"Face the Nation" transcripts, December 2, 2012: Geithner, Sens. Graham, Feinstein, Rep. Rogers

(CBS News) Below is a transcript of "Face the Nation" on December 2, 2012, hosted by CBS News' Bob Schieffer. Guests include: Treasury Secretary Timothy Geithner, Sens. Lindsey Graham, R-S.C. and Dianne Feinstein, D-Calif., and Rep. Mike Rogers, R-Mich. Then, a roundtable discussion with the Campaign to Fix the Debt's Maya MacGuineas, Moody's Mark Zandi, Rana Foroohar of TIME magazine, and CBS News political director John Dickerson.

ANNOUNCER: From CBS News in Washington, Face the Nation with Bob Schieffer.

SCHIEFFER: And good morning again. Treasury Secretary Tim Geithner laid out the administration's opening offer on how to solve the nation's debt crisis, then did a round of interviews with the networks. And it wasn't at all what the Republicans wanted to hear. Basically Geithner said no way to cut a deal without raising taxes on upper income Americans. Even so, he said he's optimistic some kind of deal can be reached by the end of the year. And he said 98 percent of Americans will not see a tax rate increase.

Here's what he told us when we sat down with him.

(BEGIN VIDEOTAPE)

GEITHNER: I do think we're going to get there, because the only thing that stands in the way of an agreement that's good for the American economy is if a group of Republicans decide they're going to block any increase in tax rates on the wealthiest Americans. I think it's unlikely they choose to do, that of course, because there's so much at stake.

SCHIEFFER: But I mean, in all seriousness, I'm told that Mitch McConnell laughed when you handed him this proposal. Is that in fact true?

GEITHNER: People say it's really - he smiles, but again - and you know they're in a hard position, Bob, you know they really are in a difficult position. And they're going to have to figure out their politics of what they do next. And they're trying to figure that out right now. But you know we're going to work very hard at this. And we're going to keep talking to each other. And, again, I think we have a very good chance for coming together on an agreement that not just protects 98 percent of Americans from a tax increase and protects the economy from deeply damaging upfront spending cuts and protects the economy from leaving us vulnerable to, you know, periodic threats of defaults by politicians, I think we can do better than that and do something good for the long-term future of the American economy.

SCHIEFFER: Do you think Democrats will support these tax increases?

GEITHNER: The tax increases in the president's plan? Oh, yeah, absolutely.

SCHIEFFER: You do?

GEITHNER: Again, if you listen carefully to the political debate, there's very broad-based support now and recognition of the need to let rates go up. We think they should go back to the Clinton levels and combine that with some tax reforms that limit deductions for the wealthiest Americans. But that's an essential part of any balanced agreement to bring down (inaudible). Now that's not enough. We think we can go beyond that and lock in some carefully designed savings that helps us go back to living within our means. And the president has laid out a very detailed, comprehensive plan for how best to do that. He has put on the table it $600 billion in savings on top of the $1 trillion that we enacted last year. And they're very detailed. And they're very well designed.

SCHIEFFER: But what gives you reason for optimism? I mean, Speaker Boehner says this is basically a stalemate.

GEITHNER: It's true that we're still a bit apart. And they're going to have to move further. And they're trying to figure out, again, what they do next in this context. Again, we've given them a very detailed, comprehensive set of proposals. We're open to suggestions on how to do it differently. If they want to come back and say we'd like you to do this differently, do more of this, then they should lay this out for us.

SCHIEFFER: What is it what cannot change in your plan?

GEITHNER: Oh, in our plan?

SCHIEFFER: Yeah.

GEITHNER: Oh, well.

SCHIEFFER: You said you're ready to talk.

GEITHNER: Yeah, of course we are. In the end, the president has said this over and over again just from from the beginning. Again, we've laid out in detail what we think makes the most sense for the American economy today. Again, you know not just extend the middle class tax cuts, but put in place some carefully designed savings to bring downtown long-term deficits and we should do ethics help growth in the short term like rebuilding America's infrastructure, helping Americans refinance their mortgages, extending unemployment benefits, those are things that make a lot of sense. We can afford them. We show a way to pay for those in our plan in that context. That's what we think makes the most sense. Now of course, we're open to suggestions. Now there's going to be other ideas from Democrats, there's going to be other ideas from Republicans. We can take a look at those ideas and evaluate them but not until we see them.

SCHIEFFER: Bottom line, though, is you're going to -- you're going to have to have more revenue and you expect to get it from upper income Americans. You think they ought to pay more.

GEITHNER: We're going to have higher rate and higher revenue interest just 2 percent of Americans. 98 percent of Americans do not need to see, and are not going to see, an increase in their marginal tax rates. That's a very important commitment of the president in this context. And again I think we're going to get there. The Republicans as you've heard have conceded -- and this is important - that they're prepared to raise revenues, raise taxes as part this deal but they haven't told us how far they're willing to go both on rates and other deduction limitations.

SCHIEFFER: Aren't you going to have to somewhere along the line, though, talk about entitlements and reforming entitlements?

GEITHNER: Absolutely. And the president is committed to that. And as I said, we put...

SCHIEFFER: But you don't have any of that in this plan.

