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JOHN KING, USA

Tax Cut Deal

Aired December 6, 2010 - 19:00   ET

THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.


JOHN KING, HOST: Thanks Wolf and good evening everyone. Tonight, dramatic breaking news, a deal brokered by President Obama and the newly empowered Republican congressional leaders -- the key points, a two-year extension of all the Bush tax cuts, an extension of unemployment benefits the White House says will benefit seven million Americans, a one-year, two percent cut in payroll taxes and incentives designed to give businesses to speed up new equipment purchases and factory expansions.

It would lower your taxes, no matter how much you make, but at a substantial price for the government now and our children and grandchildren down the road. What do I mean by that -- trillions more in deficit spending. Just moments ago, President Obama began the effort to sell the deal.

(BEGIN VIDEO CLIP)

BARACK OBAMA, PRESIDENT OF THE UNITED STATES: I'm not willing to let working families across this country become collateral damage for political warfare here in Washington. And I'm not willing to let our economy slip backyards just as we're pulling ourselves out of this devastating recession.

(END VIDEO CLIP)

KING: Before that statement, the president had a long meeting with Democratic congressional leaders and safe to say they are not thrilled. Some are angry. Some are frustrated. That's how a Democratic leadership source described the meeting to me. So is this the best deal the president could get and is all the additional red ink worth it and this question is important too. How many Democrats will now refuse to support it?

In a moment the take of a Democratic senator up for reelection next cycle, Sherrod Brown of Ohio, but first, the details and what it means to your bottom line. Here are essentially the highlights of the deal the president outlined. Let's come over here and we'll play them out. The big picture is this.

It extends all the Bush tax cuts for two years. Remember the president wanted to stop at $250,000 of income. It also extends all the tax cuts for two years. The Republicans insisted on that. It all extends jobless benefits. It's a 13-month extension window. The White House says that will protect seven million Americans over the next year. An estate tax deal that the Republicans wanted that the president said was a good deal, he believed to leave the state taxes lower.

This is a big one here, a one-year, two percent deduction in payroll taxes. That means if you make $50,000, you'll save $1,000 in payroll taxes next year because of this two-percent reduction. Also a one-year business expensing plan, the goal of that is to get businesses to speed up factory expansions, speed up buying new equipment with the end result. The president hopes of creating jobs along the process.

Here's one of the things you need to look at as you think is this deal worth it for you. This yellow line here that would be the deficit going down if all the Bush tax cuts were allowed to expire at the end of the year. The green, well that's how much red ink the government will pour (ph) up if you extend all the Bush tax cuts.

Now what the president has agreed to is an extension for two years, which is right around in here, so you see more deficit spending there. The question is then will Congress two years from now decide to repeal those tax cuts or leave them in place. If they're left in place, that is the red ink facing your government right there.

One more quick thing to look at before we get to Senator Brown, this is a deal that the White House thought was important. There are about nine million Americans right now on unemployment benefits and if you break it down, these two million, 1.9 million they were about to lose their checks at the end of the year. Three million more would be in line to lose their checks next year. The White House says -- you see five million there and the White House says about seven million in all over that 13-month window will now be guaranteed extended unemployment benefits through this deal the president has brokered with Republicans.

The question is can he sell it? So let's go up to Capitol Hill. Senator Sherrod Brown, Democrat of Ohio. Senator, you said on Saturday when you were voting on a plan to just have the middle class tax cuts stay in play. This is what you said. Senate Republicans voted in off step against tax cuts for all Americans. "They would prefer to blow a $700 billion hole in the budget to give extra tax cuts to the wealthiest two percent. At a time of record deficits, they propose borrowing another $700 billion from China and passing along the tab to our grandchildren."

Could I now fairly, in your view, read that statement back to you and say what the president of the United States just agreed to would blow a seven billion -- $700 billion hole in the budget to give extra tax cuts to the wealthiest two percent, sir?

SEN. SHERROD BROWN (D), OHIO: You could.

KING: Will you vote for it?

BROWN: I need to look at it. I'm very unhappy about it. You're right, in essence takes 700 billion -- borrows $700 billion from China. Charges it -- puts it on our children and grandchildren's credit cards and gives it to the wealthiest two percent taxpayers. I mean you know people say Washington doesn't listen enough. It's clear what the public was saying is give the tax -- keep the tax cuts going for the middle class. Extend, maintain unemployment benefits for those in my state, 85,000 Ohio families lost their unemployment benefits last week. The Republicans continue to filibuster that. We should just keep going on that and (INAUDIBLE) continue to fight for the middle class tax break.

I'm not at all happy with this. I want to see all the details before I make any kind of commitment. It's only been -- I watched the president on TV 20 minutes ago. I already had some briefing about it prior to that of course, but this is a real concern. It doesn't -- it doesn't do the right thing long-term for our country.

KING: Did the president of the United States cave?

BROWN: Oh I don't know if he caved. He came to an agreement that I don't agree with. I think that he could have gotten a better agreement. I join most of America I think in thinking this is not the right way to go. Extending unemployment benefits will help the country. You know we basically had a 10-year experiment with in 2001 and 2003, big tax cuts for the wealthy under President Bush.

