easily become a reality. okay. so it's happening. but why? well, probably the biggest reason is this, jobs. 20 straight months of job growth, yes. but over the last five months, look at that trend. roughly corresponding to the drop in consumer confidence, hiring in america has slowed. a week from now we'll have the job creation numbers for june to see where this trend is going. but until we have a strong jobs recovery, americans are going to hold back. and that is going to hamper a wider recovery. frankly, there is good and real reason to be nervous. it's that economic storm i warned you about. a crisis in europe that's causing its citizens to seek shelter. you don't buy things, particularly expensive important things from america when you're seeking economic shelter. in china and india, the fastest growing economies in the world, fewer people are making their way into prosperity and into this global economy because the west is buying fewer of their goods and services.

that's the storm out there that's headed to our shores. there's one brewing right here at home. i don't want to mix metaphors. the u.s. storm is actually a cliff, a fiscal cliff. that is the expiration of some tax cuts, some of which you'll know as the bush tax cuts, and some other benefits on midnight on december 31st if congress does nothing. i don't know about you, but i am pretty concerned about what this all adds up to. if you're not, that's good for america. you'll keep spending and if i'm wrong, then i'm wrong. i'll wear that. but i'm not running for office. my job is to arm you with the truth about what is happening in this economy. people's futures are at stake and now more than ever you need to be informed. joining me to discuss our best line of defense against this storm is stephen moore, editorial writer for "the wall street journal." diane swunk, mohammed alarian, investor with pimpco.

let me start with you. romney-obama, romney-obama. it truly doesn't matter who is president. if they win, the things that have to be done to fend off the storm have to be done in congress. nobody seems to get anything done in congress. >> you are wrong on this. i think this is one of the most economically consequential elections we've had in 30 years because these very big different vision that's mitt romney and barack obama have. >> are they that big and different? >> they are. what are we going to do on taxes? what are we going to do on health care? we have the big health care decision. i do think this is an extraordinarily important election. i'm not saying this because i'm a republican. but i do think if you got a change in leadership, i think you talked about consumer and voter confidence. i think maybe a change right now would bring that kind of confidence and bring policies that would grow the economy. >> ultimately, gridlock is more of a problem. >> yeah, but you know what? if mitt romney becomes president, he almost certainly is going to have a republican house and senate. you're not going to have the gridlock. even if barack obama wins, some

of the gridlock will go away because the voters have said we want what president obama wants. if romney wins, i think the voters give the president a mandate to do the right thing. >> what about congress? where these bills have to pass and they don't get done? that's the point i'm trying to make. don't -- maybe we don't throw out interest in the presidential election. but can we at least put a lot of it on the people in congress, republican and democrat, liberal and conservative who night get something done versus those who simply will not and refuse to. >> i agree with you on that. the partisan divide right now in washington and the gridlock is as bad as i've seen it in 30 years. and that's going to be a real challenge to overcome that. when barack obama won, he was able to get a lot of big things through congress. >> diane, you said we never escaped the storm clouds. i want to continue my vision of this. we never really been fully in the clear. >> we haven't. what we're seeing is manufacture

the problems that we faced over the last through years which seem to come around summer, so summer vacations become a bit of an oxymoron is europe. the fiscal situation in the u.s. and we've kicked the can down the road in dealing with them and only compounded them. also, twint expand on something you said about consumer sentiment. consumer confidence measures came out this last week. so did consumer sentiment which is a broader measure by the university of michigan and thompson reuters index which shows buying patterns in a breakdown by income level. what was really start bling abo the decline is it happened in high-income houseuseholds, more than $75,000 a year. they said they're going to cut back on their purchases of big ticket items like vehicles and that's very important because we've already seen the vehicle sector suffer by a slowdown abroad. and a failure of pent up demand to really produce the kind of self-feedi self-feeding recovery we have seen from the u.s.

