All-Star Panel: Obama's approach to avoiding the 'fiscal cliff'

This is a rush transcript from "Special Report," November 14, 2012. This copy may not be in its final form and may be updated.
 

(BEGIN VIDEO CLIP)

OBAMA: When it comes to the top two percent, what I'm not going to do is to extend further a tax cut for folks who don't need it which would cost close to a trillion dollars. And it's very difficult to see how you make up that trillion dollars, if we are serious about deficit reduction, just by closing loopholes and deductions.

(END VIDEO CLIP)

CHRIS WALLACE, ANCHOR: President Obama pushing back today against Republican claims that Washington can raise enough revenue without raising tax rates. And we are back with the panel. A.B., the president did make it clear today that he is not going to extend the Bush tax cuts. He said, as you heard there, that tax reform, closing loopholes, doesn't get you enough revenue. So given the fact that he is saying I am going to raise rates and the Republicans are saying we don't want to see the rates raised, where does that leave the negotiations over the fiscal cliff?

A.B. STODDARD, ASSOCIATE EDITOR, THE HILL: The negotiations haven't really begun and they won't really begin in earnest until after Thanksgiving. There is a lot of speaking to the microphones. There's an inside game and an outside game that both parties are playing. In Obama's inside game is telling labor and all his friends on the left that he is not going to budge and assuring them that he is going to fight the big fight.

At the same time, what I heard in that press conference in another statement was actually openness to creative ways of producing more revenue, that he is open and not going to close down discussions as long as they end up taxing the wealthy and the middle class don't get hit. So he is trying to not double down on rates as the Republicans are running around saying we just can't raise rates.

So I do believe that there is some willingness for him to be open as long as he is looking at a good enough number and good enough source of revenue from the wealthy.

That being said, we are looking at obviously a huge fight because the Republicans are really torn up about this. What is an increase in taxes mean, what do increased revenues mean? And I don't think we're really going to know until December whether or not they are going to offer up the deductions and everything he is looking for.

WALLACE: Charles Lane, we have these big headlines in the paper saying now that the president isn't willing, or isn't demanding $800 billion, which is what back in August of 2011, when he was having those big debt talks with John Boehner, he was talking about he wants double that. He wants $1.6 trillion in revenue increases. So, again, you know, he has got an election, and he sounds like he is going to try to push what he sees as his advantage with the Republicans.

CHARLES LANE, EDITORIAL WRITER, WASHINGTON POST: He is not going to get $1.6 trillion. That is opening bid. But you are right, he holds the cards now. He holds all the cards, because the fiscal cliff, the way it changes policy, is altogether in a liberal direction. Raises tax rates, cuts defense that's how it deals with --

WALLACE: What about social spending?

LANE: A little bit, but leaves entitlements alone. So in a way he wins if we even go over the cliff.

And the trump card he holds now is the low standing of the Republican Congress in political opinion. There is a new poll out. I think you guys showed it earlier, Washington Post/Pew poll, 53 percent of people say if we go over the fiscal cliff we will blame the Republicans. So really, Obama -- the ball is in the Republican's court. They may not like that, but I think that is the truth. And Obama is in the driver's seat right now.

WALLACE: Charles Krauthammer, I would love for you to react to that. And I also would like you to react to the president's statement today that he wants a big deal, he wants a comprehensive deal. And he was, I thought, quite open about the idea that he is willing to put entitlements and entitlement reform on the table.

CHARLES KRAUTHAMMER, SYNDICATED COLUMNIST: Well, he said that in the past, he's never proposed anything. Perhaps he will do it. I don't know. But I disagree with what Chuck said about Obama holding all the cards. Politically, perhaps. But remember Obama is not running again. So what if -- it's not going to help him if his popularity increases and he wrecks the American economy by sending it into a recession by going over the cliff.

The card that the Republicans hold is that it is terrible policy to do what would happen unless Obama yields somewhat in his demand on higher rates because we are going to have a recession. We're going to have a huge amount of defense cuts which his own defense secretary has said would destroy the U.S. military, probably cause resignation on principle, send us into a recession, and not solve our entitlement problem. We would have the worst economy, entitlements out of control, cuts in discretionary spending in defense and high taxes with a stalled economy. Is that how he wants to have a second term?

He is not running again. The popularity numbers are irrelevant. He knows if he goes over a cliff he's going to have the worst second term in the last 50 years. So I think the cards are held equally. And I'm with A.B. I heard him say, that he was open to other ways of raising revenues, "new ideas" he called it. And I think, there is clearly a compromise out there where the rates are either not raised at all or perhaps you redefine what the rich are, say $1 million or up, the Chuck Schumer idea and you get a compromise.

WALLACE: Well, that is a bit of optimism from Charles. So let me ask you, Fred, where do you think that negotiations stand now?

FRED BARNES, EXECUTIVE EDITOR, THE WEEKLY STANDARD: I think Charles and A.B. are both dreaming. Look, this is the real Barack Obama. He wants to raise tax on the wealthy. He doubled down on it. He says he wants to compromise. Why do you devote your entire opening statement to using the same stuff he said in the campaign, advocating this tax on the wealthy. It is horrible for the economy. It's not half of the fiscal cliff anyway, the tax cliff. It's about -- the entire cliff on taxes. Taxes would go up something like $380 billion. Even if you exempt the middle class, the 98 percent from having a tax increase, you have all these other things, the Social security tax, holiday is going to be gone and so on. So the president really wants to do this.

The one argument -- he was asked well, look, you didn't agree to it in 2010. Why now? He said, oh well, the economy was so weak back in 2010, I couldn't do it. The economy is weaker now. Growth has slowed in 2011 and 2012. Look, this is what his second term what he wants to do. I don't think he cares about the economy. He wants to raise taxes on the wealthy.

WALLACE: But, as Charles points out, we have ten seconds, is he really willing to go over the cliff to do that?

BARNES: Yes, I think so.

WALLACE: And have a recession?

BARNES: Well, there will probably be one anyway with all the other taxes that are going up.

(CROSSTALK)

WALLACE: We're going to leave it there. Again, something to talk about. Thank you, panel. But stay tuned to find out why you should never, ever disrespect Barbara Walters.

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