Status quo, but status quo Congressional gridlock?

>>> speaker of the house john boehner expected at any moment to address the need for congress to prevent the fiscal cliff . we heard the president last night pledging to reach out to leaders of both parties but are they going to answer? governor red rendell, we have john boehner and harry reid and president barack obama and a status quo election in that sense but do you think the president will have more success to get people to work together in the next administration?

>> well, i think that there are two things operating here. number one, the fact that that's a crisis. fiscal cliff is a skri sis. debt situation overall is a crisis and creates a environment of a real opportunity to get something done. most big changes, most big changes occur when there is a crisis vomit. secondly the president is free to lead. he doesn't have to worry about offending the base and saying he's for significant entitlement reform. he can lead and come to the middle saying to mitch mcconnell and john boehner , look, i'm for significant entitlement reform and revenues with it. let's go. if he needs and public with a plan, and the republicans torpedo that plan refusing to raise revenue, i think they're going to face political extinction in the next election because americans want the problems taken care of.

>> governor? i'm sorry. i have to interrupt you.

>> my congratulations to president obama and the first lady and the vice president biden and dr. biden. like many americans , i was hoping that this presidential election would turn out a little differently. mitt romney and paul ryan are good men. they're good leaders. i want to wish mitt and ann, paul and jenna and their families well. the american people have spoken. they have re-elected president obama and they have again re-elected a republican majority in the house of representatives . if there's a mandate in yesterday's results it's a mandate for us to find a way to work together on the solutions to the challenges that we all face as a nation. and my message today is not one of confrontation but one of conviction. in the weeks and months ahead we face a series of tremendous challenges and great opportunity. just weeks away from now looms the so-called fiscal cliff . combination of automatic spending cuts and tax increases mandated by law. within months congress will be asked to raise the nation's debt ceiling. around the same time legislation will be needed to keep the government running as a continuing resolution under which we're currenting operating expires. amid all of these short term hurdles we face the greatest challenge of all. a massive debt that's smothering growth and exceeding the size of the economy. there will be many who will say with the election overnt the first of thes e challenges by simply letting the top two tax rates expire and pushing the sequester off to some other date. think'd have us engage in the same short-term temporary policies that helped put us in the fix and in essence they're saying let's have more of the same. let's agree to drive the economy off part of the fiscal cliff and instead of driving it off the whole fiscal cliff and call it a day . you know, that might get us out of town but not out of the problem and it will also hurt our economy. we can't keep going on like that and setting the bar that low. it's time that we raise the bar. you know, the american people this week didn't give us a mandate to simply do the simple thing. they elected us to lead. they gave us a mandate to work together to do the best for our country. we know what the best thing to do would be. that would be an agreement that sends the signal to the economy and to the world after years of punt onge the mayor fiscal challenge that is we face 2013 is going to be different. it would be an agreement that begins to pave the way for long-term growth that's essential if we want to lift the cloud of debt that's hanging over our country. we won't solve the problem of our fiscal imbalance overnight. and certainly won't do in it a lame duck session of congress. and it won't be solved simply by raising taxes or taking a plunge off the fiscal cliff . what we can do is avert the cliff in a man they are's a down payment on and a catalyst for major solutions enacted in 2013 to begin to solve the problem. mr. president, the republican majority here in the house stands read ri di to work with you to do what's best for our country and that's what i told the president earlier today. that's the will of the people and we answer to them. doing what's best means fully considering the impact of the policy wes might set in motion. the independent accounting firm ernst & young says going over the top rates cost more than 700,000 jobs. they also confirmed that many of those hit with a rate increase is small business owners, the very people who both acknowledge are the key to private sector job creation . there's an alternative to going over the fiscal cliff in whole or in part. it involves making real changes to the financial structure of entitlement programs to curb special interest loopholes and deductions. by working together and creating a fairer, cleaner, safer tax code we can have a stronger economy. this means more revenue which is what the president seeks. because the american people expect us to find common ground , we're willing to accept some additional revenues, via tax reform . there's a model for tax reform that supports economic growth . it happened in 1986 with a democrat house run by tip o'neill and a republican president named ronald reagan . in 1986 , there, too, were skeptics who doubted the economics of tax reform . they were wrong. as stanford economist and former treasury secretary schultz put it, the 1986 reform is the sort of unsung hero of the very good economic times we have had for a long time. the time has come again to revamp the tax code and if we do, he argues, we'll get a gusher and there will be a response and revenue will come in. but the american people also expect us to solve the problem. and for that reason, in order to garner republican support for new revenues, the president must be willing to reduce spending and shore up entitlement program that is are the primary drivers of our debt. if we aren't seeking our will on the president, we're asking him to make good on the balanced approach. the president called for a balanced approach to the deficit of combination of spending cuts and increased revenue but a balanced approach isn't balanced if it means higher taxes on small businesses that are the key to getting our economy moving again and keeping it moving. a balanced approach isn't balance if it means we increase the amount of money coming in to the coffers of government but we don't cut spending and address entitlements at the same time. a balanced approach isn't balanced if it's done in the old way of raising taxes now and umt matly failing to cut spending in the future. a balanced approach isn't balanced if it means slashing national defense instead of making the common sense spending cut that is are truly needed. real economic growth alluded us in the first term of this president. for the purposes of forging a bipartisan agreement that begins to solve the problem, we're willing to accept new revenue under the right conditions. what matters is where the increased revenue comes from and what type of reform comes with it. does the increased revenue come from government taking a larger share of what the american people earn through higher tax rates or as a by-product of growing our economy, energized by a simpler, cleaner, fairer tax code with fewer loopholes and lower rates for all?

