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Lawmakers Talk as Fiscal Cliff Looms; Clinton Hospitalized for Blood Clot; Investors Brace for "Fiscal Cliff"; Small Biz Owners Watch and Wait; Countdown to 2013
Aired December 31, 2012 - 10:00 ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
JOE JOHNS, CNN ANCHOR: Happening now in the NEWSROOM, hour by hour, inch by inch, the nation slides closer to the fiscal cliff. We'll have the latest on this morning's negotiations and how much you'll lose if those talks fail.
Minimum wage workers in 10 states will see a pay raise as we ring in the New Year, but they might not notice much of a difference in their paychecks.
Plus this -- I'm Alina Cho in Times Square. We're just hours from now, New York will host what is arguably the biggest New Year's Eve party in the world. Number one tip, if you plan to come to Times Square, dress warmly. It is frigidly cold.
CNN NEWSROOM starts right now.
JOHNS: Check that out. Happening now it is 2013 already in Seoul, South Korea. Seoul, which is 14 hours ahead of New York is ringing in the New Year. It's midnight there. You're looking at live pictures of celebrations in Seoul, Korea.
Good morning. I'm Joe Johns in for Carol Costello. Here in the U.S., the clock ticks louder and the nation inches closer to the fiscal cliff. You could be just hours away from seeing your paycheck shrink. We're following the last-minute drama to avoid that.
But first, the health scare of the nation's top diplomat. This morning, Secretary of State Hillary Clinton is waking up in a New York hospital. She is being treated for a blood clot that formed after her fall and concussion just a few weeks ago.
Dr. Sanjay Gupta is our chief medical correspondent. Sanjay, we know this blood clot is following a concussion. Do you think the two are related and what are the chances that the clot is actually on the brain?
DR. SANJAY GUPTA, CNN CHIEF MEDICAL CORRESPONDENT: Well, certainly reading that statement that you read, it sounds like they say it was in some way related to the concussion, although maybe not as clearly as people might think. Here's why, Joe, to the second part of your question.
If someone has a blood clot on their brain as a result of an injury, almost the last thing you want to do is give blood thinners or anticoagulants because it can make the bleeding worse and it would also prevent an operation or prohibit an operation from being performed if that was necessary.
Sort of burn a bridge as far as operations go. So I just don't think it's directly related in the sense of causing a blood collection on top of the brain. When you think of blood clots that are treated with blood thinners, Joe, you know, you think of, for example, deep venous thrombosis, DVT.
That is something that can occur deep in the legs. It can be treated. If it's not treated, it can be concerning because it can break off, as you there, and travel through the body and possibly end up in the lungs. So that's something they definitely want to treat.
It could also be other veins, for example, around the head. But again, Joe, to your point, I don't think this is a blood collection on top of the brain because of the type of treatment she's now receiving.
JOHNS: Sanjay, you touched on this a little bit, but could you walk through how serious this potentially be for Secretary Clinton. How dangerous is something like this?
GUPTA: Well, if you're talking specifically about the deep vein thrombosis, it's one of the things in medicine, Joe, that if you treat it and catch it early, it can be very easily dealt with and not at all concerning because it's something that can -- we know how to treat this.
If it's not caught early and that clot starts moving around the body and ends up in the lungs or something. That can be a very dangerous situation. I can tell you, Joe, and you may know this as well. I worked for her back in the late '90s.
In fact, in 1998, she had this deep vein thrombosis at this time. She called it one of the most frightening sorts of medical experiences she had had in her life at that point. It can be of concern. We have the knowledge of how to treat and thin the blood to break up the clot and most importantly prevent it from traveling around the body.
JOHNS: Now, you know, she is a frequent traveller. She's flown all over the world many, many times. Those of us who fly a lot also know about the increased danger of blood clots generally. Do you think there's at least a potential that her flying has actually helped bring this about?
GUPTA: It's possible. You know, as you know, for the last few weeks, she's sort of been grounded as a result of this concussion. So there's been a little bit of a time lapse, but you're right. She's the most frequent traveled secretary of state in history.
And what happens when you're traveling, first of all, you're sitting for a long period of time and that's diminishing the blood flow around your legs and that can allow clots to form. That's the real concern and that's certainly can put you at risk.
The other thing, Joe, I'll add to this is that after the concussion that she had a few weeks ago, I know doctors told her to take it easy, to rest a lot, which is very hard for her to do I can tell you.
But that, you know, just lying around can also put you all the increased risk. The fact that someone has had a blood clot in the past does make you at increased risk for having one again in the future. So those three things in combination could lead to the increased risk.
JOHNS: Dr. Sanjay Gupta, thanks so much. It's always good to see you. Happy New Year to you as well.
GUPTA: Happy New Year, Joe. Take care.
