souvenir watches the najarian brothers are wearing. our special report begins right now. the fiscal cliff defined. on january 1st, a series of tax cuts expire, meaning your taxes go up. massive amounts of government spending will be frozen. that could mean hundreds of thousands of job cuts, some say it will drive united states of america back into recession. >> 700,000 jobs would be destroyed. >> i'm not going to ask students and seniors and middle class families to pay down the entire deficit. >> we have 47 days for washington to work out a deal. this is a special edition of "power lunch" -- "rise above." as we await president obama's news conference 30 minutes away. that is a live picture of

the white house, everyone. the president's news conference begins in 30 minutes from now. we will count you down every step of the way. fiscal cliff will obviously be one of the top topics this hour. brian sullivan, eamon javers, john harwood is working his way into the white house right now for that news conference. they are all gathered with me. brian, we're going to begin with you. >> this is a big day at the white house. this is a big week at the white house regarding the fiscal cliff, guys. and today, 12 top ceo are coming here to the white house to meet with the president, anything from walmart to duke energy to ursula burns of xerox and nine others. they will gather up, they will huddle up and exchange ideas to try to find a fix for the fiscal cliff. the question is, how much is the president willing to give on spending cuts, how much is the gop willing to perhaps give on tax increases and revenue enhancements, and what will the ceos say, ask and demand? eamon javers here also at the white house as we have full team coverage and he has got the ceo

part of the story. >> brian, i think one of the key questions going into this ceo meeting as we wait their arrival on the north lawn of the white house is how do these ceos react to the more than $1 trillion figure now that's been floated by the white house for new tax revenues, is that something that they find dismaying, that they feel like they can't even start the negotiations with a number that big? remember that the negotiations last year between boehner and obama really focused on $800 billion figure. now the white house is floating a much larger number. how do those ceos react? how do we get those negotiations going inside the room with the president here at the white house today. >> able, how much do you believe that the ceos are really going to be able to sway the president on some of the issues that maybe he has been less flexible on in the past? >> i don't think this is about swaying the president at all. i think this is about face time with the president. i think this is an effort by the two white house to demonstrate very publicly they've talked to all the plargs in the labor community yesterday and now the

business community today. demonstrate they are taking in ideas from all sides. basically the positions are fairly well entrenched. in order for a final negotiation to go on it is going to be between boehner and the president, it will be something like what they were working on last year. if the ceos in today's meeting throat new ideas, there is a small chance that those will be included in this ultimate deal but i think it is a very small chance at this point. i think the train has more or less largely left the station already. >> all right, eamon. we're going to hear from you in just a bit as well as our own john harwood. you know if the president brings up higher corporate taxes, i guarantee you some of those ceos will push back. >> i'm sure they will. we're going to talk about that right now in fact, brian. 12 ceos, as brian mentioned, will be meeting with the president today. you saw them up on our wall. it is quite an extensive list from a lot of different industries in this country, including financial services. ge's jeff immelt, ford's allan mulal mulally.

a lot of people were pushing back saying there is no representative of the financial services industry. yes, there is. the head of american express will be there. the financial services industry is being represented in that room. nicholas calio, ceo of airlines for america, an airline lobby group. he also served in the bush white house as a political dealmaker -- served in two bush white houses, as a matter of fact. welcome back, nick. >> great to be with you. thank you. >> how do you see this playing out? obviously the numbers have changed dramatically since we last talked to you. where do you think we're going to see some compromise and what do you expect those ceos to tell the president? you were one of those ceos who signed that letter urging the president and congress to come to some sort of agreement. >> well, hopefully what we're going to see is all sides compromise. i think that's what the ceos at the white house are going to tell the president, that everybody has to give some in order to get some. in a sense, you have to get the right mix of spending cuts and

the right mix of revenues to get to the point where you can get enough votes to pass something that will put this country on the long term path to a sustainable, strong economy like we need to create jobs. >> you were called the ultimate facilitator when you were in washington working in the first bush white house and you were incredibly successful in getting through some very tough initiatives in the second bush white house. how would you go about bringing these two sides together? what do you think is the key here for actually getting a deal done if you were the facilitator trying to bring these two sides together? >> i think the key to getting the deal done, sue, is to put yourself in the other person's shoes, realize it is very early in the game and realize on both sides that anything you say, anything you do can have an impact on locking people in to positions that you do not want to lock them in to. you want to keep people in an open space with open minds so you can move the pieces around and find the right combination

