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Fiscal Cliff Deal in Sight?; Interview With Michigan Congressman Sander Levin

Aired December 31, 2012 - 15:00   ET


JOE JOHNS, CNN ANCHOR: His team finished 10-6, but missed the playoffs. Bears quarterback Jay Cutler got the news during a live radio show.

The Kansas city chiefs parted ways with Romeo Crennel after his team struggled through a two-win season that was marred by the murder/suicide involving linebacker Jovan Belcher. Other notable names, Eagles coach Andy Reid, Chan Gailey, Ken Whisenhunt, Pat Shurmur, Norv Turner. Front office jobs aren't safe either today. The Jets, Cardinals, Chargers, Jaguars and Browns all let their general managers go.

DEBORAH FEYERICK, CNN ANCHOR: Top of the hour. Hey, everyone. And happy new year to you all. I'm Deb Feyerick live from CNN's world headquarters in Atlanta.

JOHNS: And I'm Joe Johns live from Washington.

The world's watching to see if Congress reaches a deal to avoid the fiscal cliff. And within the last hour, the president said a deal is -- quote -- "within sight" and that he himself is willing to make hard choices to avoid $600 billion in automatic spending cuts and tax hikes.


BARACK OBAMA, PRESIDENT OF THE UNITED STATES: 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 is going 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 in hand with doing some more work to reform our tax coat 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 fairer, 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, if they think that's going to be the formula for how we solve this thing, then they have got another think coming.


JOHNS: Let's go to chief White House correspondent Jessica Yellin.

Jessica, the president made sure he was flanked by middle-class taxpayers while he was speaking. What was the administration trying to get across today with this appearance?


Well, it was in large part to encourage Democrats in Congress to believe that they're getting a good deal if this negotiation should resolve itself today and encourage them to take it and live to fight again another day for the rest of their priorities and get what they want in the next fight, because there will be one when they come up against the debt ceiling, for example, in just a few months.

As you point out, he was flanked by middle class Americans, people who will see their taxes go up if there is no deal. And he made the case that he -- he's gotten for Democrats many, many concessions from Republicans. Many of their priorities are in this package.

Now, Republicans, I should point out, believe that some of his comments were rather partisan, in particular the remark that Republicans want to see them take their spending and that Republicans can take their spending and shove it.

And so there is a little bit of upset about that up on Capitol Hill today. The president also saying that he is president for the next four years. So what you see going on is sort of two-pronged battle. On the one hand, the White House working to negotiate a deal, on the other hand, the White House working to fight the P.R. war in case there is no deal and shift the blame on to Republicans for failure in case this thing collapses, Joe.

JOHNS: Always important to get in place in case there is a blame game. Thanks so much, Jessica Yellin -- Deb.

FEYERICK: Well, Joe, the president is sounding confident, almost defiant, but some Republicans are saying the president's statements are putting the talks happening today possibly in jeopardy.

Here's Senator Bob Corker from Tennessee.


SEN. BOB CORKER (R), TENNESSEE: Madam President, I just listened to the president. And my heart's still pounding.

It is very disappointing to hear what the president just had to say in front of a pep rally, something very unbecoming of where we are at this moment.

I just heard the president say that the way we're going to deal with this sequester is in a balanced way through revenues and through reduced spending. And I just want to go on record, here on the Senate floor, I know there that are negotiations taking place, but the sequester was to be dealt with, substituted with other spending reductions, not through revenues.

And I just hope that all those who are involved in bringing this together understand that even on the Democratic side, that that was the understanding. I know the president has fun heckling Congress. I think he lost probably numbers of votes with what he did. He didn't lose mine. I'm not that way. I'm going to look at the substance, but it is unfortunate that he doesn't spend as much time working on solving problems as he does with campaigns and pep rallies.

But I just want to say, I'm very disappointed in what the president had to say.


JOHNS: We now just sort of went to reset the table and talk about the proposal that we're looking at. It includes higher taxes for top earners. Taxes would revert to Clinton era rates for households that make more than $450,000 a year or individuals who make more than $400,000.

However, that nugget is already meeting resistance on the Senate floor. Listen.


SEN. TOM HARKIN (D), IOWA: The tax side that lets those most privileged in our society continue to not pay their fair -- I think the share that they should be paying, that's not a good deal. That's not fair. That's not equitable. That's not just.


JOHNS: Let's go now to senior congressional correspondent Dana Bash.

First, Dana, Republican Senator Mitch McConnell just gave an update on the negotiations. Talk about that, will you?


Just moments ago after those two senators spoke, he was on the Senate floor and he came out and he said, we can do this, we must do this. He said for the first time formally, publicly what we have been reporting, that he and the vice president have, in fact, agreed on the tax portions of this fiscal cliff deal, specifically what you just put up there, most importantly perhaps the tax rate issue.

And he is trying to get the Senate to just vote on that. The outstanding issue still is -- seems to be, according to sources in both parties, Joe, seems to be the so-called sequester, those mandatory spending cuts.

