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White House Chief of Staff Daley: U.S. Default ‘Will Not Happen’

June 30, 2011 at 12:00 AM EST
White House Chief of Staff Bill Daley speaks with Jeffrey Brown about stalled debt talks and President Obama scolding Congress in his Wednesday news conference.
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JEFFREY BROWN: The rhetorical sparring over the budget deficit and raising the debt ceiling continued today.

NewsHour congressional correspondent Kwame Holman starts us off.

PRESIDENT BARACK OBAMA: You stay here. Let’s get it done.

KWAME HOLMAN: That was President Obama’s direct message yesterday, as he pushed lawmakers to agree on raising the national debt ceiling before an Aug. 2 deadline.

This morning, the Senate’s Democratic majority leader, Harry Reid, announced the Senate will sacrifice its scheduled Fourth of July recess next week.

SEN. HARRY REID, D-Nev. majority leader: Mr. President, it is often said that with liberty comes responsibility. We should take that responsibility seriously. I’m confident we do. That’s why the Senate will reconvene on Tuesday, the day after the Fourth. We will do that because we have work to do.

KWAME HOLMAN: The president also had pointedly criticized Republicans on Wednesday for opposing any tax increases, even for the wealthiest. He called that an unsustainable position.

BARACK OBAMA: The tax cuts I’m proposing we get rid of are tax breaks for millionaires and billionaires, tax breaks for oil companies and hedge fund managers and corporate jet owners.

KWAME HOLMAN: Today, Senate Republican Leader Mitch McConnell answered the criticism, saying the president doesn’t get it.

SEN. MITCH MCCONNELL, R-Ky. minority leader: I would like to invite the president to come to the Capitol today to meet with Senate Republicans, any time this afternoon he’s available, to come on up to the Capitol and meet with Senate Republicans. That way, he can hear directly from Senate Republicans, directly from Senate Republicans, why what he is proposing will not pass.

KWAME HOLMAN: Instead, White House Spokesman Jay Carney said Mr. Obama was going ahead with plans to travel to Philadelphia for a fund-raiser.

JAY CARNEY, White House press secretary: What the senator invited the president to do was to hear Senate Republicans restate their maximalist position. We know what that position is. And he also invited them to hear — invited the president to hear what would not pass. That’s not a conversation worth having.

KWAME HOLMAN: In the meantime, reports circulated at the Capitol that other options were under discussion, including a seven-month increase in the debt limit, as the clock kept running toward Aug. 2, when the government faces the prospect of defaulting on the national debt.

JEFFREY BROWN: And that brings us to our newsmaker interview with White House Chief of Staff Bill Daley.

I spoke to him this afternoon at the White House.

Mr. Daley, welcome.

WILLIAM DALEY, White House chief of staff: Thank you very much.

JEFFREY BROWN: Was the president drawing a line in the sand yesterday, saying that tax increases must be part of any of any deficit-reduction plan, or no deal?

WILLIAM DALEY: What the president is saying in that, in order to solve the deficit, and in order to have a plan that is fair to the American people, it must be balanced.

There must be cuts, obviously, which the president is very willing and has been doing, and, at the same time, you have got to get additional revenue. There’s no one who is not a politician who is observing this system in any fair way that is not saying there must be a balance.

And, so, the American people, I think they really want to see that balance. Without that, you’re going to have a very hard time speaking to the credibility of a plan that’s really going to solve the deficit.

JEFFREY BROWN: Most noticeable to a lot of people was the tone yesterday. The president was angrier. He was more challenging. He was even a bit sarcastic, comparing the lawmakers’ work habits to his own daughters’.

WILLIAM DALEY: Yes.

JEFFREY BROWN: Now, is he frustrated? Is he fed up? What was going on?

WILLIAM DALEY: I think, in many ways, he reflects where the American people are with the system that seems to respond only at the end, his analogy to his children’s homework, and that is, you shouldn’t wait to the very end.

There’s no question that — and this is historical, and it’s not partisan. It doesn’t seem to matter who’s in charge of the Congress. They seem to go to the last minute before anything gets done.

This is a serious matter. Both rating — two rating agencies have raised the issue of downgrading the U.S. creditworthiness. Obviously, if there is a default, it would be the first time in the history of the United States.

It will not happen. I am confident that the leaders…

JEFFREY BROWN: You are?

WILLIAM DALEY: Every leader has said, Democrat and Republican, they will not let the — a default occur.

And so you have got to take them all at their word that, in the end…

JEFFREY BROWN: But so, help us. Where do you hear the compromise?

WILLIAM DALEY: Well, I think, as we get — the president laid out — the president in his plan in April that he laid out, a $4 trillion plan, that gets us to a sounder fiscal situation, so that the possibilities of economic growth increase.

Not only are we trying to get past this debt ceiling. We should be more concerned about actually dealing with the deficit that will impede real growth in the economy as we go further into this century. So — so, I think what the president — there is some level of frustration, no doubt about it.

And that’s, I think, very reflective of where the American people are.

JEFFREY BROWN: Well, the reaction, of course, was quick. We heard on our program last night from Sen. John Barrasso.

House Speaker John Boehner said, “The president’s remarks ignore legislative and economic reality.”

