"Face the Nation" transcripts December 9, 2012: Simpson, Bowles, Booker

(CBS News) Below is a transcript of "Face the Nation" on December 9, 2012, hosted by CBS News' Bob Schieffer. Guests include: Deficit reduction duo Alan Simpson and Erskine Bowles, and Newark Mayor Cory Booker. Then, a roundtable discussion with TIME Magazine's Joe Klein, Washington Post's Michael Gerson, CBS News White House Correspondent Major Garrett, and "CBS This Morning" co-host Norah O'Donnell.

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

SCHIEFFER: And good morning, again.

Well, to the famous combos of modern life, from mac and cheese, peanut butter and jelly, rum and coke, bread and butter, and salt and pepper, add one more pair Simpson and Bowles. Alan Simpson may be in Cody, Wyoming this morning and Erskine Bowles in Charlotte, North Carolina but you can't mention one without think of the other. Gentlemen, good morning. You know, when you headed up the bipartisan deficit commission appointed by the president you laid out the dire consequences if we don't get the country back on a sound financial footing. The two sides are still at loggerheads. I guess I would start this morning by asking -- and Mr. Bowles, why don't you go first -- is all this just posture or are they really going to let us go over this fiscal cliff?

BOWLES: Lord, I hope not, Bob. I think it would be disastrous for the country if we did. You know, you can look at the forecast that we have, economic growth would slow, you know, by 4 percent. That, by definition, puts you back into recession when you're only growing by 2 percent. About two million people would lose their jobs. Unemployment would go to 9 percent. You know, you can already see the effects of it by -- you look you at businesses, they're slowing their head count by attrition. They're saying that, gosh, if they're going to have to lay people off. They're going to cut their capital expenditures. They're going to cult their investments. They're already hoarding cash. Moody's and S&P -- Moody's and Fitch have said that they would lower our credit rating. That would cause our interest rate to go up. I don't think the stock market has factored this in. Everybody's taxes would go up. I think this would be a disaster to go over the cliff.

SCHIEFFER: What about you Senator Simpson, could they really let this happen?

SIMPSON: Yeah, I think the reason is as I see it when you have responsible leaders saying like this, I think it would help the Democrats more if we go over the cliff. And then responsible Republicans saying, I think it would help the Republicans if we go off the cliff, and the administration saying I think it would help the president if we go off the cliff. And as Erskine says so beautifully, you know what that's like? That's like betting your country. There's something terribly bizarre and juvenile about that to think your party comes ahead of your country. I don't go for that at all.

SCHIEFFER: Well, do you think, Senator Simpson, in the end, Republicans are going to have to agree to higher tax rates for the upper income people?

SIMPSON: Well, I think Erskine and I both agree, if anybody out there who is -- quote -- rich doesn't think their taxes go up, the drinks are on me. I'll cover it.

SCHIEFFER: So you think they've got to do that. But also, don't you think that the Democrats are going to have to agree to some entitlement reforms?

SIMPSON: Sure, but you don't have to do the tax increase. You go into the tax code, and dig into those tax expenditures, but there's no time to do that. But, yes, I mean, the bizarre thing, not touching the entitlements. The entitlements are the engine on the train driving us to the cliff. They were on automatic pilot. Health care, it doesn't matter what you call it, is on automatic pilot. And it's going to squeeze out all the discretionary budget -- defense, R&D research, all the things you love. Erskine and I always say, what do you love? And they'll name something and we say forget it because this is wiping everything. It's just a destructive force. And no cost containment till down the road.

SCHIEFFER: So, Erskine Bowles, what should they do? What is the next thing that should happen to get this result?

BOWLES: Well, you know, I'm a little more encouraged than I would have been if you had asked me about it a week ago. You know, we were going through the Kabuki theater, you know, one side making an offer and the other side rejecting it. And that's natural in any deal. But, you know, they've started to tango now. And, you know, any time you have two guys in there tangoing you have a chance to get it done. First of all, most important thing is if we're going to raise revenue and if we're going to raise it in any form, then we darn well better cut spending because spending is the biggest part of this problem, and the biggest part of that problem is the fact that health care is growing at a faster rate than GDP. I think we made some progress this week, Bob. I'm more encouraged than I was -- let me tell you why. First of all, you know, the president has been clear that he's not going to support a deal that doesn't have an increase in tax rates, but he came right back and said he also believed that he's got into get into negotiations with Chairman Camp, with Senator Baucus, in order to broaden the base and simplify the code, and hopefully bring down rates next year. He said he's got flexibility on raising more money by cutting the entitlements. The speaker, I think this is a speaker who really gets it. He's put $800 billion worth of tax cuts on the table, but if you look at the offer he made last week, that offer doesn't mention a thing about, you know, block granting Medicaid. It doesn't have a word about premium supports. It doesn't have anything in there about the deep cuts in the income-support programs. So I think that advances the ball.

