i'm erin burnett, outfront tonight,a major concession the president and leading democrats will drop a surtax on millionaires as the way to pay for the payroll tax cut extension. this is a huge step in breaking the impasse that threatened the tax cut and may have shut the government down again. here is the bottom line. the ds and rs each fought for one big thing this payroll tax battle and that is a nonstarter for the other side. the surtax for the democrats and the keystone pipeline for the republicans. now whether you love or hate either one of those ideas, the fact was this, both were deal breakers. we've been saying this all week. and compromise really isn't that hard. here's the decent proposal we've been putting out there as an example. extend the tax cut for those makes less than $75,000. that costs about $48 billion. but you can pay for it by charging more to mortgage lenders and more to millionaires for medicare. it actually comes out even. and there's a lot of different pieces to this puzzle that will work. we are getting closer to a deal. the dems dropping the millionaire surtax, republicans also seem to be moving. here is tea party senator paul out front. >> they want to separate it, separate it out and we'll make it a separate vote. we won't make it contingent on it. >> that was a headline. so do we have a deal? something to celebrate in washington? senator kent conrad and chairman of the senate budget committee and a member of the gang of six budget cutters, senator conrad, great to have you with us tonight. the i don't know, i sort of feel positive. little butterflies in my stomach that you all might be moving towards a deal. are you? >> i think we are. and hallelujah if we are able to do it and do it in a way that's timely. we all know it is critically important for the economy to extend the payroll tax cut. it is critically important for the economy to extend unemployment benefits. the challenge, of course, is paying for it all. and i do think we're moving closer. >> and how then will it be paid for? obviously with democrats and the president dropping this millionaire surtax as a way to pay for it, that's a major concession. and i know republicans have put a few ways out there, some of which democrats appear to agree with like the mortgage lenders being charged more, perhaps even means testing medicare. do you think that we'll see some of those things in this and it will be fully paid for or not? >> i do. i think another idea that some have floated late this afternoon was to use some of the savings on war funding as the offset, congressional budget office has said they would score those savings because we will be spending less than is there, than is in their projections on work costs going forward because, of course, troops are coming home. so that might be part of a package as well. the thing that is a little disconcerting is that republicans in the senate don't want to vote on the plan from republicans in the house. and apparently one reason they don't want to is because they don't have many votes in their own caucus for that plan and perhaps part of the reason is it cuts 3 million people from unemployment assistance. so that would be a tough message to send especially at christmastime, 3 million americans who don't have jobs would lose their unemployment benefits. >> let me ask you something about the war funding. it seems to me, and maybe i'm being too cynical. so tell me if i am. that people are using the we have more money in the budget than we need for war funding to pay for a lot of different things. we're kind of double, triple, quadruple counting that money. >> well, that certainly could happen, erin. you're wise to be skeptical. look, in all the groups i've been part of, the fiscal commission, the group of six, we did not use war funding as an offset for anything. but the fact is there's about $700 billion there that is in the so-called baseline used by the congressional budget office to estimate what costs will be to the government that we now know will not be expended or at least it's highly unlikely that money will be expended. so there's at least some share of that is available for offset. >> all right. so let me ask you this. the senate republicans communicate -- senate republican communication sent an e-mail to our team and they quote you in it. they're talking about this, more and more d me s for the pipeline, talking about the keystone pipeline, part of it has already gone through your state. they say, and quoting you, senator kent conrad, quote, i personally think the pipeline is absolutely in the national interest. will you vote for that pipeline or do republicans need to pull it out of any final deal in order to get the payroll tax done? >> look, i don't think the keystone pipeline should stand in the way of doing things that are critically important for the economy of the united states. and i personally believe the keystone pipeline is in the national interest if, if, it is able to be rerouted through nebraska so it does not threaten the aquifer. that is the critical issue. i have been assured by colleagues they have no intention of preventing the state of nebraska from rerouting that pipeline to protect those very sensitive sources of water and so if that's done i don't see a reason for the keystone pipeline to stand in the way of critically important measures for this economy. >> one final question before we go, and we're going to talk about this later on the show, some in the senate are trying to roll back those automatic cuts. the super committee failed in making cuts there were automatic cuts. they want to roll some back. in your role as budget chairman and europe not running for re-election, you're in a real power position here to push through some sort of a grand bargain that would require a majority