Are Republicans losing themselves in 'fiscal cliff' negotiations?

This is a rush transcript from "Hannity," December 17, 2012. This copy may not be in its final form and may be updated.

SEAN HANNITY, HOST: And this is a Fox News alert. We are now learning that President Barack Obama and House Speaker John Boehner are getting close to a final deal to avert the so-called "fiscal cliff."

Now we are learning tonight that the president just presented a counter offer to Speaker Boehner. Now some of the biggest provisions include $1.2 trillion in revenues, which means tax increases for those earning $400,000 or more a year, a potential two-year debt ceiling increase and an end to certain sequestration spending cuts. And we are just now hearing from the speaker's office, which says that Obama and his offer, quote, "cannot be considered balance, but is a step in the right direction."

Here to help sort through all of this, Fox News contributor, the ever shy Pat Caddell, former congressional candidate, Saratoga Spring's mayor, she should be congresswoman, should be senator or maybe president, Mayor Mia Love. Good to see you in New York. How are you?

MAYOR MIA LOVE, R-SARATOGA SPRINGS, UTAH: Good to see you. I'm doing great.

HANNITY: Well, I said on the radio today that Speaker Boehner really is doing a good job in negotiating with himself. Because they are talking about the "fiscal cliff," he's given up on everything. And this is the first movement at all we're hearing from the president. I don't like two years of not dealing with the debt ceiling.

LOVE: I think that that is actually the only leverage that the Republicans have right now, and to give it up would be absolutely devastating. I mean, really the cards are all with the administration and with the Democrats. And we're giving up the one leverage that we have and that's really concerning.

PAT CADDELL, FORMER DEMOCRATIC POLLSTER: Look, Sean, this is it a peace-meal surrender that Boehner has been doing for two weeks. I mean, this guy is more intending getting a deal than he is in fighting for principle.

We are down to -- the president wants more stimulus spending in his proposal. He wants more tax revenue than cuts. The more importantly -- and I wrote a piece a couple of weeks ago on Breitbart saying, wait a minute. You are going to have to raise taxes, take the Schumer idea of a million dollars and say we will go with that. You start the cuts -- and remember Simpson-Bowles 3-1, and remember the fact, and by the way, make the issue the debt limit because that's an overreach of the president.

HANNITY: If they give up on the debt limit, which is their only leverage. They are giving this president two years, a blank check.

LOVE: Blank check for two years and it's absolutely devastating. And we have to remember what we are dealing with here. We don't have a revenue problem. We have a major spending problem. Ordinary citizens like myself have to balance a budget. We have to live within our means and let's not forget that Ernst and Young said that if we tax the top two brackets that will cost 700,000 jobs. Who are those jobs coming from? They are not CEOs --

HANNITY: Do you agree with Pat's word, this is, you know, piece-meal surrender?

LOVE: Well, I think, you know, we have lost every leverage --

CADDELL: You are giving it away. He's giving it away.

HANNITY: If Republicans are not going to stand as the conservative alternative voice in the country then what are they there for?

LOVE: Well, it's a bad deal. I just think, you know, he's giving up nothing. You go from 200 -- taxing people that makes over $250,000 to now taxing people that make over $400,000?

HANNITY: Listen, if they don't have the courage --

CADDELL: Let me just say, he is going to get revenue increases because he won the election. Now he went from 800 billion and wants a trillion four. Boehner has already raised it 50 percent to a trillion two. But here's the point, this is about spending.

We are talking about a tragedy to our children. We have a $16 trillion deficit. He gets the authority to just continue to take us where he wants for two years with no restraints from Congress. The American people are important. What are they doing?

HANNITY: We are talking about the children. This is license stealing.

CADDELL: This is the future of my grandchildren whether they will have a future.

HANNITY: Robbing the blind --

CADDELL: It is it a moral issue.

HANNITY: This is taking a sledge hammer to their piggy banks.

LOVE: We absolutely are and we have to look at the bigger picture here, Sean. I mean, we are trying to make public policy without even getting out to the American people and talk -- and forming public opinion. We have to get the American people behind us. We have to talk in a language in which they understand and understand that these are going to affect them. We are going to look next year and we are going to see unemployment go up. We are going to see that our economy is going to go -- in the toilet.

HANNITY: What do say to the Republicans if they go along -- if this is the deal, they are going to give up on the debt ceiling. What do you say to them? I say they surrendered. If this is the deal, they have surrendered.


HANNITY: They have given up.

LOVE: We cannot -- we live in a country, for crying out loud, we never have been a country of fear.

HANNITY: Get a back bone, fight, and be a conservative!

CADDELL: Not only fight, but make a case to the American people. All they do is talk to each other. Obama -- the president is out there saying, I'm taking care of the middle class meanwhile Boehner just talks to himself.

HANNITY: We didn't vote them into office to rubber stamp Obama's agenda.

CADDELL: The country doesn't support more spending. They want the cuts.

HANNITY: So be the party of saving and stopping the robbing of our kids.

LOVE: It is going to end badly for Republicans either way. You might as well go as far as you possibly can and get whatever you can and hold on to the leverage you actually have.

HANNITY: I don't think they should go beyond six months ever with the debt ceiling because this president is on target now to give us a trillion more in new debt in the next four years.

CADDELL: It gives him unilateral power to raise it. We're not talking about (INAUDIBLE). This is -- with the words are, the McConnell mechanisms. What that means is he gets to raise it unilaterally and the two thirds vote to stop it.

HANNITY: No -- he may lose his speaker.

CADDELL: I don't know what he's doing!

HANNITY: We got to go. It's great -- come to town more often.

LOVE: I would love that.

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