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"Face the Nation" transcripts November 11, 2012: Sen. Graham, David Axelrod

(CBS News) Below is a transcript of "Face the Nation" on November 11, 2012, hosted by CBS News' Bob Schieffer. Guests include Senator Lindsey Graham, R-S.C., Obama senior adviser David Axelrod and a roundtable of Peggy Noonan, David Gergen, Dee Dee Myers, and John Dickerson.

BOB SCHIEFFER: Today on FACE THE NATION, back to reality, the Petraeus thunderbolt and breaking the Washington gridlock.

PRESIDENT BARACK OBAMA: I want to be clear. I'm not wedded to every detail of my plan. I'm open to compromise. I'm open to new ideas. I'm committed to solving our fiscal challenges. But I refuse to accept any approach that isn't balanced.

BOB SCHIEFFER: Can the two sides find a way to get the country back on a sound financial footing before draconian cuts in social and defense programs and an automatic tax increase go into effect at year's end?

SPEAKER JOHN BOEHNER: Well, this is an opportunity for the President to lead. Now, this is his moment to engage the Congress and work towards a solution that can pass both chambers.

BOB SCHIEFFER: If uncertainty over making a deal were not enough, Washington was rocked by the scandal involving CIA Chief David Petraeus. We'll get the latest on Petraeus and the chances of compromise on the financial argument from Republican Senator Lindsey Graham. We'll get inside on the President's thinking from his top strategist David Axelrod.

Then, we'll go to our all-star panel of analysts. Peggy Noonan of The Wall Street Journal, David Gergen of Harvard University, Dee Dee Myers of Vanity Fair, and our own John Dickerson. Election 2012 is in the books, but the story is just beginning. And this is FACE THE NATION.

ANNOUNCER: From CBS News in Washington, FACE THE NATION with Bob Schieffer.

BOB SCHIEFFER: Good morning again on this Veterans Day, and we begin with Senator Graham who's in Clemson, South Carolina. Senator, thank you for coming. You are on the Armed Services Committee, of course, so I want to start out with this out of the blue thunderbolt that hit Washington, Friday, concerning David Petraeus, the CIA director. He resigned saying he had exercised bad judgment and had an affair. CBS News and several other agencies have now confirmed that the FBI got on to this after a third woman told them she had received threatening e-mails from the woman he has reported to have had the affair with. So I guess I would just simply start, do you have any additional information to any of this?

SENATOR LINDSEY GRAHAM (R-South Carolina): No, not really. I was just as surprised and from a national point of view, General Petraeus turned around Iraq, we were losing Iraq when he took over. We had it in good spot. Unfortunately, I think the Obama administration has fumbled the ball with Iraq, but he turned Iraq around (AUDIO CUT) Afghanistan. He's a great general, and his resignation is-- is a loss for the country, but I understand why he had to resign.

BOB SCHIEFFER: Do you, there are-- there are all these stories, these-- these pieces of it that are now coming together that now there seems to be another woman who was involved--

SENATOR LINDSEY GRAHAM: Mm-Hm.

BOB SCHIEFFER: --and she went to the FBI because she was frightened of these e-mails. Do you-- do you think there ought to be a congressional investigation to sort this out or is it best to just go on and leave it where it is?

SENATOR LINDSEY GRAHAM: Well, if there's no effect of the affair on national security, I think we need to move on. But at the end of the day, the one thing that has to happen in my view is we got to get to the bottom of Benghazi. I hate what happened to General Petraeus for his family and the families for those involved, but we have four dead Americans in Benghazi. We have a national security failure along in the making. I don't see how in the world you can find out what happened in Benghazi before, during, and after the attack if General Petraeus doesn't testify. So from my point of view, it's absolutely essential that he give testimony before the Congress, so we can figure out Benghazi and from the Congress's point of view, instead of doing this in a stovepipe way, you've got the Department of Defense that needs to explain themselves, the intelligence committee. God knows the State Department needs to answer for their behavior regarding Benghazi. I would suggest that we have a joint select committee of House and Senate members and we do this together, not have three different committees going off in three different directions, so we can get to the bottom of it like we did in Watergate and Iran-Contra. I think that would be smart for the Congress to combine resources.

BOB SCHIEFFER: Well, you're on record as having said that the administration either deliberately misled people about what led to the deaths of the ambassador and those three other Americans or it was just gross incompetence.

SENATOR LINDSEY GRAHAM: Right.

BOB SCHIEFFER: Now, Susan Rice, who is the U.N. ambassador at this point, was pretty much the point person on this for the administration. She went out on the Sunday shows and first said that it was not a-- a planned terrorist attack, but was result of a spontaneous demonstration. She is now being mentioned as one of those being considered for Secretary of State. Do you think what she said during the early days of this investigation? Should that factor in any way on whether she should be considered as Secretary of State?

SENATOR LINDSEY GRAHAM: Absolutely, without a doubt. I generally defer to presidential selections for cabinets and judges. I voted for both Supreme Court judges, not because I would have chose them, because the President has a lot leeway, and if they're qualified people, I-- I tend to support presidential picks. However, I do reserve until myself and other members of Congress the ability to say no when justified. I cannot imagine promoting anybody associated with Benghazi at this point. It's not just what she said after, how did the place become a death trap for months? Why did we keep it open or not reinforce it? There are too many questions to be answered. I don't quite frankly trust her rendition of Benghazi. So, I think Susan Rice would have an incredibly difficult time getting through the Senate. I would not vote for her unless there's a tremendous opening up of information explaining herself in a way she has not yet done.