that will keep us from going off the fiscal cliff. i think you also have to realize that you have people on both sides who it's not going to be a matter of whether or not you drive off the fiscal cliff. it's going to be how high you make the flames go. you have to realize that you can't get those people probably so you want to get as many people as you can in the middle, republicans and democrats, to get the votes through to get a package that will make our economy stronger and deal with the tough choices that have to be made that have been put off for a long time. >> do they take us over the cliff, nick? do you think they'll get it done in time or not? >> oh, i'm an optimist. i don't know that they'll get the entire deal done. i think what you might see, sue, is getting a deal in place that puts a down payment down and provides more time to try to get l of this magnitude done in the next six weeks i think is very difficult as a practical matter, as a human matter, because you've got to bring people along to the point where they're willing to vote yes for something long term. >> you've been inside a number

of different white houses and a number of different administrations. a gathering like this at the white house of top ceos from the likes of procter & gamble, ge, american express, ford, you can name a number of them -- how influential will their comments be on the president, do you think? >> well, one would hope that they would be influential. one meeting doesn't make a conversation actually and i think that these business leaders bring a wealth of practical experience that's important for how the economy operates. they also bring the president and the republicans a wealth of good will in their desire to see the job get done so that we don't go off the fiscal cliff and a longer term -- all these ceos are part of the fix the debt campaign. and the goal is to come up with a deal, something that finally will put us on sustainable path to a better economy and a better debt burden than we have now. >> does their presence, very quickly, nick, give the

president and to a certain extent both sides of the aisle cover to make those concessions because they're being pushed by corporate america to do it? >> i think it does, sue, because these gentlemen and ladies are all being very reasonable about how they approach this issue and doing exactly what you said, the fix the debt campaign is all about trying to provide the political cover for people willing to make the hard choices that finally need to be made here. >> all right. good to have you here, nick. thanks for joining us. nick calio, ceo of airlines for america. back to you, brian. we're joined now by john harwood. obviously this is a huge week, a huge day for the white house and the fiscal cliff. we've also got the petraeus scandal. is that going to withdraw attention from the seriousness of the negotiations and discussions that are going on here today? it is making all the headlines. >> it is making all the headlines but i don't think it makes kitchen table headlines. therefore, i don't think it is ultimately going to distract from this work. everybody in politics knows that

some stories have high entertainment value, but not the same importance to ordinary people and i think the fiscal cliff, the prospect that you could have the economy tipped in to recession, the fact that income tax rates could go up on everybody in the country i think that is something that would bolt everybody's attention back -- >> look at the cover of the "financial times" for one today, giant picture of petraeus. hardly any mention of the ceo meetings on the front page. >> right. but i think the ceo meetings are part of the larger fabric that the news conference that we're going to have in a half-hour is also a part of, which is a broad-gauge effort by the administration to try to mobilize support for what it sees as a balanced approach, entitlement cuts plus tax revenue. >> takes us inside the politics of the meeting with the ceos. how does it work? does the president say here's what i'm looking for from you? how does it work inside that room today? >> i think, in part, the president wants to get input from them, but mostly this is

from obama to the ceos. he's trying to mobilize them and as nick calio just told sue, they can provide cover for republican members to go with the president. he's trying to orchestrate that. >> we'll try to grab some as they come out. john harwood, we'll let you get back into position. breaking news now from michelle caruso-cabrera on the headline that the president may well be asked about in his upcoming news conference. >> wouldn't be surprised. in just the last you few minutes we've gotten unconfirmed reports out of israel that they have targeted the home of a second leader, militant leader within the gaza strip. as soon as we know more we'll bring it to you. meantime, let's show you the video of what we do know happened this morning just released by the israeli defense forces. watch that car. that is not a car bomb. that is a targeted air strike by the israeli air force. inside that car is ahmed al gabari. the idf confirming they've killed him, the military leader of hamas.

believed to be the mastermind behind the kidnapping of an israeli soldier in 2005, only released last year as part of a very dramatic prisoner exchange. israelis have been trying to get this guy for several years. the last time they missed, instead they got his son and the israelis made clear -- the israeli government made clear starting three days ago they were going to start to pick up their attacks in targeted assassinations of militant leaders within gaza because of rocket fire that had been coming from gaza in to israel. there you see the aftermath of that car attack -- or that air strike, that targeted air strike within the gaza strip and what could only and headline in 2012 -- the israeli defense forces announced this new operation, "operation pillar of defense," on twitter, sue. >> that's unbelievable. >> only in 2012. >> you are view thely right, michelle. thank you very much. we'll check back with you for any further developments as they come our way. the countdown from the white house is on. president will hold his first news conference since his re-election today at 1:30 p.m.

