Debt ceiling fight looms following fiscal cliff deal

>>> did in 2011 ? already incurred. if congress refuses to give the united states government the ability to pay these bills on time, the consequences for the entire global economy would be catastrophic.

>> that was president obama on the next battle ahead in washington. the fiscal cliff may have been just a warmup. but february or early march, congress will have to vote on raising the debt ceiling, and the differences are not resolved, the country could see a default on the national debt and another potential downgrade on u.s. credit rating . joining me now, judd gregg , co-chair on the campaign to fix the debt. senator greg, thank you for joining me.

>> thank you for having me on.

>> it's a new year, new congress, but has some old problems, the debt mainly. what will happen this time?

>> well, you know, the congress and the president made two efforts here that have been fairly substantive. the 2011 effort reduced discretionary spending by $900 billion and a tax increase of $960 billion, but the big elephant has not been addressed, entitlement spending, that's driving our debt. we're running deficits of over a trillion dollars a year, even after the tax increase, so they will have to come back and address that. i hope they can do it in an orderly way, rather than what we do in recent years. the chances that seem to be slim, the congress and president don't seem to be able to work this out in an orderly way. my sense, ground work has been laid to get something fairly significant done. the president had a fairly big give. and put on the table in the last round, adjusting the poll to have it calculated in a more accurate way. that is a big issue on entitlement reform. i'm hopeful that he and the speaker and senator mcconnell and snok reid can get together before we hit these pressure points which will be the sequester vote, and three pressure points coming up. before we have the brinksmanship, i hope we can get some agreement on entitlement spending. he also wants more revenue which i have problems with personally. he already got 6$600 billion. they have to be done in the context of tax reform . we fundamentally reform tax reform .

>> it's interesting. i like to have you listen to what congressman newt gingrich said about the debt ceiling. here he is.

>> we've got to fin in the house, a totally new strategy. for example, everyone talks about the debt ceiling. that's frankly a dead loser. in the en, it's going to happen. the whole national financial system will come into washington by television, and this will be a giant heart attack. you can't be responsible.

>> do you agree with him?

>> yes. yes. you can use the debt ceiling, because we've spent money we don't have. that's what it's about. we are subpoenaing money we don't have. you can raise that to raise the topic and get the discussion going. the $930 billion of discretionary cuts that occurred already, a step forward to fiscal solvency, and now defaulting on the debt is not a legitimate option, and what the speaker is saying, you don't take a hostage you can't shoot.

>> in very simplistic terms, defaulting on the debt is akin to somebody running up a credit car bill and not playing it. i know that's simplistic. but basically is it like that?

>>> yes, i guess you could describe it that way, but are you putting at risk the concept of the united states of america , which is the wealthiest country in the world and the strongest economy in the world, unwilling to defend its currency and support its debt. and undermining the concept of the full faith and credit of the united states of america and its people. which is why our debt sells around the world and why we finance our government at such a low rate right now, and the effect of the debt would be to put that all in flux, and not only throw our system into question, as to whether or not we are responsible, but the world economy . very significant, desire straits.

>> i did say very sim listic terms.

>> you are right. that's a pretty good description for a person on main street .

>> exactly. let's move to something else here. i want to ask pu chuck hagel . is he deeply unpopular with fiscal conservatives. how ugly might the nomination fight get?

>> well, chuck is a controversial guy, and a person marches to his own drum. and is he a really aggressive guy, who is willing to make tough calls, and many unfortunately i don't agree with when he made them. but i think -- first off, the president should have who he wants in his cabinet's position, unless the people are totally irresponsible. and he has a choice like that. he's the right president to pick this cabinet. and i think chuck will bring a refreshing view to the defense department . the defense is filled with defense speak and it would be nice to have somebody who looks beyond the box and says, listen we have to think outside the box . the defense department and the whole military establishment will go through major adjustment as we try to get control over our finances as a nation, defense will be part of the issue and so you will have some creative thinking . we have a lot of angst on iran positions, sanctions, and on israel and, the fact that he supported president obama in 2008 against senator mccain . that's the bag he carries with him. but i think he will get confirmed, the president has a right to choose defense secretary , and chuck, for all the issues he may bring, he may also bring some strengths, he thinks outside the box.

>> judd gregg , thank you. we