Obama shows flexibility on taxes

>>> welcome back to " morning joe ." still with us here on set, doctors zbigniew brzezinski and --

>> you say his first name very well.

>> i should. things were going so well but we decided to try for more here. we begin, though, with some news, the latest on the rapidly approaching fiscal cliff deadline and what appears to be a stalemate in the negotiationses. in his first interview since the election president obama reiterated his demand that any deal must raise taxes on the highest earners. but yesterday the president also appeared to showroom for flexibility on lowering those tax rates in the future.

>> i don't think that the issue right now has to do with sitting in a room. the issue right now that's relevant is the acknowledgement that if we're going to raise revenues that are sufficient to balance with the very tough cuts that we've already made and further reforms entitlements 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. what i suggest is let's essentially put a down payment on taxes. let's let tax rates on the upper income folks go up. and then let's set up a process with a time certain end of 2013 or the fall of 2013 where we work on tax reform . we look at what loopholes and deductions both democrats and republicans are willing to close and it's possible that we may be able to lower rates by broadening the base at that point.

>> i think that sounds hopeful. house speaker john boehner is facing growing backlash from the conservative wing of his party over the counterproposal he just offered. at issue is the $800 billion in new tax revenue he proposed which the white house quickly rejected because it does not raise taxes on the wealthy. senator jim demint , a lead mer congress, denounced boehner 's plan as a tax hike that will, quote, destroy american jobs and allow politicians in washington to spend even more.

>> so right now everybody is just talking at each other.

>> yeah.

>> what do you do if you want to fix the problem? you actually do sit -- the president says we're not going to get the solution by sitting in a room. that's really is the only way to get a solution, by sitting down across the table, whether you are talking budget negotiations,s talking about trying to forge a peace treaty in the middle east , that's how you do it. you don't do it by giving speeches. you don't do it by campaign-style events in pennsylvania. you do it by sitting down in good faith with the other side and hammering through proposals. we're at a unique position right now, steve rattner, where republicans are starting to move away from john boehner . john boehner has an opportunity to sit down with the president of the united states and say, listen, let's talk about what i can deliver. i can evenly do what i can do. and you can give as many speeches as you want and campaign rallies as you want, but if i can't bring the majority of the majority along, we don't have a deal. so let's figure out how you get what you need and how i get what i need.

>> right. but the problem is if you take the banner letter that was issued yesterday to be what he can give, it isn't enough for the president.

>> it's a starting point.

>> well, we hope. like the president's first move was a budget that he put on the senate floor that got zero votes.

>> the president's first move -- yeah, when you go to sell your house, you don't put it on the market at the price you're willing to sell it at.

>> and that applies to john boehner 's letter as well.

>> john boehner 's letter said i will not agragree to raise tax rates . getting them in a room is the only way to get a deal done.

>> they signed on to his first deal about but they are -- there is going to have to be, mika , some compromise. and on the republican side as well. maybe you do compromise on the rates instead of 39.6%, maybe you go to 37%. if there are spending cuts.

>> we're going to get to your charts on the competing plans in just a second. really quickly, dad, we've been in washington a long time, and there have been people on both sides of the aisle who disagree on major issues but sit down and hash it out and get it done. what's different today from your point of view? what's going on here from your perspective?

>> i think it's the polarization. it's the conviction by one side that the other side is fundamentally wrong, implicitly, though it's not said implicitly, perhaps even evil. dangerous to america. i think that has to be ended. a group of americans just issued a statement yesterday, organized by pete peterson in new york and admiral mcmullen and the documents signed by others jim baker which addresses the issue and urges compromise on the fiscal cliff but also on national security . but i think there are people on both sides, yes --

>> you can hold that up. fantastic.

>> i think it is perhaps doable from the outside. people like that, perhaps even former president bush , the first, in the background on others and begin to weigh in more because this is really embarrassing to the country.

>> mika always brings up the fact when we're out and about and people are asking, what do we do? how do we move this country forward? she always brings up you as the example of somebody that would bring people over to the house that you may have disagreed with. and sit down with them and have dinner with them, have dinner with their families. how the people who work for you --

>> dad, this is the dinner table. look at this.

>> hold on one second, northeasterly. that's my point.

>> no, read the names.

>> the people who work for you. you had a future republican director of the cia and the pentagon working for you, a future republican secretary of state working for you.

>> steve hadley .

>> and a future republican national security adviser as well as madeleine albright , another democrat, but you had as many powerful republican leaders, future leaders, are as powerful democratic leaders.

>> the president should be doing every week, almost every day, you have to be meeting with some of them, having dinner with them, talking to them, chatting.

>> yes.

>> and also threatening occasionally.

>> by the way, mika has circled all the dinner guests that you've had over the years.

>> some of them worked for my dad.

>> it's the same principle that works in journalism, everyone knows if you're going to garn aeroreport, it's far better to get a source face-to-face. it's far bettory get a source of the fund than a person via e-mail.

>> and best of all to have a relati relationship with them.

>> it's just intimacy that happens between a source and a reporter.

>> this president does not like that. he's not comfortable in this person, lbj, jfk.

