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Negotiations Making Progress; Lawmakers Talk As Fiscal Cliff Looms; World Watching Fiscal Cliff Talks; Dead Sea Scrolls Now Online
Aired December 31, 2012 - 12:00 ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
SUZANNE MALVEAUX, CNN ANCHOR: Welcome back to CNN NEWSROOM. I'm Suzanne Malveaux. Here is what is going on right now.
2013 hitting right now in Bangkok, Thailand. We are taking a look at live pictures there as the celebrations and the fireworks exploding there. Lots of picture-taking. A lot of excitement there.
Also right now, Pope Benedict holding a New Year's Eve mass at St. Peter's Basilica in the Vatican. Italy's going to be celebrating the new year in just six hours.
A couple of hours ago, folks were toasting 2013 in New Zealand. Check it out.
Pretty cool. The party started with fireworks from the Auckland Sky Tower. Organizers had been worried that bad weather would be a problem, but everything turned out just fine. Congratulations.
The second major city to ring in the New Year, Sydney, Australia. Check it out. Wow, that is over Sydney Harbor Bridge. The show is huge. We are talking about seven tons of fireworks. Happy New Year's all around.
And, of course, we are waiting, as well, when the clock striking midnight here in the United States, there's going to be a lot of celebrating, but also there is some anxiety as well. What are we talking about here? That is because almost every one of us is facing a major tax hike in our 2013 paychecks if Congress does not reach the agreement on the fiscal cliff.
Right now there are still negotiations that are going on. They are being led by the vice president, Vice President Biden, and Senate Minority Leader Mitch McConnell. Sources say that they are making some progress. But even if a deal is reached, no guarantee it's even going to pass.
Listen to what one Democratic senator, Tom Harkin, said on the Senate floor. This was just earlier this morning.
(BEGIN VIDEO CLIP)
SEN. TOM HARKIN (D), IOWA: If we're going to have some kind of a deal, the deal must be one that really does favor the middle class, the real middle class, those that are making $30,000, $50,000, $60,000, $70,000 a year. That's the real middle class in America. And as I see this thing developing, quite frankly, as I've said before, no deal is better than a bad deal, and this looks like a very bad deal the way this is shaping up.
(END VIDEO CLIP)
MALVEAUX: Want to bring in our Dana Bash on Capitol Hill.
Wow, Dana, when you think about it, both sides are not happy with what is taking place, at least what they're talking about. I know you have some new information on at least what the Republicans are suggesting when it comes to those massive spending cuts. Some kind of delay in the process. How would that work?
DANA BASH, CNN SENIOR CONGRESSIONAL CORRESPONDENT: Well, this is according to Democratic sources. I just want to be clear. Actually congressional Democratic sources, saying that Republicans, specifically Mitch McConnell, who, of course, is the lead negotiator, what he is proposing is to delay that sequester, those spending cuts, for three months. So, 90 days. And what Democrats here on Capitol Hill want to do is delay it for at least a year. So there is a very interesting dynamic shaping up right now. And this probably is a good illustration of that.
And you mentioned right at the top that the negotiations are going on now between primarily between the Senate Republican leader and the vice president, not the Democratic leader. So they're certainly in the loop, I'm told, in a very constant way, the Democrats here on Capitol Hill. But the fact that they let it be known to us that they're not happy with the idea of a three-month delay, they want it to be longer, isn't just a signal to Republicans, it's also a signal to their fellow Democrat in the White House, namely Vice President Joe Biden. So that's just an example of how intricate, delicate and strange these negotiations are right now as we just get down to the wire.
MALVEAUX: Yes, they are rather strange there. Do we think that there's any movement on the president's part? We are also -- you've been reporting the fact that you've got -- the number was originally $250,000, anybody making more than that would get a tax hike. And now that's potentially at $450,000. That there is some movement on the White House's part as well?
