respond to. you said then, i think some of our members may have thought the default on paying america's bills issue was a hostage you might take a chance at shooting. most of us don't think that. what we did learn is this. it's a hostage that's worth ransoming. is that the strategy for the coming fight over the debt ceiling? >> well, first, these last-minute deals are no way to run the government. i can tell you that. we know what the problem is. you're going to have al simpson and erskine bowles on. they have talked about this for a couple of years now. we have a spending problem. you know, we have a debt the size of our economy, which makes us look a lot like greece. this administration has driven spending as a percentage of our economy from 21% up to almost 25%. we've resolved the tax issue now. it's over. it's behind us. we were able to get permanent tax relief for 99% of american taxpayers. and for 500,000 small businesses.

so that's behind us. what's left to be dealt with is the spending. and it's a shame that the president doesn't embrace the effort to reduce spending. none of us like using these situations like the sequester or the debt ceiling or the operation of government to try to engage the president to deal with this. but -- >> but you said that was a strategy, that's what you learned. i want to come back to the question. it's a hostage that's worth ransoming, the debt ceiling of the united states government. is that the strategy that you would ransom that here again to force the kind of spending cuts that you think are necessary? >> it's a shame that we have to use whatever leverage we have in congress to get the president to deal with the biggest problem confronting our future. and that's our excessive spending. >> but you're conceding that that may be the strategy this time? >> well, what the strategy ought to be is we ought to be doing something about the problem.

>> well, i understand that. but there are additional problems as well that flow from that. as you know, after the debt ceiling was resolved in the summer of 2011, america's credit rating was downgraded. johningler was the republican governor of michigan and said the following. he said this is to bloomberg news. it's a terribly blunt, clumsy instrument to try to use. it's not a good weapon for anything except destroying our own credit rating. so i understand your views about spending, and we can continue on that. but just as a matter of how you try to force those spending cuts, you heard the president. he said he will not negotiate over increasing the debt ceiling. you're saying despite whatever the business community thinks, you may have to push it to the brink once again. >> what we're seeing here is the problem, the biggest problem confronting the country, is our excessive spending. if we're not going to deal with it now, when are we going to deal with it? we have watched the government explode over the last four years. we've dealt with the revenue issue. now the question is, will the

president lead? you know, why should we have to be bringing him to the table? why isn't he leading us in the direction of beginning to solve our long-term debt and deficit problem? it's perplexing to me. that the president of the united states, elected to lead the country, is so reluctant to engage on the most important issue regarding our future. >> but you understand what the president told me last week and other democrats have said, the republicans had a chance to say yes to a number of things, in addition to the trillion dollars of spending cuts that were en80ed as part of the budget control act of last year. they could have had additional cuts in entitlement programs if you had agreed before you did it in this temporary measure. going back to the summer of 2011, the president said to all of you republican leaders, if you didn't have such a hard time saying yes to me as president we could have solved some of these issues why. is he off base about that? >> you can relitigate the past if you want to.

where we are now is we have resolved the revenue issue, and the question is, what are we going to do about spending? i wish the president would lead us in this discussion, rather than putting himself in a position of having to be dragged kicking and screaming to the table to discuss the single biggest issue confronting our future. you know, until we adjust the entitlements so that they meet the demographics of our country, we can't ever solve this problem. the time to solve it is now. presidential leadership is desperately needed. we know he's good at campaigning. but when does he put the campaign aside and start governing and addressing the single biggest issue confronting america? >> you have said a couple of times so far that the revenue question is over. the president doesn't agree. he thinks that additional revenue needs to be looked at. maybe it's part of tax reform, closing loopholes, raising additional revenue if not

through direct tax increases through other simpson-bowles also think you have to look more at deductions. is that your final answer, it's done, solved, you won't look at it again? >> yeah, that's over. i think tax reform ought to be revenue equal as it was during the reagan years. we don't have this problem because we tax too little. we have it because we spend way, way too much. so we have settled the tax issue. the question now is can we address the single biggest threat to america's future. and that's our excessive spending. i would like for the president to lead. it is a shame that we have to kind of drag him to the table to get him to discuss the single biggest issue confronting the future of our country. >> again, i think that people would push back at the idea that you would have to lead him. the president proposed significant entitlement cuts. simpson and bowles said he did

