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Obama Addresses Fiscal Cliff; NY City Leaders Fed Up with Sandy Response; Some Sandy Victims Just Returning to See Destruction; Answers Sought on Benghazi Attack; Calls for Agreement to Avoid Fiscal Cliff; Iranian Jet Fires on U.S. Drone; Giffords' Plan to Move Forward; The Future of Obama-Care

Aired November 9, 2012 - 13:00   ET


SUZANNE MALVEAUX, CNN ANCHOR: I want to welcome our international audience, our viewers from around the world, as well as in this country here. I'm Suzanne Malveaux, and we are awaiting here for the president to make a statement in the East Room about his economic policies for the second administration, the second term.

We've got correspondents, anchors, folks who are bringing some pregame analysis to cover all the things that we anticipate the president is going to be talking about, the fiscal cliff. So, in Washington, we've got Wolf Blitzer, we've got Gloria Borger. Inside, we have our Chief White House Correspondent Jessica Yellin, and we've also got our financial team, Christine Romans and Ali Velshi as well.

Jessica, I want you to start off here. You're in the room. I want you to kind of set the mood, set the scene for us, if you will. This is a president now who's got a little bit of wind, if you will, in his sails, and he is moving forward to a second term. How confident is he that we're going to avoid this fiscal cliff?

JESSICA YELLIN, CNN CHIEF WHITE HOUSE CORRESPONDENT: Hi, Suzanne. Well, they are determined to insure that we do. They do not want to see another hit to the economy like they saw at the beginning of the president's first term. But the president will be making, I should point out, what will be his first remarks from the White House after his re-election when he comes out to the podium behind me.

My guidance now is that the remarks will be rather brief. I'm told they look to be about five to seven minutes in length. We should not expect him to make any new proposals regarding the fiscal cliff, regarding his debt proposals, but, rather, to restate the principles we already know that this White House has embraced, which is a no increase -- no extension of the Bush tax cuts for those making $250,000 or more, a willingness to negotiate on other issues, including some entitlements, Medicare, Medicaid, and also a general spirit of compromise as long as both sides are willing to get there. You know, they talk about the balanced approach. But, as you point out, the president does have the wind in his sails, because he campaigned on these issues, and they feel they have some leverage here.

A point about who will be here, he'll be surrounded by what they call middle class Americans who share his views. And you asked about the mood. A little something on the lighter note, Suzanne. I've never seen this before, maybe it's because his first statement after getting reelected, but they have a band playing music outside to welcome everybody in.

MALVEAUX: It is kind of unusual, Jessica, I must say. Tell us a little bit about the invitation. I understand the president has invited members of Congress to come to the White House next week and to start working on some of these issues.

YELLIN: Yes. It's my understanding he has invited bipartisan leaders of Congress, Democrat and Republican leaders in both the Senate and the House of Representatives to come and talk about getting this deal done. I don't have a date. I don't know when that will be but they are trying to move quickly. As you know, the president has announced he will be going to Asia for a trip overseas, and then quickly on to Thanksgiving. Si, they have to move fast. And so do I, I think he is coming.

MALVEAUX: All right. Well, we'll let you sit down. We'll bring in Wolf and Gloria to talk a little bit about it. And as soon as the president goes to the podium, of course, we'll take him live.

But I want to ask you guys here. We've seen a different side to the president lately, just over the last couple of days. It is a much more emotional president. We have even seen him crying as he talked to his campaign staffers. If we have some time, let's play that clip real quick.


BARACK OBAMA, PRESIDENT OF THE UNITED STATES: What you guys have done means that the work that I'm doing is important. And I'm really proud of that. I'm really proud of all of you, and for me to stand here --


MALVEAUX: Wolf, what do you make of this? In all my years of covering Obama, I have never seen any kind of -- anything that was close to that kind of expression and emotion here. Do you think that he is allowing himself, now that he's going to be a second termer, to be more vulnerable, more expressive?

WOLF BLITZER, CNN SENIOR WHITE HOUSE CORRESPONDENT: Yes, it's a nice touch to see. You know, he's -- you know, normally very, very cool. But in this particular case, he got very emotional, totally understandable. He's just been re-elected president of the United States for another four years. Just before the end, when he -- there were a couple of other moments we did see him get a little bit teary eyed a little bit, right at the end of his campaign. There was one event, his final event that, he got a little misty-eyed.

