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Boehner's "Plan B" Goes Bust; President Obama Remarks about Deficit Reduction Talks

Aired December 21, 2012 - 17:00   ET

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


WOLF BLITZER, CNN ANCHOR: And you're in THE SITUATION ROOM. Happening now, President Obama is about to make a statement on the fiscal cliff negotiations. We're going to bring it to you live as soon as it happens.

And Newtown responding to the NRA's controversial call for armed guards in every school of the United States. We're going there live. We'll be there live emotions very, very high right now.

One parent who made her cry with laughter. We're remembering Newtown's young victims and we're keeping their memories alive. We want to welcome our viewers in the United States and around the world. I'm Wolf Blitzer. You're in THE SITUATION ROOM.

Looking at pictures of the White House right now as it gets dark here in Washington, D.C. We were just alerted the president of the United States will be in the briefing room momentarily. You can see reporters already standing. They're getting ready to hear from the president.

He's about to deliver a statement on where the so-called fiscal cliff negotiations stand right now. We'll, of course, have live coverage of the president's statement. Let's bring in our chief White House correspondent, Jessica Yellin right now. Jessica, set the scene for us. This is, obviously, a very sensitive moment in these negotiations where at so much is at stake for almost every American.

JESSICA YELLIN, CNN CHIEF WHITE HOUSE CORRESPONDENT: That's right, Wolf. It's just days until we hit that so-called fiscal cliff where taxes for all Americans go up and spending cuts -- astronomical spending cuts kick in. It's also a time when already members of the House of Representatives have left town.

So, time is running out for a deal to be reached and I can report right now, as Dana Bash has already broken that the president is in a meeting, has been meeting with Senate majority leader, Harry Reid. That's the top Democrat in the Senate. And peculiar that the two would be meeting because you'd think he would need to sit down with Republicans.

But now, that Speaker Boehner has not been able to get his members on board a deal, the president is now faced with cutting a deal with Democrats, and he'll have to figure out a way to get this done with Senator Harry Reid push something through the Senate after Christmas probably, and then turn around and try to push that through the House of Representatives.

So, it's running a little late, but when he does come in here, maybe he'll have something to report out of that meeting and tell us if they've made any progress on that front, Wolf.

Well, I also expect that he will make an appeal to the American public and probably say something we've heard them talking about, that they have gone more than halfway, that the Republicans need to take on their own base, that the Republicans need to meet them part way and it will be a messaging opportunity for the president to argue that it will be not on the president's head, they'll try to say, if the nation goes over the cliff.

We will see -- it will also be interesting to see if he'll acknowledge the NRA's statements today and talk about gun violence at all as he's done for the past few days.

BLITZER: Are we expecting he will answer reporters' questions, Jessica?

YELLIN: I haven't gotten an indication that he will, but we he will, of course, try to get him to.

BLITZER: He's in the White House briefing room. You go into the briefing room. I've said this often. You're the president of the United States. You should expect reporters to ask some questions. And, you want to make a statement without questions, do it in the Roosevelt room, the east room, plenty of other rooms in the White House.

But if you go into the White House press media room, you should answer reporters' questions. That's just me, former White House correspondent. Let's go to Capitol Hill right now. Dana Bash is standing by. Dana, this has been a pretty bad week for the speaker of the House of Representatives, John Boehner.

DANA BASH, CNN SENIOR CONGRESSIONAL CORRESPONDENT: Not a great week, that is for sure.

And it was really a stunner what happened to him last night, the fact that he was so far away from getting votes from his own Republican caucus that he didn't even bother to put this plan "B" idea for the fiscal cliff on the floor after he spent 48 hours making the case that not only could he pass it, but it was politically the right thing for Republicans to do to prove the to the American people that Republicans don't want American's taxes to go up, particularly, those making up to a million dollars.

But on the meeting that Jessica just talked about, I was told that Harry Reid, the Democratic Senate majority leader is, at the White House one-on-one meeting with the president and that really is indicative of where we are right now. Jessica was alluding to this.

The speaker, given what happened last night, given what that illustrated which is that it will be very difficult for him to get Republican votes right now for any kind of effective tax increase. The ball is in the Senate's court. Republicans say that, but it happens to be true. Democrats around the Senate know that very well.

So, they're clearly discussing a way forward, and as we talked about in the last hour, one leading contender, if you will, for the way forward might be to go off the cliff.

