -- he didn't want to see his two top picks for national security jobs to go down...


KARL: He already gave up on Susan Rice. He wasn't going to give up on his second.

VAN SUSTEREN: He's also a Republican. Let's not forget that.

WILL: Well, up to a point.

VAN SUSTEREN: And that also is -- up to a point. I mean...

STEPHANOPOULOS: I think that was the original intention.

VAN SUSTEREN: Right, that was the original intention. But, you know, look, I mean, the guy -- he's going to -- the president gets to choose, and he's going to have a hearing. He's going to answer all the questions. And without all of us sort of, you know, poking at him and all of his critics coming out and running ads against him, you know, I'd sort of like to hear what he has to say.

IFILL: But he -- the fight doesn't begin until the nomination is actually made. All this pre-fight is fun to watch, but in the other -- in the end, these guys have to show up, take their questions, get his answers, and vote or not vote and decide whether it's worth it to them to expend the political capital to go against the president on his choice.

KARL: But there was a big difference with the Susan Rice case. That battle didn't make it to -- you didn't even get -- she didn't get nominated.

IFILL: No, that's my point.

KARL: But in this case, the White House has been much more aggressive in defending Hagel even before the pick was made.

WILL: It is an odd pick, first of all, because if you pick a Republican, a Democrat picks a Republican, he ought to be someone who thinks like Republicans and is liked by Republicans, and neither of those are true in this case. Furthermore, he doesn't think the way the president thinks or at least the way the president talks about Iran and sanctions and negotiating with Hamas and all the rest, and gays in the military, all that stuff. All that said...

STEPHANOPOULOS: But he's in line with the president on Iran. I mean, they both believe we should try negotiations, that the military route should be a last resort. He's saying it's not responsible to talk about a military option right now.

WILL: I think what he says is, is it's a last resort and fundamentally a disastrous resort. And the way he describes it is it's so disastrous it's not a realistic resort, which may be right. I disagree with him on a lot of stuff, but I think he should be confirmed and will be because vast deference is owed to presidents in cabinet members, for two reasons. Their job is to carry out the president's wishes and, B, they leave when the president leaves, which is why more deference is owed to that than, say, on Supreme Court nominees.


REICH: I think I would love to quote you on that, George. But he will -- at the end of the day, he'll get through. You know, I can't imagine a Republican Senate, the Republican senators rejecting a Republican -- a former Republican senator, but...


REICH: ... well, they may -- but there will be enough votes there, George.


STEPHANOPOULOS: No, I don't disagree.

REICH: There will be blood on the floor, and -- and that's the -- why do it? I mean, that's the -- that's the question.

IFILL: Because at some point, you have to put some blood on the floor if you say you believe in things.

REICH: But there's going to be so much blood on the floor with regard to the fiscal cliff and so many other issues that are coming up, the debt ceiling.


STEPHANOPOULOS: Meanwhile, another member of the president's cabinet is leaving this month, Senator Hillary -- Secretary of State Hillary Clinton. We saw this week a real health scare. She was hospitalized for a blood clot after so many questions -- and I'm going to bring this to you, Greta, after we show some of it -- on Fox News about whether or not she was really sick.


(UNKNOWN): When you don't want to go to a meeting or a conference or an event, you have a "diplomatic illness."

(UNKNOWN): You know, I'm not a doctor, but it seems as though that the secretary of state has come down with a case of Benghazi flu.

(UNKNOWN): Immaculate concussion, because it's like, if a tree falls in the forest, does it really fall if nobody hears it fall? Did she really have a concussion?


STEPHANOPOULOS: Greta, you were not part of this in any way. You do not question her illness. But can you help explain what's behind all of these questions?

VAN SUSTEREN: I mean, I don't get behind any -- I mean, I'm responsible for what I say, number one. Those were all very dated, before she was hospitalized, and there was not much information coming out of the State Department. And very early on, with those quotes.

Look, you know, not for one second did I doubt it. Once that these people heard that she was seriously ill, that all changed. The secretary of state will have to -- I think should answer questions about Benghazi. There's a lot of mystery, and four people were murdered. If there were four people murdered in Washington that were unsolved, we'd still be asking questions to this day.

But, look, she was very sick. And when the State Department came out with more information, you saw all that stop. So I have nothing beyond to say that.

REICH: Look, I've known Hillary for decades. She is a workhorse. She works harder than anybody I know.

VAN SUSTEREN: And I've traveled with her. I've seen it. I've traveled with her. I've actually seen -- and anybody who's traveled with her has seen that.

REICH: And that's -- you know, she's traveled to more countries than any former secretary of state.

VAN SUSTEREN: And she's not shied away from a fight, either.

REICH: And she hasn't. I mean, I think that...

IFILL: Which is why she has said she's going to come back and testify on Benghazi for the Senate. So...

STEPHANOPOULOS: And that will probably be the last thing. She will not travel, and that will be one of the last things she has to do.