I remember four years ago, Suzanne, you were there when his -- when he lost his grandmother. We saw him cry. So, it's not the first time, but it's very rare that we see him -- maybe he was channeling in a little bit of John Boehner, who is very emotional all the time. And we've seen him weeping on several occasions over the years. Gets very, very emotional, which is, as I say, totally understandable.

He's going to have to change some of his sort of outreach, if you will, if he is going to be successful in these next four years that he is looking ahead to his presidential legacy. He's going to have to reach out to members of Congress, invite them over, schmooze with them a little bit, Democrats and Republicans. Is he is going to have to start making phone calls. He is going have to have to do what Bill Clinton did, become much more accessible.

Now, this goes against the grain of what he did in the first four years. He is a relatively private -- when he goes and plays golf, he plays with his buddies. When he hangs out at night, he wants to hang out, totally understandable, with his wife and two daughters. But he's going it have to get a little bit more open if he's going to want these last four years -- and every day in these last four years, these second four years will be critical if he is going to -- if he is going to succeed in having a very, very successful second term. So, he's got to change his strategy a little bit.

MALVEAUX: You know what I also think what is rather telling, Wolf, is the fact that you see him tear up. I mean, it's been twice in a -- in a week or so --

UNIDENTIFIED MALE: This is the two-minute warning.

MALVEAUX: -- oh, we're getting a two-minute warning here. We are told the president's going to start speaking in about two minutes or so, we just heard that from the announcement there. But I thought it was interesting, Wolf, the fact that this has become a front page news story, if you will, that this is a viral video, that the American people are so hungry to see the president emotional and passionate and really expressing, I think, what so many people were looking for and looking from him over the last four years, and now a new sense of the president being able to do -- to do just that.

I want to bring in Ali and Christine to talk a little bit about what we expect to hear from the president when it comes to the Bush era tax cuts that will expire and the importance here -- that important distinction the president is going to make in terms of who he believes should be taxed and who he believes should not be taxed. And who can't afford to at this time. Ali, you want to jump in here?

VELSHI: Yes, well, thank you for asking me the easy question, because that's the one piece of information that the president has been remarkably consistent upon through this fiscal cliff discussion. He feels that 98 percent of households --

UNIDENTIFIED MALE: Ladies and gentlemen, the president --

VELSHI: -- should not have their taxes increased and those at the highest end should.

UNIDENTIFIED MALE: -- of the United States.

VELSHI: And that's -- MALVEAUX: All right. We're going to have to cut you there, leave it there. The president taking to the podium here in the East Room of the White House. Let's listen in.


OBAMA: Thank you. Thank you, everybody. Thank you. Thank you very much. Thank you so much. Thank you. Thank you very much, everybody. Everybody, please have a seat. Thank you. Well, good afternoon, everybody.

CROWD: Good afternoon.

OBAMA: Now that those of us on the campaign trail have had a chance to get a little sleep, it's time to get back to work. And there is plenty of work to do.

As I said on Tuesday night, the American people voted for action, not politics as usual. You elected us to focus on your jobs, not ours. In that spirit, I've 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. I also intend to bring in business and labor and civic leaders from all across the country here to Washington to get their ideas and input as well.

You know, at a time when our economy is still recovering from the great recession, our top priority has to be jobs and growth. That's the focus of the plan that I talked about during the campaign. It's a plan to reward small businesses and manufacturers to create jobs here, not overseas. It's a plan to give people the chance to get the education and training that businesses are looking for right now. It's a plan to make sure this country is a global leader in research and technology and clean energy which will attract new companies and high wage jobs to America. It's a plan to put folks back to work, including our veterans, rebuilding our roads and bridges and other infrastructure. And it's a plan to reduce our deficit in a balanced and responsible way. Our work is made that much more urgent because at the end of this year, we face a series of deadlines that require us to make major decisions about how to pay our deficit down. Decisions that will have a huge impact on the economy and the middle class both now and in the future.

Last year, I worked with Democrats and Republicans to cut a trillion worth of spending that we just couldn't afford. I intend to work with both parties to do more. And that includes making reforms that will bring down the cost of health care so we can strengthen programs like Medicaid and Medicare for the long haul. But, as I said before, we can't just cut our way to prosperity. If we're serious about reducing the deficit, we have to combine spending cuts with revenue. And that means asking the wealthiest Americans to pay a little more in taxes. That's how we did it -- that's how we did it in the 1990s when Bill Clinton was president. That's how we can reduce the deficit while still making the investments we need to build a strong middle class and a strong economy. That's the only way we can still afford to train our workers or help our kids pay for college or make sure that good jobs and clean energy or high-tech manufacturing don't end up in countries like China.

