>> schieffer: today on "face the nation," the news from overnight. there may be a deal to keep the nation from going into financial default. congressional leaders worked into the night and they'll reconvene this afternoon as the outlines of a budget plan finally begin to take shape. and not a minute too soon. wall street suffered its worst week of the year and troops in afghanistan were told they might not get paid. >> the country is in crisis. this is not a time for politics as usual. >> but for the first time in weeks, there was real optimism, a deal may get done. >> i'm confident and optimistic that we're going to get an agreement in the very near future and resolve this crisis in the best interests of the american people. >> schieffer: mcconnell should know he's the top senate

negotiator on the republican side. and he'll join us this morning along with a top democratic leader, senator chuck schumer. it's all ahead on "face the nation." captioning sponsored by cbs "face the nation" with cbs news chief washington correspondent bob schieffer. and now from cbs news in washington, bob schieffer. >> schieffer: and good morning again and welcome to "face the nation." well, here's what it looks like is taking shape, a deal that would extend the debt limit through 2012 and would cut up to $3 trillion in spending over the next ten years. first wave of cuts would total $1 trillion and a bipartisan, super congressional committee would have to determine the additional cuts by thanksgiving of this year, or if they could not agree, congress... and congress does not act, there would be automatic cuts to defense spending and entitlements.

senator mitch mcconnell who has emerged as the key player in this deal is here with us in the studio this morning. senator, thank you so much for joining us. so how close are you? >> well, i think we're very close, bob, to being in a position where i can recommend to my members this is something i hope they will support. we've come a long way since april. back in april the president was asking us to raise the debt ceiling with no spending reductions at all. now i think the potential agreement that you just outlined is within our reach. we'll avoid default, avoid raising taxes, and begin to get the federal government's house in order by dealing with our biggest problem, which is we've been spending entirely too much. >> schieffer: the republicans in the house wanted more than this it seems to me. if they wanted more, why would they be willing to go with this now? >> well, you know, my party controls only a portion of the

government. we control the house of representatives. we have a pretty robust minority in the senate, but we're not in the majority, an we have a democratic president. there's only so much you can achieve when you don't have the leverage of power. my view is, and i think it's the view of the majority of republicans, both the house and the senate, let's get as much spending reduction as we can possibly get out of a government that we don't control. and i think we're heading in the direction to reassure the american people that we're going to deal with our biggest problem which is that our spending has been completely and totally out of control. >> schieffer: now, this deal, as i understand it, does not have any revenue increases in it, any closing of loopholes or tax reform our any of that. it's just spending cuts. democrats have said before they got to have some revenue increases. but as i understand it, this super committee that you're putting together, that once you get these goals outlined, they will get together and they will

decide how and when you cut these programs. will they have the authority to consider revenue increases, as well as spending cuts? >> well, they're going to have a broad mandate to look across the federal government, including tax reform, which virtually every republican i know thinks is a good idea. tackle tax reform. the president also wants to tackle tax reform. they can do that. we fully expect them to deal with entitlement reform. bob, the trustees of the president... the trustees of the system that the president appoint have had said repeatedly, including this year, that both programs have serious problems. they're simply not sustainable for next generation. so that has to obviously be part of what the joint committee comes back and recommends to the congress. let me also make the point, this is not another commission. you know, outsiders on this. this is a joint committee of congress, dead even between republicans and democrats. they will come back with a

report of legislation, a piece of legislation that will be voted on up or down. in the house and senate. if you're looking for an analogy, think of the base closing legislation of a few years ago. >> schieffer: and let's just talk about that just for a second so people understand. the way the base closure thing works now is it used to be congress would vote whether to close this base or whether to close this base individually. it got to where that was just almost unworkable. and so what they did was they drew up a list, a committee draws up a list of bases that have to be closed and then the congress votes on it up or down. >> right. >> schieffer: if they vote it down, it goes back and they put in a new list. that's what you're talking about here. you're talking about spending cuts. you're talking about tax reform that would all be in one package, the congress would then vote on it up or down. >> yes. >> schieffer: and that's how this would work. >> the committee would have a broad look at the most serious

