let's go out front. i'm erin burnett. breaking news, federal failure. gridlock reigns in washington once again. the payroll tax cut proposal passes the republican house. so why do we say failure? well, the republican bill included a controversial oil pipeline that the president has said he would veto. so pass, smash. we're at square one with congress playing chicken with the clock. there are just 18 days left until the tax cut expires. if it does, the average american will pay about a thousand dollars more in taxes next year. now, this may not be economic armageddon. but because the tax cut is popular for everyone, both parties want to pass it. so why are they failing? the bottom line, in one afternoon we found a way to compromise and get this done with the help of robert and williams at the nonpartisan tax policy center. here goes, what we call a decent proposal. if you extended the payroll tax cut for only people making under $75,000 a year, the price tag would be about $48 billion. that's less than half of the cost of extending it for everyone. we can pay for it with two things. charging mortgage lenders a little bit more, and charging millionaires more for medicare. that's called means testing. this compromise actually avoids the two issues that ds and rs made third rail toxic no comprise zones. the pipeline, why this house passed bill at this instant will not pass the senate and will get a presidential street yeeveto. senator rand paul is a republican from kentucky and he joins us tonight. senator paul, good to see you. >> good to be with you, erin. >> what do you think about our decent proposal. >> you might want to run for office. that's a pretty decent deal and i could probably support that. the interesting thing is i think your characterization of the pipeline is being controversial or not being part of compromise, i would disagree with that because many democrats do support it. it is a way to create energy jobs in our country, 20,000 new jobs. the afl-cio, not typically a republican organization, supports it. there is some bipartisan support for this and most of the democrats, senators in that region of the country, are for it. >> and there are some and obviously -- i talked to some people who live around there, who are republican, who are concerned. but i hear your point. there is some bipartisan support for that. but given that there is not enough and that the republicans know it is a deal breaker to put it in there, why bother? >> well, you know, the compromise is in the view of the beholder. for example, social security is $6 trillion short. i think reducing the revenue stream into the social security trust fund is a mistake. but i'm willing to go along with this if it is paid for and if it will create some jobs. so putting a pipeline -- allowing the pipeline to be built in the united states, which is allowing energy production and transfer of energy to something that helps me come on board, it is part of what i consider to be the compromise because i think reducing the funding for social security is not a good idea. >> but how does the pipeline pay for the payroll tax cut? >> well, it ends up bringing into a job creation and we have had a payroll tax cut for a year or so now. and we really haven't had much job creation. we have lost 2 million jobs since president obama came into office. so really what he's been doing hasn't been working, he's been making it worse. >> so -- but those jobs, however many there are, and i've seen the numbers, they could be significant for the pipeline, but it takes a while, right, to have that actually pay for this tax cut. so in the meantime, in the meantime, what would you put in there? like we said that decent proposal where you had the mortgage lender idea and means testing of medicare, there is a lot of ways to do it as i'm sure you're well aware, right, new rules for retirement benefits, pay freeze, all those things would get you there. pick or choose. >> the means testing for millionaires was part of the republican proposal about a week ago. >> right. >> oom a big fan of means testing for medicare and means testing for social security. i like your idea of only applying the payroll tax cut to the lower wage earners. i think there are ways we can target things and those do sound like compromises that would take facets from both sides. you have to keep the big picture in mind. social security is $6 trillion short and you are reducing the revenue stream for social security. overall it is bad policy. >> and obviously referring to the fact that the payroll tax itself funds social security. senator paul, are we going to get a compromise here by the time the clock runs out and the clock really runs out at the end of this week because people want to go home for vacation. >> right. well, they have already passed a spending bill in the house and it is ready to come over. really it is the democrats who are refusing to compromise because they won't allow a vote on the spending bill which would allow the government to stay open. we're willing to keep government open, we're also willing to find a payroll tax compromise. i think there is a compromise out there we could find. i don't think putting in the pipeline in there and saying that's not compromising is the correct narrative. i think the pipeline is part of creating jobs. the president says the payroll tax reduction is to create jobs, which it didn't do the last time, but he is still saying it would. and i do like keeping money in the private sector, but also think energy production is very important for our country and some have estimated if we actually began drilling more and mining more, we could create a million jobs in this country. >> and i've seen those numbers. but what i'm -- all i'm suggesting is that if you look at the situation as a voter, you say, all right, i may love or hate the pipeline or love or hate a millionaire surtax, but i know that neither one of those will actually pass, for better or for worse, right? why not toss them out the window for now, so you