We saw actually a decline during the Bush eight years. We had a net loss of private sector job, a net loss. So clearly, tax cuts for the rich don't trickle down and create jobs. It doesn't work. Why should we do it for another two years? And that's (INAUDIBLE) my concern.

Blow a hole in the budget. Make the deficit even greater as we talk about this deficit commission out of two sides of some of my colleagues' mouths, if you will. And why should we do this when we know this experiment will trickle down, doesn't work for the American public?

KING: Well that's a great point you make there about the deficit because we spent all last week talking about the recommendations from the president's commission and you had the chairmen of the commission, Erskine Bowles and Senator Alan Simpson saying you know what, maybe people won't agree with every detail in here, but now we have the attention of the American people and we have the attention of the politicians and there's no way they're going to continue to blow holes in the deficit. This deal would do just that, would it not?

BROWN: It would and there, you know I work in a place that too often sings (ph) with upper class accent, and when we put all this effort into cutting tax -- cutting income taxes for the top two percent, I'm not engaging class warfare. I'm just pointing out what happened.

Cutting income taxes from the top two percent, cutting the estate tax for less than one percent and then the Republicans filibuster repeatedly last week and before extending unemployment insurance, not welfare, but insurance to 85,000 Ohio families immediately who lost it and hundreds of thousands of Ohio families in Xenia, and Dayton and Springfield and Akron. And that's what the debate is here? I mean it just -- no wonder people at home are turned off to politics when that's what the arguments are. That's what the debates are here.

KING: Well, I want to read you a statement. Normally, the president of the United States cuts a deal and then when the Democratic congressional leaders issue statements, they are amen, Mr. President, good for you, Mr. President. This is a great deal, Mr. President. We're going to fight for it.

This is the quote from Jim Manley, who is the Senate Majority Leader, Harry Reid, a Democrat, his spokesman. Quote, "Now that the president has outlined his proposal, Senator Reid plans on discussing it with his caucus tomorrow" -- end quote -- end of statement.

That tells me Senator Reid and I was told at the meeting today, Senator Brown that the Democratic leaders were a mix of angry and frustrated. That they thought the president should have held up for a better deal. They think the president should stand up and fight. When you hear a statement like that from your leader what does it tell you about the pulse in your caucus and how many Democrats do you think it is possible to say sorry, sir, no.

BROWN: I have no idea, but I think the stand up and fight attitude is pretty -- running pretty rampant in the country and in our caucus. I think people all over the country believe overwhelmingly you don't do -- you don't cut taxes on the top two percent and then fight about unemployment benefits, borrow the money from China, put it on our children's and grandchildren's credit card, give it to the two percent millionaires and billionaires and then sit down and say, you know, I'm really -- I really care about fighting that -- about the deficit commission --

KING: And yet --

BROWN: -- and fighting for a smaller budget. It's just hypocrisy from a whole lot of people in this institution that sing with that upper class accent I was talking about.

KING: So it will be -- this vote could be a question of spine for many members of Congress, especially Democrats on the ballot in 2012 and I could write the ad right now, Senator, if you vote no, Sherrod Brown voted to raise your taxes in the middle of a recession. Sherrod Brown voted not to give you unemployment benefits. If you decide on principle, you don't like this deal, you don't think it is worth it, will you have the courage, sir to vote no knowing that's it's a great campaign --

(CROSSTALK)

KING: -- against you in 2012?

BROWN: If I think this deal is -- if I think this deal is as serious a problem as it looks at this point, I'm likely to do that. I understand though last week I voted for extending unemployment benefits twice. I voted for tax cuts for the middle class twice, and my Republican colleagues voted the opposite way twice. So nobody in my state, nobody thinks I don't care about the middle class. Nobody in my state thinks I don't want tax cuts for the middle class. I fought on the floor week after week for maintaining unemployment benefits for unemployed workers, so people can come and Karl Rove can spend 30 or $40 million, as he will, in Ohio in demagogue and lie, we're going to fight back, so that's really not my concern.

KING: Senator Sherrod Brown, Democrat of Ohio, sir, appreciate your quick reaction to the breaking news.

(CROSSTALK)

KING: Thank you. We'll keep in touch. Let's get a quick political reaction now. We're going to continue to break this down and throughout the hour we'll give you all the details, all the political spin. Let's get a good first impression from three of the best in the business -- Democratic strategist Paul Begala, Republican Kevin Madden and Roland Martin is with us as well, a CNN contributor.

Paul, let me start with you on the end. I could share you on this the amazing variety and the split between the Democrats and the Republicans sending in the messages and the Democrats are not happy and the Republicans think they pulled one over on the president here.

PAUL BEGALA, CNN POLITICAL CONTRIBUTOR: Yes, I in fact could not share the messages I'm getting from Democrats. This is a family network, John, and I know you're a family values guy. Democrats are unhappy. I think they get the sense that you know they understand compromise is give and take, but they feel like the president is giving and Republicans are taking.

