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WALLACE: And hello again from Fox News in Washington.
Well, it's beginning to feel like Groundhog Day in the talks to avoid the fiscal cliff. Both sides dug in, no agreement in sight. And, we're now just 23 days from the brink.
Joining us to break down where things stand are two leading senators: Democrat Charles Schumer of New York, and, Republican Bob Corker of Tennessee.
Gentlemen, House Speaker Boehner said -- on Friday that another week has been wasted.
Senator Corker, given that President Obama won the election, and seems to have most of the political leverage, what's the realistic deal to be made in the next 23 days?
SEN. BOB CORKER, R-TENN.: Well, first of all, I do think something is going to happen. I hope it's large enough for people like me that want to see entitlement reform to vote for. But, you know, the president does have some leverage now. On the other hand, Republicans have leverage with the debt ceiling and the C.R. which ends in March.
So, hopefully, cooler heads will prevail. But there are different theories coming forth on how to deal with this.
And again, Chris, it's a unique moment in history, where every developed country in the world, economists on both sides of the aisle, know the greatest threat to our country is fiscal solvency and we have a situation where the minority party is trying to leverage the president into doing something that's great for our nation. It's a very unique time and I hope the president soon will see the light.
WALLACE: Senator Schumer, three weeks left. What's the compromise and -- this is the important part, that both sides can live with -- on taxes, spending cuts, and entitlement reform?
SEN. CHARLES SCHUMER, D-N.Y.: Well, I think we will get a deal. I think everyone realizes how important it is. Our economy is moving up some, not fast enough but, some, and to go over the cliff would be terrible.
I think we will get an agreement. And, the reason I think we'll get an agreement, what's standing in the way is revenues, particularly making that top rate go up to 39.6. But I think we are seeing real progress in that regard in two days.
First, a good number of Republican conservatives, people like Coulter and Kristol, have said we have to do it. Last week, Tom Coburn said it's preferable than cutting the deductions and, you have business leaders who supported Mitt Romney, Republicans, the head of FedEx, the head of AT&T saying, let it happen.
So I think that's likely to happen. The president won the election on that issue and I think you will see our Republican colleagues reluctantly say, OK. Let's go up to 39.6.
WALLACE: Senator, let me interrupt right there, let me bring in --
WALLACE: -- Senator Corker.
Senator Schumer is exactly right. A growing number of Republicans and conservatives, though not a majority, but a growing number are saying, look, we're going to have to cave on tax -- on raising tax rates, not just the idea of closing loopholes. Would you accept returning to the Clinton rate of 39.6 percent? Or, would you accept something, perhaps, a mid-point, 37 percent or starting with people who make $500,000, rather than $250,000?
CORKER: Well, Chris, there is a growing group of folks, that are looking at this and realizing that we don't have a lot of cards as it relates to the tax issue before year end. I mean, we're -- have one house, that's it. The presidency and the Senate in the Democrats' hands.
So, and a lot of people are putting forth a theory and I actually think it has merit where you go ahead and give the president the 2 percent increase that he is talking about, the rate increase on the top 2 percent. And all of a sudden, the shift goes back to entitlements, and all of a sudden, once you give him the right on the top 2 percent, it's actually much lesser tax increase than what he has been talking about, the focus then shifts to entitlements and maybe it puts us in a place where we actually can do something that really saves the nation.
So, there is a growing body. I actually am beginning to believe, that is the best route for us to take, to, again, shift the focus where it needs to be, which is on entitlements.
Still, Chris, the top 1 percent in or country, take in 17 percent of the income and pay 37 percent of the taxes that are paid. I do hope we'll take up tax reform in a way that creates growth in our nation at some point. But at this juncture, we may be exactly where Senator Schumer says, and I'm not sure that's not the healthiest place for us to go as Republicans, to really get entitlement reform to save or nation.
WALLACE: Well, all right, Senator Schumer. You just heard Senator Corker say, look, I would consider and maybe I'll go for raising the rates, all the way up to the Clinton rate, 39.6 percent, for the top 2 percent. But, we need spending cuts and we need entitlement reform.
What are you guys willing to put on the table?
SCHUMER: Well, bottom line is, if Speaker Boehner ends up where Senator Corker has just said he is, we will get a large agreement. And -- but, Speaker Boehner has not said that. And so, we Democrats realize that there have to be two sides to this bargain.
But we're not going to go back to what we did in 2011 and put both revenues and cuts on the table. And ended up with just getting the cuts because, the other side wouldn't accept revenues. And so once Speaker Boehner calls for an increase in revenues, to 39.6 and the other things the president has called for, we have done $1 trillion in cuts already.
But we realize there have to be other kinds of cuts. And, there will be serious negotiations about that. We'll have different views, my view and Senator Corker's view, as to where we ought to go on entitlements is different, but we will have to find some spending cuts and we will.
