the president. we've got boehner, mcconnell, pelosi and reid with the president to get a deal done and with newt gingrich on tomorrow. >> and join us on the after the show show at fox and friends.com. >> this is a fox news channel special presentation. budget brawl, taking it to the limit. now, neil cavuto. >> neil: this hot, steamy saturday for much of the country it's all on the line. the government days away from running out of money and a country's top-notch credit rating maybe, inbound ma running out of time and the president of the united states scrambling to cobble together something, anything with the very speaker of the house that walked out on him yesterday. preparing to leave for this oval office meeting to ward off what could be a huge selloff on the markets on monday. because suddenly a deal that

many took as a given isn't. there is so much going on. and if you think it's hot outside now, well, get ready, it's about to get positively volcanic and for the next two hours, we're all over it with presidential candidate ron paul who says, get this, a default would be the best thing that could happen to us. his republican rival, herman cain who faults the president for creating this. art laffer, one way to fix this mess and one of gang of six senators you've heard about, a way out to settle this mess. first the very latest this saturday morning. treasury secretary tim geithner still working on contingency plans, in case, just in case no debt deal is reached and the federal government would have to decide who gets paid and who does not, because he won't have enough money to meet all of our obligations. fears mounting we could be seeing a major market selloff in that event in less than 48 hours, if investors don't like

what comes out of this emergency meeting scheduled for less than an hour from now from the white house. credit agencies are threatening to downgrade america's pristine ratings and our charlie gasperino says get this, the downgrade could come as early as monday. and we'll be bringing you live reports on the massacre in norway, it gets worse. police there now are investigating if a second suspect took part in a deadly shooting at a youth camp. the a least 84 confirmed dead. most of them kids and said to be the same person that set off a massive explosion in oslo killing seven there. capitol hill, the house and senate leaders are getting ready to leave for the talks with the president, talks that he demanded. good news air conditioning in that room. the bad news, the parties don't get along in that room. and something tells me it will be a heated meeting. to our producer for the house, chad, what can we expect?

>> well, from last night. epic fail, two words from here. what's interesting in the past 24 hours, to watch what john boehner was saying yesterday morning. walked into a meeting of the house republican conference and said i'm a happy warrior and sent everybody home. the house was initially planning on being in. everybody got out of washington and toward the end. legislative day, the speaker made sort of a rare appearance on the house floor at that point in the day, came down and sort of gave this shakespearean battle cry speech telling he was for cut, cap and balance and fight for their position and everything went dark and scrambling trying to figure out what that meant. at an impasse or what was going on. we now know that they wanted to make sure that the markets were closed about they came out and said he was walking away from the talks, the markets didn't collapse and asia didn't explode sunday night and coming away from the talks and we're not going to

say anything right now to further imperil the markets or credit ratings. we have to do something right now. this was a message to his republican base. the conservatives, the tea party members here and this was his last dench effort. right now there aren't the votes. that's the equation here, neil and still not the equation on saturday morning. >> you know, i was listening to the president yesterday, this unusual statement and press conference last night. where he talked about what his options are and i wanted to get your reaction and maybe get your sense of what he meant by this particular statement. >> he said that bottom line in the big deal, that's not going to happen. are you, are you going to be willing to go back to just, say, raising the debt ceiling still? >> well, i think i've been consistently saying here in this press room and everywhere that it is very important for

us to raise the debt ceiling. we don't have an option on that. so if that's the best that congress can do, then i will sign an extension of the debt ceiling that takes us through 2013. >> neil: now, that is not a 14th amendment deal, right? that's just something a president can do on his own. could you explain that to me? >> it's sort of uncharted territory how this would work exactly. the constitution says that the debt of the united states shall not be questioned and could he do this unilaterally without congress being involved? it's possible. there's an article in the new york times, suggesting he could do as such. i tell you, there will be a lot of people jumping up and down on capitol hill if he does that in questioning the constitutionality of that and even that could impact the credit ratings if he takes this alternative approach. remember, last night at his press conference, speaker boehner indicated that he had no interest whatsoever in a short-term agreement. there was talk yesterday morning, he came into his first press conference, the