>> and we got a warning from ford. they've been firing on all cylinders for a couple years now. they're warning partially because of activity overseas. there is a concern here in the united states. we also have a new report out this week, diane, that says personal incomes in the united states as they're measured monthly are up and yet personal consumption is down. this is all working into this idea that it may not be as bad, but people are worried that it might get worse. >> well, actually, you know, part of the increase in consumer incomes, ironically enough, came from increased retirees. social security payments, transfer payments went up in the recent income numbers. all the 1947 babies born in the baby boom, the first big year of the baby boom are turning 65 this year. we saw an increase in income. people took retirement income that is not the thing waunt to bet your money on. they're not the biggest spenders out there. that is important as well. so we do have this issue. want to also add on to something steve said. i think it's important that we have bipartisan movement

forward. steve talked about there was some movement under president obama when he first came in. it was largely democratic based. the kinds of decisions were made and need to be booipartisan. if they're not, they can ruled out down the road. consequent afford have deficit reduction without bipartisan and durability and credibility going forward, something mohammed talked about. if we have a medium term reduction plan, we have to know it's a credible path that can't just be thrown out. >> this is key to this whole discussion of why congress is so mohammed, you have said this before. when you have distrust of congress, when bond investors have distrust they will do the right thing, you don't get a settled economy going forward. >> that's right. listening to you and to others, this image flash in my mind. a car which is the economy, going forward very slowly, the drivers are arguing, the

administration and congress. the engine needs a revamp. and there's very little gas left. why? because cash cushions have been driven down. unemployment remains very high. now it's bad enough that this car is moving slowly. we have two really big headwinds. we have europe and we have the fiscal cliff. so translate all this into numbers, we think the probability of a recession is about 30%. now, that may be good news because it's less than 50%. 30% recession -- >> a lot higher than it was. >> -- at this stage of a weak recovery is really worrisome. >> i want to paint not such a gloomy picture. >> i'm going to hold on to that. stay there. we have to pay the bills unlike the american government. and when we come back, we're going to look at what stands between you and a recession. maybe as early this year. that 30%, it can be fought off.

let's see how we do it. i told you, it is cowardly and dangerous for congress to wait until after the election to act. i'm going to show you exactly what congress can do right now to help avert that recession. how does this thing work? oh, i like it! [ garth ] sven's small business earns 2% cash back on every purchase, every day! woo-hoo!!! so that's ten security gators, right? put them on my spark card! why settle for less? testing hot tar... great businesses deserve the most rewards! [ male announcer ] the spark business card from capital one. choose unlimited rewards with 2% cash back or double miles on every purchase, every day! what's in your wallet? here's your invoice. i have to know the weather patterns. i upgraded to the new sprint direct connect.

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we're joined by stephen moore and diane swonk and mohammed al arian. steve is going to make the

argument for why you out there should not feel as pessimistic about the economy as you do. steve? >> i think there is too much doom and gloom herement fir. corporate balance sheets are so much better today than they were three or four years ago. that problems that corporations had, they're sitting on a lot of money, trillions dollars of money that is ready to be reinjected into the economy. second of all, i do think you're going to see a bipartisan agreement in 2013 to really fix the tax system on the personal side. >> really? >> i really do. consensus is coming that the tax system is now -- >> do you think that people in congress -- do you think they see things differently? we don't compromise. we don't go to the other side. >> i think that's going to change. i think we're going to sigh' ee reduction in the loopholes. one last thing, the energy future is so positive for the u.s. in the next 10 or 15 years, we could actually be exporting energy, oil and gas. so all of these things, i think,

just point to a more optimistic view. don't forget one other thing. it's always darkest before the dawn. >> wow! >> it's also always brightest before the hurricane hits. diane swofrpnk, the issue is i could be wrong. we cover hurricanes. >> we hope you're wrong. >> we tell you, your only choice is to board up your house and leave. if it doesn't come, i'm happy to have that hang on my face. here we have 30% chance of a recession. some people will say that's a business cycle. i'm saying that maybe congressional action early could do something to create a shelter for that. is that wrong? should i just forget that whole argument? >> no. i think it's absolutely right. i'm encouraged. if steve really believes there is a bipartisan compromise out there, that might avert a debt downgrade even if we just kick the can down the road and temporarily deal with the extension of tax cuts and cut off the sequestration which is retro active into this year, the