BOB SCHIEFFER: Well, I mean, would you try to lead a move to-- to block her from getting the nomination if, in fact, she is nominated?

SENATOR LINDSEY GRAHAM: I-- I'm not-- I'm not-- I'm not entertaining, promoting anybody that I think was involved with the Benghazi debacle. We need to get to the bottom of it. The President has a lot of leeway with me and others when it comes to making appointments, but I'm not going to promote somebody who I think has misled the country or is either incompetent. That's my view of Susan Rice. There are other people out there. I don't want to fight with the President over something like this but there has to be an accountability. You just can't let this happen and act as if there are no consequences. And one of the consequences to me is that Susan Price needs-- Susan Rice needs to be held accountable.

BOB SCHIEFFER: Let's talk a little bit about the election. A lot of talk about your party is going to have to kind of rethink some of its positions. A former chairman of your party--

SENATOR LINDSEY GRAHAM: Yeah.

BOB SCHIEFFER:--said to me the other day, it's the Latino stupid, meaning you're going to have to do something to find a better way to--

SENATOR LINDSEY GRAHAM: Right.

BOB SCHIEFFER:--to appeal to Hispanics. What do you think the impact of the election was on your party, Senator, and what-- what needs to be done here?

SENATOR LINDSEY GRAHAM: Well, the one thing we do not need to do is abandon conservatism and the exit polls of the elections, fifty-one percent of Americans said the government does too much, not too little. Conservatism would sell with Hispanics. They're hard working, entrepreneurial, pro life, pro military. But the truth of the matter is the immigration debate that we engaged in in 2006 and '07, has built a wall between the Republican Party and the Hispanic community because of tone and rhetoric. President Bush received forty-four percent of the Hispanic vote in 2004. By 2008 we were down to thirty-one, and in 2012 we were down to twenty-seven. This is an odd formula for a party to adopt, the fastest growing demographic in the country and we're losing votes every election cycle and it has to stop. It's one thing to shoot yourself in the foot, just don't reload the gun. So, I intend not to reload this gun when it comes to Hispanics. I intend to tear this wall down and pass an immigration reform bill that's an American solution to American problem. But we have nobody to blame but ourselves when it comes to losing Hispanics. And we can't get them back with some effort on our part.

BOB SCHIEFFER: Would that mean finding some path to citizenship for the illegals that are in this country?

SENATOR LINDSEY GRAHAM: It means securing our borders which every American agrees with. It means making sure that you stop, make it harder to hire illegal immigrants, verifying employment. We need to secure the borders. Make sure you can't hire an illegal immigrant because you'll have documents that can't be faked. We need guest workers to make it a win-win for American employers when they can't find workers here. And when it comes to the twelve million, we need to be firm and fair--self-deportation is not going to work. Sixty-five percent of the people in the exit poll this election supported a pathway to citizenship. Here's what I think we should do with the twelve million. Fix it in a way that we don't have a third wave of illegal immigration twenty years from now. That's what Americans want. They want more legal immigration and they want to fix illegal immigration once and for all. Have the twelve million, once you secure the border. And you do nothing until you secure the border. Come out of the shadows, get biometrically identified, start paying taxes, pay a fine for the law they broke. They can't stay unless they learn our language, and they have to get in the back of the line before they can become citizens. They can't cut in front of the line--

BOB SCHIEFFER: All right.

SENATOR LINDSEY GRAHAM: --regarding people who are doing it right. And it could take over a decade to get their green card. I think that's the answer.

BOB SCHIEFFER: All right. We have just a very short time here. I want to ask you about the fiscal cliff. Can the Republicans find a way to get some kind of a compromise with Democrats, so we can avoid this horrendous situation that goes into effect if you don't act?

SENATOR LINDSEY GRAHAM: Fair is not an option for the country when it comes to the fiscal cliff. Say yes to Simpson-Bowles, Mister President. I'm willing to say yes to Simpson-Bowels. We need more revenue in Washington. We need more private sector jobs. We don't need to raise tax rates. We need to limit loopholes and deductions for the wealthy. Mister President, if you'll say yes to Simpson-Bowles when it comes to revenue, so will I and so will most Republicans. We can get revenue without destroying jobs and both of us need to control spending and fix entitlements. No Republican will vote for higher tax rates. We will generate revenue from eliminating deductions and loopholes. But we will insist our Democratic friends reform entitlements something we've never done and that's where the big money is at. Say yes to Simpson-Bowels. We'll get this behind us.

BOB SCHIEFFER: All right. Senator, thank you so much. And now we're going to get the other side of this picture.

And joining us now one of the architects of the President's victory, his senior campaign adviser, David Axelrod, who is out in Chicago. Mister Axelrod, thank you so much for joining us.

DAVID AXELROD (Obama Campaign Senior Advisor): Thanks for having me, Bob.

BOB SCHIEFFER: Let me just start this right on. Friday the President said he was open to compromise, but he said he would not accept any approach to deficit reduction, that does not ask the wealthy to pay more taxes. Speaker Boehner--

DAVID AXELROD: Mm-Hm.

BOB SCHIEFFER: --the Republican Speaker of the House, has already said that's a nonstarter. So, aren't we right back where we were last year?