it, though they would have liked him to have gone further. you can't say he's been dragged kicking and screaming when he has proposed entitlement cuts is. that true? >> no, he has not. he didn't even embrace simpson-bowles. ask them why he didn't embrace simpson-bowles. he hasn't embraced any specific thing in public to deal with significant entitlement changes. he has suggested he might be for change cpi, which would be an important step in the right direction. i would like to see him actually put that on the table in any kind of negotiation. he's mentioned it publicly. but has been unwilling to do it privately. until the president leads -- >> for you, though, on medicare, you're the leader of the republicans. what do you put on the table right now to solve this problem? >> i have said repeatedly publicly and other members have that until you adjust the eligibility for entitlements, do things like raising the age for medicare for future

beneficiaries. not for those currently receiving or those about to receive. have serious means testing for high income people. you know, warren buffett is always complaining about not paying enough taxes. what i'm complaining about is we're paying for his medicare. we ought not to be providing these kinds of benefits for millionaires and billionaires. we ought to make sure that the eligibility for entitlements meets the demographics of america. when social security was passed back in the '30s, i think the average american lived to be about 61. this year the average male, 79. the average female, 81. we need to adjust these programs for the future so that they'll still b there. the trustees of medicare and social security say that medicare is going to tank in 10 years. the question is, are we going to preserve these programs for future beneficiaries? the president should be leading, not being dragged to the table by republicans who want to solve the biggest problem confronting the future of our nation. >> if you are not satisfied that

you're dealing with the spending issue, the entitlement issue, the way you think it ought to be dealt with, would you rule out a government shutdown to achieve your goals? >> what i think we ought to do is to encourage the president to actually be president, address the single biggest issue that -- >> i understand that. but my question is, would you rule out a government shutdown? >> i know what your question is. what i'm telling you is i haven't given up on the president stepping up to the plate and tackling our spending. >> but other senators are saying they would consider a government shutdown. as the leader of the republicans, would you rule it out? >> i'm telling you we elected the president to be president. it's time for him to step up to the plate and lead us in the direction of reducing our excessive spending. >> as a senator, as a leader who's also facing re-election next year, or in -- yeah, next year now, i have to keep track of my dates. i want some of your reaction to some of the criticism from the

right to this fiscal cliff deal, which as you know doesn't deal with spending, is a temporary measure, and taxes are going up. charles krautheimer said it's a complete surrender on everything. ericson blogger from red state wrote this. dear members of the press, yes, you can all refer to this as the mitch mcconnell tax hike. red state approves the tea party of louisville, the president saying this week, the next test will come with the debt ceiling debate. let's hope mcconnell compromises and giving in while getting nothing in return. however, if his fiscal cliff negotiations are any indication, we'll most likely see him wave the white flag again. what's your reaction, senator? >> well, the election will take care of itself in 2014. the question is, what will we do now? we know that everybody's taxes were going up a couple of days ago. what we did was prevent tax increases on 99% of the american public. nobody in the senate, not the

90% of senate republicans who voted for this, voted to raise anybody's taxes. and the arbiter of whether something is a tax increase or not is americans for tax reform. the head of americans for tax reform said it was not a tax increase. and had he been a senator, he would have voted for it. look, this was not a tax increase. it was not the kind of complete deal we'd like, because we want to cut spending. but we did save a lot of taxes. the tax issue is behind us. and now we move forward to see if we can get a reluctant president to do something about reducing our excessive spending. >> what do you say about all the division within the republican party? look at the difference between senate republicans, house republicans, the fact that speaker boehner doesn't seem to be in a position to negotiate with the white house any further. that seems to be falling all to you. how much damage does it do to your goals for the government that the republican party seems to be so divided over what you have just done on the fiscal cliff, and continues to be

divided over the way forward on taxes and spending? >> well, there are divisions among senate democrats as well. in fact, i don't think there's a bipartisan -- i think there's a bipartisan majority in the senate for not raising taxes further. in other words, taking the same view that i do, which is that the tax issue has been resolved. it's behind us. so there are divisions on both sides. i mean, we can spend a lot of time talking about that. but the requesty is, what are we going to do for the country in the meantime? the american people chose divided government. we have a democratic president, democratic senate, and a republican house. they expect us to figure out some way to make progress for the country. that's my view. i wouldn't have chosen this government. i voted for mitt romney. if mitt romney were elected, nobody's taxes would have gone up. but this is the government we have. and can we make some progress for the country over the next two years? i'm hopeful we can. >> you said notably in the president's first term that your number one political goal was to make him a one-term president.

