york. >> a lot about contrails. you can follow ed what is going on behind the scenes in "the situation room." i'm on twitter. you can also follow the "situation room" on facebook. go to facebook.com/cnnsituationroom to be a fan. i'm wolf blitzer in "the situation room." "john king usa" starts right now. tonight embarrassment for president obama overseas as he fails to finish two economic agreements. is the big election setback dimming mr. obama's star on the world stage? a statement the president's top political advisor says is nothing new appears to be a surrender to extend the bush tax cuts or those with annual income below $200,000.

the bold new plan to slash spending and raise taxing is declared dead on arrival by liberals and conservatives alike. the president says it is time for politicians in both parties to back up their rhetoric about spending with some courage. >> if we are concerned about debt and deficits then we're going to have to take actions that are difficult and we're going to have to tell the truth to the american people. >> more on that debate in just a moment. including a look at spending cuts and tax hikes. let's see if the republican route in the midterm election is affecting the president's political standing overseas. first, some firsthand reporting from dan lothian traveling with the president in seoul. no free trade agreement with south korea and no deal at the g-20 summit.

not the trip he had been hoping for. >> reporter: that's right. no movement on the currency dispute between the united states and china, most importantly the trade deal between the u.s. and south korea hoping the white house could get it done here but in the final hours realizing there was not enough time to get it done so president obama saying he hopes they can do this in the next few weeks not months. this is critical to the obama administration because the president has been looking overseas for new markets for u.s. goods to create jobs at home. the president believing this south korea deal could create 70,000 jobs and a trade deal worth $10 billion. but, again, this deal is not getting done here in south korea. one administration official saying these kinds of deals are complex and difficult but progress is being made. >> complex and difficult. the president did promise to try to get this done by this summit. what does the white house say

when critics say and reporters say do you think leaders are testing the president? do they view him as weak? >> reporter: they do not view him as weak. that was a question asked before the president came on this trip. was there concern because of the midterm elections would this make the president weaker. the white house knocking that down, in fact, saying the president would have discussions about the midterm elections with these world leaders. they did not see that as a major hurdle for him. clearly, there is a little bit of disappointment. they hoped to leave here with the trade deal. they will not do that. >> dan lothian, thanks. that is the white house view. do his peers view the president as weakened because of his big election setback or are these tough negotiations and is the president smart not to give up too much just to make a deal. with me here in washington,

republican consultant alex cl, s cornell and gloria. the democratic president goes overseas after this election. they have to know at the white house, there will be a feeling out process. his peers trying to negotiate in south korea's case, they don't want to let u.s. beef in their market. they are slow to let ford, gm, u.s. auto makers into the market. >> he is still tremendously popular overseas. i wish some of that popularity was here. that popularity doesn't equate to moving leadership. this deal does get done because it is in interest of the koreans to get this deal done. >> generally, republicans, when you come back you are going to have republican control of the house. they are generally more receptive to trade deals. the question i have and will be interesting to see it play out, the tea partiers seem to be a

lot more skeptical about trade deals because they see them as sending jobs abroad so the republican party could have a tough time on this. >> i don't know. i think a lot of americans and republicans and democrats were hoping the president would work out a korean trade deal that would create jobs especially since there are so many unemployed democrats. had to get that in. >> you did. >> no. this is a president who has been weakened by an election. this is a biggest repudiation of an agenda any president has had since the middle of the last century. his inability to go out there and cap this election season with any kind of political economic success abroad makes you wonder -- >> he'll get it. >> this is the beginning of the 2012 campaign and he has misstepped. >> he'll get it. >> as bill clinton famously said after the '94 election, the president is still relevant. he is the president, on the global stage and reminds the

american people of the primacy of the presidency. he had a hugely successful trip to india, announced a large number of trade deals. in south korea a deal could be a bad deal for the american people. i think he has had a successful trip abroad overall. this is a disappointing round of negotiations. overall he is hugely enhanced by the alliances with india. >> let's listen to what the president said. to john's point the president knows the korean negotiations are tough. george w. bush cut a deal. the president knew he couldn't sell it to a democratic senate. he knew everyone is going to see is he weak, does he need to get a deal. the president said he wasn't willing to get a deal at any price. >> if we rush something that then can't garner popular support that is going to be a problem. we think we can make the case, but we want to make sure that