one in the morning, saying there was absolutely never any, you know, chance of an agreement. they weren't close to an agreement. there were these reports were untrue, but later in the day he they were close to an agreement on the revenue side. >> neil: all right, buddy, you're the best. chad robinson in washington. >> so far i have not seen the capacity of the house republicans in particular to make those tough decisions, so then the question becomes, with are is the leadership? >> president obama scolding house republicans ahead of today's meeting and one of the republicans joins us now and working every step of the way. republican congress woman kathy morris. congresswoman, great to see you. >> thank you, good to be with you. >> neil: he was chastising him on tv last night and after breaking off talks with the president, has to go to the

white house to talk with the president. >> speaker boehner has been a step of the solution every step of the day. every time he's called he's answered and been at table negotiating in good faith and last night i believe he became frustrated when the president changed the goal post and put another 400 billion dollars in tax revenue on the table. and after he had been negotiating in good faith, the president had changed the goal post. >> i just wonder, congresswoman, whether the well has been really pushed. there's always been a bit of a tense relationship between the democrats and republicans since the near government shut down months ago and now this. it seems to have gone to a whole new twilight zone level. >> there's a lot at stake here and we don't underestimate that either. we are committed to being part of a solution. we are the ones in the house that actually passed the

package, 234 bipartisan package. i like to think of it as the gang of 234 in the house. we're the only ones that voted to extend the debt ceiling and the national debt threatens our credit rating anyway so there's kind of two parts to their, to their warning right now. first, is next, what looms on august 2nd. but secondly, the debt that we're carrying as a country and president obama asked us to raise the debt ceiling 2.4 trillion to get us through november of 2012, it's an additional $20,000 on every american family. >> neil: maybe so, but i think that americans are looking at this and no offense to either party here, but think that all of you guys are jokes. >> americans expect us to be leaders. expect us, and elect us to show leadership, to do what's good and right for america. >> neil: they don't see that.

we're not going to get a debt deal done, are we? >> we, we have to get something reconciliation. >> neil: i know, did doesn't look like we will? >> we're still working on it. and last night, speaker boehner brought the leadership team together. we're meeting this afternoon and the conference is going to be having a conference call to continue to discuss, where we go from here. we're very much committed to being part of a solution. >> neil: do you think that the-- everyone hardened their positions since the president's comments last night, that republicans said, well, you know, now the way he's talking and saying, we're fot going to give an inch on anything, we're going to run back to our original position and democrats say they'll run back to their original position and actually what's happened, the two sides have hardened their stances and that that means a deal is decidedly less likely? >> we believe that the senate democrats, the president, need to put a plan on the table. we have put a plan on the table.

and so far, everything that we've gotten from the senate and the president have been speeches and talks about a potential outline for us to move forward, we really need to see something on paper with votes and that's where the house has done its job. the house has put forward a package. we are at the table, we would like to see what they like, what they don't like and cut cap and balance. send is back to us for legislative process, how you get the job done. >> neil: we appreciate you taking the time. >> good to be with you. >> neil: and behind closed doors, the speaker said it, ahead of today's meeting. does that have herman cain worrying. the presidential candidate is here and take the pain now and see the payoff later. why ron paul is welcoming the very thing, sending all of these guys scrambling. [ p.a. announcer ] announcing america's favorite cereal

