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STARTING POINT WITH SOLEDAD O'BRIEN

House to Vote on Fiscal Cliff Legislation; Interview with Maryland Democratic Congressman Elijah Cummings; Wilmington Ten Pardoned by North Carolina Governor; Iran Hostage Hero Dies; "Black Monday" in NFL; Tournament of Roses Parade Today; Newsmakers of 2012

Aired January 1, 2013 - 07:00   ET

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


JOHN BERMAN, CNN ANCHOR: Our STARTING POINT, a new year and a new agreement on the fiscal cliff.

The bill as amended is passed.

BERMAN: Just hours ago, the senate reaches a deal to avoid major tax hikes and spending cuts after some serious back and forth on Capitol Hill.

(BEGIN VIDEO CLIP)

SEN. MITCH MCCONNELL, (R-KY), MINORITY LEADER I'm interested in getting the result here.

SEN. HARRY REID (D-NV), MAJORITY LEADER: I'm disappointed we weren't able to make the grand bargain as we tried to do for so long, but we tried.

UNIDENTIFIED MALE: No deal is better than a bad deal and this looks like a very bad deal.

(END VIDEO CLIP)

BERMAN: And with the deal headed to the house floor for a vote, will it survive? This morning, what's in this agreement, and what does it mean for you and your taxes.

We have a packed two hours ahead. Maryland Congressman Elijah Cummings, Kansas Congressman Tim Huelskamp, Texas Congressman Lloyd Doggett -- all three of them will get a chance to vote on the bill likely today, and Sheila Bair, former chair of the FDIC.

Good morning, I'm John Berman.

CHRISTINE ROMANS, CNN ANCHOR: Good morning and happy new year, I'm Christine Romans.

ALI VELSHI, CNN ANCHOR: And I'm Ali Velshi. Soledad O'Brien is off. It's Tuesday, January the first. Special fiscal cliff edition of STARTING POINT begins right now.

BERMAN: And our STARTING POINT this morning is breaking news. The Senate strikes a deal on the fiscal cliff, but not before we've officially fallen off the cliff. We are off it right now. Here is where things stand right now.

A bill crafted by Vice President Joe Biden And Minority Leader Mitch McConnell passed overwhelmingly in the Senate by a margin of 89-8. That happened just after 2:00 in the morning. The Republican- controlled House has agreed to consider this later this morning, but it is anyone's guess how this will turn out.

Now, if the House votes yes, the measure would generate about $600 billion in new revenues over the next 10 years. Here is how the Senate leaders sized things up overnight.

(BEGIN VIDEO CLIP)

REID: I've said all along that our most important priority is protecting middle class families. This legislation does this.

MCCONNELL: This shouldn't be the model of how we do things around here. But I think we can sigh we've done some good for the country.

(END VIDEO CLIP)

BERMAN: Again, if it passes the House, here is what the plan means for you and your family. Bush era tax cuts would stay in place for individuals earning less than $400,000 a year and couples earning less than $450,000. If you make more than that your taxes are going up. Unemployment benefits for 2 million Americans would be extended for a year, and the alternative minimum tax would permanently be adjusted for inflation.

But when it comes to spending cuts, lawmakers defer for two more months. That's a nice way of saying kicking the can down the road. So we can expect more finger pointing and fighting in 2013.

White House correspondent Brianna Keilar has been up all night, joins us to talk about what's going phone in Washington, in the White House. This is a wild card. We know they will take it up, but we don't know what it means.

BRIANNA KEILAR, CNN WHITE HOUSE CORRESPONDENT: It does get tricky, John, because some House Republicans have been the ones that said throughout the whole process, we don't want to move forward on certain things. Granted, now we've gone over the cliff. Tax hikes, technically are in effect. So any vote in the House will be a vote for tax cuts, not for tax hikes. That helps.

But also what John Boehner needs to do here is take this deal struck in the Senate that presumably has some buy in from him if not from his rank and file, because Mitch McConnell did not negotiate this is a vacuum and this is a pretty overwhelming vote. He will take this to his conference today and see where they are at. The expectation is there are two directions this could go. Either a vote on the bill or House Republicans propose changes so they can amend the Bill more to their liking and send it back to the Senate. But I think this is expected to move along here.

BERMAN: There could be amendments. Once past, they could vote on amendments, could fail, and then vote on the full measure. Isn't that true also?

KEILAR: Yes, that is true, and the other thing is once anything goes to the floor, it's not just up to Republicans, it will -- and the think the expectation all along, whatever ultimately passes the house as we saw in the Senate will require Democrats and Republicans.

BERMAN: We were talking to Congressman Phil Gingrey, a Republican, a short while ago. He seemed to be leaning no on this. But this time, Speaker Boehner does no need all the Republican votes.

