David Plouffe on New Obama Deficit Plan; Rep. Eric Cantor on Budget Battle

The following is a rush transcript of the April 10, 2011 edition of "Fox News Sunday With Chris Wallace." This copy may not be in its final form and may be updated.


CHRIS WALLACE, ANCHOR: I'm Chris Wallace. The latest on the battle of the budget, next on "Fox News Sunday."



PRESIDENT BARACK OBAMA: This agreement between Democrats and Republicans --

SPEAKER OF THE HOUSE JOHN A. BOEHNER, R-OHIO: -- will, in fact, cut spending and keep our government open.

WALLACE (voice-over): Uncle Sam stays in business. But, now, a tough battle over the federal debt and the 2012 campaign year budget. We'll look at the policy and politics with White House senior adviser David Plouffe and House Majority Leader, Republican Eric Cantor.

Plouffe and Cantor live only on "Fox News Sunday."

Plus, the fall-out from the budget battle for President Obama and Speaker Boehner. Our Sunday regulars tell us who won and who lost.

All right now on "Fox News Sunday."


WALLACE: And hello, again, from Fox News in Washington.

Well, by now, you've seen the headline. House Republicans, Senate Democrats and the White House reached a deal late Friday night to avoid a government shutdown and cut $38.5 billion from the budget. It's the biggest spending cut ever.

But what's s in the deal? And what was taken out? And what does this showdown mean for battles later this year over government spending?

Fox News chief political correspondent Carl Cameron is live on Capitol Hill with the answers -- Carl.


Lawmakers have until Friday to pass the final agreement. President Obama signed the extension yesterday and then went to the Lincoln Memorial to welcome sightseers.


OBAMA: Because Congress was able to settle its differences, that's why this place is open today and everybody has been able to enjoy their visits. And that's what kind of future cooperation I hope we have going forward.


CAMERON: The $1 trillion budget through September cuts spending a record $38.5 billion. It includes a $1 billion across-the-board cut. Another $2.5 billion comes out of transportation. And more than $5 billion from programs the president planned cut next year.

The Pentagon gets $2 billion less than it requested.

The deal halts additional funds for the IRS sought by the White House. It bans abortion funding in D.C. and re-establishes a D.C. school voucher program the president let lapse.

Democrats got GOP provisions stripped out that would have defunded the health care law and Planned Parenthood but feature votes on both in the Senate.

Most Republican policy riders to defund things like EPA and National Public Radio were dropped.

The deal shows that president Obama can do business with the new House Speaker John Boehner, but Republicans wanted to cut more spending and Democrats wanted to cut less -- differences that are only likely to deepen as Congress gets ready to deal with next year's budget and raising the debt limit in the next several weeks -- Chris.

WALLACE: Carl Cameron reporting from Capitol Hill -- Carl, thanks for that.

Joining us now is David Plouffe, President Obama's senior adviser.

Mr. Plouffe, welcome back to "Fox News Sunday."


WALLACE: Let's peel back a little of the process. You have gone out today; pre-taped a few of the other Sunday shows and you're live here on "Fox News Sunday." And you are apparently saying that the president is going to lay out this week new plans to cut the deficit. Tell us about it.

PLOUFFE: Well, he'll lay out his approach this week in terms of the scale of debt reduction he thinks the country needs so we can grow economically and win the future, a balanced approach. Obviously, we need to look at all corners of government. As he said previously, his health care law is $1 trillion in deficit reduction over the next two decades, but we have to do more there.

We have to look at more spending here, carefully. As he said, we have to use a scalpel not a machete. And, obviously, this is a distinction with the congressional Republican plan that was announced this week.

That plan would give the average millionaire $200,000 in tax cuts, but ask a lot more of senior citizens. It would double their health care cost, $6,000 a year down the road. Cut education, cut energy investment at a time of record gas prices.

So, we're going to have a big debate. But what's clear on deficit reduction, like anything in Washington, if we're going to make any progress together, whether it's in education reform, job creation, deficit reduction, the parties are going to have to come together to find common ground. And that's what happened this week -- just as it did in December when the parties came together with the president's leadership to cut taxes for everybody in America.

WALLACE: Let me ask you a couple of specifics. Will the president address entitlements which he did not do in his 2012 budget, specifically what to do about Medicare and Medicaid?

PLOUFFE: Well, first, on the 2012 budget, that would be $1 trillion of deficit reduction over the next decade and lowest level of domestic spending since Dwight Eisenhower. And he said it in the State of the Union, that was just a start. We're going to have to do more.

So, as I said, we've already -- on health care, over $1 trillion. Actually, the congressional Republican plan actually preserves the Medicare spending. So, the president says we have to do more. He's going to lay out his cuts about that (ph).

On Social Security, there wasn't anything really in the congressional plan on that. What the president is going to say is he does not think Social Security is a chief contributor our deficit situation in the short-term. But as we're having these debates, as we're looking at the federal budget and all these programs, if there's a way to preserve Social Security, we should really strive to do that. So, I think there's going to be discussions about the Social Security in a way that doesn't slash benefit.

WALLACE: But specifically on the entitlement, he is going to address Medicare and Medicaid?


WALLACE: And what about taxes? Is he going to raise taxes?

PLOUFFE: Well, first of all, his budget for this year says for upper income Americans, he does believe that they need to contribute to the deficit reduction in this country. Listen, the congressional Republicans --

WALLACE: So, basically going back to rescinding the Bush tax cuts for the --

PLOUFFE: Yes, for the wealthy.

WALLACE: But that's not going to pass. It didn't pass in lame duck session, and it is not going to pass with these House Republicans.

