About 2. 25 points. The market closing lower once again today, adding to the losses we have been seeing since the election. Is a deal in washington what investors are waiting for to get back into the game . Joining me now is ben pace from deutsch back private wealth management, Scott Collier and our own mandy drury. Good to see everybody. Ben pace, what is behind this selling, and when will it end . Whats your take . I dont think its really economic right now, maria. I think its pretty political. Every pronouncement weve heard over the last four, five days has decreased the likelihood were going to have a quick resolution of bargaining that has to happen in washington. Again, it has to happen. It increases the likelihood that we fall off the cliff for lack of a better term. We still dont think thats over the 50 probability. It was probably 25 to 30 mow. Thats why the markets are where they are. Theyre starting to hit levels now where theyre looking attractive from a dividend yield perspective, distance from our targets at year end, theyre starting to look more attractive at the 1350, 1355 level. So you would put money to work at that 1355 level on the s p 500 . This is an area where were getting interested. We took some money out in september and october thinking that this might happen. I think with the floors were seeing here, this is the area were getting interested. Scott, what do you any . You have to operate your business regardless of whats going on around you. What do you want to do in this tested period were all in right now as we approach year end with no clarity on tax rates . Well, maria a, i think all of this is leading towards clarity. Its all a leading towards certainly, whether its good or bad. Obviously, the conversation were having today, the conversation that weve been having ever since the election is building up towards a very painful resolution of spending and taxation, which i think will provide more certainty. I was always raised in the school of not fighting the fed. Im not going to start now. I think i would rather be where the fed is pushing money. Thats equities. I think id be pushing towards being more exposed in equities, especially at these levels. Even though we see this deterioration with the uncertainty. You basically say the fed is going to, at the end of the day, be a bigger influence on the markets. I think the fed has been a big influence for a very long time on the markets. Absolutely, years. I think we underestimate the force of Monetary Policy. Right now, Monetary Policy in the United States is as easy as its ever been, and globally, its as easy as its ever been. Thats an important thing to remember. No matter what happens with the fiscal cliff, whether we go off or whether we stay out, the point is it will bring certainty. It doesnt feel good, but its a process, and were making it through the process. Therefore, i want to be where the money is going. I want to be in the equity market. I think thats where youd want to have most of your exposure at this point. Good place to get in, valuations are reasonable. I think the future and next year looks very bright for companies and profits. Therefore, equity prices as well. Mandy drury, what are the other catalysts . The problem is, if, in fact, we were to enter recession in 2013, that hits earnings, which has been the strongest part of this recovery. Absolutely. We really do need to get out there and try and find the good things in this market. I was listening to matt a moment ago. He was saying hes really not ready to buy. It feels like theres a buyer strike out there. A lot of fatigue. Think about all the bad headlines. Fiscal cliff, taxes likely going up, middle east escalating in violence. It really feels like a lot of things getting us down. Scott was just pulling out some of the things that are positive, like valuations being reasonable. Theres plenty of easy money. If theres good news, we have to try and find it. Lets hope earnings provide good news going forward. Well, we could try to find it, but is that going to dictate the market . Yeah, well, thats a really good question. I think obviously a lot of companies are struggling right now, especially if the company is also struggling. I think theres so much to con tepid with out there. Maybe thats a question for some of the other guests as to whether or not were going get decent earnings going and whether or not that lifts the market out of its slump. Do you think we see a rebound in earn in the Fourth Quarter . What are you expecting in terms of that fundamental driver of the markets . That is corporate profits and revenue. The last three years youve really seen summer swoons. Slow down in Economic Growth. You have housing bottoming and starting to move up. The consumer is deleveraging. Consumer spending should be reasonably good. Businesses have a lot of cash. You hope theyll start to spend a little bit. I dont think theres going to be a huge refwhoubound in earni. I think the 2013 earnings should be up midsingle digits. I dont think its going to be 15 year next year, but i think it will be mid to high single digits. Sounds like theyre not expecting more than that anyway. So at least thats priced in so far. Thanks, everybody. We appreciate it. Ben, scott, mandy, thanks. See you later. Meanwhile, theres the Financial Services sector to tell you about as well. More bank stress tests. Lets get to mary thompson. She has this breaking news on the stress tests in the banks. Thats right. The Federal Reserve releasing its outline for the stress test for 2013. Banks will be stressed under three different scenarios as mandated by dodd frank as oppose to two last year. The worst Case Scenario has stocks dropping 50 here in the u. S. And unemployment spiking another 4 . Whats different this year in the worst Case Scenario, the Federal Reserve is including a hypothetical slip