>> how unusual is this what happened? obviously it's unusual. it isn't anything any of us have ever heard of before. sinkholes happen a lot in florida. they happen in other places in the world. populated in other places of the world. how unusual is it for something to happen, to demolish a residence or a place where there are people? >> i don't think it's that unusual for sinkholes to occur under buildings like this. i think that area of florida it's even in the years past some damage to houses. but to have a catastrophic collapse like this right under a house is fairly unusual. sinkholes happen every day based on what's going on with the weather like heavy rain, during droughts. a lot of those happen out in farmers fields and woods where we never see them. a lot of them occur on highways because we have a change if the way the water gets into the ground by runoff.

so you see roadways a lot of times get this, have this happen. for houses like this, of course having somebody in the house at the time is quite tragic. >> quite tragic and very rare. randall orndorff, geologist with the u.s. geological survey. thank you for talking with us. just to bring you up to date, you're watching pictures of the home in seffner, florida outside of tampa where jeff bush was killed on thursday night when a sinkhole opened up in his bedroom and swallowed his bed with him on it. obviously very, very sad situation for the family as crews there have had to call off trying to recover his body. they are now demolishing the house, getting started on that, hoping to recover some of his personal effects before it works the rest of the day and tomorrow. we'll keep an eye on the picture and update with developments. for now i'll hand over with my colleague candy crowley and state of the union.

x xxx can you feel it now? today it happened. budget cuts. >> republicans chose this outcome over a single tax loophole. >> president obama and senate democrats failed to act. >> moving beyond who did this to what next with the senate's top republican mitch mcconnell. then the president's top economic adviser gene sperling on plan b and his side of the woodward white house fracas. plus are politics suffocating law making. posing that question to the two lawmakers leading party election efforts in the house, congressman steve israel and greg walden. and the stock market soars to new highs while income

plummets to one of the deepest declines in 20 years. our plan weighs in on the two economies. i'm candy crowley and this is state of the union. mitch mcconnell will join me in a moment. first we want to take you to just outside tampa, florida where demolition is under way to the home where the sinkhole formed killing the owner of the house, jeff bush. authorities made the decision to stop searching for bush who was swallowed up by the 600 foot sinkhole thursday night. we will keep following you this story and bring you updates throughout the hour. back to the top story, more than a year to work things out, hours before mandatory budget cuts were triggered, the president called democrats and republicans to the white house, his first bipartisan leadership meeting since december. the meeting led up to expectation but nothing happened. no ongoing negotiations. if you have visions of somebody

somewhere pulling an all-nighter or two to get this fixed, doesn't seem in the works. >> i am not a dictator. i'm the president. so ultimately if mitch mcconnell or john boehner say we need to go catch a plane, i can't have secret service block the doorway. >> joining me from his home state of kentucky, senator mitch mcconnell. thank you so much for being here this morning. give me a state of play. is this, as far as republicans are concerned, at least as far as you are concerned, are these budget cuts a done deal? they are now in place and you have no intention of having any kind of discussion about ameliorating them in some ways. >> look, candy, the question is are we going to keep the commitment we made to the american people a year and a half ago, a bipartisan agreement signed by the president that we would reduce spending without raising taxes by this amount of money in this fiscal year.

here we are a year and a half later with the president trying to walk away from the commitment we made to the american people. let's talk about the larger issue just for a moment. we now have a $16 trillion national debt. our debt is as big as our economy. that alone makes us look like a western country. we've had four straight years of a trillion dollar annual deficit. this modest reduction of 2.4% in spending over the next six months is a little more than the average american experienced just two months ago when their own pay went down when the payroll tax holiday expired. look, if we can't -- >> you call it modest, senator. if i can get back to that one word you used. you call this a modest cut. yet you know the cbo said it will cost 750,000 jobs. it will probably ding gross

domestic product by half a percent. we have heard that policemen will be laid off, firemen will be laid off, military hollowed out, crime will go up. your own republicans so worried about the defense department and yet you're calling it this modest. there's this complete disconnect, seems to me, about what's actually going on here, when lou at what democrats say is going on and what republicans say is going on. >> by any objective standard cutting 2.4% out of $3.6 trillion is certainly something we can do. >> over a short period of time, albeit. >> we promised american people we would do this a year and a half ago. here we are walking away from the spending reductions we promised to make without tax increases, the president signed a year and a half ago. bob woodard signed the sequester was the president's idea. he knows we were not going to raise taxes to achieve this spending reduction this year.

