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Interview with Olympia Snowe; Interview with Bob Corker; Interview with John Barrasso, Raul Labrador

Aired December 30, 2012 - 12:00   ET


CANDY CROWLEY, HOST: Few big things get done in Washington without drama, and we are at the precipice of a very big thing.


CROWLEY: Today the cliffhanger.

OBAMA: Well, we're now at the last minute.

CROWLEY: President Obama takes to the Sunday air waves to make his case. We get the Republican response with Senators Olympia Snow, John Barrasso, Bob Corker, and Congressman Raul Labrador. Plus, cutting through the clutter of the fiscal cliff and 2016 -- yes, 2016, with A.B. Stoddard of "The Hill," "The Washington Post's" Karen Tumulty, "Time" magazine's Michael Crowley and CNN's Jessica Yellin. I'm Candy Crowley. And this is State of the Union.

We still don't know whether a deal to avoid the fiscal cliff is in the works or out of the question. Senate Republican Leader Mitch McConnell promised reporters an update as soon as he had any news to make. That could happen maybe in an hour when the Senate convenes a rare Sunday session of Congress.

But looking to dominate the headlines now with his side of the story, while Senate leaders wrangle behind closed doors on the details, President Obama made his first Sunday show appearance in three years, sitting down with NBC's David Gregory this morning to talk about the fiscal cliff.


OBAMA: What I'm arguing for are maintaining tax cuts for 98 percent of Americans. I don't think anybody would consider that some liberal, left-wing agenda. That used to be considered a pretty mainstream Republican agenda.


CROWLEY: Joining me from Capitol Hill, Republican Senator Olympia Snowe of Maine.

Senator, let me just start with that. It does seem sort of counterintuitive to have Republicans wanting to fight for tax hikes for no one, and in that fight, being willing to allow tax hikes for everyone?

SNOWE: You know, I would agree with that, because obviously it is important to make sure that middle-income America does not confront a tax increase at the beginning of next year, which is less than two days away. So obviously that is critical. The second part of it is, of course, is trying to address the spending cuts that are going to be crucial next year as well. More for the long-term debt reduction that I think Republicans are talking about, but the bottom line is, we should pass this tax extension for middle-income America before we adjourn this year.

CROWLEY: And what is -- what do you -- where do you think this will land? As we understand it now, there is still a difference of opinion about where exactly that tax rate should end. Is it $250,000 as the president has said, and anyone below that sees no hike in their tax rates, everyone above it does, or do you think it will end up someplace higher to help satisfy Republicans?

SNOWE: It may well end up somewhere between 250 and 400,000. The 400,000 the president had offered to Speaker Boehner during the course of the negotiations, and there is a tax quirk in the law that would actually impact income holders between 250,000 and 400,000, much higher and disproportionately than those who earn more than 400,000. And obviously small businesses.

But nevertheless, I think the bottom line is that the Senate has to step up to the forefront here and address this issue and reach an agreement, build a consensus, get the support of hopefully the majority of Democrats and Republicans, and move it to the House of Representatives. I think it would build momentum. But I do think it's crucial, and I do think in the final analysis that they will reach an accord on this critical matter. I think it would be horrific for the country if at this time, the final days of this legislative session that already has reached historic proportions of failure, that we would now culminate in the failure to extend these tax cuts.

CROWLEY: Senator, you sound willing to go ahead and agree to raising tax hikes -- raising taxes on wealthier Americans and trying to preserve them for the middle class, however that gets defined. What are you hearing among the rest of the Republican caucus? Is that something that would pass the Senate?

SNOWE: I think more likely it would. And obviously there's some other issues that are part of this agreement.

CROWLEY: What are those issues?

SNOWE: Some of the tax extenders, for example, the AMT, alternative minimum tax patch, which is important to middle income. It could affect somewhere upwards of, you know, 30 million Americans.

The other part is the estate tax, and there are some issues that are obviously trying to resolve, if they can get that to be permanent, whether it's 5 million or 3.5 million exemption and what the tax rate would be, 35 or 45 percent. But I think overall, there is an appreciation here about the critical impact of making a decision on this, on this issue, and also to get it done this year, because it's -- it's really troubling in terms of what it portends for the future.

If at this point the United States Senate cannot do what it's designed to do, and that is to build consensus, but secondly that the overall Congress failed miserably in the final days to prevent a tax increase on middle-income America -- and again could create some unforeseen consequences by virtue of the reactions that could occur not only in our own markets but global markets, because we cannot get together and solve the problems for this country.

CROWLEY: Senator, let me broaden that out just a little bit. You are leaving the Senate this time around -- you only have a couple days left, actually -- and your last vote may well be on what has been an incredibly contentious but a really important issue. We are talking about tax hikes for anyone that basically gets a paycheck.

So if it is this difficult to do this on something everyone says, oh no, we can't raise taxes on the middle class, everybody says that, Republicans and Democrats, and yet they can't -- it's been this difficult to come to an agreement, what does that say about the future of immigration reform? What does that say about the future of anything that might be done about increased violence in schools or elsewhere? What does that say about important legislation that many Americans would like to see happen?

SNOWE: Well, it does suggest that it's going to be troubling for the Congress in its next year to reach agreements and consensus on some of these key issues.

The gridlock has really superseded the interests of this country. The political party's interest has superseded the best interests of this country. And that's why I'll be speaking out about the fact that we need the public to be involved and to demand in real-time accountability and transparency on the part of our political leaders and officials and the political institutions to do the job that they were elected to do.

