the president of the united states getting ready to address the nation, indeed, the world from the white house. momentarily, we'll hear from president obama. he'll make the case on how the united states can avoid default. there are some democrats suggesting the united states right now is in imminent threat of default one week from today. the country will not have enough money to pay all of its bills. tough decision also have to be made. the stakes right now are enormous. the president will lay out his case within a minute or so.

two minutes after the president features -- finishes what's expected to be about a 15-minute speech to the nation, two minutes after that, we'll hear a separate speech from the house speaker boehner. he's up on capitol hill. he'll make his case why the president right now is wrong. why the republicans are right. both of them presumably will say the stakes for the united states are enormous right now and the country must do everything possible. everything possible to avoid default. they've been negotiating publicly and privately now for weeks and weeks and weeks. and unfortunately, for the country and indeed, for much of the world, unfortunately, the negotiations collapsed over the past few days. still possible, they might be able to work out a deal. the stakes are enormous and you see the president walking up to the microphone. let's listen. good evening. the debate that directly affects the lives of all americans.

for the last decade, we spent more money than we take in. and in the year 2000, the government had a budget surplus. but instead of using it to pay off our debt, the money was spent on trillions of dollars in new tax cuts, while two wars and an expensive prescription drug program were simply added to our nation's credit card. as a result, the deficit was on track to top $1 trillion the year i took office. to make matters worse the recession meant there was less money coming in and it requires us to spend even more. on tax cuts for middle-class families to spur the economy and unemployment insurance. these emergency steps also added to the deficit. every family knows a little

credit card debt is manageable. but if we stay on the current path, our growing debt could cost us jobs and do serious damage to the my. more of our tax dollars will go toward paying off the interest on our loans. businesses will be less likely to open up shop and hire workers in a country that can't balance its books. interest rates could climb for everyone who borrows money. the home own we are a mortgage. student with a college loan. the corner store that wants to expand. and we won't have enough money to make job creating investments and things like education and infrastructure or pay for vital programs like medicare and medicaid. because neither party is blameless for the decisions that led to this problem, both parties have a responsibility to solve it. over the last several months, that's who we've been trying to do. i won't bore you with the details of every plan or proposal but the debate has basically centered around two

different approaches. the first approach says -- let's live within our means by making serious cuts in government spending. let's cut defense spending at the pentagon by hundreds of billions of dollars. let's cut out waste and fraud and health care programs like medicare. and at the same time let's make modest adjustments so medicare is there for future generations. finally, let's ask the wealthiest americans and biggest corporations to give up some of their breaks in the tax code and special deductions. this balanced approach asks everyone to give a little without requiring anyone to sacrifice too much. it would reduce the deficit by around $4 trillion and put us on a path to pay down our debt. and the cuts wouldn't happen so abruptly but they would be a drag on our economy or prevent us from helping small businesses

and middle-class families get back on their fight feet right now. this is bipartisan. while many in my party aren't happy with the painful cuts they make they will be willing to accept them if the burden is fairly shared. while the republicans might like to see deeper cuss and no revenue at all, there are many in the senate who have said, yes. i'm willing to put politics aside and consider this approach because i care about solving the problem. and to his credit, this is the kind of approach the republican speaker of the house, john boehner, was working on with me over the last several weeks. the only reason this balanced approach isn't on its way to becoming law right now is because a significant number of republicans in congress are insisting on a different approach. a cuts only approach. an approach that doesn't ask the wealthiest americans or biggest corporations to contribute anything at all and because

nothing is asked of those at the top of the income scale such an approach would close the deficit only with more severe cuts to programs we all care about. cuts that place a greater burden on working families. so the debate right now isn't about whether we need to make tough choices. democrats and republicans agree on the amount of deficit reduction we need. the debate is about how it should be done. most americans, regardless of political party, don't understand how we can ask a senior citizen to pay more for her medicare before we ask a corporate jet owner or the oil companies to give up tax breaks that other companies don't get? how can we ask a student to pay more for college before we ask hedge fund managers to stop paying taxes at a lower rate than their secretaries? how can we slash funding for education and clean energy before we ask people like me to give up tax breaks we don't need