he is now a two-term president. what's your number one political goal today? >> well, as bob woodward pointed out, all of you left out the second part of that discussion, which is that was a long time off in the future and meantime we needed to do important things for the country. my goal is always to try to accomplish progress to achieve things for the american people. the single biggest issue we have right now is this massive, massive debt hanging over the heads of our children and grandchildren. we need to address it. and the american people elected divided government. they expect us to deal with the problems, even though they are hard to deal with, when you have different points of view. i would hope the president would step up to the plate here and say, we need to do something about this spending addiction, and i'm going to lead the way. >> a couple of quick ones, leader. chuck hagel appears to be set to be nominated as defense secretary. will he be confirmed, do you believe? >> well, i think he'll be

subjected to the same kinds of oversight hearings that any nominee for such an important position would expect. and his views with regard to israel, for example, and iran and all of the other positions that he's taken over the years will be, you know, i think very much a matter of discussion during the confirmation process. >> so you're not predicting smooth sailing for chuck hagel? >> i think it will be a lot of tough questions of senator hagel, but he'll be treated fairly by republicans in the senate. >> as you know, i spend the holidays in kentucky, your home state, and i know full well there's a much different view of gun regulation in your state than in other parts of the country. never ttheles nevertheless, the president appears to be ready to push forward to a more comprehensive package dealing with mental health. have your views changed?

are you willing to entertain the idea of new gun regulation? >> i think we need to see what the vice president's group comes up with, what their recommendations are. there will be plenty of time to take a look at the recommendations once they come forward. what's going to dominate washington for the next three months here is going to be spending and debt. >> before i let you go, you talked about your re-election next year. there's talk that ashley judd, the actress, might indeed try to challenge you for your senate seat. i know you've said you're a fan of her movies. do you think she'd be a formidable opponent if it comes to that? >> look, the election is going to occur in 2014. in the meantime, i've got my hands full trying to deal with all of the issues that we've been discussing here this morning. we'll worry about the election in 2014. >> all right. leader mcconnell, thank you very much as always. >> thank you. coming up here, the two men in washington who have studied the debt and the country's fiscal problems and actually came up with a plan to fix them. former senate alan simpson and

erskine bowles. they were the co-chairs of the president's commission. they think washington missed a big opportunity with the fiscal cliff. so where do we go from here? i will ask them. plus, reaction from our roundtable about the politics of this past week. who were the winners, the losers? joining me, freshman independent senator from maine angus king. former speaker newt gingrich. chair of the house democratic caucus, congressman xavier becerra. former head of hp carly fiorina. plus, ej dionne. it's all coming up. "meet the p we know why we're here. to chart a greener path in the air and in our factories. ♪ to find cleaner, more efficient ways to power flight. ♪ and harness our technology for new energy solutions. [ female announcer ] around the globe, the people of boeing are working together, to build a better tomorrow. that's why we're here.

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now let's bring on tomorrow. coming up, with all the numbers being thrown around in the last two weeks during the fiscal cliff negotiations, we thought we'd try to put things into perspective. take a look at these figures. these are the key numbers in simple terms for money that the u.s. takes in and spends roughly every year. you see the amount we spend is greater than the total taxes revenue. and that's the difference between the two, or the money we have to find or borrow to cover our spending. and there's the total debt. $16.4 trillion to the united states government. if we wanted to bring those numbers down to size, say for a family budget by removing some

of those down thing zeros, here's what it would look like. the family would have an income of about $in,000 while in that same year spending more than they take in. $38,000. that would mean $14,000 or so would have to be put on a credit card that already has a balance of about $164,000. in the past, it's been politically difficult to make far-reaching cuts. the debt ceiling deal back in april of 2011 cuts $38.5 billion in spending. if you scale that down to your family example we just showed you, that would be like paying down $154,000 credit card balance by $385. so bigger automatic cuts are expected in two months, but our next guests, alan simpson and erskine bowles, two men who were on the president's debt commission, think it won't be enough. they say washington missed a magic moment to do something big. they are here to tell us where the ♪ [ male announcer ] how do you make 70,000 trades a second...

