captioned by closed captioning services, inc. >> chris: i'm which is chris >> chris: i'm chris wallace military helicopter shot down in afghanistan killing u.s. special operations troops. we'll have a report. >> america's credit rating is downgraded foru the first time, ever. >> fear take shakes wall street and main street. we'll talk about the hit washington took from standard & poor's in an interview with david beers, head of the agency's government rating unit. with the u.s. deeply in debt what can and should washington do to boost the economy? we'll ask paul ryan. bill miller head of legg mason

capital management. >> then we'll talk about a candidate who has a lot riding on the first caucus state, tim pawlenty. from the thursday fox news debate to the crucial saturday straw poll, the stables are high. we'll ask our sunday panel who has the most to win and lose in iowa. all right now. on fox news sunday. hello again from fox news in washington. before we get to the economy, we want to bring you the latest on this terrible story out of afghanistan. insurgents shot done a u.s. military helicopter saturday, killing 38, including 22 favre very seals, from the same unite -- 22 navy seals from the same unit that took down bin laden. >> reporter: this is a devastating blow to the small tight-knit community of special operations forces in afghanistan. the single deadliest day for

american troops since the war started 10 years ago. taliban were quick to claim responsible. saying they shot it down with a rocket propelled grenade. details are sketchy. it appears the for was beginning to launch a raid southwest of kabul when a taliban rocket did take this helicopter down. in recent months the u.s. military in kabul has been fond of saying they wrestled the momentum from the taliban this attack is all the more evidence that the taliban are still capable of launching attacks against u.s. and afghan forces. chris, this war is nowhere near being over. >> chris: conor powell reporting from kabul, thanks for that. >> now the u.s. economy. standard & poor's downgraded the u.s. credit rating friday night for the first time ever from aaa to aa+. that means treasury bonds are

no longer considered money the safest investments in the world. joining us david beers head of s&p's government debt rating unit. mr. beers what, is the practical effect of your downgrading if u.s. debt is riskier does that mean investors can and should demand higher interest rates to buy u.s. treasury bonds? >> i guess there are two parts to that. one, in lowering the rating by one notch to aa+ we are saying there's been a mild deterioration in the u.s. credit standing relative to aaa. we'll find out tomorrow what the market makes with that. based on historical experience we wouldn't expect that much financial impact in terms of higher interest rates for example. >> chris: the tel aviv stock market, one of the few in operation sunday morning, closed -- rather it opened 6% down they had to close it for

a while, because of the volume of trading. can we expect the same kind of very strong downward pressure in a chateau night and in the u.s. markets tomorrow? >> well, -- i'm no better than you at forecasting the stock market. i think it is important to put this in perspective for viewers. a lot of what is worrying the markets is the unfolding story in europe. and also, a perception from a global economic perspective that the world economy may be clothing done. i think the markets are reacting to a lot of factors not just what s&p said friday. >> chris: your downgrade focuses on the political gridlock in washington as it did on the economic situation in this country. do you hold republicans or democrats more responsible for the dysfunction here? any compromise they end upcoming up with, do you need

to see a combination of entitlement reform and also revenue increases? >> chris, in this country, congress and the administration are jointly responsible for the conduct of fiscal policy. this is really not about either political party. it is about the difficulty of all sides in finding a consensus around fiscal policy choices now and in the future. >> chris: do you need to see a mix? does any compromise have to have entitlement reform and revenue increases to be credible? >> we think credibility would mean that any agreement would command support from both political parties. of course, the composition of congress and of course the administration could change from 2012 on wards. but, the key thing is, yes entitlement reform is

important, because entitlement is the biggest component of spending. part of spending where the cost pressures are greatest. >> chris: the white house is not happy with this decision. in fact, they've accused s&p of amateurism. they say when they went through your numbers they found a two trillion dollar overstatement of what the debt would be. and when they pointed that out to you changed the rationale but continued to downgrade the debt. >> that's a complete misrepresentation of what happened. here we are talking about highly technical assumptions about projecting budget baselines far into the future. when we made the modifications that we did, after a conversation with the treasury, it doesn't change the fact that in our estimation, that the -- even with the agreement of congress and the administration this past week, that the underlying debt of