and didn't ask for. that's not right. it's not fair. we all want a government that lives within its means but there's still things we need to pay for as a country. things like new roads and bridges. weather satellites, food inspection, services to veterans and medical research. keep in mind that under a balanced approach, the 98% of americans who make under $250,000 would see no tax increases at all. none. in fact, i want to extend the payroll tax cut for working families. what we're talking about under a balanced approach is asking americans whose incomes have gone up the most over the last decade. millionaires and billionaires, to share in the sacrifice everyone else has to make. and i think these patriotic americans are willing to pitch in. in fact, over the last few decades, they've pitched in

every time we've passed a bipartisan deal to reduce the deficit. the first time a deal was passed, a predecessor of mine made the case for a balanced approach by saying this. would you rather reduce deficits and interest rates by raising revenue from those who are not now paying their fair share? or would you rather accept larger budget deficits, higher interest rates and higher unemployment? and i think i know your answer. those words were spoken by ronald regan. but today many republicans in the house refuse to consider this kind of balanced approach. an approach that was pursued not only by president regan but by the first president bush, president clinton, by myself and by many democrats and republicans in the united states senate. so we're left with a stalemate. what makes today's stalemate so dangerous is that it's been tied to something known at "the debt

ceiling." a term most people outside of washington have probably never heard of before. understand, raising the debt ceiling doesn't allow congress to spend more money. it simply gives our country the ability to pay the bills that congress has already racked up. in the past, raising the debt ceiling was routine. since the 1950s congress has always passed it and every president signed it. president regan did it 18 times. george w. bush did it seven times. and we have to do it by next tuesday, august 2nd with or else we won't be able to pay all of our bills. unfortunately, for the past several weeks, republican house members have essentially said, the only way they'll vote to prevent america's first-ever default is if the rest of us agree to their deep spending cuts only approach. if that happens and we default we wouldn't have enough money to pay all of our bills.

bills that include monthly social security checks, veterans' benefits and the government contracts we've signed with thousands of businesses. for the first time in history, our country's triple-a credit rating would be downgraded. leaving investors around the world to wonder what the united states is still a good bet. interest rates would sky rocket on credit cards, on mortgages and car loans. which amounts to a huge tax hike on the american people. we would risk sparking a deep economic crisis. so, defaulting on our obligation is a reckless and irresponsible outcome to this debate. and republican leaders say they agree, we must a avoid default, but the new approach that speaker boehner unveiled-to-which would temporarily extend the debt ceiling in exchange for spending

cuts, would force us to once again face the threat of default just six months from now. in other words, it doesn't solve the problem. first of all, a six-month extension of the debt ceiling might not be enough to avoid a credit downgrade and the higher interest rates that all americans would have to pay as a result. we know what we have to do to reduce our deficits there's no point in putting the economy at risk by kicking the can further down the road. but there's an even greater danger to this approach. based on what we've seen these past few weeks, we know what to expect six months from now. the house of representatives will once again refuse to prevent default unless the rest of us accept their cuts-only approach. again, they will refuse to ask the wealthiest americans to give up their tax cuts or deductions. again, they will demand harsh cuts to program like medicare. and once again, the economy will

be held captive unless they get their way. this is no way to run the greatest country on earth. it's a dangerous game that we've never played before and we can't afford to play it now, not when the jobs and livelihoods of so many families are at stake. we can't allow the american people to become collateral damage to washington's political warfare. congress now has one week left to act and there's still pass forward. the senate has introduced a plan to avoid default which makes a down payment on deficit reduction and ensures that we don't have to go through this again in six moments. i think that's much better approach, although serious deficit reduction would still require us to tackle the tough challenges of entitlement and tax reform. either way, i've told leaders of both parties that they must come up with a fair compromise in the next few days that can pass both

houses of congress and a compromise that i can sign. i'm confident we can with reach this compromise. despite our disagreements, republican leaders and i have found common ground before and i believe that enough members of both parties will ultimately put politics aside and help us make progress. now, i realize that a lot of the new members of congress and i don't see eye to eye on many issues but we were each elected by some of the same americans for some of the same reasons. yes, many want government to start living within its means, and many are fed up with a system in which the debt seems stacked against middle class americans in favor of the wealthiest few. but do you know what people are fed up with most of all? they work all day long, many of them scraping by just to put food on the table.

