nation." back to reality the . address thunderbolt. >> i want to be clear, i'm not wedded to every detail of my plan. i'm open to compromise. i'm open to new i ideas. i'm committed to solving our fiscal challenges. but i refuse to accept any approach that isn't balanced. >> schieffer: can the two sides find a way to get the country back on a sound financial footing before dacopian cuts in social and defense programs and an automatic tax increase go into effect at year's end? >> this is an opportunity for the president to lead. now, this is his moment to engage the congress and work towards a solution that can pass both chambers.

>> schieffer: if upcertainty over making a deal were not enough, washington was rocked by the scandal involving c.i.a. chief david petraeus. we'll get the latest on petraeus and the chances of compromise on the financial argument from republican senator lindsey graham. we'll get insight on the pretty thinking from his top strategist, david axelrod. then we'll go to our all-star panel of analysts. peggy noonan of the ""wall street journal"." david gergen of harvard university. dee dee myers of "vanity fair." and our own john dickerson. election 2012 is in the bookes, but the story is just beginning. and this is "face the nation." captioning sponsored by cbs from cbs news in washington, "face the nation" with bob schieffer. >> schieffer: good morning, again. on this veteran's day. and we begin with senator graham who is in clemson, south

carolina. senator, thank you for coming. you are on the armed services committee, of course, so i want to start out with this out-of-the blue thunderbolt that hit washington friday concerning david petraeus the c.i.a. director. he resigned, saying he had exercised bad judgment and had an affair. cbs news and several other agencies have now confirmed that the f.b.i. got on to this after a third woman told them she had received threatening e-mails from the woman he has reported to have had the affair with. so i guess i would just simply start, do you have any additional information to any of this? >> no, not really. i was just as surprised and from a national point of view, general petraeus turned around iraq. we were losing in iraq when he took over. we had it in awe good spot. unfortunately, i think the obama administration fumbled the ball with iraq. but he turned iraq around. he was a great general, and his resignation is a loss for the

country. but i understand why he had to resign. >> schieffer: there are all these stories, these pieces of it that are now coming affect, that now there seems to be another woman who was involved, and she went to the f.b.i. because she was frightened of these e-mails. do you-- do you think there ought to be a congressional investigation to sort this out, or is it best to just go on and leave it where it is? >> well, if there's no effect of the affair on national security, i think we need to move on. but at the end of the day, the one thing that that's happen in my view is we've got to get to the bottom of benghazi. i hate what happened to general petraeus for his family and the families for those involved, but we have four dead americans in benghazi. we have a national security failure in the making. i don't see how in the world you can find out what happened in benghazi before, during, and after the attack if general petraeus doesn't testify. so from my point of view, it's

essential he give testimony before the congress so we can figure out big. from the congress' point of view, instead of doing this in a stovepipe way, have the dodd that needs to explain itself itself, god knows the state department needs to answer for their behavior. i suggest we have a joint select committee of house and senate members and we do this together, not have three different committee ggz off in three different directions so we can get to the bottom of it like we did in watergate and iran contra. i think that would be smart for the congress to combine resources. >> schieffer: you're on record having said the administration either deliberately misled people about what led to the deaths of the ambassador and three other americans or it was just gross incompetence. now, susan rice, who is the u.n. ambassador at this point was pretty much the point person on this:j the administration. she went out on the sunday shows and first said it was not a

planned terrorist attack about the was the result of a spontaneous demonstration. she is now being mentioned as one of those being considered for secretary of state. do you think what she said during the early days of this investigation, should that factor in any way on whether she should be considered as secretary of state? >> absolutely wot a doubt. i generally defer to presidential selections for cabinets and judges. i voted for both supreme court judges, not because i would have chose them, because the president has a lot leeway, and if they're qualified people, i tend to support presidential picks. however, i do reserve unto myself and other members of congress the ability to say no when justified. i cannot imagine promoting anybody associated with benghazi at this point. it's not just what he said after. how did the place become a death trap for months why did we keep it open or not reinforce it? there are too many questions to