We've got some significant issues facing this country, and they're all going to come to the forefront next year. And if we can't, as you say, resolve this issue at this moment in time, how then can we come to grips, you know, with tax reform and entitlement reform and debt ceiling, a budget we haven't passed in three years, another budget that expires in March of next year? So these are overwhelming issues, and, of course, the world community looks at the United States and says, well, why can't the United States of America and its elected officials come together to address the big issues of our time?

CROWLEY: Senator, you know, a lot of the commentary and some books have been written, say this is on the Republican Party here. Basically, the Republican Party in the House, but many, many people blame Republicans for this, for being intransigent on your side about judgeships, about any number of things. Do you think your party has erred on the side of partisanship and turned its back, in some cases, on the country?

SNOWE: I think that's certainly true, but it also is true on the other side. Obviously, you know, we have responsibilities to bear with respect to the dysfunction and the gridlock, but you know, unfortunately it just grows exponentially on both sides with each congressional session, because they keep looking at the elections and how they can leverage their political positions in the United States Congress rather than what's in the interests of this country.

In the House of Representatives, we've seen this through congressional redistricting, to the point that you really have 35 competitive seats based on a story that was disclosed this week and an analysis. That again, underscores how the deep divide has only grown wider because you have very few centrists left, very few competitive seats, and that is also true even in the United States Senate.

And the political parties want it this way. They want the divide. Because then again, they can build on that, they can capitalize on that in the next election. So every vote becomes about the next election. It isn't about the country.

And that's why I think it's going to be critical for the American people to watch very closely in this next session of Congress and what Congress is doing, whether or not they're in session doing their jobs, in session five days a week holding hearings, but you know, considering legislation on the floor through the amendment process. And it's going to take both sides to get that accomplished.

CROWLEY: Senator Olympia Snowe, as I mentioned, retiring, we certainly wish you well from here. Thanks for joining us this morning.

SNOWE: Thank you, Candy.

CROWLEY: Up next, Senator Bob Corker joins me in studio to respond to the president's assertion that he has a mandate to raise taxes on the richest Americans.


CROWLEY: The U.S. will tumble off the fiscal cliff in less than 48 hours. That's the main reason why President Obama sat down for a lengthy interview this morning that aired on NBC.


OBAMA: There is a basic fairness that is at stake in this whole thing that the American people understand and they listened to an entire year's debate about it. They made a clear decision about the approach they prefer, which is a balanced, responsible package. They rejected the notion that the economy grows best from the top down.


CROWLEY: Joining me now is Republican Senator Bob Corker of Tennessee. Let's start with what the president -- you heard what he just said. And he, look, he argues we had an election, I won. He did campaign quite heavily on raising taxes for those making over $250,000. And he says, I went to John Boehner, I offered him a trillion dollars in cuts, so we're talking 2:1 cuts to income rates. Why didn't you just take it?

CORKER: Well, Candy, that's interesting. I was -- I watched the interview. I don't think any American has ever seen those trillion dollars in cuts that he offered.

CROWLEY: Well, he --

CORKER: And there's never been any specifics. And if I were a president, I certainly would lay those out before the American people.

I've been as involved with this as any senator in the United States Senate, other than Mitch McConnell and Harry Reid. I have never seen those cuts. So I'd love to take those up on the Senate floor.

But let me just say this. Like every American, I'm disgusted with where we are. I know people are irritated at the president, they're irritated at Congress, as they should be. There's no question that in the next few days or the next few weeks, we're going to rescue most of the American people from a tax increase. We're going to do it. It will be better to do it over the next day or two.

But what hasn't happened in this debate is any discussion about real reductions, reforms in Medicare and Social Security, to save those. And I think that is totally irresponsible.

CROWLEY: But there's -- look, here's where we are. There is not time for you to reform entitlements between now and midnight on the 31st.

CORKER: No, and more than that (inaudible) during the debt ceiling debate (ph).

CROWLEY: So here is your choice. You either allow tax rates to go up on everyone --

CORKER: We're going to deal with that.

CROWLEY: Or you try to protect some people.

CORKER: I would bet my life that over the next very short period of time, 98 to 99 percent of the people in the country are going to be rescued.

What's been missing in this debate, Candy, is this has been building for two years now. The president had the Simpson-Bowles committee 25 months ago, give a report. If I were president, again, I would lay out a very specific plan as to how to solve this. The president keeps talking about the $1 trillion that he offered Speaker Boehner. I've never seen it. Have you ever seen it? I was surprised that David Gregory today didn't pursue that in the interview, because he's really good at those kind of things.

So I think if we can get that on the Senate floor also, to deal with this next debt ceiling debate, I've laid out a specific plan, I've given it to the president. I've given it to Senator Reid, but that's what's missing, and what's happening, unfortunately -- we're going to move -- you know, we created this fiscal cliff, and we're going to deal with it over the next few days or few weeks.

But unfortunately, for our country, every American's quality of life is going to be lesser than it should be because now this is going to drag on to the debt ceiling. We're going to have the same kind of thing play out--

CROWLEY: The president says he's not going to play games with -- not going to play politics. He just wants it raised.

CORKER: I think he should go ahead then and lay out the reductions. You know, we set the precedent on a dollar for a dollar, a dollar increase in debt ceiling for a dollar in reductions. I actually laid out a bill to do that this week, with Lamar Alexander.

But I think what's been missing here, Candy, is it appears to me that the president either lacks the courage or the will to lay out those specific things that need to happen. Because I assure you, if he would lay those out, the House would take it up, the Senate would take it up, and we could move this behind us, and we could start this next year with the wind at our back and this fiscal issue behind us, like most of us would like to do.

CROWLEY: You know and I know that's not going to happen in the short time we have.

CORKER: I just wonder why it hasn't. And we will deal with it--

CROWLEY: Well us too -- I mean, you're part of it, right?