To go off the cliff, have everybody's taxes go up, come back in the next Congress, which starts on January 3rd just two days after that cliff happens and have a piece of legislation that will do the opposite of what they're trying to do now, which is cut people's taxes, which is much more politically palatable than raising people's taxes which is so hard to get votes for right now, especially from Republicans.

BLITZER: I want to play a little clip, Dana. This is the House speaker, John Boehner, describing what happened -- maybe more appropriately what didn't happen last night when he couldn't even have a roll call because he didn't have the votes.

(BEGIN VIDEO CLIP)

REP. JOHN BOEHNER, (R) HOUSE SPEAKER: While we may have not been able to get the votes last night to avert 99.81 percent of the tax increases, I don't think -- they weren't taking that out on me. They were dealing with the perception that somebody might accuse them of raising taxes.

(END VIDEO CLIP)

BLITZER: Here's what I don't understand, Dana, and maybe you can help me out with this -- a lot of these conservative Republicans who refused to vote in favor of what Boehner and Eric Cantor, the majority leader, what they really wanted, by refusing to vote in favor of that, they are seeing -- they're about to see a huge tax increase, maybe the biggest tax increase in U.S. history for 99.81 percent of the American people who pay federal income tax because all of the tax rates are going to go up January 1st if legislation isn't passed. Why isn't that seen as a violation of their no new taxes pledge?

BASH: It's such a great question. What you're seeing are a group of politicians standing on principle, and what they want is being forfeited because of their principle. And that really is the argument that the speaker made to his rank-and-file Republicans. Listen, guys, I'm trying to save you from yourselves here.

He understands that politically, for that reason, even when it comes to the process, Republicans will very likely get the blame if everybody's taxes go up. So, that's why the speaker was trying to push this, but it just comes down to the fact that there are a lot of rank-and-file Republicans who feel that they were elected to do one thing, which is cut spending and not raise taxes.

So it's one thing, from their perspective, to allow taxes to go up. It's another thing to actively vote to increase taxes. They insist that it is a distinction with a difference, which is why we might be headed for the fiscal cliff to sort of change the process and change the prospects of these votes which could make a very big difference politically voting to cut taxes rather than to raise taxes.

BLITZER: Jessica, I know you've been well-briefed over there at the White House and where the president stands on some of the most sensitive issues. He had, for a long time, said no new tax rates for those making under $250,000 a year. He went up recently to $400,000 a year. Boehner's position was a million dollars a year.

Is it reasonable to think that maybe between 400,000 and a million, maybe there's some compromise in the works, 600,000, 700,000 that both sides could live with?

YELLIN: More wiggle room but not a lot. Their feeling, the Democrat's feeling is that they have given a lot that they have compromised and that, frankly, they have leverage. And that Republicans have to give more. So -- and as you know, Wolf, a lot of the Democrats, I'm sorry, believe that they have the political advantage.

If the nation does go over the cliff, Americans will end up blaming the Republicans. Now, we could argue -- look at that and say, in the short term, that may be the case. You know, when the history books are written, it might be the president who's blamed in the long term, who knows. But that's the argument for the short term and that's the calculus that's being made.

So, a little bit of wriggle room on more cuts by Democrats and different rates. Somebody just came out and put some remarks on the podium, I should point out. So, I think we might be getting close to the president coming in.

BLITZER: Have they given us the two-minute warning yet, Jessica?

YELLIN: They have not, but we are seven minute after his appointed time to speak. So, we're well passed our two minutes. Perhaps, he'll be coming out shortly.

BLITZER: All right.

YELLIN: So, the bottom line is, they've indicated there's a little bit more wriggle room, not a lot. And they think they have the upper hand when it comes to both political leverage and public perception, Wolf.

BLITZER: I'm going to play a little clip right now while we await the president of the United States. Here's what he said the other day about his willingness to compromise on these very sensitive issues.

(BEGIN VIDEO CLIP)

BARACK OBAMA, PRESIDENT OF THE UNITED STATES: This is not a situation where I'm unwilling to compromise. This is not a situation where I'm trying to rub their face in anything. I think anybody who looks at this objectively would say that coming off my election, I have met them at least halfway.