GEITHNER: No, that's not true. We put out detailed reforms to entitlements that total $600 billion over 10 years that build gradually over time because they're phased in carefully. So the outer year savings will be larger than that, in that context. We think they're very good policy. Now Republicans don't like some of those proposals and some Republicans, apparently, want to go beyond that. But what they have to do is tell us what they're prepared to do. And what we can't do, Bob, is sit here and try to guess what works for them.

SCHIEFFER: Well, what is it that you propose to reform?

GEITHNER: I'll give you just a couple of examples. Reforming farm subsidies, very important to do, lots of room to do sensible reforms in that context. And they can raise substantial amounts of money. In health care, we propose to a modest increase in premium for higher income beneficiaries and we propose ways to make the government much smarter about how it buys medicine for Medicare beneficiaries.

SCHIEFFER: Why did you choose to basically say "we're going to stop letting congress have the ability to raise the debt ceiling."

GEITHNER: We are not prepared to let the threat of default on America's credit, the savings of Americans, the investments of Americans be held hostage to the political agenda of a group of people in congress over time. As you saw last August, that was very damaging to the American people. It's not the responsible way to govern.

SCHIEFFER: Are you betting that eventually the Republicans will cave on the taxes?

GEITHNER: There's no -- there's no path to an agreement that does not involve Republicans acknowledging that rates have to go up for the wealthiest Americans.

SCHIEFFER: You're saying you can't do it just by eliminating deductions and other...

GEITHNER: Very good question. You know, we've taken a careful look at this, and we think we should limit deduction but if you look carefully at how to do this, there is no way to raise a meaningful amount of revenue, relative to the sights of our fiscal challenges, by just limiting deductions for wealthy Americans. There's just not enough room there. You can raise a the lot of money if you're prepared to raise taxes significant she on middle class families by limiting their deductions, but we don't think that makes a lot of sense for them.

SCHIEFFER: Are you confident that you can find a way to stop going - stop us from going over this cliff? Can you figure out some kind of an agreement, beyond just kicking it down want road?

GEITHNER: I think we can, and we have a responsibility to do that. And, again, there's nothing that stands in the way of that agreement, except for the potential risk that a group of Republicans decide, they hold up an agreement because they wanted to extend tax cuts for the wealthiest Americans that we can't afford. Just remember to extend those tax cuts costs $1 trillion over 10 years. There is no way we can get to a balanced plan that puts us back on the path of living within our means, protects Medicare, invests in things we need, if you extend those tax rates.

SCHIEFFER: All right. Mr. Secretary, thank you so much.

GEITHNER: Thank you, bob.

(END VIDEOTAPE)

SCHIEFFER: And joining us now from Clemson, South Carolina, Senator Lindsey Graham who said he is willing to increase revenues if the administration is willing to tackle entitlement reform. So, Senator, first question, what is your reaction to what you just heard?

GRAHAM: I think we're going over the cliff. It's pretty clear to me they made a political calculation. This offer doesn't remotely deal with entitlement reform in a way to save Medicare and Medicaid and Social Security from imminent bankruptcy. It raises $1.6 trillion on job creators that will destroy the economy, and there were no spending controls. And I'm serious about revenue. You can limit deductions to $40,000 or $50,000 a person, which takes care of the middle class. Upper-income Americans will lose their deductions and raise about $800 billion in revenue, but I'll only do that if we do entitlement reform. And the president's plan, when it comes to entitlement reform, is just quite frankly a joke. So I don't think they're serious about finding a deal. John Boehner is serious about revenue. He'll get a lot of push- back, but a lot of Republicans will rally about John Boehner about limiting deductions to raise somewhere between $700 billion and $800 billion in revenue. And I bet you this, if you took the president's plan and put it on the floor of the House and the Senate, he would get very few votes for his plan.

SCHIEFFER: So you're saying you think that both sides -- and this is my phrase -- that both sides would actually be stupid enough to let us go over this fiscal cliff because they can't come to some kind of a compromise?

GRAHAM: I would just say this, that my side knows we lost the election, and we're willing to put revenue on the table that will get some political heat for people like me. That is movement in a positive way. Republicans should do revenue. We're willing to do it in a smart way. If you raise tax rates, you get $400 billion in revenue and you hurt job creation. If you limit deductions at about $40,000, $50,000 per person, you protect the middle class and you get about $800 billion in revenue. A hundred percent of Americans are going to lose everything we know as America if we don't fix entitlements. We're becoming Greece because of out-of-control entitlement spending. There's no age adjustment for Medicare and Social Security. There is no means testing in the president's plan. We should do what Ronald Reagan and Tip O'Neill did, adjust the age for retirement and means-test benefits, do it together, and Republicans should put revenues on the table. And the president's plan does nothing but damn us to become Greece.

SCHIEFFER: Let me shift to the whole situation with that episode that happened back in Benghazi that's been, kind of, in turmoil. What happened? How was it that an American ambassador and three other Americans died there? Susan Rice, who many think the president was planning to nominate to be secretary of state, was back up on Capitol Hill during the week. Did she help or hurt her case?

