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Special Report

All-Star Panel: Talks of compromise ahead of 'fiscal cliff'

This is a rush transcript from "Special Report," November 9, 2012. This copy may not be in its final form and may be updated.


PRESIDENT BARACK OBAMA: I have invited leaders of both parties to the White House next week so we can start to build consensus around the challenges that we can only solve together.

REP. JOHN BOEHNER, R – OH, HOUSE SPEAKER: I'm hopeful that productive conversations can begin soon so that we can forge an agreement that can pass the Congress.

OBAMA: If we are serious about reducing the deficit we have to combine spending cut with revenue. And that means asking the wealthiest Americans to pay a little more in taxes.

BOEHNER: Raising tax rates will slow down our ability to create the jobs that everyone says they want.

OBAMA: I am open to compromise. I'm open to new ideas. I'm committed to solving our fiscal challenges. But I refuse to accept any approach that isn't balanced.


BRET BAIER, ANCHOR: The president and the House speaker back and forth on the issue of taxes as we stare at this fiscal cliff at the end of the year.  We're back with the panel. Charles?

CHARLES KRAUTHAMMER, SYNDICATED COLUMNIST: Look, I think that if you listen to the nuances in their language it looks as if they're dancing around some compromise. Boehner started by offering a peace pipe at the beginning. Right away after the election, he says I'm willing to raise revenues but not rates. So what he means is eliminate deductions on the wealthy if you'd like, which is a matter of fairness and it will raise revenue and cut the deficit. Republicans agree on that, I think, as a matter of tax reform.

The president has insisted that the rates have to go up for the top two percent. But when he claims it's going to be a wedge into our debt it's ridiculous.  The CBO estimates it will raise $80 billion a year. We have deficit of $1.1 trillion every year. So it would reduce our annual deficit from $1.1 trillion to $1.02 trillion, which is seven cents on the dollar. For Obama it's a matter of symbolism, it's a kind of a punitive thing, it's a way of saying we're going to stick it to the rich. However, if you listen to a statement as he said there, he talked about revenues, he stayed away from rates.

BAIER: But he says there's the central question in the election debated over and over again, and the White House says that he will veto anything that extends the Bush-era tax cuts for the top two percent of wage earners.

KRAUTHAMMER: He says that, but he also says I'm not wedded to every detail, and I'm willing to -- all I want is to raise revenue. So it's which half of that do you believe?  It's like in the Cuban missile crisis the Kennedys received two cables from Khrushchev, one aggressive and the other conciliatory. And the advice, they had a big meeting on what to do, and one guy says ignore the aggressive one and answer the conciliatory one. And it worked out. So to avoid a nuclear war in Washington I say address the conciliatory suggestion – revenues -- and try to work on deductions eliminated.

BAIER: Chuck?

CHARLES LANE, EDITORIAL WRITER, WASHINGTON POST: Well, Charles, as usual, is talking sense, even more sense than usual, I would say, because he and I agree on this one. Yes, they are dancing around a compromise and the key to it is this word "rates." John Boehner keeps coming -- "don't raise taxes rates." I did a little homework today, there is a study out by the Tax Policy Center that shows if you hold the top rate, i.e. don't raise it at 35, cap deductions at $50,000 a year, you raise $750 billion over 10 years, conveniently very much like the number John Boehner has already kinda, sorta agreed to in the previous negotiations.

You also hear people like Lindsey Graham and Bob Corker, Republican members, saying hey, guys, we can cut a deal. The key though, the key, and this might end up being the problem, if the Republicans move that way on taxes, what will the president deliver on entitlements? Because that is Boehner's bottom line that he can't move off of. He has got to get something real on spending.

BAIER: Because that is what Republicans never saw in hardcore, on paper, the last negotiation.

LANE: Exactly.

STEVE HAYES, SENIOR WRITER, THE WEEKLY STANDARD: Right and it's why the House Republicans are still skeptical that they're going to see anything significant about that now and that they're going to see it in the short term. I think what is more likely is you'll see some kind of short-term compromise and then they'll revisit this broader tax reform sometime down the line.

What Republicans are trying to do -- I talked to a couple of the Republican House leaders yesterday – what they're trying to do here is get out in front of what they see as inevitable. And they want to do everything they can to avoid this increase in tax rates, which they see as punitive, which they fought all along and which is a principle of the Republican Party to oppose increases in tax rates. So they are trying to get ahead of that by being open and signaling publicly, celebrating the fact they're open to additional revenues if they come without increases in rates. I don't know if it will end up in a compromise but I think they're going to insist on seeing something more from the White House on entitlements.

BAIER: The first back and forth, though, promising?

KRAUTHAMMER: It is because I think each side could have just held the ground, gone into negotiations without having conceded anything, even rhetorically. Boehner clearly has speaking about revenues, Obama has by implying that he could drop the rates issue and make it revenues, we're not sure if he means it, but I think it's the beginning of something. Because I think every side understands that if you go over this cliff, everybody will be tarnished really severely, Republican and Democrat.

BAIER: That is it for this round. But stay tuned for some final thoughts from the panel about the election.

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Special Report, hosted by Bret Baier, airs on Weekdays at 6PM ET on Fox News Channel.