(END VIDEO CLIP)

BLITZER: So, the bottom line right now, as we await the president, he's going to tell us where these negotiations stand and make a statement and, Jessica, do we expect -- I asked you this earlier. I don't know if you got any more information. I know that he and his family were hoping to spend Christmas and New Year's at his home state of Hawaii.

That may be put on hold a little bit. Maybe the family will go out there, the first lady and the daughters, and he'll meet up with them. Is that a possibility?

YELLIN: We'll see what he announces here. I wouldn't be surprised if he's able to go out there and open up his gifts, have some sort of celebration with his family in Hawaii and then come back and wrap up this -- try to wrap up some sort of a deal, if it's possible, after Christmas is done. But, we'll wait and see what they announce about the details of his travel, if he acknowledges that when he speaks, Wolf.

It does look like maybe those of us who live in Washington and cover this will have a quiet Christmas but a busy New Year's eve. I'm not so confident that we will be resting on the days leading up to New Year's -- New Year's day and New Year's eve, itself. It could be very busy around that time.

BLITZER: It could be very busy, indeed. Let me go up to the Capitol Hill, Dana Bash is still with us. Dana, I take it the House and the Senate, they've sort of recessed until next Thursday. Is that right?

BASH: The House is gone until next Thursday. The Senate is on its way, if not, already gone. They were wrapping up a final vote just before I came on with you. But you know, one thing that I think is interesting to point out is that the big reason why the speaker had such a bomb with his plan "B" last night is because Democrats in the House held the line.

They all agreed that they would not vote for it. So, he was relying solely on Republican votes that he simply couldn't get. What you're looking at in the future, if there is any kind of bipartisan plan or any hope to put any kind of package, small or large, through the House and the Senate, it is going to very likely be with majority Democratic votes picking off enough Republicans in the Senate and enough Republicans in the House.

But what I was told earlier today that Harry Reid who, again, is meeting with the president, maybe that's why he's a little bit late. The Democratic majority leader has made it very clear he is not willing to force his Democratic senators to take a vote that's not going to pass in the House.

Whatever they agree to do, if they agree to do anything before December 31st, that fiscal cliff deadline, he wants to make sure that all the votes are lined up to make sure it goes through because he saw what happened last night with the speaker. Another reason they didn't want to take that vote is because they knew it wasn't going to go anywhere. So, it would have been a politically difficult vote to take for not a lot of giveback.

BLITZER: Dana, I want you to listen to what the president said the other day, because he seemed to be suggesting that there's so much dislike of him among so many of these conservative Republicans. It doesn't matter how far he goes in making a proposal. They're going to reject it because it simply has his name on it. Listen to this.

(BEGIN VIDEO CLIP)

OBAMA: They keep on finding ways to say no as opposed to finding ways to say yes. And I don't know how much of that just has to do with, you know, it is very hard for them to say yes to me. But, you know, at some point, you know, they've got to take me out of it and think about their voters, and think about what's best for the country.

(END VIDEO CLIP)

BLITZER: So, Dana, how much of this is the dislike, the anger towards the president coming from a lot of these Republican lawmakers in the House?

BASH: Some of it might be. I asked a number of Republican House members about those comments if that was part of it, and you know, the underlying dislike for him, I don't think it's so much it. It is the underlying, very deep philosophical divide between what a lot of these Republicans came here to do and what the president believes.

It may not really is when you get down to it. Certainly, there are politics involved and anything that goes on the Washington. But on this big issue, Republicans, I talked to several of them this morning even say that, look, they feel like this is their moment. This is their moment to achieve what they've wanted to achieve philosophically with regard to government spending, cutting government spending, with regard to taxes, keeping taxes low.

That this was their moment that was ushered in with the House Republican House and they're just very, very low to give that up. even though, at the same time, they understand even the most ardent conservatives, fiscal conservatives who I've spoken with in the hallways here, understand that the president has the political leverage. They get it, but they just feel that it is their responsibility to stick to principle when it comes to votes.

BLITZER: All right. Hold on for a moment. I want to go back to Jessica Yellin over at the White House. She's in the briefing right now awaiting the president. He should be coming out fairly soon making a statement on where these negotiations to avoid the fiscal cliff stand.

The Republican leader in the Senate, Jessica, Mitch McConnell, he made it clear that it's up to the president now to come up with a new plan. Listen to this. (BEGIN VIDEO CLIP)

SEN. MITCH MCCONNELL, (R) MINORITY LEADER: This isn't John Boehner's problem to solve. He's done his part. He's bent over backwards. Mr. President, how about rallying your party around a solution? How about getting Democrats to support something?

