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

Interview

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BORGER: And joining me now, the third-ranking Democrat in the Senate, Senator Chuck Schumer of New York.

Thanks so much for being with us.

SCHUMER: Good morning.

BORGER: Well, you just heard Senator McConnell, he said a $3 trillion deal, and absolutely no taxes. Is that something you can live with?

SCHUMER: Well, let me say first of all, this -- there is no final agreement. Nobody has signed off on a final agreement. So it's premature to talk about any specifics. The most important thing this morning is if there's a word right here that would sum up the mood, it would be relief, relief that we won't default.

That's not a certainty, but default is far less of a possibility now than it was even a day ago, because the leaders are talking and talking in a constructive way to come up with a solution that would avoid default.

But there are lots of things that are not filled in and many more discussions to go. So it's hard to say anything specifically about this, that, or the other thing.

BORGER: Well, it sounds like they've moved past the question of whether you can get another increase in the debt ceiling six months down the line, making it virtually automatic, essentially.

SCHUMER: Yes, this is very important to President Obama and to us, not so much for the reasons Senator McConnell mentioned, but because we would risk default if we just kicked the can down the road for a few months, did this again, risked the same gridlock, down to the wire, and then a few months later.

It's really vital for the credit markets to have as long a term approach as possible, and it seems quite clear that there will be -- the debt ceiling will be raised enough so that we won't have to come back to this until 2013.

And that's important for another reason as well, not only the credit markets, but we have to focus on the jobs, we have to focus on the economy and getting the economy growing, and if we are just consumed with this debt ceiling for the next year-and-a-half, it would be a dereliction of duty to our constituents.

BORGER: But it's the second part of the deal, I think, that could give Democrats some heartburn here. And that is the question of this enforcement mechanism for cuts in the second part of this, and Senator McConnell was essentially saying that this could affect across-the-board cuts in things like entitlement programs and no revenue.

So how do you negotiate that?

SCHUMER: Well, certainly the enforcement mechanism is one of the key issues that is still being debated, and it's one of the issues that has made this process go on for so long.

And here is what you had to say about it. An enforcement mechanism gets -- doesn't require, but importunes, makes it very likely that the people in this bipartisan, bicameral committee come to an agreement, because if they don't, the pain inflicted is so great that they have an incentive to come to an agreement. Now that means there should be a sword of equal sharpness and strength hanging over each party's head, obviously the sword over the head of Democrats are the cuts. We don't like them. We want to help middle class people pay for their kids to get to college help with prescription drugs, things like that.

What is the sword over the Republican? Well, it has to be equal -- the one thing we are certain of, it has to be of equal sharpness and strength. The preference would be some kind of revenues on wealthy people, on tax loopholes that would be in that.

But another alternative possible, being discussed, no agreements have been reached, would defense cuts of equal sharpness and magnitude to domestic cuts. And in the past, when the trigger has had significant defense cuts, it has brought the parties to the table, and they've come up with a balanced agreement that had both revenues and cuts.

BORGER: So, what you would like, essentially, is if this committee gets deadlocked, which is a possibility to say, here are all the things everyone hates sitting out there, and they will all be triggered and they will occur?

SCHUMER: Yes. That's right. And that, hopefully, brings the parties to an agreement that each side...

BORGER: What if it doesn't?

SCHUMER: Well, if it doesn't the -- we hope it does, because if the sword is tough enough and sharp enough the likelihood of agreement increases. And in the past that has worked.

BORGER: And that would make it more likely, then, that congress would approve this...

SCHUMER: That this joint committee, that this joint committee, and Senator McConnell, I was very glad to say that he thinks a result will come out of the joint committee, so do we. And we're going to fight very hard that it be balanced, that it have both on that joint committee, that it have both revenues and spending cuts, because otherwise it's not fair. You know, middle class people... BORGER: How are you guarantee that?

SCHUMER: Well, there's no guarantee, but what makes it a likely possibility, as I said as the strength and sharpness and equality of the two swords, we cannot go for a sword that is tough on Democrats, but not tough on Republicans.

BORGER: So how do you have these swords out there? You say one, two, three they're all at the same time? SCHUMER: No, what happens is if the bipartisan committee cannot come to an agreement, then these things take affect and Democrats go ouch. And Republicans go ouch, we better avoid it. BORGER: So you are essentially saying you have to have some system that shocks you into doing your job because you might not...

SCHUMER: Well, you know because there is a difference, we have a divided House and Senate, divided government, every side has to compromise. If one party controlled all three, this wouldn't be that hard. Our preference to have a balanced approach, to make sure that tax loopholes for oil companies, for corporate jets, for yachts, for the wealthiest among us who have done the best be part of it.

Their view is that shouldn't be the one to take all the cuts. We, for instance, don't believe that benefits should be cut for Medicare and Medicaid and Social Security, so these are very real differences that have to be bridged and the only way to bridge them is with an enforcement mechanism that is tough and equal.

BORGER: OK. Well, are Democrats ready -- if this were the case, are Democrats ready to provide the bulk of the votes to get this through the congress?

SCHUMER: Well, it's much too early to tell. Leader Reid is being consulted on an hourly basis by the administration. He's made clear what the preferences of our caucus are. And it's too early to tell.

But make no mistake about it, obviously they can't pass this without Democratic votes in the Senate, and so we have real input.

BORGER: Would -- in hearing you say that revenues have to be part of it and then hearing Mitch McConnell says the revenues can't be part of it, is the answer tax reform and loophole closing?

SCHUMER: Well, tax reform is one way to do it. And, you know, it's our believe that revenues should be part. It's their belief that revenues shouldn't. But this committee if again has a good enforcement mechanism, we believe past history shows we will be able to get revenues as part of the committee agreement.

BORGER: So you have a committee and you're going to force it to work. And if it doesn't work, then you're going to have something out there that will force you to get those cuts.

SCHUMER: Both sides. Both sides equally. It shouldn't favor one side or the other. BORGER: And let me ask you, as a leader of the Democratic Party how do you convince the base of your party who really doesn't want any potential cuts of entitlement to go along with this kind of a deal?

SCHUMER: Well, again, you know, the Ryan budget proposed a decimation of Medicare and Medicaid, and we successfully fought that back. And we are going to continue our fight, and I think the base of our party knows this, that there should be no benefit cuts in Medicare, Medicaid, these are programs -- certainly there can be savings brought from Medicare and Medicaid, because there's waste and duplication and inefficiency and all of that, but the benefits to people who really need it should not be cut. And that's been a fight we have been making quite successfully over the last mile, and we are going to continue to make it in these negotiations and further forward.

BORGER: All right. Senator Chuck Schumer, thanks you so much for being with us.

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