and when these americans come home at night, bone tired, and turn on the news, all they see is the same partisan three-ring circus here in washington. they see leaders who can't seem to come together and do what it takes to make life just a little bit better for ordinary americans. they are offended by that. and they should be. the american people may have voted for divided government, but they don't vote for a dysfunctional government. so, i'm asking you all to make your voice heard. if you want a balanced approach to reducing the deficit, let your member of congress know. if you believe we can solve this problem through compromise, send that message. america, after all, has always been a grand experiment in compromise. as a democracy made up of every race and religion, where every belief and point of view is welcomed, we have put to the test time and again the

proposition at the heart of our founding, that out of many, we are one. we have engaged in fierce and passionate debate about the issues of the day, but from slavery to war, from civil liberties to questions of economic justice, we have tried to live by the words that jefferson once wrote. "every man cannot have his way in all things. without this mutual disposition, we are disjointed individuals, but not a society." history is scattered with the stories of those who held fast to rigid ideologies and refused to listen to those who disagreed, but those are not the americans we remember. we remember the americans who put country above self and set personal grievances aside for the greater good. we remember the americans who held this country together during its most difficult hours, who put aside pride and party to form a more perfect union.

that's who we remember. that's who we need to be right now. the entire world is watching, so let's seize this moment to show why the united states of america is still the greatest nation on earth, not just because we can still keep our word and a meet our obligations, but because we can still come together as one nation. thank you. god bless you. and may god bless the united states of america.

american people and get their help in urging the republicans to compromise. >> absolutely. you heard him say the american people should not be collateral damage to the political warfare in washington. a couple of quick points in terms of practical next steps. you heard him essentially throw his support behind harry reid's plan in the senate despite many doubt it has votes at this point to become law. it still needs a path forward. you heard him make clear that he is not supportive of speaker boehner's plan. did he something interesting. he hugged john boehner and said he has been working with me. and i am not sure that was a helpful thing to do. john boehner needs distance from president obama to work with his faction of republicans in his team. we'll see how that goes over. >> we're awaiting for the speaker of the house. gloria has been watching and listening very quickly. a thought. >> the president clearly wants people to go over the heads of congress.

he wants them to put pressure on members of congress. he said let your member know. call members of congress and let them know, we have to get this resolved. and of course, he quoted ronald reagan. >> looking for an avalanche of e-mails to congress against the republicans. this was a partisan speech but i think it may have helped that the president politically with his base. he may rally people to get a lot of support for the ultimate negotiations. >> now we'll get a very different perspective from the speaker of the house. sgrain tonight it didn't take very long for the speaker of the house to make a similar announcement. let's to go capitol hill. the speaker of the house. >> good evening. i'm john boehnerism serve as speaker of the whole house, of the members of both parties that you elect. these are difficult time in our nation. many are looking for work and have been for some time.

the spending binge going on in washington is a big part of reason why. before i served in coming, i ran a small business in ohio. i was amazed at how different washington, d.c. operated than every other business in america. where most american businesses make the hard choices to pay their bills, live within their means, in washington, more spending and more debt is business as usual. i've got news for washington. those days are over. president obama came to congress in january and requested business as usual. he had another routine increase in the national debt but we in the house said, not so fast. here was a president asking for the largest debt increase in american history on the heels of the largest spending binge in american history. here's what we got for that massive spending binge. a new health care bill that most americans never asked for. a stimulus bill that is more effective in producing material for late night comedians than for producing job. a national debt that has gotten

so out of hand, it sparked a crisis without precedent in my lifetime or yours. the united states cannot default on its debt obligations. the jobs and savings of too many americans are at stake. what we told the president in january was this. the american people will not accept an increase in the debt him without significant spending cuts and reform. and over last the six months, we've done our best to convince the president to partner with us to do something drama to change the fiscal trajectory. something will boost confidence in our economy, renew a measure of faith in our government and help small businesses get to track. last tweak house passed such a plan. with bipartisan support. it is called the cut cap and balance act. it cuts and caps government spending and paves the way for a balanced budget. which we believe is the best way to stop washington from spending money it doesn't have. before we even pass the bill in

the house interesting president said he would veto it. i want you to know, i made a sincere effort to work with the president to identify a path forward that would implement the principles of cut, cap and balance in a manner that would secure bipartisan support and signed into lawfully gave it my all. unfortunately the president would not take yes for an answer. even when we thought we might be close to an agreement, the president's demands changed. the president has often said we need a balanced approach which in washington means, we spend more and you pay more. having run a small business, i know those tax increases will destroy jobs. the president is adamant. a the father of two daughters, i know these won't be there for their kids unless significant action is taken now. the sad truth is the president wanted a blank check six months ago and he wants a blachk check today.

