take a listen. or don't. we'll play that later. of course, we've got much more coming up straight ahead on "andrea mitchell reports." good day, everyone. i'm savannah guthrie live in new york. andrea is traveling to israel. as msnbc travels to that country's cable network. andrea is going to launch that show. we're going to start with politics with four weeks until the first votes are cast and one candidate in the republican race newt gingrich has surged to the lead in iowa. eight points ahead of mitt romney with 26% of the vote without herman cain in the race gingrich's lead would grow to 28%. msnbc contributing and managing et eeditor chris has the daily fix. the thing that really struck me about these polls is for months

we've seen mitt romney have the bedrock 22% support. now we're starting to see that erode. what do you make of it? >> savannah, people don't pay attention, news flash, regular people don't pay attention to these things until it gets close to an actual vote. we spend months in advance trying to figure out where voters are going to go, they don't tend to dial in until the lags month. some of this is just more people paying attention. more people starting to think who can i be for? a lot of it is we've seen this throughout the race is momentum. newt gingrich is the candidate of the moment. he's way up in national polling. he's way up in iowa. he's significantly up in new hampshire. the question is sustainability. we've seen lots of people above mitt romney and fall back below mitt romney. can he stay above him through the iowa caucuses and win there. >> that's the question is if he's peaking at the right time.

the new ad goes up in iowa. it's all the patriotic images and inspiring music. do you think he's trying to shed his image as a part stan street fighter from washington? >> yes. he doesn't want to be related to anything in washington. he wants to present himself as i think he fashions himself. this outsider of big ideas. now of course, the resume that newt gingrich has runs counter to that. he had been in congress for 20 plus years. he was the speaker of the house. i think this is an attempt to reintroduce himself to iowans as the ideas guy. the guy who can tap into that reaganesque optimism big ideas. it's a smart first ad to be honest. i would say if you look at rick perry, the governor of texas who's on on television in iowa for a month, his numbers haven't moved at all. i question how much television ads are swaying voters in early states at the moment. >> we'll check in with you a little bit later.

thank you. for more on the state of the race in iowa, matt straw joins us from iowa. good to talk with you. >> good to see you. >> let me put it to you this way, if we look at our latest polls and you see the two top guys romney and gingrich they are the two who have spent the least time in iowa. does that disturb you? >> well, i think there's two things. first, when you look at governor romney he invested a tremendous amount of resources on the ground and air in iowa four years ago. he's had a staff on the ground aggressively making sure the supporters are still in line four years later. it isn't like he was an unknown entity to us. and similarly with people gingrich. what people outside the state need to remember is he has spent a lot of time here over the years speaking to lincoln day dinners. he is not unknown at all to iowa republicans. there's a great deal of affection for him.

we've seen that coalesce in support over the next few weeks. >> what do you make of gingrich's rise. is this something similar to huckabee in 2007 he really peaked at the right time and went on to win the caucuses. >> he has that potential. one thing that's an open issue when you look at the polling over the weekend in iowa some 2/3 of caucus goers can be persuaded to vote for another candidate. it's going to be a wild ride. two more debates september 10th and 15th in the state. and retail level campaigning. it's an open issue. everybody should buckle up and enjoy the ride. there's all sorts of opportunities for even those candidates that are in the single digits to catch fire before january 3rd. >> bundle up and enjoy the ride.

whether you think gingrich has the organization to go the distance? >> his organization admits they're playing catch up. he has a message that's resonating. he seems to be raising money. now they need the mechanics of an organization to catch up. you need somebody in 1700 pri print -- precints that are going to convince their friends and neighbors to vote for you. we're going to get to our breaking news now, the white house has announced that president obama will speak this hour urging republicans to join democrats to pass the payroll tax cut extension. let's get to kristen welker live at the white house. kristin, good afternoon to you. >> good afternoon to you. president obama is set to speak in just about half an hour. he's going to press both republicans and democrats to pass an extension of the payroll tax cuts. he's been calling for this for a long time. it comes on the same day we're

learning the democrats are talking about a proposal to scale back the payroll tax cuts make them less expensive. president obama has been pressing for his jobs plan this payroll tax cut is a part of the jobs plan. tomorrow he will be in kansas talking about the economy and really mapping out the choisz between going in the direction of the democrats he will argue which will sort of provide more opportunities to more people or in the direction of the republicans. so again, president obama set to speak in just about half an hour. the focus of of the speech will be an extending the payroll tax cuts. >> what's your sense of it? is the dispute about whether or not to extend the payroll tax cut or the dispute about how toe pay for it? >> it's really a dispute about how to pay for it. the republicans have been pushing back against these payroll tax cuts saying they're not going to support anything that increases taxes on the

