editor mr. sunday morning in a pullover, hugo lindgren. secluded locations, high training, a high-stakes strength of test and will, welcome to survivor: presidential debates edition. with three new national polls showing a neck-and-neck race, no one yet knows how this 90-minute, hugely anticipated television competition will play out. and on what grounds. a new "washington post"/abc news poll shows a sharp increase in the number of americans who believe things are improving. since the end of august, there has been a 26-point swing in american optimism regarding the overall direction of the country. 42% now say the country is moving in the right direction while 56% say it's still on the wrong track. this might just deal a blow to what has been romney's central strategy. he is the economic mr. fix-it, and president obama is in over his head. >> we have a president today who doesn't really understand the fundamentals of what makes an american economy go.

if i'm president, job one for me will be creating jobs. and if i'm president, i'll go to work every day to make sure our economy comes back. >> perhaps signaling a shift, romneyland has been broadening its message in recent days. >> yesterday i raised some questions about benghazi, and the tragedy that occurred there. >> first they blame a youtube video and a nonexistent riot. >> it's time for us to stand up to china for their cheating. it's got to stop. >> the administration had their eighth chance to label china a currency manipulator. >> meanwhile, the obama campaign is also finding itself in an unexpected place, defending its foreign policy record. senior strategist david axelrod faced a barrage of questions about the benghazi attack including who knew what and when. >> what is the vice president talking about? >> i think the vice president was talking about what the white house knew. there are embassies all over the world and installations all over the world, and these requests go

into the security professionals at the state department. >> with all this finger-pointing going on at the state department, going on towards the intelligence community, whatever happened to the principle, the buck stops with the president? >> well, as i said, the president is responsible for everything that happens on his watch. >> so will it come down to foreign policy and national security, or perhaps a renewed focus on domestic priorities including immigration and health care, or maybe, just maybe, president obama and governor romney will be asked to take an 11-mile hike to a mayan temple and eat nothing but grubb worms. in the end, each man's success or failure remains in the hands of the audience, the american voter. maggie, as someone who has been out there in the campaign ether, i ask, we are in territory i don't think we expected to be in october, which is to say the discussion about foreign policy that's heated up considerably in the last couple weeks, and romney broadening his campaign message, talking about something other than the economy.

in terms of tomorrow night's debate, what do you think is the net effect of bringing in issues that haven't been on the table like immigration, social concerns like gay marriage or women's reproductive rights? >> i think that you're probably going to see a similar tone, perhaps not a change in substance, but a similar tone from mitt romney to what i saw at the last debate, which was much more about bipartisanship, much more about his massachusetts tenure. on immigration, he has got a problem in the sense that he -- i mean, he took a stand right before the denver debate, finally answering the question about the temporary halting of deport -- right, of deportations for some immigrants who are here illegally. and that, i think, helped resolve an issue that was going to come up. i expect there will be more that comes up on it. in terms of the president, i think the feeling is those issues are in his favor. we've reached an odd moment, as you note, in the campaign where the president's folks would rather talk about the economy and have that discussion, which they did not want to have for most of this campaign. and foreign policy is a little nettlesome right now. >> sam, i wonder what you make

of -- you know, romney talked about abortion, and there was a lot of attention paid to changing of positions. on certain things, we've discussed this. the tax policy question, i think voters get a little lost in the specifics of the 20% across the board tax cut, how much that's going to cost, $5 trillion, et cetera. the numbers game is harder to make, but the abortion thing seemed to be a very clear example of this guy's changing his position. so if he is asked about immigration or gay marriage, i mean, those would seem to be potentially land mines for romney. >> sure. well, i don't think he's ever actually been that comfortable talking about social issues to begin with. you can guess whether it's because he's more moderate than his public posture is on that stuff or just because it's an uncomfortable political situation for any republican to talk about immigration looking at the demographics and the numbers as they break down. you know, i think he will try to move the conversation back. he always has when the topic turns to immigration. it's never about, you know, this temporary visas for people who are here illegally or what to do

