super committee, if they'll get it done. let's go "outfront." good evening everyone. i'm erin burnett. we're in countdown, counting down to a tax hike. congress has ten days to reach a deal that will keep american taxes from going up on january 1st. if they fail to agree, the average american worker will lose $40 a week. under fire today, republican house members who rejected a deal that would have extended the payroll tax cut by two months. >> past the two-month extension, return to work on the year-long ic extension, or else explain to the american people, 160 million, why congress would not listen to them. >> the speaker in turn went before the cameras to make his point. >> we're here. we're ready to work, looking for our counterparts to sit down with us so we can do what the president, bipartisan leaders in the house and senate all want. that's to extend the payroll tax cut for one year. >> deja deal. if everyone wants to make a deal, why do we not yet have one? let's asking republican jeb hensarling from texas, co-chair of the deficit super committee which, of course, sir, i want to talk about. let me start first with this payroll issue. how is this going to end? >> well, i wish i knew, erin. my mother-in-law says the least you can do is show up. we're waiting for our democratic colleagues to at least show up and negotiate. what's a little bit ironic here is that there's only one body of congress that has given the president what he claimed he wanted, and that is the house. the house passed a bill that extends the social security payroll tax holiday. for a year. the senate didn't do that. the house passed a deal that ic tended the extended unemployment insurance for a year. the senate didn't do that. the president said, we need to work over the holidays. we have members of congress in washington right now tonight waiting on their democratic colleagues to come and work. it's ironic that it's the house that's giving the president what he says he wants. yet he criticizes us. i hope we can get this done. it's also ironic, the reason we're here, frankly, is because the president's economic policies have failed and unemployment remains at or near 9%, and the american people suffer. they need this. they need the temporary social security payroll tax relief, particularly at this time of year, and i hope we can give it to them. i don't understand -- >> the president wants that and you want it. >> i don't know if they do, erin. >> he said he does. why do you say he doesn't. it seems the disagreement has been on how to pay for it. i'm also curious as to your view as to whether you think john boehner has failed in his job, since the senate said they had a deal they could get through the house. he's the one that told him that. is it his fault? >> no, it's not. we wouldn't be here if the president's economic policies had worked in the first place. what we're saying is our constituents are having to work over the holidays. why shouldn't members of congress be expected to work over the holidays and get this done? since the dawn of our republic, the way we work out differences between the senate and the house is through something called a conference committee. we have our negotiators ready. the least you can do is show up. the american people are getting sick and tired of congress not doing its job. and kicking the can down the road, punting the ball, whatever metaphor or analogy, i don't understand, as you say, if everybody wants to get this done, then why don't we get it done? the republican house is open for business. we invite democrat senators to sit down and negotiate this and get this done on behalf of the american people. >> representative hensarling, let me just ask you, there's something that i wanted to read to you. this was from the s&p downgrade to america's credit rating which of course as we all know was painfully lost in august. they said this, quote, the political brinksmanship of recent months highlights what we see as america's governance and policy making becoming less stable, less effective and less predictable than what we previously believed. that's why we got downgraded. you were the co-chair of the super committee which was branded by many as a super fail. do you feel responsibility for the downgrade? >> what i think is that we've had policies and we're spending money we don't have. borrowing roughly 42 cents on the dollar, much of it from the chinese and sending the bill to our children and grandchildren. i guess i failed to convince my democratic colleagues on that committee who were good men and women of the gravity of the situation. listen, if we gave the president and the democrats every single tax increase that they have asked for, which we think will hurt the economy, hurt job creation, but even if we gave them every tax increase they're insisting on, that's about 10% to 15% of the problem. the american people are demanding some spending discipline and they certainly haven't seen it out of this president or out of the previous democratic congress. but right here, right now what we're trying to do is, number one, ensure that hard working american taxpayers get at least a thousand dollars of payroll tax relief where the democrats are offering 160. we're trying to give small businesses 12 months of certainty and not two months of uncertainty. we're trying to work through the holidays, whereas our senate colleagues want to go on vacation. that's the issue here and now. >> i get you, and i think everybody gets you in the sense that the two-month solution was a joke. it's sad that's all that could get through. the fact that the house said they wouldn't even do that and want to go back, frustrates people more than the two-month solution itself. i want to throw one thing out to you. just to get your reaction on this, i know you're frustrated on the spending side. on the tax side, if you let the bush cuts go away for everyone, you get $2.8 trillion. if you could do a deal like that and match it with $2.8 trillion