wealthiest americans which is essentially what president obama's pay for plan would include. it's a fundamental fight over that issue. white house press secretary jay carney was pressed on this last week and asked if the president would support a plan that would ultimately just expanded the payroll tax cuts and didn't necessarily in turn increase taxes on the wealthiest americans. he wouldn't say one way or the other how the president would respond to this. but again president obama will be connelling out in just a half an hour and reiterating his call for congress to come together for republicans to get on board with extending the payroll tax cuts. >> kristen welker at the white house. we'll see you in a few minutes. you'll be there for the president's remarks at 1:30 eastern time. let's go to mark halpern. >> hi. >> let's talk about the president coming out and trying to urge the congress to extend

the payroll tax cuts. it's clear that the white house thinking they have positioned as republicans as fighting for tax cuts for the wealthy, but not doing so for the middle class. >> there's a lot going on right here. without a doubt democrats feel they have the upper hand. smart republican strart gists on capitol hill think we've been foolish fighting this when we have to eventually give in. there's the issue of the pay for, the question of raising taxes on the wealthy. that's another one where the democrats had the upper hand. republicans may finally breakthrough on that. the other thing going here, post failure of the supercommittee, the president, there's partisan battle, there still needs to be cooperation. watch his tone. is it just combative. or does he start to get the parties in a position to work together. >> a couple of things on that. when you mention the republicans and some division twn the republican party, we haven't seen that that much. they've been singing from the

same page in terms of opposing the president, it sounds like there is some division within the ranks. should we be out opposing the payroll tax because of the optics of it. >> the optics of allowing the tax cut to expeer, being against a tax cut for the middle class, it's not good optics and not good policy. if they oppose this they're going to be on the wrong side and look hypocritical to some people and look like they're in the for tax cuts which is what the party stands for now as much as anything. >> when you mentioned that the supercommittee's failure and the kind of bipartisan disgust the american people have with congress is that what you mean when you say you'll be listening to the president's tone? meaning is he going to try to rail against congress as a body, but rather president versus congress and try to ib crease his own political fortunes. >> today he'll continue to rail. at some point if the next year's

about anything but preparing for the election, getting things done in a bipartisan way. at some point he has to pivot to say to republicans let's work together. the democratic base hates that. some members of congress don't want that. he has to do that if he's going to get any big things done in the next year. this payroll tax thing can be done in a way that doesn't have true unity. but other time he can't get anything done if he doesn't start reaching out to republicans, which has been pretty effective for him. >> as we await the president's remarks at 1:30 eastern time, he's supposed to talk about the payroll tax cuts. let's turn to republican politics. the latest polls all indicates this is real. this is very real and happening at the right time for gingrich. i think the fundamental question that's underlied his candidacy is he organized enough to go the distance to take this all the way? >> he's not organized to do it.

eventually mitt romney will win it. if it's a momentum battle, if gingrich can win in momentum early maybe iowa, new hampshire, south carolina and florida, the romney people think they can survive those losses, i'm not so sure. they have to figure out a way to get newt gingrich neutralized. he'll be hard to stop. mitt romney has the chase, does he fight him in iowa and does he go after him. he hasn't really done that very much. >> you think we'll see more of romney in iowa now? >> it's a tough choice for him. it's not his best state. it's one of his worst states. if he fights hard, the press will treat that like a big loss. he might try to lore expectations and go in at the very last minute and steal a win. they're hoping ron paul helps him out there as much as they are thinking they can win it. >> mark thank you for being here. stay with us. we're going to carry the

president's statement live at 1:30 eastern time from the white house. plus are u.s. secrets falling into the wrong hands? iran claims to have shot down a top secret american spy plane. a reminder even when andrea's on the road, you can follow the show online . ♪ ♪ ♪

