>> reporter: the real mystery is how did that assault rifle not fall off on the drive to starbuck's. truth be told, we had to do a couple of tapes because the coffee cup stuck. jeanne moos, cnn, new york. that's it for me, thanks very much for watching. i'm wolf blitzer in the situation room. for international viewers, world report is next. in north america, "john king usa" starts right now. thank you, wolf. i am jessica yellin for john king. we begin with new information on the deadly insurgent attack at the hotel in afghanistan. nine gunmen staged that attack, all nine were killed by nato and security forces. two officers were killed in that violence. despite the taliban's immediate claim of responsibility, today, the afghan government blamed the

attack on the has can ee network, a million tant group based in pakistan. an american phd student staying at the hotel as the attack unfolded told cnn there were explosions all around him. >> when they got closer, my room started to shake. i was on the floor in the corner of the room, the safest place i could think of. one of them went off below me. because i felt like i kind of popped up a bit. i didn't go flying into the air, but felt the ground move up. then i was just praying that the next one wouldn't be right under me or above me. >> we are joined by jerome starky, reporter with the london times who was in kabul. jerome, at first it was thought taliban were behind this. now this group related to al qaeda is believed to be responsible. tell us a little bit about who they are and generally what do we know about them? >> reporter: well, the hakini

are based in the mountainous area along the border with pakistan. their headquarters, base, safe haven is in fact in neighboring pakistan, led by a man and his son. they are widely considered one of the most extreme, most hard line of the three main insurgent groups fighting here inside afghanistan. they are also considered to be the least amenable to possible future peace talks. certainly this attack on kabul's inter continental hotel has all of the hallmarks of the hakani network. they have pulled off the most awe dashs, complex, daring attacks against particularly difficult or well defended targets. afghan officials and indeed u.s. and nato officials here in kabul say they believe this attack has all the hallmarks of being

carried out, planned and carried out by hakani fighters. >> as you allude to it, it was a brazen bombing. but we're still learning more how it was pulled off. what new information do you have? >> reporter: interestingly, we understand there were nine attackers that managed to sneak up on the hotel through a wooded slope underneath the building, thereby avoiding the only road in and out, which is heavily defended by two police check points. afghan police are still sifting through the debris of this attack, searching for clues amongst rubble, searching for anything that will help them identify the people responsible and crucially now identify the people that helped the nine attackers, all nine men involved in the attack were killed during the course of the battle which lasted more than seven hours. but we understand afghan police have launched a major

investigation. they are trying to identify who it was who drove these men, complete with rocket propelled grenades, ak-47 assault rifles, and indeed a russian made heavy machine gun. how did these men get driven to the scene of the hotel, who was their support network, who was behind it. that investigation very much in full swing at the moment. >> and i understand you were nearby when the attack took place. would you describe what you saw on the scene at the time? >> reporter: well, i moved to a nearby hilltop a few hundred meters away from the intercontinental hotel where i knew i would be able to see what happened. as i crested the hill, it was very late at night, it was darkness. i thought i could hear helicopters overhead. as i came over the crest of the hill and i saw the hotel on the skyline, i realized it wasn't helicopters, that sound was in fact the sheer weight of gunfire

coming from the hotel, possibly from anti-aircraft arching into the sky, and inter spursed with explosions of suicide bombs and grenades going off. it was an intense battle going on in the hotel. >> terrifying scene, no doubt. jerome starky reporting from kabul. thank you very much. today from the intercontinental hotel a conference was supposed to be held detailing security forces to the afghans themselves. it is part of obama's plan to reduce the american presence there. what's going to happen when the u.s. military leaves? cnn nick patton walsh has answers from an isolated military outpost. >> reporter: everywhere you look here on the eastern border, the choices aren't good. out post caught between the

taliban. if the americans leave, militants from pakistan will flow through the valley. if they stay, then every few days this happens. mortars hit the base. the last attack was long enough ago there's panic. they are worried the taliban have been preparing a big one. for days they have finally amassed around the compound and attacked. >> come on, hustle up, grab it and be ready. >> reporter: they use mortar first. the incoming fire is very accurate here. they arrange cover from heavy machine guns. >> as soon as they go, go quick. >> reporter: but the bullets are