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we are back.

joining me now, two of the nation's leading voices on fiscal responsibility, former republican senator alan simpson and former clinton chief of staff erskine bowles. welcome to you both. mr. bowles, let me start with you. you heard leader mcconnell. he said the question of revenue is now over. they have done this fiscal cliff deal, and there's no more concern among republicans about raising more revenue. how do you respond to that? >> well look, i think he's right about a lot of stuff. first of all, we've done all the easy stuff. all of the hard decisions lay ahead of us. we have got to reform the tax code to make it more globally competitive. we have got to reduce this entitlement spending, particularly as it relates to health care. we've got to slow the rate of health care to the rate of growth of the economy or it will eat the rest of the budget alive. and we've got to make social security sustainably solvent. if we do these things, we can go a long ways to stabilizing the debt and keeping it on a downward path as a percentage of gdp.

but it's got to be growth. it's got to have some revenue. but the big part going forward has got to be spending cuts. >> senator simpson, you called this fiscal cliff deal that was just passed, that doesn't deal with spending, a missed opportunity. why? >> well, the sad part of it is that the mountain roared and gave birth to a mouse. this thing isn't going to do anything really. erskine is so correct. erskine and i have been working on -- and don't forget, in our commission we've got five democrats, including dick durbin, five republicans, including tom coburn, and one independent -- how do you do any better than that? and the president ignored it, and the congress has ignored it, because they won't do the big stuff. and the big stuff has to get done. this other stuff is nothing. and as erskine says so beautifully, we're the healthiest horse in the glue factory right now. the trajectory of debt, deficit, and interest right now, the trajectory of debt, deficit, and interest will match any of the

piig countries -- portugal, italy, spain -- match it, but, of course, we're lots bigger. and let me tell you, we know everybody out there in the congress knows exactly what we have to do. and when erskine and i travelled around for that whole year, we knew they were in congress, because i could see their button, i didn't know any of them, and they said, save us from ourselves. how's that for courage? >> well, but mr. bowles, i asked the president last week, there's so much frustration out there. there's a pox on both houses. and he and other democrats reject this idea that there is some sort of equivalency in intransigeance in washington. and this is how the president responded to laying the blame at the feet of republicans. let me play this and have you respond. >> the offers that i have made to them have been so fair that a lot of democrats get mad at me. i mean, i offered to make some significant changes to our entitlement programs in order to reduce the deficit.

i offered not only $1 trillion in -- over $1 trillion in spending cuts over the next 10 years, but these changes would result in even more savings in the next 10 years. and would solve our deficit problem for a decade. >> mr. bowles, you heard leader mcconnell and his views about the president not leading. had republicans conceded the point on revenue earlier, say, in 2011, could we have had a broader agreement along the lines that you think is necessary? >> oh, we definitely could have had. i think it was, as you said in your opening part, this was the magic moment. this was our opportunity to do something really big, to bring down this deficit and put our fiscal house in order. yes, the president has taken some steps forward on entitlement programs. but has he done enough? absolutely not. and has the speaker shown the

flexibility he needs to show in order for us to broaden the base and simplify the code and reform our tax structure, or to be specific about which ones of the entitlements he would actually reduce? no. what we've got to do is both of us have got to get out of our comfort zone, both sides, and we've got to come together and make the tough decisions it takes to bring down this deficit. we believe it can be done. i think the american people want it done. and now's the time to do it. >> let me ask you specifically about medicare, and i'll start with you, mr. bowles, and then get senator simpson's reaction. the president again, when i asked him specifically what he would do on medicare, had this response. watch. would you commit to that first year of your second term, getting significant reform done, telling congress we've got to do the first year? >> david, i want to be very clear. you are not only going to cut your way to prosperity. one of the fallacies, i think, that has been promoted is this

notion that deficit reaction is only a matter of cutting programs that are really important to seniors, students, and so forth. that has to be part of the mix. but what i ran on and what the american people elected me to do was to put forward a balanced approach, to make sure that there's shared sacrifice. >> so to both of you, mr. bowles first, what would you specifically call on the president to do on medicare that he's been unwilling to do heretofore? >> first of all, david, if you look at the combination of what was done in the budget control act, the cuts there, and in this cliff deal, it's about half of what we need to do in order to fix our debt problem. we've got about $1.6 trillion in spending we've got to do and about $1.6 billion of revenue we've got to get by broadening the base and simplifying the code and wiping out this back door spending in the tax code. what would i do on health care?

