Bowlessimpson proposal. Erskine bowles saying the gop offer does not represent the plan, he says both sides are kind of far away from it at this point and that its now up to negotiators to figure out where the middle ground is today. Bowles said that the mid point that i used back in this is where we were last year. So used the mid point of the negotiations, but its in longer the mid point i guess. He also said he is a testimony, but he has separated himself from the administration by saying that they thoo should have taken more of their proposals more seriously. He also said last night that you will see higher marginal tax rates. Higher marginal or effective . Higher mar begin ginal rates talking about last night. Thats part of the 500. He thinks as part of the compromise to get there, youll have to see the democrats get their way in terms of higher marginal tax rates. He also said that the republicans should be able to see higher entitlement cuts, that that should be part of this conversation. Obama doesnt listen to him at this point. Do you see how this is on . Its as tenuous as the talks themselves. Leechb one way or the other, it falls off. Anything the Slightest Movement respect, and the cliff were not rising above. Youre getting a hum on my microphone . Im fine. The audio guy. Interrupts the show to tell me there is a hum and there isnt a hum. I appreciate that. Also senator harry reid says that republicans need to, quote, get serious. Both sides are saying this, both sides a lot of kabuke theater. Everyone got disgusted. Nobody needs that image. The fiscal cliff will certainly be one of the main topics of discussion when president obama meets with some of the nations governors today. Actually i think theyre meeting with Vice President biden. Then governors will be meeting with some of the congressional leadership, as well. But you guys are watching this, we know this is drama and theater. Do you think a deal gets struck at the end of the day . I do. I have to say, i still think well get a last minute deal. I just cannot imagine that congress will allow to us go over the cliff. So i think the ramifications for the economy are too significant. I think were watching whatever you want to call it, all of the politics playing out, but i still think in the end well get a last minute deal. I agree. And i think even though the sides are far apart, you have things on the table now. So you can say youre here at 800, 1. 6, you kind of it gets you somewhere close. Somebody will try to say 1. 3 versus 1. 1, but if you see publicly what theyre stating and hopefully privately other things are going on, but it will get done, but it will be very slow. John boehner with the proposal he put on the table, i did see commentary from some of the far right saying this is not an acceptable proposal. Even his proposal is not acceptable. I did see comment it ter that came through. My question is does the president now have to alienate some of his far left base in order to reach a compromise. I think youll see both of them have to actually bring the parties together. Because you wont get everybody happy. Some of the people who got voted on the ticket side, no, never. But it will all be negotiations. Howard dean wants to go over the cliff. He says thats the best way to accomplish what they want and a lot of people on the right that are start to go say that. So i dont know. I dont necessarily think that americans for prosperity, the note i saw yesterday saying speaker boehners counteroffer leaves conservatives wanting. Howard will tell us today, but hes on the record as saying i make the argument going off the cliff, i call it the slope, is the best deal progressive democrats are going to get. And i think that i dont think the president will alienate them. I think hes going to throw in his he said no people on the far right who have said its better if you go over because then youre in a situation where and you are lowering taxes rather than raising taxes. The bottom line really if youre on the right, you know if you really want to go up on the top 2 , fine. Well go up on everyone and actually accomplish something. If you go back to before bush tax cuts, three quarters of the deficit is gone. It was supposed to sunset two years ago. When is a good time to let those things sunset . Youre right, theres never a good time. Maybe do something with the sequester, but let the tax cuts expire. Although i have to say at this time its too much i think in terms of the tax increase. We never want any pain. Youre right. And we do need to get our fiscal house in order. But again, this is why the idea would be to come up with a longer term plan where you could scale some of these things in and you have to come up with a plan that youll stick to, otherwise you get into this where we never stick to anything. If we get another deal that is toothless and the markets will become even more skeptical because weve seen this before. But i have to say two things. I dont necessarily buy into the deal that theres a fiscal slope. I have to say on the tax side, one of the things we keep talking about is the amt. Boy, thats something that will howard goes on and on. Clinton tax rates on everybody. Will it cause a problem . Yeah, short recession, but we get defense cuts which republicans would never agree to otherwise, there are Human Service cut which is we wont like, but the least possible damage. And its a serious down payment on the deficit. The wall street people ringing their hands are really full of it. Im not sure what. But full of something because theyre going to see a big drop on wall street but it will come roaring back because somebody has done something. So you have him and all their friends and the right and all their friends and the president who i dont think if he can ever get out of campaign mode. Its a full on campaign again. Putting one party into youre right, the amt will hit more people in the middle class and raise their effective tax rate to a higher rate than they were