darren gersh has the latest. >> reporter: 'twas the night before christmas, and all through the house, nothing much was going on. it was the same story in the senate. washington's cliff talks still remain deadlocked. congress will return on thursday, and it's still possible a few days of holiday cheer and constituent outrage may push republicans and democrats to craft a last-minute agreement to avoid the worst of the fiscal cliff. if we do go over the cliff, the i.r.s. has warned most taxpayers may not be able to file their returns until late march. that would mean long delays for many tax refunds. and economists warn the economic effects will be felt quickly if $600 billion in automatic tax increases and spending cuts begin to take effect next year. at this rate, it looks like lawmakers will celebrate new year's eve at work-- if not resolving the fiscal cliff, at least trying to avoid the blame. darren gersh, nbr, washington. >> susie: going over the fiscal cliff will not only have an impact on the national level, it will also hit states and eventually cities. if lawmakers fail to re

darren gersh, "n.b.r.," washington. . down tnvbz%. d right? q: slgtç7 >> susie: you're pretty upbeat on the stock market side. taking look at the forecast for the s&p 500, you're calling for a gain of 8%, it will get to the 1575 level to the 1400 level. what is going to give investors confidence to take their money out of cash and invest it in stocks? >> again, susie, we've had some significant head winds over the past year or so. we think as we get past the fiscal cliff and job creation continues, i think investors are going to be feeling a little more optmistic. we think with modest earnings growth, we're looking for earnings to be up about 5%, and with a little extra improvement and sentiment, investors could push the market up about 8%. not a big gain, but a decent one, giving the slow-growing economy we're seeing right now. >> susie: your whole forecast is depending on an agreement on fiscal cliff. if we go over the cliff, what happens to your forecast. what will you be saying at the start of the year about the outlook for the economy

darren gersh has the latest. >> reporter: the president is still pushing to wrap up a deal on the fiscal cliff before christmas and just in case anyone missed that point, he visited a toy factory to urge congress to avoid raising taxes on the middle class. >> that's sort of like the lump of coal you get for christmas. that's a scrooge christmas. a typical middle-class family of four would see their income taxes go up by about $2,200. >> reporter: the president is proposing to raise taxes by $1.6 trillion, while cutting spending by $400 billion. on top of that, mr. obama asked for $50 billion more for infrastructure spending and $140 billion to extend unemployment insurance benefits and the payroll tax cut. republicans literally laughed it off. >> they want... they want to have this extra spending that's actually greater than the amount they're willing to cut. i mean, it's... it's... was not a serious proposal. and so, right now, we're almost nowhere. >> reporter: across the capitol, republican senate leader mitch mcconnell told the "wall street journal" his party would be willing to brin

still, as darren gersh reports, there are some signs the two sides are narrowing their differences. >> reporter: house republicans say they're still working on plan a: a big agreement with the president to cut spending and raise revenues, but they were pushing plan b today-- a tax hike for those making more than a million dollars. >> tomorrow the house will pass legislation to make permane tax relief for nearly every american. 99.81% of the american people. then the president will have a decision to make. he can call on the senate democrats to pass that bill or he can be responsible for the largest tax increase in american history. >> reporter: hours befe thee speaker issued his challenge, sidesresident said the tw were not that far apart. just a few more steps the president suggested and republicans would have a deal in hand to tame the deficit for a decade. >> that is a significant achievement for tm. they should be proud of it. but they keep on finding ways to say "no" as opposed to finding ways to say "yes." and i don't know how much of that has to do with it is veryt hard for the

darren gersh has the latest. >> reporter: house speaker john boehner wasn't talking after meeting with the president today. but his offer to raise taxes on those making more than a million dollars a year was taken as a sign that some progress is being made to avoid the fiscal cliff. 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 th

and as darren gersh reports, they include warren buffett and some other big names in finance. >> reporter: there was some public movement in the fiscal cliff standoff today. instead of holding dueling press conferences, republicans and democrats traded barbs on the house floor. >> where are the president's spending cuts? the longer the white house slow- walks this process, the closer our economy gets to the fiscal cliff. >> reporter: behind the scenes, progress is being made, but democrats are still arguing they've given ground in previous budget battles. that's one reason they are holding firm on higher taxes now. >> $1.6 trillion in cuts. "where are the cuts?" they are in bills that you, mr. speaker, have voted for. >> reporter: and there were new calls for more tax revenue today. warren buffett, vanguard founder john bogle, and financier george soros were among the famous names to call for a tougher estate tax. their proposal would exempt couples with up to $4 million in assets from the estate tax. above that level, estates would pay a 45% tax rate, rising to 50% or more on very large

