(CBS News) Below is a transcript of "Face the Nation" on December 9, 2012, hosted by CBS News' Bob Schieffer. Guests include: Deficit reduction duo Alan Simpson and Erskine Bowles, and Newark Mayor Cory Booker. Then, a roundtable discussion with TIME Magazine's Joe Klein, Washington Post's Michael Gerson, CBS News White House Correspondent Major Garrett, and "CBS This Morning" co-host Norah O'Donnell.
ANNOUNCER: From CBS News in Washington, Face the Nation with Bob Schieffer.
SCHIEFFER: And good morning, again.
Well, to the famous combos of modern life, from mac and cheese, peanut butter and jelly, rum and coke, bread and butter, and salt and pepper, add one more pair Simpson and Bowles. Alan Simpson may be in Cody, Wyoming this morning and Erskine Bowles in Charlotte, North Carolina but you can't mention one without think of the other. Gentlemen, good morning. You know, when you headed up the bipartisan deficit commission appointed by the president you laid out the dire consequences if we don't get the country back on a sound financial footing. The two sides are still at loggerheads. I guess I would start this morning by asking -- and Mr. Bowles, why don't you go first -- is all this just posture or are they really going to let us go over this fiscal cliff?
BOWLES: Lord, I hope not, Bob. I think it would be disastrous for the country if we did. You know, you can look at the forecast that we have, economic growth would slow, you know, by 4 percent. That, by definition, puts you back into recession when you're only growing by 2 percent. About two million people would lose their jobs. Unemployment would go to 9 percent. You know, you can already see the effects of it by -- you look you at businesses, they're slowing their head count by attrition. They're saying that, gosh, if they're going to have to lay people off. They're going to cut their capital expenditures. They're going to cult their investments. They're already hoarding cash. Moody's and S&P -- Moody's and Fitch have said that they would lower our credit rating. That would cause our interest rate to go up. I don't think the stock market has factored this in. Everybody's taxes would go up. I think this would be a disaster to go over the cliff.
SCHIEFFER: What about you Senator Simpson, could they really let this happen?
SIMPSON: Yeah, I think the reason is as I see it when you have responsible leaders saying like this, I think it would help the Democrats more if we go over the cliff. And then responsible Republicans saying, I think it would help the Republicans if we go off the cliff, and the administration saying I think it would help the president if we go off the cliff. And as Erskine says so beautifully, you know what that's like? That's like betting your country. There's something terribly bizarre and juvenile about that to think your party comes ahead of your country. I don't go for that at all.
SCHIEFFER: Well, do you think, Senator Simpson, in the end, Republicans are going to have to agree to higher tax rates for the upper income people?
SIMPSON: Well, I think Erskine and I both agree, if anybody out there who is -- quote -- rich doesn't think their taxes go up, the drinks are on me. I'll cover it.
SCHIEFFER: So you think they've got to do that. But also, don't you think that the Democrats are going to have to agree to some entitlement reforms?
SIMPSON: Sure, but you don't have to do the tax increase. You go into the tax code, and dig into those tax expenditures, but there's no time to do that. But, yes, I mean, the bizarre thing, not touching the entitlements. The entitlements are the engine on the train driving us to the cliff. They were on automatic pilot. Health care, it doesn't matter what you call it, is on automatic pilot. And it's going to squeeze out all the discretionary budget -- defense, R&D research, all the things you love. Erskine and I always say, what do you love? And they'll name something and we say forget it because this is wiping everything. It's just a destructive force. And no cost containment till down the road.
SCHIEFFER: So, Erskine Bowles, what should they do? What is the next thing that should happen to get this result?
BOWLES: Well, you know, I'm a little more encouraged than I would have been if you had asked me about it a week ago. You know, we were going through the Kabuki theater, you know, one side making an offer and the other side rejecting it. And that's natural in any deal. But, you know, they've started to tango now. And, you know, any time you have two guys in there tangoing you have a chance to get it done. First of all, most important thing is if we're going to raise revenue and if we're going to raise it in any form, then we darn well better cut spending because spending is the biggest part of this problem, and the biggest part of that problem is the fact that health care is growing at a faster rate than GDP. I think we made some progress this week, Bob. I'm more encouraged than I was -- let me tell you why. First of all, you know, the president has been clear that he's not going to support a deal that doesn't have an increase in tax rates, but he came right back and said he also believed that he's got into get into negotiations with Chairman Camp, with Senator Baucus, in order to broaden the base and simplify the code, and hopefully bring down rates next year. He said he's got flexibility on raising more money by cutting the entitlements. The speaker, I think this is a speaker who really gets it. He's put $800 billion worth of tax cuts on the table, but if you look at the offer he made last week, that offer doesn't mention a thing about, you know, block granting Medicaid. It doesn't have a word about premium supports. It doesn't have anything in there about the deep cuts in the income-support programs. So I think that advances the ball.
You look at the people on the periphery, what they're saying. You have Dick Durbin, who is very close to the president, saying, gosh, you know, that he can live with means testing Medicare. He said he doesn't like it, but he can live with it. You know, that's high on the list of things that Leader McConnell has said he's got to have to have a deal. And even Nancy Pelosi has said, look, this is not about rates, it's about revenue. It's about getting the money we need in order to reduce these deficits. So you've got to have spending cuts and you've got to have some revenue to get this done.