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Obama to Give Statement on Fiscal Cliff; Obama Speech on Fiscal Cliff.
Aired December 31, 2012 - 13:30 ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
WOLF BLITZER, HOST THE SITUATION ROOM: Because fewer people are going to be involved in seeing their taxes go back up from the 35 percent rate right now to the 39.6 percent rate, which existed before the Bush tax cuts were implemented in 2001 and 2003 during the Clinton administration. So it will be less revenue. They have to find more revenue elsewhere. But it's something the President felt he needed to do to get a deal to show he's ready to negotiate. So he moved from that 250 to 450. So that's a significant concession from the Democrats' perspective.
SUZANNE MALVEAUX, CNN ANCHOR: Jessica, what do we expect to hear from the President in the statement he's going to make momentarily?
JESSICA YELLIN, CNN CHIEF WHITE HOUSE CORRESPONDENT: I believe he's going to urge action, Suzanne, and call on both parties to pass this. As you know, and as Dana Bash reported from Capitol Hill, there are Democrats who have expressed concern about the agreement or the emerging deal. It's not done yet. And there is obviously going to be Republican resistance, but you know, he will call on both sides to do something.
I point out that while $450,000 for a household is a concession by Democrats, the Democrats are getting something, a lot in this deal as well. It's a return to the Clinton rates for the highest income earners. It's an extension of unemployment benefits. There is an increase in the estate tax. All though there's a compromise in it that would include the increase in the estate tax. If the deal goes through, it keeps middle class tax rates for 98 percent of the Americans exactly where they are. We would avoid the largest part of going over the fiscal cliff that hits regular Americans every day. Not to mention the fact it would signal to the nation that Washington can get something done as we count down to New Year's Eve. So there would be some accomplishment, and I think that's the message he'll deliver here shortly -- Suzanne?
MALVEAUX: Jess, thank you very much.
Again, we want to welcome international viewers around the world watching the negotiations, the back and forth to see what happens here, whether or not the United States, in fact, will go over the fiscal cliff.
I want to bring in Dana Bash.
And, Dana, if you would, talk about the other side to this. That is something Wolf mentioned, the need to generate revenue but also make serious cuts here. There's a sticking point when it comes to $110 billion in cuts and how the Democrats and Republicans see that playing out in the New Year.
DANA BASH, CNN SENIOR CONGRESSIONAL CORRESPONDENT: That appears to be the sticking point. I was just talking to a Republican source here familiar with these talks, and I said, can we call it a tentative deal? How far should we go? The source said we're very, very close. But according to Republicans, I should point out, the big sticking point, the only sticking point at this point is delaying the sequester and replacing it for two months. So that appears to be what's on the table, delaying the sequester and replacing it for two months with spending cuts. According to the source, it adds up to $24 billion in spending cuts. This Republican source says that that's something you can find around here under the cushions of the couch. He said if we can't find that, we should pack it up and go home, because $24 billion, when you're talking about trillions like we're here, it isn't that much.
But from the Democrats' point of view, it's more of a philosophical question. It is a question of whether or not they're willing to when they want to find other areas of the government to cut spending. So that seems to be what's going on right now. Republicans say that they have made some suggestions, maybe $100 billion worth of suggestions to Democrats. We're waiting to hear from the Democratic side on this.
But when you talk about the big picture, all of the things that they have been divided over, from tax rates, which they now agree on, as we've reported, to many other issues, the fact they talk about finding $20 billion in spending cuts to go over two months of the sequester means they are really, really close.
BASH: We've seen it blow up on terms before, but it's very close.
MALVEAUX: I want to bring in Christine Romans.
But obviously, people around the world are watching what happens here and what happens in Washington. They're waiting for what the President is going to say, and one of the things that Dana talks about so important is this notion of the debt ceiling and whether or not the United States can pay it's own bills. Explain to us why that is so important and how that ties into the negotiations that we've been hearing back and forth this morning.
