"Face the Nation" transcripts January 6, 2013: Pelosi, McConnell, New Congressmen

(CBS News) Below is a transcript of "Face the Nation" on January 6, 2013, hosted by CBS News' Bob Schieffer. Guests include: House Minority Leader Nancy Pelosi, D-Calif., Senate Minority Leader Mitch McConnell, R-Ky., Sen. Jeff Flake, R-Ariz., Sen. Chris Murphy, D-Conn., Rep. Mike Kelly, R-Pa., Rep. Matt Salmon, R-Az., and Rep. Rick Nolan, D-Minn.; plus, a panel with David Sanger, Chief Washington Correspondent for The New York Times, and Time Magazine's Rana Foroohar.

SCHIEFFER: Good morning again. Well, we sat down with California Congresswoman Nancy Pelosi Friday, and it didn't take her long to make some news. We started with that quote on "no more taxes" from Senate Republican Leader Mitch McConnell.

SCHIEFFER: Do you then agree with the Republican leader in the Senate, Mr. McConnell, who says we're done now with the taxing side of it; now we have to concentrate on spending? Is that done now?

PELOSI: No.

SCHIEFFER: Is the revenue side of it taken care of yet?

PELOSI: No, no, it is not. I mean, the president had said originally he wanted $1.6 trillion in revenue. He took it down to $1.2 as a compromise. In this legislation we had $620 billion, very significant, high-end tax -- changing the high-end tax rate to 39.6 percent. But that is not enough on the revenue side. We've already agreed to $1 trillion in spending cuts, over $1 trillion in spending cuts.

SCHIEFFER: So what are you talking about there? Are you talking about more taxes?

PELOSI: We're talking about looking at the tax code, putting everything on the table from the standpoint of closing loopholes -- and we know that we can do that -- special subsidies for big oil, for example, $38 billion right there. But again, not to take things in isolation, just to say, OK, well, how much more revenue can we get as we go forward?

SCHIEFFER: Does your idea of tax reform mean eliminating more deductions now?

PELOSI: My idea of tax reform is to have a comprehensive view. We've talked about tax simplification and fairness as something that we should be engaged in all long, long before these fights came along. And now we have a chance to do that with I'd say a heightened awareness by the public on why we need to do certain things. So let's, you know, put on the table what it is that we can, in order to increase revenue. We've changed the rate, the high-end tax rate, 39.6 percent, a very important step. And again, there's much more that we can do by just subjecting it to the scrutiny of what is bringing in revenue, what is creating growth. And we don't want to hurt that if there's some tax provisions that create growth. We want to support that. So, again, taking it one step at a time but not in isolation say "Would do you this? Would do you that?" Well, no, let's look at the...

SCHIEFFER: Well, people who are listening to you this morning are going to say she's talking about more taxes; she's talking about bringing in more, in one way or another, by increasing taxes.

PELOSI: One thing I'm not talking about is bringing in more at the expense of the middle class -- at the expense of the middle class. That is not something -- and that was what we were fighting all along in this because, to the extent that you diminished the tax cut, the tax change at the high end, you would have to claw down into the middle class to get more revenue.

SCHIEFFER: Are you then saying to the upper classes, get ready; you're going to have to pay some more; this is not the end of it?

PELOSI: Well, I'm saying that's not off the table.

SCHIEFFER: That's not off the table?

PELOSI: That's not off the table. But not in terms of tax rates but in terms of other considerations.

SCHIEFFER: You're talking about deductions and other things.

PELOSI: And the rest

SCHIEFFER: What would be some of the things that you think -- on the upper-income people, what kind of deductions are you talking about?

PELOSI: As I said, I'm not going into particulars.

SCHIEFFER: You're not going into...

PELOSI: Put it all -- put it all on the table and see what is working. You know, I'm fairly -- frankly, I'm fairly agnostic about what it could be, now that we have injected some fairness into the process. But, you know, if it works for us, if it grows our economy, if it's something that justifies its existence, it should be there. If it's something -- I mean, we've talked about carried interest. How do we do that correctly? We've talked about subsidies for big oil. What is the justification to give an incentive to drill when oil companies are making $1 trillion over that same period of time? So again, it's justify your existence if you are a special tax break, and again, all of it not to reach down to the middle class.

SCHIEFFER: Let's talk about cutting spending. Are Democrats ready to make significant reforms in entitlements?

PELOSI: We already have.

SCHIEFFER: Well, I know that.

PELOSI: Good.

SCHIEFFER: And that's what every Democrat that I ask this question always says that.

PELOSI: We already have.

SCHIEFFER: But so that's it?