case is air tight. >> it is politically inept that is president is going to set expectations to go to korea and come back with a deal. this is going to reassure the american public that he is going to create jobs. it is a political mistake. >> well -- >> excuse me. when john avalon is saying the president is still relevant. >> i was making a joke about the presidency always being relevant. >> you are not saying the president should have accepted a deal that he didn't think was right that can be -- >> i'm saying any good lawyer or politician -- >> this is the problem, alex. we are playing politics with it already, alex. >> no good lawyer or politician would ask the question he doesn't know the answer to. this president did. >> the president is trying to

keep a delicate balance, in the short term, the democrats will narrowly control the senate. yes, the republicans are more open to these trade agreements. he went through a drubing. it is his job as leader of the democratic party to protect them. it is his job as the president of the united states to finish this deal. he knows he will have republican friends, colombia free trade agreement or the south korea free trade agreement. he will say to his party you may not love it but i got a better deal than george w. bush got. >> this is a fragile economy. >> he said in toronto last summer he thought by the time he got to this meeting he thought he would have a deal. >> if you are looking at the politics you are looking to a president who said i know unemployment would be at 8%, it is 9%. i know we said we would get this

trade deal. we haven't. it is a record that doesn't ager well for a president going to an election. >> you see a kneo protectionist movement creeping up. that is the reaction of the economic crisis we are in. that is a shifts fault line in american politics at the heart of this debate and going forward. >> when the president does deliver this deal what are the tea partiers and your party going to do? >> that will be a fascinating question. does mitch mcconnell say good for you or see pressure from the tea party. >> whenever a party comes up with an agenda for growth. >> let's see what the unemployment rate is. a quick time-out. when we come back we are going to focus on tax cuts. we explore this debate about whether the president is somehow surrendering on extending the bush tax cuts. since the president is

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sometimes in politics it is not just what you say. sometimes it is where you say it. washington is buzzing because of an interview david axelrod gave to the huttington post. in that interview discussing whether or not to extend all of the bush tax cuts or the president prefers some of the bush tax cuts. david axelrod said this, we have to deal with the world as we find it. we don't want that tax increase to go forward for the middle class. but plainly what we can't do is permanently extend these high income taxes. people are trying to parse these words. cornell belcher says we can't

extend permanently these high tax cuts but he is saying aha, we can temporarily extend these high tax cuts. do they have a choice? >> the reality of the situation is you have to stake out your place of negotiation and go negotiation. that is what the president said. the reality is there is a gop congress right now so they are going to have negotiate. we can't have everything we want. >> you know, he said, i spoke with him today. it wasn't news. david axelrod, it wasn't news. he was reiterating what the president said when the president said in his first press conference after the midterms he was absolutely -- >> one word, absolutely. >> absolutely open to negotiations. it is an indication of reality. they are going to end up doing something temporarily. >> the president lost of% of the midterm election. it is 2012. he has to let the independents

know he heard them. >> is that what they said? did the independents say extend all the bush tax cuts >> the independents are concerned about raising taxes and debt reduction. axelrod was reaffirming there was a huge election lost by democrats and it is a new political world. >> let's show the math. president bush won a contested election and got these through. they are due to expire at the end of the year. the president wants to renew for individuals making 200,000 or les a year. couples making $250,000 or less a year. that adds $3 trillion to the deficit. the republicans want to renew all the cuts permanently, that adds $4 trillion to the deficit. the president's argument is we can't afford $1 million.