be answered. don't quite, frankly, trust her rendition of beg. i think susan rice would have an incredibly difficult time to get through the senate. i would not vote for her unless there's a tremendous opening up the information explaining herself in a way she has not yet done. >> schieffer: well, i mean, would you try to lead a move to block her from getting the nomination if in fact she is-- >> i am not-- i am not-- i'm not entertaining promoting anybody that i think was involved with benghazi debacle. we needo get to the bottom of it. the president has a lot of leeway with me and others when it comes to making appointments. but i'm not going to promote somebody who i think has misled the country or is either incompetent. that's my view of susan rice. there are other people out there. i don't want to fight with the president over something like, this but there has to be an accountability. you can't just let this happen and act as it there are no consequences. and one of the consequences to me that susan price-- susan rice needs to be held accountable.

>> schieffer: let's talk a little bit about the election, a lot of talk about your party is going to have to kind of rethink some of its positions. a former chairman of your party-- >> yeah. >> schieffer:-- said to me the other day, it's the lateen organization stupid. meaning you're going to have to do manage to appeal to the hispanics. what was the impact of the election on your party, senator, and what needs to be done here? >> well, the one thing we do not need to do is abandon conservatism. and in the election poll, 50% said the government does too much and not too little. conservativi will sell with latinos. but the truth of the matter sthe immigration debate we engaged in, in 2006 and 2007, has built a wall between the republican party and hispanic community because of tone and rhetoric. president barack obama received 44% of the hispanic vote in 2004. by 2008 we were down to 28, in

2012 we are down to 27. it's the fastest growing demographic in the country and we're losing votes every election cycle and it has to stop. it's one thing to shoot yourself in the foot. just don't relode the gun. i intend not to reload this gun when it comes to hispanics. i intend to pass an immigration reform bill that is an american solution to an american problem but we have nobody to blame but ourselves when it comes to losing hispanics and we get kget them back with some effort on our part. >> schieffer: would that mean finding some path to citizenship for the illegals that are in this country? >> it means securing our border which every american agrees with. it means making it hard tore hire illegal immigrants, verifying employment. we need to secure the borders. make sure you can't hire an illegal immigrant because you have documents that can't be faked.

we need guest workers, and. when it comes to the 12 million, we need to be firm and fair-- self-deportation is not going to work. 65% of the people in the exit poll of this election supported a pathway to citizenship. here's what i think we should do with the 12 million. fix it in a way we don't have a third wave of illegal immigration 20 gears now. americans want more legal immigration and fix illegal immigration once and for all. have the 12 million once you security border-- and you do nothing until you secure the borders, come out of the shadows, start paying taxes, pay a fine for the law they broke. they can't stay unless they learn our language, and they have to get in the back of the line before they can become citizens. they can't cut in front of line regarding people who are doing it right, and it could take over a decade to get their green card. i think that's the answer. >> schieffer: we have just a very short time here. i want to ask you about the fiscal cliff. can the republicans find a way to get some kind of a compromise with democrats so we can avoid

this horrindous situation that goes into effect if you don't act? >> fair is not an option for the country when it comes to the fiscal cliff. say yes to simpson-bowles, mr. president. i'm willing to say yes to simpson-bowles. we need more revenue in washington. we need more private sector jobs. we don't need to raise tax rates. we need to limit loopholes for the wealthy. mr. simpson, if you say yes to simpson-bowles when it comes to revenue, so will i and so will most republicans. we can get revenue without destroying jobs and both need to. no republican will vote for increased tax rates. we will insist our democratic friends reform entitlements something we've never done ask that's where the big money is at. say yes to simpson-expwoalz we'll get this behind us. >> schieffer: senator, thank you so much. and now we're going to get the other side of this picture. and joining us now, one of the

