All-Star Panel: Will Republicans bend in 'fiscal cliff' negotiations?

This is a rush transcript from "Special Report," December 11, 2012. This copy may not be in its final form and may be updated.

(BEGIN VIDEO CLIP)

REP. JOHN BOEHNER, R – OH, HOUSE SPEAKER: Now, if the president doesn't agree with our approach, he has got an obligation to put forward a plan that can pass both chambers of the Congress, because right now the American people have to be scratching their heads and wondering when is the president going to get serious.

JAY CARNEY, WHITE HOUSE PRESS SECRETARY: He has said that he is not wedded to every detail in this plan, and that he understands that a compromise requires all sides to accept something short of the ideal. And he is committed to doing that.  What we haven't seen from Republicans to this day is a single specific proposal on revenue.

HARRY REID,  D – NV, SENATE MAJORITY LEADER: We can get things done quickly. I think it's going to be extremely difficult to get it done before Christmas, but it could be done.

(END VIDEO CLIP)

BRET BAIER, ANCHOR: Sights and sounds of the cliff, that's what we will call it today. And just moments ago, President Obama told ABC, quote, "I'm pretty confident that Republicans would not hold middle class taxes hostage to try and protect tax cuts for high income individuals." He says, "I don't think they will do that, he says, I remain optimistic. I would like to see a big package but the most important thing we can do is make sure that middle class taxes do not go up January 1st." He says "I think the tone was good," and he thinks a deal still can get done. We're back with the panel. Optimism abounds, A.B.

A.B. STODDARD, ASSOCIATE EDITOR, THE HILL: Well, it always does from the White House, because they hold the cards in this tax rate debate. On the Republican side, although the House Speaker always comes off, I think, as infinitely reasonable in his presentations, it's getting pretty frustrating.

The feeling in the back room and in these discussions between the speaker and the president is, as the president indicated about his optimism, yes, the Republicans are going to bend on revenue or rates, probably rates. But they are not going to admit it on December 11th. Because to admit it now they would have to have something in exchange.

So when the president says show us your entitlement reform. Show us your spending cuts, the Republicans are in a corner where they can't say well for this we would ask this, because they don't want to say we would raise taxes. But they are probably going to do it on December 30th.

So the president knows that. It's up to him really if he wants to lead on this and not jump over the cliff, which Republicans suspect he does. He would have to really come over with a real middle of the road offer that would allow the Republicans a win when they take the hit for the tax increases.

He is not doing that. The number today went from 1.6 to 1.4. It was a meaningless difference. People I spoke to today on the Republican side very frustrated tonight by what they sees as a big talk on Sunday that was going well, but when it got down to the paperwork again everything was still the same.

BAIER: And when we say $1.6 trillion to $1.4 trillion, we are talking about revenues, that's tax increases that they're looking for -- the White House is looking for. But on the spending cuts side, Democrats keep talking, Tucker, about $1 trillion that's already been cut.

TUCKER CARLSON, EDITOR, THEDAILYCALLER.COM: Yeah.

BAIER: We explained this about baseline budgeting and just really quickly, a friend from Heritage explained it pretty well so we thought we would play this quickly.

(BEGIN VIDEO CLIP)

BILL BEACH, HERITAGE FOUNDATION: Baseline budgeting, just to kind of define it first before we get into the falsehoods that are based in there, is the building of a projection of spending based on what you are currently doing. So I'm currently building a house. I could -- under baseline budgeting, I could budget the same amount for building that house for each year of the next 10 years. That would be baseline budgeting. People say that's crazy. You build your house one year. That's it, not every year thereafter. What this does is it permanently builds in higher spending.

(END VIDEO CLIP)

BAIER: And then you cut and you call it a cut.

CARLSON: You cut money you never spend. Yeah, I think it's pretty hard for Democrats to credibly argue that they are planning big cuts. On the other hand, it's very difficult for Republicans to win a debate they have allowed their opponents to define. It's not at all clear why the speaker and the leadership in the House doesn't stand up and say here are the three cuts we would like, here are the cuts we would like.

And it's also unclear why they weren't laying this predicate six months ago, taking this case to the public for why we have to curtail the growth specifically of Medicare or go bankrupt. But it's not too late. And I think they could actually win this argument. The president doesn't want to give on this. He doesn't want to cut a single public sector employee. They're his base, in exchange for lifetime employment, they get -- they vote for him. And he doesn't want to cut entitlements. They are taking a strict no entitlement cut position. I think the Republicans could highlight their intransigence by stating their own position. I wish they would.

CHARLES KRAUTHAMMER, SYNDICATED COLUMNIST: It's late in the game to win the argument. I think what you have to do is emerge with your trousers still on.

Look, Boehner handed over his sword. It is clear the Republicans with all the dissension among them are ready to raise rates. That's probably going to happen. And that's really a Rubicon. But they have to do it only in return for something really important and real on entitlements. Raising the eligibility age for Medicare, changing the cost of living adjustment means testing. They get nothing. They cannot accept higher rates. If they get something from the president, which he is withholding now, I think that will give them a way to at least honorably hand over a sword but walk out still dressed.

BAIER: With their trousers?

KRAUTHAMMER: Yes.

(LAUGHTER)

BAIER: That is it for a clothed panel. But stay tuned for some things that make interviews more interesting than others on Capitol Hill. 

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