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House Passes Fiscal Cliff Deal; Prepare for a Smaller Paycheck; Lawyer Suing Connecticut Over Sandy Hook Shooting;

Aired January 2, 2013 - 08:00   ET


BROOKE BALDWIN, CNN ANCHOR: Here we go, full table this morning.

Our panel today: we have Mr. Richard Socarides, writer for the and former senior adviser to President Clinton. Also, Chrystia Freeland, digital editor, "Thomson Reuters". Welcome. And Will Cain with a tie.


BALDWIN: We've all been talking about it at the commercial.

CAIN: New Year.

BALDWIN: Dressing for us this New York.

UNIDENTIFIED FEMALE: He's got a court date.

BALDWIN: Yes. We'll talk about the speeding ticket later, just kidding.

Christine Romans joining us here at the table as well. Welcome, everyone.

JOHN BERMAN, CNN ANCHOR: Welcome, everyone. Our STARTING POINT this morning: we are back from the fiscal cliff abyss. We are in detox from our fiscal cliff addiction, as the case may be.

Tens of millions of taxpayers and small business owners exhaling this morning because late last night, the House passed that Senate bill that temporarily brings us back from the depths of that cliff. The final vote: 257 for, 167 against.

And you might be interested to know this, House Speaker John Boehner voted yes. So did Paul Ryan, by the way.

Here's what the deal means for you and your family: couples earning less than $450,000 a year are spared an income tax hike. Itemized deductions are capped for couples making more than $300,000 a year. Unemployment benefits are extended a year for 2 million Americans. And that awful, thorny alternative minimum tax gets a permanent adjustment for inflation.

BALDWIN: There are all kinds of battles ahead. We can think of three that we know of that are sort of on the docket. You know, the biggie, raising the debt ceiling. That happens in February. So, of course, the U.S. doesn't default on its debt.

And billions of dollars in domestic and defense cuts have only now been deferred. This is the so-called sequestration that happens now two months ahead of us. Two -- thank you.

So Democrats and Republicans are forced to dare we say it, compromise again.


BARACK OBAMA, PRESIDENT OF THE UNITED STATES: We can settle this debate, or at the very least not allow it to be so all-consuming all the time that it stops us from meeting a host of other challenges that we face. The one thing that, I think, hopefully we'll focus on in the New Year is putting a package like this together with a little bit less drama, a little less brinksmanship, not scare the heck out of folks quite as much.


BALDWIN: I want to bring in White House correspondent Brianna Keilar live this morning from Washington.

And, you know, Berman kinds of ran through what's in the bill. I want you, Brianna Keilar, to talk about what's not -- the biggies that are not included in this deal.

BRIANNA KEILAR, CNN WHITE HOUSE CORRESPONDENT: The biggies and the things that Congress will have to deal with. Well, let's break it down.

Some of these things Congress absolutely has to deal with. You've got the debt ceiling, which technically, we've already hit, but the Treasury Department was able to move some money around. So, the U.S. can pay its debts.

And the ability to do that expires late February, maybe early March. Congress has to increase the debt ceiling or we will default, the U.S. will default on its obligations. That can't happen, obviously.

The other thing is the spending cuts that you mentioned. They're only now averted for two months. So, Congress has to deal with that.

And then the other thing is there's sort of a chunk of things that Congress wants to deal with that the president wants to deal with that they'll attach to the things that have these hard and fast deadlines. And that is dealing with long term, the long-term fiscal health of the country through entitlement reform, Social Security and Medicare, and tax reform. It is a lot to accomplish in the next couple of months.

BALDWIN: OK. So, as we look toward, down that long road, tell me, Brianna, just some of the winners and losers from this whole thing.

KEILAR: Well, this is obvious. Some of the losers are obvious here, Brooke. If you are earning as a couple, $450,000, or more than that, then you'll be seeing your taxes take a hit, $400,000 for individuals. If you itemize deductions and you're making as a couple $300,000 or more, or as an individual, $250,000 or more, you will see your tax -- you will see you pay take or your income take a hit there. You'll see that.

But there are also some winners that maybe you didn't know about. For instance, the milk, sugar and peanut producers, they have a tax break that they will get to hold onto. Also, unemployed Americans, long- term will see their benefits extended, very key. And doctors who were set to see Medicare payments reduced to them, that won't affect them anymore. And then also, the alternative minimum tax.