GRAHAM: Well, apparently, according to the senators she met, she didn't do herself much good. But let's just say this about Benghazi. It's just not about Susan Rice. It's about a system that failed. The military failed. The intelligence community failed, before and during. This is about a system designed to protect us that completely broke down. The consulate should have been closed in the first place. I can't believe we couldn't reinforce it in seven hours. And that's where I'm going to move to next. But as to Susan Rice, the story she told on your show and others on 16 September, after having looked at the intelligence that was available, does not remotely meet the truth. She said that the security at the consulate was strong, substantial and significant on three different shows. That wasn't even in the talking points about the level of security. If you look at the evidence available, the footprint in Benghazi was not strong, substantial, or significant. It was weak. They had been begging for months to have more reinforcements or close the place like the British did. I think her story on 16 September was a political story designed to help the president three weeks before the election. And she should be held accountable for that. She let you and others know, by the way, this president decimated Al Qaida. And if you looked at the facts around Benghazi, you could not have said in good conscience Al Qaida had been decimated anywhere in the world. And this was not a result of a video. This was a preplanned terrorist attack and they should have known it early on. So her statements on 16 September are a treasure trove of misleading statements that had the effect of helping the president, downplaying a debacle three weeks before the attack (sic). The president, if he believes she is the best person in this country -- and you have a lot of good people to choose from -- to be secretary of state, that she's most talented, most gifted, the best choice he could make, then he should send her up. I am inclined to support presidential choices. Elections matter. I voted for every Cabinet official, almost all of President Obama's judges. When he was a senator, he had a different view of how to do this. But when it comes to Susan Rice, I can tell you, as far as Lindsey Graham's concerned, I find great fault with what she said on 16 September, and in other areas I find her lacking when it comes to being the best choice for secretary of state. But this is up to the president.

SCHIEFFER: All right, Well, Lindsey Graham I think... I think you laid it out in pretty uncertain terms.

GRAHAM: And can I just add one thing?

SCHIEFFER: Sure. Sure.

GRAHAM: Well -- but, OK, the next thing that Lindsey Graham wants to talk about is why, for seven hours on September 11th, we could not reinforce the compound. Did the president order the military and others to come to their aid? And if he did, when did he make that order? When was he first notified? We know every detail of the bin Laden raid. We have photos of him commanding the moment. We don't know anything about what he did on September the 11th when it comes to Benghazi. And if he ordered these people to be helped and the answer was there is nothing we can do, what did he say about it? Was he mad? We need to get into the details of how they died, and we also need to get into the details of why we left our consulate so open and unsecured when the British left and everybody else left Benghazi but us. This is a story of system failure, and if we don't get to the bottom of it, we will fail to learn. And if we don't change our strategy from a foreign policy point of view, Bob, change this light footprint approach to the war on terror, there are going to be more Benghazis.

SCHIEFFER: All right. Well, thank you very much, Lindsey Graham.

GRAHAM: Thank you.

SCHIEFFER: We will continue to talk about this when we come back.

(COMMERCIAL BREAK)

SCHIEFFER: Joining me now, the two chairs of Congress's intelligence oversight committees, Democrat Dianne Feinstein of California, Republican Mike Rogers of Michigan, who joins us from Miami this morning. Chairman Feinstein, let me just start with you. You heard what Lindsey Graham says. He says this is not -- this is getting to be more than what Susan Rice gave as an explanation. He said we're talking about a complete breakdown in the intelligence, in security, in everything concerning that Benghazi mission. What's your take on this?

FEINSTEIN: Well, I have reviewed all of the threat warnings by the intelligence community. There were multiple threat warnings, well over 200. I have read the priority warnings. I believe that the intelligence was good. Now, it couldn't say at a certain time or on a certain day. There had been prior attacks. It's well known, the attack on the British ambassador, attack on the Red Cross. They both pulled out for a period of time. The fish bomb thrown over the fence, which is not much, but it's an indication. This is an interesting facility because it isn't a consulate, as Senator Graham said. It's a mission. And the number of State Department people there were very few, just one, two, or three at the most. And there were no records or visas that I know of. It really, as I look at it now, was a place where the ambassador could come and meet with people in that area of the country. And in fact, that's what he was doing.

SCHIEFFER: Well, why was he there...

FEINSTEIN: Well...

SCHIEFFER: ... on the anniversary of 9/11? If anyone should have known of the security situation there, sure it was the ambassador?

FEINSTEIN: Well, I suspect that was his judgment call. He had a meeting, I believe, with a Turkish leader that evening who he had met with. He had some meetings in the community. This was an ambassador who not only spoke the language, he spoke the dialect. He was comfortable walking down the streets. However, if you look seriously at the intelligence, the country is spotted with training camps. The country is a magnet for all of these groups, and there is a kind of lawless history about the Benghazi area, also. So this -- this -- I think, in my view, you can't blame the intelligence. I think you have to blame the decision-makers who didn't really make the right decision.

SCHIEFFER: And those were not bringing in security. Congressman Rogers, what is your take on this?

