The economy including Home Mortgage refinancing and the permanent end to congressional control over the debt ceiling. In return, president obama is offering republicans 400 billion in entitlement cuts over ten years. Still to be negotiated. Mr. Obama also wants emergency Unemployment Benefits and a temporary payroll tax holiday extended along with the Infrastructure Spending and mortgage relief, the price tag for the president s stimulus bill could rise to 50 billion or more. After meeting with secretary geithner, Speaker Boehner said he didnt see any sign of compromise from the white house. First despite the claims that the president supports a balanced approach, the democrats have yet to get serious about real spending cuts. And secondly, no substantive progress has been made in the talks between the white house and the house over the last two weeks. Eliot no sooner had boehner finished then Senate Majority leader harry reid took the podium to challenge republicans to come up with their own plan. Were saying extend the tax cuts for middle class. As part of that, of course, we know if we do nothing that top rates go up and the nats are waiting for the republicans to come forward with something because thats our proposal, period. Eliot on the debt ceiling Speaker Boehner retreated to the position that g. O. P. Held last year. If were going to talk about the debt limit in this, theres going to be some price tag associated with it. I continue to believe that any increase in the debt limit has to be accompanied by spending reductions that meet or exceed it. Eliot White House Press secretary jay carney didnt think much of that idea. Asking for a political price to be paid in order for congress to do its job to ensure that the United States of america pays its bills and does not default for the first time in its history is deeply irresponsible. Eliot despite boehner rejecting the president s proposal, Democratic Leaders seem to expect the g. O. P. To cave at least on raising marginal tax rates on the wealthiest 2 of all tax iers. Chuck schumer was all but gleeful as he analyzed the g. O. P. s position. Theyre not going to openly concede on this point this far out from the deadline. But they see the handwriting on the wall. Eliot for more on the fiscal cliff negotiations and todays confrontation, lets go to Michael Tomasky political correspondent. Michael, this constitutes high drama by washington standards. Any surprise that the president s proposal was outright rejected by Speaker Boehner . It was an in your face proposal to him. It was. Im not surprised. I dont think any of us are surprised it was rejected. I think were a little surprised, maybe a lot surprised it was put forward in the first place. This is really different. Barack obama, this is a really different negotiating posture and position that he is starting from. If we look back to that horrible debt ceiling fiasco from last summer in 2011, i think we all remember how bleak that was that obama started his negotiating position really from a place that met the republicans more than halfway so he was going to be bound to end up meeting them in the final analysis. Which is what happened. It was demoralizing. Now, after reelection, he has been obviously very embowdenned. Hes put forth something it is clear they wont accept it. They wont wake up tomorrow morning and think they want more stimulus spending. This is a strong move. Eliot it is exactly right. Really, the president is almost moving away from the republicans because the stimulus package which he put into this, the tim geithner took up to the hill today has not been part of the conversation so far. Hes almost saying look, guys, weve got a jobs crisis. Youre all talking about an austerity crisis. Im shifting the debate. I want to stimulate the economy. This adds a new dimension to it. He gave his back of the hand to boehners for the debt this is a rejuvenated president adding things to the table, not taking them off. It is pretty amazing. Adding stimulus to the table means exactly what you just said eliot. It means emphasizing jobs and growth instead of deficit reduction. Thats something thats going to make liberals in washington extremely happy and the whole package including this debt ceiling, getting rid of congresss authority over the debt ceiling is something it is just politically strong. It is going to make his voters feel emboldened. Theyre going to give them something to rally around instead of a discussion on numbers and how much are we going to give to entitlements. He said to his base and to his voters who just reelected him by a reasonably handy margin, weve got something to fight for here. Eliot i dont want to go off on the conversation exclusively about the debt ceiling but hes right about saying to congress you pass the spending bills you pass the taxing bills therefore when we hit the debt ceiling, it is merely carrying out your own legislation. I shouldnt need to go back to you to fund the debt plus there is the constitutional argument. Hes saying to john boehner im taking your leverage home with me. Hes right about it. I dont think the house will ever go for it. But it is the way things should be, dont you think . He should have done it the last time, he should have done it in 2011. A lot of us wrote it and wondered why he wasnt doing this then but at least hes doing it now and yes this is exactly the right way to play it. The congress has increased the debt limit i forget the exact number, i think it is 73 times in american history. And never never until last year was it held hostage to other demands or filibustered by the senate which it was both of those things last year. So hes coming back and saying no no, im not going to play the game that way anymore. Eliot thats exactly right. We still dont have any clarity to switch over to what the republicans are asking for or what their proposal would look like. There are three different ways they could agree to raise revenue. You can cap deductions for individuals and mitt romney debate idea, eliminate specific loopholes or raise marginal rates. Any