Both sides have tentatively agreed to delay them for a couple of months, replace them with spending cuts. It just is unclear -- they haven't come to an agreement on what those spending cuts will be and unclear if they actually will. That's why Senator McConnell is pushing -- trying to push the envelope, to prod them publicly to at least take the tax cut issue up.

But, as you well know, Joe, because you spent a lot of years walking these halls, the Senate is one issue, but the House is another beast altogether.

And I actually have a Democratic member of the House. The last hour, we spoke to a Republican. Now we have -- we're pleased to be joined by Democratic Congressman Sander Levin.

Thank you very much.

First question I want to ask you is, a lot of Republicans, we heard it -- a parade of Republicans on the Senate floor saying they were very upset with the president. One said that they felt heckled by him, that he was just too partisan and it was the wrong time for that. What do you make of that?

REP. SANDER LEVIN (D), MICHIGAN: I very much disagree.

The president had to lay down the marker for the present package, including addressing the automatic cuts. They have to be addressed. And also as to future deficits, the president made clear. He laid down the marker. There have to be added revenues, as well as program cuts. And we have to do both. It has to be balanced. That's been the president's position all along.

And I think it was important that he make that clear as we proceed. So no one should be offended when the president speaks clearly.

BASH: That's a case that you make on the substance, but I think some Republicans, I know some Republicans were also offended on his -- about his tone, that he was just too abrasive and sarcastic, and that it wasn't the time.

LEVIN: He was pointed. When he's spoke a few days ago, he was very pointed.

And they said he was campaigning, it was political. No, he was appealing to Republicans to move off of dead center and appealing to the public to get involved. So, I think the Republicans should stop worrying about how pointed he is, and get to the main point, the substance.

BASH: OK, well, let's talk about the substance. There are a lot of members of Congress on both sides of the aisle who are not thrilled with the outlines of this deal. That's what happens with negotiations. Not everybody is happy.

Do you personally think that this is something that you can vote for, specifically, when you're talking about those tax rates as high as $450,000 per household?

LEVIN: Actually, I think it is rather close to what the president proposed some time ago. I haven't seen all the details. Nobody has except a few.

But I think there is a lower threshold for the limits on deductions. So that will increase the revenues. But I want to point out the president made it clear that, as we proceed, as we look at the deficit, they're going to have to be more revenues, as well as spending cuts.

There has to be balance, and maybe people don't like that. There has been too much imbalance in this institution. And I think the president was right to speak very, very clearly.

BASH: The other thing that seems to be on the table is some form of an extension of the estate tax. That's another thing that Democrats are not thrilled about. Tom Harkin, your colleague over down the hall there in the Senate, is not happy at all that is on the table.

Is that or anything else as far as you're concerned and many of your colleagues who you have spoken to a deal-breaker?

LEVIN: I wasn't happy with what I understand is being determined here.

But I think they made a compromise. And so I think there will be a higher -- higher exemption, but the rate will go up somewhat from what it is today. There is a lot of money involved. And I think the wealthy are really having it too good in terms of averages for the wealthy of this -- this economy.

But I think what they're working towards is going to be acceptable, though I wouldn't prefer it, but it has to be part of the overall package. And there has to be balance, and I want to emphasize that there has to be addressing of the automatic cuts because it affects not only defense, but it also affects so many programs that people, millions of people in this country depend upon.

BASH: That has to be part of the deal?

LEVIN: It has to be part of the deal.

BASH: One last question before I toss back to Joe just about the moment. Here we are, literally hours before this deadline. You have been in Congress for...

LEVIN: Thirty years.

BASH: ... a few years. I wasn't going to give it away. But this kind of frankly dysfunction leaves a lot of people are frustrated and it is pox on everybody's houses.

LEVIN: I think this is a dysfunctional Congress.

But I think really what has happened as I look back 30 years is that, within Republican ranks, it is a very different grouping. Essentially, there has been, as I have put it, a kind of radicalization of the House Republican Conference. So, they started off saying they weren't going to vote for any revenue increase whatsoever.

And that essentially stymied us, so we were not able to look at the overall package. And so the president has made very clear there has to be imbalance -- there has to be balance. I think there has been to much imbalance, especially in the Republican ranks in the House. And I hope this is a step forward. And one of the keys -- others have mentioned this -- is will the House Republicans now step up to the plate on this?

It is one thing for Senator McConnell to say we're going to move. Will the House Republicans move? If they don't, nothing is going to happen and we're going to go over the cliff.

BASH: Thank you very much. We appreciate it.

Joe, back to you. I should say obviously the Democratic congressman is saying that Republicans won't give on revenues. As you well know, Republicans are upset at Democrats for not giving enough on spending cuts. So there you have it.

JOHNS: Still a lot to be heard on this one, I think. Thanks for that, Dana Bash and Congressman Levin -- Deb.

FEYERICK: Thanks, Joe.

Forget the politics. Up next, you will hear exactly how going over the cliff affects your paycheck and your 401(k). Also, it will extend unemployment benefits.