problems, the ones that have been the most intractable, the ones most difficult to pass, put together a package in a thoughtful way, and i believe all four of the leaders will appoint individuals to this joint committee that are serious about dealing with the nation's biggest problems. we're not talking about kicking the can down the road. we're talking about this calendar year before the year is out, congress would be voting on this recommendation. >> but it would, if the congress... this committee in its wisdom decided to include some tax increases in that package, they would have the authority to do that. >> the committee has a broad mandate to look at the entire spectrum of concerns and certainly tax reform is something both democrats and republicans think is long overdue. >> schieffer: but they would have the authority to say eliminate a deduction on say people's interest that they pay on their mortgage. if they chose to do that, they would have that. >> the whole idea behind tax reform is to lower the rates and

remove a lot of the preferences. and i think there's a pretty strong bipartisan feeling that that would be a very good thing for the country. it would be good for economic growth. the president himself has talked about our corporate tax rate is now about to be the highest in the world. it makes us uncompetitive. we've got a jobs problem in this country. we need to have a competitive country and tax reform would be a big part of that. we also need to have entitlements still there for our children and our grandchildren, and at the rate they're going, bob, they're not going to be there. >> schieffer: i mean, obviously there are going to be some in the tea party, especially in the house, that are not going to go for what you have just talked about. i noticed this morning lindsey graham, senator graham of south carolina is saying he thinks the deal as he understands it now may be moving in the wrong direction. are you convinced you can sell enough republicans just in the senate on this to get it passed? >> well, i'm sure there will be both democrats and republicans who in the end find the

agreement wanting in one way or another. but i believe there will be a strong bipartisan support for this. again, this deal has not been finalized yet, but i think we're very, very close to something that i could comfortably recommend to my members and i believe the democratic leadership will be doing the same. >> schieffer: do you think that speaker boehner, he's going to have to depend on nancy pelosi to get him some democratic vows in the thousands get this passed. >> we'll have to get democratic votes in the senate as well. neither party has hammer lock on the entire congress, and we're going to have to work together to get this job done for the american people. >> i understand there's also a provision in here that calls for a vote on the balanced budget mental. it doesn't say the balanced budget ammendment has to be passed by both house, as the republican version did. why are you putting that in there?

you know it can't pass. >> we hope it would pass. i mean, it's the best kind of long-term straight jacket. our government has certainly demonstrated in the last few decades that it's not very good as controlling its appetite for spending. and the balanced budget amendment would be a good kind of long-term mechanism to put this kind of financial straight jacket on our country that desperately needs it. >> schieffer: the "wall street journal" not exactly a liberal newspaper. it took a pretty tough go at you republicans yesterday on their editorial page. one of the things they said was "the debt limit hobbit should realize that at this point the washington fracas they are prolonging isn't helping their cause." republicans are not looking like adults to whom voters can entrust the government. how much do you think the republican party has been hurt by all this? >> i don't think we've been hurt at all. the american people wanted us to do something about out-of- control spending and the opportunity presented by the president's request of us to raise the debt ceiling is going

to produce what many people will believe is a complete change in the trajectory of the federal government. we're beginning to get spending under control. >> schieffer: what do you think has caused this to be prolonged so long? it seems to me now that every major issue that the congress has to confront, it develops into something like this. is it just the divide in the country that's wider than maybe even many of us thought it was and congress just reflects that? it just seems that congress just doesn't work very well anymore. >> you know, bob, we've always had robust political debate in this country. what we've got going on now kind of pales in comparison to what adams and jefferson used to say about each other and what adams and hamilton said about each other. we've got a history of robust political debate, but this country has always come together at critical moments, and we're at one of those critical moments

right now. and we're going to come together and we're going to get the job done for the american people. we're not going to default for the first time in our 235-year history. we're not going to engage in job-killing tax increases in the middle of one of our toughest economic times ever. we're going to begin to reduce spending and get our books in order and head america in the right direction so we have a great country for our kids just like our parents left behind for us. >> schieffer: some people say the republican party has been held hostage by the tea party. one of our facebook followers sent in an interesting analogy and said, why are republicans allowing freshman congressmen to control this debate, and this person said, it's like letting the teenager in the family run the family budget. i mean, there's some truth in that. >> look, we don't have any more internal differences in the republican conference in the house and senate than they do in the democratic conference in the house and senate. there are different points of view. we come from different parts of the country. we have different philosophies. one thing republicans all have in common, they want a smaller

government and they don't want to raise taxes. that issue i think republicans are broadly united. >> do you think you can get this done by tuesday? >> we're going to get it done very soon. this country, as i said, is not going to default, and we're going to come together in the best interests of the american people and get this job done. >> schieffer: senator, thank you so much for coming by today. i know it's a pretty busy time. >> thanks, bob. >> thanks a lot. we'll get the democratic side of this when chuck schumer sits down at the table here in just a minute. in the u.s., real estate in hong kong, and the optics industry in germany? at t. rowe price, we understand the connections of a complex, global economy. it's just one reason over 75% of our mutual funds beat their 10-year lipper average. t. rowe price. invest with confidence.