this is just not going to happen. you see, there is no stalemate here in congress. the house pass ad bill to raise the debt limit with bipartisan support. and this week, while the senate is struggling to pass a bill filled with phony accounting and washington gimmicks, we're going to pass another bill. one that was developed with a support of the bipartisan leadership of the u.s. snaflt obviously, i expect that bill can and will pass the senate and be sent to the president for signature. if the president signs it, the kris atmosphere that he has created will disappear. the debt limit will be raised. spending will be cut by more than $1 trillion. the serious bipartisan committee of the congress will begin the hard but necessary work of dealing with a tough challenge our nation faces. the individuals doing this work will not be outsiders but elected official doing the job they were elected to do as outlined in the constitution. those decisions should be made based on how they will affect

people getting a job. not how they will affect politicians chances of getting reelected. this isn't about congress and the white house. it is about what is standing between the american people and the future we seek for ourselves and our families. i've always believed the bigger the government, the smaller the people. and right now, we've got a government so big and so expensive, it is sapping the drive out of our people and keeping the country from running at full capacity. it is not complicated. if you're spending more money than you're taking in, you need to spend less of it. there is no symptom of big government more menacing than our debt. break its grip and we begin to liberate our economy our future. we are up to the task. i hope president obama will join us in this work. god bless you and your family and god bless the united states of america.

>> so now we've heard from the speaker of the house and the president of the united states. different perspectives, different perspectives indeed. the speaker speaking for bonl five minutes. the president about 15 minutes. the major difference is whether or not another vote will be required next year to deal with these problems. the speaker saying yes, indeed. up to congress to have another vote next year. the president saying he wouldn't go along with that. he doesn't want to put the country through that one more time. we're staying on top of this story. this is an historic night in washington, d.c. one week from tomorrow, the nation will have a serious default crisis unless there is a compromise. unless the deal is worked out in the coming days. our special coverage continues right now with piers morgan tonight. >> thanks. you're staying with us along with the chief political analyst, david gergen, jessica yellin.

i'll start. but it seem to me having heard both those speeches, the economic equivalent of the bay of pigs. who will blink first? >> that's right. the president doesn't have a say because he doesn't have a vote. for the president, it was a moment the try to ice 38th republican speaker the house and urge him to try to change paths and find a route to compromise. we did hear him hug speaker boehner rather tight and say did he try work with the president. i'm not sure that was the best way to help john bainer to get more votes to compromise with his hard line members. i would point out to you, the president did not in this speech repeat his veto threat. we have heard him repeatedly say he would veto a short term extension of the debt ceiling. he did not do that tonight. i don't know what we should read into that. i'll find out. in essence, the president trying

to use the bully that you will foyt , the bully pulpit to rally the american people. >> this is pretty unprecedented. no u.s. president in history has ever defaulted. is it conceivable that we could get to august 2nd and a default happens? >> it is definitely conceivable. and i'm very gloomy about the prospects. because there are significant differences. they've tried and tried and tried for weeks now. dare i say for months to get some solution. i always assumed it would happen a few weeks ago. i didn't think it would go down to the final week. in the end they may have a deal but i'm not by any means convinced -- it is possible come next tuesday, there won't be a deal. the federal government will have to decide which checks to write and which checks not to write. that will cost serious dislocation. i assume if that does happen, i'm not saying it will. i fear it could. if it does happen, the reaction

would be so angry out there. interest rates would go up. there would be fears of markets collapsing. the value of the dollar going down. within a few days, cooler heads would prevail but it is definitely possible that between now and next tuesday, there won't be a deal. i hope there will be. >> gloria, republicans have already been calling today for a possible impeachment of president obama if we doing into default in america. these are extraordinary times. can you envisage that kind of scenario? >> no. people understand in washington that this is the moment of truth. i've had people on both sides of the aisle say that to me. what strike me about tonight, you listen to both these speeches. it is as if we have not made any progress in this heated debate that we've been covering for most of the last month. it still comes down to the question of tax increases versus spending cuts.