cutbacks and mandatory cutbacks in spending about it government. i'm optimistic if he believes that. great. i would love to see that. i'd like to see it sooner rather than later. i also think it's important to note steve talk about corporate balance sheets being in such good shape. you know, i was really excited about that, too, until we saw revisions. and unfortunately, the amount of cash we thought corporations had on their balance sheet is now $500 billion less than we originally thought. they miscounted. it was $2.2 trillion and then revised down to $1.7 trillion and now $700 billion from 2000 when you didn't need any cash on your balance sheet. so the fact that corporations have less cash than i thought, makes me a little less optimistic about how much can be deployed from the economy and pulled from the sidelines. i'm concerned about that. >> that's a lot, diane. >> it is still a lot. but it's not $500 billion. >> we also started to si ed ted

>> it helps to explain the less than stellar investment numbers that we've seen. we're still seeing investment and moving forward. i gr we mohammed. i'm looking at actually 1.5% growth on the second quarter now. that is really tepid and barely significant in terms of positive. >> bring in the u.n. again here, mohammed. >> come on, mohammed. >> mohammed, the other concern -- you just come back from europe. we got a deal. i have to tell you, i woke up on friday morning thinking not to expect the deal of the magnitude that they seem to have arrived at in europe which we're going it talk about later in the show. as far as my storm metaphor goes, did the storm over europe weaken a little bit? >> it did weaken but it's still there. we got a deal and they made important decisions. they didn't make the breakthrough. why is that important to us? totally agree with steve. you can put the positives clearly for the u.s. first as an engineering solution to our problems. unlike europe where the engineer

is really difficult. yes, cash balances are lower but they're still high. but thirdly, we have a massive technological shock positive in terms of shale gas. all this is important. but it will not be triggered to a full extent unless we get the political side right. i hope he's right. i hope we can move this political dysfunction. if we don't, then the storm over europe is going to start having an even bigger impact on us. >> you have often used the expression and bill gross used the expression that the u.s. interest rates are so low because they are the cleanest dirty shirt. if you're on a trip and you have to stay an extra day, dunidn't bring enough shirts, you pick one to wear again. will we be the cleanest dirty shirt if we wait until december 31 tost deal with the fiscal cliff and wait until whatever date in early 2013 that the next debt ceiling limit gets, you know, we get hit? would there be some advantage to keeping our shirt clean if we acted on this before the

elections or earlier than the end of the year? >> there's a huge advantage of keeping our shirt clean. let's not forget it's the well-being of people. the unemployment numbers are scary. the long term unemployment numbers are really worrisome. in the short term, we benefit from the fact that we are relatively good when compared to europe. but, remember, you cannot be a good house in a bad neighborhood. so there is a limit to how long we can be the cleanest dirty shirt. >> all right. great conversation. go ahead, diane. >> oh, just adding on. mohammed knows this. in switzerland, this he have negative interest rates because people are so willing to buy swiss franks and get the safety there and paying the government a premium of principal to keep their money safe there. we're not the only cleanest dirty shirt out there. >> all right. thanks to all of you, mohammed and steve stick around. coming up, i told you by doing nothing congress is make things

worse. i've told you how the partisan bickering is driving our economy back to the brink. i'm going it tell you exact wla congre -- exactly what congress can do now to protect you and the economy. there's more barbeque time in every bag of kingsford charcoal. kingsford. slow down and grill. er is differentvery bag of kingsford charcoal. but centurylink is committed to being a different kind of communications company by continuing to help you do more and focus on the things that matter to you.