KEILAR: And what struck me listening to Congressman Gingrey is that even though it seems like he is probably leaning no, there may be many Republicans are leaning no, but not necessarily saying this is -- this is a deal that should not go through. In a way, they may vote no, but they also sort of acquiesce to it moving forward and seeing the need for it to move forward even if they don't go on the record to say yes for it.

BERMAN: That's right, voting no and whipping no and trying to generate more no votes are two very different things. Brianna Keilar in Washington, thank you very much.

CHRISTINE ROMANS, CNN ANCHOR: All right, so let's break down some of what's in the deal. We've been telling you about the so-called dairy cliff. In addition to dealing with the fiscal crisis, the Senate deal would extend federal farm policies through September. That means milk prices, milk prices will not double. The deal also nixes a set pay raise for Congress. The White House scored an agreement to raise the tax rates on larger estates from 35 percent to 40 percent, but Republicans successfully insist that the exemption should be adjusted annually for inflation and that provision would increase the exemption to $7.5 million for independent and $15 million for couples by 2020.

Those households would also pay higher rates on investment assets, the rates on dividends and capital gains rising to 20 percent.

For taxpayers earning less than $450,000, the deal with restore limits on personal exemptions and itemized deductions. Those benefits phasing out for couples earning more than $250 a year, single people more than $200,000.

Now, the deal calls for a permanent fix for the alternative minimum tax, which otherwise would hit about 30 million taxpayers for the first time filing their 2012 returns. And this deal would extend tax credits for college tuition and the working poor for five years.

VELSHI: The AMT fix is important, it was really going to kick that number up.

ROMANS: That was another yearly crisis manufactured by Congress. It was designed to get rich people to make sure they made more taxes.

VELSHI: It didn't work out.

To Capitol Hill, Jonathan Allen is the senior Congressional correspondent for "Politico." Did you sleep there last night? JONATHAN ALLEN, SENIOR CONGRESSIONAL CORRESPONDENT, "POLITICO": I didn't sleep in the capitol, no. I make a rule not to do that. Once you start, it's a slippery slope.

VELSHI: There you go. Brianna made a good point. There may be some people, like Phil Gingrey from Georgia, who will vote no. Is that the same as a conservative movement, or for that matter, a liberal movement on the Democratic side to defeat the bill that they will face in the house today?

ALLEN: I think what Brianna said is right. She used the term "acquiesce." On the right and the left, I think they will acquiesce. Some voices will come out and say it's a bad idea. Tom Harkin, Democratic senator from Iowa, was one of them last night. He torched this whole plan. But it's interesting. When it comes down to the last minutes here, how much less energy and vigor some of the no voters have. They would like to at least be able to go home for a day before the new Congress starts on January 3rd.

VELSHI: They want to tell their constituents, I wasn't all that into this, but that had nothing to do with me.

Here is the problem, as we get further and further. This could have amendments and setbacks. Does that give energy to interest groups who started last night politicking and lobbying both senators and congressmen to say this is a bad deal that gives too much to the other side?

ALLEN: Sure, this absolutely gives an opportunity for opponents to make arguments this is a bad deal. Of course this legislation not available to anybody publicly when the Senate voted it on last night. There were early returns from Heritage Action Group telling folks to vote no on it if they could. But basically this is the opportunity the no crowd will have over the next 12 hours, 24 hours to make their arguments. This is the way Congress does business in the dark of night without any transparency to what they are doing, and I think ultimately that's one of the reasons the American public has such little faith.

VELSHI: You can't blame them, Jonathan. They only had 517 days to work this out at some point it will take to you the middle of the night. John, good to see you as always. Continue that habit of not sleeping in Congress. Jonathan Allen joining us at the Capitol.

ROMANS: I say that about CNN.

VELSHI: I've done it. In that room once and it is hard.

BERMAN: I'm you didn't lose it for 2013, the dripping sarcasm.

There is a lot of football to watch today, but we should say it's not the only game in town. This fiscal cliff debate, the discussion is not over, not even close. The House still needs to vote on this, so please stay with CNN all day for all of the developments. The House back in session at noon. This is not over yet. It could be a lot more.

VELSHI: That's very compelling. I'm totally not watching football today.

BERMAN: Do not watch football, watch us.

In other news, Hillary Clinton's doctors revealing new details about the blood clot that landed her in the hospital. Doctors say Mrs. Clinton did not have a stroke or suffer any neurological damage. They also say they are confident that the second of state will make a full recovery.

CNN's Jill Dougherty is live at the state department this morning. Jill, what is the latest on the secretary's condition?

JILL DOUGHERTY, CNN CORRESPONDENT: John, the latest is as the secretary is in that New York hospital, she's being treated with blood thinners, that's the main thing. They have to get blood thinners as they say treated properly so they give her enough, not too much, and be able to be released. It won't happen until they do that.