too close. >> never mind. >> reporter: locals scatters, just before huge american fire power have the last word. four massive air strikes on the hills and then the taliban fall silent. america new why it came here, but isn't sure why it's staying. >> can you get a -- >> reporter: ten minutes later, jets swoop in to the hills. a show of force for the taliban are now either gone or dead, at least five killed by the soldiers' count. next morning, it starts again. mortars and rocket propelled grenades pound the base. for a second time in 15 hours,

under attack. much heavier this time, and appears they have taken casualties. >> reporter: more air strikes. this valley is vital strategically. but doesn't want to be conquered. medics fly in to collect one soldier. his injuries are not life-threatening. there's no real victory to be had here. just a question of how long they will stay growing louder. nick paten walsh, puna, afghanistan. coming up next, here in the u.s., is michele bachmann getting more media scrutiny than her male counterparts in the gop race? is that because she's a woman? we will get answers. and what to protesters in greece have to do with the economy in the united states. we'll talk about the global domino effect. a network of possibilities. in here, the planned combination of at&t and t-mobile would deliver

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republican presidential candidate michele bachmann told people in south carolina today that the media is looking for her to get into a mud wrestling match with sarah palin, and she won't do it. she is getting a lot of traction and a lot of attention since she

announced her candidacy, but is she also receiving unfair treatment from the media because she's a woman? republican strategist mark mckin on says the answer is simply yes. we are also joined by cornell belcher, a cnn political contributor as well. mark, let's start by looking at what you wrote in the daily beast this week. conservative women in politics run a punishing gauntlet, endure psychological evaluations and near gynecological exams that their male and liberal counterparts do not. bachmann you say is not crazy, but the media are if they continue to view her as such. my question is why do you think this is specific to conservative women? >> well, maybe because i'm watching conservative women more than i am women in general. perhaps there could be a case it applies to women across the board, but there is no question. you know, i disagree with sarah palin and michele bachmann, they are not my candidates in the republican primaries if palin runs, but i see a pattern and

recognize the pattern that the way that they get treated, they amplify the gaps, they amplify things you don't see with the male counterparts, including the president, and i think if you look at it historically, over the last couple years, there's no question. you have a legitimate point. it may apply to democratic women as well. >> cornell, is this a story line republicans and conservatives want to push because they see michele bachmann as a real threat and contender and want to give her as much lift as they can or do you think it is legitimate, she's unfairly attacked? >> to jump in here, i like mark watch women in general. that said, you look at the women have a higher threshold. no one associated with the hillary clinton campaign last time around would say conservative, only something that conservative women have to go through. you look at some of the stereotypes that impact with minorities as well as women running for office, they have to overcome those. the toughness factor is one key

stereotype women have to deal with, whether conservative or liberal, whether tough enough for the job. there are still stereotypes women have to overcome that men are not challenged with. i think bachmann, i take very serious. i think she's the one with the highest up side in the end. she speaks to the grass roots, tea party grass roots of the republican base in a way that guys like pawlenty and romney just don't. >> i want to ask about a comment. she warned bachmann would be palinized, meaning the media will tear her apart. listen to what representative bachmann said today in south carolina. >> i have a very good relationship with governor palin. seems to be their sideline now. they want to see two girls come

together and have a mud wrestling fight and i'm not going to give it to them. >> do you agree that's what the media is looking for, it is media driving this? >> i think the media loves conflict, and i think representative bachmann is playing it very smartly. on the other hand, you have to recognize and acknowledge that they are going after the same base voters, i mean, the demographic and the voters that the palin and bachmann are appealing to idea logically are the same pool of voters. there is some conflict there, whether they want to acknowledge it or not. >> at the same time, cornell, i hear people say michele bachmann's success must drive sarah palin nuts and that must be why sarah palin is circling the campaign trail because they go to the same base. you don't hear that about governor perry from texas who goings after the same base, you don't hear about other conservative men going after the same similar base of voters, so i do hear the media in