eastern. we have it for you live right here on this special edition of "power lunch." if a budget is not agreed upon by congress, americans in the top 1% will see a federal tax increase of over 7%. from investing for the first time... to investing with knowledge. the potential of td ameritrade unlocked. nyse euronext. unlocking the world's potential. to a world of super-connected intelligence. the potential of freescale unlocked. nyse euronext. unlocking the world's potential.

breaking news on mf global. brokerage that declared bankruptcy just a little bit more than a year ago. we're getting a press release

from the house of representatives financial services subcommittee on oversight. an investigation saying that they will release a report tomorrow that's essentially an autopsy of what went wrong at mf global that caused it to declare bankruptcy. we are saying that it rested on decisions by chief executive jon corzine turning the 230--year-old sleepy brokerage into a full service investment bank. saying among those oversights, expansion resulted in insulation of trading activity from a preview process and failing to initially disclose the extent of risk. now the issue is this report is saying that the company faced resource demands as it expanded and therefore did not have the proper oversight in place. we are expecting this full report to hit tomorrow morning but the house is saying that jon corzine is at fault in mf global. guys, back to you. >> kayla, thank you very much. all right. as you know, we have full team coverage of this afternoon's event as we lt that live picture of the white house where president obama is going to be

meeting with ceos to discuss how to avoid the fiscal cliff. all the reporters are gathering as you can see at the white house because the president is set to hold a news conference just minutes from now and you will be able to see that as we carry it live right here on cnbc. but the big question here on wall street is what investors need to hear from president obama today. rich weis is a five-star senior portfolio manager, overseeing $16 billion at mesh seamerican investments. what do you want to hear from the president at this point on the fiscal cliff discussion? >> well, as draconian a measure as the fiscal cliff seems to be, and the most palatable analogy i can come up with is trying to lose weight by hacking off your left foot. i think what we need to hear is a move to the middle which is obvious, and some form of compromise, whether that includes kicking some of the can down the road or not. because the consumer and the

economy will aid over the next several months in helping to resolve some of those issues naturally. and so any compromise is going to be seen as good. the fact is the american public and the investing public, if you look at the betting lines and exchanges such as in trade show that they have a very low level of confidence in a successful compromise on a timely basis, and the stock market has effectively priced in already much of the fiscal cliff. not all of it. it's not priced to the worst case scenario, but clearly there is a very low expectation here. so any form of compromise is a possible way to achieve a positive reaction in risky assets, including stocks. >> how are you investing against that backdrop? because there are a lot of people down here who are saying to may, expect a lot of volatility as we hear both sides and the rhetoric that's expected to be bandied back and forth. but if you're maintaining that some of this is already baked into the pie, then how are you

allocating cash in anticipation of an eventual deal? >> we are marginally overweighted in risk assets, be it equities or high-yield bonds. >> as we watch jeff immelt of ge arriving at the white house. go ahead, rich. >> we are overweighted at the margin in risky assets, including stocks, high-yield bonds and the like, predicated on the consumer, which is where the growth in stabilization has been. assuming congress doesn't take the legs out of the economy wholeheartedly, then there is some growth here and it is a great opportunity. the fiscal cliff represents probably one of the best opportunities to leg into the market over the next three to six months. >> rich, thank you very much. brian, we saw one gentleman entering and that was jeff immelt of ge. i know that there are a number of them who will be following him in.

>> jeff immelt along with the ceos of honeywell, ursula burns of xerox. we've got 47 days before we literally go off that cliff. money being held hostage by political machine in washington that cannot seem to get its act together. so will they come together? republican congressman david schweikart. how much are the republicans willing to bend on the president's call for tax increases and revenue increases? >> brian, it is a great question. i think the mechanic has been fairly well laid out by speaker boehner, is there's ways you can get those additional revenues but it requires a couple bic steps and for a lot of us, we're waiting to see will the president speak to the biggers of all, that's actually addressing entitlements. because changes there will be huge offsets in our spending. >> i understand. but there's two issues here. there is the increased revenues,

and there is the spending cuts. let's focus on the first right now if we can, congressman. would speaker boehner agree to a higher rate? would he agree to a higher rate on the wealthy? >> there's much more in the way of moving parts to that. that's one of my great frustrations. i listen to a number of the pundits an they are starting to see this as, okay, this is raising rates. that is a tiny slice of what's going on. when you start to look at the atms, all the other things that are coming. it's time you do something dramatic. speaker boehner has said this. let's change the tax code. let's do something much broader base, lower those rates. a lot of folks are going to pay substantially more taxes because their special tax deductions will go away but we'll have a growth oriented tax system. >> congressman, i couldn't agree with you more, because we know the federal government spends $10 billion a day. the buffett rule, whatever you want to call it, maybe a week to two weeks of operating income for the government. i get that point.