Now, already I've put forward a detailed plan that allows us to make these investments while reducing our deficit by $4 trillion over the next decade. I want to be clear. I'm not wedded to every detail of my plan. I'm 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. I am not going to ask students and seniors and middle class families to pay down the entire deficit while people like me making over $250,000 aren't asked to pay a dime more in taxes. I'm not going to do that. And I just want to point out, this was a central question during the election. It was debated over and over again. And on Tuesday night, we found out that the majority of Americans agree with my approach. And that includes Democrats, independents, and a lot of Republicans across the country, as well as independent economists and budget experts. That's how you reduce the deficit, with a balanced approach. So, our job now is to get a majority in Congress to reflect the will of the American people. And I believe we can get that majority.

I was encouraged to hear speaker Boehner agree that tax revenue has to be part of this equation, so I look forward to hearing his ideas when I see him next week.

I want to make one final point that every American needs to hear. Right now, if Congress fails to come to an agreement on an overall deficit reduction package by the end of the year, everybody's taxes will automatically go up on January 1st. Everybody's including the 98 percent of Americans who make less than $250,000 a year. That makes no sense. It would be bad for the economy and would hit families that are already struggling to make ends meet. And fortunately, we shouldn't need long negotiations or drama to solve that part of the problem. While there may be disagreement in Congress over whether or not to raise taxes on folks making over $250,000 a year, nobody, not Republicans, not Democrats, want taxes to go up for folks making under $250,000 a year. So, let's not wait. Even as we're negotiating a broader deficit reduction package, let's extend the middle class tax cuts right now. Let's do that right now.

That one step -- that one step would give millions of families, 98 percent of Americans and 97 percent of small businesses, the certainty they need going into the new year. It would immediately take a huge chunk of the economic uncertainty off the table, and that will lead to new jobs and faster growth. Business will know that consumers, they're not going to see a big tax increase. They'll know that most small businesses won't see a tax increase. And so, a lot of the uncertainty that you are reading about, that will be removed. In fact, the Senate has already passed a bill doing exactly this, so all we need is action from the House. And I've got the pen ready to sign the bill right away. I'm ready to do it. I'm ready to do it.

You know, the American people understand that we're going to have differences and disagreements in the months to come. They get that. But on Tuesday they said loud and clear that they won't tolerate dysfunction, they won't tolerate politicians who view compromise as a dirty word. Not when so many Americans are still out of work, not when so many families and small business owners are still struggling to pay the bills. What the American people are looking for is cooperation. They're looking for consensus. They're looking for commonsense. Most of all, they want action. I intend to deliver for them in my second term. And I expect to find willing partners in both parties to make that happen. So let's get to work.

Thank you very much, everybody. Thank you.


MALVEAUX: All right. You've been watching President Obama in the East Room there. Very brief remarks. Really no more than five minutes or so outlining his plan. Didn't get any new details on it, but a couple of things that struck me that stood out. Want to bring in our panel, our correspondents, for some post-game analysis. Obviously Wolf Blitzer and Gloria Borger out of Washington, our chief White House correspondent Jessica Yellin, as soon as she gets set up there in the East Room, also our economic experts, Ali Velshi, and Christine Romans and the Money team here.

Wolf, I want to start off with you here. Two things that stood out. One of the things that he said was that something that could be done right away, that there was a sense of urgency here, is that you could go ahead and extend the middle class tax cuts right now. That is what the president said. We heard from Speaker Boehner who said, look, nothing is going to get done right away. Let's wait until 2013. Nothing is going to happen in the lame-duck Congress. It seems to me that he's taking on the speaker right away that we need to get something done in the next eight weeks.

WOLF BLITZER, ANCHOR, "THE SITUATION ROOM": Well, the president and Democrats have long said, you know, get -- extend the tax cuts for the middle class for those individuals earning under $200,000 a year, families earning under $250,000 a year, extend those Bush tax cuts immediately and then worry about the wealthiest Americans later.