with respect broader immigration reform. it's always about well, the obama economy has let you down. you could be better. you should be better off. you should vote for me. it really hasn't clicked except for in florida with the cuban-american population. i'm guessing if it does come up, and remarkably it hasn't in the first two debates. >> which is kind of amazing. >> yeah, i'm guessing it has to come up, that romney will quickly pivot away from that and let's talk about the economy and jobs. >> i'm also wondering where health care fits in terms of mitt romney has lately sort of embraced -- he's not had entirely negative things to say about covering those with preexisting conditions, never minding the fact that his own plan -- it's basically status quo if you have a preexisting continue. if you have insurance, you continue to have insurance, but if you don't, then that's sort of the big question. you know, what's your bet? can he go to the center on that? can i stand by his record as governor of massachusetts? >> i think he's been pretty effective at doing that and yeah, i think he'll try to do

that again. one of the things we've seen with romney on foreign policy is that he is much, much better when he's making a competence case against the president than an ideological case. one of the reasons that the benghazi attack worked so well is that raised the question of competence which is a place romney looks credible to voters. obama's challenge in many ways is to -- and you saw this with biden during the vice presidential debate -- is to emphasize those elements of romney romney's attack that are ideological. >> can you imagine if romney hadn't put out that first statement right after the cairo, benghazi attacks? i know there are questions about whether we were talking about cairo or benghazi, but it gave the impression he was knee-jerk partisan. had he not, he would be in such an amazing position than he is right now. >> the competence piece i think is a salient point. hugo, in terms of how obama has to deal with romney tomorrow, e.j. dionne writing in "the

washington post," obama doesn't have to look angry or agitated, he simply needs to invite voters to see that romney, the product, will give them no clue as to what romney, the person, might do as president. romney keeps changing the packaging because he knows that the policies inside the box are not what voters are looking for. can you do that on the debate stage? >> well, i think the challenge for obama really is going to be not to overcorrect from the last performance. you know, i think there's a lot of monday morning quarterbacks who told him exactly what he did wrong and what he really needs to do is go out there and be himself and not try to speak to the critics but speak to the voters. i liked the detail in "the times" story that he did debate prep in a place with three golf courses but did not bring his clubs. i don't know, maybe he should have brought them. i think he should have relaxed a little bit more. >> doing his debate prep in virginia, right? which is a swing state. >> swing state. there was a ferrari owners convention at the same resort, apparently. >> what restraint by obama. >> no golf! laying down the law.

>> you know, maggie, in terms of what obama needs to do, as hugo says, clearly he's not going to go out there and take a bite out of mitt romney's neck, as maybe joe biden -- >> god, that would be good. >> or his ear, right. >> if you look at the numbers on the debate, i mean, i think that we talked about the direction of the country. the fact that americans are more optimistic now. certainly we talk about unemployment rates, there's been a lot of debunking of the bls numbers. there's been a lot of discussions about how accurate they are. but there are jobs being created, and americans seem to think that the economy is improving. "the washington post"/abc poll of likely voters asked if their opinion changed after the first debate. 72% said there was no change. you know -- sorry, as far as the president and their impression of the president. 37% had a better impression of mitt romney. 47%, no change. so, i mean, as bad -- mitt romney clearly, his positives have gone up, but the president,

72% of the likely voters didn't think there was much of a change. so i guess to hugo's point about overcorrecting, he just needs to do maybe a little bit better than he did before. >> well, i think he needs to do quite a bit better than he did before. but in terms of what that means, that's a different thing. >> right. >> i mean, as you said, he can't do what a joe biden, right? the problem was for the president was it was not that he was bad. a lot of strategists made the oint to me beforehand, remember, any incumbent tends to do poorly in their first debate. for a lot of people surrounding the president, it was just how badly he did that surprised them. i think he has to sound like he can make sense of not just his own policies and defend them, but also prevent -- present sort of this door forward which is what mitt romney was able to look like he was doing. i think the challenge for romney is he is going to get asked and pressed in more detail by the president. the president has spent the last two weeks trying to essentially make up for things that he didn't push mitt romney on.