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>> man, oh, man. to be a fly buzzing in the oval office walls this

morning. minutes away now from what will surely be the most tense meeting this that building since barack obama took up residentsy in that building. a meeting that the president demanded after john boehner announced he had had it with the president even though they hear the speaker tells us closer to making a budget deal than the president told yesterday. >> let me just say that the white house moved the goal post. there was an agreement on some additional revenues until yesterday when the president demanded 400 billion dollars more which was going to be nothing more than a tax increase on the american people. >> so there was an agreement on additional revenues, that means there were about 800 billion dollars in new taxes that were essentially agreed to. so the republican presidential candidate and herman cain, what do you make of that, herman? >> neil, first of all, this is

a crisis that didn't need to happen. a year ago the administration and president knew we were going to be running up against this. the president and his administration chose to allow this crisis to happen. now, he's trying to put the blame on representative boehner and the members of the house when in fact, the president owns this crisis. secondly, the fact that as representative boehner said, the president moved the goal post, this shows a severe lack of leadership. first of all, the president doesn't get itment and so, if in fact this -- our debt credit rating is downgrades, this rests squarely on the shoulders of the president because he allowed this crisis to happen so he could force a tax increase. the last thing this struggling economy needs. >> neil: all right, well it might not have been the tax increase he envisioned, herman, but one that at least the speaker of the house was

willing to endorse partway. obviously, not the full amount that the president wanted, but revenue enhancements, whatever they want to call it, mean getting rid of credit and special allowances, tax breaks for businesses that effectively means that those individuals and/or businesses pay more taxes. their rates per se don't go up, but they do pay more taxes. could you live with that as part of the deal? >> i could live with that as part of the deal as long as you don't move the goal post and as long as you don't raise the rates. the american people have made it real clear, and to the credit of the house of representatives, the republicans, and representative boehner, they are listening to the american people, neil. so, yes, i believe people can live with that as long as you don't raise the rates. that's the line in the sand for that i don't blame representative boehner from walking out. >> neil: you would support, you're popular with the tea party, they love you, practically a god to them.

>> no. >> neil: here you are one of their heroes, saying you would in fact be open to some things, revenue enhancers, whatever you want to call them that speaker boehner and republican leaders were looking at as long as you don't raise the rates. many in the tea party don't share that view. anytime you're looking at doing something like that, you are effectively raising taxes and that's a nonstarter to them, what do you say? >> well, we've got to be practical. i would agree with that, if this were a perfect situation and if i were president, then i could draw that line in the sand. here are the nonnegotiateables. don't raise the debt ceiling. that's more important, don't raise rates and don't raise the debt ceiling. even though they do some of these other things in order to come up with a temporary solution, yes, i could live with that, despite the fact that it's going to effectively be a revenue enhancer, they're playing games with the words again. here are the nonnegotiatable and i totally support representative boehner and the

house, don't raise the debt ceiling, don't raise the rates. now, the president allowed this crisis to happen, it will rest solely on his shoulders. he is now chastising the republicans and chastising the members of the house for doing what the american people want them to do, and that is, don't raise the debt ceiling. make the tough decisions. >> brenda: let me ask you about that, you mentioned the president chastising particularly representative boehner, and the president says effectively, get your butt in here and meet with me, and representative boehner essentially agrees. would you? >> i would, because the president wants to convince representative boehner and others to do it his way. he's not going to get his way this time and i certainly hope that representative boehner and the republicans don't cave. the president wanted his way on health care, neil, against the will of the people.

the president wants his way on raising the debt ceiling, against the will of the people. once again, the president is not listening to the people he's only listening to himself and basically play to out and play the media and get his way, and if our credit is downgraded and come up to the august 2nd deadline and treasury secretary geithner decides who is going to get paid and not going to get paid. this is a crisis by this president. >> neil: herman cain, nice to he zoo you again. hope you're doing well. >> i'm going to give you an exclusive, you always want an exclusive. i just got my checkup from my doctor, five years totally cancer-free, here on your show. >> neil: you're close to the roof as anyone was, he came through that as a trooper, i don't know what that means outside of god just didn't

want to deal with you (laughter) >> herman cain, seriously, feel well, continue to fight. >> thank you. >> neil: politics or not he's going to be in the fight for a while. forget the debt limit ten days away as a major market selloff two days away? and mitch mcconnell calling a meeting of his own with the gang of six, the plan is not dead after all. one of the gang members here and only here. here's a myth: you get nothing for driving safely. truth: at allstate, you get a check in the mail