where will the other money come from? can you be specific? >> well, here's the reality. if you and i were to look at a chart and outside political rhetoric -- just put on our green eye shades and just be mathematicians. the problem is in the promises we made in entitlements, there's no money to pay for them. the medicare trust fund may only have a few years left and it's gone! because the incredible rate we're spending. if we do not hear the president talk about entitlements in that case he's just continuing his campaign of misinformation. that's actually where our o crisis is. even if we gave the president every dime of additional marginal revenues he's asking for, it doesn't come close to solving the problems until we deal with entitlements. >> i agree, congressman. but listen, also the seniors, part of your base in the gop. are you willing to stand up in front of a large part of your base and say i'm sorry, you're going to not get something that

you believe was promised to you with medicare? >> but you see, there's where i believe there is a mistake in the story telling. if you take a step back at the budgets we've passed for the last two cycles, it wasn't about cuts to those seniors. it was about rebuilding a system that adds choice and the choice becomes one of the cost controlled factors. >> bottom line, congressman. do you believe that there will be a grand bargain achieved before the end of the year on the fiscal cliff? >> brian, i am absolutely very optimistic. i'm hopeful. you and i will know in about an hour and a half if the president looks into that camera and actually lays out something with detail instead of more rhetorical flair. give us some details, mr. president, of what you you're going to do with the entitlement explosion and crisis. every day, 10,300 americans turn 65. the curve is exploding away from us. will the president actually address? >> congressman, thanks very much for joining us, sir.

back to you, sue. president obama begins his news conference at 1:30 p.m. eastern time. moments away. we'll have it for you live after a quick break. incidentally, the dow jones industrial average has pared its losses, we're down 70 points.

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an entirely new pursuit. the dow jones industrial average which was down about 90 points just a short while ago has really pretty dramatically pared its losses. they're all waiting because the countdown is on. president obama is meeting with the nation's top ceos to discuss the fiscal cliff right after he holds his first news conference since his re-election which will occur any moment now. we'll carry it for you live here on cnbc. let's bring in our team coverage. bob pisani is here at the nyse. john harwood, eamon javers, brian sullivan who's at the white house. he's my partner for today. bob, i haven't been able to hear from you yet on the dramatic moves in the market in the last 20 minutes. what does the market want to hear from the president today? >> there are four topics that i think everyone's been talking about.

capital gains tax, dividends tax, the home interest deduction has been a hot topic for the last 48 hours. finally upper income tax increases. there is a lot of uncertainty already built into the market. we're 8% off of the recent highs we had in the dow about a month ago. we're down 1,000 points in the dow a lot on this fiscal cliff uncertainty. if this can get resolved by the middle of december, i ink the market has a chance to rally going into the end of the year but we are a long way from having that happen. >> brian, what do you think? that dovetails with what the fund manager we were talking to a few minutes ago just said. he thinks a lot of what's happening and will happen in this discussion is somewhat in the market already. what do you think? >> i think so. i think he is right and he would know more than i would. but i tell you what, and to tack on to what bob pisani was just saying, we have a new worry now. not to detract attention from this meeting. we have a big day here. the petraeus thing is still floating out there. but the killing of the hamas

leader, some traders are saying that's the reason for the market weakness. all of a sudden we see ramped up tension in the middle east. no doubt the president will be, let's hope, asked about that as well. you've got the fiscal cliff, you've got petraeus, you've got the killing of the hamas leader, you've got iran getting close to nuclear capacity. this could be a huge news conference about 30 yards to our left here, sue. >> john harwood, what about that? it went from a news conference to discuss the fiscal issues that the united states faces, to now a news conference that has some international proportions to it that perhaps it didn't have 48 hours ago. >> that's true. but this is always true after presidential news conference. the president's responsibilities are so broad, it's way beyond even the management of the american economy. but i do think that this is the principal issue that's dominating washington. it is going to until this question is resolved at the end of the year or the first two months of 2013. >> eamon, what kind of language should we listen for from the

president? because that was the whole discussion late last week, the use of revenue, the use of rates. the nuances in the language that speaker boehner was using versus the language that the president was using. >> i think you have to look for a hint of an olive branch here from the president. what is he willing to cave in on here. really no indications going into the meeting now. keep an eye on the white house driveway behind us on the north lawn. we just saw the ceo and chairman of ibm go in to the white house. i had a chance to ask her what she was expecting. she said she hopes to have a good meeting which is what you say just before you go in to have a meeting with the president of the united states, you don't tip your hand. the question from the white house's perspective is what will they hear from these ceos. ibm, ford, dow chemical, when they're all in the room, they have a diverse range of interests. are they going to advocate for their sort of parochial in-house interests? or are they going to come to the white house with a united