today. And you wont you have obamacare 4 on everyone, too. If you lieu numerically, it doesnt make sense if one side says were not going to race taxes on the middle class although republicans would probably bear the brunt of the blame for what would happen if we go over the fiscal cliff. The president is counting on that. Which republicans . Boehner doesnt get some of these guys go back to the auto parts shop where they came from before they were a tea party republican, wherever they you cant its not a monday know lit. You cant get mad at the house. People pointed out some of the republicans were there and congress dont care. No, why would they . I dont necessarily think president obama cares that much either. His leg legacy is about obamacare, redistribution. And you cant control the economy. You can divide the pie better, but it will have these cycles. Bush messed things up. I did the best i could, but hell redistribute and that will happen, well spread the wealth around. And i dont think he cares that much about it. You dont think he cares about his chief of staff during the cry says said youll be this is job one, the crisis. And he go thats not enough. He wants to be transformative. I dont know. Well see. I asked the first time around why isnt he more concerned with job growth, private sector, business, the economy. He is putting more stimulus in. Thats smart. 25 spending or im saying that will be the line you get from the white house, that were putting more stimulus into this, were looking to protect the middle class to make sure they can continue to spend. At 25 of gdp, i wouldnt think about anything except trying to rein in government. The truth of the matter, whats a starting to happen is that international investors, the fact that we cannot govern is going to really come home to roost. Gld man says this is the first time hes seen people take it out of american markets. Its he supposed to work this w way. They cant govern either. I was so hopeful, i wasnt obviously thrilled with the election results, but i actually thought that result might be the result we needed to get thefshs done. In a way you you have the situation where you extend 98 but not the 2 . Believing that story is so either raise them on everyone or raise them on either it will hurt the economy if you raise taxes or its not. On 98 it wont hurt, on 2 it will well have more on this argument. In the meantime, lets talk about some of the other headlines. Financial firms are gathering for the Goldman SachsFinancial Services contractors. A key presenter is brian money tha moynihan. We talked about his reports of planned fee increases. Plus there was the issue of president obamas likely pick to follow tim geithner at treasury. We talked about how buffett threw out jamie dimons name. Here is what moynihan thinks about that idea. I wont give individual names, but i think what warren is expressing a view which i agree with is that we need to have very bright, very talented and very broad experienced people help push this thing forward. Because its very difficult right now because of just the amount of stuff that can go on every day. Dont miss his take on the fiscal cliff. Time for the Global Markets report. Ross westgate standing by london. And then i say kelly. Is that its me. Im here. Were flipflopping kelly and i. We were ready no anything there. I introduced you, but then i tossed to kelly. So thats the way well keep it from now on. Consummate professional. Hedging your options. Advancers barely outpacing decliners. Very slim gains on the equity markets. But it is worth pointing out ft ftse 100 up nine out of the last ten sessions. Ftse flat now. Xetra dax up a quarter. Cac 40 up around two thirds. Ibex up half of 1 as well. Spain have officially applied for bailout money. It is keeping yields well contained at the moment. 5. 25 . A long way below that 6 level. Italian yields also very well contained. Lower today 4. 41 . And the betting now is can spain keep from having to go for an official omt bailout to beyond the german elections which is scheduled september to october next year. So thats the game we play despite they have will have i issuance in 2013. Gilt yields, chancellor statement coming out tomorrow. Construction pmi today a little bit weaker. Concerns over the uk economy. So well see how investors take to whats probably going to be a loosening up of the budget targets the chancellor set when they came into power. So well keep our eyes on that. And at the moment today, more talks in brussels. The greeks now getting their buy back program approved 37 trying to sort out a single supervisor. I think these talks will be fairly tricky because there is a majority who bt with a tant the be supervisor for all the banks. German didnt like that. So those talks will go on longer than originally hoped. But we are marginally higher going to the u. S. Open. Thank you. Kelly, thank you. Ill just call you r kelly in now. Thats not bad. Ross, thank you. Great to see you. When we come back on squawk, bank of america Ceo Brian Moynihan in his own words, we caught up with him yesterday to talk about business, the economy and the looming figure. As we head into a break, bank of america, best performing dow component of the year. Up about 77 . 