i have been telling you about the economic storm that has been making its way to our shores. the debt could hit america at hurricane strength from asia where growth engines like china and india are stalling in the

wake of fewer exports to the west and from washington where scorches earth partisan politics could push america over a fiscal cliff if congress doesn't act. legislation needs to be passed now. to head off a series of tax increases and spending cuts that are mandated to take infect ed january 1st because congress couldn't come up with a proper deal last year. that is the compromise they came up with. if congress doesn't act before the elections, it may be too late to fight off the economic storm. you heard it from mohammed. a 30% chance of a recession he says. frankly, after listening to me saying this endlessly, even i'm starting to think i'm full of hot air. i'm going to give you thrspecif things that congress can do and must do now to address the come being economic storm. first, head off that so-called sequester, the $1 trillion of automatic across the board

spending cuts that are mandated by congress. the ridiculously named sequester legislation was passed as part of last august debt ceiling extension which followed, as you recall, but would like to forget, intense partisan blackmail by both sides that nearly shut the government down and led to a downgrade of the united states credit rating. a stupid name for a stupid thing that could hurl the u.s. head long back into recession. so solve it, congress. second, all right, we have grown to look another debt ceiling extension next year. let's all get together ahead of time and act on it before the election, before washington gets tempted to take america back to the brink a second time. and finally, third, negotiate another agreement on whether to extend the bueschsh bush era tad avoid slapping americans with a higher tax bill next year.

these are three simple things that congress can do now, three things washington needs to do before the elections to avoid falling over that fiscal cliff in january. if politicians in congress put off the work that needs to be done, let them be held accountable for the next recession. joining me now, a resident scholar at the conservative american enterprise institute. he describes himself as a centrist and his book "it's even worse than it looks: how the american constitutional system collided with the new politics of extremism." plus, cnn's political director mark preston and cnn's conservative contributor will cane. do they actually call you that? i keep adding that. >> i let you describe me. >> he describes himself as a conservative. he says that two parties working together to achieve a solution has created today's problems. >> that's true. >> i don't understand what you're talking about. >> that's true. >> you heard him say first do no harm. doing nothing before the elections in an environment where we have a 30% chance of recession if you believe him, is

doing harm. >> when you say that i think bipartisanship created our problems, what i'm talking about is a historical perspective. we have norm to join us in a few minutes here and will rebutt what i have to say. but what i'm saying to you is this combination of democrats and republicans seeking low taxes and high spending is created everything from social security to medicare to no child left behind. i don't think we can look at these across the board and say pump our fist, good job, congress. yes! now we're in a terrible situation, ali. yes, we're looking at a fiscal cliff and i've going to take a pen and put yes, get these three things done. before you just put bipartisanship up on mt. rushmore, realize what got us here in the first place. >> i'm not objecting to whether it is bipartisanship or partisanship that got us here. mark preston, why can some congressmen not fall on their sword and do the right thing if that's what it takes to help the economy?

would voters really turn on someone who has the guts to say this is the best thing to do for the future of this country and your job and our economy regardless of party agenda and partisanship? >> ali, look at the macro level. when you talk about getting things done on capitol hill, everything is done through the parties. quite frankly, what we've seen on the republican side is we've seen the rise of the tea party which had an enormous amount of influence over how house republican leaders approach legislation and approach how they do things. on the same side, on the democratic side, you have the liberals who are really pushing hard on the agenda. when you talk about the folks who are in the middle, these blue dog democrats, these folks who try to build bridges, folks that perhaps are saying might be the problem because they are trying to chart some kind of middle course. the bottom line is it so poisonous on capitol hill right now. this is not going to get fixed until after the election. if we think thinks are bad now

politically, wait until after election day when they have to deal with all the major issues. >> and that's my concern. if you are so adamant as stephen moore was that this isn't going to get done beforehand but somehow after the election there will be more impetus, the only thing we have after the election is more deadlines. norm, in addition to all the issues i mentioned, you're predicting a -- one of those possible government shutdowns over spending bills in october because house republicans are going to try and keep every dime for defense. they're going to double down on domestic discretionary cuts. i mean i don't -- my head will explode if we can't even deal with the problems we've got and now we might face a shutdown? >> you know, stephen moore said it's always darkest just before the dawn. i'll remind you of what john mccain often says, it's always darkest just before it turns completely black. but, you know, the fact is that the deal that was worked out to avoid the last debt limit, really, it was the house republicans, not john boehner who warned them they had to get something done. but others in the leadership who held the debt limit hostage the