PLOUFFE: Well, listen, what's going to be clear -- now, what I'd say on this issue, the congressional Republican plan for people over $50,000 in this country, their plan is $1 trillion tax cut. So, again, the reason you ask more of seniors, of middle class, of the poor, cut things like education, is because you're giving these huge tax cuts. Now, listen, the speaker said this week, on a -- Speaker Boehner said in an interview that he's not going to take revenues off the table. But there's a bipartisan group of senators in the Senate where clearly they are talking about revenues. So, I think the president's belief is this has to be a balanced approach. And if f we do that, we can get deficit reduction in the country.

WALLACE: Isn't this, the fact that the president is going to now lay out a plan, and it's going to be a more drastic plan, isn't it a recognition that your strategy didn't work? That the fact that you didn't have a plan for deficit reduction, as you have these negotiations over the continuing resolution, that that didn't work, you were playing defense to the Republicans?

PLOUFFE: Not at all. If you look at this agreement, the president is being clear that we need serious debt reduction. And he's going to lay out an approach this week.

If you look at the deal this week, it preserved things that are important to the president's plan to win the future: education funding, funding in medical research, other innovation areas. And that's going to be his approach going forward, that, in fact, if we're going to make those investments -- and we have to win the future economically -- we're going to we have to live within our means. So, no.

And this is going to be an important debate the country is going to have over the coming weeks and months. And I think what should be clear after this week and again back in December where we cut the taxes, dealt with things like nuclear weapons and "don't ask, don't tell," that our leaders can come together. And that's what the American people really are screaming at the top of their lungs for -- act like adults, find common ground, move the country forward.

WALLACE: Let's go to the continuing resolution, the deal that you made -- the White House, the Senate and the House this week. Let's look at key points in the final deal you make. Billions of dollars in cuts to infrastructure, and research and development, including high-speed rail, a ban on public funding, federal and local of abortions in Washington, D.C., audits and health care reform and financial regulation.

Your original offer was for no cuts -- a clean C.R. with no cuts. You've ended up agreeing to $38.5 billion, which you admit was the biggest annual spending cut in the history of the country. Didn't you end up giving up a lot more than you got? Didn't Republicans end up ending the stimulus spending surge and beginning to impose their agenda of shrinking the size of the government?

PLOUFFE: We always were clear that we're going to need to cut spending. So, the question really was --

WALLACE: You didn't offer any cuts in the beginning?

PLOUFFE: Well, no. It was clear, as we did the debates on this in terms of the C.R., we were going to have to cut spending. The president was eager to do that. But --


PLOUFFE: Yes, because there were lines he wasn't going to cross, though. Meaning, it's not just the number. It's what goes into the number. What are we cutting? What are we preserving?

So, the president feels comfortable that the deal preserves our ability to invest at the level we need to things like research, development, education, that he wasn't playing politics on issues like Planned Parenthood and family planning, but does cut spending in a serious way. You said in your intro, it's the biggest annual spending cut we've seen in this country's history.

WALLACE: I understand. But when the Republicans originally proposed some cuts like this, Harry Reid and Chuck Schumer were calling it draconian and extreme and radical. And you ended up agreeing to about two-thirds of it.

PLOUFFE: Well, again, you were just talking about the number. There were some cuts and there are actual cuts that were radical and draconian. They're not in the final package. So --

WALLACE: Billions of dollars in cuts in infrastructure, research and development, high-speed rail?

PLOUFFE: Well, there are some cuts and there are still a lot of investments. The president said Friday night, any compromise -- and, by the way, "compromise" is not a dirty word. Even with a lot of your viewers, it shouldn't be. We're not going to move forward on anything --

WALLACE: What do you mean a lot of our viewers?

PLOUFFE: Well, my point is I think that most Americans believe, there may be some in the base of the Republican Party -- and polls show this out -- the American people want compromise. There's a slim majority that does not.

We're not going to move forward on anything together in divided government unless we come together and try and find common ground. The good news is, we did it this week on the budget in spending. We did it in December on taxes.

So, I think it can be done. And it's important that we're going to have tough debates, tough battles.

PLOUFFE: There is going to be some dicey moments. But it's clear that we can, whether it's deficit reduction, education reform, new energy economy, we need to move forward on all of that together.

WALLACE: Here is what Robert Reich, Clinton's former secretary of labor, said about the deal. He tweeted this: "The Prez and Ds caved in, endangering the recovery, and strengthening the right-wing bullies, a tactical win for Prez and strategic loss."

He went on to say -- Reich went on to say that the Republicans held the government hostage and Obama ended up paying most of the ransom. That is a victory?

PLOUFFE: It's a victory for the American people. I mean, listen, in this town, you know, the Dome on the Capitol is right behind us here, a lot of people in both parties sometimes look at everything first through the prism of a political fight. And the president looks at issues on, how do we move country forward, how can we win the future?

And so I think that, no, you can't look at adoption of any spending cuts as someone, you know, you're embracing Republican orthodoxy. The president believes we need to cut spending and reduce the deficit. It's how you do it.

And as he said, you can take an machete to the budget, he is not going to do that. Or you can take a scalpel. Look at every program, every line in the budget very carefully and make smart decisions to make sure we preserve the ability to invest, while still reducing the deficit.

WALLACE: You know, you were the -- and to just sort of introduce David Plouffe to people who may not know, you were the campaign manager in 2008. You now have replaced David Axelrod as the strategic adviser.

And a number of Democrats in Congress complain that you have been behind a strategic shift for the president after the 2010 election to have him play the grown-up, to not be joined at the hip to congressional Democrats, and not to be pushing their interests. And they cite remarks like this by the president this week.


OBAMA: We want everybody to act like adults, quit playing games, realize that it's not just my way or the highway.