each party is working in a parallel universe. while they've been working to get beyond that, i think we heard some very political speeches tonight. at the end of his speech, the president wanted the country to kind of join together. call congress, let them know how you feel. john boehner kind of made a plea they would all get together. when you listen to them, they're nowhere close to a deal, it seems. >> kate, let me go to you. while president obama was putting his article around john boehner, we're great pals. john boehner was pretty quick to say get your hands off me, buddy. >> you didn't get much sense of compromise. you heard some pretty tough talk coming from the house speaker this evening. him saying the president wants a blank check and we're not going to give it to him. he is really trying to lay the blame on the president. he said for creating this crisis atmosphere.

what you're really seeing, house speaker john boehner is trying to make the case that this is what you elected us to do. this is why you gave us the majority in the house. this past election. you wanted to us get this fiscal house in order. you wanted us to cut government spending. as you well know, you don't sense these two men are any closer to compromise this evening even though they've been talking for weeks now. at the same time, we are hearing from senators that while they're working in divergent paths on two different bills, there are still people working behind closed doors to try to find a way to compromise. to try to work this out and bridge the did i have ixd at the moment, it doesn't sound like either bill has a way of passing the opposing chamber. >> david gergen, cut through washington speak here for me and analyze these two speeches. what did they really mean?

>> well, had these speeches been given three or four weeks ago, i think they would have been welcome as part of the political discourse. each side presses its point of view. to be given on the eve of a possible default, both individuals gave partisan speeches. both individuals, i think, as gloria that, giving political speeches. and i think each was intending to rally his own base. president obama was clearly trying to rally his democratic base to send an avalanche of calls, e-mails, twitters, whatever. to the congress, back to the democratic plans and to bash the republicans. and john boehner was trying to do just the opposite. and to have that happen on the eve, you know. >> let me ask you. did anybody -- >> better for the country. >> what? >> let me finish the thought. it is good politics in the traditional sense, but in terms

of getting the national answer in the next eight days, i think it left us farther away from getting an answer. it will further divide the country. >> i was going to ask you, david, whether anybody benefited from the speeches tonight. has anyone come away better than they did half an hour ago? >> i think probably each fellow came off better in its base. i think the country is so tired of political posturing and people really want leadership that finds answers and get us off the edge of the cliff. >> what was interesting also, the debate we were having in washington today seems to have moved beyond the tax increases. at least in the short term. nobody today is talking about tax increases except barack obama who still talked about that tonight in his speech. the plan by harry reid contains no tax increases. in the short term. the plan by john boehner contains no tax increases. >> let me ask you about this.

clearly the tea party factor is pretty significant. they have made it absolutely clear. no tax increases. that's it. can such an intransigent position be helpful to the republicans right now? >> well, i think there is no doubt if hit just been john boehner and let's stay more established republican leadership, a deal would have been struck. let's not forget. the irony was willing as part of an agreement to go ahead with $800 billion in tax revenue. increases in various forms of taxes by ehim naigt deduction subsidies, loopholes. $800 billion. and that deeply angered the tea party activists and so many of his republican base. in effect, it is a tax increase. he was willing to do that and risk the wrath of his base. at the same time the president of the united states was willing to deal with entitlement cuts. social security, medicaid, medicare.

deeply angering his poifrlt he was throwing out ideas about means testing for medicare recipients, poorer people would get more benefits than richer retirees, for example, deeply irritating his own base and pulling the rug out from some republican politicians who thought paul ryan's medicare plan was simply an opening for democrats to score politically. so both these men, the president and boehner, were willing. tonight you didn't get any of that sense from the two speeches. >> we bring in one of the senior advisers. david plouffe, speaker boehner made it crystal clear, forget it. as thing stand, we are not budging.

that's not a compromise. >> well, piers, no, a my way or the highway approach. that won't help solve the deficit problems. in the next few days we need the republicans in the house to understand, they will get a lot of what they want. a lot of spending cuts. washington is committed to reducing the deficit. we can't have a my way or the highway approach. if we'll just be reasonable, and that's how most things our country have gotten done. we can make a big down payment on the deficit and have the discussion the country needs to have over the next five or six months about balancing our budget and reducing our deficit. as the president said tonight mark the balanced way. not asking everything of college students or middle class families or senior citizens but also asking something of the wealthiest. >> you watched the speech. what did he make of his golfing partner's comments?