CORKER: No, I've offered a very specific bill.

CROWLEY: All of America kind of looks and goes why -- everybody is complaining about the other person, not --

CORKER: No, no. Wait a minute. I actually laid out a very specific bill five weeks ago. Gave it to the White House. Not many people are willing to lay the cards on the table, but it's the president's responsibility, when we have a situation like this, to be very specific about what needs to happen and let Congress take it up.

So look, I think everybody should be disgusted at where we are. We're going to deal with this tax issue, we're going to deal with it either before midnight tomorrow or in the next couple of weeks, but nobody in the country, 99, 98 percent of the people in the country should not be worried about revenues. But what they should be worried about is we still haven't tackled the issue of fiscal solvency.

CROWLEY: It's likely to come up during the debt ceiling. Where is your bottom line in terms of taxes?

CORKER: You know, I'm -- I feel so certain, Candy, that something's going to happen on the Senate floor over the next day and a half. I don't even want to -- Mitch McConnell --

CROWLEY: Would you -- if Mitch McConnell says, look, $250,000, everybody above that is going to get a tax hike, are you there, aye?

CORKER: Say again?

CROWLEY: If Mitch McConnell comes out and says, look, here is the best we can do, $250,000 and above, it's going to get --

CORKER: But he's not going to do that.

CROWLEY: -- a tax rate hike?

CORKER: Because -- he's not going to do that. Let me tell you why. Senator Schumer doesn't want to see that happen. Kirsten Gillibrand doesn't want to see that happen. Dianne Feinstein doesn't want to see that happen. So it's not going to be at 250. But some number. There's going to be -- I don't know what it's going to be. We know it's probably -- the floor is at least 400, because that's already out there. So my guess is, we're going to be in -- I don't even want to say it, at least 500, and my guess is it's going to happen and it's going to pass.

But here's the thing. You're talking about eight days of funding for the United States government.


CORKER: We have a Medicare --

CROWLEY: When the (ph) spending (ph) comes in.

CORKER: We have a Medicare program where people are paying one third of the cost, and 20 million more Americans are going to be on it over the next ten years, and we have yet to deal with that.

CROWLEY: Let me ask you about one other thing that the president said during this interview. He was asked about Chuck Hagel, used to be a Republican senator. His name has surfaced as a possible secretary of defense. There have been complaints about him, about some votes that he made, vis-a-vis Iran, also some comments that he made about gays and some other things he said about Israel, and here was the question from David Gregory.


DAVID GREGORY, NBC NEWS: Anything disqualifies him?

OBAMA: Not that I see. I've served with Chuck Hagel. I know him. He's a patriot. He is somebody who has done extraordinary work both in the United States Senate, somebody who served this country with valor in Vietnam. And is somebody who's currently serving on my Intelligence Advisory Board and doing an outstanding job.


CROWLEY: Do you have any problems with Senator Hagel?

CORKER: Well, I never thought Susan Rice was going to be nominated after her name came forth, and she wasn't. I don't think Chuck Hagel is going to be nominated.

CROWLEY: You don't? Why?

CORKER: I don't. I just -- look, I always start out and give people a fair hearing. I served with Chuck for two years, but I just heard too many very, very strong opinions both on the Republican side and the Democratic side about his positions, and I don't think he's going to be nominated. So if it comes up forth, certainly I look forward to knowing more about his background and having a real hearing, but I would be very, very surprised if Chuck Hagel is nominated.

CROWLEY: Senator Corker, thank you for your time this morning.

CORKER: Thank you, thank you so much.

CROWLEY: Have a busy day ahead--


CORKER: We do, and I -- I -- the American people should know that this is not going to linger, and we're going to deal with this issue. We should have done it a long time ago.

CROWLEY: Or linger any further probably is--

CORKER: That's right. Thank you.

CROWLEY: Thanks so much, Senator Corker, appreciate it.

CORKER: Thank you, thank you.

CROWLEY: We are waiting for today's rare session of Congress to begin at 1:00 p.m., about 40 minutes from right now, but next, we'll go live to Capitol Hill for an update on how we expect today to play out.


CROWLEY: I want to take you up to Capitol Hill now and our senior congressional correspondent Dana Bash.

Dana, how do we expect to see things unfold over the next couple of hours? We have got about, what, a little over 30 minutes before they convene?

DANA BASH, CNN SENIOR CONGRESSIONAL CORRESPONDENT: That's right. We are told not to expect any big breakthroughs to be announced when they do come in. But they are coming in at 1:00. And I'm told by an aide to Senator Mitch McConnell, the Republican leader, that we do expect -- we should expect to hear from him.

Just to sort of give people a sense of the fact that they are still talking, again, I don't expect him to show his cards because they are definitely still being held very close to the vest because these talks are still continuing one floor below me, where I am right now.

CROWLEY: This morning, Dana, both at 9:00 and now, so far, at noon, I've heard a lot of optimism from Democrats and Republicans. It's hard to tell often when a politician is about to get nailed for not doing something, how much of this is wishful thinking and how much of it is actual. What are you picking up, up there?

BASH: You know, I checked right before coming on with you, with Republican and Democratic sources, and they are saying the same thing, that things are going well, that talks are proceeding, and then the next breath I get the "but," but we are not there yet, but there are a lot of outstanding issues still left on the table.

And I'll just give you a couple of examples of what we are being told are outstanding issues. First and foremost, the issue which are tax rates, how much will go up and for -- at what income and how many of these tax cuts will stay in place?

Democratic sources are saying that they think at this point, they see it being at about an income level of $250,000 to $400,000. Republicans say that they want it to be more than $400,000, meaning they want tax cuts to stay in place for even upwards of people making $400,000.