You look at the people on the periphery, what they're saying. You have Dick Durbin, who is very close to the president, saying, gosh, you know, that he can live with means testing Medicare. He said he doesn't like it, but he can live with it. You know, that's high on the list of things that Leader McConnell has said he's got to have to have a deal. And even Nancy Pelosi has said, look, this is not about rates, it's about revenue. It's about getting the money we need in order to reduce these deficits. So you've got to have spending cuts and you've got to have some revenue to get this done.

SCHIEFFER: Well, let me ask Senator Simpson. The New York Times crunched the numbers of the tax increases for the wealthy and determined even if the rates go back up to the Clinton-era rates it would only give us about a quarter of the needed revenue. So what other things can be done? What other taxes have to be raised or where do you get the money to get us to where we need to be?

SIMPSON: Well, you go into the tax code, as I say, but it's going to take too much time to do that. But there is no possibility to do this, not a single economist who talked to us in our hearings, said we can't grow our way out of this thing if we had double-digit growth for 20 years. You can't cut spending your way out of this baby or you're going to are ruin a very fragile economy and an emerging and helpful nation. And you can't tax your way out of this baby. This is impossible. And when these people zero in -- as Erskine said they zero in on taxes, taxes, taxes, we said you've got revenue one to four, three times spending cuts versus one of revenue, but you go into the code and like this one, you go to home mortgage interest deduction and the housing industry guys, all the lobbyists go nuts.

Well, we said, look, we're not going to take it away from you but it doesn't need to be a million bucks on a second home. We said take it to 500,000, give everybody a 12.5 percent nonrefundable tax credit which helps the little guy. And they go, "oh, yeah, well, I guess that might work." Everybody is in the game. We'll be savaged this next month. This will be savery, full-page ads, ladies, old, children, , veterans, Simpson-Bowles are doing their tricks out there. You know, hang on tight. It's going to be a real, real struggle.

SCHIEFFER: Let me just ask you, you caught a lot of people's attention, including ourselves last week, when you did this video on internet to try to get young people...

(LAUGHTER)

SIMPSON: Erskine, will you quit laughing. I can hear Erskine laughing.

SCHIEFFER: Erskine told me to be sure and run a little of this. We're going to do that right here.

(BEGIN VIDEO CLIP)

SIMPSON: Stop Instagramming your breakfast and tweeting your first world problem and getting on YouTube so you can see Gangnam Style and start using those precious social media skills to sign people up on this baby.

(END VIDEO CLIP)

SCHIEFFER: All right, so what is...

(LAUGHTER)

SIMPSON: It is great, isn't it?

SCHIEFFER: What were you telling young people they need to be doing, senator?

SIMPSON: Oh, oh, I'll tell you, I -- I don't want to drag Erskine down into the depths, into the pits of despair,

BOWLES: I'm with you, Pal.

SIMPSON: But let me tell you, the AARP and the senior groups in this country will have stripped the Treasury dry in 30 years. And if these young people can't figure it out. And it's not because they want to, it's just the demographics, 10,000 a day turning 65, no affluence testing, no nothing. A guy gets a heart operation for 200,000 bucks. He could buy your building and he doesn't even get a bill. Who is kidding who? So I said to those young kids get off your can, and they invented the phrase -- they're tired of seeing the can kicked down the road because when they kick the can down the road they're the ones who are going to get it kicked right in the fanny. So, Erskine and I tried to help them. And if this has helped them to energize themselves and get volunteers and take on the sob sisters that say that we're trying to is destroy all the old people in America, get serious. And if humor will do that, I think that's great. Nobody has any humor in Washington. There ain't none left.

SCHIEFFER: Mr. Bowles, what are you saying to your party about the need for entitlement reform? Because that's where the resistance is coming from, it's coming from the Democrats, not from the Republicans.

BOWLES: Absolutely, Bob. And first of all I love Alan, god he's an American treasure. But, look, even if you raise the top rates back to the Clinton rates, that only creates about $400 billion over 10 years, that's $40 billion a year. We have a trillion dollar a year deficit. That alone won't solve the problem. We have to cut spending. Health care in this country, we spend twice as much on health care as any other developed nation, and that's whether it's percent of GDP or it's on a per-capita basis. We have to slow the growth of health care to the rate of growth of the economy. The president has put $350 billion worth of cuts on the table. That's not enough. We're going to have to do more. We may not like it, you know, we may wish we didn't. We simply made promises we can't keep. We've got to face up to it and we've got to have a bold decision in order to make sure we put our fiscal house in order.

SCHIEFFER: Do you both -- and this is the last question -- do you honestly believe we're going to get some -- resolve this in some way by the end of the year, or will it go into next year? Senator Simpson?

SIMPSON: Well, I -- I'm an optimist. I think they'll do something, but if they do small ball, that won't work. The markets aren't going to listen to that. But the horrible part about all this business is when you're addicted to debt, 16 trillion bucks and you're in the hole 1 trillion, and the markets are going to jump in, and nobody will know when that is. The tipping point was always described by Dick Durbin, when will it happen? But when it happens, interest rates will go up, inflation will go up, and the guy that gets hurt the worst is the little guy. What hypocrisy, what fakery.