architects of the president's victory, his senior campaign adviser, david axelrod, who is out in chicago. mr. axelrod, thank you so much for joining us. let me just start, on friday, the president said he was open to compromise, but he said he would not accept any approach to deficit reduction, that does not ask the wealth tow pay more taxes. speaker boehner, the republican speaker of the house, has already said that's a nonstarter. aren't we right back where we were last year? >> well, i don't think so, bob, for a am could you have reasons. first of all, i think the speaker also said he wasn't going to get into details about what he would or wouldn't accept. he didn't want to foreclose discussions, and that was a positive sign. his rhetoric has been encouraging. and i think we have also had an intervening election, and in fact the position of the president articulated friday was the position that he's articulated throughout the campaign. you look at those exit polls,

and a healthy majority of americans agree with him. and that's certainly going to help him form these discussions. >> schieffer: the president won, but this was a very close victory. and it came down to those battleground states. and it was close even there. does the president feel that won a mandate? >> well, bob, on this particular issue, it wasn't close. as i said, if you look at the exit polls-- i think it was somewhere around 60% of the american people agreed with the president's position on this issue of taxes. it is obvious that we can't resolve the challenge here simply by cutting the budget. we've cut by $1 trillion. there are more cuts to be made but you need new revenues and every objective person who has looked at this agrees on that. so the question is where is that revenue going to come from? the president believes it's more equitable to get that from the wealthiest american americans

who have done very well, and frankly, don't need those tax cuts. and who benefitted disproportionately from the tax cuts in the last decade. and most americans agree with that. >> schieffer: speaker boehner seemed to suggest that he was open to closing loopholes to real tax reform. can you get there by just closing loopholes or will it take more than that? >> well, look, i don't want to prejudge the discussions. and i think that the speaker's comment have been encouraging. and obviously, there's money to be gained by closing some of these-- closing some of these loopholes and applying them to deficit reduction. i think there are a lot of ways to skin this cat, so long as everybody comes with a positive, constructive attitude toward the task. . >> schieffer: let's talk a little bit about the campaign. when did you know you had this won? >> we went into election day

with confidence, and we had-- i had rems of data from these young kids who do these analytics on-- based on polling and based on our other data we've gathered, and they pretty much hit it on the nose. so when the votes started coming in and matched up with the mod they'll they had created, and in one state after another, you know, we were-- we-- we knew that we were in good shape by 8:00 or 8:15 that evening, we were pretty confident that this race was going to be ours and it was just a matter of time, and less time, frankly, than we amounted. >> schieffer: was there any time during this campaign that you thought it might slip away, like, for example, after that first debate? obviously, there was some kind of a shft there. >> there was. but most of the shift after the first debate allowed governor romney to reclaim what he had lost after their convention, which wasn't very successful, and the 47% tape that became so

well known across the country and was a negative for him. a lot of those republican-leaning independents who had moved away from him came back, so it was less about our losing ground and him gain anything it restored the race to the one we had before the conventions and the one we always anticipated, where we were narrowly ahead. we never relink wished that lead in our data, and obviously, looking state by state, we were pretty confident. what is remarkable about this race, bob, isn't the volatility of it. , or wasn't the volatility of it. there was this illusion of volatility that was created by the spate of public polls, many of which varied, even on the very same day. but in our own data, it was a very steady race. we maintained a strong-- a narrow lead but a consistent lead, really for months and months and months.

and it didn't fluctuate by much. >> schieffer: we saw something when the president came to your headquarters to say thanks to all the young volunteers. we saw a side of president obama we don't often see. i want to just roll a little of that tape and then ask you about it. . >> and you guys, what you have done, the work that i'm doing, is important. i'm really proud of that. i'm really proud of all of you. and... ( applause ) >> schieffer: it sully seemed that the president was brushing away a tear there. we don't see that much emotion from the president. what was it like to be there? >> i was standing 10 feet away and i was brushing tears away myself as were many of those young people. so when he looked at those young kids and their sense of idealism and all the sacrifices they had made, not just for him but for the kind of country that they

believe in, he really was overcome. and the president went around after that speech and he-- and he met with every single kid in the headquarters, and gave them a hug and handshake and thanks and i think that hug and handshake and thanks has sent them off in a direction where they will make great contributions in the future, and it really was a wonderful coda on a great campaign. >> schieffer: and what about you? what do you do next? >> well, i'm going down-- in keeping with that-- i'm going to spend part of my time start an institute of politics at the university of chicago. my feeling is if i can help inspire some young people to get into this arena as candidates, as strategists as journalists, then that would be a great contribution to make. >> schieffer: david axelrod, thank you so much. and we'll be back in a minute.