down in asia with additional weakness in china. Back to you. All right, mary. Thank you so much. Keep it right here. Alan simpson and Erskine Bowles are next on this special rise above edition of the closing bell. Coming up, fixing the fiscal mess. Alan simpson and Erskine Bowles sit down with maria on the eve of the critical meeting between the president and congressional leaders. Could their plan be the key to stopping america from going over the fiscal cliff . This exclusive event is next right here on this special edition of the closing bell. Iy stock screener, you can try strategies from independent experts and see what criteria they use. Such as a 5 yield on dividendpaying stocks. Then you can customize the strategies and narrow down to exactly those stocks you want to follow. Im mark allen of fidelity investments. The expert strategies feature is one more innovative reason serious investors are choosing fidelity. Now get 200 free trades when you open an account. All right. Welcome back. We have a hot show for you today. We are getting down to the brass tax on the fiscal cliff tomorrow. President obama and congressional leaders meet face to face with the clock ticking to new years on the fiscal cliff. For nearly two years, the one plan that has gotten the most support among those outside of washington and even inside has been the Simpson Bowles plan. The two, of course, chaired president obamas debt commission. Two years ago when the plan was presented, it was all but ignored by those in power. Joining me now, the two architects behind the plan, former republican senator alan simpson and former chief of staff for democratic president bill clinton Erskine Bowles. Gentlemen, wonderful to have you on the program. I want to first get to this. Have either of you or together both of you been asked to participate in any way in these fiscal cliff negotiations . Ive talked to most of the members of the white house. I met over the last couple of days with whats called the gang of eight, four republican senators and four democrat senators. Im going to update alan as soon as this ends. Senator, you have not been involved in these talks so far. Hes an hour away. Im all day away. I live in wyoming. Today were 2 1 2 hours late getting out of denver. I have to get my good threads on later. Erskine is the numbers guy. Hes done this before. Hes the last human being on earth to balance the budget in 1996. He knows the game. He furnishes it back to me. He has my proxy on every occasion. We work on it together. I guess were all trying to figure out why it is that the plan has gotten blown off for, you know, a bad choice of words, maybe. Everyone that i have spoken with believes that your plan had the most credible way to actually get our arms around the debt and deficit of this country. Why do you think because the problems are real. The solutions are all painful. Theres no easy way out. These guys who are running for Public Office worship that great god of reelection and havent been focused, i believe, on whats really right for the country. If, in fact, you focus on whats right for the country, youre always going to come down to a solution that reforms the tax code and makes the entitlement programs sustainabley softened. Theyre going to savage this plan. Unbelievable. Senator, earlier this week, you said basically dont count on a fiscal deal before automatic spending cuts and the tax hikes take effect on new years day. Why are you so pessimistic . I used to be rather hopeful, but when you see the same statements come up that came up before the campaign that come up after the campaign, you cant be hopeful. I mean, taxes and entitlements. No taxes on the rich. I mean, the rich want to be taxed. I dont know why we dont tax them. You could tax the rich into oblivion. Who is kidding who . I mean, yesterday president obama made it clear that he not only wants to tax the rich, he wants to raise tax rates, but he also wants to close loopholes. The closing of the loopholes is part of your plan. Lets talk about that. Then reducing rates as well is part of your plan. So why do you differ in terms of what the president said yesterday . He came out with a number. 1. 6 trillion was the report before he came up to the podium, which is double what he was talking about with boehner next year. Talk to us about how your plan works. The interesting thing is if you look at the amount of income tax paid, its about 1. 3 trillion. 1. 1 from individuals, 200 billion from corporations. People always ask how can our marginal rates be so nominally high and net so little money. The reason is we have 1. 1 trillion of back door spending in the tax code. Thats for deductions for credits. What we said is, look, lets wipe out all of those. Lets broaden the base, simplify the code. Lets use 92 of that money that were using from getting rid of the tax expenditures to reduce income tax rates and 8 of the money or about 100 billion a year, to reduce the deficit. 800 billion a year over ten years is where our 1 trillion of our 4 trillion comes from in our deficit reduction plan. And what rate are you going change . 8 , you know, 0 to 70 grand. 