Politico editor: Decent chance tax cuts go away by end of year

>>> joining us now with the "politico playbook," executive editor jim vandehei . jim , good morning to you.

>> morning, guys. how you doing?

>> doing good. you described the tactic in the fiscal cliff negotiations as sort of a game of good cop/ bad cop between mcconnell and john boehner . can you help explain that?

>> mitch mcconnell who runs the senate republican caucus , he's definitely playing the role of the bad cop in that he does not want to compromise at all on tax cuts , has taken a much more hard-line approach, has the bulk of his time talking to "the wall street journal " editorial page, basically speaking to the base. where you have speaker boehner talking in much more conciliatory tones and talking about getting a deal. i think that's going to be the dynamic. mitch mcconnell is up for re-election in 2014 . in a very conservative state where it's not inconceivable the tea party would run somebody against him if he does not take a hard-line approach. people need to remember that as these negotiations unfold. for boehner, he wants a deal. i do want to comment a second on the interview you had with paul ryan . ryan might not think that there is a mandate, but the president does, congressional democrats do, and the public does, if you look at polling. and there's zero chance that the president is going to compromise on this, which is why i think there's a decent chance all the tax cuts go away at the end of the year. the president put down a marker yesterday saying $1.6 trillion in total revenue that he wants to raise. i don't think that's the real number . i think that's a negotiated number. but you know the floor is $800 billion because that's what he had last year when he had a much weaker hand. so the number falls in between 800 and $1.6 trillion. you can't get to that number by just closing loopholes. there's no way congress is going to get rid of the charitable tax deduction . there's no way that we're going to change the dynamics in the housing market when the housing market is starting to recover by getting rid of the mortgage tax deduction in totality. so if you take those two off the table, there's not that much loophole money to be had. so you have to change rates. and i think there's 0% chance the president is going to compromise on that, which is why this sort of blink moment for congress and the white house is only going to become more of a white-knuckle moment.

>> jim , let's stay on this topic. and i can see grover norquist out there. what's the deal with him and the strength that he has had in past congresses, with past people in public office and his strength or his perceived strength today on this debate?

>> there's no doubt he has strength and has perceived strength. it's weaker today than it was before the election. i think the republican party from bobby jindal on down is rethinking its rigid stance on a lot of issues including taxes, including immigration. that doesn't mean that suddenly the republican party 's going to be for raising taxes . but let's be clear. when john boehner says, i'm open to raising revenues, he had on the table a proposal to raise taxes. that's what it means when you're raising revenues. they can spin it any way they want, it's raising taxes by $800 billion. so the republican party , in a growing number of folks in the republican party , are on record for raising taxes . and they know the number's going to have to be above 800. that's the floor from last year. i think the actual number will be 1.2 which will be the middle ground between 800 and $1.6 trillion. you don't get to $1.2 trillion without either raising tax rates or changing how we tax investment, which is the reason that a lot of rich people end up paying a very low tax rate . people like mitt romney can pay an effective tax rate of 10% to 15% because so much of their income comes from long-term investment holdings. something has to give. you have to change those things if you want to raise that type of revenue.

>> we've talked a lot about the tax side of this, but there's spending cuts that need to be dealt with. no one wants the automatic sequester cuts for national security purposes, and they're too big in the short term, but where are the spending cuts going to come from?

>> they're one of the thorny bits. back to the tax issue quickly because part of the logic in washington right now is that if you do go over that fiscal cliff and have the automatic rise in tax rates on january 1st , one good thing is from the republican point of view, they will essentially be able to blame all of that on the democrats. then you're talking about a very different position from which to be negotiating because if you have the tax increases, at least you can then talk about well, maybe you're going to try and roll some of that back. it changes the dynamic. on the spending side, though, that's going to be very messy because actually the type of spending cuts that are coming in play are the automatic sequestration are certainly not what any economist would suggest would be good for the economy right now. i mean, cutting defense in that very crude way is going to hit manufacturing jobs, confidence in quite a lot of the industrial complex , and that's not going to be good at all.

>> "politico's" jim havandehei, thanks, bud.