celebrating because they passed this bill. it is really a travesty and this is another kick the can scam down the road, and i think that both leaders, the president and boehner folded when it came to the tough issues. and let me talk about the boehner cuts. they say it is $750 billion -- >> and wait a minute. do one thing at a time. you said both the president and boehner folded. so number one, how did the president fold? >> yes. because he simply walked away from the taxes, and it is utterly unrealistic in the dire straits that we are in to think that we can get out of this situation without major tax increases and soon. we are raising 15% of gdp in revenue, and the lowest since the 1950, and we are spending 24% of gdp, and you could put attila the hun in charge of the budget cuts and you would not have enough to close the gap. we need major tax increases, and yet he walked away, and he didn't ticket for it.

>> okay. so, listen, before we get to john boehner, what would reagan have done? he had a recession, and he had high unemployment, and what would he have done in this situation? >> well, it is not a matter of guessing. what he did in an identical circumstance in the summer of 1982, we just had come out of the devastating recession, as bad as this one, and unemployment still over 10%, and the recovery was not even visible, and we had a massive hemorrhaging deficit, and we went to him, and we said without major revenue increases, along with the spending cuts, we can't take a chunk out of this deficit, and we can't get a deal on capitol hill, and so reluctantly he went along and signed the biggest tax increase in history, and which would be $150 billion a year in today's dollars. now, the thing is that ronald reagan was as much against taxes as anybody. we all know that. >> what was the outcome of that? >> well, the outcome was that

the next year the economy recovered and we created 3 million jobs in 1983 and 11 million over the next three years and the point is that ronald reagan was against taxes, but he also did not believe in credit card government, and believed that we had to pay our bills at the end of the day, and that is totally different than these credit card republicans today who cite reagan. they are misciting history and this is revisionism and it utterly ignores the real facts of what happens. and now today they say that -- >> well, before we end the interview, because we only have so much time mr. stockman, so pardon my interruption, so what did john boehner do wrong in your estimation? >> well, this was just a phony cut. $750 billion over ten years is a rounding error. it is 1.5% of gdp and all backloaded into the distant future. it cuts $25 billion now which is

2% of the deficit in the coming year, and 2/3, half a trillion of the cuts happen not after the next election, but after the 2016 election and in other words, so they are so far into the foggy future, you can't see them. so how does he have the nerve to stand before the american people and say we don't need a tax increase when the only thing he can come up with is a spending cuts at a half of one percent of gdp that will occur in the fiscal hereafterand not the real world that we are facing at the present time, so both of them folded, and both of them are faking, and the country at large is going to be the loser, and i don't think that the american people are stupid enough to believe that either one of them did an honest job of trying to come up with the plan that will make a real difference. >> and you know, i'm not sure if i would use that language to say that the american people are stupid enough, but there are people who are strong supporters, and who are obviously strong supporters of

the republican party, but tea party members who said, we don't need revenues, and we need to bring it down, and they have already bought into this, and then on the other side the liberals who say we need to raise taxes. so, in some way, people have bought in to this. >> well, no. i think that the tea partyiers who are for huge spending cuts were sold down the river by the speaker. they didn't get huge spending cuts, they got comparatively nothing and on entitlements $2 trillion a year worth of entitlement and mandatory spending and there is not a dime cut in in spending and a super committee who may or may not do anything. and the taxes, i agree with the progressives we need major tax increases and certainly the wealthy should be the first ones to pay, and yet this is the second time that obama has folded. first at christmas he gave an extension of the tax cuts that we cannot afford and they don't

need, and now was a chance to remedy that, and he folded again. this is very grim. we are heading down a very bad path if this continues. >> hey, listen, can i ask you this and real quickly, because i am up against the break here, and you have been in the situation, and you know, what happens when this committee of 12 comes back in november, are they going to say, all right, we are going to have to put some revenues here on the table? >> well, i hope they do, but on the other hand, i don't have a lot of confidence in a super committee because for decades now, there have been super lies being told by both parties to their constituents, and to the american public. as long as the hard core republicans are saying no way no taxes, and the democrats are saying that you can't cut social security when it is already $50 billion in red ink this year, then i don't think that a super committee is going to be able to deal with the clash, this paralysis of competing lies that are being told to the public.