BASH: It seems to be. As you said, we reported earlier today that Democrats had put on the table, I believe as early as Saturday night, the idea of moving that income threshold up to $450,000 a year. And that is, we understand, still on the table. That's for households.
Our Jessica Yellin at the White House is reporting that the number for individuals right now is $400,000. Meaning, tax cuts for everybody up to those levels, $400,000 for an individual, $450,000 for a household, would stay in place. For everybody else, the tax rates would expire. So that's what's on the table we understand now, but, you know, things are changing so fast, who knows if it -- you know, where the negotiations are really happening. That's just one example. Another thing is the estate tax, which is a very big deal to a lot of people in this country, not just, you know, people who you normally think of as wealthy, but also farmers and people with big estates. They want to keep the tax threshold at a lower level, and we're told that Democrats are seriously considering that and are open to that in a big way in these negotiations.
MALVEAUX: All right. So we know the talks are continuing. We know that both sides are weighing in on this. Do we think that the president, in any way, is also involved in this, or we're not quite at that level?
BASH: It's hard to imagine he's not. It really is. I mean this is -- so much is riding on this and -- he has so much riding on this, I should say, in such a big way. Certainly all the polls show if things go south, most of the polls show a majority of Americans will blame Republicans. But he is still the president and he is still, no doubt, if things really go south, going to take a hit. Just like everybody will. So this is a very important issue to say the least.
The vice president is a key negotiator because of his incredible ties to people here on Capitol Hill. The fact that he served on Capitol Hill as a senator himself for three decades. But it's hard to imagine the president isn't involved. But you'll have to ask our White House people just to be sure about that.
MALVEAUX: All right, Dana, we'll be following you, we'll be coming to you often as the developments warrant on these talks. We certainly hope that they're going to work something out. They are clearly, clearly running out of time. Thank you, Dana.
The clock is ticking. Twelve hours before we hit that fiscal cliff deadline. So if a deal is not reached, how is it going to affect us? Well, the Tax Policy Center crunched some numbers. Here's a couple scenario.
If you're single with no kids and you make $50,000 a year, you're going to see your taxes go up by $1,500. Now, take a married couple with two kids making $100,000. They would see their taxes go up $5,300 a year.
I want to turn to Christine Romans in New York to talk a little bit about the people who are really, really, Christine, going to feel this immediately and whose --
CHRISTINE ROMANS, CNN BUSINESS CORRESPONDENT: Right.
MALVEAUX: It's going to have the greatest impact. Who are they?
ROMANS: Well, the first people to feel it are people who are on extended federal unemployment benefits. For them, for 2 million of them, Suzanne, on December 29th, that was the end of the last week of unemployment benefits for them. So immediately hundreds of dollars a week of unemployment benefits go away.
For everyone else, anybody who works at a company and pays payroll taxes, your payroll taxes are going to rise. And, you know, it looks like that's going to happen no matter what. I mean your paycheck is going to be a little smaller no matter what because the payroll tax withheld is going to rise from 4.2 percent to 6.2 percent for all your income up to $113,000.
Early tax refunds, probably going to be delayed. The IRS has been talking about that.
And, you know, on the unemployment benefits front, I'm going to be honest with you, I've been talking to people over the past weeks and months who are on extended benefits and they're very, very concerned about this. One woman I talked to, she's pretty clear she thinks the economy's going to get better next year if she could just have a few more months on extended unemployment benefits to keep from having to, you know, dip into her 401(k) and the like.
So there's just so many different angles. Doctors, families in the AMT, there's so many different things in the tax code that every year we patch that if Congress doesn't fix it, a lot of people, millions and millions of people, are going to pay higher tax bills.
MALVEAUX: And, Christine, I understand there's one group in particular, and that is families with children, that are really going to hit hard.
ROMANS: That's right. Parents very closely looking at four key tax goodies that they get in the tax code and whether those could be going away. Four tax credits.
There's a child tax credit. It could be cut in half or zeroed out for married couples making $110,000 or more.
