good evening, everyone. we begin tonight with breaking news. late new details from inside today's debt crisis meeting. headline one, no agreement today. headline two, no meeting tomorrow after five straight days it's the end of the line for now. and headline three, the warning bells keep getting louder from the heart of capitalism to the capital of communism. standard & poors today signalling it may downgrade u.s. debt even if a default is averted. and the people's republican of china, red china, urging washington to raise the debt ceiling. somewhere chairman mao is smiling. president obama went on record of his account of how last night's turbulent meeting ended. you'll recall house majority leader eric cantor said the president sharply warned him not to call his bluff said "i'll see you tomorrow" and walked out of the cabinet room. >> no. look. at the end of the meeting after we'd already met for a couple of hours, what i said to the group

was what i think the american people feel, which is we have a responsibility to do the right thing. we shouldn't be overly partisan. we shouldn't be posturing. we should solve problems. >> well, whichever account rings true to you, today's meeting was the first to deal largely with revenue. we got late insight in a moment from jessica yellin and dploer yeah borger. but keeping them honest tonight, there's in polling you should know about that may surprise you showing what americans really think about raising taxes to close the budget gap. here's what republicans have been saying for a long time that americans think. >> right now this economy is ailing. and we don't believe, nor do i think the american people believe, that raising taxes is the answer. >> american people understand that tax hikes destroy jobs. >> i think what the american people appreciate is that you don't reinvigorate the economy by raising taxes. >> 80% of the american people do

not want to see taxes raised. >> the president's answer? let's raise taxes on job creators. mr. president, the american people don't want that. >> the american people don't want us to raise taxes. >> now, you can agree or disagree with the premise that taxes ought to be lower and government smaller. that's not what we're talking about. keeping them honest, when republicans say they are pushing for a budget deal containing no tax increases because that's what most americans want, according to every poll we have found that is simply not true. new polling out today from quinnipiac skrts voters if they support a budget deal with budget cuts only or mix or budget cuts and taxes on the wealthy and corporations. 25% said budget cuts only. 48% of republicans, not even a that joert, favor the cuts only approach. in the recent gallup poll, 26% of republicans favored lowing the debt with budget cuts alone. and just 20% of all votes did. in fact, all of the recent polling we've seen shows

americans want a mix of spending cuts and tax increases. that goes for polling from gallup, quinnipiac, abc news, "washington post," bloomberg, reuters and uscla times. we're now negotiating today and why it won't happen tomorrow. in a moment we'll talk to james carville and carly fiorina,chief white house correspondent jessica yellin has details as does gloria borger. jessica here we are two weeks away from the deadline, still no deal. where do things stand right now? >> reporter: after five days of negotiations and almost eight hours of discussions, practically speaking they are no further along than they were when this thing started last sunday. as you say, the president has said he wants this big deal but this thing broke up today, the meeting ended with the president telling these leader toss go back to their members and ask them what do they think can pass and then report back to the president with something that they believe can pass by this saturday morning. they're not even having a

meeting tomorrow. now, despite all that i am told by my sources that there's not a lot of optimism that this particular negotiating process here at the white house is going to actually end up leading to the real deal, and a lot of effort and attention is now turning to a different process that's happening in the u.s. senate and another alternate deal that's being worked out between the two senate leaders that could instead end up raising the debt ceiling. a lot of hope is centered there, anderson. >> basically what is that deal? what is that negotiation based on? that's harry reid and mitch mcconnell. >> it's a little complicated but it would effectively raise the debt ceiling which would allow for spending cuts that can be spelled out by the president but don't necessarily have to pass. there would also be a deficit commission that would allow for other spending cuts and also potential revenue elements and entitlement reforms. and it would allow people to vote against raising the debt

ceiling instead of in favor of raising the debt ceiling so that members could then go to their voters and say, i voted no instead of i voted yes. >> so gloria, why is there this separate track now? i mean, what's been the point of these white house meetings? >> reporter: it's interesting because i spoke with one republican leadership aide just to echo what jess said, he said, look, it may be that the white house talks are becoming increasingly irrelevant here. because if you're a member of congress and you get to have it both ways and you get to vote no on raising the debt ceiling but then the debt ceiling passes, why not do that? if they can come up with that kind of a deal. the only problem with that is, and the big question is, i think, do you attach a significant amount of spending cuts to it like $1.5 trillion either now or sometime in the future, or do you promise to set up a commission that gets a vote on a date certain in congress to do spending reductions and perhaps even tax reform? but it seems like that track as

jess said is moving along a lot fast. >> and jessica, a lot of people seem to have written off the mcconnell idea a couple days ago, but now it seems like even some house republicans are maybe going to get behind it. >> reporter: well, yes, because there's so much uncertainty about the process that's happening here. but i don't want to get ahead of it because the house republicans are still very wary. it's not at all clear if it could get the votes there. the one thing i would say, anderson, is that everybody you talk to in town, democrat, republican, says, i have no idea how this is going to get worked out. i have no idea. but what they do say is, it's going to happen in the end because as this approaches, people are going to be so terrified of voting no that these members who are saying no now are going to start to realize that this is what they're convinced of, start to realize that stakes are just too high and that this will come together in a sort of midnight hour vote. >> jessica yellin, gloria we'll see. i want to talk more about the