JOHNS: We'll be watching and checking the secretary of state's health.
Now let's get back to the fiscal cliff. We're less than 14 hours from toppling over the edge if lawmakers can't hammer out a deal. The Senate is returning to session in about 60 minutes from now.
President Obama says he is modestly optimistic negotiations can prevent those tax hikes and spending cuts from kicking in.
(BEGIN VIDEO CLIP)
BARACK OBAMA, PRESIDENT OF THE UNITED STATES: We don't yet see an agreement and now the pressure is on Congress to produce. If they don't, what I have said is that in the Senate, we should go ahead and introduce legislation that would make sure middle class taxes stay where they are and there should be an up or down vote. Everybody should have a right to vote on that. If Republicans don't like it, they can vote no.
(END VIDEO CLIP)
JOHNS: Up or down vote, we're following the last-minute drama to avoid anything bad happening here. Dana Bash is covering this morning's urgent talks in Washington.
Ali Velshi gives us the bottom line on its impact and Alison Kosik is on Wall Street watching how worried investors are reacting this hour. Dana, we want to begin with you. We are hearing there might have been some progress overnight between the White House and Senate Republicans. What do we know so far?
DANA BASH, CNN SENIOR CONGRESSIONAL CORRESPONDENT: A lot more optimism being expressed from sources in both parties. In fact, Mitch McConnell, the Senate Republican leader, who is the prime negotiator on the Republican side just moments ago, Joe, told reporters that he spoke to the vice president, who is the prime negotiator now on the Democratic side.
He spoke to him at 6:30 this morning and before that at 12:45 in the morning so not totally all night, but they were up pretty late and early into the morning going back and forth making what again several sources say was significant progress.
Again, hate to say it. I have seen that movie before. I know you have too in covering similar negotiations like this. You know, this is really, really been a roller coaster with people feeling optimistic and suddenly we hear things hit a snag.
You know, as you said, 14 hours to go. There's nothing like a deadline that really pushes Congress to do something.
JOHNS: And Dana, one of the sticking points you have been talking about so much here is negotiations over the income level that will actually see a tax hike. The president has stuck to his $250,000 a year for families. But it's starting to look like Congress and specifically the Democrats are talking about a number that's significantly above $250,000.
BASH: That's right. The number is $450,000. That's according to Democratic sources I'm talking to. That is, as the source yesterday said to me, out of their comfort zone.
It's a lot higher than the president campaigned on and even higher than he offered the House speaker a couple weeks ago when they were talking about this grand bargain, which didn't go anywhere.
That's something that appears to be the operating number on the table. I'm told Republicans wanted $550,000 but that's certainly big progress because that was one of the major sticking points.
Another thing I should tell you tax wise is that we're told that the estate tax, which is a sweetener for Republicans, keeping that state tax level low where it is at 35 percent or at least somewhere in that neighborhood, that's also on the table as far as Democrats are concerned.
JOHNS: Are people talking much at all about spending cuts at this stage?
BASH: We're trying to get a handling on that. That's a huge issue. Probably don't even need to say that, but it's a huge issue for Republicans. Again, one of the main parts of this cliff starting tomorrow is that $110 billion in spending cuts will go into effect.
Not immediately, but will start to go into effect. What we're told Democrats at one point had offered to delay that for one or two years. Republicans had told us yesterday that's off the table. They don't see that happening.
But you never know when it comes to these kinds of negotiations, particularly between these two men, Joe Biden and Mitch McConnell, who have struck some deals that have surprised both sides before.
JOHNS: That's right. And the clock keeps ticking. Thanks so much, Dana Bash. We'll be checking back with you. Now let's look behind the politics and go to the bottom line. How much do you stand to lose if the talks fail? The tax policy center crutched some numbers. If you make $50,000 a year and you're single, your taxes will go up by $1,500 if no deal is reach.
The news is even worst for a married couple with two kids making $100,000. They would see their taxes go up $5,300 a year. CNN's chief business correspondent Ali Velshi is with us in New York. He's going to bring us a closer look -- Ali.
ALI VELSHI, CNN CHIEF BUSINESS CORRESPONDENT: Those numbers are bad. But a family making $100,000 they can figure out how to make it work without the $5,000 they will be paying in taxes. It won't be great, but it's OK.
Here's the biggest problem. All those job cuts, "The Sequesters," the spending cuts that are going to come into place, that means people laid off. You take the 7.7 percent unemployment rate. Projections are they go up to 9.1 percent.
But here's the reality, a whole lot of people are unemployed. That's fewer people to buy the things you sell if you're a small business. That's substantially more important than the few thousand dollars more you pay in taxes. I'm not arguing for a tax increase.
I'm just saying you that have to look at these two ways. One is that your personal taxes will go up, but more importantly, in order to get this deal done, there will probably be some concessions on spending.
