Will Republicans cave on tax rates?

>>> we have been talking about the latest in the fiscal curve saga. that includes, at this moment, talk of a compromise that may or may not be in the works. an increase in the top marginal tax rate , short of what obama has been asking for, but still an increase and changes to medicare with the eligibility age in exchange for that on the democratic side. we were talking about, from the democratic standpoint, the medicare issue. i want to talk about the rate issue. there can't be a deal, unless republicans , even on these terms can't be a deal unless republicans go along with increasing the tax rate . there hasn't been a single republican willing to vote to increase tax rates . i want to bring in a former member of mitt romney 's health care advisory group. blog on forbes health care . i want to ask you about that piece of it. we have been talking about this potential deal of 37% of the top marginal tax rate . do you see a scenario where republicans would vote for that in congress?

>> well, first of all, i have to respond to this interesting hyperbole about medicare death sentence. if you raise the retirement age for medicare , we have the affordable care act as the backstop. everybody is still poverty level . we are talking means testing medicare by raising the retirement age . people who are upper income, above 400% of the poverty level won't be subsidized. it's where entitlement reform should go, to expand it into the retiree population.

>> immaterial to stick to taxing, but i would make the point on medicare , we have obama care in place. one issue is we don't have it in place right now. i think we are going to talk about it later. states have to set up exchanges. they have to expand medicaid eligibility. i want to ask about this tax piece. it's been more than two deck kalds since a single republican in congress said hey, i am willing to vote for a tax increase, even if we had to deal along the per am ters. republicans have to do that. can you see it happening?

>> speaker boehner said he's willing to raise revenue. his method is simplify the tax code , eliminating the deductions wealthy people take advantage of. president obama is less interested in that. his emphasis is raising rates. that's been the debate. republicans may or may not concede on that. as you said, they don't have a lot of leverage. if they do nothing, if no law passes, they go over the fiscal cliff.

>> that raises the issue. you are talking what a disaster the medicare eligibility portion of this would be, do you look at the compromise of 37%, if you could get something more favorable on medicare , would you say going up to 37% instead of 39.6 is enough?

>> no. look, there was a tax plan and we looked at the discussion of keeping the rates at the level and reforming the tax code and dealing with deductions. the truth is, if you want to have significant deficit reduction, which republicans are arguing for and you want to stabilize the debt, we need significant revenue. we need to -- the real challenge we have is we are not raising revenue. it's at the lowest levels it's been in decades. the fairest and best way to do that is move from 35 to 39.6%. go back to the clinton levels. we have this level in 2000 , from '93 to 2000 . we had great growth. we looked at the issue. we have bob on our plan. the reason we have that is because we recognize this argument republicans have made, which is that raising the rates will hurt the economy has not been proven true by the facts.

>> to try to put this into perspective here, i want to say, i think the story goes back 30 years. i think there's a key pivot point here. i want to play a clip from 1988 . that will kind of be a good basis here. let's play that first.

>> congress will push me to raise taxes and i'll say no. they will push and i'll say no. they will push again to them and i'll say, read my lips , no new taxes.

>> okay. efbd remembers george bush senior saying read my lips , no new taxes. two years later, hold over deficits from the reagans. he decided to cut a deal to raise taxes and go after the deficit. there was a revolt in the republican party . it was led by newt gingrich who said no, we are not going to raise rates. from that point forward, republicans have been terrified of being on the wrong side on this issue. in 1993 , bill clinton raised the rate up to 39.6. there wasn't a single republican that went along with it. there were threats. republicans in 1993 said we'll have a second recession. we are going to lose 2 million jobs. we had the roaring '90s. i come back to you on this because this is a question i have been looking for an answer for. how do you reckon with what happened when he raised the taxes and the deficit reduction.

>> there's a lot of points to make about that. first of all, we don't have clinton levels of spending. that's the biggest problem. we have obama levels of spending. if we are going to pay for that, some democrats are admitting, taxes have to go up on not just the top 2%, it has to be everybody. during the bush years from 2000 to 2007 , the top 1% paid $84 billion more in revenue in 2007 than 20006789 their share of the overall tax burden went up. the bottom half of the country, their share of income tax revenue went down from 3.9 to 2.9%. they paid 6 billion less. economic growth is important. there's a lot of ways to get economic growth . clinton benefited from the dot com bubble as well. yes, it would be great to have the clinton economy. if we had clinton tax rates and spending levels, republicans would be fine with that.

>> there's a lot to get to in that. a lot of people want to jump in and they are going to when we come back.