There's a child and dependent care tax credit. Part of the Bush tax cuts. They can claim a smaller deduction for day care.
There's an earned income tax credit. That's worth close to $6,000 to families making around $50,000 a year.
And there's something called the American Opportunity Tax Credit, Suzanne. It's designed to help lower income families pay for college. It was born out of the stimulus in 2009. That would revert to a smaller amount.
All of these are things that parents enjoy right now. So it means working families with children would see a higher tax bill as well.
MALVEAUX: All right. We are waiting, we are watching what happens here in Washington on Congress and on The Hill to make sure that people don't go through all of this because it is an extraordinary development and could mean a lot, a lot of people very much suffering because of it. Thank you, Christine. Appreciate it.
The bottom line, taxes could be going up in the next 12 hours. Everybody whose watching negotiations in Washington, they want a deal. People want a deal. And we're not talking about just here in the United States. We're actually going to go take a look at how this has a global impact as well. And later, they are ancient fragments of what could be an original copy of the Bible. We're going to take a look at the Dead Sea Scrolls.
(BEGIN VIDEO CLIP)
UNIDENTIFIED FEMALE: My New Year's message to Washington is that this entire fiscal cliff problem isn't just an isolated incident. It's representative of how partisanship and polarization have taken over Congress. I'm 18 and I go to college in D.C. I used to be excited for the future, but I don't want to live in a country that doesn't have a successful working legislature. Congress, it's time for you remember what your purpose really is and get back to doing your job.
(END VIDEO CLIP)
MALVEAUX: Amen. So, if Congress can't reach a deal by midnight, higher taxes, it's not going to be the only concern for Americans. There are many families who might not have any money coming in at all. More than 2 million people are at risk of losing their long-term federal unemployment benefits as the new year begins. Another 1 million workers will exhaust their 26 weeks of state unemployment benefits in the first quarter, won't be able to file for a federal extension.
Earlier, I talked to the president of Optimum Capital Management, Ryan Mack, about the potential fallout.
MALVEAUX: We are talking about those who are really at risk. Those who might not get their unemployment benefits. What kind of options do they have?
RYAN MACK, PRESIDENT, OPTIMUM CAPITAL MANAGEMENT: I mean, essentially these are a lot of individuals operating out of a lot of fear. I mean we do a lot of work across the country talking to those who are collecting these checks and basic questions of, what sort of -- am I going to be able to eat? Am I going to be able to pay for housing and shelter? These are basic concerns.
So what we first have to first understand is that we have to start understanding -- while we teach financial literacy, that they do have options. They can do things such as making sure that investments are not a priority right now (ph). Liquidity is key. And instead of putting money in the market or is trying to make that $10 investment in a stock become the next Google, let's put a budget together. Start doing research on improving your credit. Making sure that you can start asking certain questions, how can we negotiate our interest rates on our credit cards?
Make job searching your job, which is essentially a key component in understanding every single day, writing down a list of priorities, what am I going to accomplish this day. From 9:00 to 5:00, I would be working, but you are working, getting a database together of all of the things that you need to -- of different job connections that you may have and how -- and ranking them in terms of, are they going to say yes or no and really making sure that from 9:00 to 5:00 you're doing that appropriate search.
MALVEAUX: And, Ryan, you mentioned something that's really -- it might seem obvious, but, you know, a lot of people don't think about this. They say you should stay healthy, that you should take good care of yourself. Explain.
MACK: Well, you might not have a lot of money for a gym membership, but you can go jogging. You can do a DVD workout in the house. You can try to eat as healthily as possible. I mean, these things and making sure that you can -- working out takes that stress level down.
It allows you to have a healthy mindset and a healthy body, and it also improves your ability, when you go into the interviews, you have a more confident mindset and confident outlook, and we need you looking bright to make sure that you're consistently going on the job searches and showing your best you.