14 over that. Take the corporate rate to 36. If you cant do that, you cant tax your way out of this. You cant cut spending your way out of this. You cant grow your way out of this. So grab hold. Its going to be a rocky road. Youre saying closing the loopholes brings you at least 1 trillion. If youre willing to wipe out all of them, and that may not be politically feasible. But you can definitely solve the problem by broadening the base, simplifying the code. Both the president and john boehner, the speaker of the house, speak to be drawing lines in the sand. So this is why people are now becoming like senator simpson and sort of giving up a bit on a deal before year end. Theyre drawing lines in the sand over raising tax rates on the rich. I want you to listen to what they both said yesterday. Listen to this. Youve said that the wealthiest must pay more. Would closing loopholes instead of raising rates for them satisfy you . I think there are loopholes that can be closed, and we should look at how we can make the process of deductions, the filing process easier, simpler, but when it comes to the top 2 , what im not going to do is to extend further a tax cut for folks who dont need it. The issue there is we are not going to hurt our economy and make job creation more difficult, which is exactly what that plan would do. There are ways to put revenue on the table without increasing tax rates. Whats your reaction . Im actually more hopeful than al is. You used to be more depressed. Whats gotn n tten to you . I spent the last few days here. I am more hopeful. We got a democrat president whos in his second term, whos been willing to put entitlement programs on the line. We got a speaker, a republican, who really gets it, who understands that we have to have some decisi additional revenue. We have over half a senate who have embraced a balanced plan like weve proposed. And weve got this fiscal cliff, which will force action. I think they are pretty pitch saying the same thing. Both of them are saying we have to have revenue. The president says, look, i want that revenue to be real. The only way i dont know fknow real for sure it to raise the tax rate. The speaker is saying theres a better way to do it. Thats by reducing the spending in the tax code. I think hes probably willing to confine it to the top 2 . What we have to do is find that middle ground where we make sure so the president knows that were going to get that money but were going to get it in the most productive, economic way we can. The speakers point is you dont want to be raising tax rates now at such a fragile time in the economy. Weve already watched the stock market sell off, you know, 5 in the last week because of this uncertainty over where their tax rates are going. I am really worried that we wont get to a deal. I know we can get to a deal. I know how to get to the deal. We get there by taking some of the money from revenue and some from reducing spending in the tax coat and cutting defense and nondefense and other mandatory spending. You know, thats how we get there. I think thats pretty easy to understand. Whats worrisome is if we get over the cliff, we dont have a deal, and the market doesnt anticipate that were actually going to be so stupid as to go over the cliff, then i think youll see the market really crash, and i think youll see the rating agencies downgrade our credit again. Youll see fitch and moodys join s p. I think youll see corporations lose confidence as to what were going to do, where were going to go. I think youll see them slow down hiring and stop capital expenditures. Well be in a hell of a mess. This is not where we want to go. We dont want to bet the country, especially when there are alternatives to get it den. It upsets me youre worried were not going to get a deal. Thats how i felt. I think theres a onethird probability well get a deal in lame duck. About onethird well go over the cliff and be able to reach a deal right afterwards. Thatll be okay. B but there is that onethird chance we wont and end up in chaos. The markets have felt that no one would be dumb enough to let this happen. Now they can see that it is indeed possible. This could happen. Now they finally sobered up. They were playing it all to be done. No one had ever let this happen. It cant possibly happen. Well, mer ry christmas. Youre absolutely right. Were going to take a short break. Weve been talking about taxes. Were going to get into the other side of the ledger. Were going to talk about spending as well as tax rates. Stay with us. We have this exclusive with Erskine Bowles and al simpson. Back in a moment. Ans believe the in charge of their own future. How theyll live tomorrow. For more than 116 years, Ameriprise Financial has worked for their clients futures. 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Etter one osteoporosisrelated bone fractures and low magnesium levels have been seen with nexium. Possible side effects include headache, diarrhea, and abdominal pain. Other serious stomach conditions may still exist. Talk to your doctor about nexium. Im not going to ask students and seniors and middle class families to pay down the entire deficit while people like me making over 250,000 arent asked to pay a dime more in taxes. Raising tax rates will slow down our ability to create the jobs that everyone says they want. We should not hold the middle class hostage while we debate tax cuts before the wealthy. Ive outlined a framework for how both parties can Work Together to avert the fiscal cliff without raising tax rates. Welcome back to this special edition of the closing bell. I am back with our exclusive interview, Erskine Bowles and senator simpson, the gentlemen behind the architects of the Debt Reduction plan for america that everyone talks about and has the most credibility out there. Gentlemen, we were just hearing about tax talk from the president and from john boehner. Weve been talking a lot about tax rates. It seems thats dominating the conversation. What about spending . Arent we talking about a very small number in terms of revenue that you can actually get from the socalled wealthy, more than 250,000 . In the overall scheme of things, is that going to move the needle on our debt . Shouldnt we also be talking about spending cuts . Were talking about getting between between 80 and 100 billion a year, which is no small number from revenue with when you consider the fact we have a 1. 1 trillion deficit, thats not going to solve our problem. We must also reduce spending if were going to put our fiscal house in order. Senator . People are always