House GOP Meets On Fiscal Cliff; Biden Meets With House Democrats; Americans React To Senate Deal
SUZANNE MALVEAUX, CNN ANCHOR: I'm Suzanne Malveaux. Happy new year. While many of you celebrating start of 2013, there are lawmakers in Washington, well, they are struggling now to reach a deal. Thirteen hours after the deadline for an agreement on the fiscal cliff, you've got House Republicans, they are set to start their meeting about now. Democrats in the House, they have been meeting with the vice president to talk about this as well. He was, of course, instrumental in getting the Senate deal passed. That happened in the wee hours of the morning. So, the bottom line here is what did that agreement look like? Well, it would prevent middle class income taxes from going up. But would raise rates on the income of more than $400,000 a year for individuals or more than $450,000 for couples. Unemployment benefits for 2 million Americans would be extended for a year. What it doesn't address is the spending cuts, very controversial spending cuts. Lawmakers plan to revisit that difficult issue two months from now. So, all eyes today, right now, are on the House for its vote. Dana Bash, she has been following this. She is live from Capitol Hill. Now, Dana, first of all, I want you to explain for us -- we know that there are two things that are happening, the Republicans who are meeting and we know that the vice president is meeting with the -- with the Democrats. When do we expect these two sides to get together and make a decision about whether or not they like what the Senate has put forward or whether they want to come up with something else or amend it in some way?</s>DANA BASH, CNN SENIOR CONGRESSIONAL CORRESPONDENT: Well, let me just, before I answer that, tell you that I'm standing right near the House Republican meeting which is going to start in a few minutes and I might have to duck away because we're waiting for the House speaker to actually come by this camera. So, let me just warn you --</s>MALVEAUX: Sure.</s>BASH: -- in advance that that might happen.</s>MALVEAUX: We'll know, we'll know.</s>BASH: But to answer that question, what's going to happen, we are told, is that the House Republicans, of course, run the House, and they make the decision on when votes are. They are having the meeting right now, but we are told that that is not going to be the definitive or decisive meeting to decide when the vote will be on that fiscal cliff package and how they're going to vote on it, whether offer any amendments. That won't happen until, we're told, another meeting later this afternoon after members have a chance to digest whatever they hear right now. So, that's sort of the state of play in terms of how things could come to be when it comes to the process. With regard to what's going on in another part of the Capital right now, Joe Biden is meeting with Democrats because a big part of the issue is whether or not, as you alluded to, both sides can gather together enough votes -- leaders of both parties get together enough votes to actually pass this in the House. House Democrat -- we're still operating under the 112th Congress, the last Congress. The new one won't be sworn in until later this week. So, Republicans have a pretty health majority even if there are a significant number of Democrats who vote for this, you know, they're still going to need many Republicans to cross over. And so, what they're doing now with the Democrats, Suzanne, is that Joe Biden is trying to convince his own members not to break off because there are a lot of liberals, as we've been talking about, who simply don't like this either and say that they don't like the idea, for example, of keeping tax cuts in place for Americans and households making up $450,000. They think that's simply too high.</s>MALVEAUX: All right, Dana. We're going to be watching very closely. We're obviously going to come back to you as the developments warrant. A lot is taking place there behind the scenes. And, of course, in front of the cameras as well as they play out their own version trying to come up with something to avert the fiscal cliff. The Senate did make a decision, came up with a plan, but, of course, the House has to come up with its own plan and then somehow these two sides have to get together, cobble something together the president can sign. I want to bring in our own Wolf Blitzer in Washington. And Wolf, the first thing here, you've got speaker Boehner and he is meeting with the Republican caucus on the House side. How effective is he in really getting his team on board? I mean, when he had that modest -- more modest plan, the plan B that he wanted to put forward, he couldn't get his own party to sign off on that. Is he a potent -- is he a powerful leader in the Republican party to get them on board for anything?</s>WOLF BLITZER, CNN HOST, "THE SITUATION ROOM": Yes, I think he will show that strength assuming he has Eric Cantor on board, Kevin McCarthy, some of the other young guns, as they lake to call themselves, in the House of Representatives. The other young Republican leaders, if he can get all of them together. He's not going to bring in all of the Tea Party activists in the Republican caucus, but together with the Democrats who will support him this time and the Republicans that could cobble together the 218 votes they need. They have to do this, Suzanne, today or tomorrow because at noon on Thursday, the 113th Congress is sworn in. That's a new Congress, a new Senate, a new House of Representatives. And they have to start from scratch. The legislation that passed the Senate overwhelmingly in the middle of the night last night, that's going to have to be passed once again in the Senate if they don't get this done before Thursday at noon. And remember, tomorrow's a regular day on Wall Street. The markets are opening tonight here on the east coast in the United States. The Asian markets will be opening. And people will be watching very closely to see if there's stability, if there's continuity, if there's going to be a disrupter. And the great fear, of course, is that the House of Representatives doesn't follow the Senate's lead and passes legislation that the president will immediately sign into law. There could be a breakdown in all of that. Taxes will go up on everyone, spending cuts will be imposed, the sequestration, mandatory defense, and domestic spending cuts will go into effect and that could be a major dislocation on the world markets.