message and talk more about a big picture scenario. the white house is going to be attuned to whether these ceos can leave behind their parochial interests. >> i'm sorry to jump in, what's also remarkable about the list is not who's here, it's who's not here. you talked about it at the top of the show. there are zero wall street ceos here. is it because some now move their support to romney? is it because the friction of regulations? who knows. either way, there's no jamie dimon here, there's no lloyd blankfein here. there's also no representative of small business. the big labor leaders were here yesterday. the majority of employers in this country are not represented behind those doors today. >> i'm not sure the -- the head of am ex is there. not sure he would be a representative of wall street but it was remarked on here or not floor that there was no major banking interests there at all. you're right to point that out, brian. >> sue, if i could jump in to explain. white house has been asked about this.

what they have said to us is that they were looking for consumer facing businesses here. that's why they brought a lot of these guys who sell products to consumers out in the public. they also said this is not going to be the last one of the meetings that they are going to hold, that they will have other executives from other industries in throughout the course of this fiscal cliff conversation. >> consumers can't buy a house or a car or a business without a loan. just throwing it out there. >> i think that's a very salad point. and as bob mentioned, they are remarking about it here on the floor this afternoon. john harwood, do you agree with nick calio, our earlier guest, who feels that the broad swath of american industry represented by the ceos in the oval office this afternoon or in the white house this afternoon will give the president political cover to compromise perhaps, to change the language, to put out as eamon so aptly said, that olive branch? or not? >> well, yes, but i think the president's also looking for --

to give republicans political cover by getting the business ceos on the side of the balanced program that he wants. on eamon's point earlier about parochial interests versus national interests, that's why i think this news conference is probably, for the resolution of this issue, this is a more significant event than the event with the ceos because this is where the president is making his pitch to the american people and trying to move them and get the representatives of american business to rally their members of congress and people that they've supported behind what he wants to do. >> bob pisani, how much of this whole discussion do you think is factored in to the market? we've heard a number of people say that a lot of it is. the market's coming back. it doesn't seem to be quite as nervous as it was a half-an-hour ago, granted, the developments in the middle east seem to be overshadowing things at that point. but -- >> no, there's two things that are very important. one, even though we've seen some point declines in the last few days, they are not occurring on particularly heavy volume at

all. number one. and number two, it's very orderly. even in a sense quiet. i've noted several times that the volatility index, the vix, has not been over 20 at all. last time we had concerns about fiscal cliff type issues, remember in august 2011, about the debt ceiling, we were near 50 on the vix. so the market is saying right now, while there's obviously concern and you can see the decline showing that, there's no panic or high-volume sell-offs that are going on and they seem to be telegraphing that they think some kind of deal can be reached. of course if we get into the middle of december and there's no deal, i can assure you the vix will be way north of 20. >> it will be interesting to see whether or not the market has counted on the fact that they're going to take us over the fiscal cliff and that's already in, or they'll make a deal. there's two sides to the coin and the individual investor is trying to decide where to put their nn light of all the rhetoric that they're going to hear. >> right now it kind of feels like the individual investor is a naked guy in a barrel going

toward niagara falls. that's kind of what the individual investor probably feels like. let's hope somebody throws him or her a line. >> here comes the president. let's listen in. his first news conference since he won re-election. good afternoon, everybody. please have a seat. i hear you have some questions for me. but let me just make a few remarks at the top and then i'll open it up. first of all, i want to reiterate what i said on friday. right now our economy is still recovering from a very deep and damaging crisis so our top priority has to be jobs and growth. we've got for build on the progress that we've made, because this nation succeeds when we've got a growing, thriving middle class and that's the idea at the core of the plan that i talked about on the campaign trail over the last year, rewarding manufacturers and small businesses that create jobs here, not overseas, providing more americans the chance to earn the skills that

businesses are looking for right now, keeping this country at the forefront of research, technology and clean energy, putting people back to work, rebuilding our roads, our bridges and our schools, and reducing our deficit in a balanced and responsible way. now on this last item, we face a very clear deadline that requires us to make some big decisions on jobs, taxes, and deficits by the end of the year. both parties voted to set this deadline and i believe that both parties can work together to make these decisions in a balanced and responsible way. yesterday i had a chance to meet with labor and civic leaders for their input. today i'm meeting with ceos of some of america's largest companies and i'll meet with leaders of both parties of congress before the week is out, because there's only one way to solve these challenges, and that is to do it together. as i've said before, i'm open to compromise and i'm open to new ideas and i've been encouraged

