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Patrick Donahoe Interview; First Class Mail Delivery; Cut Deficits Or Else; John Hinckley Hearing; Russian Elections Weaken Putin; Assange Wins Right To Appeal; Seven-Year-Old Girl Missing Since Friday; FAA Administrator Arrested; Young Inventor, Life Changer; Awaiting Obama's Payroll Tax Statement
Aired December 05, 2011 - 13:00 ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
DREW GRIFFIN, CNN ANCHOR: Should be interesting what he says, Suzanne. Going to be very hard sell up on Capitol Hill, I think.
But let's get right to the news. Thank you, Suzanne. I'm in for Randi Kaye for the next hour or so. Inside a month before the Iowa caucuses, the GOP race for president is getting more interesting now. The current front-runner, former house speaker Newt Gingrich, due to brief reporters in New York City this hour. His 50-state strategy is the topic. Earlier today, Gingrich met with Donald Trump who flirted with his own White House run, and who now plans to host a Republican debate, after Christmas.
Then there is ex-candidate Herman Cain whose endorsement could go to Gingrich eventually, though he now says he's going to take his time. Stay with us, we're going to bring you Newt's comments live at 1:45 Eastern time.
Also, President Obama, we are told, is going to have some sort of statement or briefing in the briefing room of the White House. The subject is going to be taxes. A lot of talk of that up on Capitol Hill. We'll hear what the president has to say this hour.
And what does first class mean to you? To the debt-laden U.S. postal service it would mean two to five days instead of one to three days. Slower delivery of first-class mail is the latest plan to try to help trim $20 billion a year from the postal service by 2015. It would mean closing more than half the agencies' 463 mail processing facilities across the country. It's going to mean a lot of layoffs, too. I'll have some questions for the Postmaster General in our "Facetime" segment, that's just minutes from now.
Saving the euro could mean rewriting the rules of the European Union. Ahead of yet another E.U. summit this week in Brussels, the president of France and chancellor of Germany today agreed the 17 nations in the eurozone should face strict new caps on deficits. Violators could face sanctions. The French and German leaders are rejecting a common eurobond as a means of cutting borrowing for costs from member states who are now in trouble.
Testimony resumed in Washington today, the hearing on whether that guy who tried to assassinate president Reagan should be allowed to live as an outpatient. Lawyers for John Hinckley are asking a judge to grant him longer unsupervised visits with his mom who lives in Williamsburg, Virginia. The Justice Department lawyers are fighting that effort, arguing that Hinckley still poses a threat. Hinckley has been confined to a hospital for decades after being found not guilty by reason of insanity in the attempt to kill Reagan back in 1981. Hinckley's brother, Scott, expected on the witness stand today.
And after weekend elections in Russia, Vladimir Putin's ruling party is expected to maintain a majority but will likely lose a chunk of its power in parliament. Those losses come even as an international watchdog group says election violations that favored that party were in place for this election. Presidential elections take place in the spring and under new rules. Prime minister Putin could again take up the role of president, potentially keeping him in charge until 2024.
A legal victory for the founder of WikiLeaks. The British High Court has ruled Julian Assange can fight his extradition to Sweden in Britain's Supreme Court. Assange is wanted in Sweden for questioning on a sexual assault allegation. He denies that, claiming the case is little bit clay motivated.
And today, the FBI and the Georgia Bureau of Investigation have joined the hunt for a missing seven-year-old girl, her name is Jorelys Rivera, she vanished from Canton, Georgia on Friday. No witnesses have come forward. No description of a suspect. Still, police are treating it like an abduction. Here's why. She left her apartment bringing drinks to her friends on the playground. Well, she never made it to that playground. Canton police, that's about an hour north of Atlanta, are looking for any tips. They have a number it's 404-326-1988. There is the girl there.
A one-block area has been evacuated in Miami beach after that showed up on shore. The Miami Beach Fire Department says this object is six feet long, two feet wide. They've called the bomb squad to investigate, the U.S. Navy and Coast Guard also helping. We're going to keep you informed once we or they figure out what it is.
The top man at federal aviation administration was arrested over the weekend. FAA administrator, Jerome Babbitt, charged with driving while intoxicated. Fairfax County Virginia police say he was seen driving on the wrong side of the road Saturday night. Released from jail on a personal recognizance bond.
And with Christmas coming up fast, here's an idea to consider for parents who spend a ton of money on toys only to have the kids lose interest within weeks, days or even hours. There is Toygaroo on the Web site. Parents can rent toys for a lot less than it would to buy them. When the kids get bored with them, box them up, send them back.
Well, people just aren't mailing things like they used to and the post office is still running out of money. On the chopping block. Next-day delivery and jobs. The Postmaster General joins us next.
Plus Newt Gingrich, a news conference in New York City, we're going to bring that to you as it happens. But first, the halftime announcement for the Super Bowl, if anybody can hold their own against the best football players, probably her, Madonna. The material girl will take center stage and no doubt be the center of attention during football's biggest night at the most watched musical event of the year. Why? Well, she sold more than 300 million records. She's a rock and roll hall of famer and is eight years older than the Super Bowl itself. Madonna is 53, to perform at the 45th Super Bowl.