WALLACE: The point -- and this is really partly the point that Robert Reich was also making, is that you are more focused on positioning the president, and that's kind of what you are doing today, as above the fray.

You know, here are the Republicans, here are the Democrats, the president is above the fray and you are already thinking of the 2012 election.

PLOUFFE: This is not about positioning. This is the reality of his approach. And listen, it's consistent. If you look at the president's campaign the last two years, he has spoken almost every day about the need for to us get serious, act like adults, try and find common ground.

So I think the president is trying to make the right decisions for the American people. And I think that was his approach this week. And by the way, I think his public comments this week were very important.

As you in the media started to focus on what a shutdown would mean, not just the politics of it, the impact it would have on the economy and the people in this country. The president was saying, let's get serious about this. We ought to be able to bridge the divide here. And I think that was an important contribution to this.

So -- and again, I think that...

WALLACE: A lot of congressional Democrats think he kind of hung them out to dry.

PLOUFFE: Well, I would say if you look at the final package, I couldn't disagree more. I think that the president has been clear we need to reduce spending. That's what we do in this, but we do it in a smart way, and we do it in a way -- now as he said Friday night, there is, of course, some things in there that in other circumstances he wouldn't have agreed to.

That's going to happen in any negotiation. But we preserve the things that are really important to us: community health centers, medical research, Head Start for kids, those were all on the shopping block, and through the president's leadership we preserved those.

WALLACE: All right. The next battle is about -- the next immediate battle is about raising the debt limit, which is going to come sometime in the next couple of months. Here is what Speaker John Boehner said about that last night.


BOEHNER: There is no plan to deal with the debt that we're facing. And I can just tell you this, that there will not be an increase in the debt limit without something really, really big attached to it.


WALLACE: "Really, really big." And which raises the question, when the president comes out with his new plan this week, is the thought that you are going to be able to try to make a deal as part of the agreement to raise the debt limit?

PLOUFFE: Well, first of all, you know, we should not be playing brinkmanship with the full faith and credit of the United States. Speaker Boehner in January said if we default on the debt limit it would be fiscal disaster for the United States and the world economy.

I think your next guest, Majority Leader Cantor, has also spoken on it. So all the leaders in Washington have said clearly we're not going to default on the debt limit. We can't do that. So it would be the fiscal crisis we went in 2008 and 2009, many believe if we default on the debt limit, the interest rates would skyrocket, it would hurt the job creation, homeowners, so the point is...

WALLACE: Well, let me just speak to that point and then I'll let you go on. Here is the argument against what you just said. And let me put this on the screen. "America has a debt problem and a failure of leadership. Americans deserve better. I therefore intend to oppose the effort to increase America's debt limit." That is what Senator Barack Obama said in 2006 when he voted against increasing the debt limit.

PLOUFFE: Yes. And he believes that vote was a mistake. I think as we deal with this issue, it's clear we cannot put the economy -- we are growing now. Lowest unemployment -- the biggest drop in four- month unemployment since 1984 when President Reagan was in office, 1.3 million jobs over the last 13 months, that could all be put at risk.

So it should be clear, I think, you know, the congressional plan came out last week. The president is going to put his ideas out this week. There is a group of bipartisan senators working on some debt reduction ideas, that we're going to engage in a serious debate about this.

So my hope is it will be clear to everybody in America, most importantly, but members of party here in Congress that we can achieve deficit reduction. So we don't disagree that we cannot continue on this fiscal path.

And the president is going to make clear, as he has previously, but again this week, that we can't do that. So I think that we can make progress on the debt reduction.

But the debt limit obviously is something that needs to and will be passed. That is not inconsistent with a process and a belief that we have to get significant deficit reduction.

WALLACE: And we have only got 30 seconds left. Can you get a deal on these big issues, trillions of dollars, not billions of dollars, as part of the agreement to raise the debt limit?

PLOUFFE: Well, I don't know if it's going to be part of an agreement. Those details will be worked out. My point is cutting spending shouldn't be reliant on the debt limit though. It's something we have to do.

The good news for America is, leaders in both parties, the president, believe that we have to have significant deficit reduction. So the intent is there. And I think what America is going to demand is that our leaders come together.

And this is going to be a tough issue. There is no doubt. There are going to be big debates. But can we find common ground to reduce the deficit in a way that still allows us to invest in things that will allow America to win the future?

WALLACE: And the answer is?

PLOUFFE: In terms of?

WALLACE: Of whether we can come -- of whether you can come together?

PLOUFFE: I think this week shows, the effort to cut taxes in December, it shows that we can. And I would argue that we must.

WALLACE: Mr. Plouffe, thank you. Thanks for coming in today. Always a pleasure to talk with you, sir.

PLOUFFE: See you, Chris.

WALLACE: Up next, House Majority Leader Eric Cantor with the GOP perspective on all of this, and the big deal that kept the government running.


WALLACE: The budget battle was the first real test for the new Republican majority in the House. How did they do on spending cuts? Why did they give up on those social policy riders? And what is next in the effort to shrink the government? Here to answer all of that is House Majority Leader Eric Cantor.

Congressman, welcome back to "Fox News Sunday."


WALLACE: Well, the White House and the president have apparently called an audible after not cutting spending. They were going to freeze it in the 2012 budget that they released a couple of months ago. We now hear they're going to announce a whole new plan on Thursday.

Your reaction?

CANTOR: You know, I sit here and I listen to David Plouffe talk about, you know, their commitment to cut spending and knowing full well that for the last two months, we've had to bring this president kicking and screaming to the table to cut spending. I then hear they're going to present a plan as far as how to address the fiscal situation. And, by the way, they're insisting that we have to about looking at raising taxes again, all while holding up the tax agreement that was signed in December.

