FIRST ON CNBC: CNBC TRANSCRIPT: WHITE HOUSE CHIEF OF STAFF WILLIAM DALEY SITS DOWN WITH CNBC’S STEVE LIESMAN TODAY ON CNBC

William Daley is no stranger to politics. A former U.S. Commerce secretary, he is also the youngest child of longtime Chicago mayor Richard J. Daley.
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William Daley is no stranger to politics. A former U.S. Commerce secretary, he is also the youngest child of longtime Chicago mayor Richard J. Daley.

When: Today, Tuesday, July 26th

Where: CNBC’s "Closing Bell with Maria Bartiromo" and "The Kudlow Report"

Following is the unofficial transcript of a FIRST ON CNBC interview with White House Chief of Staff William Daley today on "Closing Bell with Maria Bartiromo" and "The Kudlow Report." All references must be sourced to CNBC.

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STEVE LIESMAN, host: Welcome, Chief of Staff Daley. Will there be a debt extension?

Mr. WILLIAM DALEY: I believe there will be. All the leaders have said that there will be an extension of the debt ceiling. They understand the ramifications that...that Congress' duty to do this. And I expect that they will--Congress will act and...

LIESMAN: And will do so before August 2nd?

Mr. DALEY: Oh, yes.

LIESMAN: Are you as confident now as you were a week ago?

Mr. DALEY: Well, you know, when you get to the end of any period where there's a deadline, everyone's stress levels rise. So it's rather stressful right now. But I'm confident again with the leadership all being on record the Senate and the House, and obviously the president, that in the end, the Congress will do what's right and they will not let the American people, not let this country for the first time in its history default on its obligations. It is the Congress that has created the obligations, not the president or the presidents before him. It is the Congress that has run up the bills, basically, and it's time that we take action. Whether we can see a deal that's large enough to have a substantial impact, pardon me, on the deficit, there have been many plans out there, there's plans right now that are close to $3 trillion in real deficit reduction in as short as two years. And there are lots of plans out there. But I'm confident that the default that some people fear will not occur because I believe Congress will act.

LIESMAN: Some people on Wall Street who were relatively confident now look at where the two sides are. And they had thought maybe there was a 50/50 chance the deal got done now they're thinking it's less than 50/50. Are they wrong to lose confidence in the process right now?

Mr. DALEY: Well, I'm not going to give advice to investors on Wall Street as to how they should handicap the political system today because, obviously, as the president said last night, there's a lot of dysfunction in it. We have a divided government, politically speaking, but the people wanted that. But they did not want dysfunction. So I think there is reason for concern because we are in the final week before August 2nd. No question about it, there is reason for concern. But I have an eternal optimism that in the end the Congress will do what they're obligated to do.

LIESMAN: Eternal optimism is not something one wants to be investing upon, you know that...

Mr. DALEY: Right. Right.

LIESMAN: ...because you spent time on Wall Street.

Mr. DALEY: Right.

LIESMAN: Fundamentally how far apart are the two deals from Senator Reid and from Representative Boehner?

Mr. DALEY: Well, Senator Reid's bill has a solid $2.7 trillion over 10 years of reductions to the deficit. Speaker Boehner's plan, which very well will be passed by the House tomorrow, I think it has about 1.2 trillion up front. And then there's an expectation that a committee will act that will cut another $1.4 trillion. No guarantee, obviously. And that's a big risk for those who believe that what we need in this economy is certainty during these tough economic times, and we expect them to go on, obviously, over the next at least 18 months. And so what I've heard from business leaders and every call over the last number of months, in a whole host of areas, is the problem in Washington, the problem very much so in our economy is that there's not certainty. And here we are in a period of great uncertainty the week before the deadline of August 2nd. And what business leaders are saying is give us certainty as long as you can because we as business leaders--and this you know, Steve, many boards late in the summer lay out the companies for their boards, lay out their long-term plans and next year's planning and spending. And they need certainty in this time of the year when they're going to put a budget before a board in September for '12. And so they're looking for longer term certainty than a couple months, that's for sure.

LIESMAN: But if that's true then why did we just get the Chamber of Commerce back in Boehner's court?

Mr. DALEY: I've not heard that. I talked to Mr. Donohue this morning. I did--he did not indicate that to me. He has been saying to me over many months that we should try to get a big deal, and the president tried to get a very large deal with the speaker. That has been made public after negotiations over many weeks. And so there--that surprises me that the Chamber would want a short-term solution, or not even a solution but a short-term plan that would not help the economy right now, not give certainty to business leaders, not give certainty to the members of the Chamber of Commerce that they can begin to plan next year without running the risk that six months from now, we're going to be in the same situation with a gun to the head of the economy and to the American people. It makes no sense for any business group, much less a business leader, to think that short-term solutions in this difficult economic time helps the American people. It may help some political leaders, but it sure doesn't help the American people.

LIESMAN: The charge against the White House has been what it wants to do is to just get a deal that gets it through the election. That is really -- at this point.