(COMMERCIAL BREAK)
GRIFFIN: Well, this is a first class financial disaster. Business is down, losses are up, and cut-backs, price hikes, any of the usual remedies, are virtually off the table. The U.S. Postal Service is what we are talking about. In fiscal 2011, it loss $5.1 billion. In 2012, it's expected to lose $14 billion. Mail volume expected to fall another 6 percent on top of a 20 percent decline since 2006. And rain or shine, the agency has to prepay its retiree health benefits $5.5 billion a year.
When it wants to raise prices or close offices or cut Saturday deliveries, it needs to get permission and often doesn't, so now comes a new proposal -- promise less, deliver first class mail in two to five days instead of the current one to three. Joining me now to explain is the Postmaster General himself, Patrick Donahoe. You are in a world of hurt, sir. And I'm just wondering, explain to the American public how what is perceived to be a decrease in service is going to help the postal service.
PATRICK DONAHOE, POSTMASTER GENERAL, UNITED STATES POSTAL SERVICE: Well, what we're faced with, Drew, is this, we've got a substantial budget shortfall like you talked about and we have a game plan to take $20 billion out of the expenses of this organization, including pre- funding health care, are eliminating Saturday delivery. Service going from one to three days in the domestic U.S. to two to three days. That's due to the fact that we, this organization, including pre- funding health care, the cost of Saturday delivery.
But one of the other things we're looking at is reducing the service -- changing the service standards, going from one to three days in the domestic U.S. to two to three days. And that's due to the fact that we have lost a substantial volume of mail in the blue mailboxes and that's why we're making this change.
GRIFFIN: Mr. Donahoe, I don't know of a single business that was able to survive once it started cutting the quality of its service. Are you simply out of ideas on what you can possibly do to improve service to get people back interested in the U.S. mail?
DONAHOE: Well, what we're doing is this, we're looking ahead to get a good idea of what the postal service will be delivering for America in the future. And what we see is this, business first class mail, advertising mail and packages. What's happened to us, and it's no different than any other company that's affected by big changes with the Internet. In 2000, five percent of Americans paid their bills online. Today, 60 percent pay their bills online.
So, what we're looking to change is the service standards of the mail that you would collect out of the blue mailboxes where people pay their bills. We just can't wait until it's down to zero. Like any other business, and we're a business, we're 100 percent self-funded, no tax payer money, we have to make these changes.
GRIFFIN: But unlike every other business, a lot of your direction and your mandate comes from Congress. And today in Congress, you got blasted for this plan today by DeFazio out of Oregon, who on the floor -- which we're going to play, says, look, this is the exact wrong time that the U.S. Postal Service is going to cut jobs as many as 100,000. Take a listen to this.
(BEGIN VIDEO CLIP)
REP. PETER DEFAZIO (D), OREGON: This guy, this so-called Postmaster General, should be fired because of a lack of any imagination or initiative is proposing the death nail for the great United States postal service. 100,000 people laid off. Whoa, that's just what we need in America today. Let's lay off 100,000 people. Great idea.
(END VIDEO CLIP)
GRIFFIN: Mr. Postmaster, your response to Congressman DeFazio?
DONAHOE: Here's the thing, if you take a look at what's happened with the postal service, we've had to make a lot of changes as our business models change. As a matter of fact, since the year 2000, we've reduced the head count of this organization by 250,000 people. Our people are very productive, they do a great job. But like any other business, you have to change.
I'm working with Congress right now to get some laws changed that require me to prefund retiree health benefits to the tune of $5.5 billion a year. We've put over $20 billion into that fund in the last three years. As a matter of fact, that would have turned a profit if it wasn't for that.
I also am working with Congress to resolve the five and six-day delivery proposal. Things have changed in our business and like any other responsible business, you've got it react to that and react in the way to keep your finances solid.
GRIFFIN: Is this though in fact a dying business? I'll be quite honest with you. When the first five-day delivery plan came up a couple of months ago. I just took note of what mail I get in my mailbox. And I can -- I can tell you honestly, I think I could drop it down to about once a week to get any value of what's coming in my -- in my mailbox. Are you looking for anything that drastic to just try to preserve the post office?
DONAHOE: Here's the thing, Drew. This year, we will deliver about 165 billion pieces of mail, so we're not going anywhere away anytime soon. We will continue to be delivering bills to customers, people mailing first class bills out like to reach out so they have a connection with their customers. Advertising mail -- advertising through the mail is the best way to get and keep a customer. And we also will be delivering packages.
With e-commerce today, the e-commerce portion of our business has been grown by 15 percent a year, so we have a lot of growth. The problem is when you deal with some things like changes in the Internet like we are, you have to make the responsible decision to move away and cut the losses in order to keep the rest of the business healthy.
GRIFFIN: Is the 100,000 job cut figure accurate?
DONAHOE: Here's the 100,000, it boils down to a couple things. Number one, we've got the change in the network. Number two, we've got some changes in delivery routes. I told you, our people are very productive. We've reduced 20,000 delivery routes the last five years, another 20,000 in the next two years, and the 6:00 to 5:00 day change on Saturday. We'll have no delivery, but we'll keep post offices open. We do have to reduce the headcount in the organization in order to get the finances in order.