And those spending cuts, which we think of in the abstract, we think of the government cutting a trillion dollars, the biggest cost for anybody in any business is labor. So that's people. When you think about defense cuts, that's not just machines are not being built.
It means independent contractors who contract to the Defense Department will not be getting those jobs. So the much more serious impact here is not actually the taxes you will be paying, which are real, but it's going the fact that there will be a lot more unemployment.
And that means the economy doesn't grow as quickly. But you know, when you're talking about whether it's 1,500 bucks on a family of two with no kids earning $50,000 or $5,500 on a couple making $100,000, that's real money.
I mean, those are things that they are not spending that don't result in people getting hired. We have seen consumer confidence take a dip starting in October after being at great levels, really high levels, because consumers are not sure what is going to happen. So they have already started retrenching. They are already spending less.
JOHNS: You know, we like to call this the fiscal cliff, but a lot of people actually say it's the fiscal slope. In fact, a lot of people are hoping they will never hear the term fiscal cliff again in their lives.
VELSHI: Myself included.
JOHNS: You bet. Thanks so much, Ali Velshi. Checking back with you as well. It's not just Main Street that will feel the pain of the fiscal cliff fall. Wall Street is also going to feel it. Alison Kosik is at the New York Stock Exchange now. How are the markets doing right now, Alison?
ALISON KOSIK, CNN BUSINESS CORRESPONDENT: Well, it's an interesting day so far. You know, we have seen the markets start deeper in the red than where they are right now. They have come back quite a bit. You're seeing the Dow flat and the S&P 500 in the green.
You're really seeing the market play off the headlines that are coming out of Washington about the fiscal cliff. The headlines have a more positive slant than a negative slant. That's why you're seeing stocks pair their losses at this point.
But don't worry, the Wall Street is not quite ready to pop the bottles just yet. The fiscal cliff is still this albatross around the neck of investors today. The hope is that there's going to be a deal by the end of the day, by the time the deadline comes around.
But most analysts say they do expect a type of agreement to come at the 11th hour. The question is, what will that agreement look like? You know, only 14 hours until the hammer drops. The last we heard is that progress is going very slowly now.
We are once again seeing stocks trade pretty much flat right now. The question is where do we go from here? If we get a partial deal on the fiscal cliff, what analysts are saying is that we'd most likely see a modest selloff here on Wall Street.
With the tone getting more and more negative as time goes on, but without a deal at all, that could be a rude awakening when Wall Street returns to work on Wednesday after New Year's Day.
Remember, it's not a given that Congress will act. Some experts are actually hoping for a big selloff. They say it could inspire some actual policymaking. Who knows? We certainly seemed to have tried just about everything to get lawmakers to do something about this. They have had the time, haven't they, Joe?
JOHNS: That's for sure. You know, Alison, I mean, the truth is Wall Street has seen many times the Congress, Capitol Hill and the president go through these fiscal cliff hangers and they always pretty much end up getting a deal, right?
KOSIK: Right. But the way Wall Street sees it, Wall Street doesn't want this stopgap little band-aid measure that would have to have lawmakers go back to the table in a few weeks that's not what Wall Street wants.
The opinion here is that there should be a deal. If not, go over the cliff. If there's something in between, less certainty, fewer rules of the road. That's not something that Wall Street wants at this point. JOHNS: Absolutely, I think the fact of the matter is, most people expect this is a battle that this Congress and this president is going to be fighting for months and months to come. Thanks so much, Alison Kosik. Good talking to you in this New Year's Eve.
A decision resting on a few in Washington could have a big ripple effect across the country. I'll talk to a small business owner about how no deal on the fiscal cliff could affect his bottom line.
(BEGIN VIDEO CLIP)
BILL OAKLEY, IREPORTER: My New Year's message to Washington is this. Please put an end to the outrageous billion-dollar tax shelters for Google and other big corporations. Please fix that before you push senior citizens over the cliff.
(END VIDEO CLIP)
JOHNS: We're not counting the days anymore. Now we're counting just hours to see if Congress can reach a deal by midnight to avoid the fiscal cliff. Just about every American would be affected by billions in spending cuts and tax increases.
Bob Packard is a small business owner in Virginia who like so many is watching and waiting. Thanks for joining us, Mr. Packard. What type of business do you have and how do you think your business would be affected if we go over the fiscal cliff?
BOB PACKARD, OWNER, EMBROIDME OF HERNDON, VIRGINIA: I have a Embroidme franchise and we do promotional marketing and logo ware and that sort of thing. The fiscal cliff is obviously going to affect us in a number of ways, but primarily if you look at the tax situation, if the taxes increase, we're already operating under a constrained financial aspect now just with the economy the way it is.