DAVID AXELROD: Well, I don't think so, Bob, for a couple of reasons. First of all I think the Speaker also said he wasn't going to get into details about what he would or wouldn't accept. He didn't want to foreclose discussions and that was a positive sign. His rhetoric has been encouraging. And I think we have also had an intervening election. And, in fact, the position of the President articulated Friday was the position that he's articulated throughout the campaign. You look at those exit polls, and a healthy majority of Americans agree with him. And that's certainly going to help him form these discussions.

BOB SCHIEFFER: The President won, but this was a very close victory. And it came down to those battleground states. And it was close even there. Does the President feel that he-- he won a mandate?

DAVID AXELROD: Well, Bob, on this particular issue, it wasn't close. As I said if you look at the exit polls-- I think it was somewhere around sixty percent of the American people agreed with the President's position on this issue of taxes. It is obvious that we can't resolve the challenge here simply by cutting the budget. We've cut by a trillion. One, there are more cuts to be made but you need new revenues and everyone-- every objective person who has looked at this agrees on that. So the question is where is that revenue going to come from? The President believes it's more equitable to-- to get that from the wealthiest Americans who have done very well, and frankly, don't need those tax cuts. And-- and who benefitted disproportionately from the tax cuts in the last decade and most Americans agree with that.

BOB SCHIEFFER: Well, Speaker Boehner seemed to suggest that he was open to-- to closing loopholes to-- to real tax reform. Can you get there by just closing loopholes or will it take more than that?

DAVID AXELROD: Well, look, I don't want to prejudge the discussions. I think that the Speaker's comments have been encouraging. And, obviously, there are-- there are-- there's money to be gained by closing some of these-- closing some of these loopholes and applying them to deficit reduction. So I think there are a lot of ways to skin this cat, so long as everybody comes with a positive, constructive attitude toward the task.

BOB SCHIEFFER: Let's talk a little bit about the campaign. When did you know you had this won?

DAVID AXELROD: We went into Election Day with confidence, and we had-- I had reams of data from these young kids who do these analytics on-- on-- based on polling and based on our other data we gathered, and-- and they pretty much hit it on the nose. So when the votes started coming in and matched up with the model that they had created, and in one state after another, you know, we were-- we-- we-- we knew that we were in good shape by-- by eight or eight fifteen that evening, we were pretty confident that this race was going to be-- be ours and it was just a matter of time, and less time, frankly, than we anticipated.

BOB SCHIEFFER: Was there any time during this campaign that you thought it might slip away, like, for example, after that first debate? Obviously, there was some kind of a shift there.

DAVID AXELROD: There was. But most of the shift after the first debate allowed Governor Romney to reclaim what he had lost after their convention, which wasn't very successful, and the forty-seven-percent tape that became so-- so well known across the country and was a negative for him. A lot of those in-- Republican-leaning independents who had moved away from him came back, so it was less about our losing ground than him gaining. And what it did was restore the race to the one that we had before the conventions and the one that we had always anticipated, where we were narrowly ahead. But we never relinquished that lead in our data. And, you know, obviously, looking state by state, you know, we were-- we were-- we were pretty confident what-- what is remarkable-- remarkable about this race, Bob, isn't the volatility of it or wasn't the volatility of it. There was this illusion of volatility that was created by the spate of public polls, many of which varied, even on this very same day. But in our own data, it was a very steady race. We maintained a-- a strong-- a narrow lead but a consistent lead, really for months and months and months and it didn't fluctuate by much.

BOB SCHIEFFER: We saw something when the President came to your headquarters to say thanks to all the young volunteers.

DAVID AXELROD: Yeah.

BOB SCHIEFFER: We saw a side of President Obama we don't often see. I want to just roll a little of that tape and then ask you about it.

PRESIDENT BARRACK OBAMA (Obama Campaign Video; Thursday): What you guys have done means that the work that I'm doing is important and I'm really proud of that. I'm really proud of all of you. And-- and-- and what you describe--

(Crowd cheering)

BOB SCHIEFFER: It actually seemed that the President was brushing away a tear there. We don't see that much emotion from the President. What was it like to be there?

DAVID AXELROD: Oh, my. I was standing ten feet away and I was brushing tears away myself as were many of those young people. And so when he looked at those young kids and their sense of idealism and all the sacrifices they had made, not just for him but for the kind of country that they believe in, he really was overcome. And the President went around after that speech and he-- and he met with every single kid in the headquarters, gave them a hug and a handshake and a thanks and I think that hug and handshake and thanks has sent them off in a direction where they're going to make great contributions in the future, and it really was a wonderful coda on a-- on a great campaign.

BOB SCHIEFFER: And what about you? What do you do next?

DAVID AXELROD: Well, I'm going down-- in keeping with that-- I'm going to spend part of my time starting an institute of politics at the University of Chicago. My feeling is if I can help inspire some young people to get into this arena as candidates, as strategists, as journalists, then that would be a great contribution to make.

BOB SCHIEFFER: David Axelrod, thank you so much.

And we'll be back in a minute.

(ANNOUNCEMENTS)

BOB SCHIEFFER: Our other panelists will be along shortly. But I want to start with David Gergen and Peggy Noonan. David, I want to get back to this Petraeus situation. You knew both General Petraeus and this woman who allegedly he was involved in.