they have a lame duck congress coming into town next week controlled by the democrats. he can cut a better deal now or let the tax cuts expire. the republicans will say aha the democrats just raised your tax cuts and we have to come up with a deal in january. >> it is not going to happen. >> it is the difference between 3.2 trillion which is what the president's plan would cost and $700 billion which is what the republicans would add. however, the economic argument is this. we are in a connected society now. can you tax just the rich people's side of the water bucket? can you take money out of that. we saw wall street melt down and everybody's home lose value. both sides have an economic and political value is this the time to take that much mount of the private sector. >> is the deal forget it? the president campaigned on this. he campaigned in the 2008

presidential election. but the economy has been bad so he said i'll wait. it is not a good time to raise taxes. let's extend them for two years and have another presidential election about this in 2012? >> yeah. >> it becomes a conversation because my retort would be you have a tax base that is benefitting the rich. by the way, the rich who made off like bandits while the middle class has been squeezed. are we going to let the middle class pay for more. >> here is the political issue. if you take $1 trillion out of the economy, it is an anti-stimulus. the year before barack obama runs for re-election? it is not good politics. >> you are going to extend the tax cuts temporarily, cost you a fortune and by the way -- >> you make the deficit challenge a lot harder. >> right. >> that looks doa. >> we are going to debate this

deficit commission. but john, that is part of the problem in the sense we are having a conversation about tax cuts and in a few minutes about the deficit. when are we going to have in washington with the leadership have a big global conversation that says we have to make some choices because these two don't get along. if you want to do this, you don't get this. >> they are allergic to that reality. we have a congress essentially afraid of math. they want to talk about tax cuts but don't want to talk about budget cuts. too many politicians are demagoguing the deficit and the debt but afraid to deal with it. you have a deficit commission that came out with an initial report and getting shot at from both sides. the american people sent a clear message in large part about spending, the deficit and the debt. >> john, it is getting shot at more by the liberal democrats, nancy pelosi called it simply

unacceptable. the republicans have backed off because they are going to control one half of the congress. >> if the left were quiet, it would be the right blowing it up. >> it is interesting this was leaked out. because guess what? i'm guessing there wasn't enough commissioners to vote on this. >> it is the president's commission. would the leaders have leaked out their plan without the white house approval? >> here is where we need a president -- i wrote a piece in politico arguing the first step is not what do we cut or what taxes do we raise? republicans go to their usual corner, democrats go to their usual corner. nothing gets done. a president could bring everyone together about the role of government, the size of government and what it should do and a budget. in your family if we decide we have this much money, we allocate priorities. >> that is what everybody at

home is so mad about. in the past two years they have had to make tough choices and they see nobody in this town willing to say -- a republican saying we might need revenue, a democrat saying we might have to touch social security. >> 70% of the voters want both sides to compromise. >> here is a problem. it all makes sense until you have competing interests here who are going to lose something. for better or worse, our system is set up for competing interest. it is a marketplace of competing interests. that is what congress fundamentally is. >> the problem is we keep forgetting about the national interest. washington politics is too preoccupied by special interest. if we have a national issue with deficit and debt it needs to be dealt with and everything has to be on the table. rather than speaker pelosi saying it is unacceptable, we have to engage. even before the president took office he was talking about

entitlement reform. he needs to lead on that issue. this is a nixon in china moment here. >> before we can deal with the financial deficit mr. mr. avalon's point, we have a trust deficit we have to deal with. the politicians and the parties don't trust each other and the american people don't trust any of them. you deal with the trust issue you have a grown-up conversation. we are going to continue this conversation a bit later in the program. you hear us talking about the bold new proposal, what to cut, what to tax. the pentagon, npr. you go to the national zoo to see the pandas you don't pay. under this plan you would. the write-in candidates are being counted in alaska. this one might end up in court. later tonight pete on the

street. have you seen these new proposals to go on cigarette labels, cause cancer, kill you. we'll check them out with pete.

welcome back. let's check in with joe johns for the latest news you need to know right now. >> a top leader with the tea party express says a romney run for the president could face pushback. a russian newspaper says an assassin has been dispatched to deal with the russian agent to deal with the spy ring the u.s. cracked in june.