so i think the american people need to know we have a spending addiction in washington. we're exploding our spending. we've added $6 trillion to the national debt in just four years. we've got to begin to cut spending. we promised the american people we'd do it a year and a half ago and we'll do it. >> the polling shows american people when talking about the sequester and pretty much any other budget showdown you all have had said they would want to have more tax increases in it. beyond that, are you saying to me that, yes, you believe that these sequester cuts or these budget cuts are going to stay in place. there will be no search for alternative by the republican leadership. >> well, i'm absolutely confident we're going to reduce spending the amount of money we promised the american people we would in a law the president signed a year and a half ago. we said we're open to discussing how to reconfigure those

spending reductions without raising taxes. >> keeping the top line. >> the president seems to be not interested in reducing this amount of spending even though we signed the bill a year and a half ago. >> yet we are -- >> we think it's important to the american people to keep this commitment. we're willing to do it. we're willing to talk about reconfiguring the same spending over the next several months. american people say, gee, i've had to cut my budget more than this probably on numerous occasions over the past four years because we've had such a tepid economy for four long years. i think they expect us to keep the commitment we made. >> so we are told that the president has called in recent days since your meeting with him on friday some republicans and democrats he thinks are willing to look at tax revenues on the side of sequestration to get rid of these automatic budget cuts. i'm going to assume you are not one of the republicans he called and neither is speaker boehner.

do you think there is a fracture inside the republican party that could undermine your adamant position and that of the speaker that you will not agree to any sort of tax increase. >> so far i haven't heard a single senate republican say they would be willing to raise a dime in taxes to turn off the sequester. the president is free to call whoever he chooses to. he doesn't have to go through the speaker and myself to talk to our members. i fully expect him to do that. so far i haven't heard a single senate republican to say they will raise one dime in taxes in order to avoid a spending reduction commitment we made on a bipartisan basis just a year and a half ago. >> let me ask you about the upcoming continuing resolution where the government will run out of funding. are you committed to not having a government showdown? we seem to hear it from speaker boehner, the president. >> we also -- >> go ahead. >> sorry. >> do you believe there will be a shutdown? have you ruled that out?

>> senate democrats have indicated they are not interested in that either. i believe we're going to be able to work out passing the continuing resolution later in the in march on a bipartisan basis through the house and senate. >> let me turn to some political questions for you. the first is chris christie, arguably the most popular republican in the country was not invited to cpac, a collection of conservative groups. is it a mistake for the conservatives not to have invited someone who right now has shown an ability to bring together independents, republicans and democrats. >> oh, my goodness. i don't have any advice to give to outside organizations about who they choose to invite. i've been invited to go to the conference. i'm happy to be there and looking forward to speaking there. they don't consult me on their invitation list. >> let me ask you about your own race. lots of talk about ashley judd the actress and political activist getting into the race to challenge you.

i'm wondering since we've now already seen ads from groups that support you against her, they seem a little worried she will be a big challenge to you. >> the race will take place in 2014. i will say it has started early. there's a group that's already issued racial slurs against my wife and questioned my patriotism. the left is fully engaged down here in kentucky. they would love to take out the leader of the senate. we expect a spirited race from whomever they choose. >> you're referring to a tweet by a progressive group in kentucky that talked about your wife's ethnicity. how did you take that? why do you think they did that? >> well, it's happened before. the chairman of the democratic party years back engaged in that kind of thing. my wife was a proud japanese american. she was secretary during bush

administration. her family escaped from mainland china, made their way to america and lived the american dream. for that racial slurs by democrats in kentucky, it goes with the turf at home. we expect spirited race. there's a lot of left wingers around the country who believe 2014 race is the only race of national significance and they would love to take out the republican leader of the senate. we'll be ready for them. >> yes or no, can you take ashley judd? >> we'll see who they nominate and we'll be happy to nominate whomever they have chosen. >> we've had her on the show as former secretary of labor under george bush. thanks for joining us today. >> thank you. >> when we return, will the obama administration exaggerate forced spending cuts? >> it makes me very uncomfortable to have the white house telling reporters you're going to regret doing something that you believe in. >> the war of words between the