So, on one hand, we're going to defend that tax agreement but then go ahead and violate it. Then, as you correctly pointed out, the president himself had said he wouldn't raise the debt limit. And now, they're flipping on that.

So, in my opinion, it's really hard to believe what this White House and the president is saying.

WALLACE: Why do you think the extreme change and sudden change in strategy from a budget that had no cuts in spending, a freeze -- a five-year freeze, which they say would have cut spending by $400 billion -- to saying now we'll address everything, spending cut, entitlements? Why the change?

CANTOR: I have to believe that the president and the White House are beginning to sense the American people get it. You know, we have a fiscal train wreck before us. And unless we act, and act deliberately, we're not going to enable our kids to have what we have. It's plain and simple as that.

You know, this budget deal that was cut or the spending deal that was cut this week is only the beginning. This is the first bite of the apple. And we've been saying that all along. This is about making the right decisions now.

We've got the Ryan budget up this week in the House, which lays out our plan of how we're going to address the fiscal challenges of our country. And, Chris, as you know, we've got the debt limit vote coming in several weeks as well. And what that vote is about, frankly, is dealing with the fiscal mismanagement of the past.

But there is no way that we Republicans are going to support increasing the debt limit without guaranteed steps being put in place to ensure that the spending doesn't get out of control again.

WALLACE: When you say "guaranteed steps," what does that mean? What are you going to need in return for increasing the debt limit?

CANTOR: Well, step back for a second and let's just think about a family. When they're engaging in their fiscal affairs and trying to manage their budget, when you hit the max on your credit card, and you don't know what to do, first of all, you got to learn how you got there and not commit the mistake again. If you're going to get an increase in that limit, I think most people would say OK, let's make sure that we're doing everything we can to not spend the money again.

So, there are all kind of things out there that we lay out in our budget that will be up this week. We're talking about putting in maximum caps as far as expenditures are concerned. We're talking about changing the way that the entitlements work in this country for the future, while protecting today's seniors. And these are the kind of things that we're talking about --

WALLACE: Let me make sure I understand, because, obviously, that was going to be part of the 2012. Are you saying that you're going to impose those as part of the deal to raise the debt limit?

CANTOR: Chris, just as we saw happened this week in Washington, there comes time leverage moment here, a time in which the White House and the president will actually capitulate to what the American people want right now. They don't want to raise taxes. They don't want spending to continue to spiral out of control. And those are the kind of things and mechanisms, whether it's spending caps, entitlement reform, budget process reforms -- these are the kind of things that we're going to have to have in order to go along with the debt limit increase.

WALLACE: Let's talk a little bit about the deal that you guys just made to keep the government running. You talk about the spending cuts are kind of a drop in the bucket, but it's a first step in that process.

Let me ask you another question. Why did the house GOP cave on all the riders, including funding for Planned Parenthood and EPA?

CANTOR: Well, let me just speak to the Planned Parenthood issue, because we believe very strongly that we ought not be spending taxpayer dollars to fund abortion. We fought hard for that.

Frankly, the president and Harry Reid have a very different view on that issue. But what we did get is a guaranteed vote in the Senate for all the American people to see where the senators stand on that issue -- something that we've not gotten before.

But I can tell you, Chris, around the issue of Planned Parenthood, the kind of rhetoric that came out of members on the other side of the aisle is completely inappropriate. When they are saying things like Republicans have come to Washington to kill women, that's just not serious. That's inappropriate.

And when you have that kind of environment, you can't get something serious done.

WALLACE: OK. But let me talk about Planned Parenthood, because I've been looking into this. Let's put up the facts on the screen.

The federal government has been funding Planned Parenthood since 1970. Each year, Planned Parenthood provides 1 million screenings for cervical cancer, 830,000 breast exams. Three percent of its services are abortion. And none of those are funded by the government.

Don't Democrats have a point that defunding the Planned Parenthood is going to hurt women's health?

CANTOR: What I would just say, Chris, is this -- it's all about the fungibility and money. If Planned Parenthood accesses hundreds of millions of dollars of taxpayer money and they use that for other purposes, then they can use other dollars to fund abortion. What we believe --

WALLACE: But what about 1 million cervical cancer screenings? What about 830,000 breast exams? To heck with that?

CANTOR: No one -- no one differs with the fact that those are good services for women. It's the fact that they deliver abortions is what most Americans don't believe in. And that's why we fought hard to make that point and to deprive the taxpayer dollars from being used for that.

WALLACE: Let's talk about the 2012 budget and entitlements. This week, as we all know, Congressman Paul Ryan unveiled his budget, cut the deficit by $4 trillion over the next decade, including cuts in Medicare and Medicaid.

Are you prepared -- you, the Republicans prepared to go to the Republicans next fall and say, "We stand here right now are going to say we will cut entitlements"?

CANTOR: Yes, Chris, because what we've said and what the Ryan budget calls for are spending targets. And the way we get to spending targets both on the discretionary and mandatory side of the ledger. As we know, the unfunded obligations on entitlement programs are really what are so daunting and causing global investors, as well as Americans, to doubt whether this country can deal with its fiscal challenges.

So, what we've said is this: we're going to protect today's seniors and those nearing retirement. But for the rest of us, all of us who are 54 and younger, I know those programs are not going to be there for me when I retire, just like everyone else 54 and younger. They can't. We cannot sustain that kind of trajectory.

And what we're saying is we've got to bring down the debt in this country. We've got to do the things necessary so that our kids are going to have the same opportunities that we do. It's plain as that.