DAVID GERGEN (Harvard University): I have known both of them for several years and I consider them friends. I have a very high regard for both. In the last thirty-six hours I have communicated with both by internet. We've had back and forth. I sent them messages of support because I think this is a national tragedy. It's a tragedy not only for the families, for the individuals involved I think it's a tragedy for the country. David Petraeus is a warrior-scholar. I think he's been one of the finest leaders of his generation. He is an iconic figure for any number of young troops. Bob, I can't tell you in the last few days I have talked to people who served under him and they are devastated by this because they look up to him so much.

BOB SCHIEFFER: Well, do you think-- it-- it seemed like they were really anxious to get him out of there once this happened.

DAVID GERGEN: Well, you know-- you know, it's hard to tell. The accounts about Mister Clapper and sort of telling him he'd really needed to resign, I think, you know, I only know that secondarily through the press. I also will tell you this that the code of honor goes very deep in General Petraeus. And I do believe that he-- he is-- you know, that he has a sense of shame about this, a sense that he's acted dishonorably, and he would act out of a sense of honor. I think that's-- I can't tell you how important, it's so-- you know, it's what they teach in the military, and it's what he lived up to all his life. You know, it-- it-- I would hope people would remember there have been other great leaders in this country. Remember K-- President Eisenhower, when he was General Eisenhower and Kay Summersby, how important that relationship was to him. Remember Franklin Roosevelt and Lucy Mercer, how important that relationship was to him in Second World War. There, you know, we have to-- I think we have to be understanding that as the saying goes the best of men are still men--men at their best.

BOB SCHIEFFER: Peggy, you are one of them?

PEGGY NOONAN (Wall Street Journal): Yeah, to tell you the truth, I am-- I think this story is a little mysterious. I don't really understand why the General, having made a painful mistake, painful for himself and his family, why he had to leave, and why he was, according to the press advised, to leave. And I understand what he would feel is the breach of honor, but this is a truly great and constructive American career. And-- and I'm just not sure why he had to leave. Second thing is I don't think anybody quite understands how the FBI could have been going through his e-mail, and the FBI leaders didn't know, Justice didn't know. How did this begin? How did it go forward? When was the White House told? You just have to wonder what the heck is this.

BOB SCHIEFFER: Well, we're going to talk some more about this on page two. I'll be right back with some thoughts of my own.

(ANNOUNCEMENTS)

BOB SCHIEFFER: This was a close election, so there were almost as many people who felt bad about it as good about it. So if you're one of those who is down in the dumps just think about how Linda McMahon feels. She just lost her second Senate race in a row in Connecticut, despite spending one hundred million dollars of her own money. You wonder if she'll try again. Well, you can bet all those consultants and campaign commercial makers are already lining up to tell her, "Listen, third time may be a charm." And what about that Las Vegas casino owner, Sheldon Adelson? How do you think he feels? He poured sixty million dollars into eight super PACs. That's a record for political contributions. But not one of his eight candidates won. But he's from Vegas. He knows it's all a roll of the dice anyway. I have never been one to tell people how to spend their money. It is their money. They can spend it as they choose and the Supreme Court says they can spend all of it on politics now, if they like. But I can remember the days when rich people gave their extra cash to charity. They actually sometimes saw some great results.

Back in a minute.

(ANNOUNCEMENTS)

BOB SCHIEFFER: Some of our stations are leaving us now, but for most of you, we will be back with more from our all-star panelists, all those political experts. Stay with us.

(ANNOUNCEMENTS)

BOB SCHIEFFER: And welcome back to FACE THE NATION. We're on page two now, and we're going to continue the discussion with Peggy Noonan and David Gergen, adding Dee Dee Myers, who was the press secretary for President Clinton, is now a contributor to Vanity Fair, and our own political director John Dickerson, of course. David, I want to go back to you. Someone was just saying your Twitter feed might blow up--

DAVID GERGEN: Dee Dee-- Dee Dee made that point.

DEE DEE MYERS (overlapping): I was saying, yes.

DAVID GERGEN: I want to make clear-- I'm not condoning what David Petraeus did, nor what the woman did. You know, but I do think that people are human. We have worked for human leaders ourselves, Dee Dee. And we understand that people ought to be sort of take it in context and understand when people are human they make mistakes. Some of our greatest moral leaders have done that. There's just a new book out about Thomas Jefferson and his, you know, his weaknesses he experienced in life and, yet, he was a great leader of this country. And what I do believe is that we should-- we should see it in the larger context and that is General Petraeus has given this country distinguished service for over forty years. He has put his life on the line on a continuous basis. He was nearly killed in service earlier on. And he has been a wonderful, wonderful role model for a lot of people, and we ought to understand his humanness and appreciate that.

DEE DEE MYERS (Vanity Fair): And I-- I think the American people are-- are-- are willing to forgive leaders for their imperfections. I really do even in this area. I don't think that's the question here. I think people-- I think people don't like it but they also don't think it's disqualifying. But I think this case raises so many other questions, as Peggy was saying earlier. It just seems incongruous right now that-- that it got from this relationship to the FBI to him resigning and being urged to resign by Clapper. It just seems like there is a lot of questions that haven't been answered.

BOB SCHIEFFER: The part that interests me is do we think-- does anybody have a suggestion that this had anything to do with anything besides what this extramarital affair? Was somebody upset with General Petraeus about what happened in Benghazi? I think Lindsey Graham is right when he says we need to have an investigation not just of this incident, but of this whole business, Peggy.

PEGGY NOONAN (Wall Street Journal): This is one of those what the heck is going on kind of moments where you have so many questions, as many people are saying off the record. This feels a little homeland, almost.

BOB SCHIEFFER: Yeah.