It's a fine line. And if the taxes do go up, I see an increase happening in my business. I have an increase in my personal loan. I have an increase in taxes on my customers, that's going to create a lower demand for my products, which creates lower revenue and it's a spiral downward.
JOHNS: The other thing, people in Wall Street, we just heard Alison Kosik a minute ago, talking about the uncertainty of negotiations dragging on for more than a few days, perhaps a few weeks. How would that affect you?
PACKARD: Well, there are things we need to do in business. I'd like to be able to hire new people. I'd like to be able to invest in new equipment. That's up in the air right now. I'm not sure if that's going to happen. I have to see what's going to play out with congress and the taxes and everything else they are working with. So for us, it's a wait and see game.
JOHNS: Now you are based in the Washington, D.C. area. So you're also potentially affected by spending cuts in the government. Could you give us a better idea of what that might mean to your business?
PACKARD: Absolutely. That probably is worse than the tax hike. The Washington area is probably the strongest area in the country in terms of people that are going to be affected by this. I do business with a lot of contractors that work with the federal government. Of course, if they are not in business and their demand for my products go down, then maybe I'm out of business. I don't know.
JOHNS: So I guess you were affected by the recession in some pretty dramatic ways and there's a potential for a whole new wave at this time. Can you talk a little bit about how the recession also affected you?
PACKARD: Absolutely. The last three or four years have been very tough. We have had to cut back expenses and personnel. We have done what we can in terms of increasing our revenues more efficiently. We are being smarter about how we spend our money and the customers we're dealing with. The whole aspect of what may happen in terms of losing our customer base is a scary feeling.
JOHNS: Talking about a potential double whammy perhaps if Congress and the president don't get a deal on the cliff. Thanks so much, Bob Packard. Good to see you. Happy New Year to you. We hope things work out.
JOHNS: The New Year's Eve test run is a success. Times Square is set for tonight's ball drop. We'll take you there.
JOHNS: We're now less than 14 hours from ringing in 2013. All systems are go in New York City. A switch was flipped and the Times Square ball rose 130 feet at yesterday's test run.
CNN's Alina Cho is in Times Square as preparation for the party and security kick into high gear. I'm missing being there this year, Alina. What's it like around you?
CHO: Well, you know, the crowds are actually really building around Times Square right now. People are getting here early as they should. But the number one tip I can give you if you plan to come to Times Square today, Joe, is dress warmly. It is 30 degrees officially right now, but it feels like it's 21.
Tonight when we ring in the New Year, it will feel like it's below freezing. So bundle up. Let's talk about security. It's something we talk about here in Times Square at this time of year a lot. But I think it's safe to say that security will be incredibly tight.
The NYPD says there will be thousands more police officers. There will be sharp shooters on rooftops. There will be radiological scanners, tactical teams, firearms teams, explosives teams and there will be surveillance cameras throughout. Some other things you should keep in mind if you plan to join the biggest New Year's Eve party in the world is this. If you plan to come into the perimeter of Times Square, do not bring a large bag or backpack or alcohol. You will not be allowed inside.
And as I mentioned at the top, Joe, get here early. At about 1:00 p.m. Eastern Time, that's less than three hours from now, the roads around Times Square begin to close to vehicular traffic. You want to get in here.
The other thing you should know is once you get in here in the afternoon, if you leave, you can't get back in. So make sure you have everything if you enter this zone, so to speak. If will be one big party. One million people are expected. It will be packed and it will be cold and hopefully with all the security it will be safe.
JOHNS: That's right. Well, the more people you have the war warmer it gets because of the body heat perhaps. Let's talk a little bit about the performers tonight. I know there are some big names on the way.
CHO: There are some big names. We should start with our own. Anderson Cooper and Kathy Griffin for the sixth year in a roll will be hosting a New Year's Eve special. That kicks off at 10:00 p.m. Eastern Time. Taylor Swift, Train, Psy of Gangnam Style are among the performers.
Want to tell you about the crystal ball. It seems to get bigger and better. This year is no exception. It will be 12 feet in diameter. It weighs nearly 12,000 pounds and powered by 32,000 led lights, something else that will be falling from the sky tonight, 2,000 pounds of confetti.
That works out to 17 million individual pieces, by the way, at 12:15 a.m. promptly at 12:15, the cleanup crews come in and by tomorrow it's really incredible. It's as if New York never had a New Year's Eve party. It's clean in Times Square. The traffic is flowing again and you'd never know all these crowds were here.
JOHNS: The city that never sleeps, it's amazing. I have seen them do it myself, pretty incredible. Alina Cho there in Times Square, thanks so much. We'll be looking forward to your reports.
Tonight will be a wild night. You can see it all here on CNN's New Year's Eve Live with Anderson Cooper and Kathy Griffin. That starts at 10:00 Eastern from Times Square.