and i think in terms of overcorrection, that's what he has to be careful against. >> i agree, but also the president's really got to own -- i think he's got to own the economy. that's a big change for him because obviously that was something they were avoiding for a long time. >> he wants to now. >> now they've got a point to car sales being at four, five-year highs. they've got a point to rebounding housing markets. they've got to say you know what? it was a slog, we got through it, things are turning around. and he's really got to make that case and not be defensive about it. >> i don't think that's his challenge. >> well, i think the one instructive thing he could take from the vice presidential debate is here's biden doing as much -- interrupting as much as possible, being as boisterous as possible, attacking as much as possible, and he still, by and large, won the polls after the debate. i mean, i know there's a few that suggest it was a tie, but by and large he won. so obama has a template for as far as he can go. i'm not suggesting -- >> but it would be weird to see the president sort of going ha ha! malarky! that would be weird. >> i'm not suggesting obama

chuck four lokos. >> you are or are not? >> i am not. however, he knows how far he can take it and still win, at least the public opinion polls. now, the challenge for him is how do you do that in a way that suits the town hall format? two, how do you do it in a way that allows you to give an affirmative agenda for four years? you talk to any democrat, they say fine, he screwed up the first time. he may not have hurt himself, but he didn't give voters something to attach to. >> and that goes to your point, ben. even ezra klein -- not even ezra klein -- even ezra klein. ezra klein wrote a piece in bloomberg view like a week ago suggesting that the problem here is there's not a lot of vision as far as what the next four years mean for the president. and in terms of the competence argument, the president's got to say it's not just about mitt romney being a severe conservative cloaked in sheep's fur or whatever the old adage is, but here's what i'm going to do for you. i know what he's going to do, and this is what i'm going to propose. >> i think also those numbers --

those don't look as sunny to me for obama as they do to you. we would expect that most voters by this point have a fixed opinion of barack obama. but if 37% of people are changing their opinion about mitt romney based on, you know, a half hour of debate that they watched, i mean, that suggests that there's still extraordinary room for romney to remake himself. >> benjamin glass half empty, 8% of voters thought obama -- they had a better impression of the president after that. >> i'd like to meet them. >> i'm a very optimistic person. we have to go to break, but after the break, after we come back, pain on main. while pundits and politicos obsess over poll numbers and job statistics, voters face concerns that are harder to quantity fi. are the candidates connecting with mainstream america? we're going to discuss that next on "now." bob...

oh, hey alex. just picking up some, brochures, posters copies of my acceptance speech. great! it's always good to have a backup plan, in case i get hit by a meteor. wow, your hair looks great. didn't realize they did photoshop here. hey, good call on those mugs. can't let 'em see what you're drinking. you know, i'm glad we're both running a nice, clean race. no need to get nasty. here's your "honk if you had an affair with taylor" yard sign. looks good. [ male announcer ] fedex office. now save 50% on banners. begins with back pain and a choice. take advil, and maybe have to take up to four in a day. or take aleve, which can relieve pain all day with just two pills. good eye. [ male announcer ] it's time for medicare open enrollment. are you ready? time to compare plans and see what's new. you don't have to make changes, but it's good to look.

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not everyone can be a foster parent... but anyone can help a foster child. we have a whole second shift that we bought into employees, and we have a future at our plant now. >> when you look at the president's plan, i don't think there can be any question that we're on the right course for today's economy. >> president obama does get what people need, and that's jobs and the opportunity to help themselves. >> stick with this guy. he will move us forward. >> i'm barack obama, and i approved this message. >> that is a new ad from president obama called "main street," focused on working-class voters in swing states. an article by dan berry in sunday's "new york times" details the life of one such working-class voter. diner owner in the town of elyria, ohio.

donnadove56 ignites the grill she seems to have just turned off. so seamlessly do her work days blend into one endless shift. why are her receipts going down? what lunch special can she offer to clean out the fridge? i'm just going in circles and circles, donna says one day, gazing through smudged glasses and not getting anyplace. for donna and many of her customers, the recession is more than a topic of discussion, it has pushed them to the brink. basics including health care remain far out of reach. berry writes, she cannot afford health insurance. she says it would be $1,500 a month for her and her out-of-work husband who has congestive heart failure at 57. a while back she tore something in her shoulder by pulling a heavy bottle of bleach down at sam's club, never had it fixed. hugo, i go to you first with this in terms of the story on the ground. the economy is often a narrative that is discussed in numbers and not in personal histories and "the new york times" had a great and compelling piece yesterday -- >> it's a series, yeah, it's