president's man and the veteran journalist. gene sperling tells us his side of the story next. ♪ my friends are all around me ♪ my friends, they do surround me ♪ ♪ i hope this never ends ♪ and we'll be the best of friends ♪ [ male announcer ] introducing the reimagined 2013 chevrolet traverse. all set? all set. with spacious seating for up to eight. imagine that. chevrolet. find new roads. i'm up next, but now i'm singing the heartburn blues. hold on, prilosec isn't for fast relief. cue up alka-seltzer. it stops heartburn fast. ♪ oh what a relief it is! cue up alka-seltzer. it stops heartburn fast. the people of bp made a commitment to the gulf., and every day since, we've worked hard to keep it. today, the beaches and gulf are open for everyone to enjoy. we've shared what we've learned,

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i'm joined now by gene

sperling, assistant to the president for economic policy. i want to ask you about bob woodward in just a moment. first i want to talk about forced budget cuts. is it done? >> i certainly hope not. these are harsh cuts that were not ever designed to go into effect. >> be careful what you sign into law. >> i hope that doesn't turn out to be the case. the idea of this enforcement mechanism, deep cuts on domestic spending and defense spending was they were designed to be so onerous they would force both sides to go back to the table and finish the -- >> how onerous are they? we've heard you, or the administration for the last week or so, the president said this isn't the armageddon. this will be bad but not armageddon. it's hard to get a grip on what will happen. >> there's no question on day one it will not be as harmful as it will be over time.

let me give you some sense of what people should be concerned about. every independent economist from the chairman of the federal reserve to macroeconomic advisers to the independent congressional budget office said this will be very harmful to the economy. the budget office said this will cost 750,000 jobs, .6%, over half a percent of economic growth. this is right at a time when it's starting to look like our recovery could take hold. what that means every time you see an economic number the next few months, you will know there's less jobs being created that would have been had we come to a bipartisan agreement. >> also honestly that works well for you, doesn't it? if the economy didn't go up as much as or unemployment go down as much, well, if we didn't have these sequesters. >> i want to make this really clear, this sequester is a win

for nobody. it's just a loss for the american people. >> how come nobody is talking then. both sides say this is awful, this is terrible. the economy is not going to be as good as it should be and nobody is talking about ending it? >> first of all, i want you to know this president is doing everything he can. he brought the republican and democratic leadership in on friday. i can tell you for a if he can yesterday, saturday afternoon, the president was working the phone talking to both democrats and republicans who he thought were willing to be part of the type of bipartisan compromise that we need to get out of this. >> tell me who the president is speaking to. it's clear he's not speaking to people on the leadership, republican side. >> i can tell you this. he's reaching out to democrats who understand we have to make serious progress on long-term entitlement reform and republicans who realize if we had that type of entitlement reform they would be willing to have tax reform that raises revenues to lower the deficit.

>> talking about lindsey graham on the republican side, because it sounds like he's not talking to the leadership? >> he just had the leadership in on friday. what's most important we're not trying to make those calls to read out the names. he's making those calls to see where there might be a coalition of willing, a caucus for common sense and trying to build trust. he's going to be having a lot more conversations like that because he understands, as i think more and more republicans will understand, that it makes no sense to sit back and watch communities that depend on military spending devastated. it makes no sense to see us lose 750,000 jobs when we could come together in bipartisan compromise if we're all willing to give a little. >> let me ask you about jobs. when do you expect we will see enough jobs created to make a sizable dent in the unemployment rate which has been so stubbornly high. >> this is exactly the point we're making. right now you have seen some

momentum in areas like housing and auto sales. you've started to see jobs created at a level that could slowly be bringing down the unemployment rate so we can be making progress through the year. what exactly worries me about this type of sequester is that it's going to hurt that progress of lowering unemployment rate. sandy, i talked to ceos of major companies all the time who are telling me they are putting projects on hold precisely because of this sequester and dysfunction in washington. >> projects on hold for sometime now because of the economy. >> no. but what they are saying now is this type of dysfunction hurts their confidence in the economy and makes them hold back on creating new jobs. one ceo of a major company said to me, you know, we'll be okay after a few months but we have 20,000 -- 20,000 -- small business suppliers who depend on us. those small businesses could be hurt very significantly.