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>. >> schieffer: i want to start with it peggy noonan and david gergen. i want to get back to the petraeus situation. you knew general petraeus and this woman he was allegedly involved with. >> i have known both of them for several years. i consider themselves friends. i have a very high regard for both. in the last 36 hours i have communicated with both of them. i sent them messages of support because i think this is a national tragedy. it's a tragedy not only for the families but the country. david petraeus, i think he's been one of the finest leaders of his generation. he is an iconic figure for any number of young troops. i have talked to people who served under him and they are devastated by this because they look up to him so much. >> schieffer: it seemed like they were really anxious to get

him out of there once this happened. >> it's hard to tell. the accounts from mr. clapper, telling him he needed to resign, i only know that second airily through the press. the code of honor goes very deep in general petraeus, and i do believe that he is-- you know, that he has a sense of shame about this, a sense he acted dishonorably, and he would act out of a sense of honor. i can't tell you how important-- it's what they teach in the military, and it's what he lived up to all his life. un, it-- i would hope people would remember there have been other great leaders in this country-- remember president eisenhower, when he would general-- remember franklin roosevelt and lucy mercer, how important that relationship was to him in the second world war. i think we have to be understanding that as the saying goes, the best of men are still men at their best. >> schieffer: peggy, you are one of them? >> yeah, to tell you the truth,

i think this story is a little mysterious. i don't really understand why the general, having made a painful mistake, painful for himself and his family, why he had to leave, and why he was, according to the press, sales ared to leave. and i understand what he would feel is the breach of honor, but this is a truly great and constructive american career. and i'm just not sure why he had to leave. the second thing, i don't think anybody quite understands how the f.b.i. could have been going through his e-mail, and the f.b.i. leaders didn't know, justice didn't know. how did this begin? how did it go forward? when was the white house told? you just have to wonder what the heck is this? >> schieffer: we're going to talk more about this on page 2. i'll be right back with thoughts of my own.

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>> schieffer: welcome back to "face the nation." we're on page two now, and we're going to continue the discussion with peggy noonan and david gergen, adding dee dee myers, who was the press secretary for president clinton, is now a contributor to "vanity fair," and our own political director john dickerson. david, i want to go back to you. someone was just saying your twitter feed-- >> dee dee made that point. i want to make clear-- i'm not condoning what david petraeus did, nor what the woman did. you know, but i do think that people are human. we have worked for human leaders ourselves, dee dee. and we understand that people ought to be sort of-- take it in context and understand when people are human they make mistakes. some of our greatest moral leaders have done that. there's just a new book out about thomas jefferson and his

weaknesses he experienced in life. and yet he was a great leader of this country. what i do believe is that we should see it in the larger context and that is general petrace has given this country distinguished service for over 40 years. he has put his life on the line on a continuous basis. he was nearly killed in service earlier on. and he has been a wonderful, wonderful role model for a lot of people, and we ought to understand his humanness and appreciate that. >> i think the american people are willing to forgive leaders for their impertechses, i really do. even in this area. i don't think that's the question here. i think people don't like it, but they also don't think it's disqualifying. but i think this case raises so many other questions, as peggy was saying earlier. it just seems incongruous right now that it got from this relationship to the f.b.i. to him resigning and being urged to resign by clapper. it just seems like there's a lot of questions that haven't been answered. >> schieffer: the part that interests me, do we think-- does

anybody have a suggestion that this had anything to do with anything besides what this extramarital affair? was somebody upset with general petraeus about what happened in benghazi? i think lindsey graham is right when he says we need to have an victories glowft of this incident but of this whole business, peggy. >> this is one of those what the heck is going on kind of moments where you have so many questions, as many people are saying off the record. this feels a little homeland, almost. you know wha i mean? it's a little too mysterious. look, i come back to where i started. petraeus is a great guy. he has sacrificed for his country for 40 years. it is a shame to lose him over this. and i just have to ask why do we have to lose him over this? that actually makes no sense. >> schieffer: so do you think they moved too fast? >> i don't know what they knew. but it looks very strange.