GRIFFIN: All right. Patrick Donahoe, Postmaster General. Thanks for taking the heat today coming on, we really appreciate it, sir. Thank you.
DONAHOE: Thank you, Drew.
GRIFFIN: And what started as a high school science fair project, well it's now an invention, and it could ease the pain of wounded vets. Pretty good. Katherine Bomkamp, the inventor, there she is, she's going to join us next.
Also, we are awaiting two live events. Newt Gingrich has a news conference in New York City, and the president is going to be talking about taxes. Newt's at 1:45, the president -- he's going to sneak in at 1:30, we hope.
(COMMERCIAL BREAK)
GRIFFIN: We want to let you know we're expecting the president in about 12 minutes from now at the White House to talk about taxes. We're going to bring that to you live when it happens.
But first, this inspiring story. My next guest really a go-getter out there. Her dad got treatment at an army medical center. Her name is Katherine Bomkamp. She started chatting with other vets there while her dad was being treated, many of them amputees, and they were complaining about this phantom limb pain which is really a crippling pain associated when somebody loses a limb. So her high school announced a science fair. She has invented a prosthetic design to ease phantom limb pain.
Thanks for being here, Katherine.
In the beginning here, mulling (ph) around with this idea, what did people say to you?
Katherine, are you there? I'm hoping you are.
KATHERINE BOMKAMP, INVENTOR: I can hear you. Can you see me?
GRIFFIN: Well, yes, I can hear you and I can see you.
Tell me about your phantom limb. How does it work?
BOMKAMP: OK. So I invented and patented a holistic prosthetic device that has the potential to hopefully eliminate phantom pain in amputees. And I did this by incorporating thermal biofeedback into the prosthetic socket. And this is where the person's residual limb will fit into the prosthetic limb itself. And this heat -- well, I incorporated the thermal biofeedback into the socket, and this heat stimulates the severed nerve endings in the residual limb and it forces the brain to focus on this heat, rather than to continue to send signals and commends down to a limb that's no longer there, essentially eliminating this pain that the person experiences.
GRIFFIN: Wow. How did you come up with that idea?
BOMKAMP: Well, my father was a veteran. He's a 20-year -- spent 20 years in the Air Force. So his last duty station was at the Pentagon. And my family lived right outside of Washington, D.C. And I would go with my dad to Walter Reed Army Medical Center. And basically just walking in the door I would see very young amputees, many who weren't much older than myself, who had return from Iraq an Afghanistan. And sitting in the waiting rooms, I would talk with them and hear their stories and I would go home and do research on the things that we had talked about.
And this phantom pain kept coming up in our conversations. And I started doing research and found that there's no medication approved on the market for phantom pain and that most amputees are commonly prescribed antipsychotics and barbiturates. Drugs that are both expensive and have a high addiction rate. So for my 10th grade science fair project that year, I decided to see if I could somehow eliminate this pain without the use of these drugs.
GRIFFIN: OK. Well, listen, we're awaiting the president's news conference. We have to go. But I assume everything is going well and we look for good things from you in the future. Thanks so much for joining us.
BOMKAMP: Thank you.
GRIFFIN: And also we are awaiting Newt Gingrich. He was supposed to have a news conference today. A lot of discussion today about whether or not Herman Cain would be there. Looks like Herman Cain will not, but perhaps The Donald will. That's where the Newt Gingrich news conference is going to come. And also we're waiting on President Obama, who is going to make some kind of statement about taxes. Wolf Blitzer and Gloria Borger are going to join us right after the break.
(COMMERCIAL BREAK)
GRIFFIN: We have been told that just about six minutes from now President Obama is going to speak on the tax battle going on in Congress. He's going to do that from the White House. And right now in Washington, D.C., we have Wolf Blitzer and Gloria Borger, who are going to weigh in on what may be happening, taking us to the president.
Guys.
WOLF BLITZER, CNN ANCHOR: Thanks very much, Drew.
This is a huge issue, Gloria. We're waiting for the president. Brianna Keilar's over there. I want her -- I want to go to the White House for a moment.
Brianna, set the scene for us. This is a late addition to the president's schedule. He's about to walk into the briefing room, where you are right now, and make a statement. I assume putting pressure on Congress to pass legislation that will extend the payroll tax cut.
BRIANNA KEILAR, CNN CORRESPONDENT: That's exactly right. And the way the White House is framing it, Wolf, is that President Obama will come in here and his message will be to urge Republicans to make sure that taxes do not go up for Americans, because the payroll tax cut is something that about 160 million Americans have had for the past year. The White House certainly wants to extend that and actually expand it, although this new compromise proposal coming from Democrats just extends the tax cuts that's already in effect.
Very much the White House has felt that it has had some momentum with a strategy that we've seen lately last week when the Senate failed to pass the payroll tax cut extension in two different ways. You heard the president -- you heard White House officials saying, and certainly President Obama said in a statement following that vote that it's essentially Republicans who are looking out for wealthy Americans at the expense of the middle class. So sort of couching that argument in such a way that they feel really resonates with voters, Wolf.