>> i think part of it has to do with the fact he is still relatively new to politics. this is someone who was an obscure state senator back in 2004 , and he rose meteorcally through the ranks. he spent little time in the senate, maybe two years, before he started.

>> my first three years in congress, i was angry. i was an angry young man --

>> no.

>> it was my way or the highway.

>> i can't imagine.

>> no. and you get here long enough and you start to realize, i'm not going to do anything by myself. and my ideas -- i may think i'm right be 100% of the time, but if there are a lot of other people here who think i'm wrong 100%, and we're going to have to meet somewhere in the middle. i don't know that the president gets that yet.

>> this is why i think the appointment of the secretary of state is quite important. he ought to have someone who can help him along those lines. not just someone who is very good on foreign affairs . of course the person appointed should be good on foreign affairs , but should be someone who relates to our domestic politics in an influential fashion and can talk to people and can help the president. and then he has to have someone who helps him be tough. someone who can convey to someone, say, up on the hill. look, we've had reports about your tax statements. people are looking at them. we don't really want to pursue this.

>> but --

>> but.

>> oh, my gosh, you two are speaking the same language.

>> so in terms of this issue about obama , how do you compare him to president carter in that regard in terms of his willingness to engage personally with people?

>> carter was less aloof. president obama is extremely smart. very rational. but there is a quality of -- and i don't mean this in any negative way. i admire him in that respect. a kind of aloofness. carter was much more of the people in that sense. although wasn't as effective.

>> can i just make the point, though, because it is a two-way street at the same time. the republican party has really been, you know, sort of -- it's rejected obama from the get-go. i think it was yesterday, 49% of republicans thought acorn stole the 2012 election. a.c.o.r.n. doesn't exist. they think they stole the 2012 election.

>> joe?

>> let's look at the front page of the " washington post ." it talks about how turkey is going to get nato missiles. i remember when your book came out last year and we did some events with you, you kept talking about the key position , it turkey would play in the world. we're seeing it now especially in syria. but now becoming more powerful force than nato. this is happening. you foresaw it. why is it happening?

>> it's happening because the situation is such that we realize we need turkey and it is the point of departure for any effective, constructive or destructive solution. it's as basic as that. but we have to be aware of the fact we can't let turkey out on a limb by itself. extremely successful but vulnerable from the inside. and i can see enemies of turkey ganging up on turkey , stimulating the kurd ishii you, for example, which could be explosive and damaging to turkey 's long-range future.

>> and you also have a much more complicated relationship between turkey and israel now.

>> yes.

>> which i would assume would hold us back a little bit from being completely --

>> they can't because it turkey is too important. it involves several turks. we will not apologize. that's kind of unfortunate. that could have been fussed over, i think. it's too bad.

>>> before we go to break, i do want to get to the charts we talked about at the top of the block here. steve rattner, you are looking at the competing debt plans that washington right now is still in a heated battle over.

>> so there's a lot of numbers flying around. just to pro-vlade a baseline for everybody to understand the plans, i think the first issue we've talked about earlier on the show is what are we trying to accomplish. i think the most we're trying to accomplish at the moment is to stabilize the debt. and so you can see our debt to gdp ratio has gone up to 2% over just five years it doubled and that's, of course, a function of the recession, stimulus spending and so forth. the goal, i think, that a loft us would have would be to hold it at 68%. all the fun and games began. the red line is where it will go if we do nothing. and the green line , the 68% is where we're trying to get it if we do $4 trillion of deficit reduction.

>> if we get to $4 trillion.

>> so let's look quickly it at the two plans and see how they stack up. you'll see that obama is at $3.4 trillion. when you score this honestly boehner at $3.6 billion and simpson - bowles .

>> explain the difference between what you saw in the initial news reports on the boehner plan. keep this chart up, control room . i read $2.2 trillion plan by boehner . you say $3.6 trillion.

>> do you want to spend the next --

>> no, i really don't.

>> why not?

>> so to make it simple, it has to do what you count. the biggest difference is the budget control act. the $900 billion cuts, we budget guys count as part of the package.

>> sequestration?

>> no, telephones the first deal they did. we count then and then there are interest savings. i think this is the way i like to think about it. apples to apples.

>> the third chart.

>> the last chart shows you how it breaks down. the obama plan has half from tax increases versus about 20% in the boehner plan. these are philosophical differences. boehner would cut much more. obama 's view is we've cut so much from that already we have to be careful how much more we cut.

>> when you talk about discretionary spending cuts, a big difference between defense cuts and domestic cuts. does it go after defense spending the way he has?

>> he hasn't spelled it out yet. we don't know. r&d, a lot of investment programs we think we need to keep this economy growing.

>> can i ask a question? what makes up the difference between the bowles - simpson proposals and the other ones? why is that so much higher? what are they leaving out?

>> there were more tax increases. it was light on entitlements.

>> okay.

>> where did bowles - simpson get the revenue.

>> they eliminated a whole slaw and lowering rates and also a tax on gasoline.

>> they let the bush tax cuts expire, right?

>> initially they did and then were going to do tax reform .

>> would they increase the taxes on the rich?

>> yeah.

>> they would?

>> yes.

>> to the same extent?

>> i would have to do the math.

>> don't you do any homework?

>> numbers cruncher. dad, thank you