Mr. DALEY: Well, first of all, one could make the charge that the reason the other side wants to have this vote in the election is to help themselves. So that -- as the one I just laid out. I don't believe that's the reason. I think the reason is that they do not believe that they can take a tough vote for a larger amount of deficit reduction at this point.

LIESMAN: The president has said he supports the Reid plan. However, the Reid plan has no revenue. Last night, however, in his speech, the president made a pretty impassioned plea for revenue.

Mr. DALEY: Right.

LIESMAN: So which is it? Is the president insisting on revenue in a deal or not?

Mr. DALEY: Well, the only deal that's really on the table right now--there's two deals, pardon me, on the table. There's the Reid plan, which is $2.7 trillion of real cuts, and there's Speaker Boehner's plan. Neither plan has revenue. We would like revenue to be on the table. It is in neither of these bills. So I guess we will have to wait to a final--a more final solution to the problem of the deficit that includes revenue. But the president believes very strongly that to solve the deficit, a real solution to it, and make a real dent in it, has to be balanced. You cannot do it on one side of the ledger. You must do it on both sides. And I think that in the end, the American people believe that there has to be a balance. And any sort of revenue that the president's talked about is not going to be received by the federal government until the year 2013 or beyond. So we're very sensitive to the fact that we have to do things right now to help the economy today, not damage it. Now, we understand that. And the same is true about the cuts. You can't have such massive cuts right now short term in the middle of this economic difficulty that's going to negatively impact the economy, just as you wouldn't want to do revenue increases.

LIESMAN: Would the president veto Boehner's plan?

Mr. DALEY: Well, it's pretty obvious that the Boehner plan is not going to pass the Senate. Not only Senator Reid but a whole host of senators have stated that will not pass. So it's a hypothetical question. I've answered it. The senior advisers to the president have recommended that if that bill, as is, was to pass, that he--they would recommend he veto it. But the fact is, it's pretty obvious it's not going to pass. So let's get on with dealing with what can pass. But more importantly, not what can just pass, but what can have a serious impact on the deficit.

LIESMAN: Were you surprised at how Wall Street has reacted to this whole thing? Bonds seem to be relatively changed. The market is down a bit as it looks like people have lost a little bit of confidence in the yield, but not a whole lot. How do you--how do you view Wall Street's reaction so far?

Mr. DALEY: I think it's been obviously measured. I think there is a faith in the political system that maybe some observers in this town don't have. I think they understand more than anyone the ramifications of a default. And I think they probably figure that that's not going to happen. And the system, albeit that it may not be the prettiest system of governing, but in the end, they will do the right thing. And that is our hope, that's the president's. That's been the president's position from the very beginning. Let's do—he wanted to do something big. It may be too late short term to do something really big in a bipartisan, balanced approach, but he will hold out hope for that for as long as he's president.

LIESMAN: Your arrival was heralded as an opening to the business community and to Wall Street. But there are a lot of stories about the president's Wall Street backers abandoning him. Has this not worked out the way it was planned?

Mr. DALEY: No, I don't think I came here just to get Wall Street backers to meet with the president. I would hope it's wider than that. But again, I think the way you get through the election period, and part of the problem in this town over the last couple of years is--seems to be a perennial campaign period around this time. My sense is that when the business community, not just on Wall Street, more importantly on Main Street, will look at the candidates, whoever the opponent to the president may be, and look at the difficulties that this president went through when he came in, when we had already four million jobs--were losing 750,000 a month, the size of Columbus, Ohio, every month--the challenges that he faced have never been faced by a president since Franklin Roosevelt. I think they will see leadership through this period, a desire to be bipartisan in a very partisan period in our nation's history. And I think they will, in the end, say that this man has tried and has done a, considering the situation he was--was forced on him, a terrific job.

LIESMAN: So we came down here to Washington today, we set up all this fancy equipment. Want to make sure you had a chance to say what you wanted to say. Is there anything else? You still have a message to Wall Street?

Mr. DALEY: Sure. I would say to Wall Street that they should keep faith in this system. But they should get involved in a way that not only helps Wall Street and helps their personal interests or their corporate interests, and there's nothing wrong with that but--I may need that. But the fact is, we have a country that is in a lot of pain. And a lot of us who have been very fortunate in life, either through luck or hard work or extreme knowledge, and have done very well, we do have an obligation. This is a country that's based upon the premise that we are all in this together. And I think it's important that the Wall Street interests or business interests understand that the people in this town really have the motivation to try to get it right, and they should be more helpful of trying to bring compromise. Compromise is not a dirty word. If you're on Wall Street, if you're in a business setting, you've got to compromise to move forward. If you're going to try to do a deal, if it's a win on one side only, that deal's not going to happen. So there has to be a greater understanding and a greater encouragement on the political system today to compromise for the greater good of the American people, not just one interest.

LIESMAN: Mr. Daley, thank you very much for your time.

Mr. DALEY: Thank you.

LIESMAN: Appreciate it.

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