It's really a turnabout. I was sitting here in a quiet state department this morning. It's a holiday, very few people around, and thinking how things have really changed this is a secretary who has traveled a million miles. She's traveled to more than 100 countries. And here in the waning days, we have a few weeks before the end of this administration, this part of the administration, and, you know, she's in the hospital. It's quite striking. It's good they are saying that she is talking with her doctors, talking with her family, and they expect her to make a full recovery.

But in a broader sense, it's really quite amazing what has happened at the end of a very vigorous, vigorous position of Hillary Clinton as secretary of state.

BERMAN: It's such an interesting juxtaposition, after such an eventful for years in the position, the end is fairly quiet. We're all -- thoughts with Mrs. Clinton as she recovers and doctors expect her to make a full and complete recovery. Thanks, Jill.

Amid Secretary Clinton's illness and the fiscal cliff, Americans rang in the New Year in spectacular style. One million jammed into Times Square welcomed in 2013. And in Atlanta, the Georgia peach, a giant peach was lowered as the New Year arrived there. In Las Vegas, where everything is big and over the top, it was an amazing fireworks display over the Vegas strip. Just in case anyone missed the point that it was 2013, the fireworks telling them that it had officially begun. Very cool.

VELSHI: They think big there.

BERMAN: They know how to throw a party time to time.

Two planes were damaged at Fort Lauderdale, Hollywood International Airport last night when the wing of a taxiing Spirit Airlines flight clipped the tail sections of a parked United Airlines jets. There was a gash in the tail section of the United plane, but no fuel leak from either aircraft, and luckily no injuries were reported. Off the coast of Alaska, the Coast Guard and tugboat crews are trying to pull an oil rig into safe waters. Lines were reattached yesterday, but 60-mile-an-hour wind and 28-foot high waves were in the forecast for today. Officials fear a fuel spill if that rig is grounded.

And those were wedding bells ringing in the stroke of midnight in Maryland. That's when same-sex marriage became legal there. Voters approved the new law in November. Seven same-sex couples got hitched at 12:01 a.m. with Mayor Stephanie Rawlins Blake presiding.

Ahead on STARTING POINT, how the House handles the deal won't just affect us, it could take an effect on the global economy. Our own Richard Quest breaks it down for us next.

ROMANS: And Maryland Congressman Elijah Cummings joins us live. Does he see the fiscal cliff agreement getting through the House?

And we leave you with London's New Year's celebration. There it is. You're watching STARTING POINT. Happy New Year.

(COMMERCIAL BREAK)

VELSHI: We have not entirely averted the fiscal cliff, but the Senate has passed a deal to do its part to help going over the cliff. Now it's up to the House of Representatives, which has a bit of a reputation for being intransigent. They could take action today, we hope they take action today. World markets, although closed for New Year's Day, will be watching, and investors will be watching anxiously. They will react when they open, and that will start about 8:00 p.m. eastern tonight. We'll see the first of Asia's markets open up.

CNN's Richard Quest joins us from London. Good morning, Richard. Your perspective on everything that's happened in the last 12 hours?

RICHARD QUEST, CNN INTERNATIONAL CORRESPONDENT: Well, I have it here, all six pages, and that's just the title section of the American Taxpayer Relief act of 2012, the so-called fiscal cliff. Do you know there is nearly 100 sections just dealing with the extensions and the relief and provisions? It goes to many, many pages.

But the crucial point is as far as the world markets are concerned, this is just borrowed time because although the bulk of the $600 billion in tax rises has been put to one side, as you were talking a few moments ago, you have still got, it has to get through the House, Senate, and signed. You have the two months on the spending cuts, and the debt ceiling, you've got the appropriations and reconciliation. The markets will finally say --

VELSHI: The reason we have brought you in for your remarkable expertise is because you have seen this game play out before. You watched this movie before. You've seen it before, when you have a deadline for a big deal, and what you end up is a puny deal.

QUEST: You end up with -- I wouldn't use the phrase puny deal. I would use fudge. What have you here is a fiscal fudge, because they have done the barest necessary to get over -- let's stick with the cliff analogy. So they're walking walk toward the cliff, and all they have really done severe off to the side. The cliff is still there, now they just aren't as close to the precipice.

We have seen that in Europe. We know what happens. We saw it with Greece, we saw it with the fiscal cutback. They love this word "fiscal" every time they want to do a deal. We've seen it again and again, and the warning from the market. It won't come this week I won't believe, looking at mid to late January, early February. Debt ceiling, the debt ceiling is the one to keep your eye on.

VELSHI: Senator Rand Paul, the son of Ron Paul, was on TV last night making some comment about debt we carry in the United States. Absolute debt per person being greater than absolute debt per person than Greece and that's why the United States was going to become Greece. I was so incensed that I lost the little hair I had left on my head. There is a very good reason the United States will never become Greece, will never not be able to pay its bills, will never not meet its obligations, because the United States has a remarkable printing press for money.