the u.s. government is rising and will continue to rise most likely over the next decade. >> chris: about a minute left. two questions, s&p is widely seen as one of the villains in the housing bubble for the strong rating that you gave for the subprime mortgage securities. some people are suggesting that this downgrading is an effort to get your reputation back. >> yeah, well that's completely untrue. as a matter of fact, the group that irate, the one that rates government -- that i rate, the one that rates government ratings has an excellent track record, to provide a meaningful indicator of credit risk. so, as far as the track record of our raidings are concerned we think they are -- our ratings are concerned we think they are robust and others do too and we think that will

continue to be the case. >> chris: given the economic and political situation in the u.s., which are we more likely to see an upgrading of u.s. debt back to aaa or further downgrades? >> we have a negative outlook on the rating. we think the risk currently for the rating are to the downside. >> chris: we have to leave it there, we thank you for coming in and talking with us. >> thank you, chris. >> chris: s&p downgrade was one more blow in a week when the dow fell almost 6%. latest jobs report showed unemployment still over 9%. here to discuss what can and should be done to bolster the economy are congressman paul ryan in his home state of wisconsin and in studio, bill miller head of legg mason capital management who beat the s&p index for 15 straight years. gentlemen welcome. let's start with the stp

downgrade. congressman ryan, what do you think of the decision? if the u.s. is forced to pay more to borrow to go further into debt isn't that going to add tens of billions to the deficit? >> if we go up another point it adds about a trillion or moreover the 10 year window. so yes, clearly, i'm not very surprised at this downgrade we more or less saw this coming. because we are on the wrong fiscal path. we'll find out tomorrow what kind of spike in rates we are going to get. not only does it hurt the federal government, it hurts people. car loans, home loans, all these things are going up. because washington has not gotten its fiscal house in order. to me this is more vindication of our acts. we passed a budget that would have prevented this downgrade from happening. we passed a budget that would make the debt peak in two years and goes down from there after. we put out a plan, very specific plan to address the

situation. payoff the debt, balance the budget, reform the tax code to create jobs and the economy. you have to have spending cuts debt reduction and job creation. >> way want to follow up on that. isn't that -- isn't that like a doctor saying i did the operation perfectly, but the patient died? >> no -- >> chris: let me finish. s&p condemned the political disfunction here in washington. the gridlock in washington. let's put up what they said: the political brinksmanship of recent months highlight was we see as america's governance and policy making becoming less stable, less predictable than what we previously believed. no question that if they had passed your budget, that that would have vol -- would have solved the debt problem. the cans are they weren't going to balance your budget. the failure to compromise the two sides, isn't that part of

the problem? >> let me first say, both political parties are responsible for the mess we have now. this is not a republican or democrat-only problem. i would argue that over the last couple of years, we've gone deeply in the wrong direction. the kind of compromise you need to actually fix the structure of our debt, like the gentleman just said previously entitlements. our partners on the other side of the aisle the president and senate have been unwilling to put a plan out there to address entitlements. specifically health care of the president created two health care entitlements and put this rationing board in charge of medicare. they are unwilling to open up and restructure entitlements according to s&p the primary drivers of this debt. we haven't been able to get compromise because our partners have been unwilling -- >> chris: let me bring in bill miller. how do you expect the markets

to react to the downgrade? do you think the downgrade will cause interest rates to rise for the treasury, our government borrowing debt and filtering down to somebody who wants a home mortgage or a car loan? >> tel aviv stock market gives a good early indication, at least the initial reaction of markets. s&p downgrade injects further uncertainy into the markets, markets hate uncertainy. i don't expect we'll pay more for interest rates. the downgrade was an symbolic and psychological event, an important one. usually what the s&p gentleman said it is a meaningful indicator of credit risk. u.s. is not a worse credit risk now than two weeks ago. we can print money and our fiscal situation has not changed in the last couple weeks but made a move to make it better. >> chris: i want to get back to the market side what people are focusing on immediately. >> wall street had a bad week