last time now it's boehner who is threatening to do it with the next debt limit. the deal they reached that included the sequesters if they couldn't do the other actions, now you have the house republicans saying never mind that deal. we're not even going for it for the spending bills for the fiscal year that begins october 1. we're going to renege on the defense part and double down on the domestic side. that doesn't bode well for any kind of a deal before the election. the fact is in the senate, you are seeing some bipartisan action and an attempt to try to find that golden mean, the broader deal, the larger deal, the grand bargain that we've talked about. and it has to include over the long run more revenues and a significant slowdown in the growth of spending including in the big entitlements. if you have, however, 90% of the republicans in the senate and 237 out of 242 in the house who have taken the norquist pledge that, doesn't bode well either.

so, you know, i'm nervous. i think mark is right. the likelihood of things getting done before the election remain exceedingly slim. >> things -- you just brought up the norquist pledge. let me bring you in on this. grover norquist, americans tax reform, a pledge signed by virtually every republican in the house which says you will not support any net new tax increases. if you need emergency short term spending because your economy is going down the tank again, you risk grover norquist and his people campaigning against you. why is that acceptable in our dynamic economy and our democracy? why can't we tell people stop with the pledges. go in there and make the necessary deals that have to be done. i'm not asking you as a conservative. liberals and conservatives need to do this. move on this. >> the reason i think guys like grover put that pledge out there and politicians follow that pledge is because where i started this. the historical perspective is you give a dollar to the

government and it finds a dollar to place in spending. it finds a way to spend that dollar. grover, i would assume, i don't want to speak for him, we have to cut off the spending of government. you are right. it doesn't allow for emergencies. we've arrived at two emergencies you point out, one is the fiscal cliff and the other is the one you're not talking about and that is the long term debt and deficit problem. right? both of those problems are working in opposite of each other. >> correct. >> so we have to, yes, perhaps let go of some of our historical perspective to make concessions on those emergencies and get action on those in the short term. he's not wrong on the long term. we have lessons to learn about the concept of getting things done. >> mark, later on we're going to talk to owe lilympia snow. do you come across those on your travels now while we're looking at a campaign? >> let me just say, i spent six

years on capitol hill as a newspaper reporter. i spent a lot of time with the likes of olympia snow, tom dach will a -- tom daschle and trent lott. what is happening is congress is so polarized at this point. you're seeing olympia snow say enough is enough. i'm leaving. we saw that with evan bayh. he left congress. what is going on is bipartis bipartisanship is not a bad word. what is a bad word is punting. that's what you see from leaders on capitol hill. keep punting the ball down. we'll deal with it later. that's where we stand now. >> mark, will, norm, great to have a conversation with all three of you. thanks so much. coming up next, partisanship and my way or the highway ideology in congress left one of the strongest serving senators so frustrated she decided not to seek another term. as promised, olympia snow when we return. [ male announcer ] count the number of buttons

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er is different but centurylink is committed to being a different kind of communications company by continuing to help you do more and focus on the things that matter to you. republican senator olympia snow shocked the beltway when she said she would not seek a fourth term. her reasons, intense polarization and partisanship that are crippling our political

processes. senator snow joins me now from washington. senator, thank you for being with us. you have a reputation for being a practical politician who is willing to cross lines to get things done. you said in a opinion that you wrote when you announced you weren't running, i'll read this to the viewers. "for change to occur, our leaders must understand that there is not only strength in compromise, courage in conciliation and honor in consensus building but also a political reward for following these tenants. the reward will only be real if the people demonstrate their desire for politicians to come together after the planks in their respective party platforms do not prevail." are things more partisan than they were when you first entered that building? >> oh, without a question. since i entered the senate and most especially since i served in the u.s. house of representatives when i was elected in 1979. i came to the senate in 1995. there's been dramatic change and

it's grown worse and most especially over last few years where you're seeing very little of the legislative process working in a way that it should, that allows for openness and transparency and accountability to see what we're doing, how we craft legislation, allowing amendments to be offered, working through the committee process first, reporting the bills to the floor, having an open amendment process. so the public has a chance to see how these bills are fashioned and what the differences are in views. but none of that is transpiring today in the senate virtually speaking. so what you're having is up or down votes, either/or situations. petitions and votes. all of these procedural blocks are impeding the public's interest and the country's interests. >> you're exactly right when you say that. this procedural stuff goes over our heads generally speaking. wh