PELOSI: No, that isn't it, but I say it's a sign of our intentions. We already have an Affordable Care Act. We saved -- found savings of over $700 billion by slowing the increase and the rate of reimbursement to certain providers. We used that $700 billion to increase benefits to seniors and the Republicans used it -- took the same money and used it for a tax cut at the high end and said that we were cutting benefits, which we weren't. But again, as a first step, that was really important. And secondly, I've said to my Republican colleagues over and over, we want to find savings so that we can prolong Social Security, so we can prolong Medicare, but if you're there to just destroy them, then that's not saving.

SCHIEFFER: Well, let me just ask you some specifics and you just answer yes or no. Would you support raising the eligibility age for Medicare from 65 to 67?

PELOSI: No.

SCHIEFFER: No. What about means testing?

PELOSI: Do you want to know why?

SCHIEFFER: Well, let me just...

(LAUGHTER)

... we got your answer, no.

PELOSI: OK.

(LAUGHTER)

SCHIEFFER: What about means testing on Medicare benefits?

PELOSI: We already do have some means testing in certain aspects of Medicare. And while we would want to do it in a way that, again, does not hurt the middle class, there are certain piece of it that are already...

SCHIEFFER: But there might be some way -- some things in there that you could -- you could at least consider?

PELOSI: I think you and I could probably afford to pay a little more for a deductible or a co-pay or something like that.

SCHIEFFER: OK. What about any chance of changing the formula for Social Security benefits?

PELOSI: I don't know what you mean.

SCHIEFFER: Well, I mean can you see a way of-- in Social Security, to change the way the benefits are paid? Should there be some differences, some changes in that?

PELOSI: Well, I think, as far as Social Security is concerned, this is an insurance initiative that was very masterfully put together so that it's not a poor people's program. It is an insurance program that people pay in...

(CROSSTALK)

PELOSI: ... we take out whatever -- now, you and I will pay more taxes on it because -- assuming that we make a certain amount of money -- will pay more taxes on it and that's where some of the evening out comes out. But I really do not think that we should do anything to Social Security that reduces benefits to the beneficiaries. I do think there are ways for us to strengthen Medicare and Social Security, but I think they should be on their own table, that if you find savings in any initiative on Social Security, it should be poured back into Social Security to prolong its life. It should not be a cash cow to give tax breaks some place in the tax code and say we have to cover it by changing Social Security.

SCHIEFFER: Let me ask you this. Speaker Boehner says that we need to match every dollar that goes to raising the debt ceiling, and that's one of the hardest votes that's going to be coming soon. We need to match every dollar that goes to raising the debt ceiling with at least one dollar of spending cuts. Could you support cuts that high?

PELOSI: No. Well, I don't think these two things should be related. I think that we should subject every dollar we spend, every taxpayer dollar, whether it's defense or domestic, to the harshest scrutiny. Is the taxpayer getting his or her dollar's worth for -- for that spending? But, on the other hand, that is a judgment that we have to make as we make cuts to reduce spending but having nothing to do with whether the full faith and credit of the United States of America should be placed in jeopardy. The mere suggestion of it last summer resulted in our downgrading of our credit rating, just the suggestion of it. It didn't even happen, and we were downgraded. So I think that this is a really fundamental discussion, and while -- if you say to somebody, "should we cut spending in order to reduce -- to raise the debt ceiling" it sounds almost logical, but the two are totally separate. The debt ceiling is about spending that has already occurred. You're going to say I'm not going to pay my bills unless you stop buying stuff? Well, then stop buying stuff so you don't have future bills. But right now we to pay the bills that have been incurred. And if you want to say cut spending for what we do next, fine. But don't die of tie it to the debt ceiling.

SCHIEFFER: Well, let me tell you, here are the big dates that are coming. End of February, congress has to raise the debt ceiling to keep the country from going into default, as you say. On March 1, those draconian cuts in social programs and defense program goes into effect, unless you do something to put it off.

PELOSI: Unless we do something, yeah.

SCHIEFFER: And then on March 27, the government basically runs out of money. Why can't the congress solve these problems before we get up to those deadlines? Why do we go through this kind of exercise that embarrasses everyone?

PELOSI: Well, you ask the Republicans because we always passed the debt ceiling when President Bush was president, as he was incurring these massive debts and the Republicans weren't saying boo at the time. There should be -- this is a conversation where there should be no doubt. In fact, if I were president, I would use the 14th Amendment, which says that the United States will always be paying...

SCHIEFFER: You would just go ahead and do it, you wouldn't wait for congress.

PELOSI: I would just go do it, right. But the congress has incurred much of this debt. So what are we saying, we incurred it, but we're not going to pay it? If you want to say we're not going to it so much in the future, well, that's another thing, but you can't say I'm not paying my past debts.

SCHIEFFER: What has happened to Washington?

PELOSI: I don't know.

SCHIEFFER: It simply did not used to be this way.

PELOSI: Absolutely not, no.

SCHIEFFER: What do you think is wrong here? What happened? And what needs to happen?