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>> all right. already hearing from a spokesman for house speaker john boehner, saying that our message will be simple if the white house won't get serious, we will. the speaker is determined to

tackle the problem in a way and focus on our debt. get ready the fireworks are only now just getting started. in the meantime, what happens here in less than an hour from now, could be very big things across the country come monday. there is news of debt talks breaking down bean speaker boehner and immediately fueling a debt downgrade and if charlie gasperino, yet to hear the guy being wrong, news could come monday. >> thanks for having me. >> neil: what do you think is going to happen. >> i think it's baked in they're going to downgrade unless the president and leaders come up with 4 trillion dollars and cuts and spending and savings, but covering the agencies for a long time. you don't go on a road show and tell everybody you're going to do something, and they're preparing the markets i believe for a downgrade. >> neil: what, they would do it on the notion that the

talks are stymied. wouldn't they want to wait until after august 2nd? >> well, do it look like anything is happening? at some point. they've been preparing the markets for a long time. listen, i think it could come early next week, and the one question would the downgrade happen if it were to happen prior to the markets opening at 9:30. >> a good question. that's rating agencies, remember the old china watches, it wasn't an open society and people watched their nuances and they're weird, it could come before, it could come after. it could come tuesday or wednesday, but it looks like if these talks this weekend break down and see it, the rating agencies are warning they could do something and i tell you it looks like it's coming one way or the other. the interesting thing here is that the market aren't moving as the-- as they're threatening this thing and the treasury market has been okay. >> the treasury market and treasury notes, and they've been stable, the stock market

has been stable. >> the caveat. if you watch the president's press conference yesterday he did something i think that was really irresponsible. he used the default word. basically said we could default on our debt if we don't raise the debt ceiling i think that's an outrageous overstatement. listen every here we take in 2 trillion dollars in tax revenues, that's money. that services 200 billion a year and we don't-- >> taxes haven't stopped coming out of our checks, that will continue. >> we don't have to default now is the situation going to be pretty. no, bah us stuff will have to be cut, but we don't have to default on our debt where we signal to the world that we're not good on our world. the default would be catastrophic. why he's doing this, political, why he and geithner say we're not going to default. we're going to argue about the size of government, if we do default, it will be catastrophic. why he's using that word i can't get into the guy's brain cells and it's just outrageous, that could spook the market. that's the one thing.

>> neil: would the markets then lead the president and congress. in other words, in the fall of 2008 as you've written about, it was the original rejection of then president bush's tarp plan, to rescue the banks that led to this 777 largest point fall of all time. and then everyone just woke up and watched, all right, we've got to do something. >> what you don't see are the bond markets, especially the treasury market for us, a deficit mode. we have to sell eventually. >> the rates could skyrocket. >> there's an auction on august 4th, okay, says we raise the debt limit and still worrying, temporarily and do that auction, and if people boycott that auction, that's a real problem. that could set off a global catastrophe, that's an if. not going to say it happens. when the president of the united states raises the default word and people look at that dollar and say, wow,

this is a piece of paper, it doesn't matter that much and i think that's a scary debate to have that the dollar is just a piece of paper. >> thank you, buddy, look forward to seeing you nbc of all places tomorrow. >> they asked and i said yes. >> and that's a pay-per-view moment there. >> you know, it's kind of funny i actually do work for-- ments i know you do. >> and the best business reporter on the entire planet earth. charlie gasperino. >> was it the debt plan for the gang of six senators that busted up the deal between the president and speaker boehner. one of the gang will be joining us. and later, ron paul says we're going to find out if we don't default. he's here. [ male announcer ] introducing the ultimate business phone --

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