BLITZER: Do they think at the White House that the Democrats, on this issue -- and it's a sensitive issue because, in effect, if they don't let the tax cut continue for another year, that effectively would be a tax increase on millions and millions, as you point out, tens of millions of middle class working families. Do they think they can effectively split the Republicans in the House and the Senate and get enough votes when all the dust settles? Because so far they haven't been able to do that.
KEILAR: They do. And that's why they feel that this argument resonates, because you've seen -- you've seen certainly Republicans who have stuck to no tax increase pledge. They feel like they're cornering Republicans in that way because if Congress were not to take action on this, then people would see essentially their taxes go up by seeing this tax cut expire. And so that is sort of where they've tried to pin Republicans down and say, you would be allowing taxes to go up. Of course, Republicans have had issues with the way that this is paid for and you will certainly expect that to continue, Wolf, as we've learned the details of what the Democrats are proposing as a compromise.
BLITZER: All right, Brianna, stand by. The president should be walking into the briefing room where you are, momentarily.
Gloria Borger, our chief political analyst, is here. The devil is always in the details. In this particular case, how do you pay for continuing this tax cut for millions of middle class families for another year?
GLORIA BORGER, CNN CHIEF POLITICAL ANALYST: Well, it's a question of whether you put a surtax on millionaires. If you're Democrats, that's what you want to do. And now some compromise version may be not to keep it in perpetuity, but to keep it for 10 years.
The interesting question about Republicans is, there's kind of a split in the Republican Party. There are some Republicans who say, you know what, you never should have to offset a tax cut, because, in the end, the tax cut will bring more in to the American economy. So you don't -- you shouldn't have to offset it.
But there are lots of fiscal conservatives now in the Republican Party who say, you know what, you should have to offset a tax cut. And we need to figure out a way to do it or we're not going to vote for it. So the Republicans are the ones who are really right now trying to figure out how to come to terms with this. And, ironically, it's the Democrats who are saying, OK, let's extend the tax cuts. So the parties have kind of reversed roles, in an odd way.
BLITZER: Yes, because everybody remembers the Bush tax cuts of 2001 and 2003.
BORGER: Sure.
BLITZER: They weren't offset by spending cuts elsewhere.
BORGER: Right.
BLITZER: They were just tax cuts.
BORGER: Right. So there's a new sense among these fiscal conservatives and Tea Party conservatives that, you know what, you need to offset every tax cut. And some Republicans say, no, you don't. And the Democrats are saying, OK, we're going to offset it with the surtax on millionaires, which, of course, Republicans don't like.
BLITZER: Because the Republicans make the argument that these are job creators.
BORGER: Yes.
BLITZER: People who make a million dollars. Small businesses that file as individuals, if you will.
BORGER: Right.
BLITZER: And if you raise taxes on them, that will undermine the ability to create jobs.
BORGER: That's right. And there are other Republicans who make the argument that these payroll tax cuts that we have seen actually haven't work as well as they would have liked them to work, because we're still in this recession and so some are also skeptical about it. But it's kind of an odd situation when you've got Democrats for the tax cuts and Republicans saying no.
BLITZER: Now, Harry Reid, the Senate majority leader, he says he's got a compromise, if you will.
BORGER: Yes.
BLITZER: Because last week the Democratic version failed, the Republican version failed. Both designed to extend the middle class payroll tax cuts.
BORGER: Right.
BLITZER: But how to pay for it, that was the issue.
BORGER: Right. And --
BLITZER: He's got a new version he wants to release.
BORGER: And according to our congressional correspondent Kate Bolduan, one of the things he's going to do is propose, you know, extending the tax cuts on employees, but no longer on employers. That would save some money. And also on the surtax on millionaires, not making it permanent but rather saying that it would phase out after a decade or so.
BORGER: According to our congressional correspondent, Kate Bolduan, one of the things he is going to do is propose extending the tax cuts on employees, but no longer on employers. That would save some money. And also on the surtax on millionaires, not making it permanent but rather saying that it would phase out after a decade or so.
But it's clear, Wolf, that the Democrats believe that they have the better side of this argument. Our polling shows that the American public is really with them, Wolf, when it comes to raising taxes on millionaires.
BLITZER: This whole notion -- it's fascinating. This is really important. Because they have to resolve this by the end of this year. Otherwise, it will lapse and that $1,000 per middle class family or 1,500 tax cut will simply disappear and it will go up to the higher level.
BORGER: Right. Then, you also have a Republican presidential primary going on, don't forget, Wolf. You have most people participating in that primary saying, we ought to extend these tax cuts. But some say you need to pay for them.
BLITZER: It's not going to be an easy thing as you point out. The middle of the presidential race right now. It will be fascinating to see how the Republican candidates deal with it. Obviously, very sensitive issue, raising taxes on the middle class.
BORGER: Which they don't want to do. And you know, it is for them to make the argument that we want to keep the Bush tax cuts for the wealthy but we don't want to keep these tax cuts for the middle class. That's why the Democrats believe they've got the better part of this argument. That's why we're going to hear from the president.
BLITZER: We'll be hearing from the president momentarily.
