NOW with Alex Wagner | December 12, 2012
>> to achievement. and the next great idea could be yours.
>>> the calendar date is 12-12-12, a symmetry not to be repeated for another 89 years. incidentally, the same time frame necessary to reach a deal on the fiscal cliff . it's wednesday, december 12th , and this is "now."
>>> joining me today, msnbc contributor and political editor and white house correspondent for the " huffington post ," sam stein holding it down stag style. jane mayer from "the new yorker" is here. bbc world news america anchor and former traveling press secretary for the obama campaign jen socky. this is the speed of the fiscal cliff negotiations. blink and you just might miss exactly nothing. while talks between speaker boehner and president obama over the past three days have been shrouded in secrecy, we've learned there have been two offers put on the table. the white house sent boehner a proposal on monday calling for $1.4 trillion in tax revenue , $200 billion less than the original offer. might that seal the deal?
>> the president's called for $1.4 trillion worth of revenue. that cannot pass the house or the senate.
>> okay then. the speaker's office responded with a deal of its own. yesterday it included precisely the same amount of revenue from the original proposal, $800 billion, which indicates there may have been concessions else where. a democratic source close to the white house tells nbc news the proposal included a permanent extension of the bush tax cuts . that is highly unlikely to fly, given the hard line the president has taken on tax rates and what he told barbara walters in an interview airing this friday on "20/20."
>> taxes are going to go up one way or another and the key is to make sure taxes go up on high-end individuals like you and me, barbara, we can afford it. it's entirely possible to come up with a deal, but time is running short.
>> this morning, vice president joe biden took on the cause in the kansas city star writing, "some republicans are dead set about asking the wealthiest among us to pay its fair share . maybe they just don't realize what they would mean for the middle class ." worth noting, 6 out of kansas's elected members to congress are republican. one of them told the hill yesterday he's worried about the issue of raising tax rates , saying of speaker boehner , i can see him caving. second guessing aside, boehner and the president spoke on the phone yesterday in a discussion a republican source tells nbc news was tense and lasted about 15 minutes . and speaker boehner expressed this morning that serious differences still exist.
>> there were some offers that were exchanged back and forth yesterday, and the president and i have a pretty frank conversation about just how far apart we are.
>> joining us now, washington post columnist and msnbc political policy analyst , ezra klein . ezra , we keep asking the same questions and each day sort of have the same answer, but i ask you, my friend, is anything happening here or nothing happening here, what do you make of the $1.4 trillion number and the news today republicans aren't giving ground on the bush tax cuts ?
>> i don't make much of it. what was interesting to me, not much of the deals have leaked. that means the negotiations are going fairly well. a couple weeks ago, everything leaked immediately as soon as anybody said it. it means they are trying to talk. one thing i think we sometimes forget, the two sides disagree in a big way. boehner doesn't want to or think he can sell his members on a big tax increase, and president obama , particularly if he's not going to get the tax increase, is not going to go for big entitlement cuts. the underlying problem, the one nobody is knowing how to solve, is what breaks the actual disagreement here. and as of yet, nothing either side have put on the table that is enough to do it.
>> sam stein, are things better than we think they are? i mean, as ezra points out -- did you say always?
>> as ezra points out, the fact they are not leaking details of the plan would seem to maybe say we're getting closer, but the tension and the short phone calls and the sense of intransigence on both sides, i don't know, the mood doesn't seem constructive.
>> there's a lot involved here. for instance, the idea that the boehner offer says a permanent extension of all tax rates . i got an e-mail saying that was an erroneous report. everything is in the air right now. you do get the sense, as ezra noted, because things are relatively cordial behind the scenes , it seems, that's progress, but we talked about this before. i think a lot of this is plain up noise, there's a reason for it, and boehner has to present himself to his caucus as somebody holding out until the bitter end. if he was to say let's take the $1.2 trillion, his members would say why don't you fight for more, we have time to go. for him, it's survival to hold out as long as possible, go to his caucus and say i tried as best i could, here's what we got. one point i would disagree with ezra , sorry to dominate the panel, so male of me, i'm sorry, but i do think we have a lot of agreement on each side. for instance, 98% of all the tax rates , everyone agrees, should be extended. that's a huge agreement. there are some people in the republican party who see that as a big victory. people in the republican party who have spun already this notion if he were to extend those, that would be a victory.
>> isn't that the obvious, republicans are in favor of a tax cut ? i don't feel that's moving too much to the center.
>> mathematical sense, what obama has said is he wants to extend 98% of the tax cuts . he's also said i want to cut medicare in some ways and social security maybe later. but those are big ideological victories for the republican party , if you come to think about it. a lot of democrats would rather not think about cuts, they'd want to continue to do stimulus spending.
>> the 2% they don't agree on is so important and symbolic for the democrats and something that president obama campaigned on and feels that, you know, he has a mandate to do, which is to raise taxes on the top 2%.
>> to your point, jane, there's a sense of an emotional investment in not getting these top marginal tax cuts extended. i want to play sound from harry reid this morning on the floor. you get a sense the republican resistance is theater, but there is a genuine belief they cannot extend these things. let's listen to harry reid .
>> how many times is charlie brown going to try to kick that football, because we know every time he approaches that football, it will be taken away from him. we are not going to fall for that again. the american people aren't going to be under the illusion that the republicans are some time in the future going to come up with revenue. they are going to come up with raising the rates or, madam president, we are going over the cliff .
>> i'm reminded of the famous george bush adage, whatever it was, fool me once, shame on you, fool me twice, it was actually shame on me.
