Roundtable I: Fiscal Cliff Stalemate

James Carville, Mary Matalin, Paul Krugman, George Will, Matthew Dowd.
10:12 | 12/09/12

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Transcript for Roundtable I: Fiscal Cliff Stalemate
instagramming your breakfast. Getting on youtube so that you can see "gangnam style." ♪ Gangnam style ♪ start using those precious social media skills to go out and sign people up. Then the horseback. Who knew that alan simpson could dance "gangnam style." He's part of this big debate on what to do about this fiscal cliff. We'll bring in our roundtable. George will, paul krugman of the "new york times." Abc's matthew dowd and my favorites james carville and mary matalin. Thanks a lot for coming in. George, we just heard the lawmakers there as far apart as ever with just 23 days to go, is there any way out of this? Conceptually, we're dealing here with splittable differences. Numbers, how high rates ought to be. We really in our country had unsplittable differences. Differences that you really couldn't compromise on. This is doable. The problem is, george, since the second world war, really, through all of american history, our politics has been about allocating abundance. Now, we're allocating scarcity. We're not very good at it. I would like to postulate that, the real problem in the country today isn't the divisions that we talked so much about it's a consensus. As broad as the republic, as deep the grand canyon, we should have a generous welfare state and not pay for it. Oh, boy. Paul krugman? It's not just numbers. We have a basic difference in outlook. And I think part of the problem is, republicans are unable to make concrete proposals. If you actually look, all of that talk that we just heard, deficits in china and greece, which is nonsense, all of the talk is about how to deal with this, they put out numbers. If you look at all of things that concretely mentioned, all of their actual proposed spending cuts, raising the medicare age, cutting the price index for social security, it's about $300 billion. On the wealthy? Yeah, it's tiny. What they put on the table is almost nothing. All of the rest is just big talk. How is the president supposed to negotiate with people who say, here my demands? That's the point that the white house keeps making, mary, that they can't give the republicans what they don't ask for. That's completely mendacious, the republicans have offered in theory and specificity. Raise $1.7 trillion over ten years. We have been very specific. Professor -- you know we have -- that kills charitable deductions. It hits the middle class hard. We had two different ways of going forward. We will not have medicare or social security, we have senior democrat dick durbin saying social security isn't costing a penny. You have those democrats that medicare, medicaid and social security aren't the drivers of this debt. Even the president disagrees with this. What these guys should do, coburn is right, this is meaningless, they should even given him 98% or they should do what president clinton proposed, which is like it extend it for three months and let the new congress. We have a new congress, how is it fair that the outgoing congress that lost is making -- they're the ones that voted for it. First of all, what we want to do, we want to raise taxes. We want to raise tax rates. When you say you want to close loopholes that does not count. You have to tell us which ones. That's a generic thing. Are you going to close charitable, state and local deduction? Local finance? All of the above. What is that you're going to do? The generic statement is it doesn't count. We're very clear about what we want to do. We're not enhancing revenues. We're talking about raising taxes. By the way, one thing that had me mad was, when hensarling was talking, he said that the president hasn't proposed cuts. Look at that proposal, it has specifics. The stuff that's looking forward, there are major medicare spending cuts, mostly falling on providers not on beneficiaries. But there are a lot of detail in there. Professor, if you cut a provider, that doesn't cut beneficiary. Is that an economic reality? If you cut provider, you're going to cut a beneficiary. Not true. You know that I have spent a lot of time out in the country. I was in norfolk talking about this, to me, this is not a fiscal problem, this is a leadership problem, if you watch what happens right before we came on, the american public sees that and says what's going on in washington? What values do we stand for as a country? What do we really stand for? With both sides basically taking out positions where american public is a pawn on both sides of this, if both sides sat down and asked themselves what values do we stand for? What do we represent? Do we represent a value of shared sacrifice, do we represent a value of balanced budget and fiscal responsibility? We try to convey values to the american public so that we say this is what we stand before. To go to george's point, every time the value of shared sacrifice is presented to the american public, it's rejected. Because they keep telling the american public, you have your cake and eat it, too. It's the american public fault, but leaders tell them. You know, this is exactly what we're doing. We are giving the american people $10 worth of government and charging them about $6.50 for it. Of course, they think it's a good deal. We have made big government cheap. It seems to me, paul, first of all, you may not like the ryan budget. You have made that clear in the past. But, the house has twice passed the ryan budget and sent it to the senate. They could have acted on it. Because the ryan budget is filled with magic asterisks, too, it's not a real budget. It's a fake document. The fact that he doesn't actually present real budgets. Well, look, I have yet to encounter someone who disagrees with you that you seem is that they're corrupt. Specifics have indeed have been offered. The question is, are the american people, rhetorically conservative and operationally liberal? We're in the processover calling some bluffs. George, I wrote a book about this. We haven't grown incomes in this COUNTRY SINCE THE '70s. People have watched wars come. People have watched tax cuts come, bailouts come, right now, after the election, you're the cause of this. We're going to -- you know, if they cut medicare and social security, without really laying a predicate, people are going to say, why am I paying for these mistakes? I have no growth in my income. And the top 1% has had 250%. That's what the average guy thinks out there. That's half-true. That's half-true. The other side says, those who are at fault are the rich people. You won't have to share sacrifice if we just tax the rich more. What I'm saying is, both sides have to come to the conclusion that, if we want to tell the american public that balance in your checkbook is a good ia, having a sense of shared sacrifice is a good idea, personal responsibility is a good idea, helping your community is a good idea. Washington, d.C., Ought to act on all of the same values. That we want the american public in their neighborhoods to act on. But, people who are going to a lot of those shadow values, worked hard and played by the rules and saw their income stagnant or go down, they saw the deficit go up and they saw bad war and bad decisions being made, they're not overly happy about it and I can't blame them. It presents a political problem for the republicans, mary, the tax increase for the 98%. THAT HAPPENS ON JANUARY 1st. It does seem very difficult. You'll get all of this resolved BY THE DECEMBER 31st. Doesn't that put the pressure -- that makes my point. I'm taking the clinton position here, that to try to, with the president repeatedly wasting week after week after week to have a political -- to be able to blame the republicans politically for this, that's the problem, all of this structural debt is a problem. We do have declining wages. They have declined faster under the obama recovery than under the "bush recession" that's the whole separate problem. You can't just take this piecemeal. Republicans will have a problem if they con trip late on the problem. The reality in the world the republicans, while we're looking dismal at the federal level have won the majority of the governorships and in those cases they're lowering taxes. They are flattening the tax rates. They're creating jobs and growing their economies at twice the rate of this lunacy that the president continues to pursue. We have a short-run problem, which is purely a political problem about this fiscal cliff. It has nothing to do with the bondholder and the debt. We should solve that. We should work on that. We got to take a break.

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

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