in spending cuts, you'd have a grand bargain. what do you think? >> well, i don't necessarily agree with that. you know that republicans were willing to put tax revenue on the table, but we wanted to do it like every other bipartisan effort had done it, and that is through the pro-growth tax policy, where we lower rates but we broaden the base and get rid of all the special interest deductions and loopholes. we want to do that. again, erin, i would say give the president every tax increase he wants. snap back to the '01 and '03 rates. that doesn't solve the problem. in many respects it's a diversion. it is spending. >> it may not solve it -- >> the deficit is the symptom but spending is the disease. then you'd simply, erin, have more taxes chasing more spending. listen, some people would be willing to do that if you solved the spending problem. show me the spending discipline and ultimately you're going to -- >> are you one of those people? if i was on the other side and came to you with spending cuts, would you be supportive of those tax rates going back to where they were which, to be honest, are still among the lowest tax rates in american modern history? >> well, i got to tell you, for our business entities, particularly our corporations, we have the second highest corporate tax rate -- >> i'm talking about the income tax rate, the 35 to 39.6, the individual, separate from the corporate. >> well, no. i don't believe -- particularly in this economy, you ought to be raising taxes on anybody. again, there's a difference between raising tax rates and raising tax revenues, and it's pretty clear again -- we're on the record saying we want fundamental tax reform, something rejected by the democrats and the so-called super committee. right now what we're talking about is trying to get some payroll tax relief to the american people and create certainty for the small businesses that have to administer it and were just somewhat incredulous after delivering to the president what he claimed he wanted to be criticized. really there's a simple choice for the american people. should congress work over the holiday? should congress not work over the holiday? should we kick the can down the road, punt the ball down the field? or should we get a 12-month agreement here to get this done. then should we do it in a way is that works? if i could, let me read you one quote. the democrats in the senate didn't talk, didn't talk to the american people who have to do this. national payroll reporting consortium. these are the people -- >> this is the thing about not being able to implement it by the 1st of january. >> a two-month extension could create substantial problems, confusion and cost affecting a significant percentage of u.s. employees and employers. just one more, then i'll get back to what you want to talk about, but the associated builders and contractors, the people who supposedly do all the shovel-ready projects said, quote, this sort of temporary fix underscores congress' uneven ad hoc approach to the economy and causes more harm than good for america's job creators. my point is, we owe the american people a work product, but we owe them one that actually works. >> my point is, a lot of people hear you tonight and say how can you say that? you were part of the problem? it's hypocritical to hear that out of anyone's mouth, especially someone who was the co-chair of the super committee. $1.2 trillion is what you were supposed to cut. that wasn't a lot of money. you know it. i know it. how do you feel, when i express the frustration of a lot of people, come on? how could you say those things? >> i don't know. i was just talking about payroll tax relief. if you want to talk about spending, i think my record is quite clear. again, i did something that most republicans had not done. i was willing to put tax revenue on the table. the problem was i didn't see the democrats. again, these are good people acting in good faith. ultimately they weren't willing to do what was necessary in reforming our entitlement programs that are growing two, three and four times the rate of the economy. so, again, i don't know. we were willing to negotiate in good faith, but unfortunately that effort failed. i'm sorry that it failed. right now what we're talking about is are we going to get a thousand dollars for the average middle income family or are we going to give them 150? are we going to ensure that small businesses can apply this, or are we not? are we going to work over the holidays like our constituents do or are we going to kick back on vacation for two weeks? house republicans want to get this done for hard-working american taxpayers and we want to get it done now. >> thank you very much, sir. we appreciate it. i got to say, i get so upset and frustrated. like so many americans, i want washington to work. >> you and me both. >> i think it's a great country and what's happening is upsetting. let's bring in john avlon. i am upset. i know they want to get it done but they don't compromise with all of them who do want to do the right thing, but they don't compromise with each other. >> that's right. and in this case, what you heard there was spin in a vacuum. he's talking about kicking a can down the road and he wants to stay focused on the payroll tax cuts. that's fine. he's talking about deficits and debt. i believe the congressman sincerely cares about that. >> yes, he does. >> he had two chances this year to do something, deal with the deficit and the debt. first as a member of the bowles-simpson committee and he voted against the recommendations. if he and his colleagues voted on it, it would have gone down to congress for an up or down vote. after that failure he got picked to co-chair the super committee. he failed there as well. that's kicking the can down the load in a huge way, much more important to our fundamentals economies and our fundamentals than the payroll tax cut alone. when they talk about political brinksmanship, it's got jeb hensarling's face on it. >> that was it. no one wants to take the blame. >> that's right. >> it's a human problem. but right now it's a problem hurting the greatest and biggest economy on the planet. john avlon, thank you very much. 12 days to go to the iowa caucus. ron paul is leading in the polls, the fifth candidate to lead in iowa. will he win? 