CHRISTINE ROMANS, CNN BUSINESS CORRESPONDENT: Suzanne, it's so interesting because it was a fight over the debt ceiling that sparked all of this in the first place. It caused Congress to write this budget control act saying if we don't get a budget deal to get our debt and deficits under control and agree on a budget for this country, then we're going to have this sequester with all of these automatic spending cuts and tax hikes.
So the debt ceiling is $16.4 trillion. This is how much the American government can legally borrow and add to a national debt without any more congressional approval. Congress has to approve if we keep racking up the debt. We're going to hit that as soon as today, according to the treasury secretary. There have about $200 billion in breathing room, if you will. Could get you to February, maybe even March. But Congress will have to come back to the drawing table again and say, we will raise the debt ceiling if we show how we're going to get our spending under control, and you have another fight ala the sequester and all this again. The debt ceiling and the fiscal cliff are two things all wrapped into one, which is so important. If you don't deal with the debt ceiling and you push the sequester off again and again, you'll keep having these sort of fiscal cliffesque fights over and over again.
It sort of shows how complicated the American budget process is and what they've broken.
MALVEAUX: It's a good point, Christine.
I want to bring back Wolf.
Senator Tom Harkin earlier today said that no deal is better than a bad deal. How likely is it that Congress, the Senate and House side will pass this?
BLITZER: I think that there will be liberals who will reject this deal, whenever the deal finally emerges, some liberal Democrats in the Senate, maybe Senator Tom Harkin, for example. Some conservatives will reject it because the top 2 percent will see -- those earning more than $450,000 see their taxes go up. They might reject it. I think there will be a significant bipartisan majority in the Senate that will pass it. If the President comes out and says he can live with this, and this is a compromise, he's not getting 100 percent of what he wants, but you've got to deal in reality, the President says that, if the Republican and the Democratic leaders in the Senate, Harry Reid and Mitch McConnell, if they say that, there will be a significant bipartisan majority in the Senate.
Now, the House Speaker John Boehner suggested at the White House meeting the other day that whatever passes the Senate, he would allow to come up for an up or down vote in the House of Representatives. If he allows that to happen and the Democrats are on board, there will be a need for some Republicans to join those Democrats in the House and pass it, and then the President would sign it into law.
My expectation is that that would probably happen and there would be enough Republicans to join Democrats. Yes, there would be some liberals on the Democratic side, yes, a lot of conservative it is on the Republican side would vote nay, but there would be 218 votes in the House of Representatives to pass it. Then the President would sign it into law. It might not happen today. It could happen tomorrow. Let's see what happens. But I think there will be the votes, assuming the leadership's on board.
MALVEAUX: All right. Could be a lot of fast-moving parts that happen.
Wolf, thank you very much. We'll take a quick break. We're, again, waiting for the President to speak there about the fiscal cliff negotiations. Certainly, looking like there's an outline that perhaps both sides can live with, but that might be premature. We'll have the details right after the break.
MALVEAUX: The fiscal cliff talks are intensifying. The President is delivering a statement from the White House about the ongoing negotiations that are taking place. It's a very high-stakes, so we look for a deadline looming hours away to massive tax increases as well as very dramatic spending cuts. Negotiations have been happening behind the scenes between the vice president and the Senate minority leader, Mitch McConnell. Of course, many other people weighing in as well. We understand there's been some progress, even a framework, if you will, of this agreement. Certainly, not everyone has signed on and there are serious sticking points.
We want to bring in our correspondents and anchors following this, the breaking news from all angles, Wolf Blitzer in Washington, senior congressional correspondent, Dana Bash; Chief White House correspondent, Jessica Yellin; and our CNN business correspondent, Christine Romans, in New York.
We spoke with you, Wolf.
We want to bring Jessica back into the conversation here.
Jessica, do we think that by making this kind of public appearance, and we've seen more of the President than we have in quite a while in terms of the briefing room to make his case. Is this what it's about? Is pushing the Republicans forward to accept this deal, or do we think we've got something real here?