indication which of those three they might support and if there are enough votes within their conference on the house side to vote for any of those ideas . Hard to say. Theyre not saying very much specific as you justre certainly not saying much specific about what they want in return for increased revenues. What exact entitlement cuts they want. They may be saying something privately but theyre not saying anything publicly. You know i think that obama obviously wants the marginal rates increased. Hes really kind of drawing a line in the sand on that. A few republicans tom cole is the most notable one but a couple more today, i noticed came out and said they think their party should consider that. If we get a drip, drip, drip on that, a few a day a few a week, then maybe maybe there will be a chance by the end of december that enough republicans will go for that increase. Remember, it doesnt have to be a huge number of republicans. It just has to be 25 or so of them. Eliot the president has drawn a couple lines in the sand. One of them is marginal rates go up. Another one now appears to be the debt ceiling. Hes putting himself into a position where hes going to have to tow a tough line or disappoint the very people you said earlier hes making feel very good because of the toughness and the new vigor in his negotiating position. Fun game to watch michael. Well ask you to come back in the next couple of days to tell us who is winning and losing. Great. Always a pleasure. Eliot newsweek correspondent Michael Tomasky thanks, as always for your time tonight. Thank you. Eliot a provocative column in the New York Times this week suggests even if democrats succeed in raising marginal tax rates, the top 2 , it wont be enough to reduce income inequality. Economic columnist edward toe porter argues a broader flatter tax may be necessary to fully fund a range of social programs that would make the u. S. A more Equitable Society for all. For more, it is a pleasure to welcome back to the program edward toe porter, author of the price of everything. Welcome back. Hey, thanks for having me. Eliot this was a fascinating and almost counterintuitive argument. We fought this political battle, we thought so we could raise the marginal rates on the rich because that would make an Equitable Society. Youre saying it wont work. It wont because it wont raise enough money. Once you see progressive tax rates, they are a tool basically and what im proposing is one of the important goals is theyre to reduce inequality. To reduce inequality, the experience of a bunch of other countries, you really need money. The progressive tax system that we have even thor it is more progressive than that does not really raise that much. Eliot one of the points you make in the article is our tax system is more progressive but even with and perhaps almost because it is more progressive we have a narrower base and therefore, the sheer size and volume of the money we raise isnt enough. Well, thats right. Because the progressive tax rates, they encourage all sorts of tax evasion tax be avoidance and you know, they alter peoples behavior in order to reduce their tax liability. So you know instead of investing here, youll invest in some other country with a lower tax rate. Youve had those kind of behaviors which would be narrow and progressive tax rates. Hence, the money that you raise at the end of the day is not very much. Eliot you raise and sharpen our focus on the other side of the equation. As i was reading the article i said wait a minute, were focusing so much on how we raise the money rather than how and where we spend it. And how much we spend. In a way weve been sucked into this debate about making a tax system progressive without looking as you say we should at how much we spend on the social programs that actually do redistribute. Thats right. Thats what really makes a difference. If you look at how effective taxes are at reducing inequality, theyre really not very effective anywhere. Whats really effective is spending. Because you know, you can really if you have money, you can spend on programs to alleviate poverty on programs to help kids. You know. Thats what if you look across the board, you know western europe, australia new zealand, canada, most of the redistribution comes from the spending side. Eliot in fact, our government as a percentage of gdp is smaller than most of those countries. Every one of them. Our total taxes are about a quarter of gdp. Thats ten points less than most of the rest of them. Eliot the conclusion you reach is that maybe it would be better if you voted for have a flat tax. In other words buy conservative argument. I hate to mar it with that prejudice. Have a flat tax. Give us a broader base. Then because you could raise a lot more, kind of but well spend a lot more on antipoverty programs. Perhaps i wouldnt go as far as having a flat tax because our income inequality is so intense there is a very good case of trying to tax the very rich but i do think the flatter tax would be very useful. Eliot the problem we have politically here in the u. S. Of course is there is this fundamental aversion to the size of government, to a big government. And what youre suggesting is that we need different scale of government. We need a bigger government that actually is willing to spend more on the antipoverty programs. Emotionally, the public doesnt want that. Even Warren Buffett recently said we shouldnt spend more than 21 of gdp. Youre saying we should be spending more than that. Well, yes. If you decide that income inequality is a problem and more and more economists are coming to that conclusion that it is hurting our growth. It createless all sorts of what we need to combat it in a way, to create a more level Playing Field in terms of equality of opportunity. That requires money. So rather than reducing entitlements, you have to think of well, what are other ways it could help workers adapt. All of these things require funds. Eliot our federal government as representative of gdp has been about 15 . Thats right. Eliot which is staggeringly low. Thats right. It is wray low. You hear the conversation in washington, there is a lot of bringing it back to the historical average about 18. 