Household costs in the fiscal cliff

>>> if the white house and congressional republicans cannot come to an agreement on the budget, then a package of automatic, across the board spending cuts known as sequestration goes into effect one month from today. you know how you always start the new year with a diet? well, without a deal, we are not only going to see a much slimmer federal government but possibly much leaner household budgets as well. more than 2 million americans may lose their unemployment benefits . the average american household could see a tax increase of about $3500 and child nutrition programs could lose more than 500 million in funding. democrats may benefit politically if we go off the cliff . can ordinary americans afford the cost of this round of negotiations? dan, what is the case for nothing, for just going off the cliff ?

>> a great case for nothing. at a station where i contribute, they are absolutely apaplectic about the economic impact. i'm not sure there is going to be an enormous imfact. i follow markets. the stock market hasn't reacted at all even despite the fact that we are going to go over the cliff . if they get a deal, it will be the most superficial can kick. yet, the markets are pretty strong. economic people seem to think we are going to go over the cliff . maybe it is not as bad as people think. let me tell you some things that are going to happen. $600 billion in military spending cuts. even the democrats don't want to touch this one. this happens automatically. you get a reversal of all the bush tax cuts . you can put back most if not all of them after the start of the year. you get an increase in the amt, which hits higher-income people. maybe you can reverse some of that for people making less than $100,000. there are a lot of things to like about this from a liberal point of view. the things that are bad, you can sort of work around after the new year and after this happens. economically, the democrats are holding all the cards.

>> if we are going to consider with our godfather mentality, the don wouldn't do it but michael corleone would. you are literally shooting the police officer in the sense we are killing public jobs. there is a way in which if this goes into effect. if it is not just a short game of chicken, if it is not 20 days from january 1 until the new inauguration, if it is two months, three months, those kind of cuts are real. maybe the markets don't mind. it does feel like american households mind.

>> you have to remember that those costs are over the course of the year. i totally agree with darren. the markets have priced in the fact that there is going to be at least a post january solution. it is not going to happen before the end of the year. from a political sfand point, i couldn't believe that they exempted medicare, medicaid and social security , that the republicans agreed to this, a deal whereby a congress that can never get anything done would have to get something done by a date certain or you were going to have these tremendous defense cuts. it is a great deal for democrats. even on the case for the cuts that would really hurt middle class people, there is an argument that republicans would be under such political pressure to redo the tax cuts they would also be able to get in putting some of that spending back into social programs.

>> one of the thing we are running into is the problem of the rhetoric and the problem of the metaphor of the cliff . it suggests that the nation's families have been high on the hill. if we hit the edge of the road, then they will be done. it hasn't been like that for years. in one sense, to ride out this fiscal cliff discussion, there is some kind of resolution. it is not as if everything is okay. even if this cliff is averted with respect to unemployment, sefrg you have mentioned, that's an important point. on the conversation we had before, if barack obama cannot take a hard line now, when is he going to do it?

>> i think people are waiting for him not just to fight this hard around this deal as you both mentioned but around the fate of the future of people in this country.

>> i want to know that point. this ad is running on cable and local tv stations in d.c. it was organized by the alliance. it is about the discourse. let's listen to that real briefly here.

>> our taxes are about to go up.

>> not the taxes on our dividends, though, right? that's a big part of our retirement.

>> no, it is dividends too.

>> we worked hard to save.

>> the president and congress have to work together to stop this dividend tax hike before it is too late.

>> this is the kitchen table. oh, our dividends. that's imaginary.

>> your average family is not suffering from earning $250,000 or more such that the dividend investment value is really hurting. this is complete manipulation once again and ignoring the fact that we have a wealth gap here. what we are talking about is changing taxes and dividends that will affect only a portion of this country that are earning $250,000 or more.

>> as soon as we come back, we are going to talk about exactly that. i am going to bring ari melber in. it is the point about the big family that is president obama and the fact that he said we gotta stay in the conversation. he is keeping everyone together. that's the don's challenge, how he will do it