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and spawned a a twitter page and website for users who want to avoid long distance charges. this morning when we suggested calling the number live on the air, we were told not to, due to legal rights and clearance issues, a big issue here. sometimes you just need to hear "private eyes." >> welcome to call and oats. your emergency hotline to hear one-on-one, press one, to hear "rich girl" press two, to hear "man eater" press three. to hear "private eyes". ♪ i see you and you see me >> i'm watching john avlon. ♪ oh girl, you got to know >> in the race of the iowa caucus, this week the winner is ron paul. a new poll has ron paul taking the lead over newt gingrich, 28% to 25% with just 13 days to go. this makes him the fifth candidate to take the lead in iowa which is apparently is a state that cannot make up its mind. out front tonight is gloria borger, cnn's chief political analyst with ron paul today in iowa. john avlon is with us and brian doherty who is writing a book on ron paul. let me start with you, brian, first. what does it mean for the republican field if ron paul wins iowa? >> they should all be running scared. it means the republican party is facing a serious change. that's actually going to have to face up to its responsibility to really be the party of constitutional limited government, to actually say we can cut a trillion in spending in one year as paul has proposed, to say we can't project our military force overseas recklessly and be a limited, affordable, debt-free government. it's going to be a real wake-up call to everyone across party lines because no one is saying what ron paul is saying. >> wake-up call, john avlon, but is this something he can sustain or does this mean if ron paul wins, iowa becomes less relevant? >> it would certainly shake up the race. it's unlikely it would continue. remember new hampshire is the live free or die state with a huge libertarian population. the way, i think to understand this, a vote for ron paul is the ultimate anti-establishment vote. that's been one consistent we've seen over the past year, a lot of anger at the establishment. >> people joining and people very loyal to ron paul over the years. gloria, you spoke to some incendiary newsletters attached to his name in the '80s. let's listen to that. >> not all the time. on occasion, yes. >> did you ever object when you read them? >> we talked about this twice, cnn has. go back and look at what i said on cnn. and what i've said for 20-some years. 22 years ago? i didn't write them. i disavow them. that's it. >> but you made money off of them? >> i was still practicing medicine, that's probably why i wasn't a very good publisher, because i had to make a living. >> it's legitimate. these things are pretty incendiary. >> because of people like you. >> no, no, no, no, no. come on. some of the stuff was very incendiary saying in 1993 the israelis were responsible for the bombing of the world trade center, that kind of stuff. >> good-bye. >> all right, all right. thank you, congressman. i appreciate your answer. >> you were very gracious. he was very defensive. >> reporter: well, look, he clearly believes, this is something that happened 22 years ago. it's irrelevant he believes to the race. we ask these questions because that's our job. this newsletter went out under his name. he says he was not involved with it, nor did he read these or approve of these statements. but this is the kind of scrutiny you get, erin. you know this. this is the kind of the scrutiny you get when you become the front-runner in the republican field. so he's going to have to answer lots of questions like this. >> what do you think, john avlon? what gloria was saying at the end, saying israel was responsible for the world trade center bombing. >> that's so far off the reservation. >> a very bizarre thing to say. >> beyond the fringe. >> gloria's interview was great. she was gracious and persistent. if you're the front-runner in iowa, you get that scrutiny. you can't dodge or say it's an old issue. if those incendiary remarks went out under your name in a newsletter, that's a fact when you're a front-runner. a totally appropriate question. >> brian, do you think he can get beyond that to a mass audience? >> yeah, because that stuff, a, he didn't write it which he said over and over again and, b, it has nothing to do with what he's been running on this time and last time. his enormous new wave of fans don't care about that stuff. they're interested in a president who actually stands up for civil liberties, who doesn't believe the president has the power to unilaterally assassinate or detain anyone he wants, who is actually going to bring the debt under control. those are the issues he's running on and what voters care about right now. and need to. >> ron paul getting a lot of attention. go ahead. >> those are the issues that are resonating with the iowa voters. i was at a town hall session with him today here in mount pleasant. it was jam packed. when ron paul spoke about big government, spending too much, having too much power, this is a candidate here, you can tell why he's doing very well, he receives a standing ovation. clearly that anti-establishment, anti-washington, anti-government message has a lot of resonance here. >> let me ask you about newt gingrich, sliding to second place in iowa. it may or may not have something to do with some campaign ads launched recently. earlier today he and governor romney had some words. here is that. >> speaker gingrich has had a few less than generous things to say about me over the campaign. i'm a big boy. that's the natu