ROGERS: Well, I think, the more we know about this -- and think Dianne said it well -- that the intelligence was good. I mean, the threat stream was very clear leading up to that 9/11 event. And what happened even two days later in Tunisia, by the way. We had another al Qaeda event on the 13th, killed four people, Tunisians, who were protecting the U.S. embassy there. So in a matter of two days you had an al Qaeda-affiliated event. The intelligence said, hey, they're looking for Western targets. They want to be more aggressive. All of that was right. What I find just absolute gross negligence was that they did not take the right precautions to protect the ambassador and the consulate employees.

SCHIEFFER: Well, let me just ask you...

ROGERS: Nor did they have the right plans in place to get them out. And that's what, I'll tell you, this is a serious, serious event here.

SCHIEFFER: Well, did these people...

ROGERS: And that gross negligence...

(CROSSTALK)

SCHIEFFER: ... ask for help? Weren't they asking for help? Weren't they telling the people back in Washington, we need some security here? And why didn't they get it, Congressman?

FEINSTEIN: Well, the answer is...

(CROSSTALK)

ROGERS: Well, I think that is a big part of the problem here, is that if you don't...

(AUDIO GAP)

SCHIEFFER: Well, we seem to have lost Congressman -- we lost the line there. Senator, maybe you can help us.

FEINSTEIN: Well, I can answer that. The ambassador was unhappy. There was a State Department cable from Tripoli that indicated concern with the security. Some improvements were made. They were, clearly, inadequate improvements. And the outside security departed when they saw people with guns coming down the street. We looked at the video and saw that. But I am also concerned about other places, about Peshawar. I have shared my concerns with the Pakistani ambassador over the Peshawar security situation.

SCHIEFFER: Yes. Could I just say...

(CROSSTALK)

FEINSTEIN: As well as Yemen.

SCHIEFFER: Let me just ask you this. If there were these concerns in all of this, is this why Susan Rice gave kind of a different story when she was on the television on Sunday?

FEINSTEIN: Well, now you've come...

SCHIEFFER: Was there a cover-up here to try to cover up things that should have been done that weren't done and so we just said, well, al Qaeda was not a threat?

FEINSTEIN: Now you come down to the merit of hastily prepared talking points. I do not believe the intelligence community should prepare these talking points. I think -- additionally, I think somebody should have picked the phone and called and said to a survivor, tell me the story, what happened, the next morning. General Petraeus briefed us on the 13th. There is a transcript. He said very clearly that there were al Qaeda elements involved. Apparently the initial talking points had al Qaeda mentioned in it, and they were removed. And as Mike Morrell said, they were removed by the CIA, not the FBI. So the whole issue of talking points by committee where the initial analysts of the CIA does talking points, puts something out, and then it goes from agency to agency, who pore over them and say, well, you better not use this because it might jeopardize a contact or something else. And so al Qaeda was pulled out of it.

SCHIEFFER: We're just about out of time. But let me ask you this, this whole idea -- I take it you would agree with me, it is not right to have the public talking points say one thing if they're in conflict with what the classified intelligence shows.

FEINSTEIN: Well, that's exactly right. And that's why if you have to do it this way you shouldn't do it. There shouldn't be public talking points.

SCHIEFFER: All right.

FEINSTEIN: That's right.

SCHIEFFER: We'll let it go at that.

FEINSTEIN: Thank you.

SCHIEFFER: Thank you so much, Senator. FEINSTEIN: Thank you.

SCHIEFFER: And we'll be right back with some personal thoughts.

(COMMERCIAL BREAK)

SCHIEFFER: When Congress and the White House square off any more, it is like a play. The first act, both sides say the problem is serious and pledge to work together. Act two, scene one, the actors preach to the choir. Each side talks mostly to their open people and stress the part about never giving up their principles. In scene two of act one, each side lays out their opening offer, which is quickly followed by the other side saying no way. Modern technology has added a chorus of ridiculous tweets as background music to that. But it is not until deep into act three when the two sides finally close the door and start talking in private to each other that anything of significance happens or doesn't. I think it's possible that something of significance could still happen in act three of this drama. I sure hope so. But we are not there yet. Not even close. The curtain is still up on act two. But what I keep wondering is why can't we start this play with act three or just make it a one-act play? Start with everyone meeting privately and quietly out of the limelight, get a sense of what's actually doable and then work from there? No disrespect to the actors, but this usual plot is really getting old. Back in a minute.

(COMMERCIAL BREAK)

SCHIEFFER: Some of our stations are leaving us now, but for most of you we'll be right back with more on the fiscal cliff. We'll have a panel of experts, including the Campaign to Fix the Debt's Maya MacGuineas, Moody's Mark Zandi, Rana Foroohar of TIME magazine.

(COMMERCIAL BREAK)

SCHIEFFER: -- and he's here to talk about the politics of all of this. There are politics involved here.

DICKERSON: Yes, apparently just a little.

SCHIEFFER: Isn't that amazing? You know, Maya you've been one of the kind of go to people in Washington on this in terms of crunching budget numbers, figuring out just what the impact of these proposals will really mean, you talk to us and help us understand it. Tell us a little about this organization, your organization Campaign to Fix the Debt. What exactly are you trying to do?