The problem with that, and the president and the Democrats have proposed that in the past and the Senate passed that in the past, the Republicans, especially in the House of Representatives, see that as leverage because they don't want tax rates -- tax rates to go up on anyone, including the wealthiest Americans. They say that would undermine economic recovery. You don't raise taxes during tough economic times.

What I did hear, Suzanne, that was a little bit encouraging, not only the words about the president saying he wants to -- he wants to open up to compromise. He's ready to open up to new ideas. What he did say, and I wrote these words down precisely because I think they're significant. He says he wants the wealthiest Americans to pay a little more in taxes.

He didn't say flatly. And I think this potentially could be significant. He didn't say flatly, I want to see their tax rates go up from 35 percent, which is right now, to 39.6 percent, which was the tax rate during the Clinton administration. What Boehner says he's open to eliminating loopholes and exemptions, deductions for the wealthiest Americans also. So if they can find a way that wealthy Americans would pay more by eliminating some of the deductions and exemptions, the loopholes that they're eligible for, without necessarily raising that 35 percent tax rate, that may be an opening for a compromise between Boehner on the Republicans on one side and the president and the Democrats on another side.

If the president holds firm to raising the rate from 35 to 39.6 percent, I don't know if he's going to have the votes in the House of Representatives to get that through because so many of these Republicans in the House especially, they have pledged to Grover Norquist that they would never do that under any circumstances. So he may not have the votes. But there may be an opening for a compromise by eliminating some deductions called a tax reform, if you will.

MALVEAUX: I want to bring in Jessica, because I notice she is ready now from the East Room.

And, Jessica, there was another line in there as well that the president said using Boehner's own words from speaking earlier today about how he was pleased that tax revenue was part of the negotiations, if you will, part of the talks. Really seizing on that politically and very publicly. What do you think is behind that?

YELLIN: I think that they're both trying to signal publicly and to their own parties that they're willing to negotiate, that they're willing to make room for compromise. And then they're also waiting to see, especially here at the White House, they're waiting to see what the Republicans' first offer will be.

You know, the president did not change his position explicitly, and so they're still sticking by their guns for now. And they're waiting to see if the Republicans will adjust because of the election and exactly if the -- how, as they would put it, firm they're going to be on this revenue position. So it's a little bit of wiggle room he might be offering, but I'm not sure how much.

One thing I'd like to point out, Suzanne, is that it is meaningful that for the president's very first statement after re-election in the White House, he did not hold a press conference speaking to the Washington press corps. He did not hold an address to Congress. What he did is he spoke to what they're calling middle class Americans he gathered behind him. And the reason I think this is symbolically important is because during the campaign the president said his biggest mistake in the first term was not bringing regular Americans into the White House to help make his case. And he had said, once he did that during the payroll tax fight, he started winning his fights. And I think it's meaningful that he is starting his second term by trying to enlist regular people in his battles and he is making his first speech or his first statement with, quote, regular people behind him, speaking as if he's talking directly to the people and not to Washington. I think this is something you'll see more from them in the second term presidency.


MALVEAUX: Taking a page from the campaign and literally using them as a backdrop. Jess, thanks.

I want to bring in Christine Romans.

Christine, what does this mean, do you think, for the average taxpayer when you listen to the president and his plan?

CHRISTINE ROMANS, CNN BUSINESS CORRESPONDENT: Well, you know, what they want to avoid here, the president said he wants to avoid tax rates for everyone going up. And when you look at the tax policy center, a tax watching group, you know, they say for somebody who makes maybe $50,000 a year, your taxes are going to go up next year by $2,000 if we go over the fiscal cliff.

Now, virtually, no one expects we're going to go over the fiscal cliff for the whole year. The question is, do they do something by the end of the year to a short term plan to push it six -- you know the can six months down the road? Do they do some kind of a grand bargain, or do we go off the fiscal cliff for a few weeks and then they somehow make some sort of a deal so there's a few weeks of pain for everyone.

You know, my big concern about that, and I know Ali agrees, is that if you go over the fiscal cliff, even for a few weeks or even a few days, I -- no one knows how the markets would react and how international investors would react. And I think that's dangerous.

VELSHI: You remember Lehman Brothers? Everybody thought that was going to work out fine, and it crushed the global economy. So this business about how it's OK. It's not OK. And, you know, Suzanne, they're -- I think Wolf makes a good point. The president is -- didn't outline that we've got to go from 35 to 39 percent, but maybe there's a 37 percent or something there.