SCHIEFFER: All right, Mr. Bowles?

BOWLES: Look, they absolutely can do it. If they don't do it, shame on them.

SCHIEFFER: All right. Well, thank you both for being with us this morning. And we'll be back in one minutes to talk to Cory Booker.

(COMMERCIAL BREAK) SCHIEFFER: We're back with one of the rising stars, according to Democrats, of their party. and that is Newark Mayor Cory Booker. He joins us from our New York studio. Mr. Mayor, let's just pick up on what we heard from Erskine Bowles and Alan Simpson. What are your constituents talking about? What are they telling you about this? How does this look from outside Washington?

BOOKER: Well, I think there's an immediate fear. There are a lot of people, a couple of thousand dollars, which most Americans will see their tax goes up if we don't do something about this. For many families, not only in my city, but across our state, a couple of thousands dollars could be the difference between making that mortgage payment, being able to afford food and making critical investments during every month. So, the desire for Washington to figure this out, and not to cause more harm, like they did during the last debt ceiling debate is absolutely crucial. And, you know, this is not time for the Republicans to hold the country hostage again, really at this point, holding it hostage to protect a couple of percent of our population.

SCHIEFFER: Well, I mean, it's -- Democrat -- there's got to be some give in there from Democrats as well?

BOOKER: Well, I think you're absolutely right. And look, something is frightening to me which the two gentlemen mentioned. I mean, I have seen health care costs mushroom in this country and have seen the impact on the community like mine. It was projected to go to 20 percent of GDP very soon. Right now it's 17 percent. We have got to start doing things that are actually controlling these costs or forget it. The next 10, 20 years we'll see America's global economic decline. So they're absolutely right about the urgency. But I think the president really has a balanced approach to this. We have to get through this current challenge we're in. We have a fragile economy. This is not a time for draconian cuts, because that could undermine economic growth in the long term. And I'll even say something more, this is not a time to be penny wise and pound foolish. We just saw the worst natural disaster to come through New Jersey in a very long time. And it really exposed how vulnerable and unprepared our infrastructure is in this country. And you have storm systems and even heavy rainfalls right now are causing incredible economic damage. So to not invest the pennies now to save the dollars later is also a bad thing to do. We've got to start getting back to a balance sheet analysis of our economy. Things like Social Security and health care, we really have to make sure that we're bringing in the revenue we need, that we're controlling and cutting costs and steering this delicate ship during this recession out of a recession, back to strong economic growth in America.

SCHIEFFER: Mr. Mayor, let me ask you about this experiment, as it were, that you have embarked on over last week, and that is you went out and what, bought, $30 worth of food at the grocery store, and this is what people on food stamps, this is all the money they would have to buy food if they were on if food stamps. And you decided you'd do that and just see if you could live on for a week. How is it going?

BOOKER: Well, first of all, this is one of the programs right now that the House is proposing to cut dramatically. The Senate with Senator Stabenow and the president are trying to protect, because 46 million Americans benefit from food stamps. Veterans, over a million veterans benefit. There are some military families, people with disabled children, families with kids, working families. And what we don't understand is we often vilify or denigrate folks. That are using a small amount of money to bridge them out of poverty or bridge them out of food insecurity. And so in a debate on Twitter over social media, I was talking about why don't we do this ourselves, just really see how this program works. And I'll tell you what, my modest brush -- because I'm done with this in a week, but again, millions of Americans, this is their daily challenge is finding a way to get access to healthy, nutritional foods. so for me it's been very difficult. I'll be honest with you. I take so much for granted, even going to Starbucks and buying a cup of coffee is more than my daily food allowance right now. And so we really need to expose the problems on a national level by denigrating programs that actually empower our economy in the long run, but preparing our children to learn and to succeed. And also we can do things locally by expanding access to healthy foods, more farmer stands, more locally grown produce.

SCHIEFFER: Tell me, for example, what do you eat in one day? What did you eat yesterday?

BOOKER: You know, it's about $1.40 a meal. I woke up and had an apple for breakfast. I burned a sweet potato and I couldn't go out and buy another one because it wasn't on my budget so I cut around the burned part and had a sweet potato around lurch time and then I made a casserole with just broccoli, cauliflower, beans, and peas and nursed that over a couple hours. I found that I could stave off hunger better if I eat a few spoonful, put it down, come back to it in 30 minutes or so between calls. So it's been very challenging.

SCHIEFFER: I know you're a coffee drinker. Have you been able to drink coffee?