MACGUINEAS: Well, the Campaign to Fix the Debt was really born out of some of the issues surrounding issues of the debt ceiling near calamity last summer where I think people around the country, and business leaders in particular, became painfully aware that the divisions in Washington may actually be so large that we're going to end up harming our economy and harming our country as they fail solve problems and work these things out. So over the past year, we have been joined by over 300,000 citizens, 100 of the leading CEOs in the country, 2,500 small businesses who basically have all come and said we need to fix the debt, that we know. But we also wanted to create a different kind of campaign where we come to Washington, and while you have so many folks on side saying, "don't touch this. Don't touch this. Take this off the table." Suddenly you're left with nothing on the table to fix the problem. We wanted to create a broad-based bipartisan group to work with members of congress to come up with a deal. And over the past week, we met with over 50 members of congress. We had very productive meetings with both the White House and the House Republican leadership basically saying we know we need a plan that's going to be big enough to fix the problem and bipartisan and balanced, and we want to help you come to that solution, because it's going to be hard.

SCHIEFFER: Let me just talk to you, Mark Zandi. You're our economic forecaster. I want to just go back to the beginning to try to help people understand this. How did this come about? And what happens if they don't reach some kind of deal by the end of the year?

ZANDI: Well, this is almost by design. I mean, a policy makers designed the tax cuts to expire. They had spending cuts that were set to kick in. It all came together on January 1, 2013. So to a large degree, it was by design. The pressure of this to generate a deal, and that's the hope here.

SCHIEFFER: But nobody thought that either the White House or the congress would be stupid enough to let all of this happen, but here we are...

ZANDI: No, no, this is -- in my view, this is sticking to script. I mean, this is exactly the way I think everybody thought it would go. The pressure would start - they would come together as January 1, 2013 approached, the pressure would begin to mount, Wall Street would begin to get nervous, businesses would get nervous, consumers. We'd see groups like Maya's group begin form because they don't want to see us go permanently over the cliff. So this is exactly, I think, what everyone anticipated. And so, you know, I am not panicked in the sense that I think at the end of the day...

SCHIEFFER: You think they'll actually do something?

ZANDI: Absolute, because if they don't...

SCHIEFFER: Beyond kicking it down the road? ZANDI: Absolutely. Because - for a lot of reasons, if they don't address these issues, if they don't scale back the cliff and raise the debt ceiling and address long-term fiscal issues we have got a huge problem on our hands. And secondly, I think the political stars are aligned here. And I know John will talk about this, but the president has his legacy. He's a second-term president and I think he really wants to address this. And I think the Republicans want to address it as well.

So I think we'll get it together.

SCHIEFFER: And underline for me again, what happens if they don't get a deal? Number one, taxes go up for everybody.

ZANDI: Yeah. So the first thing that happens on January 1, everybody's tax rate -- everybody, everybody in this room, across America - our tax rates will go up

SCHIEFFER: Because the Bush tax cuts expire.

ZANDI: Right, because the Bush-era tax cuts expire and our tax rates go back to Clinton-era tax rates, so everybody's tax rates go up. And then we have a boat load of spending cuts. As part of various deals we have a big cut to Defense budget, non-defense. You add up it, it's over $700 billion in 2013. And that's 4.5% of the nation's GDP that the value of all things that we produce, that just evaporates, and we'll be in a very ugly recession.

SCHIEFFER: So Radha, you've been covering this story from the start. What do you think is going to happen?

FOROOHAR: Well, you know, I didn't believe, unlike Mark, that we would get as close to the wire here as we thought we would. I sit in New York and look at this in many ways from market perspective. And you know when the talks began, markets actually rose. I think that there were great hopes that we would do better than we have so far. I am now worried that we are going to go over the fiscal cliff, in part to have a reset. I know we're going to talk more about politics, but this idea that if we go over then Republicans could start talking about cutting taxes on the middle class, as opposed to keeping them up on the rich. And the Democrats will potentially get a better deal. I think the problem is - and we can see that this has happened in Europe when you have this kind of brinksmanship over and over and over again, and you go back and forth, markets start to get very worried. They've been very volatile. And I think that businesses have been holding back on investment. You can see that big capital spending by businesses in last four months has been way down, about 8 percent. There should be a boom going on right now. We have a construction market that's recovering. We have an energy field that's booming, so companies would be spending if we could get over this cliff.

SCHIEFFER: Well, some people are actually saying maybe -- I'm hearing some liberal Democrats say let it go over the cliff. I mean, would they really do that? I mean, because what would happen, then you would have, I guess, the tax cuts would expire, but would they let these draconian cuts in, say, defense spending, where basically, the military wouldn't be able to buy gasoline for their vehicles and that kind of thing.

FOROOHAR: I think it's a dangerous argument. Now, I think the truth is if you go over the cliff for a couple weeks, no, that's not going to be a disaster to the economy if there's a deal in place, if a deal gets done quickly. But if you're on the cliff, off the cliff, and back on for weeks or months end that would have a really devastating effect not only on the economy but trust in our political system. And it's worth noting a recent Harvard Business School survey found most business leaders in this country see political dysfunction as the biggest impediment to growth.

SCHIEFFER: John.