But John Boehner's discussion, this is smoke and mirrors. This business about we'll be OK with some increase in tax revenues. Didn't say tax rates. He said tax revenues. He is basing that on an increase in growth. Economic growth is at 2 percent. This only hurts it. We are not getting -- we're not getting 3 percent and 4 percent growth. So, smoke and mirrors at this point. Either you're accepting tax increases or you're not. Long-term tax reform is not going to get done between now and December 31st.

So, bottom line is, President Obama, like Jessica just pointed out, needs to attack this to real people. Clearly, as the election showed, that the mass of Americans are not going to go out in support of the very wealthy not paying more taxes. So this is -- this is -- we have to be careful. In the next few months we're going to hear a lot. In the next few weeks we're going to hear a lot of smoke and mirrors. Tax revenues are what the Republicans are saying they'll accept, not tax increases.

MALVEAUX: All right. I want to play the highlight here of what we've heard from the president. This is the one thing that he said that really stood out. Let's listen.

(BEGIN VIDEO CLIP) OBAMA: Now already I've put forward a detailed plan that allows us to make these investments while reducing our deficit by $4 trillion over the next decade. I want to be clear. I'm not wedded to every detail of my plan. I'm 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.


MALVEAUX: I want to bring in Gloria.

And, Gloria, first of all, I want you to react and tell me what you think that compromise and new ideas he is looking for. And, secondly, is one of those ideas, could it be actually changing the definition of rich Americans? We've talked about the more than $250,000 group.


MALVEAUX: Could that shift in any way? Could that be part of the negotiations he's referring to?

BORGER: Sure. That's a possibility. It's been raised before, that you redefine up. That instead of wealthy being $250,000, maybe it's $1 million. But what I'm hearing here, and Senator Schumer of New York mentioned this a bit, as I had mentioned earlier today, is that they're hung up on sort of the 35 percent rate. If they didn't get so hung up on that -- on that being the top rate and not increasing it back to the rate it was during the Clinton years, if they said, look, what if we raised the rates on the wealthy the equivalent of raising it by tax reform, which means that the wealthy would get fewer deductions or we would cap their deductions, which, by the way, was a proposal that Mitt Romney suggested when he was running for the presidency, is that something that the White House could buy and Republicans could buy?

I've been communicating with leadership aides on both sides of the aisle on The Hill, and from the Republican point of view, doing that in terms of tax reform would work. Whether that would be a problem for liberal Democrats and for the president himself remains to be seen. But, Suzanne, what we saw today was everybody kind of putting their cards out on the table before they go into the room to talk. And it's a good sign that they're going into the room to talk immediately, that they're not waiting a couple of weeks and they all understand that it is in their self-interest to get something done. And in my experience, that's when Congress actually moves when they're up against the wall and they decided they've got to do it for self-preservation. And I think they know they have to do that this time.

MALVEAUX: Yes, they've got to get something done and that's what the American people want. They want them to get something done. Get it done as soon as possible.

BORGER: Right.

MALVEAUX: Thank you very much, of course, Gloria, Wolf, Ali, Christine and Jessica. We're going to have more after the break. But we are still watching another story. That is the thousands of people who are fighting to save their homes after Superstorm Sandy. The emotional clean-up effort that is now underway.


UNIDENTIFIED MALE: The storm until Friday morning. Friday morning I said I couldn't take anymore because they turned our gas off. When they turned the gas off, that was the end for me. I told my wife, I would walk across the bridge if I had to.




MALVEAUX: City leaders in Long Island towns hit hard by Sandy say they're fed up with the slow response to the disaster, and they're not going to take it anymore. More than 172,000 area residents still don't have power more than 11 days after Sandy hit.


TONY SANTINO, SENIOR COUNCILMAN, HEMPSTED: This is a crisis of epic proportions. This is a natural disaster. We are here as one community together to send a message -- we've had enough.


MALVEAUX: Politicians directed their anger at the Long Island Power Authority. Now, the company says it has more than 8,000 linemen and tree trimming crews making progress.

Some Sandy victims, they are just now returning to see their homes, the devastation that this storm left behind.

CNN's Susan Candiotti caught up with one couple on an emotional tour of their flooded house.


SUSAN CANDIOTTI, CNN NATIONAL CORRESPONDENT (voice-over): With Sandy's storm clouds gathering, Sue Kosakowski evacuated, but over her objections, husband, Bill, stayed behind. It was traumatizing.