QUEST: Absolutely. It has a remarkable printing press for money. It has a multitrillion dollar economy. It has a vibrancy and a flexibility of the workforce. It has a single language. It has all sorts of structural and systemic reasons why it will grow. And I mean, hallelujah, the U.S. growing two percent to three percent is the savior for the rest of the world.

VELSHI: Unbelievable.

QUEST: It is extraordinary, but growing despite the American Taxpayer Relief Act of 2013. Which I promise you, is so detailed and so many -- I suppose the best way is to say time bombs and landmines in it, in the budget pages.

VELSHI: I am glad you have at least read the preamble to the bill. I hope they have. They have until noon eastern to do so. Richard Quest, the host of "QUEST MEANS BUSINESS" talking to us from London. I will talk to you many times through the course of the day.

ROMANS: They always make it sound like they are doing us a favor when they title these bills. America, we'll help and give you this relief.

BERMAN: It doesn't sound like Richard Quest is a yes vote on this deal.

(LAUGHTER)

BERMAN: That's not much of an endorsement. But he doesn't actually get a vote. We'll talk to someone who does.

Congressman Elijah Cummings, the Democratic Congressman from Maryland. He's the ranking Democrat on the House oversight committee. We thought we would have a nice discussion with him this morning about where things are headed. So Congressman, let's ask you right off the bat, are you a yes vote on this deal?

REP. ELIJAH CUMMINGS (D), MARYLAND: I'm leaning yes. You look at the fact that the Senate voted 89-8, only three Democratic senators voting against the bill, I mean, automatically you start with the presumption that you need to look from a positive standpoint. Again, one of the things I emphasized over and over again is that politics about the business of compromise. I don't necessarily like everything in this piece of legislation, but certainly our caucus will be meeting, and we'll be going through it and determining to try to figure out exactly when it says. But from what I've seen preliminarily I'm probably leaning towards voting for it.

BERMAN: There is a lot of people, though, congressman, on the left, a lot of Democrats who do not like this deal one bit. Congressman Tom Harkin from Iowa said that no deal was better than a bad deal. He voted against it. "The New York Times" in an editorial today says this weakens President Obama's hand going forward, that it shows he willing to cave and it may hurt him in the debt ceiling negotiations. They wrote "President Obama has ruled out any negotiations over the debt ceiling, and on Monday he vowed that revenue increases must match any further spending cuts. But as this deal shows, he often compromises at the last minute." That's the important part. Let's leave it there. Has President Obama showed when his back support against the wall, he will cave?

CUMMINGS: I think the president has been very strong in these negotiations. You have to keep in mind the Republicans really did not want to tax more wealthy people in our society one dime, not a dime. And he's stuck with that. I consider myself a liberal and proud of it. We did not want an increase in t the age with regard to Medicaid and CPI with regard to Social Security benefits. And the president was strong there, and I think he'll continue to be strong.

And, you know, I notice a different president since he won this election. I think he is working very closely with Congress. And, again, I -- often I'm critical for Congress for not coming to the table and compromising, critical of our Republican friends for saying my way or the highway. But at some point, we've got to take care of a lot of people like folks in my district who through this deal will at least be able to get the unemployment benefits, and a number of others that mean something to middle class families.

ROMANS: Congressman, Christine Romans here. Are we setting up ourselves for fight after fight on budget issues in this country? I don't feel like there's a turning point here that we have fixed the problems with the process. I'm real worried about two years, three years, 10 years of fiscal cliffs because we have huge debts, huge deficits, and we can't even agree on $600 savings or $800 billion on savings.

CUMMINGS: Christine, you asked the perfect question. That's my worry. And we've got the debt ceiling debate coming up in about two months. And that was something at one time we never spent a lot of time talking about. We just did it. At some time we have to change our politics in Washington. One of the good things about getting this done, although we may not like it, at least it says to the American people they put their heads together and able to resolve something. And so I'm hoping we won't allow politics to take over policy and it seems that's what happened.

BERMAN: Good luck with that sir. We know you will face this three more times in the next three months. Thank you for coming on this morning, we should say happy New Year to you, Congressman.

CUMMINGS: Happy New Year to you.

VELSHI: Just ahead on STARTING POINT, 2012 was the worst year for gas prices, averaging $3.60 a gallon nationwide for unleaded. Will it be worse in 2013? We'll tell you on the other side. You're watching STARTING POINT on CNN.

(COMMERCIAL BREAK)

ROMANS: Minding your business. Happy New Year. Another reason to say good riddance to 2012, AAA says it was the worst year ever for gas prices. In 2012, you paid an average of $3.60 per gallon for regular unleaded, the most expensive average prices ever. AAA expects prices to stay below 2012 levels this year.

