CNN "State of the Union with Candy Crowley" - Transcript

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The Senate Republican leader Mitch McConnell yesterday demanded that President Obama get personally involved in the debt talks and he soon got his wish, and now there are reports this morning a plan is near. So joining me now Senator Mitch McConnell, thanks so much for being with us.

Let me get right to it, can you announce this morning that a plan has been reached and there's a deal?

MCCONNELL: Well, we are very close. We had a very good day yesterday, both the president and the vice president called me and the president talked to the speaker as well, and they understand that with a Republican majority in the House and a very robust Republican minority in the Senate we have to come together. And I think we've made dramatic progress in that direction since April, for example, when the administration, Gloria, was asking us to raise the debt ceiling with no spending reductions at all, nothing, just a clean debt ceiling. Now I think I can pretty confidently say that this debt ceiling increase will avoid default, which is important for everybody in America to know, we are not going to have a default for the first time in our 235 year history. We're not going to have job-killing tax increases in it. We are going to deal with the problem the American people sent us here to deal with, which is that the government has been spending too much.

We don't think we have this problem because we've been taxing too little, we've been spending too much.

So I think we're very close to being in a position where hopefully I can recommend to my members they take a serious look at it and support it.

BORGER: And get it done when?

MCCONNELL: Soon.

BORGER: Today?

MCCONNELL: Soon.

BORGER: OK.

MCCONNELL: We're aware that August 2nd is a date of some significance.

BORGER: Right. Well, let me walk you through an outline of this potential deal. There has been an awful lot of reporting from CNN and elsewhere about what it contains. First the size of the package, over $2 trillion, yes?

MCCONNELL: The entire package?

BORGER: The entire package, $2.4 trillion...

BORGER: What we're looking at is a $3 trillion package, a combination of discretionary cuts, both cuts now, caps over the next ten years to hold spending in line, and then we're also going to be voting on a constitutional amendment to balance the budget. Now that is important for the future, because it will put some constraints on our spending habits here in Washington.

Also, let me emphasize the joint committee. In the early stages of this discussion, the press was talking about another commission. This is not a commission, this is a powerful joint committee with a equal number of Republicans and senate -- equal number of Republicans and Democrats, to not only look at entitlement changes, but to make a recommendation back to the Senate and House by Thanksgiving this year for an up or down vote.

So think of the base closing legislation that we passed a few years ago for an up or down vote in the House and Senate.

BORGER: OK. Well, let me walk you through this in stages. And I want to get to that deficit commission, because there are discussions about committee. There are discussions about what would happen if it doesn't do its work. Let's -- first things first, though.

MCCONNELL: Yeah.

BORGER: One sticking point has been that the president wanted an absolute guarantee that we wouldn't go through this kind of a showdown six months from now on the debt ceiling, has he gotten his wish on that? Is there a way for the debt ceiling to come up in six months and he gets guaranteed approval of it?

MCCONNELL: Well, you know, the president has been pretty candid that he was concerned about not having to do this again before his election. Frankly, my members were a little more concerned about getting the job done properly for the American people...

BORGER: OK, but what is the deal? What is the fix?

MCCONNELL: Well, you will see that this is a process that could get him past the election. We're working on the combinations that will get us there.

BORGER: Would it be a vote of disapproval. In other words, he could just propose it and it would need a super majority to disapprove?

MCCONNELL: Well, the mechanism for getting a debt ceiling to be increased obviously would be the resolution disapproval. But look, we're still working on the parameters of it. We're very, very close to being able to recommend, I am to my members, that this is something they ought be able to support.

BORGER: So essentially then the president gets the ability not to have another showdown?

MCCONNELL: I'm very close to being able to recommend to my members that we have an agreement here that I'll be able to consider supporting.

BORGER: OK. And then the next big area is this debt committee, as you call it, and the question is how do they guarantee absolutely that you get the kind of deficit reduction you are looking for. Because we have had, with all due respect, committees in the past and they haven't done so well, one very recently. So how do you hold their feet to the fire? There is talk of triggers to make sure if they do not do their work congress will be forced to cut.

MCCONNELL: First of all, we haven't had anything like this before. This is a joint committee of congress. It is not a commission that consists of outsiders. A joint committee of congress with an equal number of Republicans and Democrats, under enormous pressure from the American people, from the markets, foreign countries looking at us to see if we're going to get our house in order, to come up with significant additional savings over and above the initial ones that we will approve before the end of this year, and entitlement reform is absolutely critical.

For example, the -- the trustees of the Medicare and Social Security system appointed by the president has said repeatedly, both of these very important and essential programs are in serious trouble.

BORGER: Well, so -- well, my reporting is, and I would like you to talk about what's going on inside the room you are in...

MCCONNELL: No, I know you'd like for me to do that.

BORGER: I would. I would ask the question of how do you absolutely guarantee that these cuts come? And as I was saying, there are these triggers people are talking about so that if, for example, they can't agree, let's just say that, then there is talk of across the board spending cuts, of as much as 4 percent in areas like Medicare and defense spending. Can you talk about these sort of fail- safe mechanisms that would enforce cuts?