I wonder if Brianna Keilar -- are you still available? Are you still there in the briefing room? Can you talk to us? Brianna, are you there?
KEILAR: Hi, Wolf, yes, I am. Sorry.
BLITZER: I was wondering if we have any word from White House officials whether or not the president will simply make a statement and then leave, or whether he'll stick around and start answering reporters' questions. If we get an answer on that, that would be interesting. Let's stand by and see what he actually does. I suspect it won't be a very long statement.
It is always important when the president decides to add his weight. There's a lot of the Republicans, at least, that have been accusing President Obama of being MIA on some of these issues. He's busy campaigning around the country. He's not getting his hands dirty, if you will, on these negotiations that are obviously involved with the Congress.
BORGER: This is one of those situations, Wolf, where the president can really use the bully pulpit. When the president goes into the briefing room, he makes a statement to reporters. All eyes are upon him. He's not out on the campaign trail.
And clearly -- don't forget, the argument of the wealth gap in this country is going to be the key argument playing out in the upcoming presidential race. And this is something that's going on in Congress right now that's about to expire. And the president believes that he's on the right side of this issue, so he can take to the podium today and make an awful lot of news without having to be out on the campaign trail. It's one of the advantages of incumbency, obviously.
BLITZER: We are still waiting for the president.
You're looking at are live pictures from the briefing room. We are told momentarily the president will come in and make a statement urging Congress to extend the payroll tax cuts for at least another year. Otherwise, there would technically -- be effectively be a tax increase on tens of millions of American families.
Brianna Keilar is over there.
Do we have any idea whether he is going to answer questions, too, or just make a statement?
Unfortunately, we don't have Brianna.
(LAUGHTER)
She's already sitting waiting for the president of the United States. We do have Will Cain and Roland Martin, who are standing by watching all of this.
What goes through your mind, Will, as you get ready to hear the president make what's certainly going to be a predictable statement urging Congress to go ahead and do the right thing, let all these millions and millions of middle class American families have this $1,000 a year, or $1,500 a year tax cut continue?
WILL CAIN, CNN CONTRIBUTOR: You know, Wolf, I think what goes through my mind is what we are all wondering, is how he will suggest that be paid for. That's the cliched term of the moment, how will it be paid for.
I think Gloria is right. It does put Republicans in a tough position to defend extending the Bush tax cuts but be opposed to extending the payroll tax. I think you'll find is they won't be opposed to extending the payroll tax cut. The entire argument will be about how it will be paid for.
I think to respond to one thing Gloria said, I think it is a tough argument for Democrats to make as well. And we want to extend this payroll tax cut but we don't have any room, anywhere within the government spending budget to cut anything back to pay for that. Republicans, on their side, suggested we ought to just freeze government wages to pay for this. Why is that not a legitimate thing?
BLITZER: A lot of Republicans are saying there is so much bloat and so much fat in the government, Roland, that, go ahead, if you want to continue this tax cut for the middle class, and everyone seems to want to continue it, then go ahead and start cutting.
I interviewed Ron Paul, the Republican presidential candidate, the other day. He said basically, bring home thousands and thousands of American civilians from Iraq. Now that all U.S. troops are about to leave, thousands of American diplomats at the world's largest U.S. embassy in Baghdad, that alone could pay for a lot of this.
ROLAND MARTIN, CNN CONTRIBUTOR: Right. Wolf, all of that being taken into consideration. But to Gloria's point, and what Will has said, the reasons Republicans are stating this is because they will not admit that the Bush tax cuts contributed to our deficit. They have been trying to deny this over and over and over again.
And if you look at the CBO number, Congressional Budget Office, it shows, during those eight years, some $5 trillion added to the federal deficit. And so all of a sudden, they don't want to say that. So what they say they want an offset, it is because they recognize that was part of the problem.
So Democrats have them in a bind because they're saying, wait a minute, Grover Norquist is your guy. You guys love tax cuts. But now you are seeing the reality that when you cut taxes, you are taking in less revenue and it adds to the deficit. That's why they're stuck in this conundrum because they don't want to own up to that real hard fact. BLITZER: It is a sensitive issue.
Will, stand by for a moment because Gloria wants to weigh in on this -- Gloria?
BORGER: I mean, you have Republicans essentially saying tax cuts pay for themselves. So why do we even have to pay for it? Because in the end --
MARTIN: But that's not true.
BORGER: -- it is going to pay for itself. Well, that's the disagreement between the Democrats and the Republicans. But, there are now -- there is now this split in the Republican Party. Some Republicans continuing to say, like Scott Brown of Massachusetts, for example, you don't need to pay for it now because it will pay for it self. And other Republicans saying, we do actually need to pay for it because it is not going to pay for itself.
MARTIN: That's not true, Gloria. Right. Republicans are dancing around this because their argument is simply not true. The numbers are the numbers. We can't have optional facts.
When the CBO says, when they score it, when they say the Bush tax cuts contributed to the deficit, we saw this whole argument play out in December when President Obama had the extension, when they said let's cut the $70 billion of the richest folks in the country because it adds to the deficit. So they don't want to say tax cuts are contributing to the deficit but this is their way of saying, oh, no, we need to have offsets as another way of saying it. They want to deny reality.