what we want to see is veteran politicians or new politicians that they can arrive at compromises that i, we the voters are neither the time or inclination to arrive at. you are going to be elected to go there and try and solve our myriad of serious problems. is there a sense amongst your colleagues that at this point in time, this very specific point in time this inability to compromise could put us back into remarkable economic turmoil, largely because of what's going on around the world. but this really could do great damage. >> you are absolutely right. and that's precisely my point and precisely my concern. and, yes, many of my colleagues do realize that i think the question is now can they transcend that and overcome it? and to make the difference in the united states senate to get something done. and that really is in the hands of the leadership. it determines the agenda and what happens and what doesn't happen, how it comes about. for example, ali, the fact that we're postponing all of the key

issues on the fiscal cliff, you know, until after the election. we wasted all of this year. we wasted all of last year and the way we handled the debt ceiling, for example. we created the super committee. we knew that wasn't going to be a possibility. they're going to achieve all these reforms in a short period of time with so few people. and then, of course, we've had no budget. and now we're facing this monumental fiscal cliff at a time where we're seeing international turmoil let alone our own domestic economic turmoil that could paralyze any one event could trigger a financial crisis. so all of that, everybody recognizes that. the question is it's not happening to change that. there is no circumstance to change that here in the united states senate unless you have the president and the leadership on both sides coming together and recognizing that we need to do this in a way that's going to billed consensus. and the american people have to understand that, too. they have to demand it of their elected officials. >> and that's what i'm trying to -- i mean i haven't been as

articulate as you have been. i've been saying for a half hour on this show that this is what we have to demand of congress. and they act sooner rather than later, before the election. all i've been told by those much smarter than i am about congress is i have a better chance of growing hair on my bald head than that happening. what i would like to do for my viewers over the next few weeks is form a list of people who are like you, willing to reach across party lines, willing to reach across ideologies. you have worked with these people directly for 30 years. tell me who the best people to start that list with would be. >> well, there are a number -- there have been a number of people on both sides. i won't give out name now. i'll be glad to work with you on that question. i do think it is important. there are people who are willing to do that. i think i would also suggest and starting with leadership. obviously, that is very important in term of what happens and doesn't happen and secondly, it is using the social

media and the technology today to get the message out. if we use social media technology and how to vote, you know, either/or situations, whether it's conservative, liberal, then we can also use that in a way to say let's build consensus. we demand consensus in the political process. >> i know you're leaving the senate. i hope that wisdom and that spirit of compromise stays after you're gone. i'll take you up on the offer to find those people in that building and the house and senate who can, who might just act earlier than the election and stave off the second economic storm. a pleasure to talk you to. thank you. >> thank you. >> i have been telling you about that storm. centered over europe right now. what are leaders doing over there to prevent it from hitting our shores? you might be surprised. some things actually happening in europe that could dissipate that storm. stay with me. [ male announcer ] this... is the at&t network.

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all right. so i got up on friday morning. i had no idea that they were going to really come to some kind of a deal in europe. boy, markets really acted like they did. investors really liked the idea. it does seem that something is happening in europe. so to explain this better than i can, i'm bringing in my buddy richard quest. he is standing by for us in

london. richard, did something actually happen? >> yes! it did. and not only did something happen, something meaningful actually happened for the first time in this crisis, they seem to have done something that was not only putting a sticking plaster over the problem, ali, but actually move things forward both in the short term for spain and italy and in the longer term towards banking union. and this is the agreement. it's a little bitty two pager. but in this little bitty two pager rests what they decided. >> if you recall back when t.a.r.p. first started, when the economy was going down the tubes in september, they first went and asked for $700 billion with one or two pages. sometimes crisis demand simplicity. in the interest of simplicity, where will europe go now that it wasn't on thursday?