WALLACE: Well, I mean, in fairness, Senator Corker, Senator Coburn, a bunch of people, Senator Schumer, have said -- now, I know it's not House Speaker Boehner, but on the other hand, you are not President Obama and they have been willing to come out and say, we are willing to raise the tax rates all the way up to the Clinton rate, 39.6 percent, can you give us some specifics of things you would consider cutting both in terms of social programs and entitlement reform?
SCHUMER: Well, the bottom line, Chris, is that would be negotiating against ourselves. President Obama has agreed --
WALLACE: Isn't that what they just did?
SCHUMER: No. The bottom line is Democrats led by our president, almost uniformly say, here is our $1.2 trillion of getting to the $4 trillion. It's revenues. It's up to the Republican leadership, prodded, correctly and boldly, by Senator Corker and others, to say they'll go along with that and then we'll start negotiating on the other side. It makes no sense for us to negotiate against ourselves.
WALLACE: Do you buy that, Senator Corker?
CORKER: No, look, Chris, we have to have a $4.5 trillion solution here and, really, I know Senator Schumer, I have talked with him numbers of times personally. He knows the general things we need to do and, candidly, most Republicans and Democrats do.
I do think it is time for the president, he knows that there is a growing body of folks, who are willing to look at the rate on the top 2 percent, but that's only -- could be $400 billion, might be $800 billion, depending on how you deal with that. And many of us, who are fiscal conservatives, are beginning to see that we can end up with a lesser revenue increase by agreeing to that.
The shift in focus and entitlements is where we need to go and, again, it is a shame that we're not just sitting down and solving this. But Republicans know that they have the debt ceiling that's coming up right around the corner, and, the leverage is going to shift, as soon as we get beyond this issue. The leverage is going to shift to our side, where hopefully we'll do the same thing we did last time and that is if the president wants to raise the debt limit by $2 trillion, we get $2 trillion in spending reduction.
And, hopefully, this time, it is mostly oriented towards entitlement and with no process. I don't want to kick the can down the road. I think Senator Schumer and I both know that what we need to do is solve this problem now.
WALLACE: Well, let's talk about --
WALLACE: Wait a second. We're going to get into that in a second, Senator Schumer.
Senator Corker, you brought up the debt limit. And as you know, part of the president's demand is that he be given the right to raise the debt limit by himself, unless Congress disapproves by a 2/3 vote in both houses. Is that a deal-breaker for Republicans?
CORKER: Well, look, let me go back, Chris. I mean, let's face it. He does have the upper hand on taxes. You have to pass something to keep it from happening, we only have one body. If we were to pass, for instance, raising the top two rates-- and that's it -- all of a sudden, we do have the leverage of the debt ceiling and we haven't given that up.
So the only way the debt ceiling, I think, is given up is if the president comes to the table, talks with Speaker Boehner about real entitlement reform. Without that, there's no way in my opinion the debt ceiling is going to be begin up. So then you go into January and February, with the negotiation about spending reductions which is where we want to go.
So, look, I mean, he can decide. I agree with Senator Schumer, we're not going to go over the fiscal cliff, to use that terminology. Something is going to happen before year end, hopefully, a comprehensive package that solves our nation's problems. And then, later, next year, we deal with tax reforms in a revenue-neutral way. But I do not want to see us do -- go ahead, I'll stop. WALLACE: Let me bring in Senator Schumer.
And, this goes beyond simply the question of this deal. Why should Congress give up its constitutional authority over borrowing? You know, we looked at your record, when George W. Bush was president, and you voted at least three times against increasing the debt limit.
Why would Congress unilaterally give up that power? SCHUMER: Well the bottom line is, I think on debt ceilings, things have shifted. I don't agree with my good friend, Bob Corker, on the issue. I think it shift the way it has on taxes and we just saw that.
Senator McConnell put on the floor a resolution that said, it was his idea, not ours, that let the president raise the debt ceiling. After all, it's money Congress has already spent, and, let Congress, by 2/3, override it. He thought we Democrats would run away from that, scared as could be.
Within a half-hour, we had 51 votes. We called his bluff and he ended up filibustering his own proposal. The normally, very politically surefooted Mitch McConnell stumbled on this because the ground changed here.
I believe debt ceiling will be part of the agreement and I believe, frankly, our Republican colleagues have learned that to say the government is not going to pay its debts and hold it up for something else is bad substance and bad politics. I don't think they'll prevail on that. If they want to say, we won't raise the debt ceiling unless you cut Medicare, make our day.
WALLACE: Make your day -- meaning, go ahead and default the country?
SCHUMER: No, make or day, meaning, you're not -- that position is untenable politically and it won't last. You won't be able to hold it. WALLACE: Let me, we got a little time left and I want to go to a couple of other subjects.