BILL KOSAKOWSKI, STORM VICTIM: I road out the storm until Friday morning. Friday morning, I said I couldn't take anymore because they turned the gas off. When they turned the gas off, that was the end for me. I told my wife I would walk across a bridge if I had to but I was getting off.

CANDIOTTI: Armed with the police pass, the retired New Jersey fire chief, married to wife, Sue, for 23 years, joined other residents allowed back on Pelican Island for a few hours to take stock of the devastation. SUE KOSAKOWSKI: What a sight.

Yes, they broke -- everybody is just broken down, yes.

BILL KOSAKOWSKI: That's my boat.

SUE KOSAKOWSKI: This is his boat.

CANDIOTTI: Ripped from a lift behind the house, the storm surge swept his boat into the street. Inside the house, they get a look at breathtaking damage. Sue, for the very first time.


This house was spotless.

CANDIOTTI: Marks on the ceiling show how high waves got inside.

BILL KOSAKOWSKI: When the water was up over my knees, I thought I might be able to save something, so I put the chairs up on the top of the table. Didn't do any good.

CANDIOTTI: As things got even worse, Bill retreated upstairs to the couple's bedroom overlooking the bay and huddled with his retriever, Blink.

BILL KOSAKOWSKI: I've never been so scared if my life.

CANDIOTTI: Their dream retirement home is in shambles, but with all they lost, Sue is grateful she didn't lose Bill.

SUE KOSAKOWSKI: The house is stones and bricks and windows. I thought I lost him, and would have been -- losing him would have devastated me. I wouldn't have known how I would have gone on if I would have lost him.

BILL KOSAKOWSKI: Come down here and expect the rest of your life in calm and peace, and in one fail swoop, everything washed away.

CANDIOTTI (on camera): Even knowing the danger of riding out a storm, Kosakowski stayed behind with the hope of salvaging something meaningful, something valuable. But as a former fire chief, he recognizes nothing is worth that kind of risk.

Susan Candiotti, CNN, Pelican Island, New Jersey.


MALVEAUX: Some Sandy victims are just now returning to their homes to see the devastation left behind. And if you would like to help, you can always go to CNN, Impact Your World.


MALVEAUX: We have one more election update. CNN projects Washington State voters have passed a ballot making same-sex marriage legal. After nearly two days of counting, voting broke down this way: 53 percent said yes to the measure, while 47 percent said no. Voters in Maine and Maryland also approved similar measures in Tuesday's election.

Lawmakers hope to get more answers about the attack the U.S. embassy in Benghazi. Senior intelligence, State Department, FBI officials, all have been appearing before Congress next week as hearings on this armed assault resume. The chairman of the panel maintains that the U.S. knew early on that the September 11th attack was not a spontaneous demonstration prompted by the notorious anti-Muslim video. Four people were killed that day, including U.S. Ambassador Chris Stevens.

His sister spoke to CNN last night.


DR. ANNE STEVENS, SISTER OF AMBASSADOR CHRIS STEVENS: He recognized fully the dangers, and not only but previously in Israel and time served, and he was very well prepared by the State Department to minimize the danger as much as possible.

I don't think all the extra investigations are going to benefit anybody.


MALVEAUX: Both the FBI and the State Department are independently investigating the attack.

Iran defends its right to confront -- that's its words -- any invasion after an Iranian jet fires on U.S. drone. Is it considered an act of war?


MALVEAUX: President Obama says it is time to get back to work to prevent the country from going over the so-called fiscal cliff. In a speech just moments ago the president said that everybody's taxes will go up unless Congress comes up with an agreement to prevent the financial crisis. It includes massive automatic spending cuts and tax hikes for 90 percent of Americans. The president stood by his position that revenue has to be part of the equation.


BARACK OBAMA, PRESIDENT OF THE UNITED STATES: You can't just cut our way to prosperity. If we're serious about reducing the deficit, we have to combine spending cuts with revenue. That means asking the wealthiest Americans to pay a little more in taxes. That's how we --


MALVEAUX: The president has now invited congressional leaders from both parties to the White House next week to take about it all. Defiant reaction from Iran on its attack against an unmanned U.S. drone. It happened last Thursday, the Persian Gulf. The Pentagon says two Iranian fighter jets fired on the U.S. predator surveillance drone. The drone was not hit. It returned to its base. The Iranian news agency quotes a top Iranian news official saying his country took -- and this is in their words -- "decisive action against the drone." Another Iranian general tells the news agency, quote, "If any foreign planes try to enter our country's space, our armed forces will confront it."