can get a compromise and get this payroll thing done. >> if this was something very esoteric, if the pipeline was something that one person out of 100 people in congress supported it overwhelmingly supported. if you had a vote in the senate and you allowed it to pass with 51 votes, you would probably get 55 votes tomorrow for that pipeline. there is at least seven or eight democrats who will vote for it and probably every republican. so really it is not something way out there that we should say, well, we'll never compromise on that. i think the pipeline passes on a straight up or down vote. let's have that. if they want to separate it, separate it out and we'll make it a separate vote and won't may the payroll tax contingent on it. >> i like that idea of stripping it out. i know the kind of first versus the second thing matters a lot. thank you for taking the time. thank you for coming out front. >> let's bring in gloria borger. what do you make of what senator paul had to say. all the rhetoric of the order in which you do things, but it seems there are compromises to get this done. >> sure. look, i think tonight what we saw is that republicans had to find a way to get to yes on this payroll tax cut because they know very well that they were handing the democrats an issue. if you're for tax cuts for the wealthy, why aren't you for tax cuts for the middle class? the speaker of the house understood that very well. so they throw in the pipeline, which is an interesting issue to debate because there is a political point to be made that the president put off a decision on this because it is a very tough decision. so he put it off until after the election. they want to force the decision. they think it is a job creator. the question that i have, that you are getting at with the senator is how relevant is the pipeline to the payroll tax cut. you know, you can put anything on a bill and say it is relevant because it creates jobs. but it was just a sweetener to get republicans to go along. so the idea of separating it out might make an awful lot of sense. but, you know, the president has threatened to veto, right? >> exactly. i'm just curious, gloria, if you have a tea party member like senator paul come on the show and say, look, i like giving the payroll tax cut to people who earn the least and not giving it to the wealthy. i'm on board with that. i'm on board with means testing medicare, which would essentially means the rich pay more. why don't the republicans do that and say, look, we're not -- stop with this class warfare talk. it seems like they're missing a pr opportunity. >> did he say he doesn't want to give it to the wealthy, though? >> he said he would do that compromise. >> but here's the problem with your -- the $75,000 cutoff, i think, which is that is that middle class? the president has promised to extend tax cuts for the middle class. and an argument can be made that was it a family earning $75,000 or an individual earner? it is not middle class, that it needs to go to, you know, higher than that, that the number needs to be higher or you would be leaving out the real middle class in this country. and so, you know, i think that's an argument the democrats would have with your solution. >> my point is you could find it. >> you know what, everybody -- i mean, everybody knows what this solutions are. you know that and i know that. means testing medicare, absolutely. raising the retirement age on social security gradually, absolutely. everybody, if you sat them in a room in a vacuum, they know what the answers are. they're just can't come up with them before -- this close to an election. they're hardly able to do it at all. but this close to an election, you know, it plays into presidential primary politics and after all, barack obama does want to get re-elected, i hear. >> all right, gloria borger, thank you very much. appreciate it. and viewerviewers, please let u what you think about our decent proposal. out front, nice newt three weeks before iowa. he says he has a kindler, gentler campaign and the latest polls crossing a few moments ago, that's next. also, our top secret drone in iran's hands. and google's eric sochmidt calls it a wake-up call. and which is a greater risk to the united states of america, iran or china? jon huntsman weighs in on that. 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[ male announcer ] yes, it is. that's the cold truth! amazon announced today that the kindle fire is getting an update to address some user complaints. some customers who purchased the fire say the power button is too sensitive, the touch screen isn't sensitive enough and there should be physical volume control buttons. on the positive side, customers seem very happy with the price, about $300 less than the cheapest ipad 2. they're also happy about the weight, which brings us to tonight's number. a billionth of a billionth. that's the difference in weight in grams between an empty kindle and a full kindle. according to john cubeitalis. his research is based on the fact that electrons hold iing energy means higher mass. it is estimated that all of the electrons required to make the entire internetwork weigh about 50 grams, which is about the same weight as a medium sized egg or a strawberry. time for our political play of the day with john. >> today's political play of the day is jump ball. we're talking about those 12 key bad battleground states up for grabs. these states aren't red or blue. they're purple. the swing voters determine who wins or loses presidential elections in america. back in 2008, president obama ran the table with swing states, catching all 12 of them. that accounted by an average of 8%, that accounted for his landslide electoral victory back in that presidential election year. but a new poll by gallop and u.s. today shows the president has real problems in the battleground states. if the election were held today, their poll shows mitt romney would beat president obama by 48 to 43%. and newt gingrich, similarly, would edge him out 48 