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Because taxes will be higher next year. Youre seeing people with if you have a large position in a company, this is probably the right time to take it. If its a large percentage, 10 , 15 , 20 of your net worth, sell it now. And if youre planning to retire in the next three to five years, youre probably better off doing your allocation change thousand than you are saying this might be awful next year, too. Isnt moynihan going to if we go over the cliff, its not going to be a great year for stocks. It wont be a great year for hiring. Lefts already started. Everybody is hiring temporary workers. Theyre not buying. Theyre leasing. You have more up front costs because youre trying to defer any long tirm purchase. But thats been happening now for two months. So you can look at the other way and say if we actually get a resolution, you might have more certainty which were all looking for and companies saying you can actually make a capital projection as opposed to really cant do anything because i dont know what my regulations and laws will be. I do think thats become actually more of a consensus type view which is that if we were to be able to find some resolution, get a little bit more certainty, there is some pent up demand on the hiring side, on the which is i inbusiness investment side. You may actually see growth at 3 say. Businesses will invest. Consumers still have the ability because housing has helped them with the tail wind and youre seeing it in the auto cycle, you saw the sales yesterday and youll see it increasing because Interest Rates are low, gas prices have come down, but businesses have the pent up demand and they didnt want to spend it because they dont know whats going to happen. Lets bring in some of the sound from Brian Moynihan. We talked about a lot of things including the looming fiscal cliff. Talked about Business Concerns as you head into the end of the year and even what to expect in 2014. Bank of america has 55 million customers here in america. They represent one out of every two households. So moynihan has a very good idea about what consumers are doing and if they spending less because of the fiscal cliff. Heres what he had to say. Im more about business behavior than consumer behavior. People continue to spend, housing is a little better. All the things that affect stock market are in decent shape. The question was will everything going on cause them on slow down again. What are you you see rg businesses right now . Almost a year and a halving a go, businesses getting concerned about the nature of the dialogue about the fiscal situation . Washington and in europe and the issues that had to be dealt with long term and how it affects near term business in terms of what would be accelerated appreciation for investment in business. What will be the final demand. So the uncertainty factor started weighing in and caused everybody to be much more cautious and continue to be more and more cautious worried about what might happen next. Youre a member of the fix the debt organization. Youre worried about what happens if we go over the fiscal cliff. Play out the scenario for how things would go down if we actually do move past january 1 without an agreement. If you get lots of economist projections, youll see the general view is the economy would have negative growth or a couple percentage points, whatever it is. Near term recession impact. And that nt would be good to the economy because its been moving its way out. Whats really after people is will we be serious about fixing the long term problems of americas fiscal situation. Basically having more revenue and less expenses so we can get the thing more if line. And thats preoccupying people because theyre worried about the longer term issue. If this doesnt move forward with a solution that actually starts to layout the ground work for the long term issues, it could be potentially disappointing. Ceos say they have to lay out their plans for what theyre planning on doing in january and they have to move forward with the plan that has an assumption that we dont get some sort of a solution. Do you hear that from your clients . Yes, absolutely. So i think its not january. They were forming these plans in august and september. So even leading up to that, people are becoming more conservative and i think thats had an impact on what the growth will be this 13 all things being equal and i think were in danger if this strings out into 13 that you could start to have problems of what 14 would look like because they make their budget in a half year, corporations make their budgets early fall, and the decisions are should i build a plant, add new equipment, all that is pretty much done right now for 13. And you really talk about what happens next. And so my concern is we need to get a solution that has both theyre term fixes for lack of a better term and longer term viewpoint that theyll be serious about if you get the confidence to have people actually speak about 13 into 14 being a very structure difference year. Youve been to washington, youve spoken with lawmakers about this. Have you told them these concerns about the short term fix and what it actually means . I try to do two things. Were a big company. We have 270,000 people. But i say put yourself in the shoes of one of our clients thats a Manufacturing Company with 500 people and the amount of things that they nas. It theyre probably more global than they were many years ago. So theyre worried about whether china will go grow as fast. Then you have the United States uncertainty. Suddenly they pull back. And then they dont know the personal tax grow, and they pull back. So what i try to talk more about is what our clients see than what we see. Because what i think we add value, we see 30,000 Market Companies in the country and by hearing from them, we can help arctic could you what the what theyre seeing and how theyre behaving. That is one of his huge concerns that at this point, its too late to save anything with 2013 blaurly for Small Businesses and their plans in terms of hiring. For 2014, you could be tinkering with that at that point if this pushes in to 2013. And takes thats the biggest t took away. Were really threatening 2014, too. I havent heard so much that about the fiscal cliff. It was not just the fiscal cliff, it was time after time, the start of the debt ceiling talks and then they get pushed off, these are temporary fixes and it keeps coming. I guess one of the things that we kind of focus on is what happens after the fiscal cliff. Because that just maybe gets you over the hump. This may be just a temporary fix to give them time to work out in 2013 perhaps a bigger deal, a grand bargain. But what