I've said it many times before, we simply cannot solve the problems we face, unless, and until the president of the United States either finds the will or develops the ability, the ability to lead. This is a moment that calls for presidential leadership. That's the way out of this. It's that simple.

(END VIDEO CLIP)

BLITZER: A lot of people have made the point, Jessica, that if there is a collapse of these negotiations, tax rates go up for everyone. Maybe they'll blame Republicans in the short-term, but in the long-term, they'll say this happened on the president's watch, and he needs to show what McConnell says over there is more leadership to get everyone together. What did they say at the White House about that argument?

YELLIN: Well, there is a human dynamic to all of this, Wolf, as you point out. The Republicans, when I talked to them, not just in public, but behind the scenes, very frustrated. They argue that President Obama can't offer them, doesn't know what to offer them to give them the cover they need to get the most conservative element of their base on board a deal to get this over the finish line.

At the White House, when I bring that up, they sort of shrug their shoulders, roll their eyes, and laugh at me and say, you know, when they put out a very -- what they viewed as a recent compromise during the debt talks of 2011, they were ridiculed and mocked because it was considered a compromised position that they led with their final offer first.

And then, Republicans rejected that and then they had nowhere to go. And so, now the President is taking, you know, essentially a more aggressive posture and as somewhere to move in a negotiation, and he's criticized for that. So, you know, they feel, you know, in essence, Democrats broadly feel that the failure of plan "B" is evidence that Speaker Boehner cannot wrangle his conference and it is -- the failure of leadership is on Speaker Boehner's side.

The bottom line is, there's a lot of finger pointing when it comes to who is leading and who is failing to lead. And there's a lot of bitterness -- and maybe bitterness is the wrong word, but there's a lot of frustration on both sides that there's not a partner to deal with on the other end. A partner who can actually get the deal done.

And so, this human dynamic is sort of fascinating. The bottom line of what really matters to Americans is that this is a Washington- generated problem. The fiscal cliff is not some natural disaster. It's not a hurricane that's hit. This was created by Congress and by the tax plan that George Bush passed and then by the last year sequester.

And it didn't have to exist, and now, Congress and Washington cannot solve it. So, they can't wind themselves out of their own pretzel. And it's a little bit confounding to everybody who's dealing with it, Wolf.

BLITZER: Jessica, still no two-minute warning?

YELLIN: No two-minute warning. And I keep asking what's going on, what's the holdup. No response yet. So, I'm sure we'll find out soon.

BLITZER: All right. We'll find out soon enough. You know what, while we're waiting for the president, let's take a quick break. Resume our coverage from the White House right after this.

(COMMERCIAL BREAK)

BLITZER: All right. You're looking at live pictures from the White House, from the briefing room at the White House. The president of the United States is going to be going in there. We're told fairly soon to make a statement on the so-called fiscal cliff negotiations where the situation stands. Not much time left for a deal to be reached before the end of the year. Otherwise, almost everyone who pays federal income taxes will go up, they'll go up to the levels that were in place during the Clinton administration.

The Bush tax cuts that were imposed -- that were implemented in 2001 and 2003 will disappear for everyone if there's no deal. Also, there will be significant cuts, spending cuts across the board in domestic programs as well as the national security and defense programs. So, the president's about to tell us where these negotiations stand, and we'll go there live as soon as he walks into the White House briefing room.

But there's other news we can follow, in the meantime, while we wait for the president. The most powerful gun rights organization in the United States is plunging into the gun control debate with a vengeance.

(BEGIN VIDEO CLIP)

WAYNE LAPIERRE, EXECUTIVE VICE PRESIDENT, NRA: Why is the idea of a gun good when it's used to protect the president of our country or our police but bad when it's used to protect our children in our schools?

(END VIDEO CLIP)

BLITZER: The National Rifle Association daring to challenge those blaming gun rights for last week's massacre in Newtown, Connecticut. The executive vice president, Wayne Lapierre, didn't let angry protesters stop him from calling for armed security personnel in every school across the country, arguing it's the only way to protect our children. Lots of reaction coming into this controversial development. Poppy Harlow is standing by in Newtown, Connecticut. Casey Wian is in California. He's talking to gun owners. Poppy, first to you, what are folks in Newtown saying about the NRA proposal to put armed guards in every school of the country?