Another thing that I'm told is -- a sticking point, is the sequestration, you know, the $110 billion of pretty draconian spending cuts that will start to take place on January 1st. I've heard the Democrats are saying, well, maybe we can just replace that with some of the revenue we get from these tax increases.

And Republicans are saying, oh, no, we're not going to do that because they want to get to deficit reduction by spending cuts and that, of course, is what the sequester is. So that's one of the sticking points.

But, again, I'm told one of the many, many sticking points right now. We're going to possibly see Republicans and Democrats meet in their respective corners to try to get a briefing from the leaders about what's going on at 3:00 Eastern, but I'm also warned if talks continue, that that might be pushed back as well.

But that's the next timeline that we're looking for, 3:00 Eastern.

CROWLEY: I think thematically what we are hearing from Republicans is, where are the spending cuts? And we heard the president this morning also reiterate that he thinks some of those tax hikes could help mitigate that $110 billion or so that is being taken out of, you know, across-the-board cuts.

So we will see you later on this afternoon, Dana, as you follow every minute of this. Thanks a lot.

BASH: Thank you.

CROWLEY: President Obama says slashing the deficit is a priority but so is more spending on certain things. We'll talk with two Republican lawmakers about the president's second-term agenda, next.


CROWLEY: One of President Obama's initial proposals to avert the fiscal cliff included $50 billion in new infrastructure spending. That, as we know, landed with a thud among congressional Republicans. But despite that reaction, it doesn't seem like the president is backing down.


BARACK OBAMA, PRESIDENT OF THE UNITED STATES: The second thing that we've got to do is to stabilize the economy and make sure it's growing. Part of that is deficit reduction, part of it is also making sure that we're investing, for example, in rebuilding our infrastructure, which is broken.


CROWLEY: I'm joined now by two Republican lawmakers Wyoming Senator Barrasso of Wyoming -- as we just said, and Idaho congressman Raul Labrador. Gentlemen thank you for joining us.

Let's talk first about new spending. I mean, investment, generally, means you want to put more money into infrastructure -- bridges, roads, schools, things like that. Is that something that you all might go along with? Is that a nonstarter?

BARRASSO: It's a nonstarter. The president really -- and you have pointed to the problem -- the problem in this country is we have a spending problem, that's how we ended up with $16 trillion in debt. And yet the president doesn't talk about ways to minimize the spending or actually get the economy growing. You know, that's one of the things he proposed was an additional stimulus package and then he wanted an unlimited credit card to be given to him so he can continue his spending binge.

We're hitting the debt limit again tomorrow.

CROWLEY: And -- but what the president is saying and has said all along -- and a number of Democrats, Treasury Secretary Geithner says, wait a minute, we did a trillion in cuts the last time around with the debt ceiling, the president says he offered Speaker Boehner of the House another -- an additional $1 trillion so it would be two to one in savings to tax hikes, what's wrong with that?

LABRADOR: It's not a trillion dollars in cuts. He talked about this morning on "Meet the Press" that he wanted to do away with the sequester by raising taxes on people.

CROWLEY: So let me just define the sequester which is basically spending cuts that were also part of this fiscal cliff.

LABRADOR: So he's taking credit for the spending cuts in the sequester in the Budget Control Act, but now he wants to do away with them and then wants to do more infrastructure spending and he wants to do all these different things, plus he wants to pay $1.6 trillion in additional revenues and just a couple days ago he decided that he was going to start paying federal employees more. He did away with the freeze on federal employees' salaries.

So he want to raise taxes on people so he can pay federal employees more. And I don't think there's anything out there saying federal employees are not making enough money.

What he wants to do is he wants to continue to spend more money. And I believe -- and some of my colleagues disagree, even Senator Barrasso I think disagrees with me, I think the president wants to go over the cliff. He doesn't want -- he's not acting in good faith right now.

You listen to him this morning, what he was saying on "Meet the Press" he's saying he came with a plan that was a balanced approach. A balanced approach, he talked about two to one, three to one, we don't have a two to one or three to one and as Senator Corker said a few minutes ago, where are his spending cuts? There's not a single plan out there with spending cuts. CROWLEY: You -- I understand the politics of this town fairly well. But -- and you're not the first to suggest that the president wants to go over the cliff but there are a lot of people saying so do Republicans, because Republicans would rather vote for restoring tax cuts to people than getting rid of them for some people.

So I mean, two can play this game. And in the end, the problem is, nobody's gotten the job done.

BARRASSO: Patty Murray who chaired the Democratic senatorial campaign committee has advocated going over the cliff so the taxes would go up, more tax revenue would come in for more programs that they would have all of these military cuts that the Democrats have supported and they could claim they'd have an opportunity to blame Republicans.

But the president the night that he was re-elected said I don't want our children to live in a country where they are burdened with debt. The president has done absolutely nothing, nothing at all, to focus on that and even in his interview today, he has again not gotten serious about tax reform or reforming the entitlement programs when 10,000 Baby Boomers today are turning 65 and they did yesterday and they will tomorrow.

And as you said earlier, people are focused on the Redskins game tonight. Every week there are enough people turning 65 to fill that entire football stadium. And we need to grow the economy to make sure that we can keep that safety net for those people.

CROWLEY: Here's the thing. You're not going to do tax reform in the next 48 hours. You're not going to do entitlement reform in the next 48 hours. You all had a year, or two years, however long, it's not going to happen. So right we're staring down and looking at everyone's taxes going up. Is that going to happen or do you think the House and the Senate with Republicans going along, will vote for something that would raise taxes on the -- in the upper brackets, but maintain them for middle-class Americans?