Ahead on STARTING POINT, he says he won't support any compromise on the fiscal cliff, but what about the deal reached overnight? Kansas Congressman Tim Huelskamp is live next.

BERMAN: And it was a night to remember in Times Square. Highlights from Kathy Griffin and Anderson Cooper's, their New Year's Eve special straight ahead. You're watching STARTING POINT.

(COMMERCIAL BREAK)

BERMAN: All right, welcome back, everyone. Happy New Year and this breaking news, the economy and your take home pay are in the hands of the House of Representatives right now.

As we said, happy New Year, everyone. Because earlier this morning, the Senate passed a plan to fend off the fiscal cliff. The deal was crafted by Vice President Joe Biden and the Senate Minority Leader Mitch McConnell. The Senate vote was overwhelming, 89-8.

That is a big vote in the Senate these days. And because the Republican controlled House left well before midnight, last night, they still have to take up the measure later this morning.

This is how the two Senate leaders summed up their progress.

(BEGIN VIDEO CLIP)

REID: I've said all along that our most important priority was protecting middle class families. This legislation does that.

MCCONNELL: This shouldn't be the model for how we do things around here, but I think we've done some good for the country. (END VIDEO CLIP)

BERMAN: This is what the deal means for you and your family. Bush era tax cuts extended for individuals earning less than $400,000 a year, and couples earning less than $450,000. The reverse side of that is if you make more than that, your taxes are going up.

Unemployment benefits extended for a year for 2 million Americans and a permanent adjustment for inflation, for the alternative minimum tax, that's a pretty big deal.

If you're wondering about spending cuts, keep wondering because lawmakers deferred. They will fight over those cuts over the next two months, probably again and again and again.

Despite the progress overnight in the Senate, it appears the drawn-out fiscal cliff fiasco has the American people permanently fed up.

(BEGIN VIDEO CLIP)

UNIDENTIFIED FEMALE: It's a shame that we've elected these officials and they can't do their job, and they blame each other or the other side when it's the American people that are suffering.

UNIDENTIFIED FEMALE: I think we have a broken system. I think that's what the problem is now, everyone trying to please different groups rather than try to do what's best for the country.

UNIDENTIFIED MALE: It's not a Republican thing or Democratic thing at some point. It becomes the question of are the people we've elected to do a job actually doing the job we've elected them to do. Frankly, I don't think so.

(END VIDEO CLIP)

BERMAN: Probably a pretty popular sentiment right now. White House correspondent, Brianna Keilar joins us live now from Washington. Brianna, the House really is a wild card here. They say they are going to take this up, open up at 12:00 today. How is this likely to play out?

KEILAR: There are one of two ways, John that this could play out. Either House Speaker John Boehner takes this Senate bill before his conference and after talking to them feels that he has enough support to put it on the floor and vote for it in its entirety, or perhaps some House Republicans say there are things in here we don't like.

We want to change some of the things, make them more to our liking. Let's amend them or at least try to amend them, and then we'll send over whatever it is to the Senate, but presumably because, one, this vote was huge in the Senate, 89-8.

That's not the kind of vote you see very often and also because Mitch McConnell, he has a sense certainly of where Speaker Boehner is. So he wasn't going to broker a deal that he didn't think would be able to get through the House of Representatives. The obvious thing here, this will require Democratic and Republican votes, that's the expectation, and we don't know where for House Speaker John Boehner that threshold is. Obviously he wants as much support from his Republicans as possible and we'll be seeing today how much he has I think.

BERMAN: We've been talking to Democrats and Republicans, members of Congress this morning, as the morning has been going on. The Democrats all tell us they are pretty much going to vote for this. For certain Republicans seem to be leaning no, but the speaker doesn't need every Republican, really needs about 30, right?

KEILAR: No, he doesn't. But I think that he would obviously want more than just 30. The other thing that makes this deal more palatable for a number of Republicans is that now the tax hikes have kicked in.

So they have gone in automatically and they are voting for tax cuts. So that really does help. Actually going over the fiscal cliff will help some Republicans vote for a measure when maybe before they would have voted against it.

I think that there were also be some Republicans who even though they are not on board. You know, they don't want to vote for this unless they have to. But I think that House Speaker John Boehner is going to want more than 30 Republicans to be on board with him.

BERMAN: No doubt the case. Brianna Keilar in Washington. We're looking for signs all morning about how this will go down. Any smoke rising from the speaker's office, we know you are watching too. Thanks, Brianna.

ROMANS: All right, let's dive into what is in the Senate deal. What it does on the business side. Some popular tax breaks would be extended through 2013 including a credit for research, which benefits high-tech companies and also an investment write off that helps manufacturers.

The long-term unemployed could count on receiving emergency benefits for another year. Doctors would be spared a 27 percent cut in Medicare reimbursements that would set to take effect in January. Although the $30 billion cost of that extension would be covered by cutting other health care programs.