But what the White House and the administration is pushing back on is a couple of things. First I have one source in the administration saying if you count it all up, it's 124 billion for the rich, which they don't much like, but they're going to accept in change for what they see as 200 billion in tax relief for the middle class. They're really touting this payroll cut, which is a job generator. It is for the middle class. It's good for small business, but I'm telling you this is a bitter pill. You heard Sherrod Brown from a swing state, the key swing state of Ohio, very unhappy with this. This is going to be tough for the Democrats --

KING: And for the Republican in the conversation, the Republicans are happy, they think they got a pretty good deal from the president. Paul just explained the payroll tax will help families out there that are struggling right now. The question, the calculation is that's next year. What about 10 or 15 years down the road.

We're going to sit around the holiday table this year. You might be ending your Hanukkah week. You might be getting ready for your Christmas week. What do you tell your children and your grandchildren when last week, it was all about Washington's going to get the message on deficit and this week, it's a spending spree?

KEVIN MADDEN, REPUBLICAN STRATEGIST: Well I think that first of all, you have to recognize that this is going to be a debate that we're going to continue to have, which is the Democratic world view versus the Republican view on taxes. Whether or not you believe that the government -- that the taxpayer's wallet is simply a gold mine for more money into the federal treasury so they can spend more money out of Washington or whether you believe that money given back to taxpayers is going to stimulate the economic growth, the fundamental economic growth that we need to help everybody.

So I think that's going to continue to happen. I think right now that many Americans do believe like Republicans do that we're winning the public debate on this, which is that the government needs a diet and the way that you stop government spending is to take more money away from the government --

(CROSSTALK)

ROLAND MARTIN, CNN POLITICAL CONTRIBUTOR: This proves to you that the deficit debate is a fraud, is an absolute fraud. I mean I understand your point, Kevin, but there is nothing about this deal that says the government is going on a diet. There's nothing.

You cannot sit here and make the argument that, oh, it's about cutting the deficit. It's about not hurting our future children, but we are going to fight for those people who are in the top the two percent and say no, we're going to go ahead and extend the deficit $700 billion. You can't. You can't even try to explain it, spend it, justify it. You can't.

KING: You can't unless the president and the Congress gets really tough when it comes to the budget next year because Washington will have less money coming in now. The question is will Washington keep spending more?

Hold on -- a quick break. We'll continue the conversation including breaking down the details. We'll come back. We'll look at the (INAUDIBLE) impact on the deficit. We'll look at the impact on your bottom line. And later with legislation in Washington coming up in Congress this week, they call it the DREAM Act. Trust me, it's a feisty debate.

(BEGIN VIDEO CLIP)

UNIDENTIFIED MALE: If this was such a great idea, why wasn't it done before November when the American people would see what was proposed? Why hasn't there been any hearings? Why do we even --

(CROSSTALK)

UNIDENTIFIED MALE: -- don't even see the text. We don't even see the text of what is coming forward right now.

UNIDENTIFIED MALE: Actually --

UNIDENTIFIED MALE: What is really saying is the fact that --

(END VIDEO CLIP)

(COMMERCIAL BREAK)

KING: As we discuss and break down the tax deal President Obama outlined just last hour, let's remember what we were talking about last week. Erskine Bowles, the former chief of staff to President Bill Clinton, he was the co-chairman of a deficit reduction commission appointed by President Obama. They released a report last week. They couldn't get a supermajority to back its recommendations. The supermajority would have forced an up or down vote in the Congress. But they did get majority support on the commission and Erskine Bowles looked the American people in the eye, looked Washington in the eye, because he thought they had reached an important threshold.

(BEGIN VIDEO CLIP)

ERSKINE BOWLES, CO-CHAIR, NATIONAL DEBT COMMISSION: Please, I really am pleading with you, please, make the tough choices. Reduce spending. Reduce it in the defense budget. Reduce it in the non- defense budget, in the entitlements, in the tax code.

(END VIDEO CLIP)

KING: Now in explaining the deal just moments ago, President Obama said yes, he didn't get everything he wanted. Yes, there will be a lot of tax cuts here. The president hopes in the short-term they help create jobs. They help ease the pain of the recession on unemployed Americans and struggling middle class families. The president conceded wealthy families also will get an extension of the tax cuts under this deal, but the president -- listen here -- suggests in two years when those Bush tax cuts are due to expire again, then tough choices maybe.

(BEGIN VIDEO CLIP)

BARACK OBAMA (D-IL), PRESIDENT OF THE UNITED STATES: These tax cuts will expire in two years and I'm confident that as we make tough choices about bringing our deficit down, as I engage in a conversation with the American people about the hard choices we're going to have to make to secure our future and our children's future and our grandchildren's future, it will become apparent that we cannot afford to extend those tax cuts any longer. As for now, I believe this bipartisan plan is the right thing to do.

(END VIDEO CLIP)

KING: So, there's a theme of the 2012 presidential campaign without a doubt. Do you take them away or do you leave them in place? Paul, by the time we get there, the Bush tax cuts 2001, then added on to 2003, by the time it gets to the 2012 campaign they will have been in place for 10 years.

BEGALA: Well, 10 years now. They were enacted in '01. They were passed in '01 --

(CROSSTALK)

BEGALA: -- in 2002 --

(CROSSTALK) KING: So, do you see a president who will go up and give a State of the Union, who says I just gave these tax cuts because I believe "A", I had to cut the deal with the Republicans, "B", I believe most (INAUDIBLE) but now I'm going to put on the table Social Security. I'm going to put on the table Medicare. I'm going to put on the table other spending cuts across the government. His base is mad at him. You just heard Senator Brown. Is he going to come up with a budget that says here, be mad some more because we need to do this?