so this sequester doesn't help anyone. republicans say they are for defense. this cuts defense deeply. they say they are for border security. this cuts bored security deeply. they say they are for long-term entitlement reform, this doesn't do anything to help long-term entitlement reform. >> want to point out one thing, the president's leadership meeting on friday before the sequester was to go into effect really was the first one of that type he's had since the end of december. so there's a lot of complaint on the republican side he hasn't been involved. as a final question, you've got to run and so do i, that is the fracas with bob woodward. have you spoken to him since this all came up? >> bob and i have known each other for 20 years and we've always had a friendly and respectful relationship. anybody that looks at e-mails from me and back from him can see there's respect and friendliness. >> somehow he didn't feel that,

though. >> i can't explain that entirely but i'll say the following. i think he's a legend. i hope that him and i can put this behind us and i hope it helps all of us focus on the issues bob and i care most about, which is how we come to the type of budget agreement that will help our economy, help jobs and help middle class americans. >> assuming you still disagree with him on the president moving the goalpost in terms of sequestration. >> absolutely. >> have you spoken to him in the last couple of days. >> i hope to. again, this is a disagreement, a substantive disagreement. as we've said often, i think everybody who was part of that conflict or negotiation in 2011 knows we put the sequester in place to force both sides to come back to the type of grand bargain bowles-simpson called for, most budgets call for that recognize it's not cutting

defense and domestic spending like education and research we need. what we need is a compromise. >> gene sperling, thank you for your time this morning. >> thank you, candy. >> when we return a shrinking battlefield in congress. is the president using this latest crisis to try to win back the house? >> what i can't do is force congress to do the right thing. the american people may have the capacity to do that. ♪ [ construction sounds ] ♪ [ watch ticking ] [ engine revs ]

come in. ♪ got the coffee. that was fast. we're outta here. ♪ [ engine revs ] ♪

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people are saying "progress-oh!" share your progress-oh! story on facebook. starts with arthritis pain and a choice. take tylenol or take aleve, the #1 recommended pain reliever by orthopedic doctors. just two aleve can keep pain away all day. back to the news. if lunging from crisis to crisis seems like the new normal in washington, look no further than the stats from november of 2012 for one of the reasons. the cook report found that only

74 of 435 members of the house won their elections with 55% or less of the vote in their districts. the flip side of that equation, 361 house members won their races with over 55% of the vote. with most house seats solidly democrat or republican, incumbents are more likely to face a primary than general election race giving them no inventive to compromise on big legislation. for 2014 it has already begun. this website was set up by conservative for growth, big money player in politics. the group sees as insufficiently conservative on fiscal matters. the address, primarycongressman.com. also gumming up the works, legislation that passes in the majority house seldom even reaches the floor of the democratically led senate. for his part president obama urges congressional members to remember why they came to

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campaign committee and walden. thank you both for being here on your debut here for us and together. so it's very nice to have you. so we sort of laid out mathematically how the vast majority of republicans and democrats in the house were elected by big marriages in today's terms. 55% or more. so realistically speaking, you all are never going to find big legislation you're going to agree on in a bipartisan manner. republicans can shove it through but you're never going to be able to agree, are you?

>> i don't think that's true. look, we'll have competitive races. when the race is over we should get together and try to solve america's problems. >> but it doesn't happen. >> it's a bicameral process. when we pass something in the house, doesn't mean senate takes it up exactly as it passes. we'll get together to see if we can work it out. at least the volleying back and forth to come to common ground or at least try. >> have you seen common ground? name me one big thing in the last four years that the house of representatives has passed on a bipartisan basis. >> look, we just passed violence against women's act, took them 500 days to get a vietnam and we did finally get a vote for it. i just came from my district. i think my district is like most others in america. i don't care if you're in a blue district, red district, purple district, you want a congress that focuses on solutions. you're tired of the politics of blame and want a congress that focuses on issues.

