Obama hits road to make case for Bush tax cut extensions

>> s.e. cupp answers it.

>> i answered the call.

>> next, road trip . the campaigning's done, so what is the president hitting the highway for now? not immigration.

>>> we're 21 days into the fiscal fiasco hostage situation on capitol hill with lots of words but little action since the election. that's getting ready to change. today the president aannounced he's hitting the road on friday for everyone making less than 250,000 a year. but we know how these things work. we know everyone is going to stall for the next few weeks pandering to constituencies because washington likes to walt until the buzzer to get their shot off. which is this week "the cycle" is unveiling our four-corners offense giving us plenty of flexibility in how we attack the story. we look at the fiscal cliff or as steve calls it the fiscal slope or the fiscal fiesta and of course the fiscal follies. we'll install our own special graphic later this week. it's our new style of play and our next guest might want to be a pair here as he writes about it every day until the situation is resolved. sounds riveting. in the guest spot today is dan gross, the columnist and global business editor for "newsweek" daily beast who says in his latest piece republicans still haven't recognized the new reality. dan , you may be right. i don't know. i guess we'll see. if republicans do agree to raise taxes, do you think that democrats will agree to any health care entitlement reform? which is the harder sell?

>> no, i don't think so. that's why i'm so pessimistic or actually so optimistic about going over this fiscal cliff. usually when i threaten to write about something every day until it is resolved, it gets resolved quickly. we'll see in this case.

>> that's power.

>> the election kind of ratified the stance. which is the bush tax cuts should expire for those making over a certain amount. the steps republicans are taking while useful in negotiating. we see the need for more revenues. okay, we understand we need to negotiate and sort of stamp our feet, they're still talking -- they're having two different conversations. they're saying it's okay to have more revenues if it comes from getting rid of certain tax loopholes, but we won't say which ones those are. by the way, you have to put the two greatest democratic achievements of the past century, social security and medicare , on the chopping block in exchange for that. that shouldn't be in exchange for that, because if we simply do nothing, the republicans lose everything they want.

>> such a great point. dan , speaking of republicans not recognizing the new reality, grover norquist has been furiously trying to spin the fact that there are several senators and members of congress who are moving away from his sacred pledge. let's take a listen to a little bit of grover .

>> the pledge is not for life, but everybody who signed the pledge, including peter king who tried to weasel out of it, shame on him as the new york sun said today, i hope his wife understands that commitments last a little longer than two years or something. no pledge taker has voted for a tax increase. they've had some people discussing impure thoughts on national television. the same thing with other people who are elected because they made that written commitment to the people of their state.

>> that sounds like a threat.

>> why does he keep making this romantic sexual thing?

>> don't make it sexual!

>> impure thoughts? romance and marriage?

>> he's really sad. he's a little heartbroken here. he's had a lot of his life in this sacred oath, and they're discarding it like it was nothing. dan , two grover 's point, you know, are those republicans having just impure thoughts as he put it, or are they willing to move away from the pledge and actually when it comes down to it not just increase revenues through closing loopholes but increase the rates?

>> this is the reason why we shouldn't be so quick to dmis grover norquist , because he's right it's been 20 years since george h.w. bush signed on a tax increase and he got a big primary challenge from bat buchanan and ended up losing. no republican since then said i'm for higher taxes. i will sign off on them. again, this is part of the reason i think we're likely to go over the fiscal cliff. it may seem juvenile to say i swore to an oath. we can't do this. i will never stroet to increase taxes. once all the taxes go up, everybody is in a position to vote for a tax cut . so the nature of this may be such that republicans feel compelled to wait until after taxes have risen so that they can actually vote for a tax cut , which will be some sort of compromise. i don't think we should dismiss grover norquist and the power of this pledge and the threat to run primary campaigns against people so quickly.

>> what you're talking about there, though, it sounds like getting out of the pledge on a technicality. if they wait for the rates to expire on their oath, then they don't have to vote for a rate increase. that really honoring the spirit of this commitment?

>> i don't think it is. if that's what it takes to get people to reality, we've been waiting for many years for republican legislators to kind of recognize reality, and people thought, okay, the 2008 election. that will really sort of wake them up and think we have to compromise on issues of taxation. no it didn't. people thought maybe 2012 will do the trick. we see them edge from this. i think their minds really won't be crystallized and focused on this until the top marginal rate is at 39% again. until dividends and capital gains are taxed at 35% and 36% again. until that happens, it will be hard to get people to focus.

>> dan , i want to ask you a serious question. i have to say something about grover norquist first. i tell you what, i like grover norquist . you don't have to agree with him, but i'm amused by him. my favorite grover norquist story when i covered congress in 2005 and 2006 , somehow i did a story about politicians who were active as student politics at colleges. i think he had been or he had some thoughts on him. i called him up for a quote, and he didn't let me done. i didn't get the question out of my mouth about student body presidents. anybody who is a student body president ought to be drowned.

>> wow, strong feelings.

>> did he sign an oath to that in that regard?

>> the thing go grover , he's an entertaining guy and he does wield a lot of power. not as much as people said, but chuck todd said he's a symbol of absolutism. dan , what i wanted to ask you about is something else coming into the picture here in these negotiations is the debt ceiling. if that's going to be -- we're going to sort of come up against that a couple months into the new year, not at the same time as this fiscal slope. obama said to boehner he wants the debt ceiling to be part of the deal. boehner said everything comes with a price, mr. president. are republicans going to use this to exert leverage right now?

>> absolutely. again, another factor that works against a big grand bargain. the more stuff you try to pack in there, you want to talk about social security , medicare . the republicans want to talk about obama care and some of the taxes in there. obama is saying he wants to talk about the debt ceiling. these are all separate issues, and the more stuff you try to jam in there, i think it actually makes it harder to come to an agreement rather than easier.

>> dan , part of the whole thing here and calling it a fiscal cliff is to add to the theatricality and the chael leng of the whole thing. it's a slope. everybody calm down. we don't need this brinksmanship which adds to the republicans ' leverage in this situation. you, sir, are writing a column a day about this. i know you're satiracal in your column. are you feeding the beast of the whole cliff thing, or are you completely trying to take it apart?

>> i'm feeding "the daily beast ."

>> well-played, sir.

>> people forget that "nightline" started because of covering the iranian hostage situation . maybe i can get a nighttime show on this. this is kind of serious not just in the sense of the economic impact, but this is a real significant, potential change in policy. we did a lot of things over the last ten years with our taxes and spending. we cut taxes on capital gains and dividends and put medicare precipitation drugs in without a financing mechanism. we did all sorts of stuff that distorted or budget processes, the way we spend money and collect money. this is a really big opportunity to either change it proactively with a large deal or to see some really big changes come in without doing anything. either way they have a pretty serious consequence, so i really think it is deserving of the saturation.

>> dan , i'm just going to -- i'll say this. you ought to hear this, too. this is probably the 15 theth straight show we've talked about the fiscal cliff, so we're guilty of it, too.

>> dan gross, thank you.

>> anytime.

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