DICKERSON: We used to walk up to the brink, now we basically live at the brink. All of this is the fourth or fifth round of negotiations of these budgets. And if you think about the politics of this, what is being debated is not just the central issues of taxes and spending that are key to both parties, but you have a president enjoying an election that he just won. He is doing well in the polls. The Pew Foundation put out a poll and said basically 53 percent of people would blame Republicans if we go over the cliff, only 29 percent would blame the president. CNN, 45 Republicans, 34 the president. He's feeling good about his political position. You have got Republicans trying to figure out their new place in the world. And you have these various serious issues at stake. Basically, the thing to keep the eye on the ball here is the president wants Republicans to agree to increase rates. In 2010, Republicans were brought to office by anti-tax activists in the Tea Party. Their number one issue -- don't raise rates. So the president is asking them to do something right at the heart of their party. Two-thirds of the Republicans who were re-elected, were re-elected with big majorities, 60 percent. It's OK with their constituents if we go over the cliff because they're standing on principle. So how are they going to get the Republicans. How is the president going to get Republicans to increase rates? He's going to have to do something on entitlements that allows those Republicans to say, hey, we -- sure, we agreed to increasing rates, but look at the pound of flesh we got from the president. The problem, is the president thinks he did well in this election. He thinks the country is behind him. He's not into giving a pound of flesh. They'll give something on entitlements, but so far it's not big enough to give Republicans what they need to get the vote here which is why we may go over the cliff.

And it's not just liberal Republicans -- Newt Gingrich, no liberal he, saying that the fiscal cliff is all - it's just a charade. It's something liberals are trying to do to get Republicans to agree to tax increases.

ZANDI: But here's the thing. Here's the thing. Tax rates are going up on everybody by definition by law. So either the president has the upper hand on this issue and the electorate has voted. I mean, in every speech stump he gave, he addressed this issue. It came up and he said I'm going to do this. And the the electorate said OK. So it's very -- it would be very surprising if we don't allow tax rates to...

SCHIEFFER: This was a very, very close election. I mean, the blue states were very blue. The red states were very red. And the battleground states were very close. Are you trying to say that the president thinks he has some sort of a mandate?

ZANDI: No, not a mandate. But he won the election, that's the...

SCHIEFFER: He won. He got a second chance.

ZANDI: If you look at the exit polls, they asked people would you raise - is this is a good way to address our long-term fiscal issues, the vast majority of individuals say yes. And here's the most important thing, from an economic perspective - I mean, forget about the politics, from an economic perspective, if you sit down and do the arithmetic or the math and you can't make it work unless tax rates on upper income house, those folks that make over 250k a year, rise to their previous levels..

SCHIEFFER: Maya.

MACGUINEAS: But what's outrageous is that the way we govern now is by playing games of chicken and the losers are going to be the American economy and the country. Basically when it comes to the policies to fix this, we know what's going to have to happen. We know that revenues are going to have to go up. We know that we have to reign in spending. We know that we have to reform entitlements. And we know it's going to be hard work, that a $4 trillion plan which is what it's going to take, the debt is not growing faster than the economy, is going to be filled with things that we don't like. But we also know that what we're doing by going up to the brink, waiting until the last minute, and adding all this uncertainty is creating a huge cost to the economy. The cheapest form of stimulus is certainty. And we don't have any of that right now. And what you see is CEOs not being able to hire, small businesses not being able to invest, and households not knowing if we are going to have a real recovery where jobs come back when we should be able to do that. And basically the election is over. And what people want is to stop the fighting and to see real governing.

MACGUINEAS: And put in place a solution. The problem's not the policy at this point. It's the politics. And we have to find a way to bring them together to get to yes on this.

SCHIEFFER: And isn't the politics and the seeming inability to come to some sort of a solution to this -- isn't this the thing that poses the real danger to the economy? Because investors look out there and they see this and they say, you know, I've got to hold my -- keep my cards close to the vest here; I'm going to keep my money in the bank?

FOROOHAR: Absolutely. And, you know, you could argue that the U.S. could actually be benefiting right now because, as rich countries go, we're still doing pretty well. If you compare the U.S. to Europe, this is still a very good place to invest. But there is just this tremendous amount of uncertainty in our political process. I would say just one other thing on the point of taxes, though. It's not just about math, although I agree with Mark's point. The Bush tax increases on the upper-income folks in the U.S. are about 5 percent of the fiscal cliff. But they have a big social impact because I think, again, you can look at Europe and see what happens when you try and do austerity and you don't have social cohesion and buy-in and a feeling that everyone is doing their part.

SCHIEFFER: Mark?

ZANDI: Yeah, I -- you know, my view is that these are really big issues we're trying to nail down here. I mean, this is entitlement reform, Medicare, Medicaid, Social Security, the tax code. It would be hard for me to believe that we could come to kum-ba-ya over these issues.

(LAUGHTER)

...I mean, this is part of the process. And it's actually quite amazing to me the way the policymakers have designed this so that it all is coming to a head. Now, I absolutely agree. The uncertainty is a killer. It's really weighing on business investment decisions and hiring decisions. But on the other side of this, if we nail this down -- and the way this is -- I think we will -- we're going to be off and running.

