Offer versus counter-offer

>>> ones who need relief. we're not going to get it done unless we also ask the wealthiest households to pay higher taxes on their incomes over $250,000.

>> in case you were wondering if president obama campaigned on the message to raise taxes on the wealthy, the obama campaign has put together a reminder for americans and specifically republican americans. as it stands right now the white house has end kaltsed it will not respond to speaker boehner's offer unless the gop agrees to raise top marginal tax rates . the president did do a little explaining over twitter yesterday. asked, is there a minimum ratio of revenue increases to spending cuts that you're looking for or simply a balanced approach? the president responded -- don't expect 100% my budget, room to negotiate. if you include $1 trillion plus in cuts already made, rough balance between revenue and cuts does trick. i'm having a hard time translating the president's tweets. translation, i won't get everything i want but at least -- but i want at least as much in revenue as in cuts. he was asked as a homeowner, i worry deductions for homeowners are at risk. is that the case. the president replied breaks for middle class important for families and economy. if top rates don't go up, danger middle-class deductions get hit. the gop is holding middle-class taxes hostage i'm not. joining me is msnbc policy analyst and columnist for "the washington post " ezra klein . it is great to have you. we need your help today.

>> you know what makes me sad about that twitter discussion.

>> what's that?

>> those were 140 character bites more substantive than almost any of the tax discussions in the media or in washington. they were beating us in 140 characters.

>> the president's twitter -- you have to -- in too many abbreviations but i'm getting ahead of myself here. let's talk about those substantive tweets which is to say, i want to talk about the closing of loopholes. i spoke with grover norquist about this magic math that the republicans are doing. let's say they put closing loopholes and deductions on the table. the issue is whether anybody is going to go for this. the deductions that are there are very popular. the ones that would get the most revenue on the table are employer sponsored health insurance which is $164 billion, the mortgage interest deduction which is $100 billion, tax free medicare benefits $76 billion and charitable contributions no one on either side of the aisle wants to get rid of, $51. why are we talking about the closing of loopholes and ending deductions?

>> i don't think we should go too far here. it is worth talking about. it gets strange quickly. here's the way i've been thinking about it. almost all of these plans are just about deductions, not about exclusions. i've not heard anybody talking seriously about the employer health tax exclusion, that's a separate tax and not a deduction. when talking about all these plans the republicans have begun to broach about limiting deductions to save $25,000 or $50,000, you're talking really about three deductions and three only. 90% of that money would come from the charitable contribution dye deduction, home mortgage and state and local taxes. hitting charities, home buyers and hitting high-tax states most of which are blue which makes it not the worst idea for republicans sometimes. you take out the charitable, though, and all of a sudden you're in a much worse place of revenue because that's where a lot of the revenue comes in. the problem with doing charitable deductions and eliminating that deduction is charitable contributions turn out to be extremely sensitive to their tax treatment. if you actually take that down, you get a real hit. that is not something where you can make a tax change and the real world doesn't suffer. the charitable section will convulse. there's a lot to be good to be had there and the white house ' decision you can't have anything under $250,000, that is one of their signature principles here, is not necessarily a good thing. some of the deductions, raise the law right under 250 and i would be fine with that. until people are willing to get serious and say these are the specific deductions we're talking about and willing to look at the consequences it's hard to take any seriously.

>> we were talking during the break about specifics and how terrifying it is for the republicans to get into specifics because as rez ra outlines the patient convulses as it were. where is the hope in all this that a deal will get done?

>> i don't think anybody wants to go over the cliff at the end of the day . we now have a really big round number from john boehner but nothing specific within it and as we went through and broke down this various deductions and loopholes many are popular, many of them make an enormous amount of sense and most of them benefit the middle class , not just the rich. i don't know where this -- where that part of the discussion goes because you're talking about unicorns earlier. they're imaginary beasts and this $800 billion through loopholes and deduction is about as real as a unicorn.

>> i want to talk about the white house and sticking to the point about raising top marginal tax rates . that's the make or break. mar thiessen writing in "the washington post " --

>> basically that was an excuse for me to invoke the drug dealer 's motto. are democrats overplaying their hand?

>> to me, frank, you mentioned those magical thinking , sort of like we're just going to throw out the deduction and not specify it, that would be the only legacy of mitt romney that we're talking about right now. we all joked about how he was totally uninfluential in this party. this has stuck. didn't work for romney. people were not interested in that. i don't really see what interest the white house has in making a deal. so far all the public polling makes it look like, again, this could change, but all the public polling makes it look if we go over the cliff the republicans will be blamed and they're the ones being recalcitrant and the white house can make a deal on their terms because they won.

>> in terms of who's going to get blamed if we go over the cliff, ari, is there a risk as the republicans put forth a plan f you're john public, does that seem like a reasonable offer? i don't know. they're playing ball. do the democrats risk getting blamed if we go over the fiscal cliff now that there is a counter offer from the gop ?

>> that's the interesting question. connects with what ezra was talking about. do the actual sacrifices happen in your backyard and do they happen in the backyard of wealthy people who are a big part of the base of both of these parties let's be honest. you quoted mark thiessen quoting biggy smalls saying don't get high on your own supply.

>> thank you for the rap encyclopedia acknowledgement. never sell no crack where you rest at.

>> you planned that. you wrote that down.

>> i write a lot of things down.

>> go ahead. i'm sorry.

>> but that notion that we know from politics which is not in my backyard. i think ezra is right. we have to look at where the bulk of these things are happening and understand why they're not serious. wealthy people do a lot of estate and charitable planning. the charitable deduction thing is not going to happen. it's also a terrible idea --

>> i mean independent of the people for the charities themselves.

>> that was my second point. it's a terrible idea because the whole reason we do this, right, is that we want to encourage people to give to charities and we want public services also outside of the government. if you were a conservative and you think that there are problems in this world that should be solved by something other than the government it's charities and churches. we can't go down that road.

>> finish by saying that's where we go next, moving those off the table and being serious.

>> ezra , you wanted to get in.

>> jump in on charitable. i agree with pretty much everything ari said there. we shouldn't get overly invested in the wisdom of the status quo . one idea that some tax wonks like to talk about, which i think is a good idea, we talk about deductions all the time but we can convert these things called credit. instead of rich people getting a ton of money everybody gets some money for them. if you do that with a charitable instead of a rich guy getting this enormous deduction for all of their -- their $300,000 donation to their alma mater andover just raised $300 million, i'm not sure the tax code needs to be encouraging that, if you change it to a credit, you could have people who make $50,000, make $40,000, make $60,000, they could then get a credit for donating to charity and what you would see if that was done is also a boost on the other side where more folks on the income level were able to donate to the charity or charity able to get more money and see a shift in the composition of charities that got that money from operas and alma matters to churches, to social non-profits to places that deal with hunger and poverty. so there are things if we're willing to get creative here, i can imagine really interesting new policy approaches. the problem again is that if all they want to do is cap deductions because they don't want to get in and deal with these specifically you can't do it. if you want to stay vague that means you have to remain larger than the confines of the status quo . you're going to have a lot of trouble with any deduction plans, not unless you want to move to other credits and other things can you talk about it.

>> do you think people will give less to the opera? what do you have against the opera?

>> i have an enormous number of things against the opera.

>> ezra klein , stick around. we're going to try to hold you for one more block if you have the time.

>> no problem.

>> to expand or not to expand. that is the question facing governors deciding whether to adopt changes from president obama 's affordable health care act. i wonder if some of those governors got a few thoughts from the president and the white house today. the states of play just ahead. time