Fox News "Fox News Sunday with Chris Wallace" - Transcript

Interview

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SHANNON BREAM, GUEST HOST: I'm Shannon Bream, in for Chris Wallace.

As the default deadline approaches, the political pressure increases.

Republicans and Democrats are talking tough. With just a month ago in the debt ceiling negotiations, is a deal still possible? We'll ask John Cornyn, one of the GOP's Senate leaders.

Also, with the terror attack rocks Afghanistan, should the U.S. rethink its drawdown plan? We'll get an on-the-ground account from two influential Washington voices on foreign policy: Senators Lindsey Graham and Joe Lieberman.

Plus, what do the fundraising numbers tell us about the Republican presidential field. We'll ask our Sunday panel, which candidates are making a move and which ones are stalled.

And on this Fourth of July weekend, actor Gary Sinise tells us how he wants to help our veterans and the wounded warriors.

All right now on "Fox News Sunday."

And, hello again, from Fox News in Washington.

As the nation celebrates the Fourth of July holiday weekend, it is getting to be crunch time in the Capitol, in a high-stakes battle over increasing the debt ceiling.

Here to discuss where the negotiations stand is a member of the Senate Republican leadership, John Cornyn.

Senator, welcome back to "Fox News Sunday."

SEN. JOHN CORNYN, R-TEXAS: Good morning.

BREAM: All right. On Friday, the Treasury Department reiterated what it had already told us. August 2nd is the date we exhaust our borrowing authority under the current debt ceiling. So, let's recap what the president had to say this week about Capitol Hill, whether they're doing their job -- and a bit of your response as well.

(BEGIN VIDEO CLIPS)

PRESIDENT BARACK OBAMA: When they decide they're not happy with the fact that at some point, you got to make a choice, they'd just all step back and say, "Well, you know, the president needs to get this done." They need to do their job.

CORNYN: Instead of going to Philadelphia tonight and raising money, why didn't he call Senator McConnell, Speaker Boehner, Minority Leader Pelosi and Majority Leader Reid into his office and sit down and do his job?

(END VIDEO CLIPS)

BREAM: Well, at that Philadelphia fundraiser that you mentioned there, the president said this deal could get done, quote, "on the back of an envelope." But he said there's no political will. So, who's not doing their job?

CORNYN: Well, let's see his envelope. I haven't seen it. The president's own fiscal commission -- bipartisan fiscal commission made what I thought was a sobering but important report back in the last December called "moment of truth." The president ignored it in his "State of the Union." His own budget grows the debt by trillions of dollars over the next 10 years and all he seems to do is to attack those who are trying to make responsible proposals to solve this problem.

So, the only way this is going to get done is with the president of the United States and fortunately, now, it's been kicked upstairs to the only guy who can make the deal. And that's the president, along with Speaker Boehner and Mitch McConnell.

BREAM: Let me ask you -- you're here because, of course, the Senate cut its Fourth of July recess short. There have been some skeptics about whether that's going to make any difference. One of them is your Democratic colleague, Senator Barbara Mikulski. Here's a bit of what she had to say.

She said, just being here to, quote, "huff and puff and hope we can blow the deficit away is posturing." Now, even you have express doubts that this is going to make a difference.

Are you feeling any more optimistic?

CORNYN: Well, the only people who can cut a deal, at least initially, are the president, Speaker Boehner and Mitch McConnell, our Republican leader in the Senate. But, you know, Shannon, it's got to pass the House of Representatives, and then it has to get at least 60 votes in the Senate. And we're running out of time.

But, this, what we -- what I'm concerned about is the president by not seriously putting a proposal forward but rather just criticizing those who have, we are running up against this deadline. And they're going to try to present it as a fait accompli, nobody is going to have time to read it or consider the implications of it and it's going to say you have to pass it or the economy is going down the tubes. That's just irresponsible.

BREAM: All right. Some on Capitol Hill had said, absolutely, no way they will vote for anything that involves a tax hike. The top Republican in the Senate, Mitch McConnell, has said that. House Speaker John Boehner has said that.

You have phrased it a little bit differently. When we talk about tax expenditures, things like loopholes and breaks, you say it would be a fruitful area for discussion.

So, would you consider that a tax hike or raising taxes? How do you define what we're talking about when we're talking about revenue?

CORNYN: Well, I think it's clear that the Republicans are opposed to any tax hikes; particularly, during a fragile economic recovery. The last thing that employers need is further disincentives to not hire people. And that's what hire taxes would mean.

Now, do we believe that tax reform is necessary? I would say absolutely. There's not enough time to get it this done between now and August 2nd. But it ought to be the first thing we turn to, try to make our tax code more rational. We could bring down rates, eliminate the tax, a lot of tax expenditures or loopholes and actually make our nation more competitive internationally.

BREAM: All right. So, just to be clear, talking about closing some of those tax loopholes, making changes to the tax code, you don't consider that raising taxes?

CORNYN: Well, it's not raising rates. I don't mean to be cute about the language. But what I think we ought to do is bring the rates down to make it revenue-neutral.

So, as you eliminate these tax expenditures, if you bring the top rates down, that's revenue neutral. That's not raising taxes.

BREAM: Do you think you will get other rank-and-file Republicans on board with that way of viewing the issue of revenue?

CORNYN: Well, I think so. I mean, I think again, the president's own fiscal commission recognizes that our tax code is riddled with a lot of special interest loopholes and provisions that really don't make any sense anymore. We just had a very important vote about the ethanol subsidy, which we voted overwhelmingly to repeal that. And I think there's now a deal being worked out to phase it out maybe in a more sensible way.

But, yes, this is a fruitful area for us to work on in a bipartisan way.

BREAM: What about def spending? How far would Republicans be willing to go in that arena?