DICKERSON: The thing about uncertainty is that both sides use the uncertainty argument. Democrats and Republicans both use it, which means it has a political smell to it, which means it doesn't work with those politicians. And the worry is that uncertainty only works as a motivator of political behavior when it starts biting, when you start seeing the effect of uncertainty in a bigger way. One other thing to mention is we have different timelines here. We -- we're talking about a sort of catastrophe of going over the cliff or not, or maybe a deal that happens in the weeks after we go over the cliff. There's another option, which is a kind of two-part deal, that they -- they're not really getting down to these big issues yet because negotiators think they might be able to do a small issue that gets us past the cliff for a short period of time, then they have a big, long, conversation about fundamental tax reform, about entitlement reform, that then plays out over the next year. The question with that, though, is does it get you any certainty in the business community?

ZANDI: No, this is key. So I don't think they can do a two-step deal here unless they're combined, unless we agree to long-term deficit reduction. Because the uncertainty will remain. And we're just going to -- that is in a sense kicking the can down the road. And that is the worst outcome in all of this.

MACGUINEAS: But here's what you can do. You can come up with an agreement on the big framework of an overall deal before the fiscal cliff. How big is the deal going to be? How much in revenues? How are we going to do entitlements? And then it needs to go where it has to go, which is through the committees of jurisdiction, where the expertise is, to figure out how to do tax reform right and how to do health care reform right. These are things you don't want to just pull together in a couple of weeks. But you do need to come up with a top-line part of the deal and make sure it's big enough to fix the problem. One of the concerns I have is that they're going to start negotiating down and down and down and not really fix the problem, and then there's no impetus to really finish up.

ZANDI: Actually, there's three issues they have to nail down. One is they have to scale back the cliff, the tax increases and spending cuts that are coming. The second is the debt ceiling. We have to increase that and address that because nothing adds more uncertainty than every time we come up to that debt ceiling. And then the third thing is the path to fiscal sustainability, the long-term deficit reduction, tax reform, reforms to the entitlement programs that get to us a stable debt-to-GDP in the future. And that has to all be done at once. I don't think you can do this in parts.

SCHIEFFER: Well, let me just ask the question, which I'm sure there is no answer to, but what do you all think is most likely to happen? Rana, I'll just start with you.

FOROOHAR: I think we're going to go over the cliff for a couple of weeks, fingers crossed. We're then going to have a deal because there's going to be a political reset that will allow both sides to be able to make nice with their caucuses and still make some progress on the issues of both garnering more revenue and doing entitlement reform.

SCHIEFFER: John?

DICKERSON: I feel like a two-part deal that does include Republicans agreeing to some kind of a rate increase that basically allows them a back door to explain how they're going to, kind of, get out of that in the future, which gives them a way to vote for tax rate increases, which is going to be very hard for them to do.

SCHIEFFER: But you think, in the end, they will do that?

DICKERSON: I think they'll do some kind of two-part deal, and they'll say, in the future, with tax reform, we'll be able to get rates down, so we're not really voting for a tax rate increase here. There's going to be a lot of trips to the euphemism factory here...

(LAUGHTER)

... where they're going to find some -- they're going to find some language here. The problem is, with the time here, is to do a big deal -- we're running out of time, and no member is going to vote for a big deal because they're going to feel like there's a lot of trickery in here, which goes back to Maya's point: let it go through the committees in the future so that people can know what they're voting for. People are getting very nervous now that, if it's a big deal, they're going to be voting for stuff that's going to explode on them later.

ZANDI: Yeah, my view is that we're going to scale back this cliff so that it's manageable economically as we move into 2013. So we'll have tax increases and some spending cuts but they'll be manageable. We're going to raise the debt ceiling. We're going to do it so that it's on the other side of the next election in 2014. And this is what I mean by a big deal. I think we're going to lay a framework for the deficit reduction we're going to do in the future. We're not going to cross the t's and dot the i's on Medicare reform and tax reform, but we're going to lay out how much we're going to -- we're going to reduce the deficit in the future by doing these things, then throw it into the Congress for the year and they will figure it out. And we'll have a budget mechanism at the end of that process to try to enforce that. So if we do those things, then I think we're going to solve the uncertainty issue to a significant enough degree and our economy will start to gain traction. SCHIEFFER: Maya, I'll let you be the last word here.

MACGUINEAS: Well, I don't think we're going to go off the cliff. I wish I were more confident of that, but I don't. Because I think politicians of both sides understand that it's just not worth it to bet the country on this. I do worry, though, that, as they spend the next year or six months working out the details, there is going to be such extreme pressures on both sides not to make the hard choices that, frankly, we all know have to be part of a real deal. And so I think it's important that there's pressures that keep on so that, if they don't come up with solutions through the committees, there are ways to make sure that we start to get those savings.

Because the U.S. has the benefit of being the safe haven. We have more time than other countries. But we will lose that confidence if we don't start to show that our political system can function and really solve these problems together.

SCHIEFFER: Well, thank you, all. I actually learned something here.

(LAUGHTER)

...Of course, I always do because I don't know much. We'll be back in a minute with Mike Rogers, the chairman of the House Intelligence Committee. Yes, we have reestablished contact, so we'll get his thoughts on Benghazi and all the other things we were going to talk about. Thank you all very much.