over the past week to hear republican after republican agree on the need for more revenue from the wealthiest americans as part of our arithmetic if we're going to be serious about reducing the deficit. because when it comes to taxes, there are two pathways available. option one, if congress fails to act by the end of this year, everybody's taxes will automatically go up, including the 98% of americans who make less than $250,000 a year and the 97% of small businesses who earn less than $250,000 a year. that doesn't make sense. our economy can't afford that right now. certainly no middle class family can afford that right now. nobody in either party says that they want it to happen. the other option is to pass a law right now that would prevent any tax hike whatsoever on the first $250,000 of everybody's

income. by the way, that means every american, including the wealthiest americans get a tax cut. it means that 98% of all americans and 97% of all small businesses won't see their taxes go up a single dime. the senate has already passed a law like this. democrats in the house are ready to pass a law like this. and i hope republicans in the house come on-board, too. we should not hold the middle class hostage while we debate tax cuts for the wealthy. we should at least do what we agree on and that's to keep middle class taxes low. i'll bring everyone in to sign it right away so we can give folks some certainty before the holiday season. i won't pretend that figuring out everything else will be easy. but i'm confident we can do it and i know we have to. i know that that's what the american people want us to do. that was the very clear message from the election last week and that was the message of a letter

that i received over the weekend. it came from a man in tennessee who began by writing that he didn't vote for me. which is okay. but what he said was, even though he didn't give me his vote, he's giving me his support to move this country forward. and he said the same to his republican representatives in washington. he said that he'll back each of us, regardless of party, as long as we work together to make life better for all of us. he made it clear that if we don't make enough progress, he'll be back in touch. so my hope, he wrote, is that we can make progress in light of personal and party principles, special interest groups and years of business as usual. we've got to work together and put our dimfferences aside. i couldn't say it better myself. that's precisely what i intend to do. and with that, let me open it up for your questions. i'm going to start off with ben

feller of ap. >> thank you, mr. president. can you assure the american people that there have been no breaches of national security or classified information in the scandal involving generals petraeus and allen, an do you think that you, as commander in chief, and the american people should have been told that the cia chief was under investigation before the election? >> well, i have no evidence at this point from what i've seen that classified information was disclosed that in any way would have had a negative impact on our national security. obviously there's an ongoing investigation. i don't want to comment on the specifics of the investigation. the fbi has its own protocols in terms of how they proceed, and i'm going to let director muller and others examine those

protocols and make some statements to the public generally. i do want to emphasize what i've said before. general petraeus had an extraordinary career. he served this country with great distinction in iraq, in afghanistan and as head of the cia. by his own assessment, he did not meet the standards that he felt were necessary as the director of cia with respect to this personal matter that he is now dealing with with his family and with his wife, and it's on that basis that he tendered his resignation and it's on that basis that i accepted it. but i want to emphasize that from my perspective at least, he has provided this country an extraordinary service. we are safer because of the work that dave petraeus has done, and

my main hope right now is that he and his family are able to move on and that this ends up being a sing the side note on what has otherwise been an extraordinary career. you know, again, i think you're going to have to talk to the fbi in terms of what their general protocols are when it comes to what started off as a potential criminal investigation. one of the challenges here is that we're not supposed to meddle in criminal investigations and that's been our practice. i think there are certain procedures that both the fbi follow or doj follow when they're involved in these investigations. that's traditionally been how we view things, because in part people are innocent until proven

guilty and we want to make sure we don't prejudge these kinds of situations. and so my expectation is that they follow the protocols that they already established. jessica yellin. >> mr. president, on the fiscal cliff, two years ago, sir, you said that you wouldn't extend the bush era tax cuts but at the end of the day, you did. so respectfully, sir, why should the american people and the republicans believe that you won't cave again this time? >> well, two years ago the economy was in a different situation. we were still very much in the early parts of recovering from the worst economic crisis since the great depression. and ultimately we came together not only to extend the bush tax cuts but also a wide range of policies that were going to be good for the economy at that

point. unemployment insurance extensions, payroll tax extension, all of which made a difference and is part of the reason why what we've seen now is 32 consecutive months of job growth and over 5 1/2 million jobs created ann and the unemployment rate coming down. but what i said at the time is what i meant, which is this was a one-time proposition. and what i have told leaders privately, as well as publicly, is that we cannot afford to extend the bush tax cuts for the wealthy. what we can do is make sure that middle class taxes don't go up. and so the most important step we can take right now -- i think foundation for a deal that helps the economy, creates jobs, gives consumers certainty which means gives businesses confidence that they're going to