WALLACE: Let's talk about the Ryan budget. It would cut Medicaid by $750 billion over the next decade. The non-partisan Congressional Budget Office says, if you take the Medicare changes, this premium support, what some would call a vouch, that as a result of it, seniors will end up paying more out-of-pocket for their health insurance than they would under Medicare.

CANTOR: What we're talking about in terms of the kind of changes in Medicare is also do some things to correlate to folks' incomes. You know, there are people making a lot of money in this country who can actually afford their own health care. We are in a situation where we got a safety net in place in this country for people who frankly don't need one. We got to focus on making sure we got a safety net for those who actually need it.

WALLACE: Well, the Medicaid people -- you're going to cut that by $750 billion.

CANTOR: Well, the Medicaid reductions are off the baseline. And so, what we're saying is allow states to have the flexibility to deal with their populations, their indigent populations and their health care needs the way they know how to deal with them. Not to impose some kind of mandate from a bureaucrat here in Washington.

WALLACE: I know. But you're giving them less money to do it.

CANTOR: Well, in terms of the baseline, that is correct. They will have more money over time than what they have now, it's just the level of growth in those programs. And what we're saying is there is so much in position of a mandate that doesn't relate to the actual quality of care. We believe that if you put in place the mechanisms that allow for personal choice as far as Medicare is concerned, as well as the programs in Medicaid, that we can actually get to a better result and do what most Americans are learning how to do, which is to do more with less.

WALLACE: There has been a lot of speculation in this town about your relationship with Speaker John Boehner. And there is this image that you're kind of itchily waiting in the wings for him to leave and for you to be able to succeed him.

Question -- did he cement his position as speaker and his support inside the Republican Caucus by the way he handled this whole C.R. debate?

CANTOR: Yes. And John Boehner and I have had a relationship, we were in the minority, we were working together very well in the majority. He got everything he could from this president and from Harry Reid, as far as spending cuts are concerned.

And both of us come to the table and come to the leadership positions that we do every day, wanting to deliver the results that we promised the American people that we would do in November. It's about cutting spending. It's about managing down the debt in this country, so that, frankly, we have a situation where our economy grows and people can get back to work.

That's what both of us share in common. We have a very good working relationship.

CANTOR: And we're going to work together to see that these things happen.

WALLACE: So you back John Boehner as Speaker of the House?

CANTOR: Absolutely.

WALLACE: One hundred percent?

CANTOR: Absolutely. And I've been on this show, Chris, probably a year ago saying that, six months ago saying that. And I'll say it again now.

WALLACE: Congressman Cantor, thank you so much for coming in. It's always a pleasure to talk to you. Please come back, sir.

CANTOR: Thank you.

WALLACE: Up next, we'll hear from our Sunday regulars about the 11th hour budget compromise that prevented a government shutdown.

Back in a moment.


OBAMA: A few months ago, I was able to sign a tax cut for American families because both parties worked through their differences and found common ground. Now, the same cooperation has made it possible for us to move forward with the biggest annual spending cut in history.

BOEHNER: We fought to keep government spending down because it really will in fact help create a better environment for job creators in our country.


WALLACE: President Obama and Speaker of the House John Boehner both declaring victory after a late-night budget deal averted a government shutdown.

And it's time now for our Sunday group -- Brit Hume, Fox News senior political analyst; Mara Liasson of National Public Radio; Bill Kristol of The Weekly Standard; and Fox News political analyst Juan Williams.

So, we actually had some news today on a Sunday morning show. I was pretty excited about this.

David Plouffe comes out and says the president is going to come out with a pretty detailed plan the middle of this week. He's going to address spending. He's going to address revenue. He's going to address Medicare and Medicaid.

What do you make of it, Brit?

BRIT HUME, FOX NEWS SR. POLITICAL ANALYST: Well, we'll see when he does it, but it's been an interesting sequence of events here.

First, on the budget just agreed to for the balance of this year, the president, as you pointed out in the interview with David Plouffe -- and he didn't dispute this -- originally proposed to cut zero. And now, as in that sound bite, you have the president bragging -- well, not bragging, but saluting the fact that this is the largest spending cut in history.

Now, you can see the direction this is going. The president proposes a budget with no real Medicare, Medicaid entitlement reform, none whatever. The Republicans then produce a budget with a huge dose of that, a truly ambitious budget in that department. And now, following that, the president is expected to come out with his own plan to do the same thing.

So, whether he will do as much remains to be seen. I have my doubts. I think it will probably be much, much less. But you can see who's driving the debate and who, so far, is winning.

And I think Mr. Boehner and the Republicans have won a significant victory, albeit in dollar terms. It will be small this week. There may be more victories to come.

WALLACE: I mean, is that what's going on here with what clearly seems to be a pretty dramatic strategy shift by the White House, that they realized that starting from zero was not a tenable position and didn't work for them very well?

MARA LIASSON, NATIONAL PUBLIC RADIO: Well, you know, I think that they have said all along that at some point, the president was going to weigh in this bigger debate about what to do about the debt, deficit and entitlements. And we've talked about this here a lot, when he was going to do it. He's doing it this week.

I believe that presidents have almost limitless ability to run to the head of the parade and grab the flag and lead, even if they don't make the absolute first step. You have got the Ryan plan now. That's what the White House was waiting for.

The Republicans have staked out their vision of very drastically limited government, privatized Medicare. You have got the "Gang of Six" in the Senate trying to put into legislative reform the president's own Deficit Commission. And this week, later this week, he's going to come out with his own plan.

I think that is essential going forward. He couldn't wait until the last minute on the debt ceiling vote like he did this time and kind of jump in and try to cobble something together. He's going to try to define his terms of the debate early on, which I think makes a lot of sense.