request a prospectus or summary prospectus with investment information, risks, fees and expenses to read and consider carefully before investing. >> for the other side of the story, one of the top democrats in the senate, chuck schumer of new york. senator, thank you. i guess i just start by asking you, are you as optimist, here as senator mcconnell is? >> well, look, let's put it like this because i feel a lot better today about the ability to avoid default than i did even yesterday morning.

a default would have such disastrous consequences for our nation for decades to come. the fact that the leaders are talking, even if i'm sure hardly anyone agrees with everything they're going to come up with, is a good thing. >> schieffer: what's going to be the hardest thing for you to sell democrats? for example, as i understand it, this committee that's going to be formed would have the authority to make, you know, major reforms in medicare and social security. i know everybody agrees something has to be done on both those programs. are they going to be willing to let a committee have that authority? >> well, at the end of the day, of course, the senate will vote up or down on whatever the committee recommends. now, we democrats have believed all along that we should not cut benefits to medicare and medicaid. can savings be rung out of the waste and inefficiency in the system without cutting benefits? yes. our republican colleagues want to decimate those programs.

the ryan budget tried to do that but we were able to stop it. so there's going to be a lot of tough decisions on the committee. the committee has no restraints on it. we will fight very hard for revenues on that committee. if it should come to exist. but we will, you know, be very adamant that there shouldn't be benefit cuts in medicare. >> i would think one of the hardest things for do you sell your members is that if this committee cannot agree on cuts for these various programs in any program, then triggers, this will set off a trigger where there will be automatic cuts in these programs and also in defense spending. >> well, the triggers are still being constructed. nothing is done yet. there's lots of decisions yet to be made. the key with the trigger is one word "equality." it should be equally tough on democrats and republicans. the tough part on the democratic side, if we don't come to an agreement, there will be cuts in programs that we like, helping

middle-class kids go college, prescription drugs. on the republican side, we believe that the trigger should have revenues potentially, so that they would have to do things they hate, like close tax loopholes for oil companies and corporate jets. another one being talked about is very significant cuts, equal cuts really on the defense side of the ledger as well as on the domestic side of the ledger and a few years back, those kind of cuts importuned republicans to go along with revenues i think under the george bush era. so the trigger will be tough, but if it's equally tough, it gives us a real chance to produce the kinds of things we believe america needs. >> i know that senators don't normally like the talk about the house and house members don't like to talk about the senate, but it's going to be tough to get this through the house. and after what we've seen over there last week, they want a lot more over there it seems to me than is going to be in this deal.

how do you... what makes you and senator mcconnell think you can get this through the house? >> well, i'm not sure. first we haven't seen it yet. leader reid and democrats in the senate have not signed off on this deal. we don't even know what all the details are. so we're not yet ready to try and urge anybody to be for it. one thing that the house republicans seemed to insist on, which was a short term only kick the can down the road three or four months, the president and democrats, house and senate, have been insisted that is no way to go. we have to get enough increase in the debt ceiling so it goes past 2012 because otherwise the markets will downgrade us possibly and all we'll be doing is having this same fight over and over again when jobs and helping middle-class families is our number-one concern. and we want to focus on that. so the house is going to have to swallow that i think without question.