to 45. smaller lead and within the margin of error. but this trend is not the president's friend. this is something that his campaign folks in chicago should be paying a lot of attention to and worried about. look at this. democrats in the key 12 swing states, numbers have gone down from 35% to 30% today. a 5% decline in affiliation. republicans on the other hand, they have stayed steady, flat lined, 27% to 27%. here is the real story. independent voters, the largest and fastest growing of this segment rocketing up from 35% to 42% of the electorate in the key swing states to date. that's where the president is having some problems. he's got to connect with the voters and so do the democrats. otherwise they're in real trouble. and voter enthusiasm. this poll shows that republicans 61% of them say they are fired up and ready to go for the presidential election. democrats are slightly underwater, 46%. the base needs to be stoked. at the end of the day, big picture, it is the swing voters in these key 12 swing states that are going to determine the winner of the election. the purple battleground states and democrats got to realize they got to make up through some purple haze and fight for the states. if they don't treat this poll as a major wake-up call, the purple states will be not their enemy, but -- not their friend, but their enemy big time. >> that's amazing. let's add to the conversation. good to have both of you with us. david from, what do you make of this, especially when in the general election the president beats newt gingrich handily, but mitt romney barely. >> needs to hear more purple haze on cnn, first of all. >> yes, that's true. that's what we're here for. >> look, this is going to be the fifth bad christmas in a row. families all across the country have been promising their kids, wage earners have been promising their loved ones, themselves, maybe next year will be better. five in a row since december 2007. the patience of the country is fading under the onslaught of unremitting bad economic news. and, of course, in large parts of the country, we're having a cold winter, that means heating bills. that is what is grinding the president. and he keeps giving speeches, but i can remember from the bush days, after a while, you can give the greatest speech in the world, people stop listening. they want to see the results and where are the results. >> that's true. but right now, i mean, john, he's doing better in the heads to heads which don't necessarily mean that much until you know who he is really running against but doing better than he was. >> that's right. nationwide. the two dynamics, it is how you're doing in the key early primary states, how you run the gauntlet. it comes down to the swings. that's why the independent number always matters the most. >> independents would be much more likely to vote for -- if mitt romney is the guy -- >> if the election were held today, a tougher sell for newt. one early poll showed mitt romney beating president obama 55-37. that's one of the reasons why some objective viewers say he's more electable. some republicans think newt gingrich is more electable. >> maria, what is your view here, especially since you've been through this and seeing what happens when you have -- in your case, hillary clinton and barack obama going state by state down to the wire before we knew who the nominee would be. >> well, i guess i'll say a couple of things, first to john's point about the swing states. this is not a surprise. this is not a surprise to the white house or this president. this president will be the first one to tell you and he has said it very recently that he thinks he's the underdog in this race. and the economy does make him the underdog in this race. so they are running like the underdog as they should be and what he is doing right now is what he should be doing, which is delineating the differences between what his vision is of a plan that will actually create jobs up to 2 million by independent analyses, his american jobs act, versus a republican plan, any of the plan that the gop candidates are putting out that will do nothing to create jobs and everything to continue to protect millionaires and billionaires. that's number one. the second thing i would say about all of the swing states is that many of those are in latino rich populations states. and right now the gop is in a lot of party with the latino community. and we know that no gop candidate can get elected to the white house without at least 40% support mongla teamong latinos. >> i'll have to hit pause there. interesting the gop has a challenge on the hispanic side. the president does too. that will be a topic for another conversation. thanks to all. next, a big box chain facing charges of racism and it started with the reality show. the backlash and a special guest ahead. plus, 'tis the season. we can't resist this story. all about christmas cards and wait until you see what we have in store for you. that will chae because it whitens by removing up to 80% of surface stains. see how it can change your life. crest 3d white. life opens up when you do. is best absorbed in small continuous amounts. only one calcium supplement does that in one daily dose. citracal slow release... continuously 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[ male announcer ] trade commission-free for 60 days. plus get up to $600 when you open an account. now a story we can't resist. even with the rise of e-mail, there are still some people, thank god, who send out christmas cards. politicians tend to do it. but british prime minister david cameron is in the news now for the people he left off his christmas card list. cameron's 2010 list was recently acquired by the british newspaper the guardian. and despite sending out more than 1400 holiday cards last year, some leaders didn't make the cut. not on the list, the leaders of syria, zimbabwe and egypt, and for some reason, vladimir putin did not get a card this year. nope. one person who was on david cameron's list was cana