In terms of winners and losers of this negotiation, yes, the president started at zero, and he ended up agreeing to $39 billion. And if you want to measure it that way, whoa, did he cave.

On the other hand, the president always wins -- this president always wins when it looks like he is finding common ground, bringing both sides together. That's what Independent voters want. That's the White House target constituency for 2012. He won because of that.

WALLACE: And let's go back and talk about -- because, to a degree, everything he is going to do this week comes in the context of what happened over the weekend.

It was John Boehner's first big test as Speaker, and to see how he was going to be able to negotiate between White House and the Senate Democrats on the one hand, and the Tea Partiers in his caucus on the other. And it was also, frankly, the first big test for the president's new -- and I think David Plouffe has a lot to do with it -- above-the-fray grand compromise, so why doesn't everybody act like a grownup? Not tied at the hip to the Democrats.

How did it work for both of them?

BILL KRISTOL, THE WEEKLY STANDARD: I think it worked well for John Boehner. And look, the November 2010 election was a very big election.

Domestic discretionary spending, which was what was being debating in this continued resolution, increased 24 percent in 2009 and 2010. In the president's own budget a year ago, he proposed I think a $40 billion increase, further increase in domestic discretionary spending.

There was a big election, and now he's accepting a $40 billion cut in domestic discretionary spending. It went up like this, and now it's beginning gradually to go down. That's why 2010 was a big election, and that is why the debate is now being conducted on Republican grounds, on a Republican playing field, I would say, and the president has adjusted.

He's not foolish and he wants to get re-elected. But he is playing defense. And the key for Republicans now is keep him playing defense, in my view.

WALLACE: Your thoughts about how Boehner did in this deal and how the president did?

JUAN WILLIAMS, FOX NEWS POLITICAL ANALYST: Well, I think the president did fine. I mean, essentially, the president did fulfill this pledge, you know, he's going to be the adult in the room.

I thought Republicans really suffered serious damage when they introduced all these social issues, the so-called riders into the discussion. At that point, I could see the White House attitude shifting.

The White House attitude then was, we'll take you on, we'll challenge you, because the American people, at that point, will say this is not about spending cuts, it's not about budget reduction. It's not about limiting or culling the size of an overgrown government. You guys, you Republicans, are just advancing some social agenda.

And the White House, if you look at the numbers, they looked at the numbers and saw they were going to win that argument. But just on the numbers, they know that the ground has shifted.

Just as you were saying, Bill Kristol, that, you know what? The American people want to cut the size of government, they want to reduce spending. They understand it, but they don't understand making it an ideological fight for no reason, threatening to shut down the government. I think, ultimately, that hurts Republicans as we go towards the debt ceiling.

WALLACE: I want to pick up on this question of the policy riders, because I think you can see it both ways.

On one hand, you can make the argument that the Republicans were very skillful in using the social policy riders on Planned Parenthood and EPA and funding health care as bargaining chips that they ultimately gave away, because they weren't going to get them anyway, to get billions dollars in more money. On the other hand, the Democrats did score some points by portraying, particularly on the Planned Parenthood, Republicans as threatening women's health care.

So how do you think the policy riders played out? Net plus or minus for the Republicans?

HUME: Well, I think it was a net plus for them because they were pie in the sky. Look, the critical factor is how do Independents, the swing vote that went against the Republicans in '08 to elect the president, and against the president and his party in 2010, how are they going to react to these things? And Independents, I think, broadly speaking, say spending cuts, yea, and their opinion is much more mixed on these kind of policy questions, particularly in the context of a budget measure.

So there were some risk to the Republicans that they fought all the way down to the end and shut the government down over these things. On the other hand, as it worked out, Boehner used them as very handy bargaining chips, and he actually got some $10 billion or so more in spending cuts as a result of giving them up. So it worked out I think very happily.


WALLACE: Wait, because I want to just get to one other issue in the time we have left.

And that's the Tea Party freshmen, Mara.

How did they end up doing? Were they successful in pushing the whole debate and the actual result in favor of more spending cuts? How did Democrats do in portraying them as the extremists who were trying to drag the Republicans off the cliff? Net plus or minus for the Tea Party?

LIASSON: I think it's a net plus. And John Boehner helped them get their victory.

They took his original number, whatever it was, $33 billion, $35 billion, doubled it almost to $61 billion, came back to $39 billion. He gave them credit all along. He said, you've put me in the corner I want to be.

I mean, I think the Tea Party freshmen got what they wanted, but they also didn't revolt against the Speaker. They got what they wanted, a lot of what they wanted, and they fell in line. And those are two important things.

KRISTOL: I think it's a huge victory for the Tea Party.

Look, we, in The Weekly Standard, were pretty conservative, published an editorial in January of this year saying, you know what? Forget about this year's budget. There's not that much money at stake. Let's get it done, let's take last year's CR, continue it, and let's have a fight over the big Paul Ryan budget.

The Tea Party -- John Boehner said no, let's try to get some cuts. The Tea Party people said let's get big cuts. And they ended up with big cuts this year.

I didn't think it could be done three months ago. And everyone says they're pie in the sky, unrealistic types. They got real cuts in real spending this year.

WALLACE: Real quickly, Juan.

WILLIAMS: I think they got real cuts at the point of threatening everybody, and I think they opened the door to charges that Republicans aren't concerned with the budget. They're concerned with extremism.

And I think if you look at the number, now people are saying, you know what? You over-read your mandate. You're threatening the American people.

And John Boehner now has the Tea Party wrapped around his neck like an albatross, and he's going to have to live with it as you go toward the next sequence of negotiations. That's a negative.

WALLACE: Don't you think it gives him some negotiating leverage?