VELSHI: Let's go to the Capitol. Republican Congressman Tim Huelskamp of Kansan is there. He is on the House Budget Committee.

Congressman, you and I got into a little bit of a dustup last night, but it's a brand new year, it's 2013. Let's start over again. Happy New Year to you, sir.

REP. TIM HUELSKAMP (R), KANSAS: Well, Happy New Year to you as well. It's a pleasure to be here as well.

VELSHI: I don't want to deprive our viewers of the remarkable fun and heat that we had last night. So let's play that back a little.

(BEGIN VIDEO CLIP) HUELSKAMP: It is going to put people out of work with the 2 percent that are going to pay higher taxes, we believe that will impact maybe a million small businesses and raise their taxes.

VELSHI: You are saying more than a million businesses will be affected if the threshold is $450,000? You want to stick with that information or do you want to check that information?

HUELSKAMP: That's our best guess.

VELSHI: I think that's a guess, Congressman.

HUELSKAMP: Can I answer the question?

VELSHI: Go ahead.

HUELSKAMP: We have numbers from Montana State University I believe is the source. You impacted 311,000 small businesses will be impacted by the tax increase. At the $250,000 level, it's over 2 million small businesses.

(END VIDEO CLIP)

VELSHI: All right, your staff kindly sent me a whole lot of information to me last night. Read through the Montana State University report and we have our own research. I think we have a general disagreement about the numbers.

According to your own Republican sources, that $250,000, which is the lower level, 940,000 businesses would have been affected in total and at $450,000 maybe about 750,000. So the Montana State University numbers are off.

But let's agree to a number, right, a bunch of businesses are going to be affected by the increase in taxes at the $450,000 level. We'll disagree about our sources. They are not all job-creating businesses.

A lot of these "S" corporations that run income through their personal accounts are one offs, celebrities, guys like me who write books and have a company and employ absolutely nobody.

These are not where most jobs in America actually come from. So the connection -- the issue I was having with our discussion, the connection you are making between raising taxes and costing jobs.

HUELSKAMP: And what is your point? I mean, we disagree on the numbers, but --

VELSHI: I mean, all sorts of studies suggest -- it's just not going to cost that many jobs. Your implication it was going to cost 1 million jobs.

HUELSKAMP: You know, I talk to average Americans and business owners in my district, and I haven't found one that says raise my taxes, Congressman, and we'll hire more people.

VELSHI: I think businesses hire people when they have demand for their business.

HUELSKAMP: Not when their cost goes up. When they have to send more money to Washington, but we do have increases in business taxes and millions of American households, lower and middle income that will pay higher taxes this year than last year.

But this deal includes higher taxes, definitely does, this deal will increase spending and it does nothing for fundamental overspending problem and lack of entitlement reform, and three strikes, looks like what is in the bill for my view. I don't know if it will pass the House. We'll find out later today.

VELSHI: But you'll agree with me that irrespective of tax rates, if you are a bakery and selling more bread, you have more customers and you need more staff. You will hire more staff. The tax rates are not actually going to override the business demand.

HUELSKAMP: You might. Don't forget Obama care, a bulk of those taxes kicked in today as well. I don't want to hire number 51, employee number 51 because of Obama care kicking in. So, yes, in a normal world that would happen, but with Obama care, I would say we'll see what happens.

VELSHI: Employer number 51 is actually an issue, that something that you and I agree on. Let me ask you about the bill. What -- from what you have seen of it so far, yes vote or no vote?

HUELSKAMP: I'm a no vote, but until we actually see the details, we're reading reports, I will say most folks might resume a member of Congress has those details. We haven't seen anything. We're reading media reports, nothing on websites out there.

Like I said, it looks like a no. Looks like typical insider deal for Washington, D.C., where they get 89 votes in the Senate, but at the end of the day, our debt will get bigger, spending will go up. Taxes will increase, and I think Americans will continue to be very upset at Washington.

VELSHI: Do you have some sense -- I've been asking colleagues this morning. You have sense if you get past the tax stuff, which has been the more politicized part of the discussion that you can then direct some attention to spending and entitlement cuts?

HUELSKAMP: I'm not very hopeful or optimistic on that at all. But with the coming of the real debt ceiling, perhaps in late February, early March, we'll have a real debate about it, but if you look back 17 months ago, Washington came to a deal, and as a result, they said they would cut spending.

The spending they promised to cut 17 months ago is the spending cuts that are undoing with this deal. So I'm very pessimistic about the chances of actually getting fundamental entitlement reform and cutting the budgets in Washington, D.C.

VELSHI: You're not making a full commitment, but you said you haven't seen it. So you don't know if you will vote for it, probably you're leaning against it. What do you think will happen? You think it will pass the House?