PEGGY NOONAN: You know what I mean. It's a little too mysterious. Look, I come back to where I started. Petraeus is a great guy. He has sacrificed for his country for forty years. It is a shame to lose him over this and I just have to ask why do we have to lose him over this? That actually makes no sense to me.

BOB SCHIEFFER: So do you think they moved too fast?

PEGGY NOONAN: I don't know what they knew but it looks very strange. I do not understand why they could not-- I guess I hope we'll find out why they-- why it wasn't a scenario in which they said, okay, we've got a problem. We see a problem. General, you have to know this. He said, "I'm very sorry, that's over, move forward" I don't understand why you have to leave over this.

DAVID GERGEN: Let me say, there are a lot of people out there who do have skepticism. They-- they-- they think maybe it is somehow tied to Benghazi. I think Lindsey Graham was right. General Petraeus should testify, the Congress should ask him, they should speak to him whatever, but he should testify to lay those doubts to rest. But-- but the second thing I don't know what happened and why he resigned. I don't know the internals. But I will bet dollars to doughnuts that there was a voluntary aspect to this that he himself felt that under the circumstances he should-- he should resign. That was the honorable thing to do.

JOHN DICKERSON (CBS News Political Director): I think the-- the distinction here is whether he should lose his reputation or lose his job and I think David is right, don't let the worst thing about a person become the most true thing about them.

DAVID GERGEN: That's true. Well stated.

JOHN DICKERSON: And I think that your point on the job is what's the standard of behavior for everybody in the CIA? They would probably be out if they were in a condition where the person they've had the affair with there was access to their e-mail just as a security breach kind of thing. And so he probably has to go because if--

DAVID GERGEN: Why-- why-- why she didn't-- why didn't she have access to his e-mails? We don't-- we don't have any evidence of that.

JOHN DICKERSON: Right. I mean who knows. We don't know. But in terms of the job he had--

DAVID GERGEN: Yeah.

JOHN DICKERSON: --which was keeping secrets and not had-- letting people get access to secret things, you can't be stay in that job, it seems to me, if you've had this happen, separate and apart from the question of his reputation. But I-- I think Lindsey Graham whether you're on the left or the right it seems to me if you're-- even if you have the President's interests at heart, you want an investigation so this can be dispensed with. Otherwise, this will be the rumor that dogs. Just the Benghazi question needs to be clarified. And as the President has said, by the way, get all the answers on the table fast or-- or it's just going to be dogging him for the whole second term.

BOB SCHIEFFER: We have a lot to talk about this morning. I want to talk a little bit about the election now that we've had some chance to kind of sink in and think about it. John, I know you've been doing a lot of reporting out in Ohio since the election.

JOHN DICKERSON: I just didn't get enough of Ohio during the election, so I had to make some more calls about it. I mean, they didn't see it coming. The Romney campaign did not see it coming. I talked to several people and they said, we weren't just cautiously optimistic on election night, we were optimistic when they found out they lost. Another person said it was like a death in the family. So how did they get it wrong? And Ohio is a good place to look for that. Basically, they didn't see that the Af-- that the President was going to be able to do with minority voters, Hispanics and African-Americans--in Ohio the question is really more about African-Americans. They just didn't think he'd have the turnout that he did. And they just-- they just missed it. And when people would raise the question and say, you know, all these public polls are suggesting the President is doing pretty well, the senior staff would say-- they would just dismiss those polls and say these polls are sampling Democrats too heavily. That's just not the way this election is going to turn out. And they just-- they just missed it. And-- and they also, though-- you know, there were two other things in Ohio. If you look at the counties where Romney did well relative to George Bush in 2004, he did well in the coal counties where they were able to effectively use the President's policies about coal against him. Where did he do poorly? In the auto counties.

DAVID GERGEN: Yeah.

JOHN DICKERSON: And that-- you just-- you see it in the turnout. And then I think finally the-- the-- the Obama adminis-- the Obama campaign was effective in turning Romney into a symbol of all of the things in the economy that had hurt people in the middle class. He was using outsourcing. He was using offshoring. He-- they painted him not just as a bad guy but as the kind of bad guy who had led to the economic situation that a lot of these people were in.

BOB SCHIEFFER: Well, I-- I-- I-- I have to go back to you. It seems to me in the beginning they just made a strategic mistake about Ohio. I mean why would you go and campaign against the auto bailout in a place where it worked, where they put people back to work? I mean that seems like an odd way to go about it. And I don't think it's the polling--in the end that they didn't understand. I mean, that-- why would you use that? That was the-- that was the thrust of their message out there. The auto bailout was wrong.

JOHN DICKERSON: Yeah. Well, they thought-- what-- what-- what con-- confused them a little bit is they thought it's about independence in-- in Ohio and we're doing well. They targeted independents, knocked on their doors. These are people who hadn't participated in the primaries of either party, and they were winning with those independents. A senior strategist said to me, he said, "If Mitt Romney loses Ohio, I'll give you a thousand dollars to your favorite charity for every point he wins among independents." His argument was there's no way he can lose the state if he wins among independents. Mitt Romney won independents by ten points in Ohio, lost the state. They just had it different-- no.

BOB SCHIEFFER: Barack Obama also won white working class voters in Ohio, which he didn't do very well with him in other places.