>> a man who never really says what is on his mind, and that is sarcasm. david stockman, thank you very much. appreciate it. >> thank you. up next, we go the kate bolduan for the latest in the breaking news from congress tonight. make sure you stay with us. woman: day care can be expensive. so to save some money, i found one that uses robots instead of real people. 'cuz robots work for free. robot 1:good morning... robot 1:...female child. sfx: modem dial-up noise woman: flaws? yeah, um, maybe. anncr: there's an easier way to save. anncr: get online. go to geico.com. get a quote. 15 minutes could save you 15% or more on car insurance.

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pass the house of representatives, so there is a sense of relief here on capitol hill amongst members as the vote goes to the senate tomorrow, and we will be watching closely how the votes land. >> and we know you will be there. thank you, kate bolduan for that report. and up next, months of horse trading and wheeling and dealing to get an agreement that nobody likes. we will ask the political panel, was it worth the price? and will president obama have to pay it? stores and pick outrehouse everything you want. the sinks ringing. hello? you think those guys have "everything you want? " consider this your wake-up call! only sears has kenmore, and all ten of the top ten brands. the other guys don't even carry all top three. i hope you brought an umbrella 'cause it's raining cold hard facts up in here. thinking about buying appliances somewhere else? think again. sears. phone retract. ♪ [ recorded voice ] onstar. we're looking for city hall.

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all right. so how is this for a bipartisan agreement, president obama is taking heat from both sides. they say he has failed to lead on the debt issue. and new york times blasted the president today twice starting with liberal columnist paul krugman, and headline "the president surrenders." and conservative columnist joined the attack, headline "the diminished president" and over at the a "wall street journal" they dismiss him all together flatly declaring a "tea party triumph." well, how big of a hit has the president take snen i want to welcome strategist margaret hooper, and also from salon.com is steve kornanke, and steve, tonight, the president's critics are piling on. do you agree he is the biggest loser? >> well, i agree it is the

triumph for the tea party and a triumph to tr most conservative element. when you look at sort of how this debate set up in the first place, it was a president who said, absolutely fundamentally my bottom line is that this country cannot default on august 2nd, and that is his position all along and no one has doubted that. but the position of the republicans is that we hope that the country doesn't default on august 2nd, but at love t t lot members are okay if it does, and if you don't want to it to happen, this is the list of items you have to sign off on to avoid it. >> and if you listen to any of the democratic guests coming on the night, they are not map hap with the president and saying this is what he has to do if he wants to win in 2012 and what could he have done better? >> well, there were realistically, since this is set up, two possibilities all along for this thing, and one is what we saw, if you are going to cut a deal with the guys, and cut a deal with the conservative

elements of the republican party, this is what is it going to look like and the other option is the one that i don't think he ever explored and what the liberals are upset about for some degree the 14th amendment option. if you get a terrible deal and a deal in your mind that slows the economy and gives the republicans so much, then is it really so bad to explore the 14th amendment option? >> well, okay. i have to ask can you this, margaret, because here is what people are saying and people are saying, this is bush would have stood up to the opposition and said, hey, we are going to do this, and do this and mission accomplished and that sort of thing. he would have enacted the 14th amendment that is what people have said, and some people say, well, the president should have done that and he should have said, listen if you want to drive the economy off of the cliff, go ahead and do it, but i will be the adult and raise the debt ceiling and you talk out the debts. >> well, i had the privilege of working with president bush in the white house and while i was a junior staffer and not at the

roosevelt room, but what i would say that president bush did do differently is to get a plan on paper and send it to congress and immigration reform and social security reform, and all of the things that did not happen, he put it on paper, and there was the white house plan and the senate plan and the president's plan, and that is one thing that has fueled the narrative that there is a vacuum in leadership. democrats are i seaing that the president doesn't know how the good negotiate and he sold the farm, and bernie sanders and far left people of the democratic party are saying that he has to primary the guy just for the principle and the point. >> and she has a point, because many people are saying and the democrats you have heard them, he stands by and sits back for a while and he does not e mote and then at the last second he comes in. you know, what other presidents before him, and clinton had the whole thing, i will shake your hand and so sorry and bush was larger in life in the way he would interact with people, but this president does not show emotion and appears to stand back and be pragmatic and come