Plus, as the world celebrates the new year, Brooke Baldwin will join me live from New Orleans where folks are getting ready for a huge one- of-a-kind party.


FEYERICK: So we avoided the cliff, apparently. Will you be richer? Well, maybe not. Tomorrow, your paycheck will likely shrink with or without a fiscal cliff deal. That's because the payroll tax cut that expires tonight at midnight, right now, it doesn't look as if Congress plans to extend it.

The 4.2 percent of your salary that you pay into Social Security, that will go up to 6.2 percent. Lawmakers have been so consumed by the fiscal cliff that it appears little was done to try to extend the 2010 payroll tax cuts put in place by President Obama about two years ago in order to boost the economy.

So what does it mean to your wallet? Here is how much less you will bring home if it does expire. Paychecks shrink $50 a month for those earning $30,000 a year. It shrinks $83 a month for those earning $50,000 a year and $167 a month for those earning $100,000 a year or more.

Now let's switch to the fiscal cliff and what that could cost you if that so-called deal in sight doesn't get done. Without the deal, the potential impact, say you're single, you work hard, OK, well, here is what you can expect. You don't have kids. You earn about $80,000 a year. Think about what you pay now. Well, guess what, you will pay an additional $3,000, that's right, $3,000 more in taxes next year.

If you're married with kids, yes, it doesn't get any better. The middle-class families get hit hard. If you have two kids, both parents work together, you earn $80,000, well, if we do go over the cliff, you will owe almost $6,000 more in taxes next year.

And that is why it is so important that a deal gets done. With so much uncertainty and so many variables, the question is how is Wall Street reacting? The stock market dipped every day last week. So what is next?


FEYERICK: And just moments ago, Russia and Dubai celebrating the new year. There you go. Take a look. Everybody loves fireworks. Who doesn't like fireworks?

Well, folks are gearing up in the United States. That includes New Orleans, where our own Brooke Baldwin is standing by for tonight's special coverage. And stay with us, because she wants to talk to you.


UNIDENTIFIED MALE: My name is Sergeant Caleb Brown (ph) serving with 3rd Squadron 7th U.S. Cavalry.

I would like to say happy holidays and I love you to my wife, Stephanie Brown (ph), my family in Roseburg, Oregon. Love you, guys. See you soon.



FEYERICK: OK, everyone. It is time to forget about the fiscal cliff negotiations, at least for just a moment. Why? Because, yes, the rest of the world is in fact ringing in the new year.





FEYERICK: So, just a couple of places, from Dubai to Russia and Hong Kong, where people's problems were so last year.

Back home, they're preparing for the countdown to the stroke of midnight in New York's Times Square. But New Yorkers may have some competition on their hands from the folks down South in New Orleans.

Our Brooke Baldwin is there. And, Brooke, you are getting ready for a big party. What is it like?


We're going to give New York a little competition, Deb Feyerick. Happy almost new year and happy almost new year to everyone watching.

Let me just set the scene for you, because I know you can't see what I'm looking at. But it is a gorgeous, gorgeous picture. So I'm sitting basically in the midst of the French Quarter. So to my left, you have beautiful Jackson Square, to my right, the mighty Mississippi River, blue skies here. It is picture perfect for what will be a huge, huge celebration.

So I'm sitting atop Jack's Brewery right now. Just behind me -- and this is what you will see on TV tonight, as we will be coming to you live for midnight, both Eastern and Central time -- you get the fleur de lis drop, you have got baby new year, which I don't even know how to describe this.

If you don't know, in New Orleans, it is the amazing tradition. They actually found this baby floating post-Katrina. They have found it. They have re-spray-painted it. It is here part of the celebration. We're here. Imagine, Deb, you have New Orleans which I'm sure you have been here, it is crazy and you don't sleep and you party all night anyway.

Take that, add New Year's Eve, add the Sugar Bowl, and you have probably they're estimating some 50,000 people. Just quickly, I will be down here in the French Quarter, with, you know, the rest of the crew, and different parts of the country, ringing in the new year with Kathy and Anderson. But then I'm not going to be ready to go to bed.

Let me just be honest. I'm going to keep the party moving and grooving until midnight Central time. So we hope you -- we hope you stay up and watch, Deb Feyerick. You're going to, right?

FEYERICK: Oh, totally, Brooke. We are so ready to party with you, because if there is anybody we want to party with, it is you, Brooke Baldwin.

Well, thank you so much.


FEYERICK: ... just the one.

OK, well, listen, if you don't have plans yet, you definitely should join Brooke and all of us in New Orleans for the 2013 countdown tonight. Of course, Anderson Cooper, comedian Kathy Griffin will be live from New York. They will ring in the new year. CNN's special coverage, it starts at 10:00 Eastern.

JOHNS: Just moments ago, Senate Minority Leader Mitch McConnell announced a deal was very close in the fiscal cliff negotiations. What's in, what's out? Our own Wolf Blitzer joins us next. (COMMERCIAL BREAK)