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Who will step up to the plate on fiscal talks?

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    Bob Rice and Penny Lee examine both parties’ strategies on a tax deal

  • Duration 16:06
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And everybody this is all no -- -- another depressing day.

Has also called -- is failed to lead.

Let's get into the fiscal cliff Clinton how we can possibly -- leaping over it lending like.

-- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- To one of those who we would like to leave -- -- Harry Reid.

Penny hello.

And then when it comes to your first pilgrimage but what do you think of us your -- bosses leadership all lack of their all of on this.

Well I think I think he's doing what he doesn't masterfully and that is.

His whole.

Kind of -- at -- how he operates his what does it take what is the caucus needs.

I'll be able to get the bill off the floor if so what he's doing right now is listening to his various members and he's kind of find out what it is that they absolutely cannot live without.

What can they compromise on what would be willing to negotiate with.

So he's trying to figure out how many kids he can collect what it with a pool of -- it is that he will be -- going into the negotiations to trade with so right now this is it.

Instill the -- face he wants to hear from these members.

Us some of those that have their elections outcome you know they're going to be retiring there's just different circumstances that are happening right now.

So and that's what is going to be doing then you'll be able to go in and negotiate with everybody.

So we shouldn't be expecting it.

People like senator Reid.

All speak up Beno or anybody on high decidedly in a leadership position heading to come out with a definitive positions yet because they have to.

Will look at what those positions are going to be.

First.

Very frustrating is it have you ever see speaker Boehner can actually dictate a little bit more with the -- is -- -- be then senator Reid.

Senator it just because of the way to house and the senate is is made -- he has a little bit more executive power speaker Boehner does and then.

Senate majority leader read -- -- one person as you know one person can hold up the entire senate.

So you do have to kind of work to see what what gives and takes obese so.

You know right now everybody's posturing everybody's trying to get their name in the -- everybody's giving their economic speech out there right now but it's really gonna come down to four -- five people in a room on December 30.

On an.

And coincidentally is talking about this.

Right now I don't know if we can put that particular picture up -- at the White -- side believe with a collection of all of middle class Americans told him -- that can we get back Chris.

We're looking to get back in the meantime loved all you're the smartest man in the world -- how do we have that the fiscal cliff.

Wolf one click and it really clear to people right off the bat here is leading it's it's.

It's more like a curb -- -- cliff.

But cubs sort of -- at all yeah that would -- have rather blunt it is that it hits the physical -- I had and I don't know -- Told you about the statistic before the one like there was a look at it is this if you look at if you -- the entire federal deficit right now sixteen trillion dollars including about that we -- essentially.

Twelve trillion outsiders can.

They need anything about it this way the handsome sum of ten million dollars that's a lot.

Being one inch long right -- one inch then our federal deficit is more than a marathon.

26 point two miles correct while so that should alarm you now.

The amount of cuts that are envisioned for next year 23 team in the so called fiscal cliff.

Is less than the length of -- high school track in comparison to America on it so.

If we can't do that much what can we do -- all right well let's let's listen to one man's ideas his President Obama talking right now let's.

Listen to the president for a moment.

Breakthrough they're getting a tax break on the first -- like everybody else.

Families and small businesses would therefore be able to enjoy some peace of mind heading into Christmas and -- heading into the new year.

And it would give us more time.

Then next year to work together on a comprehensive plan to bring down our deficits.

To streamline our tax system to do it in a balanced way.

Including asking the wealthiest Americans -- pay a little more so that we can still invest in things like education and training in science and research.

Now.

I I know some of this may sound familiar to you because we talked a lot about this during the campaign.

This shouldn't be a surprise to anybody.

This was a major debate.

In the presidential campaign and -- congressional campaigns all across the country and a clear majority of Americans.

I just Democrats.

But also a lot of Republicans a lot of independents.

Agree that we should have a balanced approach to deficit reduction that doesn't hurt the economy and doesn't hurt middle class -- And I'm glad to see.

If you've been read the papers lately that more and more Republicans in congress.

Seem to be agreeing with this idea that we should have a balanced approach so.

If both parties agree we should not raise taxes on middle class families.

Let's begin our work with where we -- great.

The -- already passed a bill that keeps.

Income taxes from going up on middle class -- Democrats in the house.

Are all ready to vote for that same bill today.