BOOKER: No, I'm thoroughly decaffeinated right now. And it's a terrible state of human existence. I don't see how people do it. But, you know, look, this has been a difficulty for me for just one week but it's a reality for Americans for months at a time. And, you know I have a social media platform called Waywire, where people are posting their own experiences on this, which -- and a really amazing testimony from Americans. This is a daily reality. And so in this time in our country where we see a decoupling between economic growth creating wealth for some but a real decoupling as real wages decline, a real decoupling between economic growth and wage increase. So you have families in this recession whose wages are frozen or dropping, still working the same amount of hours, so now working two jobs but still find themselves dependent upon programs like food stamps or SNAP. And if we cut these programs, what we really do is cast them into food insecurity, which does have a long-term deleterious effect on our economy, especially as we send kids to school, nutritionally unfit to learn, and have military families that sacrifice so much for us on veterans coming home.

SCHIEFFER: Let me -- we're about out of time. But before we go, we do need to talk a little politics. Are you thinking about running against Chris Christie for governor?

BOOKER: Yes, I am absolutely considering running for governor, as well as giving other options some consideration. I'm going to be focused on that for the next week to 10 days or so and really come up with a decision that answers my basic question, is where do I believe -- and hopefully later the voters might agree with me -- but where do I believe I can make the best difference for the city I love, for the state I love, and the nation that I've pledged my life to. SCHIEFFER: Well, when do you think you will make a final decision?

BOOKER: You know, it has got to be within the next two weeks, especially in New Jersey, because there are a lot of very good candidates for governor in New Jersey on the Democratic side and I have got to give my party and be a part of my party's push forward, whether it's with me as a candidate or with supporting other candidates for that office.

SCHIEFFER: Would you -- if you decide not to run for governor, is there any chance you might run for another office, say Senate, for example?

BOOKER: Yes, I'm actually looking at that a lot as well, and trying to get back. Because life, ultimately, is not about a position, it's about a purpose. And my purpose that I try to focus on every single day is how can I make a difference in the world around me and in the community around me? So I'm really thinking about both offices right now and which one can I better serve on the issues I'm passionate about and the things that I feel driven to contribute to.

SCHIEFFER: All right. Well, Governor, I hope you will get to have a cup of coffee here before too much longer.

BOOKER: You just made a bad mistake that might get me in trouble, but thank you very much.

(LAUGHTER)

SCHIEFFER: All right. And I'll be right back with some personal thoughts about a missed opportunity in the Senate this week.

(COMMERCIAL BREAK)

SCHIEFFER: Someone asked me the other day, has Washington changed? And I said, were you around when they passed the Americans Disabilities Act in 1990? It passed overwhelmingly, ending discrimination in the workplace and opening access to the disabled to public buildings. When George Bush signed it into law, it made you proud, whether you were a Democrat or Republican, a politician or one of the rest of us.

(BEGIN VIDEO CLIP)

GEORGE H.W. BUSH, 41ST PRESIDENT OF THE UNITED STATES: This historic act is the world's first comprehensive declaration of equality for people with disabilities.

(END VIDEO CLIP) SCHIEFFER: But that was then, and this is now.

(BEGIN VIDEO CLIP)

SEN. JON TESTER (D), MONTANA: The resolution for ratification is not agreed to.

(END VIDEO CLIP)

SCHIEFFER: Partisanship and suspicion runs so deep now that when an international treaty that calls on other countries to provide the same right to their disabled came to the Senate for ratification, conservative Republicans blocked it, blocked it despite a dramatic appeal by 89-year-old former Republican leader Bob Dole, himself a disabled World War II veteran. And even though their usual allies, the Chamber of Commerce and veterans groups, wanted it. Opponents gave various reasons, arguing the treaty might prevent parents from home-schooling. It doesn't. I didn't hear many say, though, how proud blocking it made them feel. Some just seemed embarrassed. Has Washington changed? Maybe I'm wrong, but in Bob Dole's day, I think senators would have found a way to get it done. Back in a minute.

(COMMERCIAL BREAK)

SCHIEFFER: And some of our stations are leaving us now, but for most of you we'll be right back with our political panel. So stay with us on FACE THE NATION.

(COMMERCIAL BREAK)

SCHIEFFER: And welcome back to Face the Nation. On page two now, we're going to try to make sense of all of this going on about the fiscal cliff, which may show we're not very smart to start with because I'm not sure any of it makes any sense. But we'll try to straighten it out with Joe Klein of Time Magazine, Michael Gerson of the Washington Post, CBS This Morning co-host Norah O'Donnell, and we'd especially like to welcome our new chief White House correspondent, Major Garrett. Well, Major, what's going on over there, anything new?

MAJOR GARRETT, CBS NEWS WHITE HOUSE CORRESPONDENT: Bob, I regret -- deeply regret I have no news. But I have a story and the story will have to substitute for news. I was conversing this morning, as I do every morning, with the White House about "is anything going on? Is anyone of importance talking to anyone else on Capitol Hill of importance?" And I was given the same nonresponsive answer I get daily "lines of communication are open." And finally getting sick of that I said, well look, the lines of communication were open during the Cold War, too." And I thought, well, this is kind of an extravagant over-the- top metaphor the White House would reject that. The person wrote back, yes. And the Cold War ended when one side realized they couldn't win. So I think we're on a Cold War footing right now. It feels that way to me.