JOHN DICKERSON: Well, what he did in Ohio was he did well enough with White working class voters. And then the African-American turnout in Ohio was eleven percent in 2008. It was fifteen percent in this election. Why did that happen? The-- the strategists I talked to sort of were like, well, of course, Barack Obama is going to do well with African-Americans. If you look at African-Americans, two things that you talk to strategists who know the African-American community. One, there was an effort by Republicans in states from Pennsylvania to Florida, Ohio, to shrink the amount of days that-- and ways in which African-Americans could vote.

BOB SCHIEFFER: You know, to me, the most telling statistic in this whole race, Dee Dee, is when I read and learned from those exit polls that Barack Obama had won the Cuban vote in Florida.

PEGGY NOONAN: Yeah.

DEE DEE MYERS: Yeah. Right. In Florida. And the-- the Hispanic vote made up the entire margin in Florida, ended up being seventy-three thousand votes, right? And that can all-- you can trace it a lot of different ways, but that's one of them. That's a pretty surprising. And what the Obama campaign will tell you is that not only was their turnout operation every good as-- every bit as good as they said and better. But that their message was better, that they won this because they appealed to middle-class voters. They said who will do a better job taking care of people like you. And middle-class voters, in particular, resoundingly said, yes.

The other thing is as John sort of alluded to was when you try to suppress the vote, you try to deny people their franchise through voter ID and other laws it really makes them mad, right? And that helps to explain why so many people in the col-- counties around Cleveland, for example, why African-American turnout went up. They stood in line for seven, eight hours, even before Election Day, in order to make sure that their votes counted. People were still voting in Florida after the President was declared the winner because they wanted to make sure their vote counted.

BOB SCHIEFFER: You know-- you know, Peggy, there's-- there's little doubt in my mind that the Republicans are going to come up with something different when it comes to Hispanics. Do you think they can find a way to appeal to Hispanic voters?

PEGGY NOONAN: I think they can. I think they should. I-- I would start with this. Everything that we-- that we just heard sounds extremely true, but maybe the overall message of this campaign is that a lot of Americans don't like the Republican Party as they currently perceive it--its attitudes; its way of dealing with people. It seems to me this is a very promising moment for Republicans. There was a question in-- two questions in the exit polls. One was, as Dee Dee mentions, who cares about you? And that was the Democrats. But who shares your values was the Republicans. So we have a whole nation of-- we have a lot of people who-- who agree with conservative values, but it wasn't reflected in the-- in the voting the other day. I think the party should take this opportunity to change itself in many ways. One of the things that must change is its public face and its attitude. And, yes, of course, it should move forward on immigration. It just should.

BOB SCHIEFFER: We're going to have to take a little break here. We'll come back and talk about all of this and more, in a minute.

(ANNOUNCEMENTS)

BOB SCHIEFFER: Back now with our political panel. I want to-- Peggy, I want to let you finish your thought there. You were talking about changes that are coming.

PEGGY NOONAN: Yeah, well, one of the things I think I am seeing is that the Republican establishment in Washington and the establishments wherever they exist in the country, they took a shock. They are somewhat concussed. However, the base itself has been shocked and is somewhat concussed. And I think sometimes at moments of shock, you can look at yourself and you can say there are ways I need to change. So I-- I actually consider this promising in some ways. It-- it can move forward things in a good way. I think the-- the Tea Party is going to have to look at itself. It's been so helpful to the Republican Party in the past. It saved it by not going third party in 2010, helping the Republicans sweep the House. But the Tea Party-style of rage is not one that wins over converts and makes people lean for-- toward them and say I want to listen to you. I think a friendly persuasion has to begin now from the Republican Party to the people of the United States.

BOB SCHIEFFER: David.

DAVID GERGEN: Well, let's go back to basics. This is a-- this is a race Republicans should have won. They thought they were going to win it. They thought they'd take back the Senate. I think for starters, the Ob-- Obama team outplayed them the Romney team, on a regular basis. Over the three hundred and sixty-five days of the campaign, the Obama team won three hundred and sixty-four. They lost one, October 3rd, the night of the first debate, and the rest of it, the Obama team simply outplayed them and you go all the way through them. I do think to go back to what Peggy is saying that the Republican Party has got a fundamental problem and that is, this is a center-right part country. This is a-- a-- a country where the Republicans should do well. But they're increasingly perceived as radical right. And they left a lot of people behind. There were any number of women who would have voted Republican this time. The women's vote was actually big-- much bigger deal in this--

PEGGY NOONAN: Yeah.

DAVID GERGEN: --than was the Latino vote. And the fact that so many women who would have gone with him on economic issues but got turned off on the social issues is really important. So there-- and there is a-- as we go-- approach this grand bargain, there is a tension in this party that they've got to resolve, Peggy. And I don't know whether they can because I keep hearing, look, Mitch McConnell is going up-- is going to be up in two years. Lamar Alexander is going to be up in two years. Saxby Chambliss is going to be up in two years. Can those guys afford to sign on to tax increases? Are they then going to face primaries like Dick Lugar did and some of these other people did back in their home states?

DEE DEE MYERS: Right.

DAVID GERGEN: That's the tension in this party. It's very serious.

DEE DEE MYERS: Even the Republican Party--

PEGGY NOONAN: If the Tea Party keeps having primary-itis, they are going to keep losing, we know that and they will not be amused.

DAVID GERGEN: Yeah.

PEGGY NOONAN: They'll continue losing their country.