running today and all week. >> and "the new york times." >> yeah, yeah. >> never heard of it. >> and you know, it's really interesting, they talk -- this woman is a diner owner, and there are folks in the diner that discuss politics every day. we're never told who she looks to. >> sure. >> and what party she's looking to for change. what i sort of took away from that was this sense, i could understand the hopelessness that americans feel in terms of the opportunities that are being offered by either party. >> yeah. well, i think it also shows the complexity of the economic situation in the country right now because, look, the general narrative in ohio where this diner is is that the unemployment rate is below the national average, that sort of that romney's, like, it's all bleak, message is not going to resonate. but then you go and you see pockets like in elyria and other places around the state where there's a lot of economic hardship. and so there's a lot of -- and that's true for the whole country, too. there's some spots, certainly here in new york, washington, where the economy is generally doing better, but in other

places of the country, it's still a really hard time. so it's difficult for a coherent message to connect across the board for either party, for either candidate. >> that's right. that's right. >> you know, the other thing that ron brownstein had a really interesting piece in "the national journal" a couple weeks ago talking about waitress moms, white working-class women who the obama campaign has targeted specifically. and for them, issues that we tag as maybe social issues like women's reproductive concerns, paying for contraception coverage, these are economic issues for them. and in that way, it's been this sort of long-term planning on behalf of the obama team to find these voters and the issues that matter to them. but then you hear, you know, the story of donna who doesn't have health insurance, right? so the affordable care act, what does that mean to her, even? >> right. i think to hugo's point, this is why this is such a complicated election in terms of the messaging on both sides. when the president's campaign talks about the unemployment rate going down, it is hard to do that without sounding like you're, you know, cheering when the reality for a lot of people is not great. and so i think that has been a

very difficult line for them to work. the reverse is true for mitt romney where you are walking a line of not sounding like you're cheering for bad news. so i think that you're going to see both sides of this equation very much on display tomorrow night at hofstra. it is going to be whoever can sort of connect the most with the people who are -- the feel-your-pain moment is going to be very important tomorrow night. >> and i feel like the themes of disappointment and the sense that the american dream has not only been deferred but is, like, no longer accessible to a huge part of the population. >> you know, there's sort of this extraordinary shift that's taken place within the presentation of obama as a character between 2008 and now where in 2008 there was all this talk of hope and the constituencies that he appealed to, people who were hopeful about the world, young people obviously but growing economies in places like north carolina and colorado. now you have this strain that's always been there with obama with this discussion about his grandparents and, you know, the aircraft assembly line and all of that, that's sort of a defense of this middle-class consensus of the '60s and '70s. and in some ways it's not

surprising that his place is ohio now because in many ways he's sort of recast himself as that guardian of prosperous, broadly shared middle-class dream. >> sam, you guys have a feature in "the huffington post" newsletter which i hope all of our viewers receive in their inboxes, "the daily delaney downer," which inevitably has this horribly heartbreaking piece of sort of economic trivial or an anecdote. actually, you know, we too often discuss this stuff in terms of numbers and not actual stories. and what continues to happen across the country -- i mean, this is why they can't just, you know, tout the 7.8% unemployment numbers and be excited about that. and it is a very nuanced case. stew rothenberg was on the show last friday anding the these unemployment numbers have had absolutely no bearing on the metrics of the poll numbers because it's much more about a mood and whether people feel optimistic or pessimistic. >> first of all, "the daily

delaney downer," was our human suffering correspondent. he's been doing this for a couple years now and he finds people of struggling in the economy. a lot of them have run out of insurance, a lot of them are long-term employed. if you've been out of work for two years, it's twice as hard to find a job as people bentering the work force. they're tired of being tired. and to reach them as a voting constituent is as tough as ever as everyone out here has discussed. one thing that obama can say is that it's not like he's fdr. fdr came into his crappy situation three years in. obama, it was three months in after the stock market. so he could say, listen, it's been a tough slog. it's been three awful years, but, you know, the job market is kind of turning around. economic confidence, which is a huge indicator of how people are going to vote, was pretty good this week. retail sales are up. car sales are up. we are turning the right corner. and i think he's made that case this past couple days with the

ads, with the morgan freeman ad. it's basically a different rendition of it's morning in america again almost. >> and that's the ad we came into the segment with. >> yes. >> we will see how it plays out on that stage in long island tomorrow. coming up, grand old problems. what effect will the mitt romney nomination have on the republican psyche, and what will it mean to be a member of the gop four years from now? we will consult our magic eight ball just ahead. those little things still get you. for you, life's about her. but your erectile dysfunction - that could be a question of blood flow. cialis tadalafil for daily use helps you be ready anytime the moment's right. you can be more confident in your ability to be ready. and the same cialis is the only daily ed tablet approved to treat ed and symptoms of bph, like needing to go frequently or urgently. tell your doctor about all your medical conditions and medications, and ask if your heart is healthy enough for sexual activity.