i do not understand why they could not-- i guess, i hope we'll find out why they-- why it wasn't a scenario in which they said, "okay, we've got a problem. we see a problem. general, you have to know this." he said, "i'm very sorry, that's over, move forward" i don't understand why you have to leave over this. >> there are a lot of people out there who do have skepticism. they think this is maybe somehow tied to benghazi. i think lindsey graham was right. general petraeus should exercise. he should testify to lay those doubts to rest. i don't know what happened and why he resigned. i don't know the internals. i will bet dollars to donuts that there was a voluntary aspect to this, that he himself felt under the circumstances he should resign, that that was the honorable thing to do. >> distinction is whether he should lose his reputation and his job and i think david is right, don't let the worst thing about a person become the true

thing about him. what is the standard for everybody in the sky? they would probably be out if the person they had an affair with had access to their e-mail as a security breach kind of thing. so he probably has to if-- >> why did she have acitose hi access to his e-mails? >> we don't know. but in terms of his job, keeping secrets and not letting people have access to secret things tseems to me you can't stay in that job, separate and aparent from his reputation. it seems lindsey graham, even if you're on the left or right, even if you have the president's interests will at heart, you want to have an investigation so this can be dispensed with. otherwise this will be a rumor that is dogged. the president has said, by the way, get all the answers on the table fast or it will be dogging him for the whole second term. >> schieffer: we have a lot to talk about this morning. i want to talk a little bit about the election. now that we've had a chance to kind of sink in and think about it. john, i know you've been doing a

lot of reporting out in ohio since the election. >> i just didn't get enough of ohio during the election. they did not see it coming. the romney campaign didn't see it was coming. i talked to a lot of people who said they weren't just cautiously optimistic, they were optimistic. when they found out they lost someone said it was like a death in the family. how did they get it wrong in ohio is what to look at. the question is more about african americans. they didn't think he would have the turnout he did. they just missed it. when people would raise the questions saying all the public polls suggested the president doing pretty well, the senior staff would say-- they would just dismiss those polls and say these polls are sampling democrats too heavily. that's just not the way this election is going to turn out. they just-- they just missed it. they also though-- there were two other things in ohio. if you look at the counties

where romney did well relative to george bush in 200newshour. he did well in the coal county. where did he do poorly? the auto countys. you see it in the turnout. and then, i think, finally, the obama campaign was effective in turning romney into a sim bell of all the things in the economy that hurt people in the middle class. he was using outsourcing. they were using offshoring. they were painting him as the kind of bad guy that led to the economic situation people are in. >> schieffer: it seems to me in the beginning they just made a streamic mistake about ohio. why would you go and campaign against the auto bailout in a place where it worked, where they put people back to work? that seems like an odd way to go about it. i don't think it's the polling the end that they didn't understand. i mean, that-- why would you use that? that was-- that was the thrust of their message out there. the auto bailout was wrong. >> yeah, well, they thought--

what confused them a little bit is they thought it's about independence in ohio. and we're doing well. they targeted independents, knocked on their doors. these are people who hadn't participated in the primaries of either party, and they were winning with those independents. a senior strategist said to me, fmitt romney loses ohio, i'll give you $1,000 to your favorite charity for every point he wins among independents." his argument was there's no way he can lose the state if he wins among independents. mitt romney won independents by 10 points in ohio, lost the state. they just-- >> schieffer: barack obama also won white working clalsz voters in ohio, which he didn't do very well with in other places. >> what he did in ohio was did well enough with white work clalsz voters and the african american turnout in ohio was 11% in 2008. it was 15% in this election. why did that happen? the strategists i talked to sort of were like, well, of course, barack obama is going to do well with african americans. if you look at african america african americans -- two things you talk to strategists who know the african american community, there was an effort by republicans in states from