Senator Schumer, on the first day of the next Congress in January, will Democrats change the rules on filibusters by a simple majority, rather than the 2/3 majority you generally need, to change rules in the Senate?
SCHUMER: OK. Everyone knows the Senate is broken and needs fixing. I think Bob Corker would say that, we have had discussions. We're friends.
Most Democrats -- almost all Democrats and all Republicans believe that and I think it's also true that our preference would be to do this by 2/3 in a bipartisan way. There are all kinds of discussions going on with all kinds of groups to try and come up with some agreement.
The basic problem is, Republicans say, we don't allow the amendments, we say they don't let our bills go on the floor. You can sort of deal with both issues, sort of even-handedly.
If we can't come to an agreement, whether we go to the so-called constitutional option, our caucus will have to discuss that in the coming weeks, but our hope would be, to be able to come up with a compromise and there are some interesting and productive discussions going on right now.
WALLACE: Let me just ask you about the filibuster. And you're right, there are arguments on both sides, Senator Schumer.
But when Democrats were in the minority a few years ago and you guys were filibustering George W. Bush's judicial nominations, you had a different view about the filibuster. Let's watch.
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SCHUMER: The wisdom of our republic has shown that when the Senate does slow things down, when the Senate does invoke checks and balances, the republic is better off.
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WALLACE: Senator, what's the difference except for the fact that you're now in the majority?
SCHUMER: Nothing. No, nothing, that's exactly right. And the filibuster, I am not for going to a House of Representatives where 51 votes decides everything. But the filibuster has been overused. It's not just used on major issues like very significant judges, Supreme Court leaders, the courts of appeal, health care -- obviously, that shouldn't have passed by 51 votes. It needed 60.
But it's used on such trivial things and not by the whole majority --
WALLACE: Wait, wait, we're going to run out of time. Didn't health care pass on reconciliation by 51 votes?
SCHUMER: Health care got 60 votes.
WALLACE: I thought there was a -- when it finally came back it went on --
SCHUMER: Well, there has to be, but not -- not until after it passed by 60 votes.
WALLACE: Yes, but on the changes it passed at 51?
SCHUMER: No. No. You have to do --
WALLACE: Anyway, it's a technical point but anyway, what you are saying that you think there has to be some reforms?
CORKER: Chris, if I could, really --
WALLACE: Really, quickly and then I got one last question for you, Senator.
CORKER: OK. OK. Number one, we're going to solve this. There is not going -- we will get this fiscal reform done, this year, and that's my prediction, because I think the president -- I think we're going to solve this. I think the two parties are going to solve this.
Secondly, I predict we're going to have a meeting of both Republicans and Democrats, together. Chuck Schumer has been constructive on the issue. I think we're all going to sit down together soon in the old Senate chamber soon and resolve it in a way the Democrats are not breaking the rules, to change the rules, and we actually do it the way the Senate always functioned.
And I think we're going to start this next year with a different spirit within Congress.
WALLACE: Let me ask you one -- let me ask you, Senator Corker, in the time we have left and over time, one last question. And that may test that: the new spirit. You're going to be the new ranking Republican on the Senate Foreign Relations Committee in the new Congress, will President Obama make a mistake to nominate Condoleezza -- rather, Condoleezza -- Susan Rice as secretary of state?
CORKER: I do think -- I do think that Secretary Rice, I mean, Ambassador Rice is viewed as a political operative and I don't think he's going to nominate her. I really don't. I think that that time has come and gone. So, look, as I've said, I'll give any nominee a fair hearing and I will in this case. But I think the president realizes on both sides of the aisle there are concerns about the fact that she's such a political operative and not viewed, Chris, as a principal.
WALLACE: So, you don't think that --
SCHUMER: Chris --
WALLACE: Let me just quickly and then I'll ask you, Senator Schumer.
You don't think she'd pass the Senate?
CORKER: Well, I don't know what will happen. Obviously, there are many people like me that always give nominees a fair hearing. I just don't think she is going to be nominated for a lot of reasons.
WALLACE: And, Senator Schumer, very briefly?
SCHUMER: Yes. The solution here, a lot of Republicans don't want to vote for Susan Rice if she's nominated by the president, and I think she's very capable, they shouldn't filibuster. They don't have to vote for her but don't require 60 votes to get her on. And that's traditionally been done with presidential cabinet nominees when a president is elected or reelected. That would be a solution.
WALLACE: Gentlemen, we're going to have to leave it there. Senator Schumer, Senator Corker, thank you both. We'll be watching for any sign of progress on the fiscal cliff or continued stalemate. Thanks again, gentlemen.
Up next, the U.S. draws a red line for Syria's President Assad. We'll ask Israeli Ambassador Michael Oren about the threat of chemical weapons in Syria.
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