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SEN. JOHN THUNE (R-SD), REPUBLICAN POLICY COMMITTEE CHAIRMAN: Good afternoon, Wolf.
BLITZER: Before I get to the fiscal cliff and the taxes, spending cuts, are you ready to make an announcement on how you would vote as far as confirmation of Susan Rice is concerned if the president nominated her to be secretary of state?
THUNE: I'm not ready to make that determination right now. But I do think that her meetings up here have raised lots of questions. And there are more reservations about her now than there were before. And that's a problem for her at least with Republicans here in the Senate.
Whether or not she could get confirmed, I don't know. But I think she would have a considerable amount of opposition just based on the reaction some of my colleagues have had to the discussions they've had with her here the last couple days.
BLITZER: But you still have, can we call it, an open mind?
THUNE: Well, I have an open mind, Wolf. Clearly, I've got the same sorts of questions. But until we actually have a nomination put forward, I think it's all hypothetical. Obviously, she's somebody who has a lot of experience in working in the diplomatic core and someone who I think is -- has a long background of dealing in foreign policy issues.
But she's also somebody who hasn't been willing to answer some of the hard questions that many of my colleagues have had regarding the situation in Benghazi. And I think that demonstrates questions about her judgment and how she would be -- how independent she would be as secretary of state. And that's obviously something very important in a secretary of state.
BLITZER: Let's talk about the fiscal cliff. The president and other folks are hoping for a deal by Christmas. Is it doable?
THUNE: I hope so. I think there's, at least in my view, an opportunity here for us to do something that's really good for the country. But it has to be -- it's got to be entitlement reform included in anything that we ultimately act on.
We believe that in order to solve the country's fiscal solvency issues into the future, you've got to deal with the issue of entitlement reform. That's something so far the president has been reluctant to put on the table. And so far, what we've gotten out of him is this proposal to raise taxes which we think would be harmful to the economy.
And if you look at how much revenue that raises, $68 billion next year, that funds a government for less than a week. And it does potentially significant harm to the economy and raises taxes on the very people that we are asking to go out and create jobs.
BLITZER: Dick Durbin says when you're talking about entitlement reform or cuts in spending for Medicare, Medicaid, for example, he says that's too complicated now. Listen to what he said this morning.
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SEN. DICK DURBIN (D-IL), MAJORITY WHIP: When it comes to Medicare, we know that it's going to run out of money in 12 years. Whatever changes we want to make should be thoughtful changes not made in the heat of the fiscal cliff.
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BLITZER: Can you defer Medicare for example -- Medicare reform until after you get a deal on the fiscal cliff?
THUNE: Well, if we do that, Wolf, I think what you have to do is also defer the issue of taxes. I think you extend tax rates some time into the foreseeable future whether that's six months or a year and allow us to go through the process where we can deal with entitlement reform and tax reform in regular order. I don't see Republicans supporting something up here that deals with taxes that doesn't have entitlement reform incorporated into that.
So I think right now we're a little bit of a standoff, but the way to solve this, of course, would be of course to extend the existing tax rates, which is by the way something the president agreed to two years ago when economic growth was stronger than it is today. At that time, he said we shouldn't be raising taxes when we've got a weak economy. That would be a bad idea. Growth today is actually significantly lower than it was two years ago when he made that statement.
We agree it's about jobs and the economy. That's what the president said after the election that he wanted it to be his goal and his priority. We have a difference of opinion about how to get the economy growing again and expanding again. And obviously we have a big interest in making sure that we address the fundamental problem and driver of federal deficits and debt. And that's reforming these entitlement programs that are on an unsustainable path right now.
BLITZER: So -- but remember the president also said when he extended the 35 percent tax rate for the upper income for those making more than $250,000 a year, he says that was -- he said then that was the last time he was going to do it. It was a one-shot deal. He wasn't going to do it anymore.
And as you know, he ran his re-election campaign on the notion he was going to increase the tax rates from 35 percent to 39.6 percent for those people making more than $250,000 a year. You think he's likely to blink on that?
THUNE: You know, I don't know. I hope -- I hope he is at least willing to work with Republicans. Republicans are open for business up here.
If he wants to bring entitlement reform into this discussion -- and you made the comment or showed Dick Durbin's comment this morning about that would be too hard to do. Well, all the work's been done. You've had Simpson-Bowles. You've had Domenici-Rivlin. You've got a lot of work out there that's been done.
We all know what the issues are. We all know what it's going to take to solve that problem. If we can't get that done now, we ought to -- we ought to extend the existing rates into next year.
Look, if you raise taxes right now, you -- according to the Joint Committee on Taxation -- raise taxes on a million small businesses that employ 25 percent of the work force. Ernst & Young has a study out there that said that would cost us over 700,000 jobs in the economy, reduce economic growth by 1.3 percent and lower take home pay for Americans. That's not something we want to do in the midst of a weak economy.
BLITZER: If -- THUNE: Go ahead.
BLITZER: Yes, sorry to interrupt.
But if the president, let's say, went along with this notion, you know what? We'll defer entitlement reform until next year when we can do it thoughtfully, seriously, we'll defer tax increases until next year when we can do major tax reform across the board thoughtfully, seriously. Let's say we extend the current levels of spending and taxes for six months, maybe even a year, as part of this stopgap measure over the next few weeks before December 31st, would you be willing -- you, Senator Thune -- to raise the debt ceiling right now so you don't have this fight in February or March when it comes up again?
THUNE: You know, I think the debt ceiling is something that we would be willing to entertain a conversation about if that would help us get an extension of all these rates and let us do entitlement reform and tax reform, pro-growth tax reform, the way it ought to be done in regular order. You know, obviously, it would depend of course on what kind of request the president makes, how much he wants to add to the debt ceiling, what kind of commitments we can have in terms of spending reductions that would occur to be commensurate with that.
I don't think Republicans want to raise the debt ceiling unless we have a commitment, a hard commitment about spending reductions. We went through this in August of 2011. We were able to get some important concessions.
Our members want to see spending reductions. They want to see a commitment on entitlement reform. And so far, we haven't seen that from the president.
But if we could get an extension of the things that you mentioned, Wolf, and deal with this in an orderly way next year, I think that would be a solution that would attract considerable amount of Republican support.
The question on the debt ceiling, I'm not sure about. It depends entirely on how the president and what he would submit to us.
BLITZER: All right. Senator Thune, thanks very much. Senator John Thune.
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