MALVEAUX: And you also say too that part of showing your best you is maintaining your faith, a sense of confidence moving forward.
MACK: Again, if I can just talk to the unemployed out there for a second. I understand that this political circus right now is a travesty, and the fact it has come to this and we've had a lot of individuals operating out of fear because of it. But we need you to have the appropriate amount of faith.
If there's a mathematical equation for faith, it's half belief and half acting on that belief. People act according to what they believe is going to happen in life, and we rise and fall together in this country. And we need everybody operating on four cylinders.
We need you to believe in that tomorrow you can find that job. And then we need you acting on that belief, and doing all those things fiscally as well as mentally preparing yourself to be able to move yourself forward, so we can all move together in this country.
I mean, again, I feel for you. I pray for you. We need you in this fight.
MALVEAUX: Americans aren't the only ones watching closely for signs of a fiscal cliff deal today. The world is watching, too. It's because the big tax hikes and spending cuts here could have a chilling effect on the global economy.
We want to bring in Richard Quest from London.
And, Richard, we know that folks are watching this. Perhaps not the minutia how we're following it in Washington and the negotiations process from hour to hour and minute to minute it seems. But, certainly, in the final stages of it this whether or not this is actually going to happen. Why does it make such a big difference? RICHARD QUEST, CNN INTERNATIONAL ANCHOR: It makes a huge difference because the rest of the globe, particularly, say, for example, the European Union and the euro zone is barely growing. It's stagnant and was in recession in '12. It could be in recession in '13.
If you lop off any growth from the U.S. economy, that will have a ripple affect across the Atlantic. Literally like dropping the proverbial stone, you will feel the ripples go across the Pacific to Asia, to Japan and to China, and to all those countries and across the Atlantic to Europe.
I was talking a few moments ago to Olli Rehn. He is the vice president for the European Commission. He's also the economics commissioner for the European Union -- the chief, if you like, of economics.
He says, we're concerned about the U.S. going over the cliff. It's time for a partial deal, and we support the efforts of U.S. policymakers. He said it would have a negative impact, and he said if there's no deal before the year's end.
And Europeans tonight are -- not that it makes much difference -- are calling very firmly on all the parties in Washington to get a deal done.
MALVEAUX: So, Richard, I don't know if Washington is listening to anybody outside of Washington yet, but we'll see how the day goes. There's a lot of blame that's being directed to the United States.
But, you know, you look at the euro zone, and it had its own issues. I mean, it took them quite a bit of time before they could actually get their own deal, their bailout deals done.
Is there a backlash, do you suppose? Is there a bit of blame that is actually not warranted?
QUEST: And you're right. You'll remember the president did actually admonish the Europeans to get a deal done. Tim Geithner said again and again it was time for the Europeans it to stop messing about. The Canadian finance minister was furious at the G-8, the way the Europeans were behaving. Geithner even came over to Europe to try and sort of chimming (ph) them along he was so worried.
Now, I don't think the fiscal cliff is quite as dramatic and dreadful as if there was a Greek exit for all of the euro zone collapsed. That would have been far worse.
But this drip you're talking about it hour after hour -- this drip, drip, drip effect is corrosive to investor confidence, to consumer confidence because ultimately it will slow down economies on both sides of the Atlantic. That is not an opinion. That is a fact.
MALVEAUX: All right. Richard Quest, thank you. We're going to be watching that drip, drip, drip all day. Hopefully, we can turn off the faucet, this thing is not going to happen. We appreciate it, Richard. Thanks. It is the oldest Bible known to humankind. We're getting an up-close look at the secrets of the Dead Sea scrolls.
MALVEAUX: The Dead Sea scrolls considered the earliest known surviving copies of biblical documents have been discovered decades ago. Well, they've been cleaned up in recent years, and it can be read clearly.
Well, Sara Sidner reports Google now has posted them online for the world to see.