LABRADOR: I think something is going to happen. I don't know if it's going to happen in the next 48 hours. Whatever happens, whether it happens the first month with congress, whether it happens in the next 48 hours, I think the majority of Americans are going to be safe from a tax increase. But the reality is that we need presidential leadership. We've had two years to deal with this mess. He has not led at all. We've had -- he's had four years in the White House. He's going to have an additional four years in the White House. He needs to do what Bill Clinton did. He needs to do what President Reagan did. President Reagan was willing to sit down with the Democratic Speaker of the House and work on real common sense solutions.

CROWLEY: He met with Speaker Boehner.

LABRADOR: He sat down once in the last two months.

CROWLEY: But wasn't the problem that Speaker Boehner couldn't get his House Republicans to go along even with his Plan B.

LABRADOR: You keep saying that, but look at Plan B. Plan B was a plan that was advocated by Nancy Pelosi, was advocated by Chuck Schumer just less than two years ago. They said that what we should do is raise taxes on people that make a million dollars or above. There were only 50 House Republicans who said they were not going to vote for Plan B.

You couldn't even get 50 House Democrats to vote for something like that, to send something to the Senate and then the Senate could maybe raise taxes on people that make less than that. So don't blame the Republicans when it's the Democrats that are unwilling to work on anything.

When the president said that he wanted to look at chain CPI, it was the Democrats who said.

CROWLEY: That's would be changing the way...

LABRADOR: That's a nonstarter.

CROWLEY: ...changing the way Social Security payments are attached to the cost of living.

BARRASSO: The Democrats in the senate are very divided on what that tax rate should be as well as on taxes on small business as well as the death tax. They are very divided on this issue.

CROWLEY: The estate tax, yeah.

So let me have you answer that question quickly, because I have another subject I want to bring up. But do you think there will be a deal and that most taxes will not go up?

BARRASSO: We're not there yet, but I'm hoping in a bipartisan way we can get something done before New Year's Day.


Let me -- I wanted to play you something else, particularly because you were an immigration lawyer before you came in, continues to be something you're interested in. And the president was talking about priorities for this year. And here's what he had to say.


OBAMA: I've said that fixing our broken immigration system is a top priority. I will introduce legislation in the first year to get that done. I think we have talked about it long enough, we know how we can fix it, we can do it in a comprehensive way that the American people support. That's something we should get done.


CROWLEY: Sounds like it could be a done deal. Talked enough about it. What do you think? LABRADOR: I think he has talked enough about it, hasn't done enough about it. If you look, that was the first promise he made to Hispanic community that he was going to work on immigration reform did nothing his first four years. I want to work with the president on immigration reform. We have a broken system like you said. I actually practiced immigration law for 15 years. It's a broken system. It's a system that you can't get can employers and employees to actually work within the system. We have too many people that are here illegally. I think we can get something done.

The question is going whether the Democrats want to play politics with it or whether they actually solve the problem. If you remember, in 2007 when Barack Obama was in the Senate, he voted for poison pill amendments in the Senate that actually killed any kind of immigration reform where the senators were -- were not able to get anything done because the Republicans walked away once the pro labor union amendments passed in the Senate. And those amendments passed 48 to 47 and Barack Obama was the deciding vote.

CROWLEY: Senator, let me get you in on this, do you sense a will in the Senate to get something done, immigration reform? Do you sense in the Republican Party there is a need to get immigration reform done because it really hung up Republicans certainly during the election?

BARRASSO: Well I do sense that. I've worked and discussed these issues with Marco Rubio who's taking a leadership role in that.

One of the other things the president talked about today was energy. I'm from an energy state on the energy committee and yet his actions are very different than his words in that interview. He continues to block the Keystone XL Pipeline which would help us in terms of energy security and bringing more jobs to America, so his words are very different than his actions and we see it again on energy with his policies.

CROWLEY: So, Senator Barrasso, thank you so much for being here.

Congressman Labrador, both of you come back. I appreciate it. LABRADOR: Thank you very much.


CROWLEY: Up next, the odds and costs of diving over the cliff with Time magazine's Michael Crowley, AB Stoddard of the Hill, Karen Tumulty of the Washington Post and CNN's Jessica Yellin.


CROWLEY: Joining me now, TIME magazine's senior correspondent and deputy Washington bureau chief Michael Crowley; A.B. Stoddard, associate editor for The Hill, Washington Post national political correspondent Karen Tumulty; CNN's chief White House correspondent Jessica Yellin.

Welcome all. The president gave a news conference, first Sunday appearance in three years, so there's a reason for that and it's because he's pushing to get this fiscal cliff stuff done. And Speaker Boehner took issue, this won't surprise you either, with the president's appearance, in particular the president saying, wait, I have offered $1 trillion worth of cuts, I offered two to one spending cuts and here's what Boehner had to say.

"The president's comments today are ironic as a recurring theme of our negotiations was his unwillingness to agree to anything that would require him to stand up to his own party. Needed cuts and reforms that the president agreed to just last year were no longer on the table as he cited an inability it to sell them to Democrats." So, I don't know, somebody is inflexible here.

KAREN TUMULTY, NATIONAL POLITICAL CORRESPONDENT, THE WASHINGTON POST: Well, he accuses the president of a failure of leadership. In these days when somebody in Washington uses the word "leadership," what they are meaning is caving in and then bringing your own party along.

And I think the president was very clear in this interview that his strategy all along is that he is not going to be drawn into these negotiations because the White House thinks that one of the biggest mistakes of his presidency was doing exactly that in 2011.

CROWLEY: On the other hand he hasn't got anything to lose, quite literally now in the second term of his administration. For a guy that came in that wanted to be a transformative president, really make a difference, isn't that the time to set in?