POPPY HARLOW, CNNMONEY.COM: Well, I think there's mixed emotion here, Wolf. But I mean, this is very raw (ph), just one week, the one week anniversary of the Newton school shooting here, that massacre. So, we went out this afternoon following the NRA's statement and talked to people not only in Newtown but in the surrounding community about how they feel.

I think the overwhelming sentiment is there's a lot of opposition to what the NRA had to say in terms of gun rights in this country. I want you to take a listen to a selection of people that we did talk to.

(BEGIN VIDEO CLIP)

UNIDENTIFIED MALE: I think that's absolutely ridiculous. I'm a retired school teacher. You know, how could someone expect an armed guard with, you know, maybe a pistol, just go up against something like a bushmaster which we saw here happen. It's absolutely ridiculous. That's the NRA's way of just protecting their own situation.

UNIDENTIFIED FEMALE: I'm very torn at this point. I'm not happy with the NRA. I am not happy with the NRA. And I am a gun owner, myself. There's just no reason for automatic weapons out there in the public and clips that discharge so many rounds of ammunition.

UNIDENTIFIED MALE: I have many guns, but I don't have a third- round clip and a semi-automatic weapon. We have a tragedy here and we have to address it. They're not addressing it. That's what I tell them. They're not addressing the situation here.

(END VIDEO CLIP)

HARLOW: So, you heard that last man saying they're not addressing the problem directly. The overwhelming sentiment here was not just about what the NRA said about putting armed guards and armed people in the schools, but it was really about the issue of addressing automatic weapons.

And they really want to hear the NRA address that directly, Wolf, but I think to hear that statement from the NRA was very difficult for a lot of people in this community just one week later.

BLITZER: Hard to believe it's been a week now. And I know that the community is still reeling, which is totally understandable from the tragedy of what happened. Poppy, stand by.

Casey Wian is in California. Casey, you're hearing both sides of these arguments. Gun owners telling you one thing, school officials telling you another thing. What's going on over there where you are? CASEY WIAN, CNN CORRESPONDENT: Well, Wolf, as you heard from Poppy, the NRA's proposal has been stirring up a lot of controversy all day but not at this gun range which is frequented by former members of law enforcement and the military.

(BEGIN VIDEOTAPE)

UNIDENTIFIED MALE: Fire in the hole.

WIAN (voice-over): Olympic shooters train at the Los Angeles Rifle and Revolver Club so do ordinary gun owners who have mixed reactions to the NRA's proposal to have armed guards at every school.

RAY DEL RIO, L.A. RIFLE AND REVOLVER CLUB: I think it's a good idea, but you're going to have to train these people on how to use weapons because once you start shooting inside of a classroom, somebody is going to get hurt. But the thing is not to let the intruder go into the classroom.

WIAN: There's fear that more gun control is inevitable, even though California already has some of the nation's strictest laws governing assault weapons in high-capacity magazines. Retired sheriff's deputy, Ed Knutson, says a better armed public, not more laws is the answer.

ED KNUTSON, LOS ANGELES COUNTY SHERIFF'S DEPT. (ret.): The only way to fight fire is with fire. So, if you've got somebody that's armed and you're not, you're part of the problem, you're not part of the solution.

WIAN: The president of the Glendale, California school board wants no part of armed guards on her campuses.

CHRISTINE WALTERS, GLENDALE UNIFIED SCHOOL DISTRICT: I'm extraordinarily disappointed in their response. I think the issues are so complicated, the logistics of that are ridiculous. I think kids and guns are a bad mix, period.

WIAN: Back at the gun range, one club member agreed with the NRA's position that violent movies and videos games, not guns are largely to blame for mass shootings.

RICHARD BLANKENSHIP, LOS ANGELES POLICE (ret.): I don't see any discussion going on where people are saying, what about Hollywood?

WIAN: We brought that up today.

BLANKENSHIP: What about the video game industry? You know, that's a factor.

WIAN: Gun enthusiast here generally agreed with the NRA's decision not to offer proposals for more gun control.

(END VIDEOTAPE)

WIAN (on-camera): And that school board official you heard from said the biggest thing that can contribute to better safety at her schools would be more funding for mental health treatment which has been cut here in California and many other places, Wolf.