SCHIEFFER: What do you think, Joe? What's happening, anything?

JOE KLEIN, TIME MAGAZINE: Not all that much, but also, I think that this is -- this has been an over-hyped situation from the start. You know, we have a serious long-term deficit problem in this country. We don't have a long-term deficit crisis. I think that we're going to be able -- that they're going to make a deal. I mean, that's what politicians do. The Republicans lost the election. They know they're going to have to raise revenues. But I think the over-hyping of deficits, the deficit mania that seized this town, is kind of crazy. I mean, I love Alan Simpson and Erskine Bowles, but they're talking about inflation at a moment when people are paying us money to invest in our Treasury bonds. You know, the summer before last, when we had the debt ceiling negotiations, and everybody was saying oh, our credit is about to go down the tubes. The price of U.S. Treasury bonds were going up. So the fact is that we have a problem. I'm hoping that we'll deal with it, especially, you know, the old age entitlements, because sooner or later, you and I are going to be old enough to qualify for Medicare, and we're going to want it to be a good system.

But we really have to...

(LAUGHTER)

KLEIN; I think a little bit of rationality is called for.

SCHIEFFER: But, you know, you're saying yeah, it's not as bad as it seems. I mean, the fact of the matter is when the Bush tax cuts run out at the end of the year, when payroll tax -- whatever they call it, runs out at the end of the year, people's taxes are going to go up. And that may may not be a crisis for some of the upper income folk, but if you're down the line there, that's a big deal.

KLEIN: And I fully believe that that's going to be taken care of. But if you remember, when the Clinton tax cuts -- tax rates were imposed in 1993, Martin Feldstein, the -- you know, a very substantial economist, wrote an op-ed in the Wall Street Journal that day predicting that we were going into a deep recession because of these tax rates. We went into a big boom. I mean, we're really tinkering on the edges here of a massive economy.

SCHIEFFER: Michael?

MICHAEL GERSON, WASHINGTON POST: Everybody knows the conversation needs to take place. Speaker Boehner calling the president saying I'll give some on rates, you have to give on structural entitlement reform changes. The problem is, it's the president that sets the groundwork for that discussion. And right now Republicans think the president's undermining that possible conversation by an unreasonable first set of demands, procedural changes that would make them irrelevant. The art of the deal involves giving people a soft place to land. And right now, Republicans aren't seeing a soft place to land. Their only option is humiliation in this process, and they're increasingly thinking that the president sees victory at the bottom of the fiscal cliff.

NORAH O'DONNELL, CBS NEWS: But remember when we last had this debate between the speaker and the president and the president and the White House team feels like they were humiliated by Speaker Boehner when he wouldn't even return his own phone calls. So that's part of what's going on here is the lack of trust. But, look, as soon as what President Obama wants is Speaker Boehner to say he's going to give on the tax rates. As soon as that happens that will unlock everything else. The White House says that Boehner knows they will be willing to make structural reforms to entitlements and take on his own party on that matter, but they want that concession from Boehner about the rates. And you saw Boehner walk right up to the line on Friday by suggesting maybe it could go from 35 to 37 or give a little bit. They tried to walk that back. But as soon as that conservation happens, that will unlock everything.

SCHIEFFER: But can Speaker Boehner deliver the votes in his caucus if in fact he makes a deal?

O'DONNELL: I don't think he has to say it. He doesn't have to say it out loud. That's the thing. He needs to signal it in some way, then you're going to have a two-stage process. They'll do the fiscal cliff stuff and then they'll do tax reform by August 1 of next year.

GARRETT: Well, but the speaker so far has not had a rebellion underneath him. He has said things that continue to move in this direction without a rebellion. Here's what happened on Wednesday. The president called Speaker Boehner. I'm going to send Rob Nabors up, my congressional liaison, to meet with your people. And the Republicans say, great, they're going to bring another offer. Well, what Ron Nabors said was tell us what you want after you agree to rates. The White House thought that was an accommodating conversation. The Republicans interpreted that as seeking their humiliation. So even within the contours of conversations that are direct and face to face, there are wildly differing interpretations about methods and trust. GERSON: And Republicans, by the way, know that if Boehner crosses that bridge, that it could be immediately leaped and get a Democratic victory dance on rates without really getting serious on the other side. That's what the lack of trust causes in this process.

SCHIEFFER: I guess in the final analysis, nothing is going to happen until the last minute of the last hour, though, it seems to me.

GARRETT: And the closer we get to that, the smaller this becomes by definition. You have to write it small. It can only be digested quickly. And the longer we wait and the closer we get to this the smaller the scope of the deal is.

