• With: Scott Walker, Joe Rago, Mary Kissel, James Freeman, Bret Stephens

    (BEGIN VIDEO CLIP)

    PRESIDENT BARACK OBAMA: First of all, the sequester is not something that I proposed. It's something the Congress has proposed. It will not happen.

    (END VIDEO CLIP)

    GIGOT: Remember that? President Obama in his third debate with Mitt Romney promising to sequester, those across-the-board cuts to defense spending set to kick in January 1st, would not happen. But as negations to avoid the fiscal cliff continue, sequestration is still very much on the table. And some conservatives think the GOP should embrace it, even at the risk of billions in defense cuts.

    We're back with James Freeman, and also joined by "Wall Street Journal" foreign affairs columnist, Bret Stephens.

    And OK, James, So $500 billion in defense already built in to cut. Then the sequester would cut another $500 billion over 10 years. Why should Republicans go along with that?

    FREEMAN: Because, this is really their only leverage on President Obama. And I think that, as Congressman Jim Jordan has said, the only thing worse than a defense cut is no cut at all. What you get with the sequester is defense but also cuts in the social --

    (CROSSTALK)

    GIGOT: Another $500 billion in domestic discretionary, too.

    FREEMAN: Right. And it adds up to about $100 billion in 2013.

    I think you will find that President Obama will go a long way to avoid those roughly $44 billion in cuts this year to social programs. And I think if you want to get a deal out of him with meaningful reform on spending or taxes, this is, this is the key leverage point. And if it happens, it happens --

    GIGOT: So you --

    FREEMAN: -- and you get some spending --

    (CROSSTALK)

    GIGOT: So use spending on domestic discretionary and defense to leverage better tax policy out of the president.

    Bret?

    BRET STEPHENS, FOREIGN AFFAIRS COLUMNIST: Well, good luck.

    (LAUGHTER)

    STEPHENS: First of all, let's bear in mind that we've already cut $500 billion from defense. You know, I was out on an aircraft carrier in the Persian Gulf a few months ago. This is a carrier that ordinarily takes a compliment of about 90 aircraft. It had about 60 aircraft on at the time. I don't think Americans really appreciate the way in which defense cuts are already hurting us strategically abroad in terms of the kind of forces that we can deploy.

    The other thing, when you cut defense, those defense cuts are easy to cut forever. I mean, you just think of the difference between the kind of defense expenditure that we had in the 80's, to say nothing of the 60's, compared to what we have today.

    I am not so sure that these cuts in domestic discretionary spending, OK, are going to be forever. No one Congress can bind the next. I think Republicans are foolish to think that those domestic cuts are really going to --

    (CROSSTALK)

    FREEMAN: Look, it's the long-term protection of defense that I think we ought to be concerned about. And the fact is we're not going to be able to be a military super power if they're not an economic super power. And we also know you can't grow your debt and you're spending faster than our economy every year and expect this to work out. It would be great if we didn't have to worry about what stuff costs, including defense, but we tried that. That was the Obama first term. Debt roughly doubled to about$12 trillion. So the --

    (CROSSTALK)

    GIGOT: What an elaborate --

    (CROSSTALK)

    STEPHENS: Let's stipulate one thing, OK? We're sort of having a discussion, he wants to take the hemlock, I want to take the cyanide.

    (LAUGHTER)

    And these are not -- these are some bad --

    (CROSSTALK)

    FREEMAN: But it's a way to get to a better place, I think, because --

    GIGOT: What about his leverage point, though, James' leverage point? That's the only leverage these cuts have on President Obama, to really lead to a less destructive solution on tax and spending.

    STEPHENS: Why? Do you think he cares about it?

    FREEMAN: I think the one thing he cares about is big government. And so this is the one area that actually reduces --

    GIGOT: He wants big government.

    FREEMAN: -- government spending. Because the problem I think --

    (CROSSTALK)

    FREEMAN: that Republicans have --

    (CROSSTALK)

    FREEMAN: -- he doesn't care if taxes rise.