particular say if sarah palin gets in, michele bachmann's career is over. >> i wouldn't disagree with that. and while the candidate is not going directly after sarah palin because it would be unwise from a strategy standpoint, her surrogates are. ed rollins is someone who is part of that campaign, and ed has said things that try to push sarah palin off the stage, because guess what, they need strategically to push her off the stage because they go after that same demographic. but again, if you're asking if there's a double standard in politics and in society in general between how we treat women candidates and women in business and men, absolutely there is. do they get more scrutiny? absolutely they do. do they have to overcome more to get to the positions of power? absolutely. but that's the way society works now. >> give a little scrutiny to one of the -- go ahead, mark. >> i wanted to add that governor rick perry will go after the

same base as sarah palin and michele bachmann, they will all be fighting for the same votes. if rick perry gets into it, there will be the same conflict with rick perry. >> but you don't hear them describe it as an either or in the same way. but if perry gets in, perry and bachmann are going after the same base. i hear you, there's a slightly different way that somehow the narrative is constructed. >> i agree with you. >> palin went to the premier of a movie about her political life last night in iowa. after the movie she said this to the audience. >> the movie isn't about me, it is about america's values, it is about work ethic. >> so she says it is not about me, it's about my values. it's about my life. i'm curious, how does she get away with this, that she can always endlessly deflect, even if it doesn't exactly make sense, and if the media calls her out on stuff like this, we get blasted for being unfair to

her. >> listen, she has become very adept as playing the victim card and then playing to her base. the base feels like they are victimized, feel like they are victimized by the president and current government. she plays into that sense of victimization that the base feels and plays it well. >> interesting. cornell, let's look at the republican field. we have seen recent polling that shows michele bachmann is outperforming expectations, tied for first in iowa, second in new hampshire. she's up a lot in a short time, but let's put it in perspective. recent "the new york times" cbs news poll shows gop republican voters are still unsatisfied. when we asked is there any candidate you feel excited about, 67% say no. 7% are excited about mitt romney, 7% excited about michele bachmann. i know you don't speak for

republicans, but is it too early to read into lack of enthusiasm? >> it is way too early to look into lack of enthusiasm nationally. one thing mark and i know being on the campaign trail, these primaries are not a national primary, they are state by state battles. the first state is iowa, then new hampshire, and so on, and those states are where you have to battle and win, and bachmann has pulled even with establishment front runner, and first states talk about what, talking about tossing out candidates left and right in the caucuses can say romney, an establishment candidate is going to run easily through the primary and caucuses because the tea party will have a say in whether it will be rick perry or

bachmann who right now speaks to the tea party grass roots. they are going to have significant say in this, just the way i think they had significant say against the anti-establishment candidate last time around and gave rise to barack obama, hunger in the grass roots for something different. i think you see that same hunger on the right now, and that's not mitt romney and certainly isn't tim pawlenty. >> gentlemen, thank you very much. and just ahead, a big victory for the obama administration in the fight over the new healthcare reform law. and we will speak with congressman ron paul of texas running for the republican inauguration for president, get his position on the debate for military activity in libya and the war powers resolution. oh common. and how can you talk to me about fiber while you are eating a candy bar? you enjoy that. i am. [ male announcer ] fiber beyond recognition. fiber one.

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welcome back. if you're just joining us, here is the latest news you need to know right now. a federal appeals court upheld a controversial part of the healthcare reform bill. it ruled that the individual mandate provision which will require nearly all americans to buy health insurance is constitutional. the federal judge overseeing jared lee loughner's case declined a defense request to stop prison doctors from forcing loughner to take medication. lawyers say his rights are being violated. loughner is accused of shooting and wounding gabrielle giffords in tucson and killing six

people. fire officials in new mexico believe the los alamos lab will be spared by a wildfire raging near the complex. they say all toxic materials are secure. and tropical storm arlene is expected to hit the gulf coast of mexico tomorrow. 12 mexican states are now under heavy rain warnings. coming up, outspoken congressman ron paul who is running for president. how does he feel about the president's dire forecast if congress fails to raise the debt ceiling. we'll ask him next. s s s s ] ♪ [ cat meows ] ♪ [ whistle ] ♪ [ cat meows ] ♪ [ ting! ] [ male announcer ] travelers can help you protect the things you care about and save money with multi-policy discounts.