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his career. as like the guy from pepsi who comes in to run gm. you know, he can't tell us what he's going to do because he hasn't seen the books yet. but we don't know because he seems absolutely sincere as a moderate. and he also seemed pretty severe as a severe conservative. that's not a dig, it's honest confusion. because he's got a good shot of winning. >> is the republican party on whole also facing some honest confusion? we will ask "the new york tim ' times'" matt bai when he joins us next on "now." [ female announcer ] ready for a taste of what's hot?

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triumphant showing in the midterms where they gained a whopping 63 seats in the house and 6 seats in the senate. gop voters were treated to a cornucopia of 2012 candidates ranging from michele bachmann and rick santorum to herman cain and ron paul. sandwiched in between was mitt romney who's sensing the political winds quickly moved with the herd. >> i was a severely conservative republican governor. >> that same message wasn't working out so well in the general. it came poll after poll showing romney trailing obama in all of the battleground states. democrats were not going to let severely conservative mitt get away with it. >> i had a different reaction to that first debate than a lot of people did. i mean, i thought -- i thought, wow! here's old moderate mitt.

where you been, boy? i missed you all these last two years. >> i could listen to that clip ten times in a row every morning. but in a recent story, "the new york times" magazine's matt bai the latest shift has, quote, less to do with romney's erratic campaign than with the unreconcilable dmem ma facing anyone who wants to lead republicans after november. while it would instantly turn the attention toward the next crop of candidates, marco rubio, chris christie and bobby jindal, those aspirants for 2016 may well have better political instincts than romney, he writes, but the trap that awaits them is the same. joining us from washington is matt bai, chief political correspondent for "the new york times" magazine. >> hey, alex. how you guys doing? >> good. let's talk about this.

no one is intimating that mitt romney has lost this election by any means, but this is a question even if it is a president romney which is where does the republican party go from here? he has an incredibly arrestive house caucus, theoretically if he's president, and yet they're also sort of the romney compass. which direction does that point? tell us a little bit about what you see for the future of the republican party in the next four to eight years. >> well, i'm severely confused about it, alex. you know, i watched the yankees the last couple nights. i don't know if you -- i think i have some appreciation for how republicans feel. you look at a situation and you think there's so many opportunities. >> i was watching the nats, matt, and i feel the same way. so many opportunities frittered away. >> right. you ask yourself, how can this be? and i think that's how republicans are feeling. they do have a shot and i think they're feeling better than they were a couple of weeks ago, for sure. but at the end of the day, you have four years almost dominated by unemployment over 8%, 40-plus months, all indicators, the approval ratings of the president below 50% for almost that entire time.

and you have, you know, a legitimate question to ask if mitt romney loses, is the problem him, or is the problem us, right? do republicans have to say, is it us? is it the party? i think human nature will probably tell us it's him. if he wins, he has to navigate between a bunch of factions. and my guess is, and purely a guess, that it takes a year or 18 months to realize what all presidents of the modern age figure out, which is as simple as it's not getting people in a room and you have to agree and you have to make a choice in which constituents you want to solidify and which ones you want to take on. >> it's getting more difficult for anybody to tread a line in the middle. here i will bring up the news, of course, that arlen specter passed away sunday afternoon, a man who actually was on both sides of the aisle and recognized the fact that these pivots back and forth are inevitable during the election psychin i cycle. i want to play a little bit of my interview on march 28th of

this year. >> do you think that mitt romney can tack back to the center and gain the broad support of the american public in advance of election day? >> well, let's see what mitt romney emerges in october. regrettably, the american people are used to candidates who change positions consistently. and the reality is that the winnto win a republican nomination, you have to be so far off the right that you're off the board. >> the thing that sticks out to me is arlen specter calling a pivot in october, he had the timing absolutely straight on. does mitt romney go back to the center at some point? does the republican party sit on the shrink's couch, you know, if mitt romney loses and say, the party -- there's a schism here, and we've got to come together around the family table and figure out where we're going? >> i think the whole notion of left, right and center is sort of antiquated.

