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STARTING POINT WITH SOLEDAD O'BRIEN

Clinton Spends New Year's Even in Hospital; Fiscal Cliff Eleventh Hour Negotiations

Aired December 31, 2012 - 08:00   ET

THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.


(COMMERCIAL BREAK)

DR. SANJAY GUPTA, CNN CHIEF MEDICAL CORRESPONDENT: Our STARTING POINT, Secretary of State Hillary Clinton hospitalized for a blood clot. We'll have the latest on her condition in a live report.

ALI VELSHI, CNN ANCHOR: It's 16 hours until we go over the fiscal cliff. Negotiations have stalled. When Congress meets this morning, can they get a Hail Mary deal?

CHRISTINE ROMANS, CNN ANCHOR: And if we go over the cliff, you're going to feel it right away. What happens to your paycheck and when just ahead.

VELSHI: Good morning. I'm Ali Velshi.

ROMANS: And I'm Christine Romans this Monday morning.

GUPTA: And I'm Dr. Sanjay Gupta. Happy New Year. Soledad is off. It's Monday, December 31st. STARTING POINT begins right now.

Our STARTING POINT this morning: Hillary Clinton expected to ring in the New Year from a hospital bed. The Secretary of State was admitted to a New York City hospital because of a blood clot. It was discovered while doctors were performing a follow-up exam. They say it was related to her concussion. The State Department says Clinton suffered that concussion earlier this month. The location of the clot --

ROMANS: And now a new year's eve resolution for Washington from you.

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VALERIE STAYSKAL, CNN IREPORTER: My message to all of Washington for the new year is to set partisanship aside, working on behalf of 100 percent of the voters, fix this mess you've gotten us into, bring a balanced budget to the table to grow this economy for the long term, not the short term.

(END VIDEO CLIP)

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ROMANS: Good morning. Eighteen minutes past the hour. Welcome back to STARTING POINT. Unless Congress gets its act together today, soon, America faces a freefall off the fiscal cliff at the stroke of midnight.

The House and Senate reconvene in the next few hours and CNN has just learned Democrats are now willing to compromise on the tax threshold. They're offering to raise taxes on incomes over $450,000 instead of $250,000. And while the two sides have called in their so-called closers to work behind the scenes -- Vice President Biden and Senate Minority Leader Mitch McConnell -- they're not offering much hope for an eleventh hour fix.

Let's bring in Chris Frates. He's a reporter from "The National Journal"; he's been working the story from Capitol Hill all night into the morning.

So where are we right now? What's new in the developments here that makes us think that we're any closer to stopping the fiscal cliff?

CHRIS FRATES, REPORTER, "NATIONAL JOURNAL": You know, when you guys came in, I thought your bumper music might be "Final Countdown" as we kind of get near the cliff. What's new from what I have learned since talking to some Senate aides before coming on with you guys is that there's no deal yet, but Republicans are going to huddle here later this morning, and that indicates to me, with some of the news coming out of here that Democrats moved to $450, that there may be an opportunity that Mitch McConnell may be shopping something to his members behind closed doors.

Remember, leaders are always very, very slow to want to leak any news to the media before the members can get a heads up, get them on board. So we are seeing some movement today that may be something that both sides can take back and shop to their respective caucuses.

ROMANS: What about -- so you've got the Senate and you've got the House. We've been hearing sort of this bickering about who hasn't done what when. Is something - if a deal is born in the Senate today, how does John Boehner, the Speaker of the House, get it through Republicans on the House side and make it happen?

FRATES: Well, remember, if a deal gets through the Senate, that gives a lot of House Republicans some cover because it will be a bipartisan deal that passes Senate. And you would assume that, if it did pass the Senate, it would have Democratic support and backing of the White House, and that gives Democrats in the House the ability to come forward and vote for this.

And certainly nobody expects John Boehner to get his entire caucus on board with this but he needs to bring a majority of those folks. When I talk to Hill aides on the House side, probably about 100, 120 Republicans need to get onto this thing, and then rest would pass with Democratic support. So that is the calculus right now if something were to go from the Senate to the House.