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president obama stated emphatically today that the american military movement in libya does not fall under jurisdiction of the 1973 war powers resolution. the administration's position has angered not only many republicans on capitol hill but many democrats as well. we are joined by congressman ron paul from texas, also running for the gop presidential nomination. thank you for joining us. first of all, you think the president doesn't have the right to engage the u.s. in the nato effort in libya without congress's approval. today, the president made clear he believes the law does allow him to make this commitment on his own. listen to this a moment if you would. >> i am not a supreme court justice. so i'm not going to put my constitutional law professor hat on here.

do i think our actions in any way violate the war powers resolution, the answer is no. so i don't even have to get to the constitutional question. >> simply, sir, what's your reaction? >> that's a horrible statement. no, he should get to the constitution. he doesn't have to be a constitutional lawyer. you take an oath of office to obey the constitution. if we don't know what it says, how can we take the oath. the constitution is very clear, you don't go to war without a declaration. i agree there's confusion with the war powers resolution because technically it legalized war rather than prevented war. so i don't particularly like that bill, but it is the law of the land. even that he has violated because he can't go to war by talking to the united nations and nato and refusing to talk to the congress. i think this is so sad and the kind of thing i had been fighting with both parties for decades now. i think it has taken one step

worse because he has been a little bit more aggressive in declaring that he is the unitary president, he can do what he wants. he don't have to tell the congress. so i find it rather sad he has taken that position. >> we will get back to the question of consulting congress. first i want to ask you about a point senator john kerry raised. he is chair of the foreign relations committee in the senate and raised the point if congress wanted a say in this, they actually had a chance. listen to this. >> you're saying the president violated the process here and didn't come to the congress. he did come to the congress. he sent us a letter requesting us to do the authorization. and we didn't do it. that's the simple fact here. >> he's saying congress dropped the ball at the very beginning. do you acknowledge that congress could have done something and didn't? >> well, they could have done a lot more sooner, that is true. they shouldn't have waited 90 days. they should have immediately let

the president know he was violating the war powers resolution. i don't know why he is talking about appropriations. he has no appropriations for this war. so he doesn't have the money and doesn't have the authority. and we're slipping into another war. nobody can count the wars. nobody knows if it is number four or five. with a country that's flat out broke and allow our presidents to do this, this means that the constitutional process and the economic situation in the country is totally out of control. >> foreign relations, today you raise the question of consultation. today, the president said the critici criticism he has not sufficiently consulted congress is partisan politics. he says he consulted with congress repeatedly, addressed this repeatedly. are you using this issue to

score political points? >> he hasn't called me and he hasn't come to the congress. you know, the congress is everybody. if you follow the law, the law and the constitution says if you have a war, you have to have a declaration. you can't replace that saying we had a u.n. resolution, we went to nato. many years after world war ii when nato was set up, mr. republican robert taft says don't get into nato because before you know it, we will use nato as a slip into wars, and his predictions were right. the sovereignty depends on us, not the u.n., and the constitution is the law of the land, and we don't have to be constitutional lawyers to understand that, don't need lawyers to tell us what to do and not to do, because we shouldn't be in office if we don't understand what the constitution says. it is plain and simple, but he's not the first. it has been going on so long. truman was the first one to do it. he went in under the u.n.

resolution, i am sure if i had been in congress back in 1940, 1950, i would have been as outraged as i am now. but that's a slippery slope, and unfortunately it is leading -- it is a large participant in our bankruptcy. it is estimated the wars in iraq and afghanistan, new estimates will be over $4 trillion. so hard to estimate at a time when you can't even pay medical care for people in the country. >> the president also made a point about the message that this debate that's happening in the u.s. is sending to the broader world. here's what he said. >> we should be sending out a unified message to this guy that he should step down and give his pima fair chance to live their lives without fear. and this suddenly becomes the cause celeb for folks in congress? come on. >> he is talking about gadhafi, that the u.s. should saying gadhafi should step down.