BLITZER: Let me let Will Cain react to that.
Go ahead, Will.
WILL CAIN, CNN CONTRIBUTOR: Yes. I want to agree with one thing Gloria's saying. The very important split here is the split within the Republican Party. You have men like Tom Coburn, men who were involved in the Bowles-Simpson commission for deficit reduction, are the same guys now saying we have to pay for these tax cuts.
They aren't the guys making the argument that every single tax cuts leads to economic growth and will therefore contribute to deficit reduction. Then you have guys from the Grover Norquist vein who make that exact argument. I think that's an interesting split. But the argument is how do you really pay for it? The argument that all Republicans make simultaneously is pay for it with plenty of government waste, plenty of government spending to cut back on. Why must you trade one tax for another tax? Why is that the only solution to paying for things? Why can't the government --
(CROSSTALK)
MARTIN: It's real simple, Will. It's simple. Because they don't want to have to tough those pork barrel projects. the Republicans don't want to have to touch defense. and Democrats don't want to touch Social Security and Medicare. The three largest areas of our budget and our deficit are dealing with entitlements, also dealing with defense. Both sides refuse to touch it. but no one wants to put it on the table because they know that they don't want to appeal -- they don't want to hurt those key voters who are going to be going to the polls in primaries in the general election next year. That's the real truth.
BORGER: If you're a true believer and you are a Republican who believes that the tax cuts will pay for themselves, the question really is, not how do you pay for it, but why do you pay for it? Right? I mean, why pay for it at all? The Democrats, ironically, are acting much more like the conservative Republicans here. It is kind of an odd alliance but they are actually saying we want the tax cuts but we also believe we need to pay for them. That's where the surtax comes in.
BLITZER: But what the Democrats are doing, Gloria -- I want to take a quick break. The Democrats want to pay for it by raising taxes on rich people --
BORGER: On the wealthy.
BLITZER: -- on people earning $1 million a year or more. A Couple hundred thousand people fit into that category. The Republicans are saying they're not going to be increasing taxes on even millionaires or billionaires, as the president likes to say.
All right, we are waiting for the president. He's obviously running a few minutes later. He it was supposed to be in the briefing room 10 minutes or so ago. We'll take a quick break and get ready for the president.
Also, Newt Gingrich, he met with Donald Trump earlier in the day in New York. Newt Gingrich is getting ready for a news conference in New York City as well. We'll hear what the Republican presidential front- runner has to say.
Lots of news happening today, as always, right here in the CNN NEWSROOM.
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BLITZER: We're back, waiting for the president of the United States. He's about to walk in, we're told by his aides, into the White House briefing room to make a statement on trying to extend the middle class tax cuts, extension of the payroll tax cut for another year. Unless Congress takes action, it will expire at the end of this year. And for tens of millions of American families, working families, there will be about a $1,000 a year tax increase for many of those families of $1,500 a year tax increase. The president will urge Congress once again to go ahead and pass this legislation. Congress failed to do so last week. The Democrats wanted to offset the tax cut by increasing taxes on rich Americans, those earning more than $1 million a year. Republicans rejected that. So it's going back and forth.
Brianna Keilar is at the briefing room in the White House, our White House correspondent.
Brianna, what's the guidance that you are getting? Will the president just make his statement and then leave, or will he also answer reporters' questions?
KEILAR: We're expecting that he just makes his statement and then he leaves, then White House Press Secretary Jay Carney will continue with his normal briefing, Wolf.
But this is a concerted effort that we're seeing between congressional Democrats and the White House. Democrats unveiling -- we got all of these details about compromise legislation, as they are calling it. I know Republicans would take issue with that label. Then the president coming out, and in one word, what he's going to be saying is that Republicans need to get on-board and not increase taxes on millions of Americans.
This is a payroll tax cut that has been in effect and. if it were to expire, then you would see many Americans who would see less money in their paychecks. So they would at least feel it in a small way. But overall, we are talking about $1,000, maybe $1,500 for certain families. But that's going to be the president's message that Republicans need to get on-board and that's really what he's going to emphasize. There are certainly some new details that we are learning about this legislation.
I think also what's interesting, Wolf, is that talking to some Republican sources on the Hill, last week, when you talked to sources, there seems to be this sense that it was inevitable that the payroll tax cut would be extended. I would say that there's no one saying it is definitely not going to be extended, but certainly there's more uncertainty about it at this time -- Wolf?
BLITZER: It certainly would be a bitter pill for a lot of American families to have to swallow coming on the eve of Christmas. It is a tough political time to tell tens of millions of American families your taxes effectively are going to go up next year. And here's why. It is going to be a potent political argument in this presidential election season as well.
Brianna, stand by. Once you get that two-minute warning from the officials at the White House, the president is about to walk in to the briefing room, let us know. We'll come back to you obviously.
Gloria's here with us as well.
And you know, it's the season right now, on the eve of Christmas, to go ahead and tell a lot of American families your taxes are going up next year, that's a tough one to have to sell.