a one-time spy master is on the run and may defect to the u.s. the tea party is already thinking of 2012. that could be bad news. once again it is in the prompter, what can i say. the other story is the issue of the egg that was thrown at the former white house chief of staff rahm emanuel. apparently it fell just short, it didn't hurt him. it would have been quite a photo-op. >> he was campaigning in chicago. we have that video. >> what was that? >> an egg. someone just threw an egg. >> okay. don't worry about it. >> he is in a latino community talking to citizens. cool under fire. i was waiting for the bush moment. >> it is really funny with this guy, he always seems to be where the trouble isn't. house of representatives goes over republican control, he happens to be out of the way. rahm emanuel. >> we'll watch rahm in that

campaign. don't go anywhere, george w. bush, another moment on tape, george w. bush is promoting his new memoir. he sat down with sean hannity. >> thing that for joining -- can we do that again. >> they never let me do it again. it would have been underestimate. not misunderestimate. >> this is all included. >> strategy not strategery. >> i know that, what do we call that, the other network. let's give sean and the president both points for a sense of humor. >> he seems a lot looser. >> "w"? >> yeah. >> you don't have the burden of the presidency. that is a fact.

up next, a close look at the new proposal to get the federal deficit under control, not only suggests major cuts at the pentagon, but npr cuts and you would have to pay to see the pandas at the zoo and the cool planes at the air and space museum. [ woman ] you know, as a mom,

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family's budget balanced. what about washington? will they work in a bipartisan way to bring fiscal sanity to the nation's budget? let's look at what the leaders of the president's deficit commission have proposed. raise the retirement age and social security from 67 to 68 by 2050. major tax changes, limiting the mortgage deduction. that is unpopular. lifting the amount of payroll subject to the payroll tax, eliminating the alternative minimum tax, cutting corporate tax rate to 26% and capping taxes, the federal government cannot take in more than 21% of the gdp. there are tax increases and fees. raising the gas tax by 15 cents, controversial, increasing some medicaid co payments. establishing some co payments

for the veterans in the va health and charging for spr at the smithsonian museums. some of the freezes called for, spending cuts and freezes, noncombat military pay frozen for three years, freeze all federal salaries for three years. opposition from labor unions. a long list of cuts and reductions. lowering social security cost of living adjustments, cutting domestic and defense spending by $200 billion, cut white house and congress budgets, closing 1/3 of overseas military bases, cutting the federal work force by 10%, eliminating earmarks, reducing foreign aid, eliminate commercial space flight funding, reducing farm subsidies, good luck with that, cut corporation for public broadcasting funds, that creates big bird, sesame street, national public radio.

you saw the immediate partisan divide. a leading conservative said no way. this plan includes tax increases. halfway around the world in south korea the president admonished both sides. >> and so before anybody starts shooting down proposals i think we need to listen, we need to gather up all the fact. i think we have to be straight with the american people. if people are, in fact, concerned about spending, debt, deficits and the future of our country then they're going to need to be armed with the information about the kinds of choices that are going to be involved. we can't just engage in political rhetoric. >> any hope for that or is that hopeful thinking on the president's part.

mr. walker, to you first. you have been screaming the fifty insanity in washington. i have the outline of the leadership draft here. when you look at this proposal, it is a serious document, doesn't eliminate the deficit but is this the place to start the debate or did they get it wrong? >> it is just a beginning. it is a courageous comprehensive document. i commend the president for saying people shouldn't shoot prematurely. i think it is irresponsible for leaders on either side of the political aisle to be condemning anything at this point. they don't have plan. if we don't have a plan we don't have a prayer to solve the problem. >> yet, bob, you are one of the leaders in the liberal movement of america who says no way. why? >> first of all, just because a plan is unpopular and just because it inflicts a lot of

pain, doesn't make it is a a good idea. the question i raise is what is this plan a solution to? we are in a very severe prolonged recession, the most serious recession since the great depression. most standard economics say you don't take a situation where people have 15 million americans out of work, 9% or 10% unemployment and that is what is predicted a year from now and tighten belts more and throw more people out of work. i'm in favor of bringing the budget closer to balance but let's get a recovery. >> the american people just took the house of representatives away from the democrats and gave it to the republicans in part because they're concerned about all the spending in washington. you make a point but the liberal reaction was it touches social security. forget about it. unacceptable the speaker of the house nancy pelosi said.