Meanwhile, the other big thing coming up this year, gun control coming out of Sandy Hook. We heard Senator McConnell right there saying, George Will, that this must follow all of the debates, the fiscal cliff debates we're going to be having over the next three months.

WILL: Well, if the president can -- through his allies -- control what comes before Congress, so I don't think Mitch McConnell can stop this. There are two questions. First of all, the president ought to look, first of all, at his home city of Chicago and talk to his former friend -- and still friend, I guess -- Chief of Staff Rahm Emanuel...

STEPHANOPOULOS: Former chief of staff, still friend, yeah.

WILL: Right, where they've had more than 500 murders in Chicago last year, most of them gun violence, and see if gun control has anything to do with that.

George, my feeling about gun control policy is a little like climate control policy. It's been well said that the only policy question about climate change is how much money do you want to spend on climate change to have no effect, discernible effect on the climate? And the same is true with gun control. I do not see how you can write a law that will have much effect on what they're experiencing, for example, in Chicago.

VAN SUSTEREN: You know what -- really, we should take a look a little bit more at ourselves, from top to bottom. I mean, we have so much violence surrounding us that we think is OK. When we go to the movies, we see it, it's OK. Obviously, you can't legislate against things like that. Even the president of the United States sends rappers to the White House who say horrible things. Nobody's scandalized. I mean, there's no sort of effort for us to sort of looking at ourselves and how we're so -- we're so -- we're numb to violence in our culture.

IFILL: I'm trying to figure out whether any rappers have resulted in the deaths of schoolchildren. I don't think so.

VAN SUSTEREN: No, I don't think it's all schoolchildren. There were two firefighters that were murdered on December 24th. They weren't schoolchildren. It's a -- this -- this has put a highlight on the problem.

IFILL: But as George points out, every weekend there are people killed on street corners in Chicago. And if you look back over the president's statements about gun violence in the wake of Newtown and you look at what people like Secretary Arne Duncan have had to say, they always talk about the broader idea of violence, not just about guns...

VAN SUSTEREN: Talk about...


IFILL: ... and so that what's on the table right now for Vice President Biden and the people who are trying to figure out what to do is a wide range of issues, some of it having to do with gun control, some of it has to do with speaking to gun violence. That's the only way you're going to get...


IFILL: But what happens most of the time in Washington...

VAN SUSTEREN: Gwen, I don't think it's just...

IFILL: ... is these things come up and then they fade after the shock.

VAN SUSTEREN: Gwen, I don't think Washington can necessarily answer the question for the nation. What I -- what I'm trying to point out is that we all have to look at ourselves, as well, and look at how well we do -- even like that PSA that Hollywood artists put out for gun control the other day, and then side by side, some group put all the violent movies they're in. I mean, this is a big discussion, a big national narrative that we all have to look at ourselves in terms of how our culture has now become to accept violence as an answer to problems, as a solution to problems. We see that on TV and movies all over.


REICH: ... is undoubtedly correct, but the fact remains that the murder of 20 first-graders has touched the nation in ways that I don't remember the nation being touched. I don't think this is going to go away.


REICH: The NRA's -- the NRA's technique in the past has been to really rely on the attention deficit disorder of America, basically lay low until attention is no longer placed on this. But we are having now a national discussion of a sort that we have had to have, and that...


STEPHANOPOULOS: And, Jon, I think Bob's right about how there was an initial spike in attention and concern right after Sandy Hook, but it does seem to have subsided just a bit, according to the most -- most recent polls, and that's why the White House knows that speed matters here. They're going to have to move quickly.

KARL: Speed matters. I mean, I think -- I think that there was a moment right after Sandy Hook where you could see some movement for the first real gun control legislation to pass in some 20 years.

IFILL: Among Democrats.

KARL: Among Democrats were strong supporters of the NRA. And -- but I've -- but I've got to say...

STEPHANOPOULOS: But you just heard Senator Heitkamp didn't seem all too enthusiastic about moving forward on gun control.

KARL: Yeah, and -- and it's not going to happen soon, right, because there's no way Congress is going to think about anything along those lines until we're done with the fiscal cliff mess, the debt ceiling, the funding of the government, where at least two or three months away before this can even be considered, and that's a lot of time. I mean, we do have attention deficit disorder, and I think that it's going to be a real challenge to get any gun control legislation passed.

VAN SUSTEREN: But, see, that's the real tragedy. I mean -- I mean, the children -- it was unbelievable, it drew all of our attention, but two firefighters trying to save -- probably save lives on Christmas Eve, I did criminal defense work for years. I've been to murder scenes. I've seen this stuff, this violence. You talk about the Chicago schools? It is horrible -- I mean, the Chicago violence. Most of it was -- a lot of it was in schools, and we've got...

WILL: It's 25 Sandy Hooks in one year.