pennsylvania, florida, ohio, to shrink the amount of days and ways in which african americans could vote. >> schieffer: you know, to me, most telling statistic in this whole race, dee dee, is when i read and learned from those exit polls that barack obama had won the cuban vote in florida. >> right. in florida. and the hispanic vote made up the entire marge nin florida, ended up being 73,000 votes. you can trace it a lot of different ways but that's one of them. that's pretty surprising. what the obama campaign will tell you, not only was their turnout operation every bit as good and better but their message was better. they won this because they appealed to middle class voters. they said who will do a better job taking care of people like you and middle cross voters resoundingly said yes. another thing john was alluding to, when you try to suppress the vote you try to-- it really makes them mad. and that helps to explain why so many people in the counties around cleveland, for example, why african american turnout went up. they stood in line for seven,

eight hours, even before election day, in order to make sure that their votes were counted. people were still voting in florida after the president was declared the winner because they wanted to make sure their vote counted. >> schieffer: you know, peggy, there's little doubt in my mind that the republicans have to come up with something different when it comes to hispanics. do you think they can find a way to appeal to hispanic voters? >> i think they can. i think they should. i would start with this. everything that we just heard sounds extremely true but maybe the overall mel o message of this campaign is a lot of americans don't like the republican party as they currently perceive it. it's attitudes. its way of dealing with people. it seems to me this is a very promising moment for republicans. there was a question in-- two questions in the exit polls. one was, as dee dee mentioned, who cares about you? and that was the democrats. but who shares your values was the republicans. so we have a whole nation of--

we have a lot of people who-- who agree with conservative values, but it wasn't reflected in the-- in the voting the other day. i think the party party should take this opportunity to change itself in means ways. one of the things that must change is its public face and its attitude. and, yes, of course, it should move forward on immigration. it just should. >> schieffer: we're gog have to take a little break here. we'll come back and talk about all of this and more in a minute. it ...with a deeper knowledge of their subjects. as a result, their students achieve at a higher level. let's develop more stars in education. let's invest in our teachers... ...so they can inspire our students.

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risks, charges and expenses. read and consider it carefully before investing. >> schieffer: back now with our political panel. peggy, i want to let you finish your thought there. you were talking about changes that are coming. >> yeah, well, one of the things i think i am seeing is that the republican establishment in washington and the establishments wherever they exist in the country, they took a shock. they are somewhat concussed. however, the base itself has been shocked and is somewhat concussed. and i think sometimes at moments of shock you can look at yourself and you can say there are ways i need change. so i actually consider this promising in some ways. it can move forward things in a good way. i think the tea party is going to have to look at itself. it's been so helpful to the republican party in the past. it saved it by not going third party in 2010, helping the republicans sweep the house.

but the tea party style of rage is not one nawins over converts and makes-- that wins over converts and makes people lean towards them and say, "i want to listen to you." i think a friendly persuasion has to begin now from the republican party to people of the united states. >> schieffer: david? >> let's go back to basics. this is a race republicans should have won. they thought they were going to win it. they thought they'd take back the senate. i think for starters, the obama team out-played them, the romney team, on a regular basis. in the last days of the campaign, the obama campaign won 364. they lost one, the first night of the debates and the rest of the balm team out-played them. i do think to go back to what peggy is saying, that the republican party has a fundamental problem and that is, this is a center-right country. this is a country where the republicans should do well. but they're increasingly

perceived as radical right. and they left a lot of people behind. there were any number of women who would have vote republican this time. the women's vote was actually a much bigger deal in this than the latino vote. and the fact so many women who would have gone with him on economic issues got turned off on the social issues is really important. as we approach this grand bargain, there is a tension in this party that they've got to resolve, peggy. and i don't know whether they can. i keep hearing, look, mitch mcconnell is going to be up in two years. lamar alexander is going to be up in two years. saxby chandler is going to be up in two years. can those guys afford to sign on to tax increases? are they then going to face primaries like dig lugar and other people. that's the tension in the party. >> the republicans keep having primaryite, they are regular go to keep losing and they will not be immune. they will continue losing their country. >> they will keep having primary-itis as long as the tea party occupies a big swath of

