shouldn't "fall on its sword to defend a bunch of millionaires." I don't think he got the Koch brothers' approval for the claim he made this Sunday, which is that there are a lot of "tea party" guys that "don't care that much if a few millionaires pay a couple percent more in taxes."

Tell that to their leaders Bill. That seems to be all they care about. These AstroTurf groups know who they're beholden to and who is funding them. Of course he qualified that by saying they'd accept it because it would lead to the "grand bargain" they're all pining for and tax rates being lowered later as part of that deal. So I don't think he's completely off the reservation as Bob Woodward asserted here. The truth of the matter is, Republicans are not bargaining from a position of strength right now, and Kristol and the rest of them know it, whether they're willing to admit it or not.

Here's the exchange from Fox News Sunday:

WALLACE: And let me explain what came out of the meeting on Friday, is the idea, is a two-step compromise, that there is a down payment and there's talk about $50 billion, perhaps, by the end of the year and, then a promise with triggers they would achieve a grand bargain -- heard that word before -- next year, major tax reform, major entitlement reform.

Bill Kristol, how realistic is that two step approach.

KRISTOL: I think it is pretty realistic. I think -- and I think Republicans are going -- there will be a deal by December 31, and I believe Republicans will yield a bit on top rates. I mean, President Obama ran twice on this platform and he won last I looked, both presidential elections.

He's...

WALLACE: What was the reaction - you made a lot of news last week when you said it wouldn't kill Republicans to raise the top rate. In fact, as you know, you were favorably cited not by name, by the president during his news conference. I'm sure that shot your credibility...

KRISTOL: That was bad. That was a bad moment. But you know you've got to persevere, even when these things happen.

WALLACE: What was the reaction among Republicans?

KRISTOL: The private reaction one Republican congressman was honestly, including very conservative ones, was, I don't know, do we really have to give anything - I guess maybe we do. Maybe it was good that you said that, because we need to cut a deal.

He won two elections. He didn't raise rates correctly in 2009 because we were in the midst of a horrible downturn. Republicans won a huge off year election in 2010 and were able to bargain to a status quo deal. I just don't think Republicans have the leverage, or that it's worth using all their - whatever leverage they have, to maintain rates at 35 percent instead of 37 or 38, especially if you can take it up to millionaires.

I just don't think it's economically as a matter of policy important enough.

Then the big deal has to be big tax reform with lower rates, I think.

WALLACE: 30 seconds left, Bob. And this was the subject of your book. How optimistic are you that they make a deal and avert the fiscal cliff?

WOODWARD: well, let's hope they do. But they are going to burn Bill Kristol's Tea Party card hearing him talk like this. You are off the reservation.

KRISTOL: You know, a lot of the Tea Party guys don't care that much if a few millionaires pay a couple percent more in taxes, honestly.

WALLACE: But are you optimistic.

WOODWARD: Well, you have to - because if this isn't fixed we're going to have a global catastrophe.

WALLACE: On that happy note, thank you. See you next week.