>> all right. well, you'll remember with t.a.r.p. that one piece of paper turned into a several hundred page behemoth. that's what's going to happen now. on the spain and italy front, basically they recognize the need to move forward and move forward fast. italy still has to ask for help. otherwise, that's got to move forward. on the much bigger question of architecture for the future, we are now really down and dirty in the mud. the fighting is going to begin over what it will look like. they've given themselves a deadline to the end of this year, ali. this being europe, i guarantee you can take this to the bank that they will be negotiating this to the 59th second of the 59th minute. we'll see how that one goes. >> let me ask you this -- this is how -- i mean americans have to concede with the fact that in

europe in 17 countries there is a common currency. but the other things you would think to be common in an economy don't exist. to the extent that the amount of hours you work, the -- when you retire, the taxes you pay, the expectations you have from government. there are a lot of things when they introduce the euro they thought that would pressure the different governments into gaining some commonality and that didn't happen. is that now going to happen a little more? is europe going to feel a little more common? >> that's the battle. that is the fighting ground. how do you have fiscal policy, a common fiscal policy, common budget policy and economic policy but at the same time still have national democratic rights? the closest analogy i can give you to this is states' rights versus the federal government. you know, the reality is that the federal government sits where it wants to sit. but here in the european union, we still have this process of

subsidiaries. it's much more complicated. you have eu 27 which is it all the countries. you this vthen have eu 17 and then groups within that. but the core of it going forward is just -- think of it this way -- how much sovereignty does alabama, illinois, california and oregon, how much sovereignty to the states have to hand over to washington to make the united states work as an entity? and that's what they're really battling now on the economic front with europe. but i'm pretty much certain we will have a european treasury, i would say, within a couple years. >> excellent. you made it very clear for us, rip a richard, my friend. richard quest. money is cheap right now. sounds great. is it really a blessing or is it a curse? i'll explain next on "your money."

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i'm fully aware that not everybody who wants a loan right now can get one. things are getting a little easier. it is still tough to borrow money. however if, you got credit and can you get a loan, borrowing money can get a loan, borrowing money has never been cheaper than it is right now, not just for consumers who want to buy a house or car, but people buying cars at rock-bottom rates. >> while the money is cheap, i don't know how you turn this

around into a bad thing. you've turned into a toxic environment. >> because it's called the curse of low interest rates. the global economy seems to be at a standstill. europe is a mess. growth in china is slowing so investors are turning to u.s. government bonds and they're saying, please, keep my money safe. it's no longer a return on investment, but a return of investment. last july, the yield was more than 3%. now it's almost half that, showing demand for these bond, american debt is skyrocketing. it's easy for the u.s. government to live well beyond its means in this condition. this year the u.s. is borrowing $3.6 billion every single day. that's just to maintain how america is living right now and that's the curse, at a crucial time when we must start to figure out how to meaningfully tackle debt and deficits in this country, it's never been cheaper for the government to borrow more money and that gives washington and policymakers more time to punt the ball on things like the fiscal cliff and the

potential debt downgrade because of the things we have to do to raise the debt ceiling and start making meaningful changes. let's bring in steven moore. here's what i think, the money is so cheap, let's borrow more of it and use it to build infrastructure and bridges and electrical grids and high-speed rail and resist the instinct as our conservative to say, no, no, you shouldn't borrow money because people say, you borrow this money and you saddle our grandchildren with the debt. they'll get the bill. i got the bill for someone else's irresponsibility and we'll leave a great electrical grid. someone's got to buy something, and they get to use it. they get a crumbling economy. >> it depends what you use the money for. for example, high-speed rail is the biggest wastes of money there is, so i don't see any long-term benefit from that, but it is true when they've got basically and christine was

right. people around the country are basically giving us money and paying us to hold on to the money, so it's cheap as it's been in 50 years. >> do you see any benefit to that? to borrowing money when it's cheap. >> number one, we've been doing that in spades under bush or under obama. we're already borrowing $1.2 trillion a year. how high do you want this debt to go? the second issue is what do we want this money for? if we could use the money to have a world class tax system that really solves a lot of the problems, i think we all agree the corporate taxes are a mess. it might cost money to reform that and the long-term benefits of that are very large. the one thing i would add to what christine said, and the last time we had interest rates this low was the great depression. you're right. sometimes low interest rates aren't always the blessing we think they are and the reason people aren't borrowing is the