BLITZER: Casey, thanks very much for that report. The debate is going to intensify in the coming days to be sure.

We're awaiting the president of the United States. He's going to go into the White House briefing room and make a statement on where the fiscal cliff negotiations are right now. You see the podium there. And, maybe he'll answer some reporters' questions, see what he says, about his NRA proposal to put armed police officers in every school in the country. We'll await the president right after this.

(COMMERCIAL BREAK)

BLITZER: We're told the president is getting ready to walk into the White House Briefing Room momentarily to make a statement on where the fiscal cliff negotiations.

Stand by. We don't know if he'll reporters' questions, answer questions on the NRA's proposal to put police officers outside every school in the United States. We'll stand by. We'll of course have live coverage of the president as soon as he walks into the briefing room.

Meanwhile, there's other news we're following including an American doctor rescued from the Taliban in Afghanistan. That doctor is now speaking out.

Lisa is back. She's monitoring that and some of the other top stories in THE SITUATION ROOM right now.

What's the latest, Lisa, on this one?

LISA SYLVESTER, CNN CORRESPONDENT: Wolf, Dr. Dilip Joseph released a statement through his non-profit agency thanking those who put their lives on the line to save him. He also expressed sorrow to the family of Petty Officer 1st Class Nicolas Checque, the Navy SEAL killed in the coalition rescue mission. He was taken about 50 miles from the Pakistan boarder. The rescue led to the arrest of at least two Taliban leaders.

And the Syrian regime has fired more Scud missiles in recent days. That's according to the head of NATO who calls it a desperate acts by a collapsing regime. This video is said to show a crater caused by a Scud missile. We can't confirm the authenticity, though, of this footage. Analyst say President Bashar al-Assad's forces have about 400 Scud type missiles in their arsenal.

And, well, more bragging rights for Korean pop star, Psy. The smash hit now "Gangnam Style," it has been viewed by more than, get this, one billion times. More than any other video on the Internet according to Billboard. "Gangnam Style" is already the most popular video on YouTube and Billboard estimated -- it's hard even to say this. It is watched 76 times per second.

Can you imagine that, Wolf? Seventy-six times per second people are watching that video.

BLITZER: They like Psy.

(LAUGHTER)

SYLVESTER: That's right.

BLITZER: All right. We've just been told, Lisa, that the president now will be walking in within the next two minutes into the White House Briefing Room. You're seeing reporters standing by getting ready to hear the president. He'll make a statement. We'll see if he answers reports' questions.

This is a sensitive, delicate moment now on the eve of Christmas just before New Year's. Will there be a deal that will allow everyone to have a little sigh of relief, if you will, as far as tax increases being implemented January 1st, and huge spending cuts on domestic programs as well as national security programs as will be implemented, if there is no legislation passed by the House and the Senate and signed into law by the president of the United States.

Jessica Yellin is in the briefing room. Only a few seconds away. Right, Jessica?

JESSICA YELLIN, CNN CHIEF WHITE HOUSE CORRESPONDENT: Yes. He should be out here any moment, Wolf. We'll be looking to hear if he says he's reached any kind of a deal with Senate majority leader Harry Reid with whom he's been meeting here at the White House if he has hopes for some kind of deal after Christmas. We'll be looking to hear if he is announcing any plans for his travel to Hawaii and also maybe whether he'll comment on the statements we heard from the NRA, the National Rifle Association. A totally different topic when they held their press conference for later today, their statements today -- Wolf.

BLITZER: Interesting. All right. Sit down, Jessica, because the president is going to be walking in momentarily. I always find it interesting on a Friday, late Friday afternoon a statement like this is about to be made, a statement being made after the Wall Street, after the markets are closed in New York and elsewhere.

Whatever he says about these fiscal cliff negotiations could have a significant impact on Wall Street, on the markets, on public attitudes. Maybe that's one of the reasons why he decided to wait until after 5:00 p.m. here on the East Coast so the president will be walking in momentarily.

Dana Bash is up on Capitol Hill watching what's going on. It should be -- they said two minutes a while ago. I guess he's still walking in, Dana. The markets took a little bit of a hit today after what John Boehner failed to achieve last night.

Here comes the president. Never mind.