YELLIN: I'm sorry. That just startled me, that announcement.
I think that the President is -- they're both close to a deal, and this is a way to urge it just a step closer to the finish line as we're running out of time.
I point out that we're doing this in the South Court Auditorium. He's about two minutes away. He will not be appearing before reporters but so-called, as they call it around the White House campus, regular people, which I think you're seeing them file onto the stage. I don't know who in the audience is. But usually what they do in this auditorium is bring on people who he can say are regular taxpayers who would see their taxes go up, for example, if a deal is not done. And I would not be surprised if that's exactly what he will tell us when he comes out. I don't know that for a fact. But then he can also say, if he's not appearing before an audience that's reporters, he can walk out without taking questions and not get criticized.
I'd also point out, I'd be interested to hear what he outlined as in the deal, but what's the next steps. We are running out of hours to get this done, and it's interesting to hear how he thinks it can get done before the clock strikes midnight -- Suzanne?
MALVEAUX: I want to bring in Wolf here.
Wolf, talk about the political capital that the President has. How important and significant is this that we have the fiscal cliff for the President now looking at a second term?
BLITZER: It's very significant, Suzanne. This would have been a disaster if not only the tax rates for everybody who pays federal income tax goes up and all the other taxes go up, but also if that forced sequestration -- you see the President. I guess that's the President walking over from the West Wing of the White House over to what we called the old executive office building, now the Eisenhower Executive Office Building, right next door to the White House. The President will go in there, up to the auditorium and makes his statement. Doesn't look like this is going to be a statement that's going to be followed by Q&A from reporters. We saw the President walking in. Momentarily, he'll walk over to the podium there and make the statement. And we all want to know, deal or no deal? Doesn't look like there's an agreement with the Republican/Democratic leadership in the Senate that will allow a vote in the next hour or two or three or whatever. Then see that legislation, assuming it passes the Senate, and there's no filibuster, no stalling techniques, if you will, se that legislation move to the House of Representatives. Will John Boehner, speaker of the House, then allow that same piece of legislation to come up for a vote in the House of representatives or not? Will there be any changes required by the House of Representatives? Then there's has to be a conference committee and it has to go back to the Senate. There could be a delay.
If they want to do this quickly, though, and there's some assumption that they want to do it quickly, it looks like they will be able to do it.
Here comes the President right now.
(BEGIN LIVE FEED)
BARACK OBAMA, PRESIDENT OF THE UNITED STATES: Thank you. Please, everybody have a seat.
Well, good afternoon, everybody.
Welcome to the White House.
UNIDENTIFIED FEMALE: Thank you for having us.
OBAMA: Now, I realize that the last thing you want to hear on New Year's Eve is another speech from me, but I do need to talk about the progress that's being made in Congress today.
For the last few days, leaders in both parties have been working toward an agreement that will prevent a middle class tax hike from hitting 98 percent of all Americans starting tomorrow. Preventing that tax hike has been my top priority, because the last thing folks, like the folks up here on this stage, can afford right now is it to pay an extra $2,000 in taxes next year. Middle class families can't afford it. Businesses can't afford it. Our economy can't afford it.
Today, it appears that an agreement to prevent this New Year's tax hike is within sight but it's not done. There are still issues left to resolve, but we're hopeful that Congress can get it done. But it's not done. And so part of the reason that I wanted to speak to all of you here today is to make sure it that we emphasize to Congress and that members of both parties understand that all across America this is a pressing concern on people's minds.
Now, the potential agreement that's being talked about would not only make sure the taxes don't go up on middle class families, it also would extend tax credits for families with children. It would extend our tuition tax credit that's helped millions of families pay for college. It would extend tax credits for clean energy companies that are creating jobs and reducing our dependence on foreign oil. It will extend unemployment insurance to two million Americans who are out there still actively looking for a job.