</s>MALVEAUX: And Wolf, let's talk a little about that, you know, the formal term sequestration. But really, it is -- it's all about those massive cuts, $110 billion of spending cuts. That is something that they kicked across -- kicked the can on for two months or so. So, could we actually see ourselves going through a similar process here when we have the negotiations over the debt ceiling?</s>BLITZER: Yes, we definitely will see a similar, if not even more intense and bitter process in two months or so, whether at end of February or March or sometime like that when that debt ceiling has to be raised. The president has made it clear, he will not negotiate on that. I don't know exactly what he means when he says he won't negotiate. He says he's not going to even let that come up as an issue. But in order for the debt ceiling to go up, the Senate and the House have to pass legislation raising the debt ceiling and it's clear the Republicans, at least the House of Representatives, many of them want to use that debt ceiling as leverage on the president to get what they want, namely, much more significant spending cuts, especially entitlements, Medicare, Social Security, making major reforms or changes down the road, and also domestic programs. They don't want to see cuts in defense spending while the liberal Democrats want to see significant defense cuts. So, there will be a huge battle at the end of February or March, around that time when that debt ceiling comes up once again.</s>MALVEAUX: All right. Well, thanks. We're going to be watching very closely. We want to get the nuts and bolt of the plan as it stand stands now. Business Correspondent Christine Romans, she's joining us here. Christine, first of all, you know, there's a lot to go through, but essentially there are some folks who were basically spared from these tax increases but there are -- there are tax goodies, there are tax credits, all kinds of things that happened. Go through what it means for most of us, most Americans, in terms of at least on the Senate side.</s>CHRISTINE ROMANS, CNN BUSINESS CORRESPONDENT: So, it means the status quo for 98 percent of Americans, right? It means that your tax rates won't go up. It means, for doctors, they won't have a real big cut to how much they're getting -- they're getting for reimbursement from Medicare, right? And it means, for the jobless, they're still going to be able to get a jobless check if you're on extended unemployment benefits. You know, for 2 million people, Suzanne, that ran out December 29th. If the Senate and now, of course, the House, if they don't do an extension of federal unemployment benefits, you're going to see a lot of people suddenly not have hundreds of dollars a week to spend for those jobless checks. It also means, for another million people who were facing the end of their state benefits in the beginning part of the year, they wouldn't have been able to get federal benefits either. So, there are really -- 98 percent of people are going to get the status quo, either the continuation of their jobless check, for a doctor, the continuation of their billing as it is right now, and for working Americans, a continuation, of course, of their -- of their -- of their pay rates. But one thing that's really important -- their interest -- in their tax rates, one thing that's important to note though, even though your tax rates aren't going up, you still could see a smaller paycheck. And you and I keep talking about this. The payroll tax holiday, that wasn't going to be continued -- that wasn't going to survive the fiscal cliff and we all knew it. But that means you're going to have a smaller paycheck, maybe $10,maybe $15, maybe $20 a paycheck is going to be less, so people really need to plan for that.</s>MALVEAUX: And explain this, Christine, there is something very interesting. This is folks making between $250,000, $400,000 that the taxes are not going to change but they could be paying higher taxes because of other things that happened and that has to with itemizing deductions when you file for tax returns.</s>ROMANS: That's absolutely right. So, remember the president initially said that he wanted to raise taxes on the rich? People who make $250,000 a year or higher. In the end he raised -- they're raising -- you know, they're trying to raise taxes on people who make, you know, $400,000, $450,000 and higher. But they're going to limit itemized deductions, personal exemptions for individuals earning more than 250 and households earning more than 300. So, technically, the tax rates could stay the same for these people, but if you limit their deductions, they could have a higher tax bill, that'll get some revenue, too.</s>MALVEAUX: When you take a look at the Senate plan, are there winners and losers when you look at this overall big picture?</s>ROMANS: Winners or losers, you know, I look through and I see a lot of compromise, actually. I see compromise in the estate tax, you know? I see compromise there. I see a win for the president, but I also see a big win for Republicans because of the amount of exempt, you know, estate -- the size of the estate that is exempt is pretty big so I see that there. I see -- you know, look, I look out at this and I see peril because you look at the House. You still have to get through the House part of this process, don't you? And that's something that's still an unknown here. We're just sort of beginning that process right now. I look at the markets and how the markets could react, and, you know, I mean, the markets are expecting a resolution, investors are expecting a resolution. If you get some sort of setback in the House, the real loser is going to be your 401K, it's going to be market stability. So, I think people -- members of Congress, and some of them I have talked to, who fresh in their memory is 2008 when they didn't pass the bank bailout and the markets went haywire. They don't want that to happen again. They're got the markets closed today. They've got a House that's looking at this right now. They're trying to avoid that.</s>MALVEAUX: And they got a new Congress coming in on Thursday. All right. Christine, we're going to be watching all of this. And as Christine points out here, some people look at the 11th hour compromise in the Senate as a win for the president. But, you know, what's going to happen if the House actually sends the deal back? We're going to go live to the White House, up next.