last week. there's a lot of panic. i would expect a lot of volatility. it is all about uncertainy that's the big issue. >> chris: i want to get to the central question, which is at a time when growth for the first time quarter of this year was less than 1% in the first half of the year, what can and should washington do to boost the economy? mr. miller, the debt deal signed this week, let's put it up on the screen, will cut 25 billion dollars in 2012, 47 billion in 2013 and 59 billion in 2014. will that put a drag on an already weak recovery? >> those numbers are not very large. that won't put a drag on the economy. there's very little on the fiscal side on the spending side at that time government can do to stimulate the economy in the short run. on the monetary side interest rates already zero little the fed can do absent new scale of

purchases that got the market worry the normal policy levers are not in place to stimulate the economy in the run. >> chris: spending cuts don't worry you? >> not those levels there. are automatic triggers that may cause problems in fiscal 2013. >> chris: congressman ryan let's talk about what fiscal levers may be left. the president wants to extend the payroll tax cut, unemployment benefits, seed money into an infrastructure bank. i know stimulus is a dirt word. could you support any of those as a short term way to give a little boost to the economy? >> i don't want to repeat the same mistake? this isu5=q the same logic the president used to sell us the stimulus. he said it would keep unemployment from getting above 8%, it didn't. it would exacerbate our debt problems. i won't go through every issue. i think we should do tax

reform. those things are temporary. they are demand-sided. they've proven not to work and facilitate uncertainty for business. what is making our economy is this just increases the amount of uncertainty as to what the future holds for them on regulations, taxes, interest rates and all of those things. this exacerbates those problems. we think more certainty on regulations, taxes, spending, debt, on price stability with sound money are the key to this. i think that the best thing we can do in divided government, fundamental tax reform to get us a tax system that is internationally competitive. and does not penalize businesses. we have an uncompetitive tax code riddled with special interests and loopholes. i think that would be a pro-growth strategy. what we proposed. i hear talk from some

democrats they are interested in taking a look at this i've always thought tax reform is the best way go. reform that shows the world and the country we are getting our debt under control will help the economy today. >> chris: mr. miller, let's lay these out. the democratic plan to boost the economy is to extend the payroll tax cut. extent unemployment benefits and create an infrastructure bank. obviously we are doing this in bullet points, the republicans: cut for taxes, roll back regulations and expand u.s. energy production. question, in very broad strokes, when you look at the republican plan, the democratic plan which is the better and more effective to boost the economy and get more buy-in from the markets? >> i agree with congressman ryan. fundamental tax reform on the

corporate and individual side broadening tax base lowering marginal rates is important. some of the democratics plan tax cut good idea, unemployment extension, that's a good idea. there's parts of both. fundamentally, you need tax reform. >> chris: congressional leaders have to name the members of the so call super committee which going to have to try to come up with another 1 1/2 trillion in deficit reduction, by thanksgiving. talk about having a deadline. have you been told you are on the committee? do you want to be on the committee? ] laughing [ >> good question. i have not been told. the speaker has until august 16th. we propose 5.8 trillion. we have shown plenty of ways

of arriving at this kind of up in. we have to find out whether our bipartisan friends on the other side of aisle can get to that number. if we do, we have another good down payment. a trillion on savings from government agency budgets with this deal. we want another trillion or so in savings from what we call entitlement spending. it is not enough to fix this problem. it is a down payment. look, chris we wouldn't be talking about these spending cuts had we not taken the majority and gotten this agreement. the president started off wanting a blank cheque then a big tax increase. we ended up with cutting more i hope the committee makes good on is word and cuts in spending. >> chris: if speaker boehner says, paul i want you on that committee, you are mr. budget, would you go on? >> yes, i would if he did