vote and not be subject to filibuster. will you do that? >> i'm trying my level best. in fact, i'm leaving here to go to a dinner with like-minded colleagues to discuss what a package might look like. so i have not given up on what i think is one of the key priorities for this country which is to face up to our debt threat. we are borrowing 40 cents of every dollar we spend. revenue is the lowest it's been in 60 years as a share of our national income. spending is the high eest it's been in 60 years as a share of our national income. clearly we need to act. >> all right. thank you so much, senator conrad. we appreciate it. >> you bet. >> let's bring in david gergen, senior political analyst. david, do you feel butterflies in your stomach? are we getting close or not yet? >> it seems we're getting close, and it's very encouraging news for an awful lot of people. it will help the economy to extend the payroll tax cut. what has surprised me, erin, is that the democrats have seemed to have blinked here. i think this is going to be read as something the president insisted on early on, something the democrats insisted on, and now they seem to be dropping it. the question to me is, what are they getting in return from the republicans for doing that? it's not clear what they're getting. but, overall, good news for the country if they get this done and don't go through a government shutdown this weekend. >> and what about what we were talking about at the end of the interview with senator conrad, this issue about the super failure of the super committee and now we have this $1.2 trillion in automatic cuts that some are going to try to roll back some of those. he says, look, he's not up for re-election, he could push for a real sort of a grand bar fwan. do you think it might happen, or is that just way, way, way too hindsight? >> i don't think it's time to get butterflies, erin. it's way too early. the chances are extraordinarily unlikely we'll get a grand bargain while this congress is in session. we're going to be darned lucky to get one in the next congress. so it could happen but let me go back to a couple of things. this whole effort to trim back the cuts that are planned, the president has promised he would veto that. they have to come up with some substitute that is reasonable and i was surprised that it's even being a part of this discussion is to use the unplanned funding for the war as an offset. you know and i know that's a gimmick. senator conrad knows that's a gimmick. that's why they didn't put it in the gang of six. it's a mickey mouse deal. and i just hope they don't use that to pay for the payroll tax cut extension. >> i really hope not, too, because that would just be frustrating. well, thanks very much, david gergen. david will be here with us as we count down to the wire on that deal. next, ron paul's surprise, three weeks until iowa and he is surging. guess who he is tied with. there could be an upset. also, up in arms. iran responds to what you heard dick cheney say on this show about america's top secret drum. and, abducted by a cyber predator. the familiy of a missing teenag girl speaks to us. i habe a cohd. yeah, i toog nyguil bud i'm stild stubbed up. 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[ male announcer ] ask your doctor if cialis for daily use is right for you. for a 30-tablet free trial offer, go to cialis.com. coca-cola today said it will pay about a billion dollars for a 50% stake in saudi soft drink producer algon industries. it is part of what they plan to invest in the middle east and north africa over the next decade. coke is really everywhere. actually in more than 200 countries to be exact which brings to us tonight 80s number, r58. that's the number of years it took coca-cola to sell 1 billion gallons of its syrup. it was founded in 1886 and coke didn't hit the billion gallon mark until 1944. since then they picked up the pace. coke now sells a billion gallons every six months. no company and no country has ever had what it takes to beat the real thing. all right. it's been a big day in politics. ron paul rising in the polls in iowa tied with mitt romney and nipping at newt's heels. mitt romney raking in the cash having breakfast, lunch and dinner to get wall street money. deall that today. he's at dinner right now with steven schwarzman. and president obama's unfavorable rating is at an all-time high. but he could still crush newt in a general election. john avalon is with us, a republican strategist, and tim funk is a democratic strategist. get your horses ready. let's start with mitt romney in new york city. we have some pictures of him coming and going. three fund-raisers. probably everyone else ate but it's probably like a wedding, he doesn't get to eat a lot. $2,500 a person. john whitehead from goldman sachs, james lee from morgan chase, and steve scharzman. it was standing room only. will it help him? >> his great strength is money and organization. mopey matters down the stretch especially if we've a long dr n drawnout primary flight. the flip side to that is that he seems like he's mr. 1% and that creates its own vulnerability. >> and rich let me ask you about that, the dnc, there was great irony. the dnc hired an airplane today. yeah the d th c using donations to the dnc to fly over new york city with a message that says, if you can see it there, are you the 10k bet for mitt romney. 