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FOX "Fox News Sunday With Chris Wallace" - Transcript: Debt Limit

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BARNES: U.S. bond markets are closed tomorrow for Columbus Day, but stock markets are open, so buckle your seat belt -- Chris.

WALLACE: Peter, thank you.

And we'll be following how the markets react.

As we said, the Senate is now at the center of budget talks.

And we're joined by two leaders that are trying to find a way to reopen the government and avoid a default.

Democrat Joe Manchin of West Virginia and Republican Bob Corker of Tennessee.

Senators, welcome back to "Fox News Sunday."

As we sit here on Sunday, Senator Corker, where are we?

Is there a dealing in the offing?

Where are we?

CORKER: Well, there was some movement a couple of days ago. And I think things are not moving now. A couple of nights ago, it looked like there maybe was a way to go forward. I think the Senate Democrats have pulled back at the regrets of the White House and now may be trying to look at sort of busting the budget caps that were established back in 2011.

So I think we're in a status quo. I do think we will see our way through this. But the last 24 four hours have not been good.

WALLACE: Let me follow up with you on that. As we've said, the president rejected the House GOP plan. Yesterday, Senator Harry Reid, the Senate Democratic leader, rejected a compromise plan by 12 senators, half Republican, half Democrats.

It sounds like the other side is demanding, Senator Corker, that you reopen the government and you extend the debt limit with no strings attached.

CORKER: Yes.

WALLACE: Will Senate Republicans accept that?

CORKER: Well, again, are they going to try to change existing law, which is now where they are, or are they going to agree to leave the budget caps that have been long been established as U.S. law, are they going to leave those in place and set a framework that allows us to deal with the big issues that our nation faces, which is mandatory spending?

I think that...

WALLACE: Let me just quickly...

CORKER: OK.

WALLACE: Explain to folks.

CORKER: OK.

WALLACE: -- because what happened was...

CORKER: OK.

WALLACE: -- as part of the Budget Control Act in 2011, sequester levels were cut. And these were automatic spending cuts.

CORKER: Right.

WALLACE: Then the mar -- the budget has to go -- the overall budget has to go down to a certain level.

The Democrats are now insisting, let's raise the sequester levels...

CORKER: Right.

WALLACE: -- let's relax that.

One of the questions that I know some Republicans are asking is, if ObamaCare was the law of the land and couldn't be tinkered with, why is it that the sequester, which is just as much the law of the land...

CORKER: Yes.

WALLACE: -- can be tinkered with?

CORKER: So I agree. I think, you know, look, Republicans started off in a place that was an overreach. And to try to change a law that was central to the president's, you know, agenda was not something that was achievable. A delay, maybe, other kinds of things, maybe.

Now, I think the Democrats are on the verge of being one tick too cute. As they see the House possibly in disarray, they now are overreaching.

And I think that what we've got to do is get this back in the middle of the road, act like adults, deal with these issues in an appropriate way.

Joe and I were at a dinner last night -- we're usually in our home states -- with finance ministers from around the world. This is something that is wreaking havoc around the world and will affect economic growth. And I do hope that over the next week, we'll reach a conclusion. And I think we will. But, Chris, own the last 24 hours, there's not been good productivity on this issue.

WALLACE: Let me pick up with you, Senator Manchin, because you were part of this Gang of 12 that tried to come up with...

MANCHIN: Not a gang. We have enough gangs up there. We don't need any more gangs.

WALLACE: It was an agreement -- and Democratic leaders ended up saying that this gives too much to the Republicans.

Which raises the question, do Harry Reid, do President Obama, do they want to compromise or do they want to surrender?

MANCHIN: Well, I don't know what they -- what they want. They haven't detailed that enough for us. Leadership must lead. And basically, we're in a crisis mode right now. We should not be here. There's no way it's acceptable for this government to be shut down. This is self-inflicting pain on millions of people. It's unnecessary.

And now to go out to the brink of a government default, which is catastrophic to our country, to our economy and to the people in this great country, how they can let that happen is beyond me. We have a group of 12 bipartisan -- that's 12 percent of the Senate -- a core, equally divided, six and six, Democrats and Republicans. And we've got something that has a little bit move for everybody. In a divided government, you can't have it all your way.