BARACK OBAMA, PRESIDENT OF THE UNITED STATES: Good afternoon, everybody. Over the last few weeks I've been working with leaders of both parties on a proposal to get our deficit under control, avoid tax cuts, avoid tax hikes on the middle class, and to make sure that we can spur jobs and economic growth. A balanced proposal that cuts spending but also asks the wealthiest Americans to pay more, a proposal that will strengthen the middle class over the long haul and grow our economy over the long haul.

During the course of these negotiations, I offered to compromise with the Republicans in Congress. I met them halfway on taxes and I met them more than halfway on spending. And in terms of actual dollar amounts, we're not that far apart.

As of today, I am still ready and willing to get a comprehensive package done. I still believe that reducing our deficit is the right thing to do for the long-term health of our economy and the confidence of our businesses. I remain committed to working towards that goal, whether it happens all at once or whether it happens in several different steps.

But in 10 days we face a deadline. In 10 days under current law, tax rates are scheduled to rise on most Americans. And even though Democrat and Republicans are arguing about whether those rates should go up for the wealthiest individuals, all of us, every single one of us, agrees that tax rates shouldn't go up for the other 98 percent of Americans, which includes 97 percent small businesses.

Every member of Congress believes that, every Democrat, every Republican. So there is absolutely no reason, none, not to protect these Americans from a tax hike. At the very least, let's agree right now on what we already agree on. Let's get that done.

I just spoke to Speaker Boehner and I also met with Senator Reid. In the next few days I've asked leaders of Congress to work towards a package that prevents a tax hike on middle class Americans, protects unemployment insurance for two million Americans, and lays the ground work for further work on both growth and deficit reduction. That's an achievable goal. That can get done in 10 days.

Once this legislation is agreed to, I expect Democrat and Republicans to get back to Washington and have it pass both chambers and I will immediately sign that legislation into law before January 1st of next year. It's that simple.

Averting this middle class tax hike is not a Democratic responsibility or a Republican responsibility. With their votes, the American have determined that governing is a shared responsibility between both parties. In this Congress, laws can only pass with support from Democrats and Republicans, and that means nobody gets 100 percent of what they want.

Everybody has got to give a little bit in a sensible way. We move forward together or we don't move forward at all. So as we leave town for a few days to be with our families for the holidays, I hope it gives everybody some perspective. Everybody can cool off, everybody can drink some eggnog, have some Christmas cookies, sing some Christmas carols, enjoy the company of loved ones, and then I'd ask every member of Congress while they are back home to think about that.

Think about the obligations we have to the people who sent us here. Think about the hardship that so many Americans will endure if Congress does nothing at all.

Just as our economy is really starting to recover and we're starting to see optimistic signs and we've seen actually some upside statistics from a whole range of areas, including housing, now is not the time for more self-inflicted wounds. Certainly not those coming from Washington. And there's so much more work to be done in this country, on jobs and on incomes, education and energy. You're a week away from one of the worst tragedies in memory. So we've got work to do on gun safety. A host of other issues.

These are all challenges that we can meet. They are all challenges that we have to meet if we want our kids to grow up in an America that's full of opportunity, possibility, as much opportunity and possibility as the America that our parents and our grandparent left for us.

But we're only going to be able to do it together. We're going to have to find some common ground. And the challenge that we've got right now is that the American people are a lot more sensible and a lot more thoughtful and much more willing to compromise and give and sacrifice and act responsibly than their elected representatives are. That's a problem. There's a mismatch right now between how everybody else is thinking about these problems, Democrats and Republicans.

Outside of this town and how folks are operating here. And we've just got to get that aligned. But we've only gotten days to do it. So I hope that every member of Congress is thinking about that. Nobody can get 100 percent of what they want. And this is not simply a contest between parties in terms of who looks good and who doesn't. There are real-world consequences to what we do here and I want next year to be a year of strong economic growth.

I want next year to be a year in which more jobs are created and more businesses are started. And we're making progress on all the challenges that we have out there, some of which, by the way, we don't have as much control over as we have in terms of just shaping a sensible budget. This is something that within our capacity to solve.

It doesn't take that much work. We just have to do the right thing. So call me a hopeless optimist, but I actually still think we can get it done. And with that, I want to wish every American a merry Christmas and, you know, because we didn't get this done, I will see you next week. All right. Thank you.