WILLIAMS: What negotiation leverage?


WALLACE: Leverage to say, hey, look, I've got to deal with these guys.

WILLIAMS: No. Exactly. So everybody says, oh, well, I'm sorry, you're locked in. What did Senate Majority Leader Reid say? John Boehner is being held hostage by the extremists in his party.


HUME: Juan, this is just completely wrong. In the end, what was agreed to was something that is $40 billion beyond what the president wanted in the beginning, and the president is praising it. That's your outcome here, Juan. And if that's a win for the Tea Party, and John Boehner comes out of it smelling like a rose, I don't see how you think the Republican Party is going to be in a bad light with the electorate after succeeding and getting $40 billion in spending cuts.

WALLACE: Wait. Hold that thought. We have to take a break here.

When we come back, we'll continue this discussion and talk about how this compromise will affect the big legislative fight still to come over the debt limit and the 2012 budget.

Coming right back.



REP. PAUL RYAN, R-WIS., CHAIRMAN, BUDGET COMMITTEE: The president's recent budget proposal is worse than just a commitment to this status quo. Instead of locking in the spending spree of the last two years, our budget cut $6.2 trillion in spending from the president's budget over the next 10 years.


WALLACE: House Budget Committee Chairman Paul Ryan this week laying out the big differences between his 2012 budget and President Obama's plan.

And we're back now with the panel.

So, Bill, how does this budget deal affect the coming battles -- and they're going to start right away -- over the debt limit and the 2012 budget? Does this compromise make it easier or harder for Republicans to get even bigger spending cuts?

KRISTOL: I'm not sure, actually. I think easier, but there have been an awful lot of predictions that we've been wrong in the last year about how things interact with each other.

Look, the president -- the big news is the president -- the election happened, the president laid out his 2012 budget. It had increase in spending, domestic discretionary spending, and no reform of entitlements. Now he's going to have to reform his proposal this week, as David Plouffe said.

That's a very big moment for a president to do that, three, four months into his third year of the presidency. And he is now -- Paul Ryan is leading and Barack Obama is following. That is the fundamental dynamic, I believe.

And whether it leads to more -- it will lead to some confrontations and some deals. I don't think they will be fundamental deals in the next year, and I think we'll still go into 2012 with a fundamental contrast between the two parties.

WILLIAMS: Well, I think that when you look at what Paul Ryan did, the first thing you have to do is give him credit. You have to say hats off to Paul Ryan for actually saying what he plans to do, and here is how we would cut entitlements. That's the big challenge that the whole country faces; it needs to be done.

But then when you get into the details of what Paul Ryan offered, you say wait a second, you know what? This is, like, a three to four percent difference in terms of what President Obama offered, versus what Paul Ryan is offering over the next 10 years. Paul Ryan doesn't balance the budget. You say, wait a minute --

WALLACE: Wait a minute. He's cutting $4 trillion over 10 years and Obama is cutting $1 trillion.

WILLIAMS: No, but you've got to look at the entire budget, Chris.

WALLACE: It is the entire budget.

WILLIAMS: You look, and you look at the percentage, and it's not that big a difference. And guess what? Paul Ryan is doing it on the backs of poor people and seniors.

And he says to the seniors, you're grandfathered in if you are over 55, but you know what? He wants to make proposals that are going to put more pressure on domestic discretionary spending. He's not doing much about defense spending in this country.

He is not doing anything in terms of raising taxes to compensate and say, you know what? The sacrifice is going to be shared across all areas of our economy. The rich get off like scoundrels. They're just running -- they're happy. They're like the executives on Wall Street this week who are getting all these big bonuses, despite all the --


WALLACE: It's shameful to make money.

WILLIAMS: Oh, get out of town.

WALLACE: Well, you said the rich are making out like scoundrels.

WILLIAMS: You know what? You should be ashamed to use that kind of language as the host of this show.

WALLACE: What are you talking about?

WILLIAMS: Because you should be more impartial. You know what? Leave that to Brit Hume.


WILLIAMS: Brit Hume can make these outrageous statements.

WALLACE: That's right. Brit Hume. Who is he anyway?

WILLIAMS: If you don't think that those Wall Street guys are scoundrels, then you must --

WALLACE: You didn't say Wall Street guys. You said the rich are making out like scoundrels.

WILLIAMS: The Wall Street guys that got those big breaks this week, and now are going to get more breaks from Paul Ryan. And then everybody says, oh, yes, we've got to have tax cuts, we've got to have sacrifices with this country. Oh, it's just for the middle class and especially those despicable poor people.

HUME: Well, that doesn't sound like the Paul Ryan plan to me. And there's no use in getting into a long argument about that.

But would say about this is that, if you look at the pattern here -- we discussed this moments ago, but the Republicans are driving this. They're acting as if they have a large mandate. And the president seems to think they do, or else he would not have moved in their direction.

Look, he came in their direction, as Plouffe was proudly pointing out today on taxes, which was a major element of his campaign promises, was to raise the taxes on the top bracket. He gave in on that back in December, hailed it proudly. He has done the same thing now on spending. And the question is, how much of the Ryan budget will he swallow in order to get a budget passed and/or the debt ceiling raised?

My sense about this is, the way this is going -- and, of course, things change in politics -- the way this is going is, every time you come to one of these deadlines, it's an opportunity for the Republicans in the House, controlling one-half of one-third of the government, to lever that into some serious attack on spending. And the president seems to go along.

WALLACE: Well, let me ask -- that's a very good question -- how much of the Ryan budget will the president be willing to swallow? And remember, we were talking about billions. This is trillions of dollars.