WALLACE: But forgive me...

MANCHIN: Yes?

WALLACE: -- because your leader, Harry Reid, said it was too generous to the Republicans, that it -- and rejected it and is a...

MANCHIN: Well, we're waiting to see the leadership come back with something, then, that maybe he believes is more fair. I don't know. We looked at it from the standpoint, they wanted to repeal the medical device tax. We've got a...

WALLACE: That's what the Republicans...

MANCHIN: The Republicans wanted that.

WALLACE: Right.

MANCHIN: nbsp; They compromised and gave us a delay for two years, which works.

They wanted on oversight as far as people who were signing up for it. The bottom line was is we don't want that to gut the bill and it's not going to gut the bill.

Give ObamaCare a chance to work. If it doesn't work, it will fall on its own. But don't have the underlying motive to just get rid of it. And the social issue, we're talking about finances of our country. A lot of those social issues, I have talked about an energy policy, coal, what role it plays in an economy and the government and the energy that we have.

But that's not the place for it. And everybody wants to bring their social agenda to the table when we really should be fixing the finances of this country.

And that's what Bob and I have been working on.

WALLACE: Senator Corker, Majority Leader Harry Reid, late yesterday, along with other Democratic leaders, went to the White House, in the Oval Office, met with the president to discuss where they stand at this point, in these negotiations. He says he wants a compromise by tomorrow, by Monday.

Any idea what he has in mind?

And what do you think?

Realistically, I know you want -- you want to say, you hope, that it -- what are the chances, real chances, that we would reach Thursday, the debt deadline, without a deal? CORKER: Well, I've been able to predict these in the past with really perfect results so far. At this point, Chris, I cannot. I do think we will rise to the occasion and deal with this issue. And I do think that -- I think the White House pulled back Senate leadership two nights ago and asked them to step back away. And I think that they're watching what's going to happen on the Republican side for a few hours.

But nothing is going to happen, I don't think, if it's about, again, breaking those spending caps.

So my sense there...

WALLACE: That's the key issue now is -- is whether the sequester...

CORKER: Well, you know, I mean...

(CROSSTALK)

CORKER: -- it would be beyond belief, as a country, to have the huge amounts of debt, $17 trillion and growing, and to not only not take gains -- which is what all of us want to do, we want to make our country stronger -- not only not do that, but back off from the disciplines that we put in place back in 2011, which, by the way, is the law of the land.

So my sense is that Democrats will pull back. We'll end up in a place where we're focused on those good government things that we should have been focused on all along.

And that we will move along in an appropriate -- at some point, Chris, this is something that I think that the administration will realize is not -- it's not a game they need to be playing with and we need to get back to, again, the constraints that we have, with a few victories for both sides, and move ahead.

WALLACE: Senator Manchin, the number two Democrat in the Senate, Dick Durbin, says that your side has -- and to use his words, we've got that up on the screen -- several somethings in their back pocket as a way to avoid default, even if you don't get a deal.

Do you have any idea what he's talking about?

MANCHIN: Well, I would assume that they might be referring to the so-called nuclear option, if you have to use that, basically, to keep this country from falling into default. So we go to 51 votes on the Senate side to prevent that from happening.

I would hope we don't get to that. I don't think we need to go to that direction whatsoever. And I think that we can come to agreement.

The bottom line is, if you want to avoid the sequestering numbers, then get a long-term fix. Bob and I both have been looking for a long-term. We both probably agree with all of the Bowles- Simpson, the template of reform and spending and revenue, to a certain extent. We might have differences of what we define that...

WALLACE: But you can't get that done between now and Thursday.

MANCHIN: Oh, we know we can't get that done, but we could move in that direction. If we can come to an agreement, that's what we said. January 31st on the debt ceiling, March 31st on the CR. It gives us the time to work. Put the budget conference in place.

The budget conference, the conferees aren't even meeting. So if they want to fix it and get rid of the number, then sit down and come to an agreement and let the orderly process work.

WALLACE: I've got to throw something else into this...

MANCHIN: OK.

WALLACE: -- mix, or, as some would say, mess. Even if the White House and the Senate agree, you kind of get something, then, through the House.