PELOSI: Well, I think that sadly, because as you said, it didn't used to be this way. In fact, in recent history, it hasn't been this way. When President Bush was president and I was speaker, we worked cooperatively to do the biggest energy bill in history. We did the TARP, the Republicans walked away from their own president. We did a wonderful stimulus with rebates all the way down to refundability for poor people. We worked together on a number of things. We didn't agree on the wars and we had their differences, but we worked together with the president. When this president came in and we were in the majority, we got things done. When this president was still there, and the Republicans came in, they said the most important thing they could do was to make sure he did not succeed. And that's really unfortunate. But it also, I keep saying to my Republican friends, take back your party. This isn't the Grand Old Party that did so many things for America, that commanded so much respect. We need a strong Republican Party. This is really the over-the-edge crowd. That's the way i see it. It doesn't mean there aren't some in there who still had some respect for the role of -- the public role of clean air, clean water, food safety, public safety, Medicare, Medicaid, Social Security and the rest. But the fact is that it is dominated by an element that are anti-government ideologues, and are committed to not cooperating with this president. And it's hard to understand. I think this new class coming in invigorates, refreshes the congress and says let's just have a fresh -- let's sweep away what happened the last two years. Let's go back to another time where we had respect for each other's opinion and respect for people who sent us here.

SCHIEFFER: Leader Pelosi, Thank you so much.

PELOSI: Thank you.

SCHIEFFER: And we'll be back in one minute to find out what Republican Senate Leader Mitch McConnell has to say.

SCHIEFFER: And we go now to the top Republican in the Senate, Mitch McConnell. He is in Louisville this morning. Mr. Leader, thank you for joining us. You just heard Leader Pelosi, she says tax revenues are still on the table. If I understood you last week, you were saying we're done with that. Now it's time to talk about cutting spending. What did you think of what Ms. Pelosi had to say?

MCCONNELL: Well, it certainly underscores the voracious appetite for more taxes on the other side. The tax issue is over. We resolved that a few days ago. Everybody's taxes were going to go up because that's the way the law was written, eight few days ago, 90 percent -- 95 percent of Senate Republicans worked -- voted for a permanent tax relief for 99 percent of the American taxpayers and 500,000 small businesses, not a single Republican senator voted to raise anybody's taxes. The tax issue is over. And now it's time to pivot to the single biggest threat to our country, both in the short term and the long term. We now have a debt of $16.4 trillion. That's as big as our economy. That alone makes us look a lot like Greece. We have an incredible spending addiction. This administration has driven spending as a percentage of our economy from 21 percent up to almost 25 percent. It's time for the president to pivot and lead us in a discussion about saving this country for our children and our grandchildren.

SCHIEFFER: Well, it does not too.

MCCONNELL: This is simply unsustainable.

SCHIEFFER: It does not sound from what we just heard from Ms. Pelosi that she doesn't seem to be pivoting. I mean -- and she speaks for the president's party here. It sounds like from her point of view, that finding more revenue is still on the table. When you're saying no more taxes here, are you also saying no more tax reform, that there are not going to be some deduction eliminated? Aren't revenues still on the table? She says they have to be.

MCCONNELL: I think tax reform is a good idea, but now that we have resolved the revenue issue, tax reform ought to be revenue neutral, as it was back during the Reagan administration. They did the last comprehensive tax reform. It was revenue neutral. The government didn't benefit by getting any more revenue out of that reform. In fact, Bob, I think it would be a bipartisan majority in the Senate will have the view the tax issue is behind us. So the question is we all know that we have this massive debt and deficit not because we tax too little but because we spend too much. The question is will the president now pivot and address the single biggest issue confront our country and its future? And that's reducing spending. And we have a few opportunities here in the next few months, presented to us by his request to raise the debt ceiling, by the sequester kicking in, two months from now, by the continuing resolution to operate the government, plenty of opportunities to generate that discussion. But what's really disappointing to me is that the president isn't generating the discussion on his own, that he has to sort of be dragged kicking and scream, to the table when we have these other big issues like the debt ceiling to get him to talk about it. I wish he'd lead.

SCHIEFFER: Let me just ask you, some of your colleagues in the senate, John Cornyn of Texas, part of the leadership in an op-ed piece in one of the Houston papers yesterday said that Republicans have to be prepared basically to shut down parts of the government if they can't get the kind of spending cuts that are going to be needed here. Are you ready to go that far, Senator McConnell?