if we have divided government which is what we will have in january, if people just decide forget about it and won't start the conversation saying, okay, it is too much cuts here or the tax increases are too big. why can't we come to the table and discuss it before we say forget about it. >> we can. john, this is about sequencing. you don't inflict austerity in the middle of a dire recession. i'm in favor of bringing the budget closer to balance. people voted the democrats out of the house of representatives because of the depth of the recession and joblessness not because an idealized conception the budget ought to be balanced. people are hurting. people are out of work. that is why the democrats lost 60 some seats. >> john, frankly, with all due respect to speaker pelosi, her comments were irresponsible. i agree with bob, we need to

separate the short-term from the structural. most proposals in this mark didn't call for tax increases or cuts right away. they delayed them. we need to do what it takes to make sure we have a recovery. we need to make sure we get unemployment down. we need to have a plan we can phase in that will end up not undercutting this economic recovery while at the same point in time showing our foreign lenders we are serious about putting our federal financial house in order. >> you are salt laking your head. >> this phases in less than a year from now when unemployment is 9%, 10%. everything is not on the table. >> are you saying they should have a serious conversation and the left should say we need to push the effective date back but will talk about social security and medicare as long as the republicans will talk about revenue increases. >> social security is going to be in surplus for the next 27 years. social security has nothing to

do with the budget deficit. >> that is just false. that is false. social security is running a cash flow deficit. it is adding to the deficit. it will be in a permanent cash flow deficit starting in 2015. that is just false. >> i'm sorry. it is not false. >> i'm a trustee. i know what the numbers are. >> so do i. >> okay. >> this commission was charged with -- the report says social security has nothing to do with the current deficit and the cuts are not going to take effect for decades. i don't know why social security is part of this at all except ideological opposition. >> it is a chance to see the expectation of every generation of americans. what was proposed here was very moderate. by the way, the fact of the matter is i agree we need to look at when these cuts should take place. i respectfully suggest we look at once we are sure we are not going to have a double-dip recession and unemployment gets

to a reasonable level. i agree with you on that, bob. but we have to have everything on the table. >> everything is not on the table the bush tax cuts cost $4 trillion over a decade. they're not on the table. before the bush tax cuts the budget was balanced. >> they should be. >> thank you. we can agree on that. let's end on the point of agreement. we will continue this conversation, on that point, the bush tax cuts your problem may be in the short term. this was a good conversation. we will keep at it. next live to alaska for new numbers from the write-in boot count. veterans day was once called armistice day, the day world war i ended. 5 million americans served in that war still alive in 1918. today there is one. 109-year-old frank buckles spent the day in west virginia. he is hoping congress will designate a 1930s memorial on

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it is veterans day. not a holiday for the vote counters in los angeles. they are going through the 92,000 write in ballots. we have the latest numbers and new reaction from joe miller's campaign. shannon. >> reporter: that is right, john. right now as i speak there is dramatic development. there is a press conference right beside me. this is floyd brown, an advisor

to miller's campaign. two key points. they are saying even though a lot of the sorting that has happened with 89% toward murkowski, they feel the absentee and other ballots will help tip the scales in miller's favor. they are alleging widespread voter fraud. they will go to court to make sure people accurately voted and no fraud involved. >> we have pictures of ballots, people wrote in lisa murkowski's name. if it is close enough, we see these ballots. i remember going in, if it is close enough and the intent was clear they would count it. is that the practice going forward and is the miller

campaign upset about that or just ineligible voters? >> reporter: excellent question and a key point. as our viewers are seeing some of the ballots are showing a version, a variation of murkowwski's name. in some cases the election officials are counting them as solid votes for murkowski. we are seeing ballots clearly spelled for lisa murkowski, some are being challenged on the grounds by the miller count, it is illegible, there are smudges. >> shannon, nice work. they are counting behind you, a news conference on the other side. that is a man who keeps his focus. floyd brown, that is a blast for your past. put that in your search engine. congressional parties from both