>> that is john boehner describing what his version of a balanced approach to a grand bargain type of deal would look like. we have governor ed rendell there. what do you make of that?

>> as co-chairman of campaign to fix the debt, i cochaired with judd gregg from new hampshire, there's a lot in what speaker boehner said i approve of. i think we need a balanced approach. we do need to reduce spending and we need to cut the military budget . bob gates a republican hawk says we can cut it $80 billion a year. we spend more than the top 20 nations in the world on military spending . we don't need to to still be secure and the strongest country in the world and consider reforming the tax code but it has to produce substantial revenue. we need to do this in a big way. speaker boehner 's right about that. we can't kick the can down the road. but that means doing a lot of things that are painful to people on all sides of the equation. but it's the only way that it gets it done. i hope the president responds positively to this. i mean, we can nitpick it. surely we can point out when bill clinton raised taxes on the top 2% of americans it produced a greatest period of economic growth in the last 60 years. 23 million new jobs created so i don't know that speaker boehner 's contention of a job killer to do that is correct.

>> right.

>> the evidence shows that it's incorrect but look. the bottom line is the speaker says he's willing to accept revenue. i hope he's speaking for a majority of his caucus. if he is, we have a chance to do some really good things.

>> steve ?

>> yeah. governor, we have been down this road, though, before. i remember republicans before when we had the grand bargain negotiation summer of 2011 and unlike republicans saying we're likely to accept new revenue and talking about the thing that mitt romney proposed in the presidential campaign and bringing down the marginal tax rates on rich and maybe other people and dealing with loopholes and saying we have extra revenue there. the central question and fiscal cliff , are we going to go back to the clinton era tax rates . 36% and 39.6% rates? we have been living a decade without them. it exploded the deficit. didn't do anything for economic growth . here's the final opportunity for democrats to get back to the clinton level and seems to me the nightmare scenario of democrats is obama short circuits the opportunity here, cuts the grand bargain more on the republicans' terms and revenue source that boehner is looking for and entitlement reform aspect and shouldn't this be something democrats should be willing to work for?

>> well, look. speaker boehner ignored the fact that in 2011 the president agreed to what the equivalent of a trillion dollars in spending cuts already. and that's certainly has to be factored in to the equation talking about spending cuts because that's part of it. but look, simpson-bowles says we can do this. we can cut the corporate tax rates significantly by removing a lot of the corporate loopholes that would produce a whole lot of revenue. a boatload of revenue. the devil is in the details. i think for us as democrats we ought to be interested in one thing, steve . that's "x." "x" is what revenue is produced and if revenue is produced in a fair way i think that's the key and if it's enough revenue produced in away that's fair to the middle class regardless of how it comes we ought to consider that as a potential bargain. but i don't think we can say, look, i'm in favor if i'm king of the world , we would have the clinton tax rates back. 4%. but that's not going to just do it. raising the clinton tax rates for the top 1% or 2% of the country isn't going to produce enough revenue to get us there.

>> governor, quickly, you talked about we are in crisis and we have to make a deal and crisis is valuable to the gop in the congress and used it to limit the leverage the president and the democrats would have so wouldn't that continue the problem and make it worse?

>> no, no. i think we where speaker boehner is wrong is the idea to kick the can down the road, get over the fiscal cliff without putting up or shutting up. i think the time is now.

>> yeah. yeah. he said he didn't think it could be solved in a lame duck congress. we can see.

>> we can set it in motion and why v an agreement but steve 's right. we can't kick the can down the road and lose leverage. make the outlines of a solid deal now and for the country, guys. the one thing they're right about, if we solve the debt, reduce the debt to a manageable part of gop, begin the process of eliminating the debt, the economy will take off. there will be an explosion.

>> thanks for being with us.

>> thanks, guys.

>>> up next, the tables have turned. we are crunching the numbers on all those political number krumpblers, a special post-election nate spot straight ahead . [