VAN SUSTEREN: And -- and so when -- you know, when are we going to have this national narrative? Not just -- I mean, we've got to look at all communities and see what's going on in all communities, and we've got to stop being so numb to the violence that surrounds -- and we just say, "OK."

STEPHANOPOULOS: Real quickly, how many of you think that there's going to be a serious package of reforms passed by Congress this year?

IFILL: On guns? I think it's as likely as a serious package on immigration reform and energy and climate change and all the other things the president has said are high on his list.

REICH: I think it will happen, George, if the president gets behind it, gets chiefs of police, mayors, mobilizes the public and the people who are likely to be supportive of it.

STEPHANOPOULOS: George, you're shaking your head.

WILL: Well, define serious. If by serious you mean makes a difference in gun violence, no. But some laws will be passed.

STEPHANOPOULOS: OK, we're going to have to take a quick break. We'll be back with all of your picks for who to watch in 2013.


STEPHANOPOULOS: What a day for Senator Mark Kirk right there. A year ago, he suffered a stroke, walked back up the steps of the Capitol this year to the applause of his colleagues. A big triumph for him. He is coming back to the Senate.

As we look ahead to 2013, I want to get all the roundtable to weigh in now on who they think in the political world is really going to make a splash next year.

WILL: Jeb Hensarling is a splendidly conservative Republican from Dallas who's now new chairman of the Financial Services Committee. Sherrod Brown is a dismayingly liberal senator from Ohio. The two of them could get together, because Sherrod Brown is absolutely right on the need to break up the large banks, to reduce the too-big-to-fail threat to our society. Those two could get together and solve an actual problem.

STEPHANOPOULOS: That would be quite an alliance. OK?

IFILL: I have small bore, big bore. Small bore is pure politics, and that's Deval Patrick, the governor of Massachusetts, who gets to decide who the next senator from Massachusetts might be. And right now, he's up against a hard -- rock and a hard place with Barney Frank, saying, hey, I wouldn't mind being a temporary guy...

STEPHANOPOULOS: And Vicki Kennedy, right?

IFILL: And Vicki Kennedy, and then, of course, Ed Markey is thinking about running for the seat. So that's an interesting thing to see the balance of the Senate and what -- what Deval Patrick has to do with that.

The other large bore is -- is Bashar Assad -- al-Assad, who gave a speech today in Syria in which he said I'm not negotiating with terrorists, take that, U.N. envoy. I'm -- yeah, it sounds familiar. He is -- we keep waiting for him to fall, 60,000 Syrians killed in this violence, and no sign that he's going anywhere.

STEPHANOPOULOS: Amazing he's lasted this long. Jon Karl?

IFILL: Exactly.

KARL: All right. So mine is not exactly a new face, Joe Biden, who on New Year's Day showed that he is the one in the White House that can still work with Congress. I think this is going to be a big year for Biden, because if the president's going to get anything accomplished with Congress, it's clear that he's going to need Biden to work directly with them. So I look for Biden and I wonder if it's either going to make or break his prospects for 2016.

STEPHANOPOULOS: They call him the McConnell whisperer. Greta?

VAN SUSTEREN: And I go out to the states -- and I've said it before here -- I spent a day with Governor Susana Martinez, who is a Republican Hispanic governor of New Mexico. When she took office a year ago, she had a deficit. She came in, worked with the Democratic legislature, balanced the budget. They no longer have a deficit.

And right now, the president is considering signing Katie's Law, which has to do with taking DNA from people who are arrested, and some people may not -- may challenge the constitutionality of it, but she was the underlying D.A. in this law, and she's a big crime-fighter. So...



REICH: Two rising Senate stars. One is Elizabeth Warren. I think that she will be helpful in George's and my campaign to limit the size of the big banks. And also Angus King, an independent from Maine, tremendous integrity and very popular.

STEPHANOPOULOS: Two New Englanders there. I say also Senator Joe Manchin of -- senator of West Virginia, keep an eye on him.

And now we pause to honor our fellow Americans who serve and sacrifice.

This week, the Pentagon released the name of one soldier killed in Afghanistan.

And finally, "Your Voice This Week." Diana Biederman has today's question. "Why do we have inaugural ceremonies for re-elected presidents? It seems redundant, no?"

Well, yes. But the Constitution says that all presidents have to be sworn in, and that's always been an excuse for some kind of party. This year's has been scaled way back from 10 balls to 2, but second inaugurations have also been a time for some firsts. African-Americans joined the parade for the first time at Abraham Lincoln's second inaugural. At Woodrow Wilson's second inaugural, 52 years later, the first women were included. Harry Truman's 1949 inaugural was the first on television. And in 1997, Americans could watch the swearing-in online for the first time, that was Bill Clinton.

Tweet me your political questions to @georgestephanopoulos. Plus, Greta's going to answer your questions 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 don't forget "Nightline" has a new time starting Tuesday, 12:35 a.m. I'll see you tomorrow on "GMA."


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