Fiscal cliff standstill: who do we blame?

>>> wnk back to "hardball." today president obama again made clear there will be no deal to avert the so-called fiscal cliff without the rich paying a higher tax rate . got it? higher rate. in this interview on bloomberg tv , he made it. let's listen.

>> the issue right now that's relevant is the acknowledgment that if we're going to raise revenues that are sufficient to balance with the very tough cuts that we've already made and the further reforms and entitlements that i'm prepared to make, that we're going to have to see the rates on the top 2% go up, and we're not going to be able to get a deal without it.

>> there you heard it again, top rates have to go up and rates. and some republicans are saying that the gop will ultimately say uncle. conservative columnist byron york , a very smart guy wrote, quote, republicans will cave on the question of raising the tax rate for the highest income americans. the only question is whether they do so before or after the government goes over the so-called fiscal cliff "new york times" column us david brooks describes it this way. republicans will be raising middle class tacks in order to serve the rich. shafting sam's club to benefit the country club . if republicans do this, they might as well get mitt romney 's 47% comments printed on t-shirts and wear them for the rest of their lives. so republicans have to realize they're going to have to cave on tax rates . the only question is what they get in return. michael steele is former chair of the republican national committee and an msnbc political analyst and steve mcmahon 's a democratic strategist. michael , you're on the republican side and what do you think of that? the argument made by brooks which is more sophisticated. make your deal now while you can get something for it because after january 1st you will just be saving your rear end.

>> i think he's absolutely right. i think part of that deal should include giving the president what everybody in this town agrees on and that is those middle tax cuts for the middle class out of the bush tax cuts . set that aside because everyone agrees we're not going to go after those. then it gives you some time and some room to really negotiate down on that -- what that --

>> we have to do all that by january 1st .

>> and it can be done. chris , this is not rocket science . that piece is very easy to --

>> but once you do that, why don't you admit you're not -- you're going to let the top rates go back to 39.6%.

>> you can do that but this is the kicker. the republicans want to see that they're actually going to get something in the bargain that's going to be real and genuine, not the promise for cuts in entitlement spending four or five kongss from now but in the next --

>> let's talk turkey. everybody on the o shows do it their way. i want to do it a certain way.

>> of course.

>> of course. sarcasm won't stop you, might not have you back here again. i'm just kidding. you're invaluable. let's go with this thing. during the cuban missile crisis kennedy and khrushchev were communicating through different ways. kennedy was trying to communicate i will do it this way, this won't work for you stick, this will work for you. so they found ways to communicate. is there a communication going on head to head between the president and the speaker right now?

>> as of --

>> are they thinking back and forth?

>> as of last wednesday they spoke on the phone for 25 minutes. here is what i think is interesting --

>> are they thinking this back and forth are they gaming each other.

>> i think they're farther a apart. the president says elections have consequences. but he talked about higher revenues. he didn't stick on higher rates. today --

>> he's back.

>> he's moved to higher --

>> i think people on the left all the way to center are saying you got to do rates or you're not going to get pelosi and the core 69 democratic party .

>> i think you're absolutely right. that's where the leverage point for bain ser right now knowing that fact.

>> does he know that the president can't deliver his party without that rate change?

>> i think he does, but i think also that the president knows that boehner has got some problems in his --

>> what does boehner need to do to pay for that? ft. boehner knows he has to give on the tax rate at the top, what does his party insist on getting in return? do you know? do you know? what do they want?

>> i think that they get -- as i said on this show before, the deal has always been, here, we will give you the cuts in spending if you give us a tax increase. we get the tax increase. we never get the cuts in spending.

>> what do they want to spending? 50/50?

>> i don't know if it's 50/50?

>> 10 to 1.

>> let's not get sarcastic.

>> 3 to 1.

>> yeah.

>> $3 in spending cuts for every $1 in revenue.

>> at least.

>> that's crazy. they'll never get that. they won't get that, will they?

>> no the republicans have no leverage.the only people who haven't figured out they have no leverage is the republicans and the speaker.

>> why don't they --

>> all the president has to do is marng the markets. if he gives a speech this week and says we're going to go over the cliff , it's not going to be a calamity, the markets have already priced this in.

>> i don't believe that.

>> it's not going to be --

>> the world is listening. the world is not going to listen to the president.

>> i agree with you, chris . i think, quite frankly, if the president gross out and announces we're going over the cliff , it will rest doctor.

>> here is a poll that makes your point. let's take a look at the question. a new " washington post "/ pew research poll shows republicans will get most blame if there's no deal done. congressional republicans will get 53% of the blame game . obama just 27%. now, that's an interesting development there. i looked at that all afternoon and your view of that.

>> i think it's absolutely right. number one. number two, the republicans are creating a symbol that is not good for their brand, that they're going to let the tax codes go up for the middle class to protect the wealthy. the president has framed this very well. he's talked about balance. he's talked about the 2% having to do a little bit more. and on every one of those things the public is overwhelmingly with him. one-third of mitt romney 's voters believed the top 2% need to pay a little more.

>> conceptually you're obviously right. here is my difference. the conditions in which the world lives. right now we're talking about a possible fiscal cliff . we're not off the cliff .

>> right.

>> if it's january 2nd or 3rd and the stock market is going down by a couple thousand worlds around the world. the japanese markets, european countries , countries in europe which are precarious are in bigger trouble. the whole thing is going wacky, one guy is going to be standing in the middle of the storm, not grover norquist or some republican but the president of the united states who has to weather the storm and point the finger across the aisle to someone nobody else in the world knows. speaker boehner , will you solve this problem. i think times change.

>> the economically the biggest risk is the sequestration. it's not the tax cuts going into effect. and --

>> you mean the millions of dollars --

>> the cuts that will be forced through in the next two years. that's a much bigger risk to the economy.

>> therefore?

>> therefore, if the president lets this thing -- look, the markets have already priced this in.

>> i hear the opposite. i hear that they believe that grown-ups will do the job when they have to. they don't believe they're going to let us go over theically.

>> i don't think the grown-ups believe they have to do the job by january 1st . i believe they believe the grown-ups have to do the job by january 30th or february 15th .

>> they're going to believe the politicians can get the job done when they failed to get it done by january 1st .

>> i hear what steve is saying there. i'm standing in your camp which is a rare spot for me to be in, standing in chris ' camp here but i think you're right. i think the markets have not baked this into their equation.

>> dysfunction and childishness.

>> it has nothing to do would my bottom line in terms of how i'm going to pay for things. as a market force, i don't think they've baked that in. number two, i don't think that the president is going to allow this thing to get to that point. i think they're going to cut a short-term deal to get through that first quarter of next year.

>> kick it down the road.

>> no. who is the only hero from this election other than the president? chris christie . people of all colors, all ethnic groups, you poll them, i have been in the rooms, i was there recently, they want peace treaty of some kind to make it work. they don't want a big victory for the let or right. they want a peace treaty right now. that's what they most want to know, that their parents are getting along. the president should get a little edge on this because he earned it, some edge.

>> he's just asking for rates. that's all he's asking for but the same thing he campaigned on --

>> i'm with you. he's got to get it done --

>> he's got to get it done --

>> you go off that fiscal cliff you're part of the chaos and you're in the midst of the chaos.

>> however he gets there, he will get there.

>> okay captain ahab .

>> thank you, michael and steven. . i'm where michael tonight. drives people crazy. a broken clock is right twice a day. up next, the latest from sarah palin who is never, ever right! she says the president is turning the nation commie. wait until you hear her. she's still at it and totally irrelevant. this is "hardball," the place for