MCCONNELL: Well, look, what I'm ready to do is to discuss the biggest issue confronting the country. As I said, it's a shame you have to kind of drag the president to the table to talk about if the single biggest problem we have in our country -- excuse me -- it shouldn't require doing any of these things. It shouldn't require having a discussion about the debt ceiling or the sequester or the continuing resolution. Why isn't he saying let's get this problem fixed? And we know we can't fix it. You were talking to leader Pelosi about entitlements. All the Democrats are willing to do is to hit health care providers who take care of seniors. What they're unwilling to do for future generations is to make the eligibility for our popular entitlement programs fit the demographics of America. You know, when Social Security was passed in the 1930s, the average person lived to be 61. This year, the average male will live to be 79, the average female 81. For future generations, these programs have to fit the demographics of our country. The trustees of the Medicare and Social Security system say we have about 10 years to go before Medicare is completely broke. When do we intend to fix this problem?

SCHIEFFER: Let me...

MCCONNELL: And my view is the time to fix it is now.

SCHIEFFER: Let me also ask you this. John Boehner says that before he agrees to raise the debt ceiling here, which is going to be the next big vote that we're all talking about, he wants at least $1 in spending cuts for every $1 that the debt limit is raised. Are you willing to go that far?

MCCONNELL: Well, what I'm willing to say is if the president won't lead us here in the direction of reducing this massive spending addiction that we have, then we have to use whatever leverage we have. And there are some examples of leverage coming along, the debt ceiling is one of them, that hopefully would get the president engaged, even though he seems unwilling to do it on his own.

SCHIEFFER: Well, are you willing to say this morning, Mr. President, you're going to have to do that, you're going to have to cut -- for every dollar we raise that debt ceiling, you're going to have to cut a dollar in spending?

MCCONNELL: What I'm saying is I want the president to lead us in the direction of solving the single biggest problem confronting the country. The American people elected divided government. They didn't give either side total control. They don't expect us to sit here and do nothing for the next two years. I would love for Mitt Romney to have been elected president, but he was not. And so this means we have to work together. And it's clear -- it's clear that the biggest problem, Bob, is the massive federal spending.

SCHIEFFER: All right. I'm going to say with respect, I don't believe you really answered my question, but we'll go on to something else. The Washington Post reports this morning that the administration is talking about a very extensive program to control weapons, going beyond just re-instituting the ban on assault weapons. They're talking about databases. They're talking about setting up data on you can tell when you have a background check on people, stronger -- more information on people of the mentally impaired people getting guns. Are you ready to seriously consider those things? Are Republicans ready to do something on this issue?

MCCONNELL: Well, I think, first, we want to wait and see what Vice President Biden recommends with his task force. Clearly, we will not be addressing that issue early because spending and debt are going to dominate the first three months. And when the vice president comes up with some recommendations, I'm sure the House and Senate will take a look at them.

SCHIEFFER: All right. Well, Senator, thank you so much for joining us this morning.

MCCONNELL: Thank you.

SCHIEFFER: And we'll be back in a moment with some personal thoughts.

SCHIEFFER: Watching the blundering ineptitude and the vulgar partisanship of last week made me think of other days our modern politicians may have forgotten, an era when Washington actually worked.

SCHIEFFER (voice-over): When Lyndon Johnson was thrust into the presidency after the assassination of John Kennedy, one of the first people he called for help was former Republican President Dwight Eisenhower. Johnson thought Eisenhower was the best politician he ever knew. And within days, Eisenhower was there to offer guidance. As president, Johnson passed historic civil rights legislation, but he always said he couldn't have done it without the assistance of Senate Republican leader Everett Dirksen. Hardly a day passed when they didn't talk. More recently, who could have been more different than George Bush and Ted Kennedy? Yet, they maintained a personal friendship that led to important education reforms.

GEORGE W. BUSH, 43RD PRESIDENT OF THE UNITED STATES: I was so proud of our work, I even had nice things to say about my friend Ted Kennedy.

SCHIEFFER: Ideologically, they were no further apart than Republican Ronald Reagan and Democratic Speaker Tip O'Neill. But Reagan and O'Neill shared a love of politics and respect for each other that enabled them to craft legislation that staved off the collapse of Social Security. Liberal Senator Russ Feingold and conservative John McCain forged important campaign reforms. And the arms control legislation fashioned by Democrat Sam Nunn and Republican Richard Lugar left today's world a far safer place.

SCHIEFFER: The rearview mirror has a way of making things look better, but those things really happened, and we used to say Washington was a place of giants. You don't hear that much anymore. Back in a minute.

SCHIEFFER: Some of our stations are leaving us now. For most of you, you will be back with our panel of new members of Congress and our political "Roundtable." So stay with us.

SCHIEFFER: And welcome back now to "Page Two" of FACE THE NATION. And joining us first, two new senators, both of whom have served in the House, congressman from Arizona, Jeff Flake, now Senator Flake. He's in Phoenix this morning. And Connecticut Democrat Chris Murphy, who was also in the House before coming to the Senate. He is in Hartford this morning. Senator Flake, let me start with you. You heard Nancy Pelosi. You heard Mitch McConnell, it sounds to me like we're in for more of the same. I don't think anything has changed here. Tell me I'm wrong.