tv show, fear factor. there's so much fear out there nobody wants to invest. >> that and the combination of people who would like to borrow still can't get access to it and the fact that i hope i'd like to have a job or business to pay that back. mohammed, pimco is the lowest bond investor, what do you think? low interest rates, a blessing or a curse? >> i feel like i'm going to put on my blue helmet and say you all have a good point. first, interest rates are low for the wrong reasons, and we'll be lucky to get 2% and the fed is in major experimental mode and we're here for the wrong reasons. this is a window, but weir not using this window properly. you'll only borrow if you know a couple of thing, one that you'll enhance the growth potential and two, that you'll be able to pay off the debt in the long term and we no longer have growth-enhancing measures and

nor do we have a medium-term fiscal plan. the risk is that we waste this window and we find ourselveses with lower growth, low debt and more political polarization. >> you're right. you did come down on this entirely and you're saying take the low interest, use the money if you can prove that you've got growth and the ability to pay it back. what would you, because you were the rubber hits of -- and you would invest. what would convince you that the u.s. has that type of plan. as you know, i'm focusing on congress here. what kinds of things can congress do that would give you some certainty? >> first, do no harm, so we need to get the fiscal cliff out of the way. the numbers are clear. as i said, we're lucky to go at 2%. the fiscal cliff alone is minus 4% so that would throw us into recession. we have to do it in a sensible, cohesive recession. second, let's do some good. let's combine some borrowing fiscal stimulus with medium-term

fiscal reforms. let's unclog the credit channels that you're talking about, medium and small enterprise and let's clear the housing market and let's focus on education and investment. we can do this. all we need is some political compromise in washington. >> and that's exactly where we are in this conversation. stephen, let me bring you back into this for a second, so we have this general agreement that investment can be used in the right way. we have a disagreement. so here's part of the problem. you said high-speed rail brings commerce and competitiveness and they do, we don't. not in the u.s., but my point is how do we get some agreement. say you and i are on opposite sides of this, we're not and say we were and we've got to make a deal because congress can't do that. where do we go? do you think there's enough common ground between conservatives and liberals agree, rates are low and we agree that we want to pay people

back and we agree that we want growth. i do think this debt is a big problem. and the problem i have with what he said and i agree with a lot of it is that i've been in washington for 27 years. we always say we'll borrow now and then we'll cut spending later and we never do. it never comes and that's when i first came to washington, we had $400 billion in deficits and i think americans realize that there isn't the political will to cut spending and if there isn't today there won't be that tomorrow. >> all right, mohammed, stephen and christine, thank you very much. you've heard my thesis and now it's your turn. tell me why i'm wrong and i'll get you the answer to the questions you're asking next. and some difficult ones. but, through it all, we've persevered, supporting some of the biggest ideas in modern history. so why should our anniversary matter to you?

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>> new you tweet, i listen. last week you demanded further proof of the economic storm. did i make my case today? you'll let me know. my handle is @ali velshi. we're here every saturday at 1:00 p.m. eastern and every sunday at 3:00 p.m. have a great weekend. -- captions by vitac -- www.vitac.com welcome, everyone. you're in the cnn "newsroom" where the news unfolds live. i'm poppy harlow in for fredericka whitfield.

dangerous weather threatens the entire united states, and knocking out power for millions of americans. a brutal heat wave is broiling and we're talking about 100 million people feeling this today and triple digit, record-breaking temperatures lasting into next week and then that relentless wildfire out west after days of battling the ferocious flame, firefighters are starting to get an upper hand. that's the good news. we have reporters, as always, all over the country covering these major stories for you. i want to start out with sandrasandra endo and let's begin with athena. athena, nearly 4 million homes are without power from indiana to player land from the brutal storms, the death toll is climbing. what can you tell us? what are you seeing? >> reporter: well,kn