the republican base. and the tea party, while very help envelope 2010, has always opinion more a sign of dysfunction in the house than a help. you don't have the party splitting-- the electorate being dragged kicking and screaming to the right if things are going well. the republicans would control the senate now but for the tea party. >> but they wouldn't have the house. and that's what makes a difference. >> and that's why i think-- >> the energy and dynamic-- >> that's their tension. it's a dilemma. >> but if the energy and dynamism can move towards reform, great. i think there's a tension in the republican base-- you said they got a shock. but it's unclear whether the shock is i need to change or i was sent to stop this guy obama from raising taxes and doing terrible things to the country. that's unresolved. >> schieffer: let me ask you something, dee dee. there are going to have to be some changees, i would think, in the administration and in the democratic party. after all, the president has had four years to try to break this

deadlock and he hasn't been able to do it yet. i'm not saying it's all his fault. isn't he going to have to give a little here? >> no question. and he said i'm willing to compromise, i'm willing to listen, and i'm willing to entertain new ideas. the truth, though, is the president has the upper hand right now. not only was he re-elected by a pretty convincing electorate. he also picked up-- we picked up seats in the house and senate. and with the fiscal-- and 60% of americans, by the way, agree with him on taxes. they think taxes need to go up for the wealthiest so everybody pays their fair share. they agree with him we need a balanced approach. how is that going to play out? that's $64 million question as we approach the end of this year, the lame duck session. how does the president-- he doesn't want to drive the country over the fiscal cliff, but is he willing to let tax cuts expire for everyone if republicans won't agree to raise taxes for the wealthiest? that's main tension and it is going to affect everything else happening in the next two months. >> schieffer: what do you think, john? >> i think one important thing is the president is not up for

reelection. so the republicans can work with him without fear of helping his electoral chances and that might help things a little bit in terms of the negotiation. i would love to see how the obama-boehner golf game part two might go because boehner now has to make a choice. he has a alaska, and he is kind of a deal maker by natural inclination. he has to figure out what his 230-some-odd members took away from this election. how many of relexingtonned tea party type members feel they were sent to washington because they refused to comexprms how many are available for the new kind of compromise necessary to get a grand bargain. where he lands is the most interesting question to me. >> schieffer: what happens next, david? let's just talk about this. unless they find some compromise here, you're going to see these horrendous across-the-board cuts in defense and social programs. you're also going to see these tax cuts expire, which means everybody gets a tax increase. do you think they can do it before the end of the year? or will they just kick it down the road? >> i think they can find a way

to postpone the fiscal cliff for another six months a year. i think that's certainly doable because everybody understands you're going to get tipped into recession and everybody pays a price if you do that. they're often dumb in washington, but they're not crazy. and i just don't think they'll let us go over the cliff. the real question to me is can they begin to fashion a bargain based on simpson-bolz. i thought lindsey graham earlier in the show was very smart by going to simpson-bowles. i think there are going to be democrats will who want simpson-bowles. some would disagree but the question to me is if the republicans are willing to take simpson-bowles, will democrats will take it. >> can the president sell-- >> schieffer: if they do simpson-bowles, republicans in the house will have to disavow the pledge they took not to raise taxes that they all took. >> they have a little escape route-- the escape route could be tax reform. the rate doesn't change but you remove a lot of deduction so you