>> on medicare specifically. >> we're going to have to reduce health care spending in medicare by $500 billion to $600 billion over the next ten years. you have to do it in some of the ways that mitch mcconnell talked about. you're going to have to look at some kind of cost sharing, some kind of means testing. you're going to have to look at age. you're going to have to look at lowering the price we pay the drug companies for drugs. look at paying for quality instead of quantity. you're going to have to have some kind of tort reform. and we've got to do something about the whole end of life scenario without talking about death panels. we do these kinds of things, we can bring down the cost of health care. >> senator simpson, tactics and strategy are part of this. to achieve goals, you heard leader mcconnell, he is not ruling out a government shutdown. he wouldn't do that in the interview. he also wouldn't back away from a comment he made in 2011, which is using the debt ceiling, holding it ransom, even though our credit rating suffered as a result, to force spending cuts. what do you think of those strategies or tactics?

>> i'll tell you what i think. i've been on a lot of commissions, and a lot of them worked. i was on the iraq study group. i did other things. the issue is, what happened in the past, that doesn't matter a whip, or who said what. it's what the hell do you do now? and right now, i can't imagine a worse place for mitch mcconnell. he apparently can't deal with reid, and that's a sad thing. i know them both. but let me tell you, when i was in the u.s. senate, the work was done between howard baker and robert bird, and bob dole, and george mitchell, and tom daschle, and now apparently poor mitch is caught in a situation where he has to go to the vice president, who is a good egg. i've known joe for 40 years. think of that. you can't do the work of the senate because the leaders won't work together. they don't like each other. that's the saddest thing of all. forget who said what. >> so what breaks this impasse? you're looking at the next two

years. the president is talking about immigration and gun control and energy and all the rest, but he's locked in trench warfare with republicans over the budget. >> look, that's going to happen. it is happening. but if the american people can't understand -- i love that they say, well, the polls showed you should tax the rich. well, great, i'm ready for that. but they also said that 75% of them said cut spending. if anybody can't get that, and if you can't cut, forget the word "cut." you stabilize, do something with health care. stabilize social security. for god's sake, there are 16 people paying into that, and one taking out when i was a freshman at the university of wyoming. now there are three people paying into that baby and one taking out, and the life expectancy is 78.1 instead of 60. what the hell? who's kidding who? >> all right. senator alan simpson, and erskine bowles. simpson-bowles. thank you both very much this morning. i want to bring in our roundtable for some reaction. joining me at the table, former

speaker of the house newt gingrich. columnist for "the washington post" our friend ej dionne. chairman of the house democratic caucus, chairman xavier becerra. sorry i butchered your name just a minute ago. i should have known better as a californian. former head of hewlett-packard carly fiorina. and for the first time, the newly elected freshman independent senator from maine, angus king, succeeding the retiring olympia snow. he's a former governor of the state, and it's said that he will caucus with the democrats. and a big redskins fan, which is particularly important today as they play seattle. senator, welcome, and all of you welcome back to the program and happy new year. senator, let me start with you. based on everything you've heard this morning, it doesn't seem like a great way to run the government or to solve big problems, does it? >> i think one of things that comes out of this is of course the budget is important and the deficit is important, but there's an underlying structural issue that's affecting the economy and the market, and that is people have lost confidence in the ability of our government to do anything.

this whole fiasco with the fiscal cliff going two hours over the deadline, coming back, how it finally worked out, and simpson and bowles are right, it's a very small piece of the solution. it's not much of a solution at all. it was, in effect, the easy part. so i think the discussion you had with senator mcconnell is very important because it's the inability of our government to work in a way to solve these problems that itself i think is a big drag on the economy. >> but as you approach the job newly here, how do you propose to break that sort of impasse? >> well, i hope i can do -- i mean, listen, i'm not arrogant enough or naive enough to think that one guy from maine is going to change the way the u.s. senate works. but clearly, i think there have got to be some people that come in and say, look, the solutions are more important than the parties. the pragmatic solutions to these issues really transcend ideology.

let's try to solve some of these things and make some decisions. and i think that's a big part of what we just saw. by the way, i once asked erskine bowles why it was always called simpson-bowles. he said because they realized if it was bowles-simpson the initials might have thrown people off. >> fair enough. speaker gingrich, you thought this fiscal cliff deal was a disaster for the republicans. i asked leader mcconnell about the division within the republican party. how severe do you think it is and what's the impact? >> i think there's a real internal argument underway, and it's partially over the very nature which we're setting up once again of these kind of negotiations. we're now going to spend 60 days or 90 days totally fixated in the media on the next big crisis. and then the crisis will go down to the white house. and then there will be secret meetings. and at the last minute, once again we'll produce 2,400 pages no one will have read. it's exactly the opposite of healthy self government. and i think the people are fed up. if you're a house member and you thought you won an election and you came here to do something and you're told, actually, your