Now, when you were proposing your deal, Senator Manchin, which the Senate Democratic leadership said was too generous to Republicans, Paul Ryan, the chairman of the House Budget Committee, said it was a total cave and that it was unacceptable and House Republicans would never pass it because it was a cave to the president.

MANCHIN: Well, that tells you...

WALLACE: But...

MANCHIN: -- it might be pretty good if both of them are rejecting it...

WALLACE: Well, I...

MANCHIN: -- right from the get-go.

WALLACE: -- I know, but it...

CORKER: Yes.

WALLACE: -- but the point is their...

MANCHIN: It might be a point of balance.

WALLACE: OK. But here's a question, Senator Corker.

How can you, if that was too much, how are you going to get something through the House that is even more favorable to the Democrats?

CORKER: Well, I know you've got Jim Jordan coming on in a minute and he'll enlighten you to that end. But, look, at the end of the...

WALLACE: But it's got to be a factor...

CORKER: Yes, no, no...

WALLACE: In your consideration...

CORKER: -- no, it is a factor. At some point, first of all, we had a lot of conversation back and forth. Joe and I were with Eric Cantor last night.

You know, I think at this point, we've got to figure out a way to get something out of the Senate that we think is close enough for the House to accept. There's got to be some evolution, I think, on both sides.

But right now, just to think about it, we haven't gotten anything out of either body. Getting something out of one body would least be progress.

So I agree, this is -- that's why I say, it's not clear to me how this ends, because there is such disarray. And now, again, Republicans overreach, now the Democrats are beginning to overreach.

Hopefully, as we move into this next week and markets are reopening, hopefully, both sides will get back in the middle of the road, do some things again that pull a little rope toward making us stronger fiscally and set the stage for something even better.

WALLACE: Let me just -- before I ask a final question of Senator Manchin, do you think it may take the markets tanking, reacting very negatively, to get you guys off the dime?

CORKER: You know what, I think -- I think that this time, more than last time, I think people more fully understand the impacts and understand that we're in a pretty fragile recovery. I hope that's not what it takes.

There are a lot of folks -- for what it's worth, there are a lot of folks in the Senate that really want a good, solid solution that doesn't gouge either side. And hopefully, that's what's going to prevail.

WALLACE: And finally, Senator Manchin, since the shutdown began, we saw the Park Service shut down the World War II Memorial to veterans. There is, as we see, a demonstration there. There's the so-called Million Vet March today to protest that.

This week -- and I think everybody was horrified by this -- the Pentagon said they could not pay for the death benefits of our fallen soldiers or pay for the families to go to Dover to see the remains returned until Congress ended up passing an emergency bill.

I want to ask you a direct question.

Do you think that this administration, the military has used veterans, has used other groups, has used the cuts politically to make -- to give them pain in order to put pressure on you guys?

MANCHIN: I can't -- there's no way I can accept that any Democrat or any Republican would do that. Public service is public service. We take an oath to basically serve the public and the best that we can.

WALLACE: So how do you explain some of these decisions?

MANCHIN: Well, basically, I don't know from the -- from this, just the whole political process or basically just the bureaucracy of what we're dealing with.

I called Ken Fisher when we had that situation that we found out about...

WALLACE: The head of Fisher House?

MANCHIN: Fisher House. And basically they were the catalyst that came to the table. We've got that corrected now. But I wanted to thank Ken Fisher and the Fisher House for what they have done. They were willing to step to the table and make sure no one missed a payment on that. But to think target someone would inflict this much pain, this is what's hard for me to believe. I didn't sign up for this type of duty. I didn't sign up for public service to put an undue pain on people. And it's hard for any of us to sit here and accept that.

I have faith in our leadership. I believe that they'll come together in a rational way and fix this problem. We've given some outlines. There's 12 of us working together. That's a pretty good core group to build off of.

The president is rejecting it.

Why don't they look and see how they can improve it? that's what we're hoping will happen today and tomorrow and we're willing to work with them.

WALLACE: Senate Manchin, Senator Corker, thank you both for coming in.

CORKER: Thank you.

WALLACE: We'll see how the -- the next few days...

MANCHIN: Thank you.

WALLACE: -- shake out.

Thank you, gentlemen.

MANCHIN: Thank you.

CORKER: Thank you.

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