SCHIEFFER: Let me ask you all -- we can get back to this -- I want to ask you about some of the other things that happened this week. This idea that Jim DeMint, who was the conservative, the Tea Party hero, as it were, announce he's not even going to finish out his term as the senator from South Carolina, he's going to take a job at the Heritage Foundation. Michael what do you think, as a conservative, what are the implications of this?

GERSON: Well, he was always more of an activist than a legislator. His colleagues sometimes resented him because he supported primary opponents against them. Many of his Republican senate colleagues resented that. But I think this is mainly a problem for the conservative movement and conservative think tanks. Republicans are going to have to enter a period right now of rethinking on major issues, on immigration, on economic policy, on social mobility. And the Heritage Foundation, one of those major think tanks is turning to someone who is not particularly inclined to this process. He's actually -- you know, the Tea Party hero, somebody that's intolerant of dissent when it comes these issues. I think that's a very bad sign for the conservative movement. They need something that they seem to be turning away from in key ways.

GARRETT: Well, one other thing that struck me about it, Bob, was that this move signals that one of the political elements will of the Heritage Foundation may be enlarging its focus. Heritage Fund for America, which is a political arm of a think tank. Now, that hasn't been there before. The Center for American Politics on left has both, a think tank and a political arm. Now Heritage is beefing up the political side of its think tankery. That seems a structural difference in Washington, one that makes conservatism not just about ideas and concepts and thinking about government, but putting a political agitating force alongside of it. And that may not be good for the conservative movement but it is a change.

KLEIN: I think it's pretty sad actually. I remember Heritage was where Obamacare originally came from, you know the idea of an individual mandate came from Stewart Butler of the Heritage Foundation. We're at the moment now where there's some interesting thinking is happening among younger conservatives on a lot of the social issues that are bedeviling us like health care. And, you know, I don't know that Jim DeMint is all that interested in that kind of stuff.

SCHIEFFER: Well, what about, Norah, what about the Republican Party in general? Where does it go from here? It got beat when all the indicators suggested they should have won this election, if you just went by the economic indicatores, and all of that. And yet, President Obama won.

O'DONNELL: Well, look at all the -- those who are leading the Republican ticket, presumably, for 2016 whether it's Rubio, Ryan, Jeb Bush, all of them acknowledge that the party has got to change to some degree, and especially Rubio and Bush, acknowledging the need to tackle on issues like immigration, to speak to middle class voters. So there is an acknowledgment that they are going to be change. Bobby Jindal as well. I mean, these are people who are forward thinking. The question is whether the congress will be able to go along and present some legislative victories. Certainly, the Republican governors are proud of their work in the states. But in terms of congress, so we'll see. I mean, immigration reform, once they get through the fiscal cliff, by all accounts is there could be some movement on that in the new year.

SCHIEFFER: All right. Well, we're going to take a break right here and when we come back we'll talk about all this and some other stuff going on in Washington.

(COMMERCIAL BREAK)

SCHIEFFER: We're back now with our panel.

Joe Klein, let's get back to something else that happened this week in the Senate that shows this is kind of a different place than it once was. And I talked about this in my commentary. This is turning down the treaty on disabilities, which really didn't have all that much impact in this country but it just called on other countries to provide the access and the nondiscrimination that the disabled have.

KLEIN: It was an outsourcing of American values to the rest of the world.

SCHIEFFER: Yes.

KLEIN: But interesting thing to me about that vote -- and it goes back to what we were talking about before with the future of the Republican Party -- it wasn't just hard-line conservatives who voted against this. Yet, people who were moderates, people like Saxby Chambliss, who talked about raising revenues, and Lamar Alexander from Tennessee, and Lindsey Graham, who is often a moderate on issues, been a moderate on climate change -- all three of them voted against this treaty. Why? Because all three of them are likely to face Tea Party primaries in 2014. And I think that, that-- you know, that bloodbath hasn't ended within the Republican Party. We're going to see at least another cycle of it.

SCHIEFFER: Let's talk about the more immediate things, and that is the next Obama administration. One of the things that strikes me, and you brought it up in the green room a while ago, Joe, we have not seen the administration nominate anybody.

KLEIN: Anybody.

SCHIEFFER: To any office here. We're a month into -- after the election, and we've had all the controversy over Susan Rice, and who know where that is? What's happening? What's going on here?

GARRETT: Well, the administration is, as it says, studying all of its options. What it's trying to figure out a way if in fact it wants to make the Susan Rice fight which is now visually going to be a difficult fight. And if it does, how hard will it fight and how far is it willing to push? There are those who argue, look, if you put Susan Rice at the National Security Council and put Senator Kennedy up that becomes an easier thing...

O'DONNELL: Senator Kerry.

GARRETT: Senator Kerry from the Senate up to nominate for Secretary of State. The problem with that is Tom Donilon and the existing National Security Adviser doesn't want to leave and has no intention of going. That's complicated math inside the White House, and for the administration. All the other positions, the thought is, Lugar goes to Treasury to replace Treasury Secretary Geithner, but who would replace him as chief of staff?

SCHIEFFER: Tom Donilon.