job is to sit around for two or three weeks while all the real work is done by three people in some room you're not allowed in. you inherently build up hostility. and i think that we're seeing the same dance start over again. i said 11 months ago it will end up at the last minute doing something in secret, which no one will have read. because you could just see the dance. >> congressman, you voted against this. you thought this fiscal cliff deal was a bad one. why? >> i think newt just gave the explanation for my no vote. these political showdowns don't work. this is no way to run government. you can't give anyone any kind of certainty where to go, whether it's the markets or the average american family. and we have to get to the point of dealing with these tough decisions with big deals. you can't keep hitting singles or hope to be walked to first base and win the game. you have to go for the big deal. and it's time for us to sit down, lock ourselves all in a room, not just a couple of folks, and come out with a deal. at the end of the day, you end up doing what ultimately

happened, which is if you can't agree because you have the extreme sides, then put your best proposal on the table and let the best proposal win. >> e.j., you have a dissenting view. you think that view is too narrow. you think this is a better deal than it's gotten credit for. >> i think i'm the only person here who think it's a better deal than it's gotten credit for. if you keep hitting singles and actually start scoring runs, you can win the game. and i think to say that this was the easy part, since when is raising taxes, $620 billion, the easy part? i agree that there are flaws in this deal. there are things i wish it had done. the real question is what we do now. and in a sense, i would like to challenge the premise of this conversation. we could spend all of our time arguing about how to fix the debt in 2035, and what to do about 2035, or we can stabilize the debt at a rate that's way below greece, way below most countries, with a deal of about $600 billion in revenue, $600

billion in spending, and then we can start dealing with the problems we face now, getting more job growth, above all. broadly shared economic growth, and dealing with problems like gun violence and immigration and education and infrastructure. we've got to stop being accountants. i think if we are going to keep talking like this, we might as well have a constitutional amendment requiring all members of congress to be accountants. because all we're going to be doing for four areas is talking about budgets. >> carly fiorina, there is some symmetry here. the white house would argue that the 2010 election happened, the republicans had big gains. $20 billion cuts in the budget control act of last year. the president wins re-election. gets his tax hikes, now we've got a debt ceiling negotiation. they are going to push for additional spending cuts. is this the right balance to get ultimately to where we have to go? >> well, unfortunately, i think this will sound like a crazy thing to say. but everyone in washington is spending way too much time talking about the politics and not enough time talking about the pragmatic facts. here are the pragmatic facts.

the economy has been in a slow-growth mode now for three years, reconfirmed by the latest job report. the deal that just got done adds $4 trillion to the debt. it will cut 1 1/2 points from economic growth, according to doled m goldman sachs economists. we have not solved a single problem that is real. we cannot focus on growth until we deal with some of these problems. so forget who's winning politically and who's losing. the only way to change the current trajectory unfortunately is for someone to lead. and the president as he is want to remind us frequently, one, and he is the president, and therefore the obligation and the opportunity to lead falls mostly on his shoulders. and he has to step forward -- >> but he has to have someone to negotiate with. >> absolutely, but he has to be willing to negotiate as well. and he wasn't truly willing to negotiate. i have negotiated many deals in my life. and here's what they take, a win-win and a willingness to treat your opponents with respect.

not a constant win-lose and a denegration of your opponent at every opportunity. you're not going to get a good deal that way. >> the president put several proposals on the table, and at the end of the day, republicans once again -- speaker boehner walked away from the deal and just washed his hands of this, all of this. and at the end of the day, the president did everything he could to fulfill his commitment to not let middle class americans take a tax hit. but this is not the way to do it. let me give you the level -- show you the level of dysfunction in the house of representatives on the republican side. the same week we were supposed to vote to provide the victims of hurricane -- superstorm sandy relief -- they're all suffering, millions of folks. a bipartisan bill passed in the senate with over 60 votes. republicans and democrats, to provide the $60 billion in

relief that governor cuomo and christie said we need. republicans would not allow the bill to come to a vote. and today we are watching the victims in those four states of new york, new jersey, pennsylvania, and i forgot the fourth state, i apologize, connecticut, suffer as a result of this. >> and why is there no outrage that politicians as usual use a real disaster to lard up a bill with a bunch of special interest gimmes that have nothing to do with the victims of sandy? why isn't there any outrage about that? >> this is the problem. clearly this will distinguish the two parties. that bill, 64% of it did not spend out in the next two years. 31% of it had nothing, nothing, zero to do. the train came through and the boys said, let's throw the pork on the train. it came out of the senate as exactly why the country is now sick. this was not emergency spending that the house should have done. >> tell that to governor christie ask tell that to the republican members of the house from those four states who said they needed that bill. >> they need any bill. they don't care how much the rest of the country spends as long as they get what they want.