If we can get a few house Republicans to agree as well.

All signed this bill as soon as congress sends it my way got to repeat I've got to pet.

-- -- So my point here are necessary -- let's approach.

This problem.

-- of the middle class in mind.

The folks were behind me.

And the millions of people all across the country who they represent.

In America people are watching what we do.

That is the president of bomber of course Applewhite had -- surrounded by what the white has describes as middle class Americans.

Bob rice is chuckling off to my side here ball -- no laughing matter but tell -- what makes you chuckle about middle class Americans what I did this stage craft involved in OK go eight people then you're going.

Listening to these eight people.

Come -- please thank you know a lot of politics in this oh lord have mercy.

I'm kind of under heading -- -- and didn't and that's I mean I think that's what frustrates a lot of people.

When they look at this this getting that not just on the president design but on both sides.

Everybody seems to be playing politics -- -- we consistently told is our future.

-- it is it's amazing palace theater it actually takes action pass a bill or did actually something done I mean I know -- for senator Reid I mean we -- we would have.

You know pre -- the debate the post today we -- condition all the environments we make sure we had different groups in and putting out their own press releases of the theater amongst I think would -- -- about the theater around all of us.

Is truly absurd because really what they should be doing right now is -- into that room right now and figuring out what it is they can get -- You heard the president you know and there is saying absolutely no one of his lines in you know in the sand right now is that.

Anything you know millionaires is is likely those rates -- an -- 2% is likely to go is is going to go up.

And and that Social Security can't be touched OK you we have an agreement on the middle class everybody and Republicans and Democrats -- -- see those tax cuts extended.

Now let's figure out how we pay for where we go in and let's just get this through a negotiated.

Well -- -- -- -- -- -- -- -- you 1010 million is one inch.

We have to get to 26 point two miles.

A little more brutal -- don't panic right now whatever you know it's -- six point two but it's more than -- -- so.

How does.

And isn't even possible.

To get there I mean I guess that's the question when everybody talks about this is how much we need to -- into this extraordinary man.

That -- -- even do that in one deal will it doesn't send me like they can know they can't do that and when deal so we're.

What you can do however you've got there are three ways out of this and you have to use all 31 way is.

-- we're just talking about raising it raising taxes and cutting entitlement spending for -- that's a key part of it.

But we can't do the whole job that way.

The second element is growth.

Remember growth the idea that the economy actually get a -- off.

-- -- -- -- There -- some wacky idea of the economy gets bigger over time and -- more tax revenues that's the second component of the solution.

And the third component of the solution is inflation which is -- inflating part of our data -- and that's one of the reasons that the Fed is keeping -- was -- regularly eating -- about that awaits.

Well it's dollars get less valuable than what we pay China off the debt that we had right that they they have a bars they're getting.

Basically less value for the death of their currently holding and so that's adding another way.

Third -- kind of hidden way that the government has every intention Republican the Democrats they so we're.

They have every intention of devaluing the currency to -- the amount of actual value.

We're transferring -- satisfaction of our foreign debt and so that's the third -- If you put all three of those things together.

Yes you can get there but the first part is really important and I am scared to death that -- -- politicians we have.

Our civil -- and you know they're gonna have all this talk and all this compromise and actually just.

Kick the can down the road again and not make a serious serious dent in this deficit and that's why I personally I know this is shocking thing I wish we go over the fiscal well writers I think that the economy can withstand it more or less sort of kinda.

And we have.

To actually make really meaningful -- Or entitlement spending is that on entitlement spending and or what will happen is and -- this is that that -- big hammer that nobody is paying attention to.

And the bond markets will revolt.

The interest rates won't go off and then our deficit is going to be incomprehensible.

And and won't be able to do anything about it we have to act now we have this window of low interest rates thank you for that optimistic view sorry to -- Patty what it entitlement spending you -- -- ads as a pres.

And has said no touching Social Security so who walk will what will do you think Democrats might.

Ultimately coalesce around in terms of cutting entitlement spending.

-- had taken a look at and the president's going to be interesting to see because at some point he's gonna have to enter into it triangulation.

He -- have to put some of the liberal wing of the Democratic Party.

You know in in a bit of a triangulation in in putting their interest aside because they don't want anything cut right now and that's just is not feasible especially when.

