Both sides digging in solidifies stalemate

>> congressman van hollen, you have speaker boehner saying this morning to fox, we are nowhere. this was an unserious proposal. is it just political theater like the treasury secretary said?

>> well, what's happened now is that the president has put forward a plan. it's transparent. it's on the internet. speaker boehner needs to come forward and put his counterplan on the table right now. that's what has to happen. so when speaker boehner says we're at a stalemate, it's because he refuses to put forward other options. let's be really clear on what the president has said. he wants to extend tax relief for 100% of american families and small businesses on their first $250,000 of income. and what republicans are saying it is, nobody gets that tax relief unless folks over $250,000 get the extra four cents on the dollar that they were getting compared to the clinton tax rates . and i just don't believe that the american people are going to accept the republican position when we need to extend middle class tax cuts and get serious about our long-term deficit reduction.

>> gamesmanship. that's the big piece of this. what's the bottom line? does the president have a chance to prevail with how he's going about this at the moment?

>> at this point, it looks like both sides are digging in. based on that interview, it looks like the president is digging in and that's unfortunate, because it doesn't seem like we are looking at compromise right now. as far as the economy is concerned, we will see a hit to the economy if in fact both sides continue to dig in. and the markets right now are expecting a deal. the markets have been trading fine. if we don't get a deal, we're going to see a sizeable decline in stocks. we are going to get a big disappointme disappointment.

>> jim, let's talk about it. when we go over the fiscal cliff, what happens? the bush tax cuts expire january 1 , so they automatically go up to clinton era levels. the 2011 payroll tax holiday expires. the alternative tax kicks in. and then you have $1 trillion of cuts, half of which is in defense. how is the president doing in his pitch so far, both in his first offer and how he's going to the public to sell this?

>> i think he's doing pretty well. i think he is calling for compromise. compromise means no firings of any great magnitude starting january 8 . january 8 , that's the first company reports. there will be a foot race to fire. who can fire the most? who saw the recession coming? and i think that compromise, which i believe the president is actually offering, avoids those firings. avoids the big spending problems that you're going to see. there's no valentine's day. there's no easter. there's no big spending days coming if you go through and don't compromise.

>> here's what i think is going on in part, grover. the president is being as aggressive as he is with this initial proposal, putting boehner in a position to fight him hard, so if boehner can win some concessions, that he can look better. that he can say to his caucus, look, we fought the good fight here. i dialed them back from where they were significantly. we've got to take this tough medicine.

>> it might work, except you left a couple of things off. there's $1 trillion of obama care taxes hitting in the next several years, many of them major taxes. if you have a flexible savings account on january 1 -- this isn't the fiscal cliff. this is what obama has already baked into the cake. your flexible savings account will be trashed by taxes. millions of special needs families will find their taxes go up. if you're really sick, you can't deduct as much of your health care costs as you used to. these are all the ways that obama 's raising taxes , $1 trillion, $1.1 trillion, over the next decade. five major taxes. his new taxes are not off the table. they hit directly into the middle class . medical devices . when you go to the hospital, medical devices like riding in a wheelchair will get more expensive because of this tax. i mean, these taxes are damaging. he wants to make them permanent.

>> i think grover knows that the major source of additional taxes is part of the affordable care act is asking higher income individuals over $250,000 to pay higher capital gains and more on their medicare contribution. that was the bulk of the taxes. so to suggest that this is a big tax increase on middle income americans is just not right. the president's proposing that we extend tax relief for the middle income americans. that's what we've got to do.

>> if you have a flexible savings account , you're being damaged.