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we are awaiting a statement from the president on tax cuts. it's set to happen in about 15 minutes from now. we will bring it to you live when it happens. also developing right now faa administrator randy backit was arrested saturday night in virginia on suspicious of dui. he was release from the fairfax adult detention center after being placed on a personal recognizance bond. tom costello is following this story. >> this happened at 10:30

saturday night in fairfax city in northern virginia. randy babbitt who runs the faa was pulled over for driving on the wrong side of the road and then arrested for suspicion of dui. he was released on a boend. the city of fairfax has a policy that anytime a government official is arrested that information is release odd the public. randy babbitt has been running the faa since president obama took office. prior to that he was a veteran pilot. 25 years in the cockpit. also at one point ran the airline pilots association. as head of the faa for the past few years he has been in charge as he has dealt with allegedly drunk pilots, not only in the united states but u.s. pilots overseas. he's had to deal with air traffic controllers sleeping on the job. he worked for the department of transportation which has a zero tolerance policy on drunk driving. just recently held a news conference with madd on this very issue.

i think one question that will be posed to the white house and to president obama this afternoon is whether mr. babbitt continues to serve the president. when did he notify the secretary. has he notified the president and will the president ask for his resignation. we'll see how this goes. >> tom costello all good questions if the president takes questions this afternoon. a u.s. official tells nbc news that the iranian military has recovered a supersecret drone after it crashed on its side of the border. officials are concerned it could give iran access to a we'll of american technology. jim miklazewski is the chief pentagon coronrespondent. >> u.s. officials tell nbc news that in fact this super secret drone, the rq-170 which looks more like a flying wing than an airplane itself was flying a surveillance mission inside afghanistan right along the border with iran when suddenly commanders on the ground lost all control.

we're told that this drone ten took a hard turn into iran where it ultimately ran out of fuel and then crashed. it's not clear in what shape this wreckage is. there is some amount of concern that the iranians would be able to exploit and maybe even reverse engineer some of the technology on board. but other experts we talked to say you know, that sounds easy, but it may be a little more difficult to apply particularly in terms of the stealth technology and quite frankly according to these experts most of the sensors on board, the cameras and the intercept, the eavesdropping equipment on board is already out there most of it on the open market. so there appears to be less concern about that. more concern about the fact that this could hand them a huge political or public relations victory at a time when the u.s. is turning up the heat on iran. >> indeed.

nbc's jim miklazewski at the pentagon. today secretary of state clinton told an international summit that even as the international military commitment? afghanistan winds down, diplomatic and financial support must continue. she says the u.s. will lead the way. >> the united states is prepared to stand with the afghan people for the long haul to support this transition to sustainable stability and growth and we recognize that the afghans themselves as the president has said have commitments that they must meet. >> once those forces leave at the end of 2014, afghanistan estimates it will need around $10 billion a year to avoid financial collapse. stay with us. we're going to carry the president's statement about tax cuts live in a few moments at 1:30 eastern right here on msnbc. just ahead, obama's outreach. what the white house is doing to renew the bond with one-of its key constituencies.

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we are awaiting a statement from the president on tax cuts. it is about to happen -- in about seven minutes from now. we will bring it to you live when it does happen at the white house. on can campaign trail now. newt gingrich is the latest republican candidate to kiss donald trump's ring. karl rove called on candidates to skip trump's december 2 27bd debate. trump responded this morning. >> karl rove gave us george bush. and george bush crashed and burned and because of that we have obama. the republicans have to get rid of the karl roves and they need fresh blood. karl rove is going to lead them into doom. >> republican strategist mark mckinnon is co-founder of no labels and a former advisor to george w. bush.

>> thanks. >> if you were advising one of the candidates in the republican race would you say they should debate in this debate that will be moderated by donald trump? >> i'd say don't do it. it ruins the brand of the republican party. it diminishes the brand. the reason i'm at the jfk school at harvard i'm doing a propaezal to recommend a presidential commission for primaries in 2016 so we don't have these ridiculous side shows. >> what do you think about the candidates that have tried to get donald trump's endorsement. it's increasing the perception of his influence. do you think he's such a powerful figure inside the party? >> i don't get it. i really don't. i think it's bad for the party. i think it's bad for people who are looking to the republican party for new ideas. if donald trump is increasingly the guy that republicans are as

you said kissing his ring, then its suggests to the american voters and a lot of independent voters that republicans will need in the general election that the republican party isn't to be taken seriously. donald trump is a real estate investor. he's got his own opinions, sure. but he's not a serious guy. and when he gets republican candidates parading in front of him time after time and now hosting a debate for goodsness sake, it's really problematic. i think the best thing for republicans to do is to just boycott the debate. let's talk about gingrich and romney. all the polls show gingrich is on the rise. romney has sooechb the bedrock support be a little by eroded in new hampshire and iowa. do you think that the romney gingrich match up has the potential to be one of these epic long, protracted battles for the nomination? >> just when you think it was starting to get boring, we get a new evolution which is going to be really fun for all of you.