Republicans if they come anywhere close into compromising on increasing revenues -- you gonna have to give a little bit and so he's gonna have to have a moment.

When he's gonna have to say to the -- -- -- in the Democratic Party.

Look this is the deal we're gonna go for it with it.

And so one of the things I mean you'd have to take a look at is Medicare.

Are -- continuing savings in Medicare do we need to change the eligibility break her great age some things in which we can -- there on Medicaid again.

Is there means test is is there other ways in which we can go -- create scenes within that program.

So those two I think are very much on the table.

You know it's Social Security you could argue doesn't necessarily adhere to the debt or doesn't directly affect the -- -- maybe we could put that aside for more Social Security reform.

But Medicare Medicaid I mean he's gonna have to have that moment when he tells you know Democrats look we gotta do something.

-- and is other -- actually.

Easy announces here if if you look at entitlement spending if you take aside if you take away the politics of it.

I'll bet -- Joseph cool it's relatively simple ways of doing this the people in the financial world.

Aside from politics would look at and say that's the way to do it yes.

Thank you OK moving off the hook up what -- -- ways mr.

All the as as penny just since I -- delirious and he never he had breakfast let me just moaning.

They've always -- -- together I don't know.

Up other breakfast or use an intoxicating experience and I have -- -- -- -- -- Please go at metabolism Winston church out.

-- -- -- -- -- Missouri this episode about a -- just said the magic phrase means test you so -- the idea -- but it's not just on entitlements.

It's for tax benefits as well.

You should mean -- across both what the government is -- to people.

And you should limit deductions for people who don't need them.

In right and so that's a fair and balanced so to speak way of a -- -- approaching both sides of the problem.

Both -- both tax deductions.

And spending federal spending or are delivering benefits to people who are very wealthy and who simply don't need them.

So that's one way and end all and entitlements the second way also has been -- it you simply have to push the retirement age back all of these systems were built on the idea.

That you would die when you're seventy years all in everything in our system is built on that premise.

That's not true any more people living to 80851995.

You can't run the system on that assumption.

Without changing the underlying nature of the economics it's not possible threat by the but then then penny on the on the flip side of that.

There is the end taxes as well.

Do you -- Republicans are in a position.

To compromise on that do you think they eat the LDC think they should.

Do you think they will and if so at what point do we stuck on this above 250000.

-- -- do you think that might move to 1200000.

I think he's going to be immediate short term and in the long term in the short term I think you while -- hopefully -- -- most likely we'll see you know the 250 the middle class.

Have their tax 'cause of bush tax cuts extended for them mom and then on the upper 2% -- it not be extended.

And Republicans can -- you heard Tom Cole representative Tom Cole say today.

You know look at it by eight by not doing any being.

-- rates go up but we did it actually vote for the incursions so you've got this you know bifurcation in which they're trying to say.

You know they go up but we didn't raise -- and so -- the Grover Norquist pledge that we all signed.

-- it doesn't apply to us so it's it's going to be interesting to see how they knew -- obviously anybody -- -- anything.

Once the deal is done.

I think the consequences for the Republicans in being in the absolute roadblock when you do have a majority of their of the American public.

Saying that they do want to get -- finally seen the increase on the top 2%.

You CNN as in transient -- down as you know blocking another measure for progress going border are getting our fiscal.

House in order.

Is is more detrimental and that's what we'll see it in their polls and that's for those seed in the outcome come between fourteen so.

They've got to weigh against that India and figure out what they can do and so.

I imagine we'll see Mitch McConnell and the speaker Boehner release a certain amount of people so they can actually get a deal done.

All right and so did you would shed before I let you go play because I have to that studio in DC would you share the president's optimism that he -- just.

Enunciated at the White House saying that he hopes and believes they can get a deal done -- Christmas.

We will get as some kind of deal done and that it -- the market that doesn't put -- completely over the fiscal -- We might be -- column -- I didn't in it in a different way and we'll kick it down for more longer term things.

There are some things that have to get done what they call the Alternative Minimum Tax have to get done the doc fix -- to get Don.

So there are and debt ceiling don't forget one of the things that they are -- that Democrats especially are asking for too is.

Let's get the debt ceiling out and over over the ways that we don't have to deal with -- in in the new congress.

All right -- -- -- a senior advisor to senator Harry thanks so much -- legacy was always you good to see you.

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