Brooke, when you cover Washington, you're always talking about the AMT fix, a tax that was supposed to hit the wealthy but because it wasn't indexed for inflation, it would always start creeping up on the middle class, people who didn't make a lot of money. And so, Congress would have to be constantly fixing it. Well, they permanently indexed it for inflation, so I don't have to talk about it anymore and middle class Americans don't have to worry it.

BALDWIN: Hallelujah for you.

BERMAN: That's the Brianna Keilar carve-out.

KEILAR: I'm a winner.

BALDWIN: Brianna, thank you so much.

BERMAN: Obviously, there was so much political drama late last night -- twists and turns in this whole thing. It looked like the whole thing was going to fall apart. And, finally, it didn't.

So why didn't it?

We're joined now by Chris Frates. He's a reporter for "The National Journal." He's in our Washington bureau.

And, Chris, "The Journal" has put the other tic tac of what was going on behind the scenes during this whole thing. Walk us through it.

CHRIS FRATES, REPORTER, "NATIONAL JOURNAL": Well, John, what we're going to report a little bit later this morning is a really fun anecdote. We saw the talks fall apart in the Senate between Harry Reid and his Republican counterpart Mitch McConnell. Mitch McConnell felt the Democratic leader was slow-walking him towards the cliff, to try to get more political leverage.

And we learned that when the Republican leader called the vice president, he left them a message and got on to the Senate floor to vote and got a note he had a phone call waiting for him. He walked into the Senate cloak room off the Senate floor, sat down at the phone booth and made a pitch to Vice President Biden to work with him. He said, I'm frustrated, I need a dance partner here.

And he essentially said, look, Joe, you know the trip wires here. I'm working with smart people but they don't know how to negotiate and have your experience. Will you help me?

Biden said to him, let me get back to you with an offer. That was the first offer that kicked off the back and forth that 30 hours later led to the deal that we have today.

BERMAN: So fiscal political history being made in a phone booth. Crazy.

So that's where the late deal actually started. It ended last night with the House vote in that meeting behind closed doors with house Republicans.

What one of the Republicans that ended voting for this I think surprise a lot of people. That's Paul Ryan, who was a Republican choice for vice president.

Any intelligence on what put Paul Ryan on the yes side of this ledger?

FRATES: Well, I think, you know, for both, it was interesting that Paul Ryan yes, and Marco Rubio no split. We had, you know, two folks who looked like they might be running for president in 2016 take different tacks on this plan. So, that's something they'll sell to primary voters.

And I think for a lot of conservatives in the House, a majority of the House Republicans voted against this thing, and I think there was a frustration that there weren't the spending cuts that they were looking for and Boehner had and relied on the Democrats to put this over the edge.

BERMAN: All right. Chris Frates of "The National Journal", we have the first talking point of the 2016 campaign. Thanks very much for joining us this morning.

FRATES: Thank you.

BALDWIN: Thank you.

BERMAN: I want to turn to Christine Romans now to talk about what this means for paychecks.

CHRISTINE ROMANS, CNN BUSINESS CORRESPONDENT: Well, for most people, the vast majority of Americans -- your tax rates will not rise but your paychecks will be a little smaller anyway. Here's why: For two years, you've had a break on how much you pay into Social Security, to fund Social Security. That payroll tax holiday is over now.

Here's how the increase affects your paycheck. If you're earning $30,000 a year, you'll surrender $50 more a month in those taxes, those payroll taxes.

If you're earning $50,000 a year, you'll contribute about $83 more a month towards Social Security, funding Social Security. And if you earn more than $113,000 a year, you'll pay an additional $189 a month in payroll taxes. Now, this was -- I never thought this was going to survive, last summer, we started talking about we don't think the payroll tax holiday is going to survive the fiscal cliff and it didn't. It was a focus on the rates, the rates you pay, it was the focus on investment taxes, the payroll tax holiday, two years stimulus for the economy, it's over now.

BERMAN: Party's over.

ROMANS: The party is over. Plan accordingly. I hope you have a budget because you're going to two fewer lattes a month, Ms. Baldwin.

BALDWIN: Christine, thank you very much.


BALDWIN: Moments after the House passed a bill to avert a fiscal cliff, President Obama looked ahead to the next fiscal fight here on the horizon, this congressional vote, as we've been talking to raise the country's debt ceiling.

And Jen Psaki served as a traveling press secretary for President Obama's reelection campaign.