that. >> chris: do you want to be on it? >> i think -- i'm not butting my stock in this committee. i think people are over tim emphasizing what this committee going -- over emphasizing what this committee is going to achieve. democrats have never wanted to put their health care bill on the take. may have not wanted to address -- we haven't seen a budget passed in two years. 9 president hasn't put out a plan. -- the president hadn't put out a plan. they don't even want to go to structural entitlement reform. i will do this, but i want to make sure people understand that i don't think this is going to be a committee that is going to fix our fiscal problems. i hope it going to get another single or double, down payment on our problems. i think you need to change the leadership in washington. [ talking over each other ] >> chris: let me jump in.

you talk about the lack of open minedness and production and not passing the budget by democrats. if you were on that committee and you get a deal three or four dollars in spending cuts in entitlement cuts for every one dollar in revenue increases and the revenue increases came through tax reform, where you lower rates, but you also close the loopholes and some of the deductions and use some of that for revenue and speaker boehner agreed to use 800 billion dollars of that, at least temporarily, would you be openminded to including some of that revenue as part ever a debt deal? >> it depends on the spending side of the ledger. can you get higher revenues that gets more economic growth and higher revenues? the answer i believe is yes. the question is, we've yet to see a response the question, are we doing what we need to do to get the spending line down, down to 20% of gdp.

it is going to 40% by the time my kids are my age. we've yet to see any commitment to actually bring the spending line down. if you are just raising revenues to chase ever higher spending i don't think that is a good agreement. if we are restructuring entitlement programs and getting that spending line down to meet that revenue line then can you have higher revenue growth through more economic growth in tax reform? the answer yes. i don't see agreement from the other side getting close to doing that. >> chris: mr. miller, is this super committee, select committee, a formula for another stalemate or do you see the chance, particularly with the pressure from the downgrade, that there could be a grand bargain entitlements and tax revenue? >> i think it is a start at best. likely to be staffed by people that the leadership want to represent their positions. probably a greater than 50/50

chance they have a stalemate. i think the key issue for markets long term entitlement reform. discretionary spending doesn't matter except a little drag on economy. pro-growth policies and fundamental entitlement reforms are keys to long term fiscal health and confidence of the markets in the country. >> chris: congressman ryan, you talk about changing leadership in washington, 30 seconds left. i have to ask you the obligatory 2012 question. you said recently, you want to see how the gop presidential field develops before you make up your mine. i know you say you have already got the best job in washington. it sounds like there are some circumstances unwhich would you consider running for president. what are they -- under which you would consider running for president, what are they? >> i thought you were asking who i was supporting. my answer is the same the last time you asked me. i don't think a grand bargain is going to come out of this

because they are not going to put health care reform on the table. >> chris: gentlemen, thank you both for joining us. we'll be watching to see what the markets do tomorrow. >> up next, also a big week in iowa for the 2012 republican presidential field. we'll ask tim pawlenty what is at stake for him, when we come back. we come right back.

>> chris: we ten our series of 2012 one-on-one interviews with gop presidential candies with a man who hopes to boost his chances this week with the

fox news debate and iowa straw poll. joining us tim pawlenty. welcome back to fox news sunday. governor, can you hear me? >> i can now chris, i lost you there, i'm sorry. >> chris: good, i'm glad we've got you. iowa reporters and some top state republican officials are saying your campaign is starting to pick up some momentum. are you going to surprise people with your showing in the ames straw poll? >> he are going to show good progress in the apes straw poll. my record of cutting government spending appointing conservative justices, doing health care reform the right way is getting out as we've had ads and spending time mere in iowa i think we'll show good progress for the ames straw poll. our real goal is caucuses next january and february the ultimate objective for republican candidates in iowa. >> chris: there is talk on ground about momentum we have to go with the hard numbers,