have consumers during the holiday season, is if we right away say 98% of americans are not going to see their taxes go up. 97% of small businesses are not going to see their taxes go up. if we get that in place, we are actually removing half of the fiscal cliff. half of the danger to our economy is removed by that single step. and what we can then do is shape a process whereby we look at tax reform, which i'm very eager to do. i think we can simplify our tax system. i think we can make it more efficient. we can eliminate loopholes and deductions that have a distorting effect on our economy. i believe that we have to continue to take a serious look at how we reform our entit entitlements because health care costs continue to be the biggest driver of our deficits. so there is a package to be

shaped and ima'm confident that folks of good will in both parties can make that happen. but what i'm not going to do is to extend bush tax cuts for the wealthiest 2% that we can't afford and, according to economists, will have the least positive impact on our economy. >> you've said that the wealthiest must pay more. would closing loopholes instead of raising rates for them satisfy you? >> i think that there are loopholes that can be closed and we should look at how we could make the process of deductions, the filing process easier, simpler. but when it comes to the top 2%, what i'm not going to do is to extend further a tax cut for folks who don't need it which would cost close to $1 trillion.

it's very difficult to see how you make up that trillion dollars if we're serious about deficit reduction just by closing loopholes and deductions. the math tends not to work. and i think it is important to establish a basic principle that was debated extensively during the course of this campaign. this shouldn't be a surprise to anybody. if there was one thing that everybody understood was a big difference between myself and mr. romney, it was when it comes to how we reduce our deficit, i argued for a balanced, responsible approach and part of that included making sure that the wealthiest americans pay a little bit more. i think every voter out there understood that that was an important debate and the majority of voters agreed with me. by the way, more voters agreed with me on this issue than voted for me. so we've got a clear majority of the american people who recognize if we're going to be serious about deficit reduction we've got to do it in a balanced

way. the only question now is are we going to hold the middle class hostage in order to go ahead and let that happen, or can we all step back and say, here's something we agree on, we don't want middle class taxes to go up, let's go ahead and lock that in, that will be good for the economy, it will be good for consumers, it will be good for businesses. it takes the edge off the fiscal cliff. and let's also then commit ourselves to the broader package of deficit reduction that includes entitlement changes and it includes potentially tax reform, as well as i'm willing to look at additional work that we can do on the discretionary spending side. so i want a big deal, i want a comprehensive deal. i want to see if we can at least for the foreseeable future provide certainty to businesses and the american people so that we can focus on job growth so that we're also investing in the things that we need.

but, right now what i want to make sure of is that taxes on middle class families don't go up and there's a very easy way to do that. we could get that done \s>> on immigration reform, the criticism in the past is that you have not put forth legislation with specific ideas and send it up to the hill. this time around you have said again that this will be one of the top priorities for a second term. will you then send legislation to the hill? and exactly what do you envision is broad immigration reform? does that include a legalization program? and also, what lessons, if any, did democrats learn from this last election and the latino vote? >> well, i think what was

incredibly encouraging was to see a significant increase in latino turnout. it is the fastest growing group in the country and historically what you've seen is latino vote at lower rates than the broader population, and that's beginning to change. you're starting to see a sense of empowerment an civic participation that i think is going to be powerful and good for the country. and it is why i'm very confident that we can get immigration reform done. before the election, i had given a couple of interviews where i predicted that latino vote was going to be strong and that that would cause some reflection on the part of republicans about their position on immigration reform. i think we're starting to see that already. i think that's a positive sign. this is not historically been a partisan issue. we've had president bush and john mccain and others who have supported comprehensive immigration reform in the past

so we need to seize the moment. and my expectation is that we get a bill introduced and we begin the process in congress very soon after my inauguration and in fact some conversations i think are already beginning to take place among senators and congressmen and my staff about what would this look like. when i say comprehensive immigration reform, it is very similar to the outlines of previous efforts at comprehensive immigration reform. i think it should include a continuation of the strong border security measures that we've taken because we had to secure our borders. i think it should contain serious penalties for companies that are purposely hiring undocumented workers and taking advantage of them, and i do think that there should be a pathway for legal status for those who are living in this country, are not engaged in criminal activity, are here

simply to work. it's important for them to pay back taxes, it's important for them to learn english. it's important for them to potentially pay a fine. but to give them the avenue whereby they can resolve their legal status here in this country i think is very important. obviously making sure that we put into law what the first step that we've taken administratively dealing with the dream act kids is very important as well. one thing that i'm very clear about is that young people who are brought here through no fault of their own, who have gone to school here, pledged allegiance to our flag, want to serve in our military, want to go to school and contribute to our society, that they shouldn't be under the cloud of deportation, that we should give them every opportunity to earn their citizenship. and so there are other components to it obviously. the business community continues to be concerned about getting