Jen, good morning. Good to see you.


BALDWIN: We're well and I think you're well as well with the White House and this thing going through.

PSAKI: I am.

BALDWIN: Let me just ask you, because we were sort of asking on the House side, you know, take me behind the closed doors, what -- the question to you is what happened in the White House? You know, last night, they're hearing, you know, that this vote was going to happen one hour, then another hour, might they amend it, might they pitch it. What was happening?

PSAKI: Well, look, I think there's no question that everyone in the White House, the president included, is happy to have this vote in the rearview mirror.

As you've mentioned this morning, there are a number of other obstacles they have that they also want to get behind them because, you know, avoiding the fiscal cliff, you know, making sure that the country votes, that Congress votes to increase the debt limit is not the president and the White House's idea of a second term agenda. So, you know, I think they were watching closely, they were optimistic.

They've been very careful in how they've handled this because they want the will of the American people to remain behind them as they emerge from these obstacles they have to go through over the next couple of months. BERMAN: So, Jen, John Berman here. One of the things the president said yesterday and he said repeatedly over the last several weeks, that he's not willing to negotiate on the debt ceiling. Explain to me what that means.

So, if Republicans then say we're not going to vote for it unless you give us spending cuts he's going to say, "Sorry, we're going to default"?

PSAKI: Well, look, there are a couple of opportunities, which you have mentioned, over the next couple of months, and Republicans believe they have a couple different bites at the apple. Of course there's the debt limit. They've made no secret of the fact they want to use that as a negotiating tool for spending cuts.

But there's also the funding of the government, there's the two-month extension of the sequester.

What the president was saying was: I'm not going to play chicken with the debt limit. I've learned my lesson in 2011. This is something that impacts businesses. It impacts markets. It impacts the view of the world of the United States' economy and this isn't something we should be fooling with.

And again, he has been very tough in negotiating and making clear to the American people this is what the stakes are, this is what's happening. And right now, he still has them behind him and that's a very powerful thing.

BERMAN: You say he's been very tough. There are people on the left, though, who say he has not been tough. Let me read you a quote from Adam Green, who is particularly angry with the president. He's from the Progressive Change Campaign Committee.

He wrote this, he said, "The president remains clueless about how to use leverage in a negotiation. Republicans publicly admitted that they lost the tax debate and would be forced to cave, yet the president just kept giving stuff away." Your response?

PSAKI: Well, unfortunately, for Adam Green, laws are not made by simply waving a wand, and making it so. It involves compromise. It involves negotiation.

And that's what happened here. There's a lot that progressive Democrats, including Adam Green, should be excited about in this package. You know, it's the extension of unemployment insurance, college tax credit, child tax credit, making the middle class tax cut permanent.

Of course, it wasn't perfect. But, you know, Democrats have to be careful about not letting perfect be the enemy of the good. And this package is good.

BALDWIN: Quickly, Jen, do we know -- we know the president is back in Hawaii with the family after this whole debacle.


BALDWIN: Do we know when he might be signing this?

PSAKI: I don't have an update on that. I'm sure he'll want to get it signed as quickly as possible, given how hard they fought, and they'll move on to the next fight.

BALDWIN: All right. Jen Psaki, thank you so much. We appreciate it.

PSAKI: Thank you.

BERMAN: Happy New Year.

PSAKI: Happy New Year.

BERMAN: Checking other top stories right now.

Doctors say Secretary of State Hillary Clinton's blood clot could have been fatal, caused a stroke or may be even led to seizures or epilepsy. She's being treated with blood thinners. She should make a full recovery. Former President Bill Clinton and daughter Chelsea, they were both seen visiting her at New York Presbyterian Hospital yesterday.

BALDWIN: Also, the governor of Pennsylvania going after the NCAA here. Later this morning, he'll be announcing this lawsuit over the stiff sanctions it imposed on Penn State University, of course, in the wake of the Jerry Sandusky scandal. He's the former assistant football coach convicted of sexually abusing all those boys.

The NCAA fined Penn State some $60 million, stripped the football program of 14 seasons of its victories under its late head coach, the legendary Joe Paterno.

BERMAN: A sad story of Los Angeles this morning. A photographer was killed last night trying to get a shot, a photo of Justin Bieber. Police say the man snapped pictures of a parked sports car he thought was the pop star. He thought Justin Bieber was sitting in it. The photographer was struck and killed while crossing a freeway to return to his own car.