FLAKE: Well I'm not sure you are. It does look like we're going to have another high-wire act or two here coming up. But I would have to agree with Mitch McConnell. You know, I just can't see how the president goes back to the well on more tax increases now. We've got to cut spending. We put off the sequester -- the sequester is really only $1.2 trillion over 10 years. That's really just a start. We've got to do actually more than that, and we put that off. So we've got to cut spending now.

SCHIEFFER: Well, Senator Murphy, let me go to you. From the Democratic side of the aisle, what do you see happening here? Do you think that the senate and the House are going to find a way to raise the debt ceiling? That's going to be first hard vote. You've also got what Senator Flake refers to as the sequester, that is these draconian cuts that go in across the board unless the congress finds some way to resolve some of this stuff. What's going to happen here?

MURPHY: Listen, we've got to have a conversation about reducing spending. Jeff's right. There's absolutely no way to take a sizable chunk out of the debt and deficit without reducing spending, but we also have to talk about tax reform as well. And I think that's what the speaker was talking about, about trying to remove some of these deductions and credits which really don't fulfill good public policy goals and end up costing the country money. But we should have this discussion aside from the debt ceiling. I mean, legislative hostage taking just doesn't work. It doesn't work for the American people, it doesn't work for the world economy. And what I hope doesn't happen is that Republicans do what they did a year and a half ago which is essentially hold the entire country's economy hostage to their demands. We need to have a reasonable conversation here separate and aside from this issue of the debt ceiling.

SCHIEFFER: All right. Well, let's just round this out. We want to bring in some new House members who are actually, a couple of them, are some old House members who are back, just kind of kick this around and see where it goes. Arizona Republican Matt Salmon was elected in 1994 as part of the Republican revolution. He left to fulfill a pledge to serve only three terms. He's with us this morning. Also sworn in for a second tour this time around, Minnesota Democrat Rick Nolan. He was elected in 1974. He left congress in 1980 and opened his own business. He's decided to come back. And also with us, Pennsylvania Republican Mike Kelly. He's now in his second term. He joined us on Face the Nation two years ago when he was first elected. And congressman, let me just start with you, last time you were here you said you had come to Washington and you were not at all impressed with the way things were done around here. And some of the other people on the panel said, wait a minute. You're part of the team. You're part of the group now. You've got to take -- you have been here now two years, so you think you got anything done this time around?

KELLY: You know, I think we got a lot accomplished. This is the first time in the history of the country that we actually started about spending cuts, we started about reigning in the size of government. So that was a huge win. Now also, this last debate we just had, getting permanent tax relief to 99.3 percent of the American people was huge. And I go back to Chairman Camp, let's talk about tax reform and we're talking about tax code that's 10 times bigger than the Bible with none of the good stuff. We have to get serious about this spending cut. And getting this trajectory of spending down. And if we don't, we are walking away from a pledge to the American people. Listen, I'm a Republican. Matt and Rick are with me today. But more than anything else, we're Americans. And if we want America's future to be bright, if we want America's future to be the future that we had growing up -- listen my dad was a World War II guy. He didn't want to go fight but it he had to. We're at a point right now where we have to address this spending in a really adult manner. And I keep hearing about we need to get more adults at the table. Well, you can get as many adults at the table as you want but the conversation has to be an adult conversation.

SCHIEFFER: Well, let's see what that conversation is, then. You fellas were here before. Now could you have come back, you've had a chance to look at this thing from afar. What do you think they've been doing wrong since you left?

SALMON: I think we have to take the bull by the horns now. It's been four years under the same administration and we never even really opened a serious discussion about fixing Social Security and Medicare. And that makes me lose sleep. Honestly, we deserve a lot better. Social Security will go bust within about 10 years -- excuse me, Medicare in 10 years, and Social Security not far behind. And we have a responsibility. I have a 90-year-old mother that depends on that. We've got to fix that. And if we don't address these spending issues now when Republicans have the leverage, then when? In the last four years, nothing's been done. There hasn't been a budget passed by the Senate in four years. Trillion-dollar deficits every year. If not now, then when?

NOLAN: Bob, you and others have talked about what's different between now and then. And I think that's a great question. This congress worked 32 out of 52 weeks last year. My first term we worked 48 out of the 52 weeks. There are a couple of things I think we need to do to change the process, to change the way we do politics. First of all, money has become too dominant. We went through $20 million in my election contest. That's toxic. It's obscene. And it's taking away from the time that we were elected to govern. Members of congress now have to be successful or expected to spend 30 hours a week in call time dialing for dollars? That's time that we need to go to work, four, five days a week, like the other people in this country do. Put the legislative process, the committees back together. Have a process where things evolve, and there's cooperation, collaboration, compromise, we get to know each other.

