White House: The Debt Crisis Requires Compromise

White House on Obama, Boehner Addresses

Senior adviser David Plouffe on the debt talks, dueling speeches

This is a rush transcript from "On the Record," July 25, 2011. This copy may not be in its final form and may be updated.

GRETA VAN SUSTEREN, FOX NEWS HOST: White House senior adviser David Plouffe joins us. Good evening, sir.

DAVID PLOUFFE, WHITE HOUSE SENIOR ADVISER: Hi, Greta.

VAN SUSTEREN: David, why did the president want to speak to the American people tonight? What did he hope to achieve by speaking to them directly?

PLOUFFE: Well, first of all, eight days from now, if Congress doesn't act, the nation would default for the first time, and that would cause huge economic catastrophe. So I think it's important to let the country know we're getting close to that, and that, most importantly, we're actually at a moment in Washington where both parties seem to be committed to deficit reduction. At least, a lot of members of both parties agree on the scale of it. And we're just having a disagreement about the composition.

But to get through the crisis of the moment is going to require compromise, and that's what we need to see in the next few days so that we can avoid default and do significant deficit reduction.

Now, your previous guest was talking about entitlement reform. Both the Reid and Boehner plans have the same committee that would produce potentially some suggestions on entitlement reform. Now, that committee could deadlock. It's six Republicans and six Democrats. It's why the president was working with the speaker of the House and willing to do a lot of tough things on entitlement that a lot of people in our party had a tough time swallowing.

But he believes we reduce the deficit, it just can't be the easy things. You're going to have to do tax reform and entitlement reform. And so even though we're not going to get that done in the short term, the president is committed to making sure in the months to come we try and get a deficit reduction plan, a balanced plan for the American people.

VAN SUSTEREN: What happened in the last seven or eight days? Because it seems to have gotten so hostile from both sides. I mean, I know in politics can -- sometimes people are very passionate about their politics. They got, you know, people leaving it and it's, like, exchanging of insults. The president gets up and he throws in that corporate jet remark. By the way, I researched it. That was in the February '09 stimulus bill that the Democrats supported, as well as going back to 1988 during the first George Bush presidency. But nonetheless, it's -- it gets thrown -- I mean, the nastiness just keeps getting thrown around on both sides.

PLOUFFE: Well, a small thing, but that tax break that we want to repeal was not part of the stimulus package. But here's the thing. I think there was hope that the speaker and the president and like-minded people could work on a big deficit reduction package called the "grand bargain." I think when that broke down last week and we've got this deadline in front of us, obviously, the temperature's going to get a little hotter in Washington.

But that's why I think the president made a very important point. We need to compromise. And what's interesting is there were reports tonight - - the president asked the American people to call Congress, let them know they want that -- if you wanted a balanced approach with compromise. And you know, Capitol Hill is just getting deluged with calls from the American people, who I think are frustrated, who want their leaders to simply compromise, to lower their voices and try and find common ground.

And I think any fair observer would say the president through this process has tried to do that. And that's what he's going to try and do in the days and months ahead.

VAN SUSTEREN: How do you compromise on ideology? Because the Republican Party and the Democratic Party have very different views on how to handle this. It's not just, you know, wrangling over a couple dollars here and there. But it really is, you know, the size of government, and I mean, very different ideologies on how to solve this. How do you compromise that without coming off your principles for both parties?

PLOUFFE: Well, I think both parties have actually agreed -- not every member of every party, but a lot have agreed to about a sense of the amount of domestic spending we can cut. So that's good news. The president and speaker were very close in terms of what kind of entitlement reform to do. So that's good news.

The big issue, I think the big unresolved issue, is revenue, where pretty much any neutral observer says the only way to get significant deficit reduction that doesn't put too much of the burden on seniors and the middle class is through tax reform, to make sure the wealthiest Americans, through elimination of deductions and loopholes, participate, as well.

I think now, in the short-term process we're facing in the next week, we're not going to do entitlement reform or tax reform in the next week. So the question is -- either of them would reduce spending significantly. So it's a good down payment on the deficit. But are we going to have this debt ceiling hanging over us five or six months from now?

VAN SUSTEREN: Let me -- let me --

PLOUFFE: And added to that is this -- yes?

VAN SUSTEREN: Let me ask you about the tax code reform. The Simpson- Bowles commission said there are 3,300 tax loopholes or whatever in the tax code, or earmarks in the tax code. That was something that was -- they didn't get enough votes, so it didn't become -- it didn't get passed over to Congress. I understand that. But the president could have adopted that. Why didn't the president seize upon that and say, You know what? Let's get rid of those 3,300?

PLOUFFE: Well, listen, he adopted a lot of the Simpson-Bowles commission in the budget framework he laid out in the spring and a lot of the negotiations that took place with the speaker, and that will be reflected in whatever deficit reduction package we got flowed (ph) from that.

Now, the president and speaker were agreeing on lowering rates, simplicity. The speaker agreed to, you know, an $800 billion dollar revenue number through tax reform. So we were making a lot of progress.

And at the end of the day, five, six months from now, hopefully, our leaders can report to the American people that we finished the job and we had done both entitlement and tax reform in addition to additional spending. That's the only way we're going to reduce the budget, is in a balanced way. And I think the president has shown that he's willing to do deep domestic spending cuts. He's willing to tackle entitlement reform in a serious way. But we also need some revenues through closing loopholes. And if we do that, we will put this country on a stronger fiscal path.

VAN SUSTEREN: David, thank you.

PLOUFFE: Thanks, Greta.