i think, you know, you have to take the issue by issue. especially with mitt romney who i think in essence is a political survivalist. he will do what it takes to win. when he's governing, he will do the same. i think there are some issues where you will see him push a moderate stance. i think the republican party will join him, for instance, on immigration reform because they are not stupid. they can look at the numbers, and they can see that if he's only going to get 25% to 30% of the vote, that is a recipe for extinction. so, you know, that's a survivalist thing that they have to do. i think a trickier thing, for instance, would be gay marriage. a lot of the, you know, financiers, the republican financiers are very supportive of gay marriage. obviously social conservatives are not. that's one of those things where you can't say is it left, right or center? you have to look at it issue by issue. then there's going to be battles within the republican party to see where they stand on those issues so it's very complex. >> matt, if the president is

re-elected, he's talked a lot about the fever breaking in the republican party, this idea that somehow republicans are going to realize that they've been playing the wrong hand of cards and that they need to make deals. how overly optimistic do you think that is? or do you think that's realistic? >> well, let me say, i agree with sam actually that the notions of center and right aren't quite right on this. i think the challenge for romney, should he win, is actually whether he can turn republicans back into a governing party versus an anti-government party, which they arguably have been for most of the last decade. and i think he's right to say it's not just a simple ideological shift. you know, on the president, where will he be with republicans? my hope, my thought is that they would have learned from the last four years that you don't bring republicans to the table by twisting arms or ingratiating them and inviting them to super bowl parties. you don't have magical reconciliations. you have to go to the public. you have to actually build public consensus for an agenda, and they are not doing that during this campaign. there's no real agenda for the next four years to speak of.

and so that is something, should he win, and i think you have to go out and do once you have secured that second term. once immediately after winning, and i think it's something they failed to do four years ago, frankly. i think they thought they had a mandate that they didn't actually have. and i think, you know, i would assume that this time around there's a more sophisticated understanding of how you will presidential power which for whatever reason has been lacking. >> i think that criticism is fair, but i think some blame lays on the shoulders of john boehner and his ability to corral his own folks. and that's where it comes back to the republican family table and whether they can sit down and agree to certain things. >> well, there's no question boehner has the hardest job in washington. and as i've written about and chronicled at length, he and the president, you know, came a long way toward finding an agreement on some of these fiscal issues that are going to paralyze washington again at the end of the year. and the good news is they still have that piece of paper in each of their desks which gets them 75% or 80% towards at least a

framework which is all you're going to be able to pass anyway. it is boehner who shoulders at least as much responsibility, the speaker has to figure out how to bring along more of his caucus. and, you know, should they lose this presidential race, my guess is he would have a little more leverage in that regard. but that could go either way. >> thank you to "the new york times'" magazine's matt bai, a great piece. >> i saw hugo telling you there, you've got to view the magazine. >> the "new york times" magazine, "new york times" magazine's matt bai. thank you, as always. after the break, a budget on the brink. >> i think that both campaigns have failed to say to the american public, this is going to be hard. this is a real crisis in america. you look at the imf projections about where the global economy is now. they're saying you've got to get your act together. we could be in another recession next year at this time. they've got to level with the american people about everyone's going to have to give something. and there's going to have to be some revenue raised at some point as well. >> we will peer over the edge of

the looming fiscal cliff when cnbc's john harwood joins us live next. [ male announcer ] humana and walmart have teamed up to bring you a low-priced medicare prescription drug plan. ♪ with a low national plan premium... ♪ ...and copays as low as one dollar... ♪ ...saving on your medicare prescriptions is easy. ♪ so you're free to focus on the things that really matter. call humana at 1-800-808-4003. or go to walmart.com for details.