>> oh, yeah. >> he seems to be implying -- >> is he the only bad guy in the world? >> do you agree that members of congress who are calling for u.s. troops to leave libya are sending mixed messages to gadhafi and is it important that u.s. politicians are unified on the issue? >> well, no, it is not important. what is a free country supposed to do, what are debates all about. this idea is that you can't dissent from a president that we sincerely believe is thwarting the constitution, we're not supposed to say anything? that's just beyond imagination. but the whole idea because he's a bad guy, we don't like him, he might have done something if we hadn't gone in, gadhafi may kill civilians. how many civilians have been killed since we have been involved and bombing. maybe hundreds or thousands killed there and gadhafi is not killing his own people. but there are a lot of bad

people in the world. does he want to do it in every dictatorship around the country? we have since the cold war ended, we assumed this responsibility that we have to dictate to every single country which dictator should run their country, so when there's a good dictator, we give them a lot of money. when they turn against us, decide he is a bad dictator, wasn't that many years ago we were doing business with gadhafi, just a few years ago. it is just over and over. at one moment, we're their best friends. we were on the same same as bin laden was when the soviets were in afghanistan, then he became our arch enemy. saddam hussein was our best friend in the '80s, we helped him and helped them get a nuclear reactor at one time. it is flip flopping around and we forget about the purpose of the congress and the president to protect the sovereignty and safety of this country, not to take care of the whole world and police and decide which dictator

to run out. >> think for a moment, talking about the economy, you're opposed to cutting a deal to raise the debt ceiling. you argued we should let that deadline come and go and that we will survive without a financial crisis. but in a press conference today, the president disagreed. >> i want to address what i've been hearing from some quarters, which is well, maybe this debt limit thing is not that serious. we can just pay interest on the debt. for the u.s. government to start picking and choosing like that is not going to inspire a lot of confidence. moreover, which bills are we going to decide to pay? are we really going to start paying interest to chinese who hold treasuries? and we're not going to pay folks their social security checks? >> so sir, which bills would you pay or do you dispute the whole proposition? >> well, for the president to

imply we don't think it is serious, as a matter of fact we think it is very, very serious. we just think that continuing the process is worse than facing up to the fact that we are out of money and flat out broke. so he should never challenge and tell us we're not seriously worried about this. but the whole thing is, fear tactics is the tool of big government. this is how we go to war, this whole thing about saddam hussein, he unleash nuclear weapons on us so we go to war and none of it was true. and when the crisis of 2008, if we don't bail out all the big banks and the fed doesn't double and triple the money, it will be the end of the financial world and end of western civilization. so people are like okay, we better do it. once again, he is using the fear tactic. >> if we don't raise the debt ceiling, you think the u.s. won't suffer a financial crisis? >> well, we're in the middle of

financial crisis and it is going to get worse no matter what we do, and it is going to get much worse if we don't quit spending and printing money because we're defaulting. they say this, we can't do this or we will default on our promise. we default every day when prices go up because that's depreciation of the money, so we are in the middle of default. >> thank you so much. i wish we could continue, we are out of time. ron paul, thank you very much. the greek country makes a move to save the country's ailing economy, but protesters worry about jobs and salaries. time to deploy the chex mix boring potato chip decoy bag. now no one will want to steal the deliciousness. with a variety of tastes and textures, only chex mix is a bag of interesting.

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greek lawmakers passed budget cuts, slashing jobs and reducing pay for public workers. passage was hailed by european leaders and finance officials, but protesters once again crashed with riot police in athens. police say at least 19 officers were injured and dozens of people were sickened by the tear gas. cnn's becky anderson is in athens. >> reporter: there may have been relief in the greek parliament today when the controversial package of austerity measures were passed today, but on the streets here in athens, nothing but rage. the violence ebed and flowed. we got in amongst protesters, just after the vote, and it was really quite a frightening