BORGER: It's for families, say, earning around $50,000, you'd see about a $1,500 increase, which is not easy for the Republicans to sell, which is why I agree with Brianna that I think, in the end, they're going to get something through.
But there's another question also, Wolf, which is the extension of unemployment benefits -- will be coming up if they -- they expire at the end of the year. This is something that the Democrats are really pushing for. And so far, Republicans seem to be holding out on that. It seems to me much more likely that you would get some kind of extension on the payroll tax cut than the extension of unemployment benefits. But again, I wouldn't be surprised if we heard the president talking about both.
BLITZER: Yes, talking about both in the same breath.
BORGER: Right.
BLITZER: Although, you're absolutely right, politically, continuing the tax cuts for middle class, that's obviously going to be a much greater political issue than keeping the 99 weeks of unemployment benefits going for a longer period of time. That's going to be the subject of debate, whether that actually helps or hurts the economy.
We'll take another quick break. We're waiting for the president of the United States.
And also for the former speaker of the House, the Republican presidential candidate. Looking at live pictures coming in from New York. We'll hear what he has to say. He met earlier today with Donald Trump.
Newt Gingrich and Barack Obama, they're both coming up live right here in the NEWSROOM.
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BLITZER: We are standing by for the president of the United States. These are live pictures from the White House briefing room. He's about to walk in, we're told, fairly soon. He's running about 20 minutes later so far. Walk in and make a statement on extending the payroll tax cuts for at least another year. The Democrats coming up with some new so-called compromise proposals to try to sell it in the House and the Senate. The president will make a statement. We'll take that live.
We are also standing by for Newt Gingrich, the Republican presidential candidate. He's getting ready to hold a news conference in New York. He'll make a statement and answer reporter questions as well. There you can see a live picture from New York.
As we await the president, let me bring back Will Cain and Roland Martin.
I want to talk to you briefly about Gingrich.
Will Cain, first to you. What an amazing comeback story out of nowhere. I think he's now, together with Mitt Romney, it's fair to say, the Republican presidential front-runner, doing amazingly well right now. But a lot of his enemies, critics, say he's fully capable of going back down if he says something, if he explodes or implodes or whatever. What do you think, Will?
CAIN: When, not if, Wolf. When? When does he implode, not if? When do all of his skeletons, all of his substantive problems -- he's just as guilty as being a RINO as Romney. He's got just as many character flaws as Cain. When do those come out, not if. Will it be before or after he wins the nomination or before he wins the nomination? I think these are legitimate questions. I don't know how Gingrich will hold on for the long haul. I suspect he won't. I'm concerned about when this might happen.
BLITZER: This notion of being a RINO, Republican in Name Only, Will --
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-- I want you to explain. I've known Newt Gingrich for a long time.
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BLITZER: I've known him as a conservative and a Republican. Why do you think he's a RINO?
CAIN: No, no, no. I didn't say that. I said he's just as guilty of being called a RINO by those that are RINO hunters. And you defined it, and I'm sorry that was inside baseball talk. Republican in Name Only.
Mitt Romney gets called a RINO for having championed the health care mandate in Massachusetts, for being on both sides of the abortion issue. Well, Newt Gingrich has been on both sides of the climate change issue. He sat on a couch with Nancy Pelosi and said man is causing climate change and we must do something about it. He championed Medicare Part D. He championed the health care mandate itself. He has many of these flip-flop issues on substantive policy, as many as Mitt Romney, in his past.
The issue is, Wolf, I think many conservatives are placing style over substance. Newt Gingrich is combative. He's going to take it to President Obama. So a lot of voters, or at least a lot of poll takers are willing to overlook these charges against Gingrich in a way they won't with Romney.
MARTIN: Hey, Wolf --
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BLITZER: Roland -- hold on, Roland.
Newt Gingrich's supporters are probably watching right now. We're getting ready to hear from the president of the United States. We're getting ready to hear from Newt Gingrich. Probably, many of them are saying, wouldn't this be nice if this simply continued into the presidential general election season next year?
But go ahead and weigh in from what we heard from Will.
MARTIN: Yes. First of all, remember, in 2008, Republicans were saying John McCain wasn't conservative enough. Look at his track record. My god, the kind of criticism he got, so it's no doubt you're going to hear that. Also, I this think part of the problem, the Washington, D.C., media elite needs to stop sitting here saying, oh, Americans already know everything about Newt Gingrich. Look, he wasn't on the national stage. People weren't talking about him as being the president of the United States, as being commander-in-chief. I do believe we can't dismiss his statements, dismiss his personal issues, his financial issues, the $300,000 fine he had to pay to Congress. And so we have to do our job to say, this is who this man is who wants to be president. There's no doubt they'll look tough at him.
But I think, Wolf, that we fail to say it's a Gingrich/Romney deal when, in the latest "Des Moines Register" poll, Ron Paul is sitting it in second place. It's a bit unfair to overlook the person sitting in second and look at the person sitting in first and third. We've done that far too often. I'm not saying Ron Paul can win the nomination. But it's a bit unfair to overlook the guy that is actually sitting right behind Newt Gingrich.
BLITZER: Yes, Ron Paul doing great in the states, these early states, Iowa, New Hampshire, South Carolina, Florida. There's no doubt about that.
