Roundtable I: Fiscal Cliff-Hanger

Matthew Dowd, Joe Klein, Ruth Marcus, Peggy Noonan, David Sanger.
9:46 | 11/25/12

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Transcript for Roundtable I: Fiscal Cliff-Hanger
We're back now with the roundtable. I'm joined by matthew dowd, ruth marcus, david sanger, joe klein, and peggy noonan. Let me begin now, matthew, talking about the fiscal cliff. We heard from the two senators right there, and I wonder if those two senators might be a bit of anomaly. You have dick durbin ready to take on entitlements and lindsey graham ready to take on the president was put in a great position in the aftermath of the election to get a deal down. They're making arguments passing the fiscal cliff and going over would be a better way. I think for the markets getting a deal done is much better. It will be a short term deal. It will be a short-term fix. Some revenues. Some expenditures. They won't do anything on entitlements. They don't want to make any fundamental changes in those programs. It will be a short-term deal to get done. There's a growing sense from both sides, that seems going over the cliff isn't a bad thing. You heard that from grover norquist. Ruth marcus, you have been covering budget battles. You're picking up in your reporting a little bit pes schism about a deal. Yes, george, from the previous battles it always looks like it's not going to get done just before it actually gets done. That said, I have been very disappointed. I agree with everything that matt has said. But the republican house offer that came in the aftermath of that very nice sounding meeting with words of encouragement and moderation and flexibility on both sides, it was an offer as far as I have reported that did not reflect the impact of the election. No increase in rates. Increase in revenues, but nothing specified. Get rid of the sequester. No trigger if the tax reform doesn't reduce anything. And also pay attention to this, no increase in the debt ceiling. And the president has been very clear and the white house that he doesn't want to have to go through that again in february. Solve the cliff in january. All of that adds up to a pretty dire situation. That's true, peggy noonan, but it does seem that both the president and speaker boehner, know, in my ways, their legacy is on the line. They must have it on their minds, the two of them, if they really wanted to work hard, they might be able to sort of replicate that great old memory that all of us had of ronald reagan and tip o'neill, being able to make some big agreements, even though they had such disagreements and their party conferences were opposed to each other. That was one of the last times americans looked at washington and thought, oh, my goodness, this place worked. I think the president and the speaker could see this as an opportunity, this fiscal cliff thing, to convince people, you know what, we still can govern and that would be heartening. Agree? Yeah, I may be getting old and soft-headed and too weak to be cynical. But I'm actually -- this is bipartsanship. But I think that this election mattered in a way. I think that there was a tremendous fever in the country, a fever of partisanship and i think that fever has broken. Obama has already put entitlement reforms on the table in his private negotiations with boehner a year ago and I think that we're going to get a deal. We may go over the cliff for a week or two weeks, or whatever. But I'm optimistic there's going to be a deal. There's some talk that actually going over a cliff wouldn't be the worst thing in the world, for republicans, they're voting to cut taxes. And also, the president's leverage goes up as you get closer to that date. Because the taxes go up, at that moment, he's just negotiating about how much to cut them back down and I suspect that, as they get closer to the date, the republicans are going to look at the president's leverage, post january 1 and think they won't want to face that. There's a second element that comes into this, once you're passed that date, it's very bad for the market as matt said, but it may not be an immediate effect on the market. Everybody will look at this and say, this is probably the worst way to cut the pentagon budget as one pentagon official said to me at one point, what do we say, we don't want the last 7% of the plane? It's more of a slope than a cliff. Could create a recession over the long term. Cliff is a little bit of a misnomer. But it could be a cliff in the sense that markets can react very badly. We have really lucked out in the sense, despite our apparent inability to govern ourselves and come to the compromises that everyone wants, we haven't been punished too much by the markets so far. But one of the things that's interesting, you have the extremes in both parties willing cliff. At the same time, you asked matt if senator graham and durbin were anomaly, I don't think they are. They're a growing cadre of members in both parties that understand elements of a deal. On both sides of the aisle, the administration, everybody in the media knows that revenue has to be raise. The only way to raise revenue is to increase tax rates on the wealthy. Everybody knows that defense can be cut without hurting our security. They know that entitlement reform has to happen. Both sides of the aisle. The only good thing about the only good thing about grover norquist is that he was named after a character on sesame street. I think it goes back to boehner again. I think that there's a centrist coalition to pass this in the house. You know, you may lose the tea party on the right. You may lose some of the more extreme liberals on the left, if you do entitlement reforms. It depends on whether john boehner is willing to risk his speakership in order to have a legacy. And nancy pelosi will have a role here, too. One has the sense that the leaders of the parties have feared sequester and feared going over the cliff. They don't want it. Meanwhile, you have seen the movie "lincoln," ruth, you watched it with some members of congress. I wrote that the president had the screening of lincoln at the white house, which I was not at, he should have a regular 4:00 showing, everyone should come and sit down in those nice seats, eat the popcorn and recognize a few things from the president's point of view, nice words and lofty speeches, gettysburg address are good, but we need hard-headed filmmaking lobbying. It's wonderful to go along with it. And also from the point of view of congress, that congress can rise above itself. But also, I think the ultimate message of that wonderful movie, I thought that it was an act of patriotism. The ultimate message is, bring back earmarks. Earmarks have always been the grease, you know, that grease is the wheels that gets things done. He made such a huge campaign about earmarks when there are far bigger targets. One of the great things about that movie, beautiful movie, is that progress is never made through pure means. Everybody has a vision of this lincoln and all that. The idea of lincoln he was so forthright, he employed means to accomplish something to make the country progress. Definition of politics. Yes, it is. I have a feeling that the grail on this whole issue is going to be all about spending and entitlement reform. No. It's going to be about spending on entitlement reform if republicans see serious movement there, they'll be much more likely to go there.

This transcript has been automatically generated and may not be 100% accurate.

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