BEGALA: I don't know. It'd be pretty interesting if he did. I don't think so, no. I think first off what the president needs to is explain to the American people what caused this deficit. OK, I worked in the White House. We balanced the budget. And the next administration, Republican administration squandered the entire surplus and here's what they did it on.

Tax cuts for the rich, Mr. Obama has now endorsed tax cuts for the rich. Two wars we are not paying for. Mr. Obama's tripled the troop levels in Afghanistan. He said he would in the campaign and he's been good to his word. A prescription drug benefit with no way to pay for it which nobody's talking about making seniors actually pay for, and then this God awful recession.

That's what caused it. Social Security didn't cause this and normal government spending on special needs children or veterans, that didn't cause the deficit. Those four things caused the deficit and I think those four things is where the president needs to lead us if we're going to cure the deficit --

KING: If you would accept those four things, you'd also have to add in an economy in a funk.

(CROSSTALK)

KING: Washington's getting no money.

UNIDENTIFIED MALE: Right.

MARTIN: Also, if you are a Republican, you are happy that the president is in essence defending Bush tax cuts. A point that Paul made earlier when it came to payroll taxes, what Democrats (INAUDIBLE) e-mails or phone calls are saying is wait a minute, you should be having a discussion about Obama tax cuts as opposed to Bush tax cuts.

And so Republicans are certainly I think winning in that particular area as well. You also look at look when the president had tax cuts in the stimulus bill, 95 percent of Americans got tax cuts. The perception on the right was it didn't even exist. And so he's going to have not only a battle with the left when it comes to the details of the plan, but also how do you sell it? How do you sell it? He is going to have to stick to this whole notion of I did it to protect the middle class voter and he's really talking about the Independent voters politically.

KING: If it helps the economy, if the economy starts to come back and you can say some of it at least is because of these tax cuts. Then we'll be having a very different conversation a year from now. But if it doesn't roar back and Ben Bernanke last night was on "60 Minutes" saying it will be five or six years before we get back to six percent unemployment in his view.

How can you justify the Republicans got some candy here, they got the tax cuts they wanted. Maybe the Democrats got some candy here in terms of the unemployment extension, and that payroll tax Paul -- but someone's going to have to pay for that candy some day.

MADDEN: Well I think the bigger problem for this president right now is that one of the things that he's under assault on right now, like he's lost a big middle of the electorate is because he has -- hasn't shown that he's had a willingness to dig in. Now I take a very clinical approach here, because I think that the president -- I agree with what the president did today. I'm glad that he gave in to Republican demands. But I think one of the big things -- one of the big debates that we've seen over this last year --

UNIDENTIFIED MALE: Diplomatic way to put it --

(CROSSTALK)

MADDEN: -- nice way to candy coat it. But I think one of the base that we've had over this last year is, is he a calcified ideologue or is he this political amorphous. Is he going to do what it takes to survive politically? I think what we saw today, which is where I think the president's going to have a bigger problem politically, is that he's showing his liberal -- his left base that he is much more of the latter. That he is willing to try to survive politically than fight for what he --

MARTIN: Actually what he's done is he's made it perfectly clear that unlike how I'm being painted by the right he's really not this far left guy. He is a pragmatic politician who will cut the deal and you're right at some point, you're going to have to fight. But the question is what is he going to fight on and when it's going to happen?

KING: We'll break on that point. When we come back, we'll pick up right there. What kind of a negotiator is the president? Where does he draw the line and did he pick the right fight and make the right deal here?

A lot more to come in the program as well, as we come over here, we'll break down what's still ahead. And one thing we'll have a big debate about it's called the DREAM Act. It would help illegal immigrants' children, young children who came to the country illegally, this would help them, but conservatives say no way. It is amnesty.

Also, we'll give you the latest on the WikiLeaks investigation, Julian Assange the police are trying to meet with him.

Also, a tragic story out of North Carolina, Elizabeth Edwards' doctors have told her, her cancer can no longer be treated. We'll update you there as well. And at the end of the program tonight I'm going to talk a little sports and politics with my friend "Pete on the Street". Bipartisanship political football -- we're all leaning forward into a game tonight where my team's going to beat his team.

(COMMERCIAL BREAK)

KING: Continuing now of our discussion of a breaking news story -- if you are just joining us President Obama last hour outlined a deal he has negotiated with the Republican congressional leadership. It would extend all of the Bush tax cuts for two years. It would also protect unemployment benefits -- extended unemployment benefits the White House says for up to seven million Americans.

Also, next year, everyone, everyone no matter how much you earn will get a two percent reduction in their payroll taxes. If you make act about 50 grand, the White House says you'll save $1,000 in taxes next year. So did the Democratic president negotiate a good deal or as many Democrats are saying tonight did he cave?

Let's get back to Paul, Kevin and Roland I want you to listen to the president because he knew the criticism was coming. He knew that some Democrats would say use your veto pen, stay in the fight, here's the president.