sequestration, house democrats have attempted on three separate occasions to get a vote on a solution that is based on compromise, that is fair and balanced. that continues to cut spending beyond what we've already agreed to cut, a trillion dollars. that cleans out our tax code, eliminates loopholes for special interest, archives. couldn't get a vote, not one vote on those three things. look, i like greg walden a lot. we do a lot of work together. we share each other's pains. my question to greg, can we at least in the spirit of compromise get a vote on solutions. can you vote no but at least give usa vote. >> the way this works, we've had two votes, one in may and one in december to offset sequestration in the house. we came up with common sense reductions in spending, some of which came from the president's own initiatives. we sent that to the senate. the senate never took it out, never passed. if you don't increase taxes, i'm going to veto it. we tried to get flexibility from

the sequester moving forward. it's been rejected, like the jimmy buffet phone, if the phone doesn't read, it must be me. we're waiting for harry reid or barack obama. >> something caught my eye in "the washington post." it quotes you, come congressman israel. quote, the president understand to get anything done he needs a democratic sorority in the house of representatives, said representative steve israel, chairman of the democratic congressional campaign committee. to have a legacy in 2016, he will need a house majority in 2014 and that work has to start now. how is that substantially different from mitch mcconnell, who was pounded for years for saying his priority was to get the president to be a one-term president. >> there's a huge difference. the difference is that house democrats have consistently supported compromise. the president put out -- >> this is about the president's legacy now, which you point out. the president's legacy. how would we ever know that he

really wants to work with house republicans when we know that he wants the house to be democratic and is actively working in a way he has not worked at it before. >> here is why. last thursday republican speaker of the house john boehner spoke to the republican caucus and said there will be no more negotiations, no more talks. not one corporate tax loophole -- as part of the sequester. the republican house cheered. since when did we cheer for failure, cheer for compromise. >> i think probably cheering for -- >> the fact of the matter is the speaker said we will not negotiate and there was cheering. what the president needs is more conversation about compromise and less cheering for the lack of compromise. >> the first phone call the president of the united states made as he left the platform on election night to steve israel as reported by "the washington post," i'm all in this trying to take back the house. the next phone call was to nancy pelosi saying i'm all in to take the house.

he's had the never ending campaign using "air force one," $180,000 an hour to campaign around the country. he's not committed to solving these problems until he has nobody to stand up and say let's have a check and balance, mr. president. for heaven's sake, don't get in the president's way or question him or you might regret staking our your position. >> you can see why people might look askance. obviously presidents want their own party in. this in the midst of negotiations shades how you look at it, does it not? >> the president has consistently supported compromise. the president and house democrats have supported over a trillion dollars in cuts. we know we have to cut even more. what the president has said to house republicans is let's substitute 750,000 pink slips, which this process will lead us to, with a reduction in big handouts to a few big oil companies.

let me finish. the kinds of cuts that are going to cost 750,000 jobs. we need compromise and solutions and less blame. >> let me move you onto issues. >> before you do that, i do think i get a chance to respond here in terms of the fiscal cliff. the president just got 6 to $700 billion in tax increases at the end of the year in a compromise on the tax code. that was a compromise by the house and senate into law. that's an enormous amount of revenue you think about 600, $700 billion in higher taxes. we've done the tax piece. we need now to deal with washington wasteful spending and it needs to be done. the trillion dollars he's talking about part of the budget control act. it did happen. long included the sequestration. that's what we're arguing about today. that's where the cuts come from. >> let me ask you, moving forward on sort of separate issues you have. we have a situation where a number of republicans joined in publicly stating their support

for gay marriage. i wanted to ask you as you look at these upcoming elections for house members, how do you hold true to the social pillars of the republican party and still invite in those, and there are many republicans who say we need to be supporting gay marriage. >> there's certainly republicans who do. others have actively engaged in that and support that. in other parts of our country, they don't support that. >> primary challenges. >> it can. it does. that's what primaries are about. i think we're evolving on a lot of these issues. the thing americans care most about is am i going to have a job, are we going to get the economy going, sign off on keystone pipeline, create 20,000 jobs. i think the economy is just number one and should be for everybody. >> let me ask you on your side of the aisle, you have, i think, more than almost a dozen, maybe more than two dozen, actually,