GARRETT: Well, it could be Tom Donilon or Ron Klain, those are the names that -- the final decisions haven't been made and there are a lot of pieces on the chess board.

SCHIEFFER: Is this just because of the fiscal cliff thing that is going that they haven't focused on who is going to serve in the next administration?

O'DONNELL: Yeah, they don't want to pick a fight with Capitol Hill while they still have the fiscal cliff in front of them, but it will be something they have to deal with because people want to leave in the new term. And certainly, Secretary of State Hillary Clinton has long signaled that she is only going to serve one term as secretary of state. And we see on the front page of the New York Times today a big piece by Jody Kantor about what is next for Hillary Clinton, about what she's going to do, and whether she is a front- runner in 2016. The Washington Post had a poll out this week that showed that Hillary's favorability ratings are at an all-time high, that almost two-thirds of Republican women would vote for her. So the discussion is already happening. They're going to have to start putting some names out there.

SCHIEFFER: Do you think she'll run, Michael?

GERSON: I think she would have a consider support of the party. I think she has a history of being interested. I think there's a lot to commend this, as a prospect. But I do think on the previous point that the preoccupation with the fiscal issues is just dominating everything else. And, you know, the stakes are high for the president. If he got in a plan for long- term fiscal constraint and did immigration, these would be some large, historical achievement, things that any president of the United States would be proud of. If the system collapses, and we can't achieve anything because of politics, that's it going to be a tremendously bad start for his term. So the stakes are high for him

GARRETT: And it would cast a shadow on the remainder of the second term. And it would also -- his legacy would be of partisanship. Health care and the financial reform were largely Democratic. There would be no large, structural, bipartisan efforts achieved by this White House.

KLEIN: But it wouldn't be a picnic for the Republicans.

GARRETT: It wouldn't either. They're going to get blamed for this.

KLEIN: And, you know when I go out in the country and I spend a lot of time out there, people are just sick of these kind of games. They just want to see it get done. And I think that -- I mean, there's an outline that's there, that's pretty obvious about where we have to go. The president has proposed $1.6 trillion, the Republicans have proposed $800 billion. $1.2 trillion is right in the middle, right?

(LAUGHTER)

KLEIN: And we all know that the health care system has to be addressed. There are ways to do it. Some of which Paul Ryan suggested. You know, Ryan's plan for Medicare is exactly the same as Obamacare. I mean, if people would just stop being so oppositional and sat down and make the kind of deal you were talking about before. You know, it was interesting to see bob Dole on the floor, and George H.W. Bush in the -- in hospital this week. These were giants. That was a Republican Party that came up with a lot of really creative ideas and got things done.

SCHIEFFER: Well, you know, this used to be -- and maybe it's things always just look larger in the rearview mirror. I mean, most of the time they look smaller in the rearview mirror in reality. But it seems here, they look larger in the rearview mirror. And you just wonder has -- has this generation of politicians simply forgotten how to negotiate, forgotten how you get things done, or is it in this age of the new media is it impossible to do things the way you do them? And that is, you know, you have friends across party lines. And you talk after work, and you work out things, you find out who needs what. Now, nobody seems to know anybody. Nobody seems to know what the other guy needs. They put out these tweets. They put out these press releases. They put out these photo opportunities, but somehow or another they never get around talking to one another.

GARRETT: The idea is positioning presages an outcome. That if you win the positioning battle, then eventually you get to governing. Whereas when I first came to Washington in 1990, not as early about some of us at the table, but people were about governing first and then we'll position our ways to the governing outcome. Now, it's all about positioning. And if you position yourself and win by enough, then maybe you can govern without the underlying assumption, hey we're going to govern and ultimately we're get something done. It's the positioning that takes precedent

GERSON; And the budget is a particular problem, because if Democrats get what they want -- tax increases on the wealthy -- they can crow about it in public. If Republicans get what they want, which is structural changes in Medicare, they can't crow about it in public, they are doing this for fiscal reasons. That means this entitlement reform never gets done unless the President of the United States gives cover to people and says we're going to all jump together. And that is what I think Republicans are questioning whether that's...

KLEIN: He's on the record. He was willing to do that in negotiations with Boehner in 2011. He's willing to even think about raising the age of eligibility for Medicare. He is willing -- he was willing if the Republicans would have played on Obamacare, to give them malpractice reform.

GERSON: But he's not leading on it.

KLEIN: Well, I mean, you know, he's negotiating on it. And I think that every time the president makes an initial proposal, the Republicans squeal and say it's like Appomattox. It's negotiating. And I think that that negotiation is going on now. And if they're smart -- I know that this is a real leap if of when it comes to this congress -- if they're smart, they'll get it done in the next week.

SCHIEFFER: You know, major, all the problems are not here at home. There are some pretty big ones building overseas, this whole Syria mess. I mean, who knows where this thing is going. What's the latest on that?