>> well, it sounds like senator mcconnell is ready to do that. >> well, you'll have to talk to him. but obviously, you know, we have to have a longer-term, because it's just counterproductive and devastating to the nation to have shorter term. and i think we'll prevail on that. i do. >> you say you don't know exactly what's in this. ho who does? nor reid, the president? >> it's in the that we don't know what is in it. a lot of things haven't been determined yet. the trigger, which i mentioned, which is essential. we're going to insist that it be equal. and both the white house and democrats, senate and house, are fighting for revenues to be in that trigger. certainly that is the preferred alternative. tough, you know, equal defense cuts might work. we have to see how it looks. >> schieffer: what are some of the other things that haven't been determined yet? i'm just trying to figure out where this is. >> well, we feel very strongly that medicare should not be cut in terms of benefits, and there shouldn't be benefit cuts in the

trigger. republicans always want to cut medicare wherever they can, and we believe it has to be a more focused approach on the kind of waste and duplication without hurting beneficiaries. but there are hundreds of details here, and all of them have to be worked through and obviously it's got to be done very quickly to avoid default, which is the nightmare for everybody. >> i just asked senator mcconnell this. i want to get your take on this, too. what do you think has happened in washington. senator mcconnell said, well, jefferson and all of, that and that is obviously true, but i'm going to say, i've been here 42 years, and i have never seen it like it is right now. >> i think you eluded to it when you asked senator mcconnell, i haven't seen anything quite like the sort of new group of sort of hard right people who believe compromise is a dirty word. when you have divided government, as senator mcconnell pointed out, you have to compromise.

they have said, for instance, many of them that it's okay for the nation to default. now, that just flies in the face of logic. we know what would happen. we know that our credit rating would go down. we know interest rates would go up and the very deficit that we all hate, including them, would go up. we know that average families would pay more than $1,000 in interest increases on their mortgage, on their car loan, on their credit card rates. so for people to come here and say it's okay to default, it sort of defies imagination. i think that the group of the hard right, which i have to say is not a majority of the republican party, has added an element here that in my 37 years as a legislator i have never seen because it just seems when there are facts that everyone else agrees on, they say no. >> schieffer: you would admit that there are some on the left, who are just as hard and fast. >> there are. and that is true. but what i would say is that democrats have shown throughout this debate a willingness to compromise. i mean, the mirror image of what they do, no revenue, we should

say no cuts. and we don't do that. so there are people on the left who would probably say no cuts, but they haven't been able to have their way within our caucus, whereas this hard right group seems to get its way all the time. you sort of get the feeling speaker boehner wishes he didn't have to go along with them but ends up going along with them. the proposal they sent to us that said you could not do... you had to pass, not just put on the table, pass the balanced budget amendment. that needs a two-thirds vote, otherwise we'll default, guaranteed default. it was wacky. >> what you're saying is the republican party is sort of being held hostage by these people? >> well, in a certain sense, that's... i'm not in that house republican caucus. i don't know if they'd let me in. i wouldn't want them to, but they wouldn't. but that's how it seems to be, that a smaller group is dictating. whereas in the past the majority was in the caucuses and they were able to have more sway. hopefully that will change.

>> schieffer: all right. well, senator, it's always a pleasure to have you here, too. i hope you'll come back soon and i wish you the best on getting this thing resolved. we'll be back in a moment with some final thoughts. moment with some final thoughts. i love that my daughter's part fish. but when she got asthma, all i could do was worry ! specialists, lots of doctors, lots of advice... and my hands were full. i couldn't sort through it all. with unitedhealthcare, it's different. we have access to great specialists, and our pediatrician gets all the information. everyone works as a team. and i only need to talk to one person about her care. we're more than 78,000 people looking out for 70 million americans. that's health in numbers. unitedhealthcare. so i want to major in biology. miss gopie is the best teacher i ever had.

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>> schieffer: finally today in the midst of the country's worst debt crisis in recent memory, we discover according to the washington post that the white house is now divided on how to portray obama. the newspaper says there is an internal battle among the president's advisers over whether to picture him as a central player trying to forge a deal with congress or a cool, above-the-fray observer. the problem according to the newspaper, his advisers can't get their story straight. the president's longtime friend, valerie jared, told a wire service that the president was working so hard he was getting absolutely no sleep. while his press secretary was telling reporters the president was "well-rested and focused." excuse me for thinking the president's people have more to do than check the president's

sleep patterns and no president is well served by such efforts. but it took me back to katrina and fema's head man michael "you're doing a heck of a job" brown, who got advice from his p.r. people to roll up his sleeves during tv interviews so people would think he was working hard. here is a free tip to the president's aides: how people regard the president will depend how this crisis comes out. good policy always trumps bad public relations. and the best pr can't trump bad policy. whether or not the president is sleeping well won't be a fact your in his reelection. that will depend on what he does while he's awake. back in a minute.

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