i think there's a really good possibility that this will be a protracted nomination. i don't think gingrich -- he'll be attack ds and some deflation over time. he's been around. people know about gingrich and his record and his past. they're going to give him a pass. they like the fact that he's big and bold and he's got big ideas. he's a guy they can see sitting in the oval office and taking on president obama. i think he's a real challenge. i think it will be a sustained nomination contest. >> let me ask you very quickly, do you think a sustained nomination process might ultimately benefit romney in the sense that he would be battle tested if we were to go on and win it and face general bram in the general election as opposed to if it's just a cake walk for him? >> i do. the great thing about primary contests are that they really challenge the potential, the ultimate nominees. they harden them. they get them battle tested. it was good for barack obama. it was good for others.

it's like spring training. the more spring training you get, the better you are in the big game. >> finally we await the president's statement on the pay rom tax cut in the future. as a republican, doo you like where republicans are in terms of this debate or do you think democrats have been effective in portraying republicans as not fighting for the middle class. >> i think with most americans all see as it games right now. nobody's make big dags decisions. nobody's adopting commission recommendations. the answers that are obvious to all americans. they know what we need to do. we continue to see these band-aids, these small political moves that don't address the big problems. people are fed up. i don't think it's a real political gainer for either party. and ultimately the americans say why can't congress work? the no labels community in about a week is going to put forward

12 reforms that congress can enact over night to make congress work better than right now. stand by for that. >> we will. good tease. good to have you here. thank you. >> thanks. we are just minutes away from the president's remarks on the payroll tax cut engs tension. tension. stay with us.h you could guarane they won't be beat. oh, actually... then i'd be like, you rule! and my kids would be like, you rule! i'd be like, yes, i do rule! ohh! that rules! oh, load up the sleigh; this is going to be a great christmas. yeah. ring dinga-ding, ring dinga-ding, ring, ring, ring me up. [ male announcer ] no need to wait with our christmas price guarantee. we're so confident in our prices if you do find a lower one between now and christmas, we'll give you the difference on a walmart gift card. save money. live better. walmart.

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it's amazing. ♪ [ male announcer ] this holiday, chevy's giving more. now very well qualified lessees can sign and drive a 2012 cruze ls for around $199 a month. ♪ breaking news on msnbc, we are awaiting remarks from president obama. he is expected to address the white house briefing room in a moment. asking republican lawmakers to compromise with democrats on an extension to the payroll tax cut. let's go to jim politico's executive editor. jim, it wouldn't be the end of the year if we didn't have an epic battle between the president and congress over some issue with regard to taxes. is there anything different this

time? it seems like we always get here. who's got the better of the argument this time in terms of the politics? >> i think republicans are worried that democrat haves the better end of the argument because of payroll tax cut benefits so many different americans particularly in the middle class. i think mark was probably right, i doubt anyone really benefits because disgust with washington is so high most people tune out a lot of legislative debates and assume that washington will do the wrong thing. i don't think that anyone walks away from this with big advantage. but democrats for the first time do feel united with the president on a big economic issue. they feel like it's something that resonates. so democrats are really biting into this one. >> at the same time we see for not the first time, but rarely republicans having some division within their own ranks. people saying payroll tax cuts it's not good policy you're not

going to get the being for your buck. we should extend it. it's a matter of how you pay for it. are we seeing more division within the republican party? >> i think you captured the division perfectly. there are republicans saying there are better ways to use the tax code growth short-term and long-term. there is a lot of evidence to suggest that's true. you have a lot of republicans saying who cares about the long-term implications if we're going to ends up paying a political price for not being on the right side of cutting taxes. so now you have basically an argument going on between the two parties, yes, we're going to do it. we're going to extend this tax break. but how are we going to pay for it? republicans would like to take away benefits for wealthier people from medicare is one mechanism to pay for it. >> let's go to kristen welker many the briefing room right now.