(BEGIN VIDEO CLIP)

OBAMA: As sympathetic as I am to those who prefer a fight over compromise, as much as the political wisdom may dictate fighting over solving problems, it would be the wrong thing to do. The American people didn't send us here to wage symbolic battles or win symbolic victories. They would much rather have the comfort of knowing that when they open their first paycheck on January of 2011 it won't be smaller than it was before. All because Washington decided they preferred to have a fight and failed to act.

(END VIDEO CLIP)

KING: Now, some Democrats will criticize him publicly. A lot of Democrats are more fiercely and with more vehement words shall we say not so family friendly criticizing the president privately. I want you to listen here to Bill Maher, yes, he's a comedian, but he's also a social commentator. This is Bill Maher talking to Fareed Zakaria this weekend.

(BEGIN VIDEO CLIP)

BILL MAHER, HOST, "REAL TIME WITH BILL MAHER": I'm so disappointed and I still like him. I still think there's hope he could get it yet, but I'm so disappointed that he just seems to be another in a long line of Democrats that come across as wimpy and wussy and whatever word you want to describe to it of not standing up for what they believe in enough.

(END VIDEO CLIP)

KING: Fair?

BEGALA: Yes. Bill Maher is speaking for a whole lot of Democrats out there. And I think where the president made a huge mistake in tone in his speech tonight was in saying that Democrats who -- will oppose this in principle and on principle the way Senator Brown seems to be leaning toward opposing it. He didn't say I understand people of good conscience and principle in my own party may not be able to swallow this compromise but I have to do it for the good of the country.

He set himself up above both parties, but this is going to annoy the Democrats more. And look what he said. He said that would be political. It would be wrong. It would be symbolic and to do so would put fighting over solving problems not -- look I understand people of good conscience just can't justify this proposal.

When he was in the Senate, Barack Obama called these tax cuts for the rich, the income tax cuts he said they troubled his conscience. So it was a moral issue for him. It's a moral issue for a lot of Democrats. He needs to be very careful about the attitude that he's using that those who disagree with him are somehow political and wrong and want to fight instead of solve problems.

KING: I can't resist because of the Democratic president you last worked for, but might we call that triangulation?

BEGALA: Absolutely. I remember that. It was a very tough time for him and for the Democrats as well. That's absolutely true. You have to be very careful --

KING: It's a good time to be a political reporter.

(CROSSTALK)

UNIDENTIFIED MALE: I bet so.

BEGALA: Having lived through that, you have to be very careful about not telling people in either party who disagree with you because of principle that you're the only principle person in this game. And this is the attitude that at least I as a progressive got out of President Obama's speech tonight.

KING: So, what have we learned about it? This is the first teachable moment, if you will, since the election. How would he react to what happened in November?

MARTIN: Well again, we actually saw this take place when it came to the health care debate. We saw it when it came to the stimulus and that is we put it in the hands of Congress. And Democrats were saying look, Mr. President, give us exactly what you want so we can then go to battle for it. His deal pretty much was look, you send me a particular bill. He has to reach a point where he does draw a line in the sand.

When you think about presidents in the past, you can say whatever you want (INAUDIBLE) President Ronald Reagan, but when he said I'm going to fire you air traffic controllers if you do not return to work. What he did, he sent a signal to Congress, to folks out in the public, do not mess with this president. And so I do believe that every president, every leader, mayor, governor, has to have a certain level of fear -- fear from his own party, but also the opposition party. And I think the president has made it perfectly clear. I am going to tow the line or that I will cut the deal if necessary, but he has not shown on any particular issue that I've yet to see where I am willing to go to the mat on this because this is my principle --

(CROSSTALK)

BEGALA: -- President Clinton did when Newt Gingrich wanted to cut Medicare by $270 billion, he vetoed that budget and they shut down the government. Everybody thought that Clinton could be rolled and he stood firm --

(CROSSTALK)

KING: So should President Obama have allowed taxes to go up and said you know what, the Republican will blame me. I'm blaming them and let's continue to fight? Let them --

BEGALA: He -- that's right.

(CROSSTALK)

BEGALA: -- confidence himself. He would win that fight.

(CROSSTALK)

MARTIN: I wrote a column on CNN.com. It was very clear. I said the GOP (INAUDIBLE). We know you're going to blink. At some point you have to push it to that point because they're saying look, we know you're not going to let the middle class not get cut, so we'll just lay back and wait.

KING: Do Republicans fear him? This used to be -- you're a Republican strategist now on the outside. You worked on the hill for a long time. Do Republicans fear the president of the United States?

MADDEN: This is on Roland's point, this goes to something I've been very critical about which is the president's lack of executive ability. Today the pageantry was very bad for this president. He looked like a justifier in chief and explainer in chief rather than a commander in chief. That bodes very poor for how his standing looks, his profile looks like with the American public. But up on Capitol Hill not only Republicans John but amongst Democrats he's always been light, but he's never been feared and respected. Now, that fear and respect, the lack of fear and respect is going to make it very hard for him not only with Republicans, but Democrats on Capitol Hill.

MARTIN: Because the fear for Democrats, if we take the stand, will you have our back? I'm hearing folks say, on this particular issue, hey where we are, unemployment, excuse me, taxes, two years out. Democrats are saying why don't we extend unemployment benefits two years instead of 13 months? MADDEN: They're going to be convinced he's in survival mode geared towards 2012 and not worried about their interests.