DEE DEE MYERS: But they-- they will keep having primary-itis as long as the Tea Party occupies a big-- a big swath of the Republican base. And the Tea Party, while very helpful in 2010, has always been more a sign of problems and dysfunction within the party than of help. You don't have the party essentially splitting and having, you know, the-- the electorate being try-- you know, dragged kicking and screaming to the right if things are going well. The-- the Republicans will control the Senate now but for the Tea Party-- electing five Tea Party--

PEGGY NOONAN: It's true. That's true too.

DAVID GERGEN: Exactly but they wouldn't have the House-- but they wouldn't have the House and that's what makes it (INDISTINCT).

PEGGY NOONAN: That's true, too.

DEE DEE MYERS: And that's why I think that the question--

PEGGY NOONAN: They wouldn't have energy and dynamism--

DAVID GERGEN: Exactly and that's their tension.

PEGGY NOONAN: --at least--

DAVID GERGEN: It's a problem. It's a dilemma.

PEGGY NOONAN: They were the ones who aren't feeling defeated.

DEE DEE MYERS: But if that energy and dynamism can move toward reform, great.

PEGGY NOONAN: Yes.

DEE DEE MYERS: But if it's, you know, because I think there's this tension now in the Republican base. You said they got a shock but it's-- it's unclear whether the shock is. We need to change or the shock was-- I was sent to stop this guy Obama from, you know, raising tax or doing all these other terrible things to the country, that's unresolved.

BOB SCHIEFFER: Let-- let me ask you something, Dee Dee. There's going to have to be some changes, I would think, in the administration and in the Democratic Party. After all, the President has had four years to try to break this deadlock and he hasn't been able to do it yet. I'm not saying it's all his fault.

DEE DEE MYERS: Right.

BOB SCHIEFFER: But didn't he going to have to give a little hear?

DEE DEE MYERS: No question. And he said, look, I have my-- on my plans but I'm-- doesn't-- I'm willing to compromise, I'm willing to listen and I'm willing, you know, to-- to-- to entertain new ideas. The truth, though, the President has the upper hand right now, right? Not only was he re-elected by a-- by a pretty convincing, you know, electorate. He also, you know, picked up-- we picked up seats in the House and the Senate and with the fiscal-- and-- and sixty percent of Americans, by the way, agree with him on taxes. They think taxes need to go up for the wealthiest so that everybody pays their fair share. They agree with him that we need a balanced approach. How is that going to play out, right? That's the sixty-four-million-dollar question as we approach the end of this year, the lame-duck session. How does the President-- he doesn't want to drive the country over the fiscal cliff, but is he willing to let tax cuts expire for everyone if Republicans won't agree to raise taxes for the wealthiest? That's the-- that's the main tension and it is going to affect everything else happening in the next two months.

BOB SCHIEFFER: What do you think, John?

JOHN DICKERSON: Well, I think one important thing is the President is no longer up for re-election and so Republicans can work for him without fear of helping his electoral chances and that might help things a little bit in terms of its negotiation. I would love to see how the Obama-Boehner golf game Part Two might go because Boehner now has to make a choice. He wants-- he has a legacy and he is a kind of a dealmaker by natural inclination. He has to figure out what his two hundred and thirty-some odd members took away from this election. How many of the re-elected Tea Party-type members feel like they were sent to Washington because they refused to compromise and how many are available for this new kind of compromise that would be necessary to get a grand bargain--

BOB SCHIEFFER: So--

JOHN DICKERSON: --and where he lands is the most interesting question to me.

BOB SCHIEFFER: --what-- what happens next, David? I mean and let's just talk about this. Unless they find some compromise here, you're going to see these horrendous across-the-board cuts in defense and social programs. You're also going to see these tax cuts expire which means everybody gets a tax increase. Do you think they can do it before the end of the year or will they just kick it down the road?

DAVID GERGEN: I-- I think they can find a way to postpone the fiscal cliff for another six months to a year. I think that's-- that's certainly doable because everybody understands you're going to get tipped into recession and everybody pays a price if you do that. And, you know, they-- they're often dumb in Washington but they're not crazy. And I just don't think they'll let us go over the cliff. The real question to me is can they begin to fashion a bargain that is based on Simpson-Bowles. I thought Lindsey Graham earlier in your show, Bob, was very smart by going to-- to Simpson-Bowles because I think there are going to be Democrats who want Simpson-Bowles or some would disagree with it but the question to me is if the Republicans are willing to take Simpson-Bowles, will the Democrats take it, it's not clear.

PEGGY NOONAN: Yeah, that's a question. You know--

JOHN DICKERSON: And the President-- and can the President sell (INDISTINCT) entitlement--

BOB SCHIEFFER: If they do Simpson-Bowles, Republicans in the House will have to disavow the pledge they took not to raise taxes that they all took.

JOHN DICKERSON: They have a little escape route-- they may have to do that for sure. But the escape route could be through tax reform.

PEGGY NOONAN: Yeah.

JOHN DICKERSON: Which is to say we're not going to-- the rate doesn't change but you remove a lot of deduction so you get some revenue and it gives you a rhetorical way out to say we never raised rates.

DEE DEE MYERS: Well, and the challenge is, you canot do tax reform in the next two months, right?

JOHN DICKERSON: Yes.

DEE DEE MYERS: You-- and-- and the tax rates as they are now expire December 31st on New Year's Eve.

DAVID GERGEN: That's right. That's right.

DEE DEE MYERS: So how do you get to a compromise.