experience. there were thousands of protesters outside here, constitution square, outside parliament buildings. many of whom were here, protesting peacefully. must be two or three hundred that were making it very difficult for the police. there were thousands of them. they were throwing rocks, chairs, tables, anything they could get their hands on. in return, the riot police were using tear gas and stun guns to keep the protesters at bay every so often. the violence would start again, the police would try and move protesters away, down the side streets, trying to get them away from the main square. it was really an extremely physical and violent situation. now after midnight here in athens, things have quieted down a lot. we've got the police still in a

standoff behind me with protesters, but nothing like the violence we saw earlier on this wednesday. what happens on thursday is yet to be seen. there are still more votes to be had on implementing some of what was agreed on today. who knows what's going to happen thursday. as i say for now, at least, things are much, much calmer. >> thank you, becky. the new round of cuts opens the door for greece to receive billions of dollars in additional bailout funds from european union countries and the international monetary fund. for some global perspective, we turn to cnn's richard quest, also in athens. in your view, is this move going to be enough to help the greek economy now turn the corner? >> reporter: it is the old question will it cure it or will it kill it. there are those people who who say the second round of austerity is too fast, too deep,

too painful, and that there is no hopeful growth involved with it. then the ins and europeans say this will restructure systematically the greek economy and put it on a firm, solid footing for the future. those are the stun grenades that have been going on hour after hour after hour as the police battle against a hardcore of protesters. then the tear gas locked up into the square, breathes over, everyone will have to grab the goggles, otherwise you can't be out here. back to your question on economics, jessica something had to happen, and what's happening is serious severe austerity. but whether or not it's too severe, ask me in a year or two's time. >> okay. well, we appreciate your enduring the discomfort you must

be going through there. in terms of the economy, how much worse -- i know there's no serpt, but how much worse is it going to get for the greek people and what's the likely next move? >> reporter: oh, it is going to get a lot worse, and the reason it is going to get a lot worse is because it is hitting every part of the economy at the moment. quite a lot of tear gas now is being thrown up into the air. every part of the economy, every person on benefits will find them cut. jobs will be lost in the public sector. taxes will rise on everybody, direct and indirect taxes. a comfortable way of life will exist no longer. pensions will be cut. people will be working longer. this is an assault on what greek people believe is normal and correct way of life. i'll give you one example.

one of the famous tax dodges have been people that have swimming pools don't pay tax on them. guess what, if you've got a swimming pool in this mediterranean country, you'll be paying tax on that in the future. >> we can't weep for them exactly. my last question, and please go ahead and put on the goggles if you need to, don't be shy just because you're on air. one of the largers reasons the eu is forced to grapple with the whole issue, is it because greeks were less than honest about the debt load? they were kind of allowed to cook the books. what kind of broader reforms does the eu need to prevent similar problems in other countries, and might they consider broader reform. >> reporter: excellent, excellent question that goes to the heart of what this is all about. every european official tells me now that it is not just enough to bail out greece, that is if you like the starting point. that gets you into the game, but

there has to be reappraisal of all european institutions. we have in this euro zone, we have monetary union, but not fiscal union. imagine the united states with the fed, but not the u.s. treasury. imagine u.s. treasury didn't exist, and each state was able to borrow in dollars, but not have to worry about the debt. that's what happens in the euro zone. and so just about everybody accepts and needs to be changes. those changes will be 2013 and 2014. there's no question, jessica, that the euro zone has had a brush with death and they are not quite out of intensive care yet. >> time to learn some lessons. richard quest, thank you very much. please take care of yourself. up next, the looming august 2nd deadline to raise the debt

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today in his news conference, president obama called on members of congress to do their job and hammer out a deal with raise the debt ceiling before the august 2nd deadline. but the obama administration has laid out four different dates where it said the debt ceiling should be raised or the nation would face dire financial consequences. three of those dates have come

and gone and so far no debt ceiling has been raised. >> i find it inconceivable that the congress would not act to increase the limit. we've run out of room on may 16th. >> we do not need to play chicken with our economy. by linking the raising of the debt ceiling to anything, we should do that right away. >> we have into june to solve this basic problem, but we don't have much more time beyond that. >> the markets think you're going to default, they could start reacting in a way that could really hurt us way before august 2nd. >> we do believe that it is important that action be taken in a timely manner. >> joining us now to discuss all this from aspen is the host of american public media's "marketplace." i understand you watched this press conference earlier today. i asked the president about his administration moving the target on raising the debt ceiling. here's the president. >> we haven't given out four

