(CBS News) Below is a rush transcript of "Face the Nation" on December 30, 2012, hosted by CBS This Morning Co-host Norah O'Donnell. Guests include Senate Majority Whip Richard Durbin, D-Ill., Sen. Tom Coburn, R-Okla., CBS News Chief White House Correspondent Major Garrett, and CBS News Congressional Correspondent Nancy Cordes. Plus, a roundtable on the "fiscal cliff" and other political issues, with Time Magazine Columnist Joe Klein, Wall Street Journal columnist Peggy Noonan, former press secretary for President Bill Clinton Dee Dee Myers, and Time Magazine Executive Editor Michael Duffy.
O'DONNELL: Today on FACE THE NATION, with the country set to fall off the fiscal cliff in just hours, time is running out for Congress to make a deal. And what a difference a day makes. On Thursday, things looked bleak.
SEN. HARRY REID (D-NV), MAJORITY LEADER: Speaker Boehner is unwilling to negotiate, we have not heard a word from leader McConnell. There is -- and nothing is happening.
SEN. MITCH MCCONNELL (R-KY), MINORITY LEADER: We wanted an agreement, but we had no takers.
O'DONNELL: It took a trip to the White House and a public scolding from the president.
BARACK OBAMA, PRESIDENT OF THE UNITED STATES: The American people are watching what we do here. Obviously, their patience is already thin. This is deja vu all over again.
O'DONNELL: But by week's end, Senate leaders agreed to make a last-ditch effort to get a deal.
MCCONNELL: So I'm hopeful and optimistic.
REID: I'm going to do everything that I can. I'm confident Senator McConnell will do the same.
O'DONNELL: We'll have the latest on what that agreement might look like, but will it actually do anything to cut the deficit? And what happens if they don't get a deal? We'll hear from two senators who have been working together on deficit reduction, Assistant Majority Leader Dick Durbin of Illinois, and Senator Tom Coburn of Oklahoma. Then we'll look forward to 2013 with an all-star panel, including: Peggy Noonan of The Wall Street Journal; Dee Dee Myers of Vanity Fair magazine; TIME magazine's executive editor, Michael Duffy; and also TIME columnist Joe Klein. Plus, we'll hear from our own chief White House correspondent Major Garrett and congressional correspondent Nancy Cordes.
UNIDENTIFIED MALE: Are you going to get a deal today, sir?
MCCONNELL: Hope so.
O'DONNELL: It's all ahead because this is FACE THE NATION.
ANNOUNCER: And now from CBS News in Washington, FACE THE NATION with Bob Schieffer. Substituting for Bob Schieffer, co-host of "CBS THIS MORNING," Norah O'Donnell.
O'DONNELL: Good morning, again. And welcome to FACE THE NATION. Republican Senator Tom Coburn and the number two Democrat in the Senate, Dick Durbin, are here, and we'll turn to both of you in just a moment. But we want to start with some new information from chief White House correspondent Major Garrett and congressional correspondent Nancy Cordes who are here. I know you both have both been speaking with your sources this morning. And, Nancy, what's the latest?
NANCY CORDES, CBS CONGRESSIONAL CORRESPONDENT: Well, Norah, Democrats at this point are very pessimistic that leader Reid and leader McConnell in the Senate are going to be able to strike that deal that they were so hopeful about just 24 hours ago. Their two staffs worked late into the night. They traded proposals back and forth. But Democrats tell us that they are just still too far apart on taxes. Democrats want to set that limit at $250, 000 or less, let the Bush tax cuts expire for people making more than that. Republicans want that limit to be far higher. They're also very far apart on estate taxes. So leader Reid and leader McConnell are going to meet with their caucuses later today and at that point we expect that they're going to tell their members that they just weren't able to work out a deal on this.
O'DONNELL: Major, you have been talking to the White House. What do they say about this?
MAJOR GARRETT, CBS CHIEF WHITE HOUSE CORRESPONDENT: Well, the fiscal cliff preoccupation has largely been about taxes. But there's another part to the fiscal cliff, that is across-the-board spending cuts, and in ways that the administration simply hasn't before, it is now preparing in very real ways to send out furlough notices, break federal contracts, and apply the sequester, 6 to 7 percent across-the- board spending cuts across all federal agencies.
O'DONNELL: The White House is preparing to do that?
GARRETT: It has to, because the deadline is approaching. It cannot reasonably ignore the law, and misapply it. So it is now preparing to send out all a variety of notices to federal contractors, the contract is suspended or canceled. Or to tell various agencies, the TSA, FAA, all throughout the federal government, lay people off, this is real, because they see the negotiations are not getting anywhere near a deal and they have to prepare for the cutting side of the fiscal cliff, not just the taxes.
O'DONNELL: And then, Nancy, if there is no deal, what happens next on Monday?
CORDES: Well, then essentially we move to plan D, where Senate Democrats introduce their own plan in the Senate that caps the Bush tax cuts a at $250,000 or less, extends long-term unemployment benefits, maybe imposes some spending cuts to push off that sequester for six months or a year. And then we see if Republicans allow a straight up-or-down vote that only requires 50 senators to vote yes, or if we have to go to a 60-vote threshold. Democrats think that they can get those seven Republicans they need -- actually they think they might be able to get up to 10 who have signaled that they could go along with something like this. But that's not the end of the road. Then even if it passes, they have got to go to the House, and that's a tricky road as well.
O'DONNELL: All right, Nancy and Major, thank you for that new information. Let's turn now to our senators that are here. Senator Durbin, you're the number two senator on the Democratic side. How far apart are you with the Republicans to reach a deal?
DURBIN: Well, I think there still is a chasm there. There's work to be done and not much time left. And it's interesting that it does come down to two very basic issues. One is, what percentage of the wealthiest people in America will pay a higher tax rate? And secondly, how many of the richest Americans who pass away should be spared paying extra for estate taxes? So from the Republican side, those remain their highest priorities, protecting the highest income individuals from tax increases and protecting up to 6,000 estates a year from paying an additional $1 million. That's what this is about. We see it differently. What's at stake as far as we're concerned are 98 percent of the American families, working families and middle- income families who shouldn't see their taxes go up on January 1st. That's our highest priority, and as the president added, the 2 million who would lose unemployment benefits immediately if we don't act to change that between now and the deadline.
O'DONNELL: So you say there's a chasm. You don't think there will be a deal today?
DURBIN: I wouldn't go that far. I have been around Washington long enough to know that it takes a deadline, it takes a lot sweat and a lot of worry, and people reach a point where they finally say, all right, let's try to find a way through this. It has happened before and it could happen again.
O'DONNELL: Are Democrats willing to raise that threshold from $250,000 to $400,000 or $500,000?
DURBIN: Well, each time you raise it, you're adding more to the deficit in terms of what we're going to face later on. Tom and I know this, we've been working -- this amazing Washington odd couple has been working on this for a long time. But each time you decide that you're going to protect some of the higher income Americans from paying more in taxes, it imposes more of a burden to cut spending, to reduce expenditures in Medicare and other areas, it becomes very problematic for a lot of working families.
O'DONNELL: Senator Coburn, what are you hearing from your Republican leader? Has he come up with a deal?