SCHIEFFER: Let me just point this out -- we're talking about you need to get back to work. I never heard of anybody that got a job and the first two weeks they went on vacation. That's exactly what has happened here with the congress.

UNIDENTIFIED MALE: I agree, I agree. SCHIEFFER: Senators, what do you think about that? That doesn't sound like a sense of urgency there. Everybody gets elected and oh, my gosh this thing is just terrible, we have to do something so we'll see you in a couple of weeks. What about that, Senator Flake?

FLAKE: Agreed. I'd love to get back. We talk about having a conversation. I think we've had plenty of conversations. We need to cut spending. And whether it's the framework that Erskine Bowles put forward or any number of frameworks or other reasons to just cut spending. I mean, we've got to do it. We are in control now in the congress. But pretty soon, we won't be. the markets will react. And we'll be looking like and acting like some of these European countries that have an austerity program imposed on them. We want to avoid that and so I think it behooves us to get to work now.

SCHIEFFER: All right, well, Senator Murphy, what's the first thing you ought to do then? If you could just make a magic wish here and get something done, what's the first constructive thing that could be done here to get this thing going again?

MURPHY: Well, listen, I think we should shoot for that grand bargain. I think we should look at a deficit reduction and debt reduction deal that's in the neighborhood of $3 trillion or $4 trillion. And I think the American people are where President Obama is, that they want it to be an equal mix of spending cuts and some increased revenue coming in from people that can afford it. But let's be honest about this conversation about Medicare, right? I mean, Democrats put on the table $500 billion of Medicare spending reductions in the health care reform bill and Republicans went out and attacked Democrats on it in the 2010 election. So Democrats have been willing to have conversations about spending reductions. We just haven't had a lot of partnership on this. I think there's a lot of common ground here on Medicare, Social Security, if we're willing to put politics aside and come to the table. But let's get that big deal done early on. It gets harder to do as you get closer to elections. And if you really want to unlock this economy, if you want to make the United States the place where world capital comes to, let's do a deal and let's do it early.

SCHIEFFER: All right, well, let me just ask you all this. They're talking about now, Senator Cornyn in an op-ed piece yesterday in one of the Houston papers said that Republicans have to be willing to say yes, we're going to shut down part of the government if we can't get the kind of spending cuts we need. Is that really a good idea?

KELLY: You know, I see no reason to shut down the government. Both sides agree spending is a problem. So if we came here to fix things, then let's not polarize it right off the bat. Let's talk about -- the president agrees. He said we need to get spending under control. Both Republicans and Democrats agree. Now let's get started on it now. Let's get work nag that direction. I think when you try to set up an obstacle right away you create a problem. Now, I will tell you this -- spending cuts have got to come in. And if our credit rating goes down, it's not because we didn't pay our bills, it's because we haven't addressed the future and looking at a nation right now, the trajectory of our debt runs us off the cliff much bigger than the fiscal cliff. So we better get that under control. With the assets we have we can do it. It's there.

SCHIEFFER: Nobody disagrees with that, but it's how do you get it done.

SALMON: Bob, I would like to interject maybe a little bit of a different thought, because I was here during the government shutdown in 1995. It was a divide government. We had a Democrat president of the United States, we had a Republican congress.

SALMON: And I believe that that government shutdown actually gave us the impetus, as we went forward, to push toward some real serious compromise. I think it drove Bill Clinton in a different direction, a very bipartisan direction. In fact, we passed welfare reform for the first time ever, and we cut the welfare ranks in the last decade and a half by over 50 percent. These are good things. We also balanced the budget for the first time in 40 years in 1997, 1998, 1999. And when I left, we had over a $230 billion surplus. This was with a Democrat president, a Republican...

SCHIEFFER: So you think that's a good idea?

SALMON: Yes, I do. I think it's...

SCHIEFFER: You really do?

SALMON: Yes, I think it's about time...

NOLAN: Yeah, Bob, I think it would be terribly irresponsible. Every one of these dollars that was spent was approved by the Congress of the united states. And call me old-fashioned. I'm a businessman. You spend the money, you've got to pay the bills. And the last thing we ever want to do is to essentially declare the United States of America bankrupt. That would just be terrible. It would be devastating. We can't do that.

SCHIEFFER: Well, Senators, let me ask you, just yes or no. If it takes shutting down the government to get spending in line, would you -- would you be in favor of that, Senator Flake?

FLAKE: Well, it shouldn't take that. But we've got to cut spending. And we've got to use whatever leverage point. I would agree that the debt limit is not the optimal leverage point to use. But we've got to use everything at our disposal to actually cut spending, and nothing has worked so far. And so whatever we can do to cut spending, we've got to do.

SCHIEFFER: Senator Murphy?