JESSICA YELLIN, CNN CHIEF WHITE HOUSE CORRESPONDENT: He cares about his legacy. What he wants now is entitlement reform, for bringing down the deficit in some meaningful way, and to do it in a way that is consistent with Democratic priorities.

But he can do that next year. And his poll numbers keep going up the longer he stays at a distance from Congress, as Karen is pointing out. MICHAEL CROWLEY, DEPUTY WASHINGTON BUREAU CHIEF, TIME: Well, and to your point, Speaker Boehner is complaining that he is not in the same place he was in the last time they went around this block. I think the president's position is, I just won a really hotly contested election. And one thing that struck me in his interview with David Gregory was the number of times he referred to that campaign.

He said, we've had a conversation about this for a year, the choices were clearly presented to the American people and they re- elected me. So I think he's playing that card, he's spending some of that capital right now in saying, guys, I won the election.

Now I know that House Republicans say, we were all re-elected too, do you think winning the presidential election has a certain force to it that maybe he feels overrides that.

CROWLEY: It does. And it was a handy win, it was a good, solid win, but 47, 48 percent of the country didn't agree with him. So that's not a small little number of differing opinions.

A.B. STODDARD, ASSOCIATE EDITOR, THE HILL: That's true. And I think the president actually is complicit in our permanent state of "cliff-itis." We are going to have a tiny patch. We're not going to have a real deal that solves our problems. We're going to go right into another fight. The world has been waiting for a year-and-a-half for us to solve our first debt deal. It fell apart. They're waiting on a second one.

We're going to rattle the global markets. We're going to tell our enemies that we're cutting our military. We are telling everyone that we're paralyzed. He's going to be complicit in that. And it is not good for him to go into his second term, the beginning of it, without the ability to go on to move on to clean fights.

We're always at the cliff. We're always at the precipice of default. And that -- the inability to deal with entitlements, to really give on -- and move to the center, on the side of both parties has brought us to this point.

I don't think Republicans are going to be the only ones to take the blame.

YELLIN: Well, let's be clear, there are two separate issues. I mean, a majority of Americans supports raising taxes on people who make $250,000 or more. A bigger number of Americans support that than even voted for President Obama. That's one issue.

Separately is, how do we bring down our deficit? Do we attack Social Security, entitlements, Medicare, Medicaid. And that's this ideological struggle we're seeing between the Democrats and Republicans that will continue in a series of skirmishes probably over the debt ceiling come February, and perhaps ongoing until they finally have it out and resolve this for the long term.

TUMULTY: And I think the White House's view in political terms is that how he handles himself on this really sets the terms of engagement for those subsequent fights. And again, a few weeks ago, when I was talking to people at the White House about how they were going to strategize this, they said, look, this is a reset moment, and, again, we've got to reset sort of the balance of power from the 2011 talks.

M. CROWLEY: I think it's just worth emphasizing on the numbers you mentioned, the public overwhelming supports raising taxes on the wealthy, but also on the spending cuts, they oppose cutting any of those programs in large numbers individually. The problem is, they support cutting spending sort of in the abstract, but when you get specific about it, no, don't cut that, don't cut that, don't cut that.

YELLIN: Right, hands off my Medicare.

M. CROWLEY: So the president has a lot of advantages in the polling although the Republicans do have this card where people say, generally speaking, bring spending down, just hands off my program. CROWLEY: He does. But the fact is, that there -- this whole fight within the Republican Party about tax cuts and tax rates, and all of that, has masked, I think, some real divisions in the Democratic Party about what they're going to eventually have to get to which is these cuts in entitlements. That's when we'll see that kind of inter-party warfare within the Democratic Party, yes?

STODDARD: And it's up to him to force that debate within his own party. You talk to a lot of Democrats and they say, we can never raise the eligibility age. It's a disaster. People are in physical labor. They can't make it from 65 to 67 without really falling through the cracks.

Other ones say, let's just do it, let's just, you know, do the three things Republicans are asking for, which is the chained CPI or raising the age and means testing. It's a real divide over there. But he keeps putting off having the fight with his own party to get to a compromise that actually gets this solved.

TUMULTY: Although, as he pointed out in the interview this morning, he has gotten there on the chained CPI issue, which, again, seems like a really technical thing, but there's a lot of money there.

YELLIN: We'll see if that holds come the new year.

CROWLEY: Exactly.

YELLIN: If we go over the cliff, it could be a whole new ball game.

CROWLEY: A whole new ball game. Hang on just a minute, our panel is going to stick with us. More sorting through the politics of the fiscal cliff when we come back.


CROWLEY: Welcome back to State of the Union.

We've been discussing the president's interview this morning. Some things he had to say mostly about the fiscal cliff, but other issues as well. He talked about his priorities for his second administration. He talked about righting the economy again. He talked about immigration reform. And in his top four, he talked about energy. In his top four, he did not mention gun control until prompted by David Gregory. Take a listen.


OBAMA: You know, I've been very clear that, you know, an assault rifle ban, banning these high-capacity clips, background checks, that there are a set of issues I have historically supported and will continue to support.


CROWLEY: We are back with Time magazine's Michael Crowley, The Hill's AB Stoddard, Karen Tumulty of the Washington Post, and CNN's chief White House correspondent Jessica Yellin.

So, it was not a yes, we're going to get this gun thing done, whatever the gun thing is,whether it is school safety, combination of that and mental health, some kind of gun control. It was not uppermost on the president's mind. What do you make of that?

MICHAEL CROWLEY: Well, he's not running into the breach and as a president you have to prioritize.

CROWLEY: About anything.

