night on "the rachel maddow show," guest host ezra klein asked former clinton budget director alice rivlin on where we could see the fallout from the fiscal cliff. >> the real uncertainty i think is what the markets will look isn't in control of its own destiny because we're acting that way right now. now, if you're an investor, whether you're in some part of the united states or you're in some other part of the world, do you really want to buy american securities? do you want to invest in a country whose government isn't functioning? i don't think so. so, we could get a big market reaction, a drop in the stock market, and that might scare people. >> "the rachel maddow show" week nights at 9:00 eastern right here on msnbc, the place for politics. >>> home prices on the rise, syria's head of preventing defections decides to defect. your headlines are straight ahead. plus, connecting the dots on sonia sotomayor, health care and a fine. you're watching "first look." >>> some stories making news this morning. toyota says it's reached a more than $1 billion settlement in a case involving uninte

former clinton budget director alice rivlin expects the final deal will play out in two steps. first the president and the speaker agree on some numbers. >> how much do we need over ten years from taxes and some specifics about how we get them. but not too many. and how much do we need to take out of the major entitlement programs to slow the growth and then they will kick it to the next congress-- but not kick it so much as instruct the next congress to bring back a plan that will meet those numbers. >> reporter: entitlement spending is a key sticking point. republicans complain democrats have already ruled out savings from social security and they are taking many options for medicare savings off the table. >> from a republican point of view, wanting something that is really structural in nature to bend the cost-curve over time, i think something like eligibility age is probably a must-have for republicans to vote for a tax increase. >> reporter: if the two-step process doesn't come together in the next few days, house republicans could move on to plan b. that could mean the h

. >> reporter: alice rivlin served as a member of the president's debt commission. she believes neither side is foolish enough to let the nation go over the cliff. but she says our leaders must find a way to reduce debt for future generations. if no deal is reached before the end of the year, automatic spending cuts will kick in and taxes will go up for all americans. tara mergener for cbs news, washington. >>> a pair of nasa spacecraft were deliberatedly crashed into a mountaineer the moon's north pole -- mountain near the moon's north pole today ending our look at our nearest neighbor. engineers command the twin spacecraft ebb and flow to burn and crash. it was a successful mission, according to the project manager. >> we know more about the gravity now of the moon than any other body in the universe and so the mission has been very successful very proud of our team and unfortunately, it's time for it to end. >> nasa says it dedicated the impact site in honor of sally ride, the first american woman in space who died earlier this year. >>> today in newtown, connect

alice rivlin has a plan. nior fellow at the brookings institution and served as director of the white house office of management and budget, the omb, under president clinton. alice, good morning. >> good morning. >> nice to have you here on the show this morning. you're saying that it's too late for the lame duck congress to pass legislation to fix all the problems that exist, but you have created a framework for something that you call a grand bargain. what is it? >> well, it isn't just me. anybody who has looked at this problem, i was on the simpson/bowles commission and chaired another committee with senator domenici. everybody sees first that the budget is on an unsustainable course. we're on a course to accumulate more debt over the years and accumulate debt faster than the economy can grow. that's not sustainable. the grand bargain is that we have to do something about this, and the things we have to do are slow the growth of spending, especially the health care programs like medicare and medicaid for ol

. >> reporter: alice rivlin served as a member of the president's debt commission. believes neither side is foolish enough to let the nation go over the cliff. but she says our leaders must find a way to reduce debt for future generations. if no deal is reached by the end of the year, automatic spending cuts will kick in and taxes will go up for all americans. >> that was tara mergener. if and when the speaker reaches a deal with the president, lehave to convince his -- he will have to convince his fellow republicans in the house to pass the legislation. we made it easy for you to track all the developments on the fiscal cliff and ways it could affect you and your family. just go to our website wusa9.com and click on the banner at the top of the page. >>> virginia governor bob mcdonald's revised budget includes modest spending increases in health care and teacher raises. changes in the $80 billion package adds about $211 million in spending. the money includes $59 million for a 2% teacher pay hike. $70 million to hold down state employee health insurance rates, and

. >> thank you to alice rivlin and andy roth. >> on deck, the final countdown is on, three down, two to go. herb is ready to reveal the big secret mystery of his worst two ceos of the year. no doubt he was up hemming and hawing all night on this. >> absolutely we're looking forward to that. banking, stocks that are booming. is it too late to get in, though, is the question. ♪ [ engine revs ] ♪ ♪ [ male announcer ] the mercedes-benz winter event is back, with the perfect vehicle that's just right for you, no matter which list you're on. [ santa ] ho, ho, ho, ho! [ male announcer ] lease a 2013 c250 for $349 a month at your local mercedes-benz dealer. ♪ [ male announcer ] this is karen and jeremiah. they don't know it yet, but they're gonna fall in love, get married, have a couple of kids, [ children laughing ] move to the country, and live a long, happy life together where they almost never fight about money. [ dog barks ] because right after they get married, they'll find some retirement people who are paid on salary, not commission. they'll get straightforward guidance and be able t

it's been done by alice rivlin and pete domenici and others who are here. and, frankly, we have a pretty good sense of where we opt ago. i think there's a building consensus about broadening the base. and i think if we do that and do it in a smart way we could now make a commitment to the additional revenue that would come from tax reform and have a lot more possibility of a bipartisan outcome. because as you know, republicans including myself have said more revenue on the table needs to come from a couple of things. won his reductions in spending come and that's again important but unsustainable entitlement programs. a second pro-growth tax reform. on the supercommittee where i served, turned out to be not too super, we talked a lot about that. we actually had a lot of bipartisan agreement on that fact as we got into the details, it became harder. there are reasons it wasn't successful in the context which i think of nothing to do with the issue of tax reform. by to think out of the process we developed an understanding among some of us in the senate and h

this proposal is similar to one backed by former bill clinton budget director alice rivlin. in addition, this bill would update cost-sharing requirements to reflect a 21st century health care practices like capping out-of-pocket expenditures for beneficiaries and unifying deductibles and coinsurance structures. this bill also would improve solvency by requiring higher income beneficiaries to pay more for their premiums. finally, it would raise the eligibility age incrementally from 65 to 67 by the year 2027. moving to medicaid, the bill would provide increased flexibility for states to achieve medicaid savings by establishing a waiver process for the states to better manage their medicaid programs. it also would eliminate a massive tax gimmick used to bilk federal taxpayers out of $50 billion over a ten-year period. next let me walk through social security changes. although some have suggested we should ignore the impending crisis in social security funding, we should address it now because it is already beginning to cause the federal government to spend more than it takes i