i understand. that's local politics in a crisis. the house should have passed a purely stripped down reform bill that met everything for sandy and nothing for the pork. now the country would have understood clearly doing that. and i think the house is not moving at the speed it needs to. but i also want to say one other thing, david. republicans ought to quit worrying about president obama. the president's going to be president. the house ought to worry about being the house. senate republicans ought to worry about being senate republicans. let the president deal with reality from their side. the house has no obligation to pass a cr -- the continuing resolution on the president's terms. it has no obligation to pass a sequester of the president's terms. i think those are both much better fights than, say, a debt ceiling. the debt ceiling guarantees a crisis. it guarantees that the markets will all cave in on the republicans. and the republicans in the end will give up. >> let me get a break, ej, and we'll come back with you. i want to talk about the strategy, whether there's a government shutdown in the future, as well as what this fight means to the president's

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back with more of our roundtable. and we're talking about the coming fights, ej, which include the threat from some republicans of a government shutdown or at least using the debt ceiling debate as ransom. you heard leader mcconnell not back away from that. is that the future here, the near term future of the president's second term? >> i just want to say on sandy relief, i don't understand why the house walked away from something that congress has done in every other disaster. but i almost never get a chance to do this, so i want to say that i hope republicans listen to newt gingrich. because newt gingrich is absolutely right when he says that using the debt ceiling as part of this fight would be an absolute catastrophe for the country. you know, people talk about hostage taking. who's the hostage here? the hostage here is the american

economy. the hostage here are the american people. we're saying, if you don't give us what we want, we will risk wrecking the economy. that's bad substantively and dumb politics. and i noticed that mr. mcconnell did not answer your question, which made me wonder where he is on this. >> it's important to talk about what the debt ceiling really is. the debt ceiling is not the future. it's the past. it's allowing us to borrow money to pay for money we already borrowed. it's as if we spend money on our credit card and say at the end of the month i'm not going to pay it, and it wrecks your credit. it's not about future opportunity to borrow. it's spending already incurred. and if you look back at 2011, you can see the job numbers, the dip in the summer of 2011, when we went through that hostage taking. >> this is a matter of politics, carly, the reality is you have the business community, the white house will try to line up in a way that they haven't

before, to say, uh-uh, don't mess with this. john engler saying, don't play around with the debt ceiling. you saw what happened last time. that would give the president a bit more strength, could it not here? >> i agree. and i also agree that it is not wise to fool around with the debt ceiling. if the debt ceiling is increased, and there is no progress on solving these fundamental problems that erskine and bowles spoke of, moody's will still downgrade our credit. so i would argue that if the president is serious about not wanting an argument about the debt ceiling, then what he should put forward is a substantive and sincere process for which spending is going to be on the table. because so far, we've had a commission. we've had a task force. we've had a fiscal cliff. nothing has put spending on the table. >> and i appreciate ej's support here. but i want to make a point that he may not be as enthusiastic about. they have two vehicles.

they have a continuing resolution which is at the end of march, and they have the sequester bill. now these are legitimate government spending bills. the debt ceiling is different because it triggers all of these international financial problems. and it triggers the credit of the united states. they don't have to say we're going to be wimps. i helped close the government twice. it actually worked. bill clinton came in and said the era of big government is over after two closings, not before. >> you also wrote in your memoir that you regretted it from the point of view that you relied too much on the enthusiasm of the activists and didn't factor in the disdain of the american people. but we got re-elected for the first time since 1928, and we would have never gotten to a balanced budget and never gotten welfare reform without that fight. so if congressional republicans want to say you'll have a hard time with the continuing resolution, that's legitimate, and it's exactly the right ground. and then take the president's speech from yesterday, in which he said once you have spent it, have you an obligation to the debt ceiling, say terrific, we agree with you.