LIASSON: I don't think the Ryan budget -- what finally emerges, if anything emerges, is not going to look almost anything like the Ryan budget, because the Ryan budget is not balanced and comprehensive. It doesn't deal with defense, doesn't deal with revenues. It doesn't even close tax loopholes. I guess he's leaving that to Dave Camp of the Ways and Means Committee.

But I think what's going to happen pretty soon is, the reason that the Ryan budget got so much praise across the board -- commentators of every political stripe -- because he had a plan and he went forward, and he did something about the big drivers of the deficit. That's going to change pretty soon.

The president is going to have a plan this week. I assume that in the Senate, you're going to have the "Gang of Six," this bipartisan group of senators working on the Deficit Commission. You might even have more. There'll be a liberal Democratic entry.

There's going to be a bunch of deficit reduction plans, and there's going to be a huge debate. And in that debate, the president can prosper.

WALLACE: Bill, our colleague, Charles Krauthammer, wrote a very interesting column this week in which he called the Ryan budget -- and let's put this up on the screen -- "a suicide note." And he meant that as a compliment.

Question: Is there any reason to think that voters are going to get serious and are willing to accept what Ryan is calling for, real cuts in entitlement, real cuts in Medicare, real cuts in Medicaid? And if this -- and I think we all agree that this isn't going to get all passed, maybe very little of it will get passed -- if this becomes the Ryan budget, and the policy choices in it becomes the central issue in the 2012 election, which side does that favor?

KRISTOL: It favors Republicans. And here is why.

Listen to the incoherency of our friend Juan a minute ago. See, everyone above 55 is exempt.

The brilliance of the Ryan plan is that it is bold and comprehensive. It is not radical. It is gradual.

Paul Ryan preserves the safety net. The current programs are going bankrupt. The plane is going to crash if we stay on auto pilot.

Ryan tries to say let us gradually reform Medicare, let's not touch anyone over 55. How are people -- can Democrats really say what Juan just said -- they're balancing this back -- they're balancing the budget, they're cutting spending on the back of seniors, when everyone over 55 has current Medicare benefits? I don't think so.

LIASSON: But every plan is going to exempt people over 55. Every --

HUME: Well, good.

KRISTOL: Well, good.


KRISTOL: So Ryan's plan is not a suicide note, because in fact --

LIASSON: Yes, but it's a suicide note for different reasons.

KRISTOL: -- it fixes the system. It fixes -- well, people can sit here cynically and say the American public are a bunch of idiots, they don't know we're going bankrupt, they don't know that we have a trillion-dollar deficit a year. And how silly of Paul Ryan to actually address like a grownup the actual problems that the country faces.

LIASSON: That's not what people are saying at all.

KRISTOL: That is what people have been saying.

WALLACE: Wait. Stop.

LIASSON: You're acting as if the alternative --

KRISTOL: What did Barack Obama say in January?


LIASSON: You're acting as if the alternative to the Ryan plan is the status quo.

KRISTOL: The alternative to the Ryan plan is the Obama budget so far.

LIASSON: No. It's going to change this week.

KRISTOL: Oh, that's nice of the president. That's nice of the president. He's the president of the United States, and he has to wait for a Republican congressman to set out a plan before he behaves responsibly?

LIASSON: You know what? Everything is going to change this week when he has an entry, when the Senate steps up. The Ryan plan, compared to the status quo, yes, is the absolute essence of leadership. But that's not what it's going to be. That is not what it's going to be.


Juan, let me ask you another question, because the first fight, even before the Ryan budget, is the debt limit. And Republicans huffed and they puffed, but in the end, they didn't shut down the government.

So, are Democrats more likely to call their bluff this time and say, do you want to let the country go into default? Go ahead.

WILLIAMS: Absolutely. Because you know what? In this case, Wall Street -- I mean, the very pillars of our economic system are at risk.

WALLACE: The scoundrels.

WILLIAMS: The scoundrels, those Wall Street guys.

WALLACE: Despicable.

WILLIAMS: Let me just tell you something. If you don't raise the debt limit, you put our bonds at risk, you raise interest rates, and you absolutely condemn our weak, fragile recovery.

I mean, so everybody is just going to say Republicans are in this for their own reasons. They have a social agenda. This is not about the budget, not about the economy. They're not serious people.

WALLACE: All right. Don't look at me like that.

WILLIAMS: Well, I'm waiting for you to attack me.

WALLACE: No, I'm not --


WALLACE: Thank you, panel. See you next week.

Say goodbye, Juan.

But you're going to want to check out "Panel Plus," because I am going to attack him on "Panel Plus," where our group is going to pick up right with the discussion on our Web site, We promise we'll post the video before noon Eastern Time.

Up next, we hear from you.


WALLACE: We have been fighting all through the commercial.

Time now for some comments you posted to our blog, "Wallace Watch." And most were about our two guests last week.

Jacque Girard wrote, "Paul Ryan and Marco Rubio did a fantastic job today. And as tough as some of these proposals might be, it's about time someone tells the truth and does what is actually best for our great nation."

Pastor Carl A. Dixon disagrees. "Ryan and Rubio are obviously very smart and exciting men, but they will not be effective and will not change the game."

And John McDonald is thinking about the next election. "I am solidly behind Ryan-Rubio in '12. The best ticket I can imagine." Please keep your comments coming. You can find us at

And that's it for today. Have a great week. And we'll see you next "Fox News Sunday."

Content and Programming Copyright 2011 Fox News Network, LLC. ALL RIGHTS RESERVED. Copyright 2011 Roll Call, Inc. All materials herein are protected by United States copyright law and may not be reproduced, distributed, transmitted, displayed, published or broadcast without the prior written permission of Roll Call. You may not alter or remove any trademark, copyright or other notice from copies of the content.