Gloria Borger, as we await the president of the United States, he's getting ready, we're told, to come into the briefing room, make a statement on extending the payroll tax cut for middle class families.
you know, for the first time in recent days, I don't know about your conversations with Obama supporters, Democrats, White House officials, I'm beginning to get a sense, you know what, they always thought it would be Mitt Romney and only Mitt Romney. That he was the inevitable Republican challenger, the Republican nominee. But now I'm hearing, well, maybe it could be Newt Gingrich.
BORGER: Well, it's interesting. I think you're right. I went to a focus group last week with 12 Republican primary voters in Virginia, and I watched them talk about Mitt Romney. And it was very clear to me, they had absolutely no emotional attachment to his candidacy whatsoever. They respected him but had no affection for him.
With Newt Gingrich, they seem to have a lot of affection for him and they were very unaware of the history that Roland Martin is talking about. When you talk to people inside the Romney campaign, they'll say to you, we want that history to come out. But is there enough time to let the American public know about it, to let the Iowa caucus goers know about it before the Iowa caucuses in less than a month? So now suddenly, timing becomes very, very important here.
BLITZER: Four weeks from tomorrow, January 3rd, the Iowa caucuses.
Our White House correspondent, Brianna Keilar, is still over there.
Do we know why the president is running 25 minutes late or so, Brianna?
KEILAR: No, Wolf. We have no idea at this -- although, I think -- here he comes. Or here his binder comes, I should say, which is an indication he'll be here in a couple of minutes.
So we expect President Obama's message to be pretty -- I guess he's trying to keep it pretty simple. And that is, don't increase taxes on middle class Americans. This is his message for Republicans. He's urging them to join with Democrats on this plan that has been unveiled today to keep that payroll tax extension in place.
And, of course, the way that Democrats are proposing to pay for it would be an increase on the wealthiest Americans, sort of a somewhat adjusted millionaire surtax, as Democrats called it, Wolf. That's a message the White House really thinks resonates certainly when they look at public support, and they feel they've sort of boxed Republicans a bit into a corner with this message -- Wolf?
BLITZER: Are we now formally in the two-minute warning or they haven't done that yet, Brianna?
KEILAR: Wolf, it's unclear. I expect the president shortly. He's definitely running late but I haven't heard the two-minute warning.
BLITZER: OK, all right. We'll stand in close touch with you and all our producers over at the White House as well.
Gloria still watching what's going on.
You know, the whole notion, though, the Republicans are not going to vote for increasing taxes on really, really rich people, people making more than $1 million a year. But the president and the Democrats continue saying this surtax is definitely the only way to go.
BORGER: Right.
BLITZER: How do you get over that?
BORGER: Well, they say you've got to do the surtax on millionaires, but they're not going to make it permanent. They would sort of sunset it in a decade or so. And also they are going to propose some kinds of cuts in non-health care, mandatory spending. So they are going to attack the spending side of this. Because they're not including employers anymore in the tax cuts, Wolf, the price tag goes down from about $265 million to about $180 million. So they don't have as much to pay for as they would have if they included employers.
But I guarantee you, Republicans, if they're going to go for this extension, will want to include employers as well, and that will cost more money.
BLITZER: All right.
So we're now in that two-minute warning, we're told, meaning, we're, I think, we're about a minute away from the president walking into the briefing room over at the White House. You'll see it live here.
And later, I just want to remind other viewers, Newt Gingrich, the Republican presidential front-runner, he will be holding a news conference in New York. You'll see that live here in the CNN NEWSROOM as well.
So a lot of news happening on this day. But the focus right now is on extending the payroll tax cut for at least another year. Unless Congress takes action and passes legislation in both the House and the Senate in the coming days, that continued lower tax rate for middle classes families will simply disappear and it will cost -- wind up costing tens of millions of American families about $1,000 a year, maybe even $1,500 a year. That would be very bad news anytime, but especially coming on the eve of Christmas and New Year's. This holiday season that's going to be politically very, very difficult to sell.
Right now, Republicans and Democrats on the Hill say they're ready to extend the middle classes tax cut, but the debate is how to offset what it would cost the U.S. Treasury, that tax cut. That debate is intense. Democrats want to raise taxes on millionaires. The Republicans say that would simply undermine the economy, it would destroy the job creators, if you will, people who are out there creating jobs. They're going to vote against that. That did last week. They will down the road.
Right now, Harry Reid, the Democrat leader in the Senate, he's suggested that maybe there's compromise, maybe there's a way out. And maybe we'll hear one of those compromise proposals from the president when he walks into the briefing room in the next few seconds.
You see his aides there bringing in some documents, taking some documents away. The president will walk in. You'll see some of his aides walk in with him. And we'll listen to hear what he has to say.
Gloria, as we wait for the president -- and I think he should be westbound literally a few seconds if you believe that two-minute warning that the White House officials gave us. Once the president walks in -- I don't know why he doesn't simply stick around and answer reporters' questions. What's the problem?
BORGER: Well, he may --
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BLITZER: Why does he just walk in, maybe a statement, and then leave and let Jay Carney, his press secretary, answer reporters' questions?