I have to say that ever since I took office, throughout the campaign, and through the last couple of months, my preference would have been to solve all these problems in the context of a larger agreement, a bigger deal, a grand bargain, whatever you want to call it, that solves our deficit problems in a balanced and responsible way that doesn't just deal with the taxes but deals with the spending in a balanced way so that we can put all this behind us and just focus on growing our economy. But with this Congress that was obviously a little too much to hope for at this time.
May be we can do it in stages. We're going to solve this problem instead in several steps.
Last year, in 2011, we started reducing the deficit through $1 trillion in spending cuts. Those have already taken place. The agreement being worked on right now would further reduce the deficit he by asking the wealthiest 2 percent of Americans to pay higher taxes for the first time in two decades. So that would add additional hundreds of billions of dollars to deficit reduction. So that's progress, but we're going to need to do more.
Keep in mind that just last month Republicans in Congress said they would never agree to raise tax rates on the wealthiest Americans. Obviously, the agreement currently being discussed would raise those rates and raise them permanently.
OBAMA: But keep in mind, we're going to still have more work to do. We still have deficits that have to be dealt with. We still have to think about how we put our economy on a long-term trajectory of growth, how we continue to make investments in things like education, things like infrastructure that help our economy grow.
And keep in mind that the threat of tax hikes going up is only one part of this so-called fiscal cliff that everybody has been talking about. What we also have facing us, starting tomorrow, are automatic spending cuts that are scheduled to go into effect. And keep in mind that some of these spending cuts that Congress has said will automatically go into effect have an impact on our Defense Department, but they also have an impact on things like Head Start. So there are some programs scheduled to be cut that we're using an ax instead of a scalpel. May not always be the smartest cuts. And so that is a piece of business that still has to be taken care of.
And I want to make clear that any agreement we have to deal with these automatic spending cuts that are being threatened for next month, those also have to be balanced because, remember, my principle always has been let's do things in a balanced, responsible way. And that means the revenues have to be part of the equation in turning off the sequester and eliminating these automatic spending cuts, as well as spending cuts.
Now, the same is true for any future deficit agreement. Obviously, we're going to have to do more to reduce our debt and deficit. I'm willing to do more, but it is going to have to be balanced. We're going to have to do it in a balanced responsible way. For example, I'm willing to reduce our government's Medicare bills by finding new ways to reduce the cost of health care in this country. That's something that we all should agree on. We want to make sure that Medicare is there for future generations. But the current trajectory of health care costs has gone up so high, we have got to find ways to make sure that it is sustainable. But, that kind of reform has to go hand and hand with doing some more work to reform our tax code so that wealthy individuals, the biggest corporations, can't take advantage of loopholes and deductions that aren't available to most of the folks standing up here. Aren't available to most Americans. So there is still more work to be done in the tax code to make it fair, even as we're also looking at how we can strengthen something like Medicare.
Now, if Republicans think that I will finish the job of deficit reduction through spending cuts alone -- and you hear that sometimes coming from them, sort of after today we're just going to try to shove only spending cuts down, you know, well -- shove spending --
-- shove spending cuts at us, that will hurt seniors, or hurt students, or hurt middle class families without asking also equivalent sacrifice from millionaires or companies with a lot of lobbyists, et cetera. If they think that's going to be the formula for how we solve this thing, they have another think coming. We have to do this in a balanced and responsible way. And if we're serious about deficit reduction and debt reduction, then it is going to have to be a matter of shared sacrifice, at least as long as I'm president. And I'm going to be president for the next four years, I hope. So --
OBAMA: So anyway, for now -- for now, our most immediate priority is to stop taxes going up for middle class families, starting tomorrow. I think that is a modest goal that we can accomplish. Democrats and Republicans in Congress have to get this done. But they're not there yet. They are close, but they're not there yet. And one thing we can count on with respect to this Congress is that if there is even one second left before you have to do what you're supposed to do, they will use that last second.
So as of this point, it looks like I'm going to be spending New Year's here in D.C.
You all are going to be hanging out in D.C. too.
I can come to your house? Is that what you said?
I don't want to spoil the party.