congressman with the president, no way, no how can you touch social security, medicare or medicaid which everybody says are the huge drivers of the deficit. how do you sort of bring the democratic party behind not a single but at least a consensus view of what should happen to these entitlement programs. >> number one we've already achieved over $700 billion in savings and efficiencies in medicare. number two, we understand we've got to go beyond that. we've got to have a serious conversation, good compromise and start strategy on entitlements. what we get is we want to reform medicare. we want to begin to reduce medicare and social security from the republicans but we can't find one single special interest tax loophole they are willing to roll back or end? why is it seniors have to be the first to sacrifice the most. >> everybody does think the sbil entitlements seem to be what you

do have to approach. >> i've got to go here. i want to thank you so much. congressman israel, congressman walden, come back will we'll do it again. >> thank you. what's the defense between armageddon and painful. we'll get to that in a second. we're monitoring the situation in florida where authorities are demolishing a house where a sinkhole swallowed a man alive. t unstuff your nose. what? [ male announcer ] alka-seltzer plus liquid gels speeds relief to your worst cold symptoms plus has a decongestant for your stuffy nose. thanks. that's the cold truth! good morning, turtle. ♪ my friends are all around me ♪ my friends, they do surround me ♪ ♪ i hope this never ends ♪ and we'll be the best of friends ♪ [ male announcer ] introducing the reimagined 2013 chevrolet traverse. all set? all set. with spacious seating for up to eight. imagine that. chevrolet. find new roads.

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>> either they don't want to legislate or they don't know how to legislate. >> we've shown that we can pass bills to replace the sequester. >> the republicans want the sequester to go forward. >> the president is moving the goalpost. >> the leadership is simply running out the clock. >> the president and democrat leaders have failed to pass a solution of their own. >> the house basically decided to sit it out. >> almost like the administration was given a homework assignment 18 months ago and showed up last week and said, gee, we're not ready for this. >> is this as bad as it gets? joining me around the table to discuss, mark zandi, chief common mist for moody's, steven moore, columnist for "the wall street journal." we don't lack for finger pointing what we look for is any

kind of solution to this. it does not sound to me as if the republicans or the democrats are eager to get together to do anything. is that the sense you're getting? >> yeah, i think the sequester is going to be the sequester. i give the president some flexibility on how to implement it, which will be a good thing. won't give that, particular resolution. the spending cuts is a done deal. we're going to face that. >> they stay. >> republicans are very frustrated. i heard your interview earlier with the president's chief economic adviser. what he left out is when they had the debt ceiling -- this is the result of failed debt ceiling cuts two years ago. republicans say let's reform this entitlement, that and others. the president rejected every entitlement reform the president put on the table. for now the president said we want to reform sbilentitlements. sure, let's do that. one thing they won't do is agree

to any tax increases. >> it didn't sound like it, susan. just from a political point of view, seems a gamble for republicans only because public polling continues to show that the democrats and the president are the ones that get less blame anyway. >> there's clearly a miscalculation on the part of the white house. they figured that the defense cuts would be enough to force republicans back to the table, but not this republican party. that was the old republican party. this party cares more about spending than it does about keeping defense numbers up. therefore this option that seemed completely unacceptable, sounded like from your interview both sides ready to accept them. what we'll start to see is the sequester to make dire predictions we've heard from the white house about what's going to happen to try to deal with it to make the impact as limited as possible, although there is going to be an impact. >> one thing that could happen if the impacts are significant, a lot of disruption in the air

traffic control system or fda, they could take it back through emergency authorization. so when you add it all up, may take some cuts back. >> what's frustrating to me, i'm deficit hawk, i want to see them reduced. trillion dollar deficit. outlays, billions in savings. the average agency $0.04 to a nickel on the dollar. most americans know $0.30 of every dollar is wasted. are you kidding me, we can't save $0.05 on a dollar without shutting down air traffic control system or schools. >> if you add up dollars and cents this is meaningful. >> do we really know what the impact the be? we have gone from one extreme to, it's not going to be that bad, only $0.05 on the dollar. we don't actually know what's going to happen, do we? >> we had a sequester when i worked for president reagan in 1987. everybody said -- it was a little smaller than this one.