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break political news on the debate to extend all or some of the bush tax cuts. let's get the news and talk it over with dana bash and jessica yellin who joins us from los angeles. what are you hearing? >> reporter: there is talk on what they can compromise on the bush tax cuts. the most likely scenario at this point, emphasize at this point, is temporarily extending all of the tax cuts. two, three years for everything, the wealthiest americans and those making $250,000 and less. i'm told by democrat and republican sources in this scenario both sides would give a little. why would they do that if everyone agrees on extending all

of the middle class tax cuts, on the republican side i'm told by the gop side it is not politically beneficial to do one without the other. unclear if this is going to get very far. this is some of the talk. >> it might be the best deal the president can get. if he waits untiljanuary, the republicans control the house and you know many liberals will say surrender. >> many liberals will be outraged. they are starting petition drives. this is the final straw if the president caves on this. they are done. whatever that means to them. it seems inevitable the president has to do this because the new republican house will not make it easier to get a deal. he has to address the political reality and deal with the liberal base. >> this deal or any deal would become a big debate in the 2012

campaign whether for the presidency or the senators and house members up for re-election, again. you are not just in hollywood to party with the stars. you have been digging deep into the data that tell who is voted and who didn't vote last tuesday. >> what was astonishing to me, the president lost the independent vote. democrats lost the women's vote. democrats lost that, not the president. what's fascinating is fewer -- the obama voters turned out at far fewer numbers than mccain voters. old mccain voters got more of a turn out this time. the argument that if the president was more liberal, he would have excited the base and got them out in bigger numbers, it doesn't wash. liberal identified democrats turned out at the same rate. the moderate democrats are the ones he lost or they said they

are independents. they raised questions to who he thooz appeal to for 2012. >> the other question is not just what democrats and republicans agree to, it's what they agree to among themselves. what jessica is talking about is are the liberals going to be okay with compromising. a big question now, can democrats compromise among themselves on what the best strategy is on tax cuts or anything else when they have to do it? >> it's fascinating. when president bush's numbers went down, it dropped off the planet. a lot of republicans didn't want to say i'm a republican. they said i'm an independent. now, the democrats are saying that. i don't want that label now. watch the middle. the middle goes like this in politics. with the congress deal with it in the lame duck session?

nancy pelosi is speaker. harry reid will be the senate leader. one question, will they vote to repeal don't ask, don't tell. a study in the washington post said more than 70% of respond t respondents to a survey said the effect in revealing it would be positive, mixed or nonexistent. not as big of a deal or disruption as some military leaders and conservatives in congress warned. will they vote on it next week? >> i talked to republicans and democrats who said it's unlikely. they are not closing the door on it. the votes have not changed much from before they went home to campaign to where they are now. >> this is a bit -- go ahead. >> this is one of the areas where the democrats could give something to the liberal base. if they could get the votes together, it would be a big gift

to keep them satisfied for awhile. >> does the president want to push this or is it better for the president to regroup and not deal with the issue. >> they have so many items on their agenda. so many. we are taum talking in a number of weeks. they said they have to put it on the list. it's probably not going to make it. >> don't you think it was leaked to prod congress to act on it? >> i think it's entirely possible. >> how cynical of you people. >> entirely possible. i haven't talked to anyone that thinks it will move the ball. >> thank you. before we go to break, i want to show you something. this is veterans day. there are 23 million, more than 23 million veterans in the united states now. 92% men, 8% female. if you are a veteran in america,

your average household income, $35,000. unemployment 10.6%. federal spending $96 billion. veterans who were wounded in iraq, they live all across the country. the redder the state, the higher the number of wounded iraq veterans. wounded in afghanistan as well, 7200 plus. if you haven't taken a minute to say thank you, please, please, please do. how much is it? how much is too much? pete on the street investigates, when we come back. i said "sure." "well, let's grow some algae." and that's what started it. exxonmobil and synthetic genomics have built a new facility to identify the most productive strains of algae. algae are amazing little critters. they secrete oil, which we could turn into biofuels. they also absorb co2. we're hoping to supplement the fuels that we use in our vehicles,

and to do this at a large enough scale to someday help meet the world's energy demands.

so, we all know smoking is bad for your health. how far should the government go in warning those about to buy a pack. pete. >> john king, that's right. they have a bunch of new warning labels. we can look at some of them here. i have an idea, john king, not everybody is motivated by the fear of death. some of us want to be accepted. you have time for a couple of my ideas for a label? >> go. >> how about this one, john king? if you smoke your breath will smell like crap. that's a good motivator. if you only smoke because you drink it's because you are lonely. it will cause you to stand outside in the dead of winter, shiver over your addiction. the president is a