HUELSKAMP: I don't know. There used to be something called the Hastert rule where the last Republican speaker of the House if nothing comes to the floor unless it has a majority of the Republican conference. I'm presuming we'll have a long debate behind closed doors with Republicans, see what happens. But as of now, everything I know about it, three strikes in my book and I'll vote no on this bill.

VELSHI: Congressman, thanks for joining us this morning. We appreciate it. Wish you the best for the New Year.

HUELSKAMP: You too, thank you so much.

BERMAN: Other news going on this morning. Let's look at some of top stories happening right now. Civil rights activists known as the "Wilmington Ten" have been pardoned by North Carolina's outgoing governor. Nine African-American men and one woman were convicted of firebombing a grocery store in 1972.

Their sentences were commuted in 1978. Their convictions were over turned two years later, but now finally the governor saying that their convictions were tainted by naked racism.

Ben Affleck's movie "The Argo" tells the story of how six Americans were smuggled out of Iran during the hostage crisis there. An (inaudible) concealed a covert operation by the CIA and Canadian government. Now the Canadian diplomat who played a critical role in the real-life drama has died. He was 88.

Call it Black Monday in the NFL. Lovie Smith of the Chicago Bears, one of the seven coaches that got fired after the final game of the regular season, after though he finished with a 10-6 record, not so bad.

This year, he led the Bears to the Super Bowl in 2006. Other coaches getting the ax, lots of them, Kansas City's Romeo Crennel, Buffalo's Chan Gaily, Arizona's Ken Whisenhunt and Andy Reid of the Philadelphia Eagles, the longest serving coach in the NFL up until now.

Cleveland's Pat Shurmur and Norv Turner of the San Diego Charges, five general managers also got the ax, it was a tough day in the National Football League yesterday.

Something else to watch during today's 104th tournament of Roses Parade, for the first time ever, the Defense Department has a float. It will be a replica of the Korean War Veterans Memorial in Washington, D.C.

ROMANS: Is there something significant about the first day of the year?

BERMAN: The season ended the day before, finished all their games. As soon as games are over, they fire everyone, clear house. The reason you fire so many coaches in the NFL. There is so much parody. The teams all have such relatively the same levels of talent and people do think coaches make a big, big difference and now a lot of them looking for work.

ROMANS: I'll say.

BERMAN: All right, so you knew it wouldn't be New Year's around here without Anderson Cooper and Kathy Griffin. They rang in 2013. Here's a sample.

(BEGIN VIDEO CLIP)

KATHY GRIFFIN, COMEDIAN: Rihanna will be here.

ANDERSON COOPER, HOST, CNN'S "AC 360": Someone on Twitter said that there is a drinking game every time I giggle nervously.

GRIFFIN: Calvin Harris and the three shots mafia.

COOPER: Who is Calvin Harris.

GRIFFIN: OK, Grandma, you know what -- name Mitt Romney's sons.

COOPER: Schlapp, Tag, Josh, Ben, Matt.

GRIFFIN: Yes.

COOPER: Craig. Yes. Thank you.

(END VIDEO CLIP)

VELSHI: I thought it was going to be a little longer than it was. Last time I saw that there was more going on.

BERMAN: Just like your New Year's Eve party, wasn't it?

VELSHI: Last time I saw it, with Kathy Griffin --

ROMANS: Sexting David Gergen.

VELSHI: I guess that was the other hour's version. We're going to take a break.

Coming up on STARTING POINT, now that we know Secretary of State Hillary Clinton's blood clot found in her head, what does this mean? We're going to look how serious this is with our president practicing -- our resident practicing neurosurgeon, Dr. Sanjay Gupta.

ROMANS: I'll try to get us back on track with Honey Boo-Boo, big newsmakers in 2012. Who shall we watch in 2013? That's ahead. We'll leave you with Dubai as Dubai rang in the New Year. That's right. Wow. That's pretty impressive.

VELSHI: That's cool.

ROMANS: You're watching STARTING POINT.

(COMMERCIAL BREAK) BERMAN: Welcome back to "EARLY START" -- or STARTING POINT. Secretary of State Hillary Clinton spent New Year's Eve in a New York City hospital. Clinton is being treated for a blood clot in her head. We asked our chief medical correspondent, Dr. Sanjay Gupta about her condition.

DR. SANJAY GUPTA, CNN CHIEF MEDICAL CORRESPONDENT: We do have some of these details now about what precisely happened to Secretary of State Clinton and the specific blood clot. The blood clot we're talking about now, unclear where it was located previously.

But we know it's in one of the blood vessels around the brain. It is not, again, on the brain. Pushing on the brain in any way, but it's a blood vessel that actually drains blood away from the brain, a cerebral vain.

I want to show you here. We know in Secretary of State Clinton's case it's on the right side of her head, the right transverse sinus. I'll show you the left side for sake of demonstration here.