do you have any hint about what the president might say this afternoon? >> president obama's going to come out momentarily. we expect him to address both republicans and democrats to pass an extension of the payroll tax cuts. i don't expect him to get into the nitty gritty of how this should happen. we think he's going to basically make a broad message to both parties to get this tax cut extended. this is all coming on the same day that democrats are essentially expected to roll out some sort of compromise plan on this extension of the payroll tax cuts. a plan that would be less expensive and would essentially mean that the wealthiest americans would wind up paying less to get this extension of the payroll tax cut passed. remember, even if this passes through the senate, it still has to make its way through the house. at this point in time, it still has a fair amount of opposition in the house. a big question mark about the future of the extense of the payroll tax cuts. >> as we await the president,

kristen asked jim in terms of the argument here, we've heard it time and time again, republicans making the argument if you don't extend a tax cut, it amounts to a tax hike. now we see the president and democrats making that exact same argument with regard to the payroll tax cut extension. >> it's what happens. it happened with the bush tax cuts a couple times. it really begs the question of will this ever end. it was raised in a few columns this morning if the litmus test is this is a tax increase if you don't extend it, it's going to happen next year. what a lot of republicanings are saying is listen, we have to live within our means. there are certain tax cuts, certain breaks that feel great and are popular. we have to look at it within the larger map of what's happening with our fiscal situation. are we cutting spending enough? if we're going to use a tax code

are we doing it in a way that does it as efficient as possible possible. >> is there room for some compromises, i saw some proposals about not as much as a payroll tax cut or in terms of how it's paid for? there's got to be room for negotiation here. >> unlike most fights in washington there's obvious compromises. you have the bulk of democrats and the bulk of republicans in agreement that you should extend it for some period of time. then the compromise is how do you pay for it. yes, the starting points were wildly different for both parties. but finding common ground isn't that difficult. the question is you've got that clock ticking. people don't want to be here through the holidays debating the payroll tax hikes. you have both parties today offering their both sergs versions of compromise which suggest momentum. by the end of the week you might have clarity that both parties can signed off on.

>> at the risk of your awkward position -- this seems to to be the position that the white house wants to be in recently, where it's railing against the so-called do nothing congress trying to pit the president against congress's inaction. >> that's right. we expect him to make a similar message tomorrow when he speaks in kansas. he will argue that the time is now. he put forth his among jobs act. in the days after it has essentially stalled, we've seen him make these trips throughout the country essentially saying that congress hasn't done enough to create jobs and to get this economy back on track. it is certainly a message that we will hear him reiterate tomorrow and likely today when he takes the podium in a few minutes. >> jim, we've heard the argument over and over again, is there any evidence that it's having an effect? that it's been an effective argument for the president that

it's increased his political fortunes? >> his numbers have been static over the last couple of years. what the president's trying to do is gradually set the stage for a binary choice for voters between him and mitt romney or newt gingrich at this point. they want to start putting the building blocks in place when they have that fight. they've always assumed that they're not going to have any real appreciable change in their poll numbers until that choice is upon them. you use debates like this. you use speeches like the one he'll do later this week to start to set the stage for that debate. >> and jim, in terms of the rhetoric, in terms of what we've seen from the president he's been helped. at least on friday the unemployment number came down a bit. obviously there's a little bit more to that. part of the reason unemployment came down is because people were discouraged and stopped look for work. in terms of optics, when people get out their newspaper, is there some psychological effect that's beneficial to the

president? >> again, you can't just look at it in a one week or a one week period. 8.6% unemployment's better than 9% unemployment. you have an up tick in retail spending coming up with the holidays. this question is that long lasting? when you talk to people in the white house around washington everyone knows how fragile this economy is. hoeb can predict what it looks like three months fl now. the truth is we're very dependent on how things play out in europe how they deal with their currency and their own fiscal problems which could have a huge spillover effect for the u.s. economy. it's hard to tell if the last two pieces of information are good information over the long-term. but the white house which has had nothing but bad economic data do deal with for the last year will take anything it can get. >> as we await the president who's due to speak any moment now, running a built late, let's go to capitol hill and get the view from the other end of 1600 pennsylvania avenue.