enough high-skilled workers. i am a believer that if you've got a ph.d in physics or computer science who wants to stay here and start a business here, we shouldn't make it harder for him to stay here. we should try to encourage him to contribute to this society. i think that the agricultural sector obviously has very significant concerns about making sure they've got a workforce that helps deliver food to our tables. so there are a bunch of components to it, but i think whatever process we have needs to make sure border security is strong, needs to deal with employers effectively, needs to provide a pathway for the undocumented here, needs to deal with the dream act kids, and i think that's something that we can get done. chuck todd. >> mr. president, i just want to follow up on both ben's question and jessica's question. on having to do with ben's

question -- >> how about hala's question? >> no, i feel like you answered that one completely. are you withholding judgment on whether you should have known sooner that there was a potential -- that there was an investigation into whether your cia director potentially there was a national security breach with your cia director. do you believe you should have known sooner or are you withholding judgment until the investigation is complete on that front? and then the follow-up to jessica's question -- tax rates. are you -- is there no deal at the end of the year if tax rates for the top 2% aren't the clinton tax rates, period? no, if, ands or buts. >> i am withholding judgment with respect to how the entire process surrounding general petraeus came up.

we don't have all the information yet. but i want to say that i have a lot of confidence generally in the fbi. they've got a difficult job. and so i'm going to wait and see to see if there's any other -- [ inaudible question ] >> i mean, chuck, what i'll say is, it is also possible that had we been told, then you'd be sitting here asking a question about why were you interfering in a criminal investigation. so i think it's best right now for us to just see how this whole process unfolded. with respect to the tax rates, i just want to emphasize, i am open to new ideas if the republican counterparts or some democrats have a great idea for us to raise revenue, maintain

progressivity, make sure the middle class isn't getting hit, reduces our deficit, encourages growth, i'm not just going to slam the door in their face. i want to hear ideas from everybody. well, look. i believe this is solvable. i think that fair minded people can come to an agreement that does not cause the economy to go back into recession, that protects middle class families, that focuses on jobs and growth, and reduces our deficit. i'm confident it can be done. my budget, frankly, does it. i understand that -- i don't expect the republicans simply to adopt my budget. that's not realistic. so i recognize that we're going to have to compromise. as i said on election night, compromise is hard. and not everybody gets 100% of what they want and not everybody's going to be perfectly happy. but what i will not do is to

have a process that is vague, that says we're going to sort of, kind of raise revenue through dynamic scorings or closing loopholes that have not been identified. and the reason i won't do that is because i don't want us to find ourselves in a position six months from now, lo and behold, the only way to close the deficit is to sock it to middle class families or to burden families that have disabled kids or have a parent in a nursing home. or suddenly we've got to cut more out of our basic research budget that is the key to growing the economy in the long term. so that's my concern. i'm less concerned about red lines per se. what i'm very concerned about is not finding ourselves in a

situation where the wealthy aren't paying more or aren't paying as much as they should. middle class families one way or another are making up the difference. that's the kind of status quo that has been going on here too long and that's exactly what i argued against during this campaign. if there's one thing that i'm pretty confident about is the american people understood what they were getting when they gave me this incredible privilege of being in office for another four years. they want compromise, they want action. but they also want to make sure that middle class folks aren't bearing the entire burden and sacrifice when it comes to some of these big challenges. they expect that folks at the top are doing their fair share as well and that's going to be my guiding principle during these negotiations, but more importantly during the next four years of my administration. nancy cortes.

>> mr. president, on election night you said that you were looking forward to speaking with governor romney, sitting down in the coming weeks to discuss ways that you could work together on this nation's problems. have you extended that invitation, has he accepted, and in what ways do you think you can work together? >> we haven't scheduled something yet. i think everybody forgets that the election was only a week ago and i know i've forgotten -- i forgot on wednesday. i think everybody needs to catch their breath. i'm sure that governor romney's spending some time with his family. and my hope is before the end of the year though that we have a chance to sit down and talk. there are certain aspects of governor romney's record and his ideas that i think could be very helpful and -- well, to give you one example, i do think he did a

terrific job running the olympics and that skill set of trying to figure out how do we make something work better applies to the federal government. there are a lot of ideas that i don't think are partisan ideas, but are just smart ideas about how can we make the federal government more customer friendly, how can we make sure that we're consolidating programs that are duplicative, how can we eliminate additional waste. he presented some ideas during the course of the campaign that i actually agree with, and so it would be interesting to talk to him about something like that. there may be ideas that he has with respect to jobs and growth that can help middle class families that i want to hear. so i'm not either prejudging what he's interested in doing,