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SCHIEFFER: And we're back now with Congressman Mike Rogers, the chairman of the House Intelligence Committee. We lost our satellite feed, and we are not going to blame this on any kind of either government or enemy operatives, Congressman. It just happens every once in a while.

(LAUGHTER)

...I'm glad we could get reconnected with you. Let's go back and talk about this Benghazi business. You heard both Dianne Feinstein and Lindsey Graham say that stuff happened that shouldn't have happened here, and -- and the security was not what it ought to be. What do you think went wrong?

ROGERS: Well, it's very clear to me, Bob, that the intelligence was right about the threats in Benghazi. Now, they didn't know the specific day and the specific event, but all of the threat streams were right. So what went wrong was that the policy and decision-makers at Department of State did not make the right security call, and I argue it's gross negligence. There were discussions, Bob, prior to, to try to consolidate space in Benghazi. We had, you know, different consulates -- or not consulates but other operations around town there. They thought about bringing everything in one place, and they thought that that place was so insecure, they shouldn't do it. Now, that decision was made prior to the 9/11 event. That means that somebody was absolutely negligent in not providing the right security for the ambassador and the employees that lost their lives that day. And somebody should be held accountable for that, and we shouldn't -- we shouldn't walk away from that.

SCHIEFFER: Well...

ROGERS: Secondly...

SCHIEFFER: Go ahead.

ROGERS: Secondly, though, we're -- we're three months -- nearly three months after, and we have not aggressively pursued the individuals who have killed four Americans and, by the way, four Tunisians who helped us guard our embassy on the 13th that was under attack just two days after the 9/11 attack in Benghazi. That is the other -- these are the two biggest problems I think that you'll find moving forward we have to get some answers to.

SCHIEFFER: Well, and then you go to an administration spokesman was sent out, and it was Susan Rice, the UN Ambassador, who had nothing to do with any of this. I mean, we should make that clear. But she was sent out to explain it, but was given talking points as it were that didn't seem to jibe with what the intelligence committee knew or what the classified versions of what happened said. I still can't get that straight in my head how that's the right thing to do. I mean, should they have not sent a spokesman out? Should they have said we can't answer those questions? The whole thing just doesn't seem right to me?

ROGERS: Because it's not right, Bob. You cannot have the intelligence reading one way-- now, it's not a crime for the president, the administration, to take a different political narrative than what the intelligence said. That's not a crime. But it certainly is irresponsible. And in many cases may have risen to the level of negligence, because that narrative created other problems and other bad decision after the 9/11 attack. And so, it really is beyond the talking point, it's beyond Rice, because it was a political narrative designed not around what the intelligence said, but what they that you want the best politics were for them. That's why that got so dangerous in my mind and why it had such a negative impact on policy decisions that happened after that, including, by the way way, Bob, using U.S. taxpayer money to buy television ads in Pakistan nine days after the event, and it was very clear by then what had happened, nine days after the event to talk about that video that actually inflamed and caused tensions all across Pakistan. That's why this is so important to get right and we have got to get answers. And we have to go after the people who killed four Americans in Benghazi. And that needs to be a focus here that I am not real comfortable about where we're at right now.

SCHIEFFER: All right. Well, congressman, I'm glad we finally got to get your take on all of this and we were able to reconnect. Hope to have you back again. Thank you so much for being with us. We will be back in just a minute with this week's Face the Nation flashback.

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SCHIEFFER: So after a bitter and long campaign, there they were in the Oval Office, Mitt Romney and Barack Obama, not the first time it's happened, and that is our Face the Nation flashback.

(BEGIN VIDEOTAPE)

SCHIEFFER: It's become traditional for presidential winners and losers to get together after the election. Sometimes it goes well, sometimes it doesn't. When George Bush beat Al Gore in the bitter campaign of 2000, outgoing President Clinton invited Bush over for a two-hour session, but Bush's meeting with Al Gore, the man he beat, lasted only 15 minutes. Bush said he had to get back to Texas for a Christmas party. When Richard Nixon beat Hubert Humphrey in 1968, there was a certain been there, done that, feeling when he invited Humphrey to chat in Florida.

RICHARD NIXON: I recall in 1960 after losing a very close election that President-elect Kennedy called on me when I was here in Florida and now history repeats itself. So I know exactly how you feel.

HUBERT HUMPHREY: Thank you very much.

SCHIEFFER: After beating Bob Dole in 1996, Bill Clinton invited Dole to the White House for a ceremony honoring World War II veterans. Dole brought down the house when he said.

BOB DOLE: I, Robert J. Dole...

(LAUGHTER)

DOLE: Do solemnly swear-- oops.

(LAUGHTER)

DOLE: Sorry, wrong speech.

(LAUGHTER)

DOLE: But I had a dream...

(LAUGHTER)

DOLE: That I would be here this historic week receiving something from the president.

(LAUGHTER)

DOLE: But I thought it would be the front door key.

(LAUGHTER)

SCHIEFFER: Our Face the Nation flashback.

(END VIDEOTAPE)

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SCHIEFFER: Well, that's it for us today. We thank you for watching Face the Nation as always. We'll see you right here next week.