GARRETT; I mean, the feeling in the administration is they're gathering intelligence information on an hourly basis to try to figure out what's happening to the stockpiles of chemical weapons. Are they being mixed, moved, is there anything that is of dire, immediate consequence about that? There is a report in the Sunday London Times today that there is a covert operation already to take arms from Libya. The United States is okay with it through other Middle East allies to give it to the opposition. The administration told me this morning the position of the U.S. government has not changed. They will not directly or indirectly arm the opposition through arms in Libya or anywhere else. But the sense is, this is on an hour-to-hour basis and the immediate danger for not only the Syrian civilians but for the fate of the Assad government is a top concern for the administration.

SCHIEFFER: And Norah, I mean, as tragic as all this is, isn't the real problem knowing who to aid? I mean, we say we want to aid those that are opposing Assad, but we don't know who some of these people are. Some of them we know where al Qaeda.

O'DONNELL: Right. That has long been the White House worry about arming the different opposition groups, some who are al Qaeda. But I think what we're seeing here is the president laid out -- he said any moving of chemical weapons would be a red line. If they're moving chemical weapons what's then -- are we at the red line for the president. His rhetoric shifted a bit on this issue in terms of when the U.S. will engage. The bright spot for this administration on Syria is Secretary of State Hillary Clinton meeting with the Russian foreign minister, and it look likes will the Russians are willing to move. And the ultimate outcome, Bob, is not going to be military involvement. It's going to be getting the Russians to get Assad out of there and...

(CROSSTALK)

KLEIN: Syria is different from any of these other problems we've had in the Middle East because 95 years ago or so, a bunch of Europeans drew straight-line borders in the sand in the Middle East and called them countries. They're not really countries. And when Assad goes, as he probably will, there are Kurds up in the north, there are Sunnis who might want to join with the Sunnis in Iraq. And I think that we're coming to a very, very difficult period in the Middle East, far more difficult than the last couple of years because we're going to see whether these countries actually are countries.

SCHIEFFER: And isn't one of the real problems here, Michael, is when we talk about these chemical weapons, maybe not so much that Assad might use those on his own people but somehow in this chaos, that al Qaeda, some of these other people, might get control of one of these things?

GERSON: Yes, but this is one of the concerns. The critics of administration policy on this say we haven't been active enough and that all these results would happen. You would have destabilization of the region, you would have problems -- humanitarian problems. And they have all happened, in fact. The fact that America wasn't more engaged earlier and actively in this process I think was probably a mistake.

KLEIN: We can't assume that Western powers like the United States any more in an age of Twitter and Facebook and all the rest are going to be able to dictate results in these countries once again. I think that our diplomacy could be a little bit more subtle -- supple, but I really think that these people are going to have to make decisions about who they are and what countries they want to have.

SCHIEFFER: Well, I'll tell you one thing strikes me, I think all of us are going to be able to find work over the next 12 months. I think there's going to be plenty of things for us to keep track of.

KLEIN: Speaking for myself, Bob, that's very good news.

(LAUGHTER)

SCHIEFFER: I guess there is some bright side to these clouds of doom that we see.

Well, I want to thank all of you for coming by this morning. It's a lot of fun to kind of go over some of this stuff. I'll be back in a moment with some of the lighter moments of the last week. Stay with us.

(COMMERCIAL BREAK)

SCHIEFFER: Finally for our "FACE THE NATION Flashback" today, we didn't have to flash very far back, just a couple of nights last week because the fiscal cliff had the comics on a roll.

(BEGIN VIDEOTAPE)

JAY LENO, HOST, "THE TONIGHT SHOW": We have good news and we have bad news! First, the bad news, it is just 28 days until the fiscal cliff deadline. The good news, only 17 days until the Mayans say we're all going to die so who cares about the fiscal cliff! Exactly.

JAY PHAROAH, "BARACK OBAMA": And we would like to announce that we have reached an agreement to avoid a fiscal cliff. In order to get the support of the speaker, I agree there will be no tax increases. I repeat, zero tax increases. Now, why would I do that? I mean, I won the election. I have the leverage. Why give in? Well, simply put, I felt sorry for this man.

JON STEWART, HOST, "THE DAILY SHOW": Is there a prospect for a deal?

GARRETT: There's not a prospect for a deal.

STEWART: Of course! But the ongoing talks.

GARRETT: There aren't even very many talks going on.

STEWART: You're killing us! Give us something!

GARRETT: But for the first time, there are numbers on pieces of paper from both sides.

STEWART: Numbers on paper!

(END VIDEOTAPE)

SCHIEFFER: That is our "FACE THE NATION Flashback." One note to Major Garrett. Major, I was here 10 years before people thought I was important enough, and you are off to a fine and fast start.

GARRETT: Thank you, Bob, thank you very much.

SCHIEFFER: We'll be back in a minute.

(COMMERCIAL BREAK)

SCHIEFFER: And that's it for us today. We want to thank you for joining us here on FACE THE NATION. And we'll see you here next week.