BOB SCHIEFFER: So what--

(Cross talking)

DAVID GERGEN: You can extend it. But, look, the Washington Post on its editorial today pointed out that you can keep tax rates exactly where they are, limit deductions to fifty thousand dollars and you would raise as much basically as you would raise by increasing rates on the wealthy. And that-- that would be a fair compromise, as long as it's accompanied by entitlement reform.

DEE DEE MYERS: It would. And it's what the--

BOB SCHIEFFER: But wouldn't that mean that the President would then be willing to extend tax cuts for the wealthy?

DAVID GERGEN: But at that rate. But with the understanding, it's got to be tied to actual reform. And that's the trick, how do you-- what's the trigger mechanism.

DEE DEE MYERS: And I think you're hearing the President is the wealthy have to pay more. He's not saying rates have to go up. They've been very careful.

DAVID GERGEN: That's right.

DEE DEE MYERS: We heard David Axelrod say the same thing this morning. He didn't say rates.

DAVID GERGEN: But-- but-- but-- what about Jay Carney when you--

DEE DEE MYERS: Well, it's an opening position. He's the press secretary. I feel his pain. You go out there and you stand by the administration position which is Clinton tax rates.

DAVID GERGEN: So it-- it could be an operative soon.

DEE DEE MYERS: Yeah, it could be that we evolve you know. We were all hoping for some evolution here.

BOB SCHIEFFER: And when did evolution become so popular? You know, Sean Hannity has now evolved--

DEE DEE MYERS: Right. Right. Immigration, yeah.

BOB SCHIEFFER: --on a path to citizenship for-- for Hispanics. I mean evolution is suddenly the word of the hour here.

DAVID GERGEN: That's right.

PEGGY NOONAN: Well, the--

DAVID GERGEN: Better than creationism.

PEGGY NOONAN: --the President evolved before Sean Hannity did.

BOB SCHIEFFER: Creation, maybe we need some creationism here-- create some new ways to do things.

JOHN DICKERSON: It would be nice if the evolution brought a new species to Washington and get something done. The-- what would be interesting about a deal in-- in which the President said, okay, we're not going to raise rates it's that he said he will be able-- remember in 2010 after the election the President worked out a deal with congress, and he-- he extended the Bush-era tax cuts, but he got a lot of things that liberals wanted. So he gave in on his big thing, which was that this top rate would have to go up but he also got stuff that liberals wanted. That kind of a deal could work out here. If he says we get revenue, we don't raise the rate but he can say look at all these good things I got. That's a kind of a template for how this might work out.

PEGGY NOONAN: And through tax reform they would also be making our impossible, ridiculous tax code more coherent, more efficient, more helpful, which a lot of people would like.

DEE DEE MYERS: Very successful in 1986 when they lowered rates, limited deductions--

PEGGY NOONAN: It's certainly gross. And Republicans, in fairness, Republicans have been saying for a long time do tax reform, not just a tax hike, do the reform. The rich will pay more if you put a cap of, say, fifty thousand dollars on what they can write off each year. You can work it out.

DAVID GERGEN: Do you think-- my sense is, Peggy, that the President is right if he establishes two principles (a) we have to have more revenue. I think more Republicans are coming around to that. And (b) the rich need to pay a higher proportion. How you get there is-- is a question. But those are the basic principles.

PEGGY NOONAN: But how you-- yeah.

BOB SCHIEFFER: Does anybody think--

PEGGY NOONAN: But how you get there is very meaningful.

DAVID GERGEN: Yeah.

PEGGY NOONAN: One way would be very hard for Republicans; another way would be much more acceptable.

DAVID GERGEN: Exactly. I totally agree.

PEGGY NOONAN: Indeed, many Republicans have been pushing it.

DAVID GERGEN: I agree with you.

JOHN DICKERSON: And-- just back to David's point, you have to figure out the shape of the animal on entitlements.

DEE DEE MYERS: Right.

JOHN DICKERSON: What that compromise is--

DEE DEE MYERS: Yeah, we've forgotten that.

JOHN DICKERSON: --and-- and we're all going to forget the rhetoric of the campaign by the way, where it used to be, if you touched Medicare, you were terrible and horrible. Now everybody's going to be finding a way to--

PEGGY NOONAN: Absolutely.

DEE DEE MYERS: And by the way, there is this whole other question of-- of the sequester, right, which takes effect beginning in January. And so you have to deal with that in the lame duck as well. You have to come up with some kind of a down payment--

DAVID GERGEN: You got to find some way to-- yeah, that's right.

DEE DEE MYERS: --right on those hundred and ten billion dollars in-- in cuts that will take effect in the coming year if something's done.

DAVID GERGEN: Sounds like a lot of fees.

PEGGY NOONAN: Can I have a dream?

DEE DEE MYERS: Yeah.

BOB SCHIEFFER: I will let Peggy have the last word.

PEGGY NOONAN: My dream is that after this election, two things that are a little surprising will happen. One is that the President's approach will be newly magnanimous and eager to make sound history quickly. It will add to his legacy. It will be helpful to the American people. And the Republicans on the other hand will be newly sober and thoughtful and brave and Republican leaders in Washington will come forward and say this isn't a perfect deal but it's a good deal. Move forward.

BOB SCHIEFFER: All right. I'm sure you were right. You got it right.

PEGGY NOONAN: I know. Beautiful. You never know.

BOB SCHIEFFER: You got it right. We're going to be back with this week's FACE THE NATION Flashback in a minute. Thank you all of you.

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