get some revenue and it gives you a rhetorical way out to say we never raised rates. >> the challenge is, you can't do tax reform in the next two months and the tax rates expire december 31. so how do you get to a koms program-- >> you can extend it. the "washington post" pointed out you can keep tax rates exactly where they are, limit deductions to $50,000 and you would raise as much as you would raise by increasing rates on the wealthy. that would be a fair compromise, as long as it's accompanied by entitlement reform. >> schieffer: it would mean the president would then be willing to extend tax cuts for the wealthy? >> at that rate. but with the understanding, it's got to be tied to actual reform. and that's trick, how do you-- what's the trigger mechanism. >> the wealthy hasv to pay more. he's not saying rate have to go up. they've been very careful. >> when you-- >> it's an opening position. he's the press secretary. you go out there and you stand by the administration's position which is-- is-- it could be thae

evolve. i think we're all hoping for some revolution here. ( laughter ). >> schieffer: when did evolution become so popular? sean hannity has now evolved on a path to citizenship for hispanics. i mean, evolution is suddenly the word of the hour here. >> well, the president evolved before sean hannity did. >> schieffer: maybe we need some creationism here-- create new ways to do things. >> evolution brought a new species to washington. the-- what would be interesting about a deal in which the president said, another we're not going to raise rates. he said he will be able-- remember in 2010 after the election the president worked out a deal with congress, and he extended the bush-era tax cuts, but he got a lot of things that liberals wanted. he gave in on his big thing which is the top rate would have to go up but he also got stuff liberals wanted. that kind of a deal could work out here. if we get revenue-- we don't rails the rate but he could say look at all the good things we

got. >> through tax reform they would be making our impossible, ridiculous tax code more coherent, more efficient, more helpful, which a lot of people would like. >> very successful in 1986 when they lowered rates-- >> in fairness, republicans have been saying for a long time, do tax reform, not just a tax hike. do the reform. the rich will pay more if you put a cap of, say, $50,000 on what they can write off each year. >> do you think-- my sense is, peggy, that the president is right he establishes two principles -- a, we have to have more revenue. i think more republicans are coming attend that. and, b, the rich need pay a higher proportion. how you get there say question. >> how you get there is very meaningful. one way would be very hard for republicans, and another way would be much more acceptable. indeed, many republicans have been pushing it. >> i agree with you. >> back to david's point, you have to figure out entitlements. >> we're all going to forget the

rhetoric of the campaign where if you touched medicare you were terrible and horrible. now everybody-- >> by the way, there's a whole other question of the sequester, right, which takes effect beginning in january. so you have to deal with that in the lame duck as well. you have to-- to-- have to findn payment on those $110 billion in cuts that will take effect in the coming year. >> sounds like a lot of fees. >> schieffer: i will let peggy have the last word. >> my dream is that after this election, two things that are a little surprising will happen. one is that the president's approach will be newly magnanimous. and eager to make sound history quickly. it will add to his legacy. it will be helpful to the american people. and the republicans on the other hand, will be newly soaker an sober and thoughtful and grave and republican leaders in washington will come forward and say this isn't a perfect deal but it's a good deal. move forward. >> schieffer: all right, i'm sure-- you got it right.

we're going to be back with this week's "face the nation" flashback.

>> schieffer: the election made it a boom year for the people who make campaign commercials. but it was also good for the business of another group-- the late night comics and that is our "face the nation" flashback. >> this is my concession call. congratulations, blah, blah, blah. did you it. >> hey, hey, hey. everything okay? you seem a little down in ( laughter ) >> it's just i really wanted to be president. i was going to create 12 million jobs. >> look, look, buck up. you created one job, except it was for me. >> all right, very funny. you got me. >> if congress does nothing, the u.s. could go off a so-called fiscal cliff that could cause another worldwide financial collapse like the one in 2008. congress had a lot of questions about the scenario, like, what do you mean if we do nothing? ( laughter ). >> the vice president joe biden said today that now that the election is over, he is going to take a vacation.

you've been vice president for four years. that is your vacation! what are you going to do? where are you going to go? >> schieffer: our "face the nation" flashback.

>> schieffer: well, that's it for us today. we're going to leave you with a reminder, this is veterans day. may we never forget those who gave their all to keep the rest of us free. we'll be back here next week. we'll see you then. captioning sponsored by cbs