and we're not going to spend it. >> let me go back to the senator for a second. as an independent voice, you said you'd caucus with the democrats, but as as an independent in the senate, how do you think you can have a real impact on these debates and on the strategy and on the politics? >> well, in the first couple of weeks that i -- after i was elected, before even being sworn in, i came down here and had a series of meetings with a variety of senators. i met with 30 different senators. i think it was 11 republicans and 19 democrats. and what i found was my peculiar status as an independent, i could have frank discussions with both sides without being viewed as a member of the enemy camp. and we talked, for example, a lot of the bill fufilibuster. i heard from both sides about that. and i feel i came up with a view that was more balanced than it might have otherwise been. i hope i can play that role. and that's certainly the role i hope to play. i'm going to be on the rules committee, for example, to talk about things like campaign

finance reform. this budget thing, the reason it's not being resolved is the hard part is left to do. there's got to be more revenues. there's got to be more significant cuts. and there's no way -- i spend a good deal of the campaign sort of digging into this. we're not going to grow our way out of it. there are going to be painful cuts. and i think that's why it's so hard. nobody wants to do it. >> here's where i agree with senator mcconnell. i think the president needs to take an affirmative step and say, look, we've got to do something here. he keeps saying it will involve revenue and cuts. call some people together. i don't know who they are. and start working on. we've all seen "lincoln." lincoln got his hands dirty negotiating the 13th amendment. and the president can't do it by remote control. i think he ought to call them up to camp david, lock the door and say let's get it done. >> davidó i agree with a lot o what the senator said, because you do have to have a balanced approach, which includes painful cuts, some additional revenue.

but we have to be honest, carly. put everything on the table. we have already had over $1.5 trillion in spending cuts, not taxes, spending cuts, in the last year's deal. we had over $700 billion in savings to medicare under the affordable care act that in fact a lot of democrats were pounded on by republicans during the campaign. and on top of that, an additional $1 trillion, $200 billion cuts that will take place unless we deal with the sequester in a more smart way. that's over $2 trillion, close to $3 trillion, in spending cuts that are in place now without us having to do a thing. >> but it doesn't change the fact that everyone agrees that the fundamental issues sit in front of us. reforming the tax code so it's simpler. broaden the base, lower the rates. deal with health care costs. stabilize social security. get out of control spending under control.

grow the economy. those fundamental problems are still in front of us despite good work by many on both sides. and the deal that we just -- >> we've got to keep doing it in a balanced way. >> first, i want to underscore that something that both carly and newt said. let us right now, why don't the republicans announce, we will take the debt ceiling off the table. we have other power to use. let's get rid of that issue right now. that would be great for the economy because there would be some certainty that we're not going down this crazy -- >> i think if mcconnell had said that this morning, the markets would have gone up 200 points. >> newt gingrich and i probably disagree radically on what needs to be done, because i think we need more revenue than we got in this deal. but the other thing is we forget how much we have already done. there has been one deal after another after another that has cut spending very significantly. and that's why to say it's now only about spending and no more

revenue on the table is just a big mistake. we have cut a lot. >> you would get broad widespread agreement if the revenue argument was, as simpson-bowles have suggested, a vast simplification of the tax code. this latest deal complicated the tax code. continued corporate welfare. simplify the tax code. close the hoop holes, lower the rates, you would get broad agreement. unfortunately, that has never been part of the deal. >> you're right. that's what we need to do. >> but let me come back to exactly the point that you just made. if we could -- because the media plays a major role in this mess, ok? we went through a fiscal cliff. oh, my god, i was on your show that somebody from bloomberg said -- >> don't start bashing the media here. >> it's not a question of bashing. it's mutual responsibility. fiscal cliff became a way to hypnotize all of us to avoid thought. and we all sat around and said, what are they going to do? now we have the crisis of the debt ceiling, and that will allow us to voice that.

the house republicans should meet with the 30 republican governors who have vastly more than the rest of the states. they all have to balance their budgets. we have a $4 trillion government. does anybody at this table seriously believe we can't find things to eliminate that the country would be happy with? sometimes first steps toward success are doing easier things, not harder things. >> can i ask you -- 30 seconds left, senator. senator hagel. could you vote to confirm him as defense secretary? >> i'm going to be on the armed services committee so i'll reserve judgment. but let me share my standard, because i have thought about this. i start with the premise that the president should be able to appoint his own people. i think the standard is different for a cabinet member for a judge who's in for life. so i start with that premise. but i'm going to want to ask some serious questions. hear from senator hagel about the issues. he's a guy with a distinguished record, and i'm going to listen to the answers.

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