luke russert. this issue about the payroll tax cut extension, boil down where you think the fight is right now? >> the fight is how exactly is it go i think to be paid for. there was some concern last week amongst republicans in the house that they did not like the legislation as it was written because it wasn't necessarily the type of tax cut that they saw to be valuable because it depleted a lot of the social security fund. that viewpoint is descended into we need to pass this tax cut because it would be a problematic election year issue. we're going to hear now is this new compromise coming from senate democrats bob casey is going to introduce it. essentially it would change the way in which this payroll tax cut extension is paid for by taking away the fact that it would not apply to an employer. there's talks of democrats having a surcharge on millionaires as well as taking some republican principals about

auctioning off respective lands. bottom line, republicans are going to push back on this democratic plan saying once again it's a tax on job creators, millionaires. i spoke to a gop aide on my way over here essentially before the president speaks saying his compromise plan if it's anything close to what senate democrats are offering has no chance of passing in the house in the next few days. what we'll see is i think a real hard core, if you will, negotiating session that will involve speaker boehner, harry reid, president obama, the medicare documents all these things need to be kmeeted by january 1st, 2012. >> have there been any negotiations so far? or is everyone offering their competing proposals? >> it depends who you talk to. obviously you would think that these three individuals in these positions of power are probably

communicating albeit indirectly. as far as real negotiations that would involve the chiefs of staff of boehner, reid, obama, none of them have been made public if they are. >> do you think this payroll tax cut extension issue will be put together with the extense of unemployment insurance and some of these end of year items of business that always seem to get done and fought about this time of year. do you think that's likely to be the ultimate scenario where they put it together in a package and pass it? >> absolutely. the reason being is all these issues especially unemployment benefits are very -- it's a contentious issue to get through the house gop. they see that as something that's going to add billions and billions to the debt. unemployment benefits, the payroll tax cut extension, it's more likely than not that these will all be coupled together in some big piece of legislation and there will be some

negotiating done between house republicans and the president. what you're going to see here is some sort of spending cuts have to occur for all these things to go through. john boehner will have a difficult path to getting to 217 votes that he needs unless they aren't. there's always the possibility that democrats in the house could secure their negotiating leverage and say we're going to take it or leave it and try to get it on board at the best of the leadership once it gets on the floor by sniping off some republicans. more likely than not, boehner's going to have to throw some red meat to his conference which views many of these with an unpopular eye. that's why it's going to be coupled together in a big package with some red meat. you will not see these things on the house floor, the senate floor individually in a way that it has any substantial possibility of being passed. >> luke, red meat, you mean spending cuts that will make republican rank and file happy

to accept some of the other issues? >> something we've seen all along. spending cuts. you have to understand a lot of members from the house gop especially the freshman conference they see spending as the issue why they were sent to washington, d.c. there's a problem right now for the house gop leadership on this issue, the payroll tax cut extension. in the sense that last week they had to formulate what their message was going to be. john boehner at first said he didn't know what the economic impact was. later on he said, there's no question that the payroll tax cut extension will be good for the economy. there's now a belief within the house gop leadership you have to pass this especially going on to an election year because republicans do not want to be seen as being responsible for raising taxes on the working class heading into election year. the problem though has been with this issue is that the rank and file they see it as paul ryan, the house gop budget chairman once called the payroll tax

extension a sugar high. it's not a substantiative tax cut. there should be something more. this is a temporary fix that's going to add to the debt. that issue has been agreed to the leadership realizes they can't do anything that would hurt them politically. they have to figure out a way forward on this and the red meat would come from spending and you could have policy writers in this type of agreement that have to do with an array of social issues. >> luke, standby, just to remind our viewers that are tuning in, we are awaiting remarks from president obama. he's expected to urge congress to pass an extense of the payroll tax cut by the end of this year. jim, if you're still with me, picking up on what luke was talking about. here you have this division within the republican caucus about whether and how to pay for these tax cuts. again, this is the flip side of what we talked about a few minutes ago. if republicans are going to start arguing that tax cuts have

to be paid for or offset with spending cuts, does that put them in a box when it comes to much larger tax cuts like the bush tax cuts that continually get extended without necessarily the spending cuts to go with them? >> it puts them in an awkward situation in the specific debate. it does seem incon grew ent with the argument for tax cuts in the past. that essentially tax cuts pay for themselves they tend so have a stimlative effect on the economy. that's been a bedrock principle for republicans for some time. what happens here is you have a tax debate getting wrapped into a much larger budget debate. what's driven and consumed republicans really since early 2009 has been the larger budget picture. they feel that washington is spending way too much. a lot of republicans want to focus on that. it's way we had the super committee. it's why we had the showdown talking about lifting the debt limit. it's why there was a budget