ROMANS: One of those rare days, Chris, where the party hats and champagne corks aren't for New Year's Eve, they'll be for a deal. And the ball dropping metaphor isn't about New Year's Eve either, it's about your elected leaders.

Chris Frates from "The National Journal". Nice to see you. Happy new year.

FRATES: Good to see you. Happy new year to you too. We'll see you here maybe late tonight.

VELSHI: I was going to say, why are you saying happy new year to him? We're going to be all hanging out together for many more hours today.

ROMANS: I'm trying to enjoy myself somewhere along the way.

VELSHI: I'm glad he said that they're shopping around something because I almost don't want to talk to any more people about this in Washington because they keep telling me the same thing. I've heard the same thing nine times this morning.

ROMANS: I think there are insiders who are doing the hard work, and a lot of other people watching around on the edges, like we are.

VELSHI: All right. We're going to get hold of some of those insiders very shortly.

Just ahead on STARTING POINT, if we go over the fiscal cliff, it won't affect just the United States. What does it do to America's global standing and what does it do to the rest of the world's economy? Next.

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VELSHI: Welcome back to STARTING POINT. Minding your business, the world is watching closely, very closely this morning, because if the United States goes off the fiscal cliff at the stroke of midnight, it will have a chilling effect on the global economy, not just on American taxpayers.

Let's bring in Richard Quest live from London. He's the host of "QUEST MEANS BUSINESS". Richard, what are we looking for? What is the word looking for today? Because they're probably not as concentrated on the minutia of whether it's the House or the Senate or this one or that one. What are they looking for?

RICHARD QUEST, CNN INTERNATIONAL HOST: They're looking for a deal to be done that averts the worst effects of the fiscal cliff always remembering that there will be some form of spending cuts and tax rises in the United States, but nothing like the grinding austerity that would be imposed on the U.S., and by definition and extension, the rest of the world, if the U.S. goes over the cliff.

Put it in context. This year the Eurozone is in recession. Next year recessions likely, growth just about possible. In that scenario, for the largest trading partner to have a fiscal retrenchment, a slowdown of the magnitude of the cliff, Ali, is pretty dramatic and drastic for everybody else watching.

VELSHI: Richard, there's a chance there could be a boomerang effect. So the United States may grow, let's say 3 percent, for argument's sake in 2013. That is going to be healthier than Europe by a long shot, and we're seeing slowing in a lot of other major economies, including China, India, Brazil. Is there some sense that, just like the U.S. set off all of this nonsense back in 2008, a U.S. retrenchment, as you call it, a slowdown in growth caused by the fiscal cliff, could boomerang around the world and actually push the United States further back?

QUEST: There's no question. A self-defeating, downward spiral would begin if the worst effects of the fiscal cliff come into effect and are not reversed. And you don't even have to wait for the full magnitude which would, as you rightly know, Ali, it's not a cliff, it's a slope. It's an ever-increasing slope over many months. You don't even have to wait long. You've only got to see what will happen when the Social Security withholdings start increasing, the withholding tax starts to move up. Then you see that boomeranging effect that you talk about.

VELSHI: You look at the whole world -- you and I have made fun of a lot of the Europeans who have not been able to get their act together. When you look at the United States, who's messing it up more?

QUEST: It is -- I can only tell you from listening to morning to the commentaries on British radio and reading the British papers, it's mind boggling. People are absolutely stunned at the inability of the U.S. to do a deal.

And here's one point about this, Ali. I was just looking back, doing my own research. We knew about this fiscal cliff, and we knew about the magnitude of it. I saw one article back in July the 9th of 2012. So anybody who says this has just happened a week yesterday has clearly been lying in a darkened room.

VELSHI: You and I will be spending a lot of time today together, Richard. Thanks very much, Richard Quest of "QUEST MEANS BUSINESS".

Just ahead on STARTING POINT, Senators are meeting in a few hours on the fiscal cliff. Will there be a vote? Next we're talking with Georgia Senator Johnny Isakson. You are watching STARTING POINT.

ROMANS: And a high speed chase caught on camera. What led to this chaos? That's just ahead.

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