5 of the economy. But that is still very low compared to pretty much everywhere else in the world. Every other advanced country in the world. Eliot what i hear you saying is that even if the president gets everything he wants, even if we go all the way to revenue that gets us to 18 19 and the government spends 21 , we wont resolve our fundamental problem of inequality. I think that we will not yes. I think there is a certain thing that if we get to 19 of gdp 18. 5 of gdp were still going to have to do a lot of cutting of entitlements. The idea of creating new programs to assist workers whacked by more technology or competition from abroad, there arent going to be funds to address the issues. Eliot the problem gets worse and worse because of demographics as we ang and healthcare costs increase. Thats why we have aging and a more and more competitive economy. Eliot i guess what i should have said at the time is the article is provocative but gloomy. I have been called eeyore. Eliot i wont call you eeyore. I thought the article was fascinating. We have to reframe our debate. I think the article suggests how we should do it. Eduardoporter, thank you for coming back on the show. Thank you. Eliot a new constitution in egypt and a seat at the table for palestine. Mints called mints . Answer in a moment. Eliot when news first broke the makers of twinkies were going out of business, too many people assumed it was the same old story. Union workers demanding exorbitant wages. Lets take a look at what the management at hostess has been up to over the last few years. Theyve sold the Company Three times since the 1980s each time losing assets and picking up debt. Leading to two bankruptcy filings in the last ten years. The ceos salary was tripled earlier this year. Now as a parting shot, they just gave us our number of the day. 1. 8 million. Thats how much hostess wants to pay just in bonuses to 19 of their top executives. On average, each executive would get nearly 100,000 on top of their normal salary to help wind down a company that failed under their watch. But theres no point in picking on hostess. This kind of mentality has become common. The average pay for an american ceo went up 15 last year and 28 the year before. Even as real wages for most americans continue on a 40year drop, somehow this has become the normal way of doing business. Science and republicans do not mix. Now its your turn at the only online forum with a direct line to eliot spitzer. Join the debate now. Eliot today on the 65th anniversary of the u. N. Vote that created the state of israel, the u. N. Officially recognized the state of palestine by a vote of 138 to 9 with 41 countries abstaining and the u. S. Voting in opposition. Palestine status at the u. N. Was upgraded to that of nonmember observer state. While they still be only be able to own proceedings, this allows palestine to apply for membership in other international organizations. Something both israel and the United States had hoped to avoid. Meanwhile in egypt for the seventh day in a row protestors marched in Tahrir Square to have the Constitutional Assembly begin voting on a new constitution. Yets Egypt Supreme Court announced that on sunday, it would decide whether or not to dissolve the Constitutional Assembly so voting was accelerated to perhaps render moot sundays decision. Many of whom are boycotting what they perceive to be a process hijacked by the Muslim Brotherhood. Joining. Me is James Jeffrey former u. S. America west arena bass der to iraq. He served as the deputy to the president. Thank you for your time. Maybe you can unwind the chaos that is the middle east these days. Thank you very much for having me here, eliot. First of all, behind the chaos are fundamental changes that manifest themselves first in things like the u. N. Vote which follows the fighting in gaza over the past week between israel, the past two weeks between israel and hamas and also the arab spring in its manifestation again in the developments we see in egypt. It is very, very important for us to try to get a handle on these things because of the importance of this region and the key role that the United States should and must continue to play. Nobody can replace us in leading that region and in trying to find some way out of this chaos. Eliot you begin specifically with the u. N. Vote. Does that help or hurt . Does it make more or less likely the possibility of reigniting genuine peace negotiations . Does it help the Palestinian Authority and abbas by reestablishing his credibility as an individual with whom israel can and must negotiate or is this just some continuing unfolding of jockeying that leads us nowhere in particular . It is a symbolic vote as you said. There is much jockeying in the u. N. General assembly. That is not where peace will be decided in the middle east. On the other hand, it is popular opinion around the world is slipping away. It also is a sign of confidence in abu in abbas because of fears that the hamas group which is much more radical and rejects recognizing israel, rejects the state of israel, may be gaining ground around the palestinians and in the region so it is important to bolster him. I think thats one reason why so many states voted for this resolution. Eliot i think there has been something i hate to use the word consensus but certainly there is a strain of thought that netanyahu has missed the strain of thought to turn abbas into a genuine partner for peace and hamas as you just said has risen in the eyes of certainly the palestinians and many of the nations in the middle east. What should netanyahu do to extend the olive branch, if anything to abbas to say wait a minute, the two of us are going to be the peacemakers. Lets begin the process . Both sides have agreed that direct negotiations between the two for two state solution is the way forward. Since the end of the 1990s there has been a broad outline of how such an agreement could be achieve