In a statement, Bieber said he was not in the sports vehicle but he sends his condolences to the victim's family. Police have not yet released the photographer's name.

BERMAN: Did you guys hear about this? The fact that this guy was killed crossing the street and again, we were sort of talking before the show, it's like here's a member of the paparazzi. But at the same time, so many people, they buy the magazines, right?

CAIN: That's exactly right. It's like anything like panning for gold or oil, people are going to go where the market is and there's a market for these photographs. They're going to take the risks for the payoff. There's a big payoff for these photos.

BERMAN: We'll talk about that more in a bit. BALDWIN: Still ahead this morning here on STARTING POINT: the lawyer who planned on suing Connecticut over the Sandy Hook school shooting has withdrawn his suit at least for now. He's going to join us next with why he filed it in the first place.


BALDWIN: An attorney in Connecticut has withdrawn his request to sue the state for $100 million in the wake of the Sandy Hook school Shooting. The attorney represents the family of this 6-year-old girl who witnessed and survived the shooting just from a couple weeks ago. He says the state failed to take steps to protect the children from harm.

He is Irving Pinsky. Ivan Pinsky he is with us this morning, forgive me, I have two versions of your first name.

IVAN PINSKY, ATTORNEY: You're perfect. It's perfect.


BALDWIN: Mr. Pinsky, good morning. With regard to this young girl, what is the family telling you? Why go after the state of Connecticut?

PINSKY: That's not really their decision even though legally it is technically. The truth is, it is our legal strategy. We're not only going after the state of Connecticut but we had to do to get the state of Connecticut was we had to file a request for permission to sue them. You can't even just sue them. That's the law in Connecticut and many other states so we filed it and we got new evidence coming in, plus we had all the backlash of intense nervousness, so we withdrew it but reserved all rights to bring it again within the next year.

BALDWIN: Let's talk about the backlash. John and I were both in Newtown a couple weeks ago. Toughest story I've ever covered, very tenuous there right now. And I imagine just so recent after what's happened to the young people that you have gotten quite a bit of backlash. Why continue if you so will choose to do so?

PINSKY: Well, it's a natural reaction to get that backlash. I know that, but on the other hand, when I get called, I have to save the evidence. I can't wait for the attorney general to get their evidence or the police to get their evidence. As a lawyer, I'm looking for different evidence than they are. So I had to go in early and that was not made clear to the public, because there's so much of the fog of disaster. So I just was doing my job and I'm still doing it and I've got a year to file the request.

CAIN: What kind of backlash are you talking about? What did the people of Newtown have to say about your suit?

PINSKY: I didn't have any problem with the people of Newtown even though I'm sure there was, but 340 million people in this country, if that, you're going to have all kinds of people including some crazy people who are just going to start issuing death threats left and right and also you're going to have a lot of people who are going to scream the usual epithets, oh, greedy lawyer, oh, he's an ambulance chaser.

BERMAN: What is your spoons to that? That seems like the obvious question.

PINSKY: Well, just like you wonderful people in the media get your share of "you know what?" I have to hold my head down or up and go forward.

RICHARD SOCARIDES, WRITER, NEWYORKER.COM: But that's really a side show, right? You believe that the state of Connecticut may have legal responsibility in some way for what happened and there may be others who have legal responsibility. What do you base that claim on?

PINSKY: Well the easy answer, which is I'll start with that and give you anything you want almost. Anyway, the easy answer is, look, this shouldn't happen, a crazy, young gunman shouldn't be able to walk into a school and start doing this over and over and over. The police got there in three minutes. Assume that's true. That's wonderful but you know, there are loads of security devices and cameras and protections that can stop this way earlier than three minutes. I just saw on the news --

BALDWIN: But Dawn Hochsprung, the principal, she had just installed this new security system, you couldn't walk into the school after 9:30 in the morning. I mean he basically shot through the glass to get in.

PINSKY: Which was supposed to be bulletproof glass.


CAIN: Your gut reaction is obviously this shouldn't happen but you have a legal case to prove, right? And for you the term that becomes important is "foreseeable." Was this a foreseeable incident, that's the standard for negligence in a civil suit. Can you tell me this young man, mentally disturbed possibly, taking weapons into a school and shooting 20 kids was foreseeable?