SARA SIDNER, CNN SENIOR INTERNATIONAL CORRESPONDENT (voice-over): The pain-staking process to preserve a tiny piece of history, more than 2,000 years old. In these delicate pieces of ancient parchment, you can se the text of the Ten Commandments, Genesis, Psalms, many of the writings that make up the Bible, as well as other non-biblical books. These are some of the thousand of fragments of the Dead Sea scrolls found by a Bedouin shepherd in caves 65 years ago near the Dead Sea, in what is now the West Bank.
PNINA SHOR, ISRAEL ANTIQUITIES AUTHORITY: These are all manuscripts written 2,000 years ago at the time when both Judaism and Christianity were formalizing as we know them today.
SIDNER: There are only five conservators on the planet allow to handle these fragments which when pieced together reveals some of the holiest and well-known texts of the world.
Now, they're available for anyone to see and study online, a joint project between Google and Israel's antiquity authority.
SHOR: For me, this is a dream come true. I've been working on this or I've come up with this idea five years ago. Now, not only the scholarly world is going to gain from this, but the public as well.
SIDNER: The five-year process included photographing thousands of fragments, 28 times each front and back, using different colors of the spectrum and NASA technology to reveal previously undetectable writings.
SHAI HALEVI, DEAD SEA SCROLLS PHOTOGRAPHER: And I'm getting all the exposures on the screen and combining them all into one multispectral image.
UNIDENTIFIED MALE: We're going to integrate at this point the infrared image of this part, exactly this part, and now secret writings are going to be revealed by the infrared image.
SIDNER (on camera): So, every itty-bitty fragment has a code, and you can punch that code in by going to explore the archive. Then it will give you a lot of the information about that particular fragment. So, we were looking at 4Q243. That's the one that we saw photographed. We punch that in, and up comes some images. It says that the site it was found in was cave 4, Qumran, that the language is Aramaic. And then if you click on any of these photos, you can zoom into an incredibly tight picture and see just the finest of details.
YOSSI MATIAS, MANAGING DIR., GOGOLE ISRAEL R&D CENTER: Google's mission is to organize the world information and make it universally accessible and useful. It's hard to think about more important content than the scrolls that have such significance to so many people worldwide.
SIDNER (voice-over): In the 1950s, the scrolls were photographed. And last year, five of the 900 manuscripts were put on the Internet. For this project nearly all 900 manuscripts are online, and 1,000 of the fragments have been enhanced by the new technology.
Controversy has followed these scrolls from the day they were discovered. Arguments abound over who actually wrote them and who owns them.
Now that they are available for the entire world for crowd sourcing, who knows what new controversies or perhaps answers can be uncovered in these ancient writings.
Sara Sidner, CNN, Jerusalem.
MALVEAUX: Just about 12 hours left before potentially we take the plunge off the fiscal cliff into much smaller paychecks. Now, many of you, of course, are weighing in.
(BEGIN VIDEO CLIP)
JOSEPH SEGAL, IREPORTER: My New Year's message to Washington is to secure the blessings of liberty to ourselves and our posterity and invest in our children, in our schools, and in our communities. Raise taxes on the rich, and eliminate corporate loopholes, and do not cut Social Security or Medicare.
(END VIDEO CLIP)
MALVEAUX: In Washington right now, a potential agreement to keep us from falling of the fiscal cliff.
Jessica Yellin at the White House with some details.
Jess, what are you learning?
JESSICA YELLIN, CNN CHIEF WHITE HOUSE CORRESPONDENT: Hi, Suzanne.
Well, first of all, there is an emerging deal here, but it is still not done. It is in progress. There's a sense of sort of optimism that this will come to closure. What we know about this deal right now is that it would allow for earners at the very top to let their tax rates go back to Clinton levels. So that is what was set to happen in the New Year anyway. It only hits the very top earners.
Then the next level of the deal, households that earn $450,000 are the ones who would be impacted by this. And individuals who earn $400,000 a year are the ones who would see it go to Clinton levels.