>> we were walking out of the room. so we did not get to watch speaker boehner's speech. i read the transcript. the point is this. and the president said. speaker boehner and he had a great discussion. as wolf blitzer said before i came original speaker boehner is willing to do thing if. many in his party might have found objectionable. and the president is willing to do some things that many in his party had trouble. with enough democrats supported that that we could have done a huge deficit reduction for the american people. the question is, clearly this my way or the highway approach, digging in, not willing to compromise. that won't get the job done. as the president. in eight days if we don't solve this, the country will default. if the house republicans will just compromise a little bit. and do what's right for the country, we'll be able to get through this period. most importantly, we will get to continue to work, reducing the deficit 9/11 of the short term

solutions on the table now to get us through problem at the moment, will not finish the job. we'll have to do reform. things president is looking forward to working with the congress on. let's assume worst-case scenario. no compromise comes. we get to august 1. is the president prepared continue to invoke the 14th amendment and simply go alone? >> there are no off-ramps here. there are no exits. congress has to do its job. and so it is unfathomable that over the next five, six days, maybe sooner, if sanity prevails, there will be a compromise struggle that allows to us make sure the company understands, america will pay its obligations. this isn't about paying for future spending. we've put on the credit card, they have to pay for it. now in this effort to reduce the deficit, what we're saying is let's stop putting so much on

the credit card. you want to be an optimist, the great thing is there is huge consensus in washington in each party that we need to reduce the deficit. and we all generally agree by how much to reduce it. we're just debating about how to do it. most sensible people and most deficit reduction plans, whether they be republican or democrat, have a balanced approach. that's what the country needs to make sure we go down the right fiscal path. >> we are watching the ultimate game of political brinksmanship here. what happens tomorrow if the message from the republicans is. no we're not compromising. take it or leave it. what does the president do? >> well, listen. we'll keep making the case privately and publicly. that compromise is the only option. the speaker put forward a plan. i guess he will vote it out on wednesday. from what i've seen, it is pretty clear. it won't fast united states senate. we have a stalemate situation. so what we'll have to do is have a compromise here. again, the notion that we'll go

through, you've been covering this a lot on your program. you're coughing it tonight. do we really want the country to go through this in five or six months? it is irresponsible. let's do the responsible thing. let's make sure we don't default. but also let's commit ourselves to deficit reduction. if we do that, we can have a stronger economy. >> david plouffe, thank you very much. taking a break now. when we come back, congress in a stalemate with competing republican and democratic plans on capitol hill. we'll come back and ask senators on the left and right. they make a deal on time? anana] this...is the network. a living, breathing intelligence that's helping drive the future of business. in here, inventory can be taught to learn. ♪ machines have a voice. ♪ medical history follows you.

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tonight the financial future of this country may come from compromise. the word the president repeated tonight. the right and left make a deal?

joining me, chuck schumer. what did you make of both speeches tonight and particularly emphasis on this word compromise. it didn't sound to me like the republicans are prepared to compromise very much. >> well, they haven't been at all. wove been willing to entertain large spending cuts. republicans don't like that. they haven't been able to move one dime off their stand. the president put the blame squarely on the shoulders of where it belongs. a block of extreme right house republican who's just refuse to compromise at all. and it is leading to disaster. standard & poors, it is reported tonight, said if we did the boehner plan, there is a too strong a likelihood of a downgrade. they said the reid plan wouldn't produce that. that would be terrible for american family and for the american government. what we're really asking, i

think, is for speaker boehner not to follow this extreme group, but to lead a little bit. this group, the 80 to 100 house republicans, many of them newly elected who are at the extremes, shouldn't be able to say to the entire country, it is our way or no way themselves don't represent the thinking in most of the country. >> we are face arg financial doomsday here. the american public are watching you guys all squabbling around and saying just get this done. nearly 10% of us are out of work anyway will. >> if one side is willing to reach out and compromise all the time and the other side says no, it is awfully hard to get it done. and to do what they want, which is a short term renewal of the debt ceiling, raising of the debt ceiling, we'll be back where we started in a couple months and standard & poors is