as darren gersh reports, the tone of the talks, if anything, is getting worse. >> reporter: house democratic leader nancy pelosi may just have a second career as a stock analyst. her commentary on the markets today was dead on. >> so far, they trust that we would not be so stupid as to go over a cliff. >> reporter: but pelosi made clear what everyone knows-- time is running out to reach a deal by christmas >> we really have to come to some agreement in the next couple of days or the very beginning of next week for us to have engineered our way to a solution. >> reporter: the fiscal cliff is really a negotiation between two men, and one of them today was not sounding very happy. house speaker john boehner brought out the charts to make his case. >> here we are at the eleventh hour, and the president still isn't serious about dealing with this issue right here. it's this issue-- spending. >> reporter: the president left his spokesman to respond that republicans were pushing a plan of fantasy economics that raised more revenues while also cutting taxes on the wealthy. >> what spending cuts have

darren gersh reports. >> reporter: house speaker john boehner says the president is asking for about half a trillion dollars more in taxes than he is willing to cut from spending. that means the two sides have narrowed their differences, but the speaker says not enough progress has been made to call it a deal. so he is making other plans. >> our plan b would protect american taxpayers who make a million dollars or less and have all of their current rates extended. >> reporter: while the speaker prepares his back-up plan, the outlines of a grand bargain with the president are becoming clearer. both sides look ready to adopt a new inflation indicator that better measures the way consumers shift their purchases when prices rise. >> this is a technical adjustment that supporters of it and outside economists say is meant to make the government's estimates of inflation more accurate. >> reporter: that switch to a chained consumer price index would reduce future benefits for social security, and it would affect the way the i.r.s. sets tax brackets, a move that would raise about $100 billion

darren gersh, "n.b.r.," washington. >> susie: our guest tonight is bullish for 2013. he's wayne kaufman, chief market analyst at john thomas financial. >> so, wayne, give us your bullish case. make the case for us for why you see the dow and the sep up by as much as 12% in 2013. >> well, i do think there's a very good chance that the major index is the s&p and the dow make new all-time highs, sometime in 2013. you have been going over the housing market doing much better but the entire construction industry, the whole building sector is also doing a lot better. there's something called "the architect's work on the boards index" and that shows the architects making at all-time highs. automobile is better, payrolls are better, the jobless claims are improving and, based on that, the consumers' ability to pay their debts is at the best levels that it has been at since the 1980's and that's very important, with the consumer being 70 percent of the economy. gdp for third quarter was 3-point 1% which was a big increase over second quarter. in addition to this you have a syn

darren gersh, nbr, washington. >> susie: investors will bengorn those fiscal cliff talks, and they will also be studying tomorrow's importa")jé:0@6cj& but josh feinman says the november numbers won't give an accurate picture of the labor market. he's chief economist at d.b. advisors. >> reporter: hi, josh, so you're talking about distortions in that report. tell us more. >> yes, hi, susie. i think that the hurricane sandy may distort the numbers. we've seen it in some of the other high frequency data in the last couple of weeks. keep in mind tomorrow's labor market report will report on a snapshot of the labor market taken in the middle of last month. and that's when the hurricane and its aftermath were having their effects. >> so the consensus numbers from a survey of economists, they're expecting american businesses added 110,000 jobs it to their payroll. the unemployment rate staying around 7.9%. does that sit right with you. is that what you are seeing? >> probably somewhere around that maybe a little less. one of the problems is it is hard to gauge exactly what the impact of the st

darren gersh reports. >> reporter: here is a measure of how bad things are now in washington. markets rallied on news the house will come back to work on sunday, even though there is no solution ready for lawmakers when they return. and in the senate, which is back at work, republican leader mitch mcconnell warned he would not write a blank check to the white house, though he said he would keep an open mind on anything the president proposes. >> it appears to me the action, if there is any, is now in the senate side and we'll just have to see if we're able, on a bipartisan basis to move forward. >> reporter: senate majority leader harry reid said he too would try to reach agreement. but that was after spending most of the day hammering away at house republicans. reid blamed the current stand off on the inability of house republicans to pass their own plan which would have extended tax breaks for everyone making less than a million dollars a year. >> it's the mother of all debacles. that was brought up in an effort to send us something. he couldn't even pass it among the republ

darren gersh, nbr, washington. >> susie: we turn now to judd gregg for his perspective. he's a former republican senator from new hampshire, and currently senior advisor at new mountain capital, a private equity firm. senator, great to you have back on nightly business report. let me begin by just asking that if you were in the senate today would you be voting for plan b? >> well, yes, but i don't think plan b is going to be the final option here. i general binly believe that it's in the interest, both of the speaker and the president and both party to its reach an agreement before we go over the fiscal cliff. and that because it is in both their political interests to do that and because when you look at the numbers that they are debating over right now they are reasonably close, especially in the context of ten year numbers, i just think you're going to get an agreement here probably on the thursday, friday after christmas. >> susie: so you think there will be a deal? some people were saying that they are hoping that this going it to put political pressure, this vote o