(CROSSTALK)

BLITZER: All right. So the president made his statement. He made about a seven-minute statement, to be precise, saying he didn't think the sides were too far apart. He thought that they could at least get a stop-gap deal that would allow taxes for the middle class to remain as they are right now.

Let's get up some -- go up to Capitol Hill, Dana Bash is standing by.

I didn't hear anything new from the president right now, Dana. This is a proposal he's had out there for some time, just in the past legislation that allows the Bush tax rates to continue for everyone making under a certain amount of money. He used to say $250,000, raised it a little bit to $400,000. But that doesn't look like it's going anywhere, at least for the time being, in the Republican majority House.

DANA BASH, CNN SENIOR CONGRESSIONAL CORRESPONDENT: That's right. You know, we laid out in this program, according to sources here, three potential scenarios for the way forward. One was going off the cliff and two was kind of a fallback scenario.

What he just laid out was that fallback scenario the Democrats here are talking about. And what I mean by that is just to try to get some Republican votes on his bottom line when it comes to tax rates and we're just talking about tax rates here. Keeping taxes low for the middle class. But also adding some tax rate sweeteners.

He talked about unemployment insurance which is not necessarily a sweetener for Republicans but maybe adding a state tax, keeping the taxes low on that and a few other things. So what he's saying now is he wants to see if the speaker can get enough votes. Maybe they can get enough votes from Republican in the Senate.

But let me give you a reality check. As we were talking, I was going back and forth with a Democrat who knows where the votes is -- are in Congress. Reminding me that it is very unlikely that that's going to happen, very unlikely that they're going to get bipartisan agreement particularly on what the president just laid out which is effectively, as you said, his position on taxes.

BLITZER: Let me go over to Jessica Yellin over at -- in the Briefing Room at the White House.

Jessica, whatever the president puts forward, I assume almost all the Democrats in the House and the Senate would support it but in the House you need a whole bunch of Republicans to support it as well, some moderate Republicans. Does the president think that Boehner will bring along enough Republicans to pass this kind of temporary legislation?

YELLIN: Look, Wolf, they're worried about Republicans in the House. I've talked to Democrats who are also concerned that Republicans in the Senate will be hard to bring on board because they have concerns about their re-election next year and outside groups, pressure from outside groups as well.

I mean, there's no absolute confidence that we will not go over the cliff. That's why you heard the president make what was essentially a political appeal here, a messaging appeal to say, look -- an appeal for commonsense and an appeal for action. Because this is really now about trying to reach beyond us to the American people.

He was talking to the American people, not to the people in Washington or to -- in this room and saying this is about -- that a reasonable compromise is within reach and if it doesn't get done, it's only because of -- in his estimation, is extremism in Washington. That's the message they're trying to put out there -- Wolf.

BLITZER: It looks like everybody is going at least out of town for Christmas. They'll be back presumably later in the week. The president, I suspect, heading out to Hawaii with his family at the same time.

All right. Stand by. Everyone, stand by. We'll continue the breaking news coverage. We'll also update you on what's going on as far as the National Rifle Association is concerned. Their proposal today to put armed police officers in every school in the United States. We'll go to Newtown for the latest on the investigation. Much more of our coverage right after this.

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BLITZER: 9:30 a.m. today, church bells toll in Newtown, Connecticut, exactly one week to the day that so many lives were cut short. It's a scene that was repeated all across the country at exactly the same time, including here in Washington, D.C., at the National Cathedral.

Also in Miami. And so it went in many other states. Then a somber rendition of "Amazing Grace."

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(COMMERCIAL BREAK)

BLITZER: President Obama gave the eulogy at a memorial service today for Senator Daniel Inouye at the National Cathedral. The president, a Hawaii native, called Inouye his earliest political inspiration, crediting him for his career in public service.

(BEGIN VIDEO CLIP)

OBAMA: We remember a man who inspired all of us with his courage and moved us with his compassion that inspired us with his integrity and who taught so many of us, including a young boy growing up in Hawaii that America has a place for everyone.

(END VIDEO CLIP)

BLITZER: Senator Inouye was the second longest serving senator in U.S. history. He died Monday of respiratory complications. He was 88. His body will be returned to his home state of Hawaii tomorrow. His funeral is set for Sunday.

Newtown's tragedy became a sharp loss felt by all Americans. Just ahead, CNN's own reporters reflect on what it was like to be in Newtown in the aftermath of this terrible shooting.