But the --
OBAMA: -- the people who are with me here today, the people who are watching at home, they need our leaders in Congress to succeed. They need us -- they need us to all stay focused on them. Not on politics. Not on, you know, special interests. They need to be focused on families, students, grandmas, you know, folks who are out there working really, really hard, and are just looking for a fair shot and some reward for that hard work. They expect our leaders to succeed on their behalf. So do I. And so keep the pressure on over the next 12 hours or so, let's see if we can get this thing done.
And I thank you, all. And if I don't see you, if I don't show up at your house --
-- I want to wish everybody a happy new year.
Thank you very much.
OBAMA: All right.
(END LIVE FEED)
BLITZER: So there he is, the President of the United States, speaking for nearly 10 minutes, making the case for a deal. He says an agreement is within sight but it is not done. He says it is not done yet. He's says he's hopeful but there is still some time on the clock that is going to continue. The President also reaching out to, I assume, some of his fellow Democrats, making the case that this is by no means a complete package. He's got more work to do. They will have more work to do. And also going after the Republicans making the case that you can't just cut various programs to come up with a deal. There is going to have to be more tax cuts, more tax revenue coming in some place down the road, as well. Looking at some options there.
Let me go to Dana Bash, our senior congressional correspondent.
Dana, I was sort of surprised that the President came out and gave the speech. Obviously, it is designed to rally his base, if you will, put pressure on the Republicans, but if this is such a sensitive moment in the negotiations right now, doesn't he risk alienating or irritating a lot of those Republicans who are going to need to vote in favor of this deal?
BASH: Yes. He certainly could. But I think at this point they -- both sides, both leaders, leaders in both parties realize they need to make sure that they each corral as many of the members as possible.
The other thing is, yes, it is not done, but I am told by Republican and Democratic sources here that it is very, very, very close, that really the only big thing remaining is the fact that they have -- seemed to have agreed to delay the sequester or the mandatory spending cuts for two months and replace it with other spending cuts. The question is, what are those spending cuts. So it is just a matter of time, both sides say, before -- we have seen deals like this blow up on matters even smaller sometimes, but that I think is a big reason.
And the truth is, Wolf, that the vice president and, more importantly, Harry Reid and Mitch McConnell would not even come this close, at least when comes to Senate votes, to getting a deal this close, I should say, when they don't think that they have the votes. They simply wouldn't bring it to the floor if they didn't think they had the votes. They realize a failed vote when it comes to spooking the markets is even worse than no vote in going over the cliff.
BLITZER: Is it a done deal, though, if the Senate passes it and there is a significant bipartisan majority in the Senate? Will the speaker of the House, Dana, John Boehner, allow it to come up for a vote, as is, in the House of Representatives?
BASH: It's not a done deal, but I will say that the speaker made clear in private, and Republican sources are telling us as well, that if the Senate can come up with something, and pass something, he will move to bring it to the House floor. A very different kind of posture that we have seen from the speaker for months and months, where he has not wanted to bring anything to the House floor that he did not -- was not sure was going to pass.
One interesting kind of wrinkle in what is going on here, Wolf, is that Deirdre Walsh and I have been told it is very unlikely for the House to vote on anything today, December 31st. More likely to vote tomorrow or the next day.
What does that mean technically and politically? It means that tax rates will go up at midnight tonight. So politically, it will mean that all the House members would be taking a vote to effectively cut taxes as opposed to raising taxes, which will be a lot easier to swallow, especially for House Republicans.
I was talking to a House Republican source involved in these discussions who said it certainly isn't the reason, the reason is the delay behind me in the Senate, but it could be enough to bring over a handful of Republicans and a handful, this source says, might be exactly what they need.
BLITZER: President walking across the street from the Eisenhower Executive Office Building into the West Wing of the White House after delivering that nearly 10-minute statement.
We're going to get Republican reaction. Much more on the breaking news, a deal is within sight, the President of the United States says, but it is not done yet.
Much more coverage right after this.