Now, as you say, the stakes are high.

WILLIAM DALEY: Right.

JEFFREY BROWN: Aug. 2 isn’t that far.

So, where do you — but you said you think things will get done. Where do you see or sense some compromise?

WILLIAM DALEY: Well, I think, if you — if you look at the process that the vice president ran with Republican leadership and with Democratic leadership over about a two-month period, they made real progress in trying to not only identify the areas of possible solutions to budget problems, but areas that there was a general sense that these may be areas that there could be agreement on.

Obviously, it didn’t come to a conclusion. And it was intended that, in the end, that the leaders of the Congress, the leaders of the parties, along with the president, would come together and try to make a deal. That’s the process we are now into.

The president has met with both the Republican Senate Caucus, the Republican House Caucus, the Democratic House Caucus, the Senate Democrats. He’s met with the leaders. He met with Sen. McConnell two days ago. He met with the Democratic leadership yesterday. He met with Nancy Pelosi and the Democratic leadership of the House last week. He’s talked to Speaker Boehner.

So, there is a lot of discussions going on. And at some point very soon, the leadership of the Congress has got to begin to come together and actually talk about what solution is possible.

JEFFREY BROWN: Well, you know, it was interesting yesterday in the press conference. The president, even — even unprompted, expressed annoyance at some questions of his leadership in this matter.

And I wonder, because even the critics on that regard have not only come from Republicans, but even people friendly to the administration, a sense that the president didn’t get engaged in this early enough, didn’t talk to the American people, didn’t tell us about the consequences or the possibilities down the line.

Why did he step in so late?

WILLIAM DALEY: First of all, it was the president who created a fiscal commission last year. It was his idea. He created it. He — and they moved forward and raised the issue and the urgency of this.

After the 1st of the year, the president has talked about this. He — we had a very long, much longer process to get a budget just for this year with enormous savings in that, an acknowledgement that we are in a difficult deficit situation for our government.

So, the president has — he gave a speech in April where he laid out a $4 trillion plan. Many on the Republican side dismissed that, because it did speak of the need for a balanced plan, not just on the backs of Medicare recipients, but the need for revenue to be part of that, in a way that doesn’t stymie the economy now, that gives us a chance to — as we come through this recession, to have opportunities for growth.

And then the beauty of trying to solve this long-term deficit is you can do that over a long period. It took us 10 years to get into this situation, and no one expects us to get out of it shortly. But we have got to make the tough decisions now that will be implemented over the next 10 to 20 years that will begin to solve our problems.

JEFFREY BROWN: Do you think, though, that the American public understands the potential — yesterday, the president talked mostly about taxing the millionaires and billionaires.

But the experts all agree that this would have to be much more wider spread. Even those taxes would make a very small dent in the deficit.

WILLIAM DALEY: The president has been very clear that this shouldn’t be — any revenue increases shouldn’t be on the backs of middle-class Americans, who are struggling hard enough right now.

There are ways that you can raise revenue. There are ways that this package could be put together that, number one, doesn’t step on the growth that’s going on. This idea that any revenue to address this problem is somehow a negative to the economy short-term is just not realistic.

And it is not — obviously, it has to be a balance. If you go too far one way, it will be bad. And if you go too far the other way, it will be bad. But the fact of the matter is, if you listen to what the president said yesterday, what he is stressing is the need for a balanced approach to solve this problem that the Congress got into by — by the amount of bills that have been created by actions of both Democratic and Republican Congresses.

This is very much a bipartisan problem we’re in. And it can only be solved in a bipartisan way. So what the president — maybe what people detected of a little bit of a frustration yesterday is, people still seem to be posturing for political advantage with political talking points, when the American people are out there saying, solve the problem.

JEFFREY BROWN: Well, let me ask you finally about the core problem, which is the economy.

WILLIAM DALEY: Yes.

JEFFREY BROWN: The slow — the growth seems to have — the recovery seems to have stalled. The job creation is not nearly what you want.

How much of a concern is there in the White House that everything you have done, everything the Federal Reserve has done to this point hasn’t worked, or hasn’t worked fast enough?

WILLIAM DALEY: Well, look it, everyone — and no one is more frustrated than the president that the level of recovery for the American people has not been stronger and faster.

Every day he gets up, every day, we try to figure ways that can help this economy, help it grow, help the American people. They know how difficult of a situation we are in. It took us a long time to get to this hole. When the president came in, we were losing jobs at a clip of 750,000 a month, you know, so — so, we have come a long way from that.

We are a very long way away from what the American people expect. But every day, we’re out there trying to make this a better, stronger economy. And we are seeing some signs of improvement. And those are all positive, but nowhere near the pace that the president has.

There is also overhanging right now a sense of whether or not the political system in Washington can make tough decisions, not just easy ones that are short-term. Much of the problem we’re in today is the result of short-term political actions that Congress took, both Democrat and Republican, over many years, that has ended up creating a deficit that is just unsustainable for the long-term for our kids and our grandkids.

JEFFREY BROWN: All right, White House Chief of Staff Bill Daley, thanks for talking to us.

WILLIAM DALEY: Good. Thank you very much, Jeff.

JEFFREY BROWN: And we will have a Republican view of the impasse over the debt talks in the coming days.