KING: Roland, Kevin, Paul, thanks for coming in. A tough conversation, well worth it. We'll continue our coverage of the tax cut debate. We'll break it down for you as we go and we'll ask some important questions of our reporters a little bit ahead including now that the president's cut this deal, can he get some other priorities through the Congress before it leaves for the year? And one issue the president does want the Congress to act on. It's called the dream act. We'll have a debate when we come back.

(COMMERCIAL BREAK)

KING: Both the house and Senate begin debate this week on legislation known here in Washington as the dream act. The bill would create a path to citizenship for undocumented immigrants who entered the United States before the age of 16, stayed out of legal trouble, earned a high school diploma and committed to attending college or serving the military. Here to discuss the bill's merits and its likelihood of passage, Illinois Democratic Congressman Luis Gutierrez and California Republican Congressman Ryan Bilbray. Congressman Gutierrez, I want to start with you first. You have been fighting for this legislation for quite some time. I just checked with a Senate source who says they will try to have a closer vote Wednesday morning. The back half of that message was but we're still not sure we have the votes to pass it. As you know, there are some saying this is a political stunt. Democrats trying to please a constituency and they know they can't pass it.

REP. LUIS GUTIERREZ (D), ILLINOIS: We tried in September. There are at least 12 to 13 members in the Senate who voted for it in 2006, been a cosponsor of the bill or voted for it in judiciary. This is a bipartisan piece of legislation, that's why we keep stressing in your description, it isn't amnesty. It's the kids that came here through no fault of their own with their parents and joined the military and they pay back and earn their legalization. As you suggest, it might have a pathway to citizenship, but it's a long path. It's ten years in this temporary status. You've got to work, go to school, join the military, graduate. Some estimates, maybe only 40 percent of those eligible will be able to qualify over that. Then you have to stay another three years in another temporary. So 15 years before citizenship and in the meantime you pay taxes and you've enriched our economy.

KING: So Congressman Bilbray, what's your objection? Specifically here, we could have a long conversation in a minute about the broader immigration issues, but here, you're talk in talking about young children brought into this country, yes, illegally, but by their parents. It wasn't their decision or by someone in their family, it wasn't their decision. If they're behaving well, if they want to be get a good education, serve in the military, pay taxes. What's the problem?

REP. BRIAN BILBRAY (R), CALIFORNIA: The big problem is why are you trying to do it now? Why didn't you have hearings? Who even knows what's going to be brought up. First of all, you don't know that. Second of all, in a week where you've seen the cartels were busted in Phoenix, smuggling under age people in the country, now, we're talking about trading a whole new public policy of rewarding that kind of illegal activity. Second of all, you're not talking about children.

KING: They don't cross the border and get status.

BILBRAY: No, no, no. This will go through the process, but the process is if your parents smuggle you in illegally, you now get the benefit. Remember, this will be the first time the Congress has equated military service of veterans with the promise of attending school. That kind of concept has got people like the ranking chair of veterans very upset. The congress will set a policy that an illegal going school is equal to veteran service. The biggest message that we've got to say is the mixed message this country continues to send to people around the world that America will reward illegal behavior.

KING: Congressman Gutierrez, it sounds listening to the passion of your Republican colleague here that you have this week and next week to get this done because his party will control the house come January. Is that a fair statement that if you don't get this done by the end of the year in this lame duck Congress it is DOA?

GUTIERREZ: You know, unfortunately, I really believe that is the truth. That this is the last opportunity to get some reform in our system, but I do think, John, it's important to note that my friend refers now to the drug cartels. These kids have clean records. As a matter of fact, they have to submit to a complete security background check before they're allowed to even enter the program. And we're not -- and it's a one time only. If you're not in the United States at the point in which this law is signed, you don't get it. Let's say you're 11 and you've been in the country four years. Guess what? When you're 18, you don't qualify. It's a very tailored program to a group of young people who can serve in the military. Let me just share with you, I've met a lot of the young dream activists. They love this country. They're American citizens because some got here when they were 2, 3, 4 years old. Then the grade school, high school. This is the only country they know. The only country they love and they want to serve in the military. What a better way, how about I say, what's the ultimate tax a citizen can pay or a member of a society can pay to a government? If not the tax of their blood, of their limbs, of their service, of their life and the protection of that nation.

BILBRAY: John, if this was such a great idea, why wasn't it done before November when the American people would see what was proposed? Why hasn't there been any hearings?

GUTIERREZ: Actually, it was done.

BILBRAY: We don't even see the text of what is coming forward. What it's saying is the fact we're going to create a whole new status, and this concept of oh, we'll only do it one time. That's what we said in '96 when we did that amnesty. You really think the people around the world are so blind to think that if you give amnesty, you start rewarding illegal behavior, we'll find a little niche for every body that it doesn't send a mixed signal. Look you can sit in Chicago. I'm on the border. I'm seeing the death. I'm seeing the cartels. They're smuggling drugs and illegals into this country.

KING: We're not sure if this dream act will pass which is a small slice of the immigration debate in the immigration fight. Is it a fair statement -- do you agree on this point given that this one is so contention and it is such a small one, you would think somewhat less controversial than some of the bigger issues and the big debate issue, that the broader question of comprehensive immigration reform you have been pushing for for years Congressman Gutierrez, is that now a dead issue through the next presidential election given the politics of Washington right now at least?