MURPHY: Yeah, absolutely not. I mean, there's way too many people in Washington who, sort of, just view this whole thing as a game. They're going to shut down the government or they're going to abrogate our debt ceiling just to get what they want. Those things have real consequences. There are people that rely on those government programs. There is investment that doesn't come to the United States because of the fiasco that it creates. We should absolutely take the debt ceiling off the table as a leverage points and a government shutdown off the table and just stop viewing this as just political theater and, you know, get down to solving the problem.

SCHIEFFER: Let me -- let me just shift to something else Senator McConnell said this morning. He thought that this is the argument that's going to take up about the first third of the Congress. But you've also got this gun issue out there. What's going to happen on this?

KELLY: Well, listen, I think everybody is concerned about the gun issue. And there's more elements than just one element. In my lifetime, I've seen things change completely. When I was going to school, they used to worry about you chewing gum. Now they worry about you bringing guns into school. We have to address it the same way we've addressed everything else in society. We are much more vulnerable now for a lot of reasons, not just one reason. So I think, when we talk about that, we need to look across the board what the changes could be that would protect the most vulnerable people in our society. Certainly, schools right now are very vulnerable and we have to do things to protect them.

SCHIEFFER: Would you be willing, Congressman, to think about reinstating the ban on assault weapons?

KELLY: You know, Bob, but what I'm interested in -- I'm looking to see what everybody has to say right now. And once we get a chance to look at that, put it all out on the table, look at -- the framework is what's important. How are we going to protect the most vulnerable people in our society?

SCHIEFFER: What about you fellows?

NOLAN: Bob, I grew up in northeastern Minnesota in the forests and lakes, and I was, like, 19 or 20 before I had my first chicken and roast beef. I'm a hunter. I believe in second amendment rights. But you know what? I don't need an assault weapon to shoot a duck. And I think they ought to be banned. And I think we need to put a ban on the amount of shells you can carry in a magazine. And I think we have to strengthen our background checks.

SALMON: There's two things that I use to make decisions back here. One is the...

SCHIEFFER: You're not pulling out a gun there, are you?

(LAUGHTER)

SALMON: No, I'm not pulling out a gun.

(LAUGHTER)

One is this little document, the U.S. Constitution, and the second is, is it going to work? And, first and foremost, it doesn't pass the first test. I can't support anything that violates any of the amendments in the bill of rights. And I do not believe that impeding on people's right to bear arms is the right answer. So, no, I do not support the assault weapon ban. I was here during the assault weapon ban. it happened in 1992. I was here for six years during the assault weapon ban, and I remember when the congressman from Columbine came into my office weeping, and we prayed together that day. It was a terrible time. That happened right in the middle of the assault weapon ban. Let's stop placating the American people and telling them we're doing something when we're really doing nothing.

SCHIEFFER: All right. Senators? Senator Flake?

FLAKE: Well,. Vice President Biden is coming forward with a -- with some thoughts, and I look forward to hearing them. And I think that Senator McConnell is right that debt and deficit are going to dominate the first couple of months of the year. And so that's the priority right now, is debt and deficit.

SCHIEFFER: Senator Murphy, this all -- this latest thing happened in your state. What do you think needs to happen here? What do you think is possible?

MURPHY: Yeah, I -- well, listen, I spent most of the last month in Newtown, Connecticut with those families. And frankly, the most important thing that happened on Thursday was not the swearing in of a new Congress; it was the fact that Sandy Hook Elementary went back to school. Let me assure the representative of two things. One, a ban on assault weapons and high-capacity magazine clips, the weapon and the cartridge that this young man used in Sandy Hook Elementary, it's constitutional. And it's also possible, because we've done it before and because this country has been transformed by this incident, and they know that, if this guy didn't have an assault weapon; if he only had a cartridge with 10 bullets rather than 30 bullets, there would still be little boys and girls alive today. It absolutely makes a difference. It's common-sense gun legislation. It's supported by hunters all across Connecticut and all across this country. And I disagree with Senator McConnell. I don't think we should wait three months to get this done. I think we should get it done now. And I frankly think that, if we did that, it would save lives.

SCHIEFFER: All right. Well, gentlemen, I want to thank -- you two, I want to congratulate you on coming back.

NOLAN: Thank you very much.

(CROSSTALK)

SCHIEFFER: You knew what you were getting into.

(LAUGHTER)

NOLAN: We should have known better, Bob...

(CROSSTALK)

NOLAN: ... but we're here to make a difference.

SALMON: Mr. Toad's wild ride. We're going to have our own version of March madness here.

(LAUGHTER)

SCHIEFFER: All right. Well, it's nice to have all of you. Senators, it's nice to have you, too, Congressman. We'll be back in a minute with our analysis.

SCHIEFFER: Back new for a little analysis. Two of the smartest people in Washington. David Sanger is the chief Washington correspondent for the New York Times and Rana Foroohar is assisting managing editor of Time magazine. David, I was very interested in a piece that you wrote this week when you talked about the impact that these -- the fiscal cliff negotiations had on, kind of, the perception of this country. You talked to a lot of foreign policy experts. What was -- what did you come away from that, doing the research on that piece, feeling?

