ABC "This Week With George Stephanopoulos" - Transcript - Sequester and Budget

Interview

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STEPHANOPOULOS: And, let's get a Republican point of view, now from New Hampshire, Senator Kelly Ayotte. Thanks for joining us this morning Senator. You heard...

AYOTTE: Good morning, George.

STEPHANOPOULOS: Good morning. You heard Gene Sperling there said, this is not a win for Republicans. Do you agree with him on his assessment on how much damage these cuts are going to do?

AYOTTE: Well George, I serve on the Senate Armed Services Committee. I've listened to our military commanders for the last year. I also traveled around the country with Senators McCain, and Graham, and so I am really concerned about the impact on our national security. We've already heard on cuts on training for our active duty troops. Also flight hours for the -- the combat fighter pilots.

So yes, there's some real concern about undermining our national security. But I want to step back for a minute because I actually think that what the Woodward exchange with Mr. Sperling demonstrates is that both sides are rewriting history here to some extent.

You have the president out blaming Republicans when the idea came from the White House, and now he's trying to write into -- tax increases into the plan, when it wasn't ever in the plan, and...

STEPHANOPOULOS: But Republicans...

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AYOTTE: (Inaudible) on the Republican end.

STEPHANOPOULOS: Republicans were...

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AYOTTE: Right. Exactly.

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AYOTTE: That's why I say on the Republican end, the enforcement mechanism was one where we left 50 percent of spending off the table so that defense takes a disproportionate cut, which where's the party of Ronald Reagan on this? So I think it's time -- you know Mr. Sperling talked about this being a choice of increasing taxes. We just increased taxes, the Congress did in January at the president's request.

How about alternative spending cuts? In fact this week I offered a proposal to do that. So why can't both sides work together to do this in a more sensible way?

STEPHANOPOULOS: What are the spending cuts you think would work to achieve these same kinds of savings?

AYOTTE: I think there are many. First of all, the House obviously had a proposal. They did last year, but there are a whole host of reforms. We left 50 percent of spending on the table, so I had some ideas on -- you can continue a pay freeze for federal employees. You can reform federal retirement, and Congress' retirement. You can do things to reform some of the problems that we've had with food stamps, that in fact are similar to what we passed in the Senate farm bill, so not a new idea.

There's a whole host of ideas of how we could cut spending in a more responsible way that doesn't undermine our national security. And that seems to be being left out of the discussion on both sides here.

STEPHANOPOULOS: You also heard Gene Sperling say that he believes the pressure is going to build on a lot of Republicans to come to the table on new revenues. And -- and then one of your colleagues already, Senator Lindsay Graham of South Carolina, has said he's open to that. Take a listen?

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GRAHAM: To me this is a bipartisan problem. This is the chance to do the big deal. I am willing to raise revenue. I'm willing to raise $600 billion in new revenue if my Democratic friends would be willing to reform entitlements and we can fix sequestration together.

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STEPHANOPOULOS: Why not go for the big deal at this point? You mentioned the president's position earlier. His position always was $2.00 or $3.00 in spending cuts for every $1.00 in new revenue. Right now you're at -- you're going a rate of $4.00 in spending cuts for every $1.00 in new revenue. Are you prepared to sit down, and talk about a much bigger deal?

AYOTTE: Well, George what the president is now -- what he pushed recently in the Senate this week, the $85 billion small deal with tax increases. That's not going to work. If we're going to increase revenue again, it's got to go to the debt with real entitlement reform, and real tax reform when you actually lower rates. And I think that none of that's been in this discussion, so absolutely, I think we need to do a big agreement for the country.

Because we haven't dealt with the fundamental drivers of our debt, the entitlement programs. And the tax reform has to be done uniformly, at a lower rate.

STEPHANOPOULOS: So -- so -- but are you willing -- let me just be clear here, you're willing if -- if -- if tax reform goes forward, and if the president is willing to talk about entitlement reform, in Medicare, and Medicaid, and other entitlement programs, you're saying you're willing to have an agreement that actually raises revenue? Or does it have to be revenue neutral tax reform?

AYOTTE: I am willing to say, if we take the form of lowering rates so that we can focus on economic growth, and then we take a portion of that, and apply it to the debt with real entitlement reform, but it has to go to the debt. I'm not going to agree to any more tax increases that are going to go to increase more government. I mean here we are, that's what the latest proposal is from the president, this sequester has to be dealt with within existing spending, and alternative cuts.

And we need real entitlement reform, and real tax reform. That's what we need for the country if we're going to drive down our debt, and also be focused on economic growth.

STEPHANOPOULOS: That might be a little bit of an opening that can be seized on later, although it may not happen any time soon. But Senator Ayotte, thank you very much for your time this morning.

AYOTTE: Thanks George, appreciate it.

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