MCCONNELL: Well, let me say my view is that there is a mathematical possibility, obviously, that the committee could deadlock, a mathematical possibility. And there has been a lot of discussion with the White House, you are having one of their folks on -- Gene Sperling I think later to talk about. A lot of discussions over the last week about what do you do if the committee deadlocks. I think it's highly unlikely that will happen. And that has been something we've been discussing for over a week. And I hope we're on a path to resolving the what if?

BORGER: What if?

MCCONNELL: We'll let you know.

BORGER: Well, I'm going to try again.

Because the big concern of the Democrats like Gene Sperling, have been that if the committee dead locks, and you have to come up with these deficit reduction, they want to see a balance. They want to see revenues and spending cuts. Is there a way you can guarantee that revenues would be part of any kind of overall big second phase of this?

MCCONNELL: At the risk of frustrating you, let me say again, that the trigger issue has been the one that has locked us in the extensive discussions. I thought we were very close to an agreement a week ago today, and then went off to our separate corners and in my view kind of wasted a week firing volleys back and forth across the Capitol, but now I think we are back in the right place and the trigger issue is one that we'll let you know we've agreed to when we agree to it.

BORGER: What's something you want, though?

MCCONNELL: We will let you know what we've done on the trigger issue when we make the announcement.

BORGER: OK. So clearly, this is the sticking point, because the Democrats -- I mean, can you say the triggers are the sticking points?

MCCONNELL: Well, that has been an item of outstanding discussion for over a week.

BORGER: And let me go to something you mentioned earlier, which has also been a point of some contention, and that is the question of the balanced budget amendment. The people in the House and the speaker's plan wanted a guarantee of passage of the balanced budget amendment. Would that be in any deal or would there just be a guarantee of a vote?

MCCONNELL: Well, we intend to be voting on the balanced budget amendment in the Senate, and we will let you know when that is scheduled.

BORGER: As part of this plan?

MCCONNELL: We are going to be voting on the balanced budget amendment in the Senate. I hope it will pass, because that's a good, important...

BORGER: But you're not talking about a guarantee of passage.

MCCONNELL: That's an important restraint long-term on the government of the United States which has certainly demonstrated in the decade that it can't get its financial house in order unassisted.

BORGER: Well, let's say you have this deal and you get through the whole trigger question, how much of his caucus does John Boehner have to deliver?

MCCONNELL: You have to ask him that question.

BORGER: Would you expect that he would need to deliver half, though? I mean, looking at the politics of the way this is?

MCCONNELL: Look, I serve in the Senate. The best I can tell you is, I am hoping very soon to have an agreement that I can recommend to my members and we're hoping that we will have a significant percentage of them support it.

BORGER: Why would conservatives who want a guarantee of the passage of the balanced budget amendment, not just a vote as you're talking about, but passage, and deeper cuts, why would they sign on to this kind of deal?

MCCONNELL: Well, I think what conservatives want to do is cut spending, and at the risk of repeated what I said earlier, back in April the administration was asking us to raise the debt ceiling cleanly, with nothing attached to it at all. We have come along way.

I think this agreement is likely to encompass up to $3 trillion in spending reductions, no tax increases that we know will kill jobs, the president made that argument last December when he passed a bill to extend the current tax rates for two more years. He understands that tax increases are a job killer, particularly when you have over 9 percent unemployment, that certainly is not going to be part of this.

BORGER: So can you guarantee to conservatives that no tax increases will be a part of this deal?

MCCONNELL: We're not going to raise taxes in this deal. I just said that, and I will say it again, there are no tax increases in this bill.

BORGER: So even if there is tax reform and closing loopholes, do you consider loopholes...

MCCONNELL: There will be no tax increases in this proposal. Look, we've got...

BORGER: Why would Democrats sign on to this, then?

MCCONNELL: Look, we have got over 9 percent unemployment, Gloria, over 9 percent unemployment. A vast majority of the Democrats back last December voted to extent the current tax rates, not to raise taxes on anybody.

So they understood then, the president understood then, it was a job-killer to do that. We don't intend to start doing that. That is not what this is about. The government spends too much, it does not tax too little.

BORGER: Let me ask you, why would the Democrats sign on to a compromise that included potential entitlement cuts but no tax increases?

MCCONNELL: Well, you will have to ask them. If we get an agreement, the president will be supporting it and he will be making the arguments in favor of it, and you will have to ask the Democrats about what their motivation might be.

BORGER: And we are going to ask that in a moment to Senator Chuck Schumer. One last question, what has it been like to deal with the president and the vice president on this level?

MCCONNELL: I like them both. I mean, I have had a lot of dealings with them over the last couple years. And I am particularly appreciative that we're now back talking to the only person in America who can sign something into law, and that's the president of the United States.

BORGER: Well, thank you so much, Senator Mitch McConnell. Thank you for being with us.

MCCONNELL: Glad to be here.

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