fight earlier this week. republicans want to try to come to washington and push down is size of spending. that's become the dominant characteristic of the tea party movement and of the conservatives that were elected as a result of the tea part movement. again, every one of these debates fits into something bigger. >> luke, any reaction as we were walking over on your blackberry from republicans on the hill about the fact that the president has decided last minute as far as we knew to come out and talk about the need to pass this payroll tax cut extension? >> one of the things what house republican aides have said all along is that the president has showed a complete failure of leadership when it comes to anything to do with spending. i was look at my blackberry i got an interesting note that said essentially by including a surtax into this compromise that the president's expected to speak about in the next few minutes, the surtax would be on millionaires to help pay for this tax cut extension. it's obama aiming as the word

hits here right here -- aiming to fail so that obama can attack the gop. essentially that this legislation they know will go down on the senate floor it will not be able to break the filibuster. the president will use the opportunity to essentially hammer away as the gop not willing to have a tax cut for working families in exchange for to raising taxes on millionaires and billionaires expect to hear that line a lot. you know how this works. this will no doubt be turned into a 2012 political ad that's what house gop aids feel the president is doing now by taking this issue national. >> let me send it to kristen welker who's awaiting the president's remarks. i've seen it from republicans today accusing the democrats of staging so-called show votes things that would make republicans look bad that the white house and democrats have no hope of passing.

how would the white house respond to that? >> the white house would push back against those allegations. they think that strategically this is working for the president to come out to call for an extension of the payroll tax cuts or the american jobs act tomorrow which he has done throughout the country over the past several weeks and months. they're basically looking at the polls to bolster their argument because if you look at it the approval rating of congress is essentially at its lowest level. and president obama's approval rating has been stuck many the mid to low 40s. however, it's been inching up as of late. so the white house thinks that this strategy of having the president come out, call for what he wants. call for action is working and it is resonating with the american people. >> all right. i think we've got harry smith joining us now. you are an observer of politics for years.

what your take on whether we are right now and whether or not americans tune into the knit dwri gritty. we have congress once again facing an issue of whether to extend the payroll tax cuts. do you think most americaned are tuned into this, or are they thinking washington is so messed up and they tune it all out? >> i think you said it, savannah. this is another day. a lot of this news rolls in one ear and out the other. it's the kind of mounting frustration that you can feel among the electorate, because here's the thing. both sides basically say -- the republicans have been saying for two years, we don't want to raise taxes of any kind. this payroll tax cut is tligt there waiting to be renewed. how can't the two sides get together and say, you know what, you're right. we want to keep that cash ntd hands of american people. it's good for the economy. how is that not an issue that two sides can't come together on. i think it's one more example of that mounting frustration

kristen was talking about it a second ago. the popularity rating or approval rating of of congress in general now is 8%. you can't go any lower than that. >> it seems to be in some sense a pox on all of your houses, bipartisan blame in terms of american people. the track is descending popularity for all of the parties here. even though the president has time and time again said that the public's on his side and polls dmon the straight that the public will say, we'd rather tax the wealthy than the middle class, he hasn't really gotten that much traction out of those arguments, at least personally in terms of his own on prooufl rating. >> this one in particular is neutral on all sides. this is just the payroll tax cut that, you know, people embraced. everybody said this seems like a good idea. republicans are against raising taxes. it this should be a no-brainer. on the other hand, looking at what orrin hatch said about this

this morning, and he says, we in the republicans in the senate were never consulted on this. nobody is talking to us. how can this be? it almost feels like no one is in charge. it feels from our normal human distance that the entire place is just adrift. whether or not that's true, it's a little hard to discern, but that's sure what it feels like from our perspective. >> no one seems to make the calculation so far on either side that getting something done would be beneficial to them politically. instead, we see the divide seem to grow even stronger. let's bring in chris, and as i go to you, i read a quote from a house republican leader aide who says that the proposal moves in the right direction, but the inclusion of small business tax hike is a poison pill that shows senate democrats are aiming to fail so president obama can attack republicans. setting the specifics aside, this seems to be the republican

complaint today, that the democrats and president obama are more interested in staging show votes and scoring political points than in getting a deal done. >> which, of course, savannah, is in and of itself a political position for republicans to take. we're 29 days from the iowa caucuses. the campaign has begun significantly in ernest. republicans have stood against the president and on congressional democrats on raising taxes at all on anyone since he took office. i can't imagine that they're going to walk away from that positive pofl now, and president obama on the other hand is going to make the case he's been making but hasn't been successful poll-wise in making. i'm the adult in the room getting things done, and republicans are blocking the way. you know, i feel like i was just listening to harry, and he's exactly right. in a lot of ways we're back to square one. this is the same old fight over a slightly different issue we've had for the vast majority of the obama presidency.