different dates, we have given out dates that are markers for us getting into trouble. it's the equivalent of you're driving down the street and the yellow light starts flashing. the yellow light is flashing. now, it hasn't been a red light yet. august 2nd is a very important date, and there's no reason why we can't get this done now. >> he sounded a little frustrated. in your view is the president playing chicken or is he chicken little saying if we don't have this vote the world will fall into economic crisis? >> well, two things, jessica. first of all, i don't think we want to find out. what was interesting about that cut you played from the president was the way he kept on talking and talking and taulkin as if that's going to drive home the point anymore. you were right in your question. there have been four dates. the two most important is may the 16th when we hit the debt ceiling. we hit $14.3 trillion.

ever since then the treasury department has been moving money around. government hasn't done itself any favors, the administration and timothy geithner by saying, no, not that date, this date. the latest one is august the 2nd. whether that's the real date or not, we don't want to find out. that's the point, you don't want to know. and here's why you don't want to know. it's not a political question, it's not a consumer confidence question, it's a markets question. the markets are watching washington much closer than washington is watching the markets. as that date gets closer and as those interest rates start to react, that's when we'll really see things happen but nobody wants that to happen at all. >> because the markets are watching, how hard is it for the president to talk up the risky stakes, to talk up the danger of seeing august 2nd come and go out a deal, without damaging consumer confidence and the broader economy? >> okay, so here's the thing. i'm going to get a little technical on you. you remember back in the financial crisis we heard about these things called credit default swaps where you basically bought insurance

against somebody else's debt. you were betting that that person's debt would or would not default and you paid off on that insurance policy. you can buy credit default swaps against the american debt. you can buy it against treasury bonds and notes. those prices have been rising. the market already thinks bad things are happening. it's truly not a question of consumer confidence. it's not a question of whether or not you're going to spend more munoney on an ipad or buy flat screen television. it's the story of what the market thinks will happen when washington does nothing. >> so does the president have to be more careful when he talks about this because things will get even worse as they delay a deal? >> you bet, that's exactly right. so the president, as we heard in that clip you played, is trying out a whole bunch of different messages. yellow light, red light, flashing light. pick whatever image you want. the president is driving trying to dance around this thing of bad things happening. make no mistake, it's bad things

will happen. if the government decides one day it can no longer pay its debts. that is a very difficult thing for the president to negotiate around. the other thing is you've got congress saying wait a minute, people are saying, you know what, this date, it's not real. it may or may not be real, we don't really know because the treasury can move money around as much as it wants. but the problem is we don't want to get that close. if we get close, the markets will react and it will be ugly. >> a lot of this sounds like we're talking about big money and wall street. but to the average american, will a failure to raise the debt ceiling have any practical effect? >> oh, sure. interest rates are going to rise, your credit card interest rates are going to go up, your car payment is going to go up, your mortgage payment if you've got an adjustable rate will go up. this is not good news for the consumers. bad things will happen throughout the economy. it will happen in a very macro context. you will see things like yield spreads on treasury bonds and all kinds of technical things

happening that you don't want to pay attention to, but you will hit it in your pocketbook as a consumer if this happens, no doubt about that. >> okay, you're pretty clear that's not a pretty picture. more broadly, in listening to the president's press conference today, did you hear anything he said that would actually help create jobs? >> so here's the other thing that the president has to deal, with right? the american economy is an intractable beast. you can't go out and say i'm going to spend $4 trillion and hope you're going to turn this thing. we are nibbling around the edges with jobs programs, with stimulus, with the payroll tax credit the president talked about this morning. he's doing what he can. the problem is as with any president there's only so much the president can do. these things have to work themselves out. let's think about what's going on in the economy. joblessness, 9.1%. a huge political problem for the president in the next 12 months. housing, an overhang of unsold properties and foreclosed properties that is going to take years to work its way through the economy. and then this thing you mentioned a couple of times, co