PINSKY: That's the fairest question I could ask for and the straight up answer is it had to be assumed that this was going to happen eventually somewhere, and I cannot tell you for sure at this point, I can't tell you even beyond a reasonable doubt, which is not the standard, but I can tell you beyond a reasonable doubt that this would have happened or should have happened or they should have known. But my job now is to follow the evidence that comes in. I have to authenticate it, I have to make sure it's credible and then I have to follow it and if the evidence shows that there's no case, I don't bring a case, but I have to try to get the evidence and I have to, more than that, and I'll make this short, more than that, my mission now is to stop this from happening again. Now I know it's going to happen. We all know that, don't want to admit it.

BALDWIN: Let's hope not. PINSKY: It hurts me but I know it's coming and I know I can never stop, we can never stop it happening everywhere, but we have to minimize it. And with modern technology, we can really minimize it and every day, eight days a week in Connecticut and New York, the police, the courts and other people stopped it from happening somewhere. There are so many people out there with malice in them.

BERMAN: How does your lawsuit help them stop it next time in.

PINSKY: Because I think we can get higher standards for security in the schools, and --

SOCARIDES: Are you going to sue the NRA?

PINSKY: I've had some great lawyers call me who I'm in awe of call me and say look, I don't like your case but I'll help you if you want to sue the NRA, for free. That's really true, but if you say something about the NRA, and you got guts even to mention that, because when you say something about the NRA you get double bonus death threats from all over the world.

BALDWIN: We could keep going, I'm sure we will in the commercial Mr. Pinsky. We'll follow up with you and see where this goes. We appreciate it.

BERMAN: A lot to talk about, no doubt. Ahead on STARTING POINT, did the rich get off the hook in the madness of the fiscal cliff? That's today's tough call.

BALDWIN: How will the world react to this plan? Richard Quest in London for us this morning with a look at the global markets. Is that confetti?

CAIN: They look like they're shooting confetti and clapping.



BALDWIN: Our tough call this morning here, is the fiscal cliff deal, is it a big win for the rich? They faced a potential 39.6 percent tax rate on dividends and instead they got a 20 percent, that's up slightly from the current 15 percent. Henry Blodgett from "Business Insider" in this piece called it, quote, "great news, rich Americans, Congress just raised taxes on workers while saving investors billions. The tax deal that Congress just agreed to will raise $125 billion from increased payroll taxes from all working Americans (poor and middle class alike) while saving the richest Americans at least $20 billion in dividend taxes." To the panel, should rich people this morning have a little extra pep in their step?


CHRYSTIA FREELAND, DIGITAL EDITOR, "THOMSON REUTERS": Absolutely, it's a bullet dodged and I think Henry hits it exactly right. If you look at, I mean think about to make it really specific, think about how people were really surprised at Mitt Romney's low tax rate. It's not for really rich people. It's not about the income tax. It's about what happens to your dividends and your capital gains and that was really a huge win. It's a little bit tougher than it was in 2012 but it could have been so much worse. It's actually a relatively new notion that capital gains and dividends should be taxed at a lower rate than ordinary income. This has been entrenched by Barack Obama, right? By they Democrats, they said yeah we're cool with that.

BALDWIN: All right, money lady. You dream in numbers.

ROMANS: That 125 billion he's talking about the payroll tax going away. On the one hand you have a de facto tax increase for all working Americans because the payroll tax holiday went away but it was a big bullet dodged, I agree with you, on the dividends. It could have been much, much worse for the very richest Americans and investors.

SOCARIDES: I really think thought that we have to keep an eye on the big picture here. I think that overall this is a good result for the American people. I mean I think compromise is very difficult in Washington, these days. You saw a lot of Republicans who did not want to make a deal with President Obama no matter what the deal was unless they got whatever they wanted. In retrospect he played his cards pretty well and got a deal that is fair in a very broad sense of the word.


FREELAND: You're not one of the progressives attacking the President?


BERMAN: The good news is for all of us who like to talk about this kind of thing, we'll have three more bites of the apple and three more cliffs coming in the next two months so we have to hold on until then. Because right now ahead on STARTING POINT, the fiscal cliff deal passed but does it still kick the can down the road? Economist Diane Swonk is going to come in and talk to us about that next.

BALDWIN: Also this morning, this pilot sees a burglary in action from his plane, and you won't believe who is getting robbed, that story is just ahead.

BERMAN: From the plane?

BALDWIN: From the plane. 28 minutes past the hour. You are watching STARTING POINT.