GOP ready to drive country over ‘fiscal cliff’?

>> it is a busy monday for politics and policy both here at home and on the world stage. conflict is raging in the middle east , and we'll bring you more on that in just a moment. but first, the president is in cambodia. a presidential first and the third and final stop on his southeast asia tour. he's also made a historic visit to myanmar urging further reforms there. and to thailand where he sought a little divine intervention for budget negotiations that are ongoing in washington.

>> yes, we're working on this budget. we're going to need a lot of prayer for that.

>> indeed, the prayer of a righteous man is effective, especially with just weeks to the so-called fiscal cliff, and on that front, the president's call to raise tax rates for the wealthy appears to be on a collision course with republicans ' desire to close loopholes and deductions. an idea that minority leader nancy pelosi smacked down without the slightest hesitation.

>> we've seen talk about a possible compromise that would leave rates the same but cap deductions for high income earners. is that something that's acceptable?

>> no.

>> not at all. no way.

>> no, the president made it very clear in his campaign there is not enough -- there are not enough -- what you just described is a formula and a blueprint for hampering our future.

>> yes, it does seem that the gop's new ideas look a lot like their old ideas, which were just litigated in the election and lost. of course, mitt romney 's chalked that up to gifts from the praez's president's camp. how is that going over?

>> i just think it's nuts. i mean, first of all, it's insulti insulting. this would be like walmart having a bad week and going the customers have really been unruly.

>> we'll grant mr. gingrich his share of schadenfreude but surely mr. romney is getting more support in other republican quarters for taking on the takers.

>> we're in a big hole . we're not getting out of it by comments like that. when you're in a hole, stop digging. he keeps digging.

>> if we want people to like us, we have to like them first. you don't start to like people by insulting them, by saying their votes were bought.

>> for anyone who wants to live their piece of the american dream , we have so show we're serious about reaching out and helping everyone, not just a group here or a group there.

>> all right. republicans at the very least can count on outspoken mouthpiece for the makers, birther, bloviater, and block head in chief, donald trump to stand strong against higher taxes on the rich, right?

>> bring our deficit down it a really manageable number. i'm okay with whatever they do as long as they get this country going again.

>> okay. with whatever as long as they get this country going again. well, maybe thanksgiving has come early this year. let's get right to our panel. in washington, democratic strategist julian epstein and in chicago professor james peterson of lehigh university . good afternoon. julian , it seems mitt romney 's legacy will include something other than just deriding 47% of the nation as parasights because his idea of capping deductions is being discussed but will this produce enough revenue and will democrats be satisfied if taxes do not go up for the top 2% given what the president has already said?

>> it's not that democrats want taxes to go up for anybody. it's just that the math doesn't work otherwise. if you begin to cap deductions, you may get taxes to 16% or 16.5% of gdp, but there is no republican in the congress that proposes spending to be less than 19% or 20% of gdp. even if you take the republicans ' own math, it doesn't work. you have a huge gap you have to make up. that's point one. point two, as some republicans have pointed out, this was an issue that was litigated by the last election, and the democrats won this argument, and the polls show that the public is in favor of tax fairness. and what this is really about at this point it seems to me, martin, is whether the inmates are still in charge of the asylum or whether there is a wing of republican party that's interested in governing. they will not win this issue. mark our words. we predicted pretty accurately on this program what will happen in the republican primaries . they have a choice whether they want to do it the easy way and show the country they can govern or do it the hard way and get beaten when president obama takes this case to the public.

>> i was thinking of getting you to do the lottery for me because you called this right. professor peterson, after tasting disastrous election defeat, some conservatives are waving the right flag. take a listen to bill crystal on sunday.

>> i believe republicans will yield a bit on top rates. i mean, president obama ran twice on this platform and he won last i looked both presidential elections . i just don't think republicans have the leverage or that it's worth using all their -- whatever leverage they have to maintain rates at 35% instead of 37% or 38%, especially if you can take it up to millionaires.

>> professor, first donald trump and now bill kristol .

>> number one, the faux love affair with mitt romney is over, martin. it is done. he has dug himself enough of a hole post-election that people are realizing they have to distance themselves from him and his policy. a dirty secret about the loophole piece when you're talking about taxes is the fear that is that there are certain folks who will have these invisible loopholes and hide their money offshores. it's not about tax increases. it's about going back to the clinton era tax rates and at the end of the day the president has an exceptional strategy which is if we go over this fiscal cliff, he will be able to pressure the republican house to make a decision upon whether or not they want to raise taxes on 98% of americans. and that is a no-win situation for republicans . we're confronted with that kind of strategy. they should be talking more about how do we sort of negotiate here? how do we get to a point where we get the top 2%, top 1% to go back to the clinton era tax cuts . it's not the only way of solving our crisis but it's a big step in the right direction.

>> julian , it's not just americans who are beginning to realize we need a balanced approach as the recovery continues. here is the conservative mayor of london, boris johnson , who just gave a stretch today where he said this, and i'm quoting him. we need to abandon the rhetoric of austerity because if you endlessly tell business to tighten their belts and eat nut cutlets and drink their own urine, then you will be putting a big downer on growth and enterprise. now that those who believed in austerity have abandoned it, will paul ryan accept that the president's balanced approach is actually the better way to deliver economic growth ?

>> yes, and i think the comment from this colorful mayor as well as a lot of other european leaders should make both parties step back here. remember what the fiscal cliff, the prem m is -- the entire premise that it is based on in august of 2011 , which is that we had to have deficit reduction to match dollar to dollar the amount of debt ceiling extension. that is a good policy if we're in 3% or 4% economic growth but when the economy is growing at 1% or 2% growth you don't engage in fiscal austerity. 90% of all economists believe in keynesian economics . the idea now that we have to be facing a fiscal cliff when the economy is only at 2% is wrong and is wrong for most economists' point of view. if democrats and republicans are looking for a way out of the fiscal cliff, this whole idea of having to cut $1.6 trillion in january '13 is just a made up number. it's an artifice. there's no reason we need to stick to that. if we're looking for compromise, we should cut that number way back. there's no economic reason why we're doing that.

>> very quickly.

>> when we're talking about austerity, economies are behavioral entities. you can shape economies by the kind of attitudes you inject. it does matter what the ideology of our economy is.

>> and, of course, it's worth saying that 11 of those 27 nations in europe are back in recession because of austerity principles.

>> exactly.