STEPHANOPOULOS: One thing that is also coming on quickly are all these negotiations over the fiscal cliff. If congress doesn't do something, we're going to have tax increases on January 1, spending cuts on January 1, more than $500 billion likely to cost every American family about $2,000.
Senator Murray, let me begin with you, we have already heard from the speaker and the president. Speaker Boehner says tax hikes aren't acceptable. President Obama says he won't sign any extension of the tax [cuts] for the wealthiest Americans. We've also heard from Senator McConnell, the Republican leader in the senate who says he will not raise taxes to turn off those spending cuts, the sequester.
So if Senator McConnell and Speaker Boehner don't bend, do you still believe the president should go right up to the brink, go off the fiscal cliff and allow the tax cuts to expire?
MURRAY: Well, here's where we are, our country has a tremendous debt and deficit problem. We also have a challenge in making sure that we educate our work force. We need to make sure we care for our veterans who need that care today. We need to have research. And we need to be able to compete in a global marketplace, those investments are important.
Everyone who has looked at this, including the supercommittee that I served on, said we need to have revenue as part of the solution to this problem as well as looking at entitlements and spending cuts. What has been the missing ingredient is congress to date has been the revenue and to make sure that it is fairly distributed and the wealthy pay their fair share. That is what we face right now. If our Republican counterparts can step forward with that revenue piece we will be able to find a solution.
STEPHANOPOULOS: And if not, go off a cliff?
MURRAY: Well, clearly, we have the ability between now and the end of the year to not go off the cliff. But we can't accept an unfair deal that piles on the middle class and tell them they have to support it. We have to make sure that the wealthiest Americans pay their fair share.
We just had an election where President Obama ran on that. We increased our majority in the senate with Democratic candidates who said that so solve this problem the wealthiest Americans have to pay their fair share, too.
So if the Republicans will not agree with that, we will reach a point at the end of this year where all the tax cuts expire and we'll start over next year. And whatever we do will be a tax cut for whatever package we put together. That may be the way to get past this.
Notice the stipulation that we're going to make more demands on the middle class? Again: We are not starting from a level playing field. The economic security of working and middle classes has been absolutely devastated in this recession. This continued mantra about a "balanced" deal makes as much sense as asking a rape victim to pay for her rape kit. The Democratic caucus has been consistent about their message -- don't buy it. (As my nana used to say, "The fishmonger never yells 'Rotten fish for sale!'")
STEPHANOPOULOS: And Senator Chambliss, you said there could be riots in the streets if this isn't done right. So what is the right way to do this? You just heard Senator Murray say the defining principal for the Democrats, the president has said exactly the same thing, is that the wealthy are going to have to pay more.
CHAMBLISS: Well, what's going to have to happen, George is, that because there's no silver bullet, as was discussed in is the Simpson-Bowles commission and ultimately a recommendation of the Simpson-Bowles commission to do this -- we got to look at cutting spending. We still spend way too much money in Washington. What is choking our economy and what is choking the economy of Greece, and this is why I referred to it the way I did, even though it was a figure of speech, but, entitlements are choking us. And we've got to make the real right kinds reforms there to make sure that we do it right, that we protect these programs.
And then thirdly, listen, Speaker Boehner said it I think very well, I thought he showed great leadership by saying that revenues need to be on the table.
Again, we need to do it in the right way. Bowles-Simpson said, look, eliminate all these tax credits and tax deductions. You can generate somewhere 1 to 1.2 trillion in additional revenue. You can actually lower tax rates by doing that. And I think at the end of the day, what's got to happen, George, we've got to get this economy going again.
We have had an outside group, Ernst & Young, look at the raising of the taxes on the highest-income earners. What they concluded was we immediately lose 700,000 jobs in America. Now, is that the kind of economy that this president wants to start out with in his second term? I don't think so. President Obama said two years ago, now is not the time with a sluggish economy to raise taxes. We need to consider the fact that the folks who he's talking about raising taxes on are the job creators, the small business community. So there's a right way to do this and there's a wrong way to do it. And Speaker Boehner was absolutely correct, that you do have to have revenues on the table, but that does mean raising taxes. There are other ways to do it to get the economy going.
Let's take a little break and read something from that well-known Commie rag, Accounting Today:
The study is based on several assumptions, however. It assumes that the top two tax rates would increase from 33 to 36 percent and from 35 to 39.6 percent. In addition, it assumes the reinstatement of the limitation on itemized deductions for high-income taxpayer, known as the “Pease” provision. It also assumes that dividends would be taxed as ordinary income at a top income tax rate of 39.6 percent and there would be an increase to 20 percent in the top tax rate for capital gains. In addition, it assumes an increase in the 2.9 percent Medicare tax to 3.8 percent for high-income taxpayers and the application of the new 3.8 percent tax on investment income, including flow-through business income, interest, dividends and capital gains.