CORNYN: Well, the main reason the federal government exists in my view is protect the national security. And so, when Leon Panetta was confirmed as the defense secretary, I asked him about the Clinton era tax -- excuse me, the spending cuts in defense -- worried, of course, that there would be those who want to cash a peace dividend in a time America is still at war in at least three places. He seemed to say he was sensitive to that.

Now, there are things we can do to make the Defense Department, the Pentagon more, run more like a business. For example, better financial management procedures. Actually, the Pentagon is incapable of producing an audible financial statement, Congress said they have to do it by 2017, but they're not on a path to do it now.

That's the kind of thing we can do to make it more efficient to eliminate waste. But we can't weaken our national security.BREAM: Let's talk about comments that former President Clinton made last night about this. He's urging President Obama not to blink on the issue of compromise with Republicans and he also said, if you won't move on issues of revenue, that what should come together sort of a mini-deal. Maybe debt ceiling extension that gets us through six or eight months.

Is there an appetite on the Republican side to do that?

CORNYN: Well, the problem with a mini deal is we have a maxi problem. And these -- the big problems aren't going to go away if you cut a mini deal. All it does is delay the moment of truth.

And so, I'd say better now than then. But if we can't, then we'll take the savings we can get now and we will relitigate this as we get closer to the election.

BREAM: All right. And in addition to dealing with the content of negotiating this deal, there is a bit of a PR battle that's involved here as well. Senate Majority Leader Harry Reid has had a lot to say about what is standing in the way of getting something done. Let's take a listen.

(BEGIN VIDEO CLIP)

SENATE MAJORITY LEADER HARRY REID, D-NEV.: The main obstacle, and I want to be very clear, to finding common ground is Republicans' stubborn insistence on protecting taxpayer funding and giveaways to corporations and individuals who don't need the giveaways.

(END VIDEO CLIP)

BREAM: The president has also framed this choice, earlier this week, as kids going to college, or tax breaks for corporate jets. I mean, it's something he said, the American public, it's an easy choice for them. So, what is the GOP planning to do with their strategy for dealing with that PR side of this battle?

CORNYN: Well, Senator Reid has newfound religion when it comes to tax reform. And we're willing to work with him and Democrats to do that. Again, the problem is, I don't know whether we can get it done between now and August 2nd. But it should be something we do.

I think the American people understand that raising taxes grows the size of the federal government. If there's one thing that I think they told us on November 2010, is that they want government to get smaller, not bigger -- that they feel the government is far too intrusive in their lives, whether it's Obamacare, whether it's the Dodd-Frank financial regulatory so-called reform bill. They just feel like the government has grown too big.

So, the only way to get government smaller, more rational is to cut spending, not to raise taxes. So, I think we win that.

BREAM: All right. How much has this turned into a political debate? Senator Chuck Schumer has some words to say about that the GOP may be using the economy and the struggle of average American out there to their benefit, simply for 2012.

Here's his accusation.

(BEGIN VIDEO CLIP)

SEN. CHUCK SCHUMER, D-N.Y.: It's becoming clear that insisting on a slash and burn approach may be part of this plan. It has a double benefit for Republicans. It's ideologically tidy and it undermines economic recovery, which they think only helps them in 2012.

(END VIDEO CLIP)

BREAM: Playing politics with it?

CORNYN: That's certainly false. There's just no basis to it.

You know, the president and his party are doing a pretty good job of undermining the economy as it is, with the unemployment at 9.1 percent -- much higher than the other parts of the country. People with capital on the sidelines because they don't know whether the taxes are going to get increased, whether regulators are going to overreach, or what the cost of Obamacare are going to be to their business.

So, look, we're Americans first, not members of any political party. We want to do what's right for the country. But that kind of rhetoric doesn't particularly advance the ball.

BREAM: Senator Schumer also was asked about a very interesting concept that's bubbled up with some in the academic world and on the Hill as well, this idea that the president may be constitutionally allowed to ignore the debt limit and continue issuing debt because of phrase in the 14th Amendment.

Here's what he said when asked about it. Quote, "It's certainly worth exploring. I think it needs a little more exploration and study."

You're not only a lawyer, but you've been a judge who sits on the bench as well. How would you rule on the legal debate?

CORNYN: That's crazy talk. It's not acceptable for Congress and the president not to do their job and to say somehow the president has the authority then to basically do this by himself. We ought to sit down and work together.

And it shouldn't take the form of press conferences like the president gave last week, where he was essentially this cool mom (ph) scolding Congress for not getting its job done when, in fact, he is the one who has not stepped up and giving us a proposal. We'd like to see what his proposal is. Let's do it in the light of day, not in secret behind closed door negotiation. Only to spring it on the American people at the last moment to say, you know what, it's this, take or leave it, or else there's financial calamity.

BREAM: While we have you have, I want to ask you one quick foreign policy question as well. This week, the Senate will likely vote on the bipartisan resolution that authorizes what the president has done in Libya. There are some caveats there. It comes to vote I believe on Tuesday.

Will you vote in favor of it?

CORNYN: I'm going to vote against proceeding to this particular resolution, but I have an alternative resolution that I think we need to consider. First of all, we need to consider what's the goal of the mission in Libya? I think the goal should be to depose Qaddafi. The president likes to say, well, that's our political goal but not our military goal. Well, those ought to be unified.

And then weed a plan from the president, not just a handoff to NATO and say it's their problem, not mine. And then we need to once the American people understand what the goal is and the means to achieve that goal, then I think we'll become unified behind this effort.

BREAM: All right, Senator Cornyn, thank you for your time. Thanks for spending part of your Fourth of July weekend with us.

CORNYN: Thanks, Shannon.

BREAM: Up next, Senator Graham and Lieberman from Afghanistan on the U.S. war efforts there and Iran's meddling across that region.

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