MICHAEL CROWLEY: Really about any of those. He didn't seem that passionate about his second term agenda generally. I think he may still be figuring it out. But he responded, as you say, to a question where he was prompted to talk about it. but the test will be, does he leap into the breach? Does he choose in moments in press conferences or to hold presidential events when he could be doing something else to drive this gun control issue? In this case he didn't, he waited until he was asked.

That said, the language he used was pretty forceful. He does seem to feel genuinely about it. He keeps referring to the day of the shooting as the worst day of his presidency. You don't say that lightly. So I think it still remains to be seen.

CROWLEY: But he also said I've historically supported and will continue to support.

YELLIN: Well, look, I know that the White House is mono focused right now on the fiscal cliff. They have put off all cabinet announcements, maybe for a variety of reasons, but I do know that they are trying to make sure nothing is brought up except the fiscal cliff right now. So that's part of the reason they're prioritizing only that.

That said, on gun control he's getting emotional about this. This is -- you can say whatever you want to criticize President Obama. He is not a man who gets emotional easily in public. And I do think that this is something that has hit him deeply, probably out of guilt, because he didn't do much about it or anything about it in his first term.

Will he make it a political priority, will he really be able to pursue it aggressively given the obstacles in his way politically, we'll see. That's yet to be determined...

CROWLEY: But the one thing -- when we covered the White House -- when the White House actually would come up with a bill and say here, Capitol Hill, we would like you to pass this.

TUMULTY: The one thing has always been clear on the gun control debate is that time is not the friend of gun control advocates. Unlike everybody else, the NRA has a singular focus and they have a long memory. And you cannot say that about the public at large.

YELLIN: The Biden group is the tasked with getting them specific legislative resolutions by the State of the Union. You can expect he will come out in the State of the Union with specific -- I bet they will have a bill by February, say.

MICHAEL CROWLEY: But as he said, there will never be...

YELLIN: Is momentum gone by then?

MICHAEL CROWLEY: There will never be more votes for that bill than the day after that shooting. The number is only slowly going to diminish.

CROWLEY: What do you think, AB?


STODDARD: He was resigned -- no, no one wants to talk about it on the Hill on either side. But he was resigned about how congress is broken and he does the best he can and he expects grass roots energy from Americans on these issues that they find the most important. And that he's -- he doesn't say I'm powerless but he said this before that you change Washington from the outside, not from the inside.

And he's urging the public to get involved. Because it is a huge fight. And it's not one he knows he can win. Plus, we're going to stay on the cliff for a few more months and he doesn't know what he can get started in the meantime.

CROWLEY: Well, right. And one other thing just as a final question it seems to me is coming up next, is the debt ceiling. I mean that could happen as early as -- well, it's already happened. And they're fudging the numbers now so that we can continue to do whatever it is we're doing. But we hit that debt ceiling again.

The president said a while back I'm not going to play the debt ceiling game. Does he have any choice?

YELLIN: Listen, people tell me they're willing to go -- they're willing to let us default this time. I mean, they sort of let them play that game.


MICHAEL CROWLEY: Which White House and Liberals and Democrats said was a completely reckless, irresponsible and even crazy position for the Tea Parties to hold. So they are going to have a lot of back tracking to do if that's their new position.

YELLIN: That's not their official position, that's just the -- you know...

MICHAEL CROWLEY: Right. Right. I understand what you're saying. But if the president's position is I'm not going to play that game again. As I understand it, he's essentially ruled out this constitutional option of just doing it unilaterally, so if that leaves essentially the only other option is defaulting is not so bad, boy that runs against a lot of rhetoric from the last time around the block.

CROWLEY: Karen Tumulty, thank you very much. AB Stoddard, thank you. Michael Crowley, our chief White House correspondent Jessica Yellin, thank you for sticking around with me today. I appreciate it.

Stay with us. We're standing by for the Senate to reconvene. We'll be right back.


CROWLEY: You're looking at a very familiar picture that is a live picture of the U.S. Capitol. Why? Because we are moments away from the U.S. Senate right there convening for a rare Sunday session. We are expecting to hear from Republican leader Mitch McConnell, maybe even Senate Majority Leader Harry Reid. As of now, so far as we know there is no fiscal cliff deal, but negotiations primarily between those two men are going on even as we speak, or at least between their staffs.

CROWLEY: We are hearing a new sense of optimism from some senate members who believe they might be able to pass some kind of minimalist package that would keep tax rates from going up on the majority of Americans.

I want to go to capitol hill and CNN's senior congressional correspondent Dana Bash. Dana, is that the sense you get that somehow we should be optimistic about whatever it is that's going on?

BASH: You know, as we talked about before, you definitely get a feeling or the atmosphere here is that there is progress being made but in the same breath you get the but -- but there are still things to be worked out.

One thing I want to point out to our viewers as we wait for what we generally see when the Senate opens which is the pledge of allegiance, a prayer and so forth, that if you see the bottom of your screen, I'm not sure if you can see it, white hair, that is Harry Reid, that's the senate majority leader Harry Reid. So maybe we will hear an update from him. It was on again, off again. Maybe we will hear -- maybe we should listen to the prayer opening the Senate.

UNIDENTIFIED MALE: ...let us feel your presence today on Capitol Hill. As we gather with so much work left undone, guide our lawmakers with your wisdom.

Lord, show them the right thing to do and give them the courage to do it. Be their shelter in the midst of the storm, regardless of how high the waters rise. When they feel exhausted, remind them of the great sufficiency of your grace.

Look with favor on our nation and save us from self-inflicted wounds. We pray, in your strong name, amen. BASH: And now you, Candy, are very familiar with the scene. We're going to hear "The Pledge of Allegiance. Maybe I'll pause for that."