BILBRAY: I think the fact --

KING: I don't --

BILBRAY: It's a dead issue to talk about amnesty. The Congressman and I can concentrate on going after the real culprits of illegal immigration. That's illegal employers. The Congressman should be joining with Congressman Shuler with a bipartisan effort to require e-verification that we shut off the illegal employers creating the major magnet. We've also got to cut off the politicians who are saying wet to reward illegal behavior.

KING: If you do those things, you'll still have 12 million people who came into the United States illegally.

BILBRAY: John, you don't have the -- you've got to stop paying them. Stop the employers who are paying them to stay here illegally. We have seen that across the board. We've seen the reduction when enforcement and economy drops off and I think the Congressman will agree. We don't have enough jobs for the people here legally. We don't have enough educational opportunities for those who are here legally. Why in the world at this time of crisis, when we ought to be talking about jobs for Americans, that we'd be talking about actually creating a whole new group of entitlement, of education and employment, that we would not be able to fulfill under existing economic situations. That's what we ought to be talking about, jobs for legal immigrants and legal citizens.

GUTIERREZ: Here's what we have had. John, we just appropriated $600 million. It's quadrupled the number of border patrol agents that we have. As a matter of fact the head of the border patrol want to control the border, have comprehensive immigration reform. We believe that you should have make sure that everybody in the United States is employed is checked by the government, that you have e-verify, that you're putting people on the border, that you do punish and put people in jail, but then there's like this fantasy that the 12 million will just go poof and disappear. It's not going to happen. Many of them have deep roots in the communities in which they live. 4 million American citizen children whose parents are undocumented and living in the United States of America, so all I'm saying is we'll give you, but the policy of enforcement, I've been in the Congress 18 years consecutively. We keep appropriating more money because we keep exacerbating the problem because we don't deal with it. BILBRAY: And Congressman, you know we need to go after interior enforcement in Chicago. The problem isn't in my neighborhoods at the border. The deaths and destruction is going on there, but your employers up north are the ones who are employing these people and until we Republicans and Democrats go after that, talking about rewarding illegal behavior with amnesty, you can't build a fence tall enough to do that. Ask the border patrol association. They say enforcement in the workplace is what we need.

GUTIERREZ: Mr. Bilbray, I know you like telling me what I should be doing and what I should know. Here's what I do know. 1994, your party gained the majority and for eight years, from 2001-2008, you were six of those years you were in the majority and for 12 of those years, you were in the majority in the house and for eight of those years, you had the presidency, everything, and you didn't deal with the problem.

KING: When we come back, top stories including a sad update on Elizabeth Edwards' battle with cancer.

(COMMERCIAL BREAK)

KING: Welcome back. Let's check in with Joe Johns for the latest news you need to know right now. Hey Joe.

JOE JOHNS, CNN CORRESPONDENT: John, the founder of Wikileaks apparently appears ready to answer questions about a warrant for his arrest. His lawyer says Julian Assange is making arrangements to meet with British police about sex crime allegations against him in Sweden. The Obama administration is turning up the heat on Assange as well as hoping to prosecute him for leaking hundreds of thousands of secret diplomatic cables.

(BEGIN VIDEO CLIP)

ERIC HOLDER, ATTORNEY GENERAL: We are doing everything that we can. We have a very serious, active, ongoing investigation that is criminal in nature. I authorized just last week a number of things to be done so that we can hopefully get to the bottom of this and hold people accountable as they should be.

(END VIDEO CLIP)

JOHNS: Elizabeth Edwards reveals she has stopped her cancer treatments. Doctors say they couldn't do anything more for her. We're told she is surrounded by her family at her home in North Carolina, including her estranged husband, the former presidential candidate John Edwards. Mrs. Edwards alludes to all she's been through in a statement saying, "The days of our lives, for all of us, are numbered. We know that. And, yes, there are certainly times when we aren't able to muster as much strength and patience as we would like. It's called being human." John, as you know, you've been in on some of the reporting today, Elizabeth Edwards apparently at least just weeks to live.

KING: I was talking to some family friends today. It's terribly sad news. She was told this last week by her doctors. They said it would just be futile to keep trying to treat the cancer. She's getting treatment for side effects and symptoms, but not for the cancer itself. She's not in pain and in remarkably good spirits all things considered because she has had a long time to think about this and to prepare for this. Our thoughts and prayers are certainly with the Edwards family. Joe, thank you.

When we come back, we'll talk to reporters. Back to tonight's breaking news, the tax deal the president of the United States is negotiating with Congressional Republican leaders. Here's the big question. Can he sell it now to Democrats?

(COMMERCIAL BREAK)

KING: Back to tonight's breaking political news, just about 90 minutes ago, President Obama at the white house announcing a deal he's negotiated with the Republican Congressional leadership. Here's what it would do. It would extend all the Bush tax cuts for two years. It would extend unemployment benefits for 13 months, it would have a lower estate tax, a one-year 2 percent reduction in payroll taxes. That's the big part of this deal. And a one-year plan to help businesses speed up expensing, the idea of that being to get them to invest more in factory expansions and new equipment. The question now is, he's cut a deal with Republicans, can he sell it to Democrats? Here's Senator Sherrod Brown, Democrat of Ohio, up for reelection next cycle with us at the top of the program.