The Pentagon insists the drone was in international airspace east of Kuwait. The U.S. has launched now a formal protest with Iran.

Barbara Starr broke the story. She's joining live on the Pentagon.

Barbara, first of all, what do we know? How is this different than what we've seen before?

BARBARA STARR, CNN PENTAGON CORRESPONDENT: Well, this, Suzanne, is the first time we are told by the Pentagon that Iran has actually fired at a U.S. drone in an attempt to apparently take it down. It's not happened before. Drones have crashed inside of Iran. This is the first time Iran has taken military action. The belief it was Iran's Revolutionary Guard Corps that was flying those planes. That's the most aggressive element of the Iranian military. It's the one that causes the U.S. the most concern. They have caused trouble before on the water. They are called the "cowboy force" by some members of the U.S. military. The U.S. doesn't think the Iranian military, in general, is coming after it, but this Revolutionary Guard Corps force, and what they did last thursday shooting at a U.S. drone, a matter of great concern, especially in that area of the oil shipping lanes.

MALVEAUX: Tell us a little bit about the administration's response here. I understand that they didn't reveal the incident until after you actually reported on this yesterday, breaking this news story. Is there any indication the Pentagon intentionally tried to keep this under wraps until after the election?

STARR: Well, you know, that's the question. Certainly, they didn't want to see some dust-up with Iran over the front pages. We're told officially that the Pentagon didn't talk about it because it was a classified mission by this drone, although they also say it was a routine surveillance mission. The surveillance really over the gulf is of Iranian military assets, ships, planes, missile batteries, keeping an eye on everything Iran is doing out in that area, so it is classified. And they say that they didn't respond to it because it was -- they didn't talk about it because it was classified, but they did respond after we asked about it.

MALVEAUX: And, Barbara, this is not the fifth we've seen aggress from Iran. We know that Iranian boats have approached the U.S. military ships at a very high speed in the Strait of Hormuz in the Persian Gulf. The latest incident essentially wondering has the U.S. wondering if Iran intends to disrupt this crucial oil shipping lanes in the gulf.


MALVEAUX: What is the greatest fear?

STARR: Yes, it really does all come back to that, Suzanne. It's the oil shipping lanes. This is very busy water space, very busy airspace. Both commercial and military assets constantly moving through this area. Big concern is that Iran, if pushed to the wall, will decide to take aggressive military action. And the fear is that they will mine the waters of the Persian Gulf, of course, disrupting international oil traffic. And, again, that's why you see stepped up U.S. military surveillance, keeping an eye at all times on what Iran may be doing -- Suzanne?

MALVEAUX: All right. Barbara Starr, thank you. Excellent reporting, as always.

It was, as you can imagine, a very emotional day in court. Former Congresswoman Gabby Giffords confronting her shooter. Her husband, Mark Kelly, on what's ahead.


MARK KELLY, FORMER ASTRONAUT & HUSBAND OF GABRIELLE GIFFORDS: Our long-term plan is to look forward and try to make the best out of every day and not think back to January 8th and what that meant. And we all need to move on.


MALVEAUX: President Obama calls on Congress to keep the country from going over the so-called fiscal cliff. In a speech just moments ago, the president said that spending cuts alone will not prevent the financial crisis. That includes massive automatic spending cuts and tax hikes for 90 percent of Americans. He says the revenue has to be part of this equation. He urged lawmakers to act immediately to extend middle class tax cuts.


OBAMA: What the American people are looking for is cooperation, consensus, common sense. Most of all, they want action. I intend to deliver for them in any second term. I expect to find willing partners in both parties to make that happen. So let's get to work.


MALVEAUX: President has invited congressional leaders from both parties to the White House next week for discussions. We now know who's been invited. It is not surprising -- Senate majority leader, Harry Reid; Senate minority leader, Mitch McConnell; House Speaker John Boehner; and house minority leader, Nancy Pelosi.

The husband of Gabrielle Giffords says their long-term plan is to move forward and try not to look back at the day that Giffords was shot.

On January 8, 2011, Jared Loughner opened fire at a rally for Congresswoman Gabrielle Giffords. He shot her in the head at point- blank range. 12 others were wounded and six killed. Yesterday, a judge sentenced Loughner to life in prison without the possibility of parole.