likely to downgrade us. much more likely than under our plan. so we're asking senate republicans, many have shown a degree of compromise. 16 or 17 of them signed a statement that would entertain revenues. it is the house republicans holding this up. now that the president has gone on national television, and put the blame where it belongs squarely to their shoulders, that one of two thing will happen. either they will yield, although i doubt it because they're idealogs. maybe the main stream of the republican party will say, look, for the good of the countriering with can't just follow these people. they don't represent a majority. >> there is an option. it is not being tested properly legally nobody seems quite sure if it is a legal option for the president. under the 14th amendment, he basically go alone. no default has ever happened before. would you encourage the president to take that option if all else failed? >> well, i think we ought to

avoid that option if we could. it is unclear how the courts would determine it. it is unclear how the credit markets would regard it. it is something that should be explored down the road, perhaps go but not for this scenario. better, a much better way to go is the reid compromise. it gives the republican what's they've asked for. it has no revenues even though most want revenues. it says amounts of cuts will be equal to the debt ceiling. it is sort of an offer they can't refuse and they won't take yes for an answer. it leads to you wonder what is going on here? when 50 or 60 house republicans say they think it is a good idea not to pay the debt ceiling and default, i think that says it all. the reid compromise answers every objection they have had. no revenues. an amount of cuts again equal to the amount we raise the debt ceiling.

and everyone of though cuts was approved by the bipartisan negotiations led by joe biden. what more do they want? >> thank you. with the clock ticking down, when it come to the blame game, the gop might have the most to lose. 51% of americans said they would blame the republican that's the there is no deal to raise the debt ceiling. far fewer, 3 in 10, said they would blame the president. joining me now from the republican side, to rob portman. ] this...is the network. a living, breathing intelligence that's helping drive the future of business. in here, inventory can be taught to learn. ♪ machines have a voice. ♪ medical history follows you.

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we're back now with senator rob portman. senator, thank you for joining me. you ran budgets for president crisis on bush tax cuts and

expensive wars. isn't it time you guys took one for the team, the team being america? >> well, if the team is america, the issue is how to get the economy moving again and that's what republican have been focused on. if you take the president's own words of about eight months ago where he said we shouldn't be increasing taxes on a weak economy, that's basically what republicans have saying today, deal with the yuntd underlying problem, which is the debt and the deficit. the president seemed to be talking past the congress, because as senator schumer said a moment ago, there are now two proposals in congress, both deal with the spending side, and the president, instead tonight, chose to rehash and relitigate old arguments about tax increases. we're focused on the right thing, which is not hurting the economy by increase ing the burden of taxation, moving immediately with cuts, moving to tax reform, which is needed, getting rid of the loopholes the president talks about over the

next six months and then making progress. i think the situation is a lot more hopeful than the president described tonight. he was talking about something that's been decided up on the hill, which is we're going to focus on spending cuts. >> it was interesting the president quoted reagan. would you rather reduce deficits and interest rate business raising raising raising revenue from those not paying share share or accept higher interest rates and higher unemployment? i think you know the answer. reagan was the great republican hero. he had a point, didn't he, the president raising that quote? >> he did. his point, we need to reform a broken tax system. there have been thousands of changes to the tax system since 1986 when reagan worked with tip o'neill and others to reform it. economists agree with this, peers. we could have a more efficient tax system that would encourage investment, growth and jobs and

therefore economic activity and revenue. but do it through tax reform. let's not at this time, as our economy is trying to, struggling, to get out of the recessioning weaken it further by increasing the burden of taxation. that's the issue. what the president said tonight was appropriate, perhaps, a week ago but tonight on capitol hill you have two proposals, one schumer talked about reduce spending immediately over a longer term, giving extension to the debt limit and a republican proposal which has more cuts immediately, cuts like the ones the democrats are proposing, and then a six-month process for deeper cuts. we're not focusing on the hill on raising taxes. we're focusing on doing what the markets have said we must do, including credit agencies you talked about earlier, which is to get the underlying problem settled, which is the growing spending and the deficits and the debts. >> there are millions of americans who are steaming with anger tonight, saying, who are

these politicians to put this country in this precarious position, the markets are already reacting very adversely to this, the rest of the world is watching aghast at the world's number one economy in this meltdown, as you guys all argue with each other. they just want skulls cracked and a deal done. are you prepared to compromise, as the president asked, and get the deal done? >> i think it's happening. it's not happening with the president as much as it's happening with harry reid and john boehner, speaker of the house. they're closer than the president would indicate in his remarks and i think it's incredibly important we extend the debt limit. it's absolutely necessary. it's not sufficient, we have to deal with underlying spending problem while we do it or else we won't have addressed the concern that standard and poorer's and the other credit agencies are talking about. they will downgrade the debt unless we deal wit the debt and deficit issue by controlling spending.