If I remove the hemisphere of the brain here, you can actually see where the veins are, the blue area right there. That is the area that is draining blood away from the brain and one of the veins in this area, that's where the clot actually has occurred.

Most likely due to a combination of the head trauma that she had a few weeks ago in addition to the fact that she has had a problem with blood clots in the past, dating back to 1998. Her doctors say she is awake, talking. There is no evidence of stroke or neurological damage.

My guess is they will continue to monitor her for a couple of days in the hospital and probably get another scan at some point to make sure the clot has dissolved as a result of blood thinner medications. As we get more details, we'll bring them back to you.

BERMAN: All right, thanks to Sanjay. It is certainly worth repeating Hillary Clinton's doctors do expect her to make a full and complete recovery.

ROMANS: All right, ahead on STARTING POINT, speaking of Hillary Clinton, she is expected to step down as secretary of state, but don't take your eyes off of her. Why she's one to watch in 2013 along with Jeb Bush and Michelle Obama we'll explain why, next. You're watching STARTING POINT.

(COMMERCIAL BREAK)

BERMAN: So what got us talking in 2012 and what is on the radar for 2013? We're there already, my goodness. CNN contributor and Republican strategist Ana Navarro joins us live from Miami and I'm sure you had a great night. Great to see you this morning.

And CNN contributor and Democratic strategist, Hilary Rosen is here in New York to talk about the newsmakers of 2012 plus their big predictions on 2013. Let me ask you off the bat about 2012. We'll dispense with that fast, biggest person in 2012. HILARY ROSEN, CNN CONTRIBUTOR: For me, I'm a political consultant so for me the political story of the year is the silent one, the campaign geeks have taken over politics, election analytics are really so important to why Barack Obama won.

You know that hidden group of guys they hired and women that spent a year behind their laptops at campaign headquarters in Chicago made the difference showing where to pull out the vote, huge different for the president.

BERMAN: Ana, biggest newsmaker 2012?

ANA NAVARRO, CNN CONTRIBUTOR: I agree with Hilary and told my Republican counterparts we need more geeks. We need less nerds and more geeks. There is a difference between the two. Less pocket protectors and more piercings and facial hair.

I think for me one of the biggest newsmakers was Malala Yousef who was shot by the Taliban and who is making a recovery. She really has shown such perseverance. She gives me hope as a woman. She's an example of young girls all over the world.

She is the most inspirational story for me in this entire year is this young girl not to afraid to talk, to raise her voice on behalf of freedom for other women and stand up for her rights and fight for her life.

BERMAN: Where do you stand on Honey Boo Boo, Ana?

NAVARRO: I love Honey Bop Boo. I am confessed I am in the Anderson Cooper fan of Honey Boo Boo clan. It makes fun of reality shows. It makes fun of the people, but you know what? They're laughing all the way to the bank and I just think she's terrific, you know, she's done it all. She's done a great thing for rednecks. She's become the redneck child star pageant queen. I love Honey Boo Boo, child.

ROSEN: I can't go there with Honey Boo Boo, sorry, Ana.

BERMAN: In 2013, for you, a Honey Boo Boo less year, but what does 2013 hold do you think?

ROSEN: There are a couple big things on the radar that I see. First of all, when we look at the transition for the last year over what happened for same-sex marriage, an issue important to so many people including me obviously the fact that we won important referendums.

And that the president of the United States came out in favor of same- sex marriage, the Supreme Court is going to rule next year on this issue. This is going to be life-changing for so many people. That's huge.

The other person to watch I think is Michelle Obama coming out of the campaign, you know, it's well-known she doesn't particularly like to, you know, the political rough and tumble of a campaign. Now she doesn't have to worry about re-election. This is her year to shine.

NAVARRO: She's free.

ROSEN: She's freed up a little and I'm excited to do what she'll do with the newfound freedom.

BERMAN: We always talk about second terms for presidents but for the first spouses they're not running for anything unless you're Hillary Clinton.

ROMANS: Modern first spouse. Things are different over the past two or three presidencies from the historical perspective of a first lady. Somebody has a chance to make a difference.

ROSEN: She's very different. She's clear she's not a political candidate like Hillary Clinton thought she might be but not going to be quiet like Laura Bush was. She has a lot to offer and talk about.

NAVARRO: She's also very young, you know, she still has a lot to do and next chapters in her life.

BERMAN: As are you, Ana Navarro in Miami, happy New Year to you and Hilary. Great to have you here with us this morning.

ROMANS: All right, ahead on STARTING POINT, the Senate passing the bill to fend off the fiscal cliff. Will the House follow suit? We'll ask former FDIC Chairwoman, Sheila Bair if it's the right deal for the country.

And Secretary of State Hillary Clinton is hospitalized with a blood clot near her brain. What her doctors are saying this morning about her prognosis. You're watching STARTING POINT.

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