in at the last minute. >> well, there is something to be said for the theatrics of it, and something to be said for -- >> well, that is true, but for the american people, sometimes they want to feel that you are involved and that you have a feeling about something. >> sure, sure, but when you look back to other presidents we have a tendency of years and decades after the fact to make them into sort of idealized versions of what they were. >> we romanticize history. >> because if you went back to reagan era, you would hear the grief they took from their own parties, but the things torn -- on the negotiating parties if obama had brought the debt to the table, it would have emboldened them, because if from a pragmatic standpoint, it would have been good for the 14th amendment and not given them an issue to run against. >> and i feel like we are

beating up on the president, but how did john boehner fair in this? >> well, he is coming out genuinely with soaring colors, because he had a wily caucus and 97 members of the tea party, and many of whom were not going to be -- >> soaring colors? >> well, flying colors and he has come out king of the mountain and not because he has gotten the caucus together which is extraordinarily different caucus, and include big the way the majority leader who undercut him in the negotiations, but he made a deal with the president who has no tax hikes and normally these reforms have tax hikes in the beginning and then they promise spending cuts that eventually never happen. and this is spending cuts immediately and no tax hike, and that is the deal he negotiated though, and that is john boehner's work. >> well, many people are saying that in his own party and the tea party members we wanted it to go further than it did, and john boehner didn't do that and

both of the guys believe that president obama and john boehner may have lost some clout in all of this? >> well, the reality is that the entire narrative has changed from spending more and more and more to curtailing spending. from even though they did not touch the entitlement reforms and the budget balanced amendment may or may not be voted on the entire course of policy making has changed in the last year because of the tea party and john boehner's deft ability to negotiate with the wily caucus and the president of the united states. >> what happens if the committee comes back in november and says we cannot accomplish this unless we have revenues and couple of seconds here. >> it won't happen. the same thing will happen as when the grand bargain was proposed a few weeks ago, those tea party members who are the backbone of the republican party in congress will say absolutely not. and if the price is automatic cuts in defense, they will be okay with it. and john boehner is not going to be in a position to say, that what we are learned about boehner, he is not in position to deliver anything. he could not go along with the grand bargain and he had to go

with the tea partiers and even then he had to vote with them. >> this is historic and at the end of the day they have incentives to find more spending cut, and otherwise a pox on programs and that is not what anybody wants. and this has to be done by christmas. >> everybody will abide by the rules? >> my bet it works out. >> all right. margaret hoover and dean, thank you for being here and thank you for joining us "in the arena" tonight. and good night from new york. piers morgan starts right now. tonight, beat the clock. >> the deal negotiated with the leaders of congress is a victory for the american people. >> but is anybody in washington really happy now? >> this process has been messy. it has taken far too long. >> we have been operating under a balanced budget amendment that we never would have gotten ourselves into the mess we are in. >> no one got what they wanted.

>> wulill this make the e kocon even worse? >> this will cast a long term shadow on the nation's reasonableness and reliability. >> has congress shot itself in the foot? >> the american people hold us and their low opinion of us, because we are failing to do what they think is our job, and by the way, they are right. >> tonight, i will talk to the white house and members of both sides of the aisle and the man who can answer what may be the biggest and most important question of all, what will all of this cost you? of this cost you? this is "piers morgan tonight." -- captions by vitac -- www.vitac.com good evening. breaking news tonight the house has passed a debt deal by a vote of 269-161 and next stop is the senate and we expect a vote tomorrow at noon. but tonight, the moment that nobody expected, congresswoman gabrielle giffords casting her very first house vote after she was nearly killed in an assassination attempt in

january. her colleagues giving her an arousing and emotional standing ovation, and nancy pelosi honored her, and we will talk about the debt battle next with my colleague wolf blitzer, and erin burnett. wolf, start with the uplifting there with gabrielle giffords, and nobody expected that and it was not really a dry eye in the house, right? >> it was very emotional, and understandably so, because we really haven't seen much of her and a little bit when her husband took off on the shuttle, but there she was and people could see her and come up to give her a hug and kiss and remember the days and she looks obviously different than she did, and she is coming back. i was frankly surprised to see her on the house floor and she stood up, and it was an emotional moment for everyone, democrats and republicans and liberals an conservatives were thrilled to see her and i know that the constituents back in tucson, arizona, were thrilled she is back in action and she actually cast a vote today.