>> that's what republicans are saying exactly this, the white house has opportunities in the future in which it can raise taxes on the wealthiest and it should take those opportunities in order to get us through this crunch period. do the minimum that is possible now to stop us falling over the fiscal cliff , then when it comes to actual tax reform later next year, that will be the white house opportunity. democrats are saying we don't buy that. we're going to do it now, a majority. country supports us doing it and we're going to do it right now. it's a little bit the inverse of the republican argument that if we give you tax hikes now, how do we know we're getting the spending cuts later. democrats are saying the same thing, but in reverse.
>> they feel they have the wind in their sails, not only because of the election, but people talk about debt ceiling being leverage. it would not be good for their party.
>> that's exactly right.
>> let's hear from jen first, ezra . i have a policy question for you.
>> i think the debt limit is something that republicans are willing to put out there and hold over the democrats ' head, as crazy as that is, but at the same time, there are a couple of dynamics, political dynamics, going on here. one, if you look at the exit polling from the election, it's not just that democrats in washington feel strongly about taxes going up on the high income , the american people , two-thirds of the american people --
>> including republicans .
>> -- feel strongly. so look what happened post-debt limit 2011 , the approval rating for congress plummeted. that was a big contributing factor to it. this is entirely different from what the president went through in 2011 , from what the president went through in 2010 . he has a great deal of leverage. the republicans have their backs up against the wall on this issue, and the question for them is how and where do they buckle so they don't look weak and say look, we got this, though.
>> ezra , you wanted to get in there.
>> yeah. one of the big problems in negotiation right now, i agree, the debt ceiling should not be republican leverage, and it seems insane to say if you're worried about being blamed for the fiscal cliff , you would prefer to be blamed for the debt ceiling, which might create a global financial crisis , leave to a health scape.
>> the problem for boehner , a lot of folks think that is the right move. i think it was sam saying a couple minutes ago, he's got to show he's taking this all the way to the mat before he could ever cut a deal, he's done everything he can to build his leverage and fight and push the white house . they don't think the fiscal cliff is actually the marker of that. they think the debt ceiling is. that's made simply the ability to come to whatever deal they are going to eventually come to in the next couple of weeks as opposed to the next two or three months, a lot weaker.
>> there are plenty of republicans concerned, particularly the economist side that these negotiations have huge ramifications for the american economy , as well, and global ramifications. the markets will respond badly if we go over the fiscal cliff . foreign investors will respond badly if america goes over the fiscal cliff at the end of this year. there's a sense, i'm hearing, increasing pessimism among republicans that say we can't afford to have these kinds of talks, even the stalling process doesn't look good for the country.
>> there's other incentives that are bringing both republicans , especially the white house , to the table with respect to the fiscal cliff . we did reporting on this.
>> your bosom buddy.
>> yeah, but there's stimulus the white house wants as a result of the fiscal cliff deal. they don't want to see a lapse, for instance, in the payroll tax cut. although they'd be fine with it being replaced by something else. unemployment insurance passed, infrastructure spending, those are incentives for the white house to cut a deal on the fiscal cliff as opposed to just going over it and saying, okay, we'll just take the, you know, sequester cuts and bush tax rates .
>> that's right, and they were willing to do that in 2010 and were criticized, of course, by the base of the party because they felt so strongly about the stimulus measures. that shows how firmly the president is going to fight for those in the final package.
>> i think there's so many reasons why boehner has to take a deal, though, in addition. if you look at the polls, 2 to 1, the public blames the republicans if there is no deal. and he's, meanwhile, gotten his tea party radicals, he's punished them for not following his line and his leadership. so, you know, look at wall street , they so far the market's been up, they seem to be expecting a deal.
>> we'll see. ezra , ezra , i will say, as we go, what is interesting about this discussion is we focused almost completely on the $441 billion in rate hikes, but there's also $407 billion the president has in his plan to reform capital gains and dividends, $119 billion from higher estate tax , which is a sticking point with republicans who call it the death tax and $584 for limiting tax breaks and loopholes, which is a lot of stuff to work out.
>> you could get that money in a lot of different ways. if you want to know the truth, i think a lot of people on the democratic and republican sides expect the way the tax side is going to go in the end is a midway rate increase, 37%, 38%, some kind of deductions count, more along the lines of what republicans have been talking about, cap for high-income deductions at $25,000, cap gain side, compromise in the estate tax and end in $1.2 trillion in revenue. i want to mention about something we should be careful about on the bush tax cuts , i think it's an important insight at this point in time democrats are closer to george w. bush than they are with bill clinton . they want to keep most of the bush tax cuts , but it's not 96%, it's about 75%. it's 96% of folks will have the same tax bracket , but above that, you're paying a lot more and getting a ton of money because of the level of inequality in the country. the white house wants to raise taxes on the top 2%, 3%, 4%, much higher than they were under clinton. you have to include, a, other taxes you just mentioned, alex, also the high-end increases in the affordable care act , which is kicking in the next month or so.
>> taxes galore, thank you, ezra klein , for shedding a light in the way not many else can.
>>> licking heels, other gop members suffer from delusions and denial. is there a prescription that can cure both ailments? we'll diagnosis next on "now." it was like a red rash... very sore looking kinda blistery. like somebody had set a bag of hot charcoal on my neck. i was a firefighter for 24 years. but, i have never encountered such a burning sensation until i had the shingles. i remember it well. i was in the back yard doing yard work. i had this irritation going on in my lower neck. i changed shirts because i thought there was something in the collar of the