what if we came up with a situation tomorrow, you opened up the newspaper, and there was some conciliation. there was some agreement. it may not be everything that one side would want, somewhere in the middle, maybe even closer to the extreme that you didn't like, but there was some compromise that was laid out. what kind of a stimulus do you think that would provide? >> i'd be a buyer of the market. >> that was goldman sachs ceo lloyd blankfein last week saying that the economy too actually see a boost if congress did its job and came to an agreement, any agreement, really, on the fiscal cliff. if lawmakers don't make a deal, the first round of automatic spending cuts will take effect. and nearly every tax cut passed

over the past decade will expire resulting in 90% of households seeing their tax bills go up by an average of $3,500. the lethal combination could send the country into recession and cause the unemployment rate to shoot up to 9% according to the congressional budget office. so what are washington lawmakers doing to drive the country bag from the brink and rev up the economy? meh! not a whole lot according to former senator alan simpson. >> they worship the god of re-election. they're figuring all that and how to duck every hot issue before november 6th and then erskine says the whirlpool of 7 trillion bucks is going to hit us like a rainstorm. >> joining us now is chief washington correspondent for cnbc and writer at "the new york times," the inimitiable john harwood. it is great to see you, my friend. and i wonder, as someone that covers fiscal matters, money

matters broadly, are politicians talking enough about the fiscal cliff, or is this just something that is going to have to wait until after the election? >> it's going to have to wait until after the election. no, they're not talking enough about it. no, they're not preparing the american people for what's going to come. however, it's not within the power of lawmakers right now to settle this. they got as far as they could with the boehner and the obama talks in the summer of 2011. when those collapsed, it was really left to each side to take your best hold, fight it out in the election, and whichever side wins is going to have a big impact on how this gets resolved. and i think that if president obama wins re-election and republicans control the house, which i think in both cases the odds are better than 50/50 right now that those will happen, one of the first phone calls the president makes is going to be to john boehner and we'll get right back in those negotiations to try to resolve it. >> chuck schumer calling for a fiscal cliff resolution in the lame-duck session of congress. "the wall street journal" perhaps unsurprisingly had sharp

words for that, writing "mr. schumer's speech is best understood as a political marker no matter who wins re-election. if romney wins, mr. schumer will browbeat any democrat who even thinks about supporting a simpson-bowles reagan-style reform. if obama wins, the senator will fight the kind of tax deal boehner wants as part of a grand budget compromise. syme to glad the finger pointing has begun without any kind of actual deal on the table. >> look, i think that's kind of silly from "the journal." chuck schumer and democrats are going to go along with what president obama ultimately wants to do. yes, there will be a break or a curve on how far the president goes in some areas, but he's going to be calling the shots on this, and it's clear that he wants a deal and that he's willing to give up some of the things that democrats have been trying to protect for a long time like the sanctity of the entitlement programs as they now exist in order to get it. and then the question's going to be, if you can get some revenue

from the republican side, that means tax increases, you're going to get entitlement cuts from the democratic side. and then you're bargaining over the price. >> sam, john brings up a very good point. we've talked about this. the president is willing to go there on some of these entitlement programs. and the expectation is as soon as he sort of has political capital or time and space to negotiate with the republican party, something big is actually maybe probably going to get done. >> obama even if not re-elected controls all the cards basically. the bush tax cuts, the sequestration will hit before he's out of office, he can veto, whatever it is. and then you to let the bush tax cuts expire for anybody, you have to build a tax cut plan. that's what democrats want. let's say he loses, hypothetical hypothetically. romney will say put a three-month extension on it. he doesn't have to do that. he can say this is how it's going to be, and that will force boehner to the table. there's a number of other complicating issues.

but let's keep in mind, you know, if deficit reduction is what we want, if that's the ending goal, then simply doing nothing is the greatest thing you can do. you will reduce the deficit, reduce the debt, immeasurably. no one wants it because it's going to end up burdening a lot of households with a ton of tax liabilities. but that's the baseline. and so i'm a little bit confused about this whole notion of uncertainty versus certainty because i was under the assumption that the wall street guys wanted a lot of deficit reduction, now they don't. >> well, when the cbo is coming out with numbers saying that say unemployment's going to go up to 9% and that taxes are going to be raised 90% of americans by $3500, that's very counterintuitive to conservative principles, maggie. >> that's exactly right. and i think also to get back to where we were in the beginning of this conversation, this is why you are not seeing either candidate talking about this. this is dangerous and it is uncertain for both. whatever scenario that sam just laid out, both of which are plausible, happens, there is a great deal of uncertainty and a great deal of negativity, and you do have two candidates who are not being particularly open