political dividing lines as well as areas of potential agreement. carly fiorina vice-chairperson of the national senatorial campaign committee. also political contributor and democratic strategist james carville. james, we're told the president wants to see some kind of an agreement within 36 hours. what do you make of all this? how do you see this? >> you know, this is a great civics lesson. because we have the president and the congressional leadership. and they go to the white house and they sit around a table and everybody there. in reality what's going on is senator reid and senator mcconnell are kind of meeting in some closet or somewhere deep in the bow else of the capitol scratching something on back of the napkin looks like it's going to be the kind of deal that's going to happen. one of these fascinating things of the way that washington works. and this thing will probably happen and as jessica was saying, it's going to happen late because the terror of what

would happen if it doesn't, you go back and remember t.a.r.p. remember that voted that down and then they had to go back up the stock market fell 770 points. and everybody was trying to gain the system where they can vote no and it passes. but you need what like 218 house members to vote yes. somebody's got to bite the bullet here before it's over. >> carly michele bachmann and others are saying things will be tough but fine if there's no deal by the deadline, the dire warning by the president are just scare tactics. as a former businesswoman what do you think? >> well, i disgrow with that. i think we must raise the debt ceiling. i think what's disappointing to so many americans is that a deal that could have been passed, that would have been passed has been on the table for at least six months. and that deal started with obama's deficit commission reporting out. the deal involves lowering the corporate tax rate and closing the corporate tax loopholes. it involves reforming entitlements in a simple way, in a simple way, to index medicare and to change the inflation indexes on social security. and it involveses some spending cuts.

that deal has been on the table for a long time. and unfortunately i think james said it well. everybody's been gaming the system, including the president, i would add, and that deal hasn't been done. >> james, why hasn't that deal been done? >> first of all, one of the interesting things that we're reporting and gloria and jessica are on top of it this is they're going to have a commission that's going to have an up and down vote. if you'll remember, that was something that was proposed by the previous -- during the previous administration by senate republicans, president obama picked that up and said let's have a commission and have an up and down vote. seven republican senators changed their mind. now we're going to go back to that. we could have had that in february of 2009. if they would have gone along with it. the president did propose that and that's exactly what senator reid and senator mcconnell are talking about doing right now. well, sometimes it takes awhile to get there but maybe this is

going to be a good idea. i don't know. >> well, unfortunately, though, the truth is that president obama hasn't proposed anything very specific except a budget in february of this year which was voted against 97-0. >> carly, he proposed to have a deficit commission that was on a fast track. it was like the base closing commission. you could vote it up or down. seven republicans who were -- >> so he hasn't put forward a specific plan. >> but doesn't everybody -- >> anderson, your original question, we've got to come up with an answer here. >> doesn't everybody know, though, that some kind of a compromise has to be made? i mean, that both sides kind of ultimately to get something done, to get cuts, to deal with deficit, something compromise has to be made. i mean, is that not true? >> there's a large part of the

sort of right wing media if you listen like talk radio, read the "wall street journal," that says to heck with it. just do it. it's not going to be that big a deal. listen to michele bachmann, listen to a ton of these house republicans, just shut the thing down. that's the only way you get a bill to do this thing. it's sinful to vote for this. and by the way, a majority of the country says that they're not in favor of increasing the debt limit. that's just a fact. >> and you also have people like nancy pelosi saying that entitlement reform is absolutely off the table even after the president of her own party put it on the table. so there are people in both parties who are playing games with. this i just think it's a shame that a deal that would have both raised revenue, to the tax rates, and reformed entitlements and cut spending has been on the table in washington, d.c. for six months and it hasn't gotten done. >> well, i don't know of a single democrat that said that that is no big deal if we don't raise the debt -- >> nancy pelosi and others said you can't touch entitlements. >> i don't know of a single democrat that said it's not a big deal if you don't extend the debt limit.

>> there are lots of democrats who said entitlement reform was off the table which is in essence the same thing. >> james carville, carly fiorina thanks very much. follow us on twitter @ anderson cooper up next, the man who claims to be an expert on terrorism. this is a fascinating story. we did part one last night. this is part two of it. claims to be an expert in terrorism because he says he used to be a terrorist himself? the problem is, cnn has found no evidence to back up his claims. and tonight, we have tough questions for him about how he runs his business, a business not only tax-exempt but taxpayer supported. it's getting taxpayer dollars. keeping them honest. also tonight this just brakes your heart. video of an 8-year-old boy here in new york city just moments before being abducted and later murdered. dismembered by his killer. there was an arrest and now police say there's a confession. you're going to hear part of that confession tonight. it is chilling. details provide a horrifying window into an apparently very, very sick mind.

we'll talk about that and the legal implications with sunny hostin and dr. drew pinsky. ok. [ cellphone rings ] hey. you haven't left yet. no. i'm boarding now... what's up? um...would you mind doing it again? last time. [ engine turns over ] oooohhhh...sweet. [ male announcer ] the chevy cruze with the my chevrolet app. the remote control car is finally here. well, now she's just playing with us. oh. [ horn honks ] it's schwab at your fingertips wherever, whenever you want. one log in lets you monitor all of your balances and transfer between accounts, so your money can move as fast as you do. check out your portfolio, track the market with live updates. and execute trades anywhere and anytime the inspiration hits you. even deposit checks right from your phone. just take a picture, hit deposit and you're done. open an account today and put schwab mobile to work for you.

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