Gabrielle Giffords sat through the sentencing with her husband, Mark Kelly, by her side. Kelly talked to our Piers Morgan about what it was like to be in that courtroom.


KELLY: It was certainly a little stressful. It was tense, especially when he walked in the room, when he responded to the judge. After a while, I got to settle down a bit, but just sitting there for all of the other victim impact statements is really a tough thing. You know, Gabby said afterwards, for her, the biggest emotion was just sadness, to hear story after story of what the impact of this horrible day had on people. It was really difficult.


MALVEAUX: As Kelly mentioned, some of the victims spoke in court, directing their words at Loughner.

Suzie Hileman said this, "If you pointed a weapon at me and shot me -- over the last several months, I wanted to take you by the shoulder and shake you and scream at you. It's an awful situation and it's all because of you."

Mary Reed, who was among the wounded, blamed Loughner for introducing her children to something sinister and evil. She said, "My children will forever remember the moments of people when they died, the smell of blood everywhere."

Loughner pleaded guilty to 19 charges in exchange for a life sentence. He had been facing more than 50 federal charges.

A group of Navy SEALs are charged with giving up classified information to a video game company. Seven members of the Navy's SEAL Team Six reportedly worked as paid consultants on this video game without permission. It is called Medal of Honor, War Fighter. The members of the elite Special Forces unit have been punished with their pay docked. Medal of Honor is in stores now and is getting attention for looking so realistic.

Public awareness campaign in south Australia is certainly feting folk's attention. This is a wrecked car. It is actually 17 painted men and women stacked on top of each other, part of an awareness campaign to try to get drivers to slow down. The underlying message is, when cars crash, it is really people who pay the price.

With President Obama re-elected, what does it mean for health care? Are there any changes we can expect? Dr. Sanjay Gupta will break it down.

(COMMERCIAL BREAK) MALVEAUX: The law of the land, now that President Obama has won a decisive re-election. His health care reform legislation here to stay. Some parts of the law have not taken effect yet, and will not until 2014. Other provisions have deadlines that are around the corner.

CNN chief medical correspondent, Sanjay Gupta, has more on what you need to know.

DR. SANJAY GUPTA, CNN CHIEF MEDICAL CORRESPONDENT: One of the ways to think about this, Suzanne, is almost more of insurance reform even than health care reform. I will read you some things you will see go in to affect the next couple of years. A lot of them are designed to protect consumers and patients.

January 1st, 2014, you can't be charged a higher premium for being sick. That's a big one. Obviously, a lot of people focused on that. Can't be denied coverage due to preexisting conditions and no dollar limits on health benefits. A lot of people have been unable to purchase health care insurance because they have a pre-existing condition, and this will help them.

There's also a lot of people that have bought health care insurance after being sick and paid a lot of money to get that insurance. This is going to offer relief for them, as well. There's something else you may have heard about. These health insurance exchanges some if you are someone who don't have insurance or if you are going to buy it on your own, you can go to an exchange in your state where various insurance companies are essentially competing for your business. They hope that that competition will help to drive down costs. Or if you work for a small business, for example, that doesn't offer health care insurance, this is another option.

Part of what makes this all work is having a mandate in place. Right now, there's 16 states that say they will do this. Three more say they are looking in to it. That leaves a lot of states up in the air about this. By November 16th, they have to decide whether or not they are going to do it. If they don't, the federal government comes in and does it for those states.

If you don't buy insurance, if you can afford to buy it and don't buy it, there is a penalty. A lot of people have asked, how significant is it? This may surprise you. For the first year, for example, it is $95 or 1 percent of your income. May not sound like a lot but, by 2016, it goes up to $695 or 2.5 percent of your income, which ever is greater.

Lot of changes coming down the pike. We will translate as much as we can for you. As we figure it out, we will bring it to you.

Suzanne, back to you.

MALVEAUX: Thank you.

Dr. Sanjay Gupta will have more on this election as the dust settles this weekend on "Sanjay Gupta, M.D." A look at the future of medical marijuana, the right-to-die battles, and soda taxes. That, and more this Saturday at 4:30 p.m. eastern, and Sunday, 7:30 in the morning.

CNN NEWSROOM continues with Brooke Baldwin.

BROOKE BALDWIN, CNN ANCHOR: Suzanne, thank you.