10k bet romney is out of touch. i need glasses. sory. they hired a private plane to fly that over new york city. you get the point. is this going to hurt him, rich? >> no. you go where the money is. it's like robbing banks. you rob banks because that's where they keep the money. you go to new york and you go to hollywood because that's where the money is and it just makes sense. you're not going to raise enough to fund the presidential campaign, you know, going to target. you have to go where people can write big checks and the president does that. we whine about it and romney does it and they whine about it and that's part of the game. it's only newsworthy for the second that it's going on and then everybody goes on to whatever is going to happen next. >> tim hunt, looking at the numbers we do look at and they tell an interesting tale. mitt romney has raised more money from wall street than president obama, $3.8 million to president obama's $1.8 million. but last time around in 2008, this is stunning, president obama raised $15 million from wall street. i mean, wall street gives money to everybody. >> yeah, they give money to everybody. i think the point of the fundrai fund-raiser today and some of the talk around the fund-raiser today it's really terrible timing for mitt romney. he couldn't have picked the worst day to go, right on the heels of the iowa debate where he made the $10,000 bet. it continues this caricature of mitt romney as somebody who is out of touch with middle america and the middle class so bad timing for him certainly. >> let's go on to ron paul rising in the polls. here's what he said to reporters about his raise. >> and one thing is characteristic about our campaign is when people join our campaign they rarely leave. they're real solid, determined supporters. they understand what the message is about and agree with that. so i think it's a very dwad sign and i think in political terms it means that we're probably peaking at the right time. >> the paulites are certainly loyal even when he's not running in the middle of president obama's term the paulites are out fighting. rich, does he have a shot? >> oh, yeah. i think it's possible trending toward probable in iowa. the thing we've always said about ron paul is his support is very deep. it's as wide as a quarter. now it's clearly getting wider and wider, and i think what he's doing at least in iowa is tapping into the anti-government, anti-incumbent sentiment that we saw in 2010. we see in the 0 occupy wall street. we see everywhere. and he's beginning to crystallize that vote. how long it will go, we'll see. i think he has a real shot. >> i'll tell you, i think ron paul is the real wild card in iowa. i was 0 out there this weekend and picked up "the ron paul family cookbook" which is part of his charm offensive now. ron paul supporters are not just devoted, they are growing. his message has largely been vindicated in the last four years since he first ran and his support isn't going anywhere. no one should count ron paul out of this. >> thanks so much to all three. appreciate it. >> anytime. well, apparently iran watches "outfront." a member of iran's parliament has responded to our interview with former vice president dick cheney about the top-secret stealth u.s. drone that went down in iran. now iran has said it's been able to control the rq-170 sentinel. there are only about a dozen of those in the entire american fleet. it's part of the cia's reconnaissance mission. today a member of the national security and foreign policy commission in eiran told the iranian student news agency, quote, the islamic republic of iran which possesses the capability to bring down the super advanced spy drone can give a crushing response and cut off the hands of anyone who wants to violate its air, navy, and land borders. he was explicitly responding to something former vice president dick cheney said on this show two days ago when he gave his advice to president obama on how he should have handled the drone situation. >> the right response to that would have been to go in immediately after it had gone down and destroy it. you can do that from the air. you can do that with a quick air strike and, in effect, make it impossible for them to benefit from having captured that drone. >> it is believed that iran will or already has shared this technology from the american drone with china. that's former secretary of defense william cohen said on this show. well, ahead the mandatory defense cuts. the five republican senators really have a way of avoiding them. plus, showing love for the camel. they deserve an image makeover. 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[ mucus ] advil congestion relief. the right relief for the real problem. it wouldn't be hump day without the camel report. according to a u.n. study released today the world's camel p population is in serious decline. since the mid-1990s, and these are stunning numbers, pakistan's camel population down 20%, somalia down by half, and saudi arabia, where they adore the camel l, is down 39%. people don't seem to care even though this is a sign of serious environmental problems. maybe because people think camels are aggressive and they spit. that's not true. and camels need an image makeover. we teamed up with someone who has worked with them for more than 40 years, the director the bronx zoo, jim broheem. what it s it about camels that makes you love them? everything you say about cats, they're independent, they have an attitude. they're not terribly willing to please. they like to play tricks sometimes on the people who are working with them so if you have a new person that starts working with them, they'll kind of take advantage of somebody, the fact that somebody is new. you can tell if a camel is in good shape really by touching the hump and if it's firm and not saggy then they have plenty of food and water. >> like these guys. >> like these guys. c camels can spit and kick if they're not treated well or if they feel threatened but most of the time if you're really good with them and they are use d to you and they're used to being handled, then they'll be fine. ♪ i leave it all to you my love my love, my love my endless l