we're lurching toward the right result, which is extend but do so with spending cuts in place and then setting up a real process to deal with tax reform and the entitlement, structural changes in our important entitlement programs that are necessary because those programs are not currently sustainable. >> thank you. some say grover norquist is a man of the middle of the debt crisis, president of americans for tax reform and 250 members congress signed his anti-tax pledge. grover you're the eye of the tiger in all of this, people take their lead from you on the republican side. there will be no tax increases. most impartial observers outside of america say that is crazy, and you have got to change your attitude to this and allow some tax increases.

>> well, since the problem that america faces is our government is spending too much money, over the last ten years, certainly it's sped up over the last two to three years, the only way to solve overspending problem is to spend less. raising taxes is what politicians do rather than reduce spending. so taxes should be off the table for two reasons. one it distracts from cutting spending, it gets the in the way of reducing spending. but also tax reform is something we need to do put some time and effort into it, think it through, over the next couple of years should radically reform the tax code and have lower rates, as reagan moved to do in '86, not a tax increase the '86 tax reform bill, eliminated deductions in credits, reduced rate. we ought to move toward what reagan was proposing. we shouldn't raise taxes, we should shrink bigger government. >> it's a situation that has been pretty well unprecedented.

we've had this enormous global financial crisis hit america and americans incredibly hard, and then watching a bunch of politicians squabbling in washington as their livelihoods are going down the drain and what they want is people in your position to start thinking the unthinkable and as long as you refuse to do that, as long as you say, no, it's our way or the highway, the chances of a deal are dramatically reduced and america could, within a week, go into default with all of the carnage that would cause. >> well, we heard president obama call for tax increases to pay for the size government that he wants. but you also heard republicans and democrats, harry reid's proposal does not raise taxes. you might -- i hope the newspapers tomorrow will write down the budget cuts he's talking about. he saves a trillion dollars by winding down wars that are winding down overseas, those spending reductions might not be

real but at least he's beginning to put a list together. we still haven't seen a budget or a proposal from obama for six, seven months now. if he would put something in writing it would be easier for the american people to look at it and see if it's real. the house has passed both the $6 trillion spending restraint in paul ryan's budget, $2.5 trillion spending restraint in cut -- cut, cap and balancing and again waiting for obama to put anything down in writing. he gave a political speech tonight. it was an essay form. what we need is some arithmetic with numbers written down. obama still hasn't done that for us. >> i mean, it's a very high stakes game, this, isn't it grover norquist, because the american public according to the polls tonight, have made it pretty clear they blame the republicans more than the president at the moment. should america go into default, which would be completely unprecedented, never happened before, if that was to happen.

the political fallout could be levelled at your party and not the democrats. so the quaint notion that many republicans seem to have that this might be bad for president obama, it could be the complete opposite, everyone they may turn into fury on the republicans. you don't want that, do you? >> well, i'm opposed to the idea of going bankrupt or hitting the debt ceiling. i believe that we should come up with something as senator -- as congressman boehner put forward, speaker boehner, to reduce spending dollar for dollar with the debt ceiling increase. but your quite correct that, over the last several months, president obama has focused on the politics of this rather than the economics. the republicans in the house have written out budgets and written out proposals and the president hasn't written anything down because he's writing speeches and reading from teleprompters. tonight you got rhetoric, not a single number, not a single real proposal. a conversation about all of the sacrifice he was willing to make.

really give us some numbers, write it down so the american people can judge the republican house proposal, senator reid's proposal. the democrats in the senate have passed a budge net three years. they haven't passed a budget in three years. what do they do with their time? how does the president fill his days when he's not willing to put forward in writing something that you and i and the american people could look at judge. he's playing -- he's giving political speeches and evidently that works a little bit, but the election's a year plus away. people have an opportunity to see that obama's not taking this seriously. the republicans in the housekeep putting proposals, written down proposals in legislative language that actually matter and the president gives the speech with the teleprompters and no actual written proposal that we could even look at. >> finally, finally, grover norquist, some stage, somebody has to hand the baby to the enemy.