CROWD: I pledge allegiance to the flag of the United States of America and to the Republic for which it stands one nation under god indivisible with liberty and justice for all.

BASH: And now perhaps we are going to hear from the Senate Majority Leader Harry Reid. He is down in the well, as I was saying before we heard the prayer, we were getting some guidance that maybe he would speak, that maybe he wouldn't speak. It really speaks to the fluid nature of the talks going on behind the scenes.

But the fact that we do see him on the floor there, we actually saw him preparing what looks like a little speech.

And there he is.

REID: And that Galante (ph) nomination at 2:00 p.m., there will be two roll call votes on confirmation nominations on William Bear (ph) to be an assistant attorney general, and Carol Galante (ph) to be an assistant secretary at HUD.

Following those votes, there will be a recess to allow for caucus meetings.

And the majorities meeting will begin at 3:00 today.

Will the chair announce the business of the day?

UNIDENTIFIED MALE: Under the previous order, the leadership time is reserved. Under the previous order, the Senate...

BASH: OK, Candy, that is familiar to you and anybody else who tunes in to C-SPAN. Unfortunately for us, at least for now, the senate majority leader has not given us an update on where things stand. He was simply doing some business, some typical business setting in place the schedule that they do have. They actually are going to do other work today, believe it or not. They have some nominations to vote on. So we didn't hear from him in any -- even in any generic sense about where the talks are.

We do expect to hear from the Republican leader in a little bit, though -- Candy. CROWLEY: So Dana, before I let you go to gather up more information, what are we hearing so far? I know sitting in here, I hear both Democrats and Republicans sounding fairly optimistic that they'll get something before the midnight bell rings on 2013. And -- but in general this is just up to those two men, one of them we just saw Senator Reid and the other Mitch McConnell.

BASH: That's right. It's up to them. And, of course they are no question consulting with the White House, consulting with some of the various factions I would say in their caucuses and conferences to figure out if they're heading in the right direction and each side could swallow what ever it is that they're talking about, because as the president said very well, everybody has said, if they have a deal, still a big if, nobody is going to be happy with it.

But you're right, it's kind of interesting that these two men certainly when it comes to the issue of trust, we talked about the fact that the president and the House Speaker who were really the prime negotiators for weeks and weeks, don't have a good level of trust, don't have a good relationship, these two men do. Senator Reid and Senator McConnell know each other and work together as only leaders of the senate have to and have to come to really rely on each other. And so maybe when it comes to the relationships here in Washington, it's a good thing that it's these two men that are working together. And you're absolutely right, it really does rest on their shoulders right now.

CROWLEY: Dana Bash, covering the story for us on Capitol Hill.

I have with me Michael Crowley, AB Stoddard and our own Jessica Yellin.

Just before we go to break, it's great if the two of them can come to an agreement and the White House loves it, but it's always been the House that's been the sticking point. What do you think the scenario is there, AB?

STODDARD: Well, that's going to be really tough for the House Speaker. He said on Friday in meeting with all the leaders and the president that he wanted to bring something up. It might be amended and sent back to the Senate. But he doesn't know what's in there, how much money the Democrats are going to push for to cover the Medicare doc fix, the uninsurance -- I mean, unemployment insurance that is going to lapse at the end of the year and put 2 million people out of reach of a check. And there's other issues -- the alternative minimum tax, a lot of money that they're scrambling to find as they also deal with the tax issues.

So it's really going to depend on what those numbers look like and Boehner doesn't entirely have a sense until he has a Senate proposal to try to sell to his House side.

CROWLEY: I just want to remind our viewers, we will join Fareed Zakaria GPS in progress as we watch the Senate floor and the Senate in general for any signs of progress. But let me ask you vis-a-vis the House. There used to be the so- called Hastert rule, a majority of the majority, that is most Republicans, in this case they're the majority, must support a bill before Denny Hastert would put it on the House floor. I don't get the sense that that's where Speaker Boehner is.

MICHAEL CROWLEY: It doesn't seem like we're there yet. And so you could imagine a scenario, hypothetically, where the House could pass an agreement that's reached in the Senate, with a minority of Republicans and where dozens of Democrats come in to make up the difference. I think that would essentially be John Boehner sort of falling on his sword, diving on the grenade and potentially giving up his speakership.

So you know, Democrats might say this would be a great act of self-sacrifice. It's not the kind of thing you see a lot in Washington. I don't think there isn't any indication it is going to happen.

I just very briefly think it's worth reminding people, however, if we go over the cliff the world doesn't end. It gets worse the more time passes into January and god forbid February, but there's a good chance they will be able to work something out in early January.

Unfortunately, the flip side, is if they do a band-aid solution right now, we do have the debt limit fight coming up.

So either way things are still in churn. It's not like it's black and white in the next 24 hours.

CROWLEY: Really quickly, do you think the speaker would put a bill on the floor that he knew most of his Republicans would vote against?

STODDARD: That's a tough call for him. A lot of people say his Speakership is safe, but that vote happens on Thursday. And you have seen things implode, leadership fights. It's a dangerous thing do.

YELLIN: It could be blessed, though.


YELLIN: They could agree in advance, his members could agree in advance, to let him do it potentially.

STODDARD: Right. And I think that's what he would be willing to do.

YELLIN: Even though they would vote against it.

CROWLEY: Lots and lots of things that are going on many layers to this.

YELLIN: And can we just remind viewers that the next steps now are that the negotiators are working this out, Reid and McConnell will be explaining it to their members later today. And they could, if they get that deal and members agree, they could hold a vote later this evening. It could be a very late night for all of us.

CROWLEY: Thank you guys so much. We'll continue to monitor things. We have to take a quick break. And on the other side Freed Zakaria GPS.