SANGER: Well, Bob, I felt that, at the end of the whole fiscal cliff drama that we saw, I think the world saw a Washington that still appeared to be dysfunctional, that hadn't addressed the major issue. Remember, the fiscal cliff was all about forcing Washington politicians to deal with the bigger grand bargain that you have been discussing through the entire show.

SCHIEFFER: And the thing we should not overlook is it was something created by Washington. This was not the Japanese bombing Pearl Harbor. This was not something that happened -- that came from some place else. This was created here.

SANGER: It was -- and we forgot what we were trying to do. I mean, what they were trying to do in this was -- was to actually solve these issues that would restore some confidence that the U.S. could go ahead in a leadership position. So what kind of weakness does that create? I think three-fold. The first is there's a perception that the U.S. is still having a hard time getting its act together. The second is I think people around the world are looking and saying, is the U.S. prepared to remain engaged in many parts of the globe, even as it pulls out of Afghanistan? We're already out of Iraq. People aren't convinced of that. And third, the president has said a big element of his future strategy is the pivot to Asia, which is going to take time and resources -- not clear that's going to happen. What hasn't happened is investors are not fleeing from the U.S., and that's the best news. The question is can you get through this next debt limit fight with that still being the case?

SCHIEFFER: And, Rana, talk about that, a little bit, because you -- you focus on economics.

FOROOHAR: Absolutely. And it's fascinating because, if you look at what happened last time around in August of 2011, when we were having the big debt fight, you didn't see as much of a downturn in U.S. markets as you -- as you might have. In fact, 10-year treasuries actually rallied. But at that point, we were really benefiting from being the prettiest house on an ugly block that was the global economy. Europe was falling apart. The emerging markets were slowing down. The situation's a little bit different now. Europe is actually stabilizing. China, at least, is not going to have a hard landing. It looks like growth is continuing there. So I think the global investors may not be as patient with us this time around and it really is the political dysfunction that they want to see corrected, because our underlying growth is actually pretty good compared to competitors like Germany, France, UK, Japan, we're doing better still.

SCHIEFFER: Do either of you see anything down the vote here when they get ready to vote raising the debt ceiling that is not going to be just like we saw on this thing with the fiscal cliff -- last minute, last hour, last day?

SANGER: I'm sure it will be last minute, last hour. It always is. The big question is President Obama has said he won't negotiate within the -- on the debt limit issue itself, that he'll talk about spending cuts elsewhere. Now, that was what he was supposed to be doing with this last fiscal cliff effort. It will be interesting to see whether or not he comes around to go do that. In the end, my suspicion is the debt limit will pass again because the consequences of not doing it are so great. Last time we lost a bit of our credit rating just on the threat that it might not pass.

SCHIEFFER: What about what we heard one of the congressmen saying, actually, the last time they shut downtown government that was a good thing.

FOROOHAR: Well, you know, there are some disasters scenario arguments to be made. Some people feel that that's what it takes to really change things. I agree with David, we can't default on our debt certainly. Most of the world's economy is run in dollars, that would be a complete disaster. It would be a Lehman Brothers times 10. And I don't think we are going to do that. I am worried, though, that we may end up in a position where we have to make spending cuts earlier than we should given our growing. If you look back historically not just in this country but all around the world, when you go through a period like we're in, you really want to have growth closer to trend which for the U.S. is more like 3 percent a year rather than the 2 percent that we're in right now before you start make a lot of cuts.

SCHIEFFER: David, I want to ask you because I know you follow this very closely. If all the signs are that Monday, tomorrow, the president is going to nominate Chuck Hagel, the former Republican senator, to be secretary of defense, and it looks like he's going to be in for kind of a rough confirmation hearing.

SANGER: That's exactly what it looks like, Bob. And to some degree, that's something of a surprise because the idea of appointing a Republican senator, in this case a decorated Vietnam War hero, was to have a fairly easy passage. But there's going to be a few issues for Senator Hagel. He is not on board with the president's strategy on Iran. He has voted against all of the major efforts to impose sanctions on Iran or many of them. He has -- he made some comment about gays and lesbians that he apologized for a few weeks ago. He made them many years ago. He made them many years ago. The White House has said that they think that that resolves the issue, but I think he's run into some opposition there. And then the pro-Israel lobby has been very, very active in campaigning against him. Republicans themselves I think on your show, you've heard some Republicans say they doubt that he's going to get many Republican votes.

SCHIEFFER: Very interesting. Well, I want to thank both of you for helping us on all of this. And we'll see what happens. And we'll be right back.

SCHIEFFER: Well, that's it for us today. We'll be right here next week Sunday. Thanks for watching Face the Nation.