(BEGIN VIDEO CLIP)

SEN. SHERROD BROWN (D), OHIO: I'm very unhappy about it, you're right, in essence, it takes 700 billion -- borrows $700 billion from China, puts it on our children and grandchildren's credit cards and gives it to the wealthiest 2 percent taxpayers. People say Washington doesn't listen enough.

(END VIDEO CLIP)

KING: So can the president complete the sale to members of his own party? What other political problems? Gloria Borger, Jessica Yellin with us. I was told the white house meeting you had a mix of anger and frustration from the Democrats?

GLORIA BORGER, CNN SENIOR POLITICAL ANALYST: Yeah, right, of course. They understand. And I think the Democrats have a point here, that the Republicans are having the Democrats do their dirty work for them right now, they're al at the buffet table, there's something in this for everyone. Get it done during the lame duck session and Republicans take over, and guess what's going to happen. They're suddenly going to talk about deficit reduction. And they will nickel and dime Barack Obama on every single spending program, because this is not about the deficit.

JESSICA YELLIN, CNN NATIONAL POLITICAL CORRESPONDENT: And this is where we have a real responsibility to sort of -- as we say, keep them honest, as much as all these politicians are talking about paying for everything, none of this is paid for. Unemployment insurance isn't paid for, the extension of that, that's not the only part of it, how are these tax cuts? Where's the money going to come from? You heard Sherrod Brown there from China and --

KING: It's borrowed money.

BORGER: And we just had, reality check, deficit commission came out and said, what a huge problem we have now. I personally believe Barack Obama can come out in the state of the union, call for a deficit summit, call for reforming the tax code, part of that being tax increases and try to get something done and call the Republican's bluff. Whether he does that I have no idea.

YELLIN: The left flank of his own party, they're basically stupefied that he has in their view endorsed President George W. Bush's central economic policy.

KING: The question is, has the president made the calculation the left may be mad at me, but they won't dessert me when it comes to reelection in 2012? So number one, I'm going to cut a deal with Republicans. The question is, what's the next step? Does he in the state of the union say, I'll embrace my deficit reduction commission? Let's get some cost savings in Medicare? Let's cut elsewhere across the government?

BORGER: I think he might. I mean, look, this is about leadership at this point. It's not about his left flank. It's about leading the country and making sure that he's not the one that leads the country into the ditch you used to talk about in the last campaign. He's got another ditch right now he's got to dig out of. I think it requires him to actually lead. He believes the public will reward him for it in the long term. Right now his Democrats are going to be angry about it, because the Republicans were clever.

KING: It's remarkable the number of Democrats who use the words spine saying the president doesn't have. The president says he knows he's going to get criticized he didn't want working families to get a 3,000 or $5,000 tax increase next year.

YELLIN: That's right and as he said, that's a real effect on real people. This payroll tax holiday or the reduction in the payroll tax will be felt by millions of Americans, will make a real difference. The bottom line is, it's still a long time before the re- elect. He has a long time, he can figure out how to shape a message and try to get people back on board.

BORGER: This is a political deal. Everybody understands, this is a political deal that he had to make, but the next phase is what we really need to pay attention to, what he does in the state of the union.

KING: Jessica, Gloria, thanks. The next phase is very important, and the next couple weeks. We'll see if the good will on the deal on the Republicans' side gets the president anything else.

So when we come back we shift. What do bipartisanship and football have in common? Pete Dominick breaks it down. (COMMERCIAL BREAK)

KING: I like Pete Dominick. Pete Dominick's a friend of mine. But the poor guy has lost his mind. What are you thinking? That's the wrong team, dude?

PETE DOMINICK, OFFBEAT REPORTER: John King I've gotten recognized in front of the camera this evening more than ever before doing this short. Everybody thinks I'm Darrelle Revis. Listen Patriots, Jets tonight. You're the Boston guy, I'm the Jets guy. In the spirit of bipartisanship, I would like to extend a compliment to Boston if you'll agree to extend a compliment to New York?

KING: No.

DOMINICK: Well, that didn't go as well as planned. All right. Let's forget it, all bets are off. If the Jets win tonight have you to stuff a pillow in your shirt for tomorrow's show to pretend to be Rex Ryan. If the Patriots win, I'll dress up as Tom Brady or Gizelle, one better.

KING: You'll dress up as Gizelle. I don't know. I need this job. I don't know if I could put a pillow under this thing but I'll do some Rexisms for you. Give me your prediction?

DOMINICK: Jets 24-Patriots 17 and Rich Sanchez -- Mark Sanchez will win the beauty contest.

KING: Tom Brady will win the game. It's funny you said the Jets would get 24 points. Because I wrote it down before the break. They will get 24 points but New England's going to get 28.

DOMINICK: Oh, no, that's not going to happen. That's not going to happen, John King. It's going to be a sad night for you guys, but we'll talk about it tomorrow night.

KING: We'll see you right here tomorrow. That's all for us tonight. We'll see you tomorrow we hope too. "PARKER SPITZER" starts right now.