it feels like both democrats in the senate and president obama in the white house as well as republicans in the house and senate are waiting around to see what the 2012 election brings before they even think about changing their political stance on these policies. >> which is, of course, the very thing that disgusts so many americans. >> it's a vicious cycle. >> about our political system. as we expect to hear from the president any moment now from the white house briefing room, he was supposed to talk at 1:30 and he's 25 minutes late athis point. what do you think, chris, about the president's tone? kristen walker said the president is expected to push congress to do something. we've seen that argument from him in the last few month kind of railing against the do-nothing congress. is this effective for him. >> this is more effective that what preceded, savannah, than is to work together for the country. he shifted into campaign mode.

he said the republicans are blocking this and it's their fault as opposed to saying we want a solution. i can't imagine he would go away from that more urgent, more cam spa painy speak. he's in the mid-40s, and you have polls approximate in swing states that suggest mitt romney would be tied if not ahead of him. this is a tough election for the president, but i think he's deciding in his own mind, the time for compromise is essentially over with. the time for campaigning now. i think republicans have been on that line for quite some time. >> i just saw a gentleman put what appears to be the president's remarks on the podium. i know this from my white house years, that generallily signals about two minutes before the president comes out. as we await that, chris, why do you think the president chose to come out and make this statement today? it was unexpected in terms of the rest of us. >> drive the agenda, savannah.

this is monday of a week where we expect lots sxlots of debate over the payroll tax and where it should go. the president has the bully pulpit. any time he speaks, we pay attention to it. he wants to set the terms of this final gambit of the year over yet, again, the economy, the future of our fiscal policy in this country and which way it should go. he wants to get out there and set the ground rules and take advantage of the rhetorical power his position affords him. >> democrats think they have republicans right where they want them. republicans are fighting only for the wealthiest tax cuts. i suppose that's why they want to highlight this issue. >> absolutely. savannah, one thing to look in in the president's remarks, how much does he talk about income equality. the "occupy wall street" movement is still out there. democrats think they've happened upon something here that's powerful. that is, they're fighting for the middle class and republicans

defend the rich. how overtly does president obama appeal to that message, but i think democrats think they've found if not a winner, certainly something that's beneficial to them as they position against republicans on the economy heading into 2012. >> we just got the actual two-minute warning to president obama. while i have the chance i turn to kristen welker about what we expect to hear from the president in a couple of minutes. >> two minutes from now president obama will come out and press congress to pass an extension of the payroll tax cuts, this coming on the same day that senate democrats are apparently working on some sort of compromise measure to get this through their chamber. of course, the major sticking point has been the pay for it plan. republicans have said they won't support any plan that increases taxes. democrats and president obama had been proposing a plan that would essentially increase taxes on the wealthiest americans. republicans are saying they're not going to do this.

this compromise plan would lower taxes on those wealthiest americans, and also get rid of the payroll tax cut for employers, which is something that president obama had also been calling for. savannah, i said it earlier. even if this passes through the senate, there's no guarantee that this would pass through the house. there's a fair amount of opposition to it there already. again, we await president obama coming out and calling on both democrats and republicans to pass an extension of the payroll tax cut. i believe the president is coming out. >> i'll let you sill down kristen. >> chris is there anything that happens in washington na doesn't have the 2012 presidential election hanging over it? >> i know the president is coming out, so i have an easy one word answer, no. there doesn't. we're in an ubber political time now.

up to 18 months before an election, it has a political element to it. so this in some ways is nothing new under the sun. once the car dlendar turns to 2, congress doesn't do much of anything. this may be the last major thing they do, although you could debate it. this is the last big fight i think they will have certainly this year and potentially all the way through 2012. i think both sides are just waiting to see what the 2012 election tells us. the worry, of course, is what if it doesn't provide a mandate, it doesn't tell us anything other than people are divided. that's the lingering fear. >> you can give more than one-word answers. i've been told the president is being longer. the larger issue is, of course, this payroll tax cut discussion today in washington that we expect the president to address is at the heart an issue about the economy, which is going to be let issue in the 2012