>> and she voted yes obviously for the deal. we are in a situation now where everyone expects the senate to rubber stamp this tomorrow, wolf. where are we in terms of the winners and losers here? who has come out of this well? who has come out of this badly? >> probably the tea party supporters have come out of it pretty well, because they did manage successfully to get this entire issue link reducing the national debt and raising the debt ceiling. that has never been done before. they managed to get it on the agenda, and at the same time they managed to achieve at least in the short term what they wanted to do it without any tax increases. no enhanced revenue from any tax reform or anything along those lines, so i would say that the tea party movement, they come out of this as winners. the president, the republican leadership, and the democratic leadership, they don't necessarily come out successful, big winners politically-speaking, but they did manage to step away from the brink that the united states at least not now the united states

will not default on the obligations, the financial obligations. that could have been a disaster, and no guarantee, piers that this is necessarily going to stop the rating agencies from reducing america's aaa rating, but at least in short term, it moves the united states back from what could have been an economic disaster. the dollar going down in value, interest rates going up, and given the fragile state of the u.s. economy right now, that would have been a huge, huge burden. >> and erin burnett, let me turn to you, because just as an impartial observer watching this slightly aghast might think that the tea party did well politically, but in terms of the behavior and when they shoved the president into the corner and made a crisis out of something that should not have been a crisis in terms of the debt ceiling being raised and pretty much stabbed the speaker john boehner flat in the back, didn't they? >> well, that is a good way to put it. you could say, piers, in a sense, they were playing chicken with the whole situation. if they ended up getting out of it massive cuts that moved the

needle which the cuts on the table now do not, and they don't address the major entitlement programs, well, if they had accomplished that, then you could say, well, yes, it was worth it, but all of that storm for, well, frankly not much. so i would say, yes, not very much was accomplished that was positive from this and now you have great uncertainty about the economy as wolf indicated by far the top story. you saw the market rally on the news of the deal and then terrible data of manufacturing back in recessionary territory and the markets gave it all back. >> yeah, almost every sector in the american economy is floundering, manufacturing, housing, and you look at it and it is going backward and the jobless figures expected to continue to rise, and nobody believes, erin, that anything this the deal will stimulus the american economy and that, in itself, is incredibly serious, isn't it? >> yes, and nothing in the deal will stimulate the economy insofar as you get the certainty which is a good thing, but as

far as we don't know the full extent of the cuts, and you want get clarity until november, but economic growth in general, this is the whole debate of spending money and whether we should make significant cuts and some would argue and including som of the biggest bond investors in the country, and you would think they would be pushing spending cuts, but no, they say we should spend money right now and we should cut when we have economic band width to make those cuts. >> quickly, erin, predictions for the markets? >> well, it is tough. overnight we are seeing the markets in australia open and not gains there, and weakness there we are seeing because of the weak u.s. manufacturing data, and so we will see what will happen tomorrow, an obviously, everyone is expecting the senate to be a rubber stamp as you and wolf were indicating. >> and wolf, quickly from you, has speaker boehner's position been weakened here by the tea party, and could his position be in jeopardy? >> i don't think in jeopardy,

but weakened a little bit. he merged victorious and he got the deal through and a lot more than the majority of the republican caucus through, so he is coming out okay on this, and mitch mcconnell the republican leader in the senate was behind the scenes very instrumental in putting the deal together, and for those who wanted to avoid a default, he has to emerge as one of the unsung heroes of the last minute deal if you like the deal to begin with, and most people know the consequences of failure could have been a disaster so most people like it even though they don't love it. >> wolf, erin, thank you both very much. it seems that the best of the president's own party can say about the debt compromise is that it is not perfect, but is it good enough? joining me right now is white house senior adviser valerie jarrett. interesting comment from nancy pelosi that it was not a satan sandwich you had to eat, but satan sandwich with satan fries on the side.

>> well, it was not perfect, but in wkt, it ashington, it was thf the possible and what is most important is that we protect the united states reputation and full faith and credit that everyone around the world looks to and prethe aaa rating and appreciatable time, and nobody wanted to go through this debate through the holiday season and continue this cloud of uncertainty having a chilling effect on the economy. that is something that the president was determined to have, and we now have a deal if in fact it is passed be i the senate and signed by the president that will last until 2013. that is certainty that is important. >> and you think that when the american people voted for barack obama in such huge numbers and then when he promised change, they felt they were having to be eating satan sandwiches and doing deals with the devil? i mean, it is not quite what we hoped for, was it? >> well, it is a messy process