or honest about what either option means. >> and john, i mean, it's also consumer confidence is increasing. so you don't exactly want to dampen that by saying hey, everybody's going to have, like, thousands of dollars less in their pockets come, you know, christmastime, basically, right? >> right. obama obama's position, though, is that everybody's not going to have thousands of dollars less in their pockets. his position is people over $200,000 income are going to pay more, or as joe biden said kind of leading that little fact, millionaires, that's what they're trying to make happen. if they do nothing, as sam was talking about, and we go over the cliff for a short period of time, democrats will then propose a tax cut that disproportionately benefits middle and lower-income earners, and dare republicans to oppose it if it doesn't have a lot of benefits for the top. >> one clarification, but the tax plan that obama's putting forward actually doesn't extend the tax breaks for the wealthiest people up to $200,000

in income. it's the rate that's over that that don't get taxed. >> john, basically what we're seeing is potentially this could be a fiscal clif in the wile e. coyote style where you tread in the air but you could come back onto solid ground. >> it's possible. in fact, it's probably more likely than not that going over the cliff for at least a short period of time would be the action-forcing mechanism that produces a solution. and i think you have to say, for all the raps on congress and their approval rating is somewhere in the single digits, they did do a pretty good job of designing something that is so onerous to all sides that they really don't want it to take effect. >> thank you to john harwood who answered my wile e. coyote question with a totally straight face. now he's laughing. inch coming up, bubba and the boss in the buckeye state. will a bill clinton/bruce springsteen double bill grab votes for an all-important ohio?

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oh, hey alex. just picking up some, brochures, posters copies of my acceptance speech. great! it's always good to have a backup plan, in case i get hit by a meteor. wow, your hair looks great. didn't realize they did photoshop here. hey, good call on those mugs. can't let 'em see what you're drinking. you know, i'm glad we're both running a nice, clean race. no need to get nasty.

here's your "honk if you had an affair with taylor" yard sign. looks good. [ male announcer ] fedex office. now save 50% on banners. welcome back. time for "what now?" talk about a one, two punch, president clinton and bruce springsteen are campaigning for the president together. the two are headlines an obama rally in parma, ohio, on thursday. hugo, can we get bill clinton singing backup? >> i think he's going to play sax. isn't that what bill clinton does? i think if you're asking americans, do they want to go to a rock concert or watch two guys not talk about the fiscal cliff, i think they're going to go for the rock concert. >> there should be am

mini-documentary about this moment in history. >> it's not going to help the youth vote. >> what's the big deal? >> sam? >> i'm just insulted that you think that's going to draw more viewers than my discussion, our discussion with john harwood about the fiscal cliff. >> the candidates. the daily downer, it's not going to draw attention away from that. >> it's known as ratings gold. human suffering correspondent. no, not to denigrate arthur's work is actually incredible. >> don't listen to them, arthur. >> arthur, we love you. i wish i had tickets to the impending clinton/boss duet in parma, ohio. some people just have to be at 30 rock. thank you to sam, benjamin, maggie and hugo. that is all for now. i'll see you back here at noon eastern when i'm joined by bloomberg's "businessweek," the huffington post ace ryan grimm, "time" senior political analyst mark halperin and former massachusetts gubernatorial candidate shannon o'brien here to talk mitt romney.

until then, check out our facebook page for all sorts of behind of-the scenes treats, facebook.com/nowwithalex. "andrea mitchell reports" is next. good afternoon. >> good afternoon. coming up, what the numbers tell us ahead of tomorrow's debate. the town hall meeting. joining me, romney campaign co-chair virginia governor bob mcdonnell. and what we've learned about the libya investigation with defense secretary -- former defense secretary william cohen. and remembering arlen specter. we'll talk to former pennsylvania governor and nbc analyst ed rendell who knew him well next on "andrea mitchell reports." now with a fancy coating that gives you a burst of wildberry flavor. now why make a flavored heartburn pill? because this is america. and we don't just make things you want, we make things you didn't even know you wanted. like a spoon fork. spray cheese. and jeans made out of sweatpants. so grab yourself some new prilosec otc wildberry.

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