life went on. agencies found they could save on travel and conferences and paper clips. what i find objectionable why does the president want the most sensitive, valuable instead of the waste where everyone knows where it is. >> he's hamstrung, the sequester what makes it more disruptive at the project and program level, gives agencies less flexibility. >> why did the president say this week he didn't want -- remember, he said, i don't want the flexibility. he wants this as dire as possible. >> politics. >> we're on your forte here. nobody wants to be the person that says save this program, don't save that one, right? that's part of the problem here. >> part of the problem is where the president could get really hurt is if the economy takes a dive in part because of this. >> aren't they setting up already for bad economic figures because the first thing that gene sperling said was now when

we see economic figures in the future, we'll know what the impact has been. >> we've covered various presidents. how effective is it when the president says the economy is not really my fault, it's somebody else's fault. fact is, bad economy is bad for barack obama even if he can argue the republicans did it with the sequester. >> when you say we don't know. we do know. this is arithmetic. when you put out $40, $45,000 in outlays, that's cut to people in a six-month period, that's doing to have an impact. can you do the math, half a percent of gdp. >> this is where we disagree. i actually think cutting government spending is a good thing. i think it will give financial markets some sense we'll do something about the deficit. let me ask you, if we can't cut $50 billion out of the deficit, how are we going to get rid of another $90050 billion. >> we just don't want to cut it all at one time? >> when. >> let me ask you about the dow which hit this five-year high on wednesday. meantime, we're gett reports about personal income

takes a huge monthly dive. are there two economies out there or is wall street just sort of now discounts what's going on in washington? >> of course, the tax increases, right? that reflects the payroll tax and a big boost in december when everything was cut out to avoid the higher taxes. the stock market is reflecting the fact that american companies are in fantastic financial shape. their profit margins are fantastic. >> housing is really picking up. i mean, some real signs of progress. i think the only thing that is holding back the economy is washington right now. >> but you know how president bush used to talk about the soft bigotry of low expectations when it comes to expectation. there is no assumption that washington is going to be able to deal in a serious, long-term way with things like the sequester so it gets discounted and what we see this messy debate in washington does not have an effect on the dow. >> that's exactly right. the other thing with each

passing round of brinkmanship, becoming less of a problem for washington because they know the script. as long as washington doesn't go off the script, meaning shut the government down, that is going off the script or not paying its bills. then wall street is going to be fine and the economy is going to be fine and we're going to be off and running. >> let me ask you a final wrap-up question here. we heard the president say that these budget cuts will not be armageddon, but they'll be very bad. i was going to try to get each of you to say, what is your description of what's going to happen if you're at home watching from st. louis, missouri, what is going to happen? >> it's not catastrophic. we'll feel uncomfortable when we have to digest the tax increases and the spending cuts. it all comes together this spring and summer. the economy will slow in a sense that the economy will slow to a pace that unemployment could start to notch up, again. >> i think it's important where you live. if you live in the washington,

d.c., area, you may see more impact than if you're in a place more shielded from it. armageddon something permanent. i think this is something temporary. >> washington, d.c., did the best over the last four years with all the stimulus spending. the fact that some people in washington will lose their jobs, maybe that's not such a bad thing in the rest of the world. look, the sun will still rise in the east tomorrow and the next day. this is not a big problem. i think we can handle it and we've done it before. when you have a $1 trillion deficit, you have to start somewhere. >> steven morris, susan paige. coming up, the next news from florida where workers begin the demolition of a home over very unstable ground. from trac. ♪ to tracking field conditions. ♪ wireless is limitless. [ female announcer ] from more efficient payments. ♪

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we want to take you back to seffner, florida, just outside tampa where crews are demolishing a home. jeff bush was in his bed when the ground beneath him collapsed thursday night, creating the 50 to 60-foot deep hole. joining us on the phone now is hillsboro county investigator. thank you for joining us. can you tell us the situation now? are you nearing completion of demolishing this home and have you been able to save any of the valuables? i know the family was certainly interested in some remembrances of the deceased. >> yes. we're actually in the middle of demolition and the first thing that we did is to help out the family was to extract as many of the valuables as we could from the property. and we were very successful in doing so. the family is very happy with what we've been