those are not encouraging. you have spent 42 days in iowa and held 102 events. yet, according to real clear politics average of iowa polls michelle bachmann is leading with 27%, romney 22.3 % and you're a distance 3rd at 7.5%. when you have campaigned longer and harder in iowa, why is congresswoman bachmann beating you? >> as you know, those early polls don't predict the final outcome almost ever. if they predicted anything giuliani or hillary clinton would be president. more importantly, we are seeing momentum on the ground. a week from yesterday, next saturday at the ames straw poll the proof will be in the pudding you will see our campaign close are to thetron of the pack. getting things done if a liberal state -- done in a

liberal state people are seeing that record, that i've did it the most difficult circumstances and they are responding. chris you and bachmann from minnesota, appeal a lot of same voters, you've been taking shots at congresswoman book hand recently. you say she has no accomplishments in congress. she makes a lot of speeches, but doesn't get results. is that fair? the congresswoman founded the tea party in the house. she was the first kong person to call for repeal of -- the first congress person to call for repeal of obamacare given the fact she was in the minority until just this january, those accomplishments? >> i think i can unite the whole conservative movement. it consists of economic, social, libertarian, tea party conservatives and more. i have an record that can appeal to the whole thing. many of the other candidates

appeal primary to one chunk but not all. that's one of the s bring for. to congresswoman bachmann or any other candidate, one of the minimum prerequisites to being the next president is you have executive experience that you have run a large enterprise or the public component. i've done that my comments about her record, if you look at her record in congress there's great comments, offering amendments that didn't pass and the like. asening tos we are concerned about, cutting -- as to concerns we -- accomplishing these things, getting results, i said her record is nonexist ten that is not disputable, that is a matter of fact. >> chris: she was in the minority, she couldn't defeat obama care by herself. >> we are all held to our results. whether you have talked about it, given it rhetoric one of the themes in this race is going to be after barack obama he came through iowa and other

places gave soaring speeches, incredible comments people hear democrats bought it in iowa they catapulted him to the president. we now know he wasn't prepared. he hadn't run anything. he hadn't done anything. his record of results were nonexistence. we don't want to repeat that mistake. >> chris: are you comparing bachmann to obama in terms of not being prepared for the job? >> again, i don't think it is unreasonable or inthrapler to to say the next president of the united states should have executive experience with results running a large enterprise. it is one of the strengths i bring to the race. >> chris: let's take about your record everyone the congresswoman says you were a big spending, big government, compares to you barack obama and says you left a five billion dollar budget nest in your state which is one of the reasons we had this shutdown in minnesota. >> well, look my record in

minnesota is one of the best of any governor in the country. the cato institute gave only four governors in the country an a grade i'm one. and the other three are not running for president. taking spending from historic lie highs to historic lows, health care reform the right way, public employee compensation reform before it was cool and popular, done the list. everything that republicans are -- down the list, everything that republicanses are talking about i've done, i don't flap my jaw saying maybe i will do it some day, i've done it undifficult circumstances in minnesota. i've been in the battle, i got a few battle scars like everybody does. by record is one of the best, maybe the best of any in in the country. >> chris: let's talk about the downgrade of our credit rating. s&p blames political gridlock in both parties. you say that you don't support

the compromise that after weeks and weeks of negotiating all sides came up with. if the problem is gridlock, wouldn't president pawlenty be part of the problem? >> absolutely not. i have a of getting things done. i never had a republican legislature fully in my state. yet, all of those things i mentioned earlier, we got accomplished. one of the ingredients of breaking gridlock is having a leader. in this case a president of the united states who has the courage and experience and fortitude to lead. look at this president, we can't find him where is his plan on social security reform? where is his plan on medicare reform and medicaid reform? we shouldn't have to play come out-come out, whatever you are with the president of the united states. he has an obligation and responsible to lead and you can find him. he should step for to the microphone and lead in nation on the more challenging issues

of our day. he's not in action. he's hid -- he's hiding, ducking, leading -- he should be leading. >> chris: you think you are going to be up near the lead when we get results from the ames straw poll next saturday. as we say, you spent more time and more money in iowa than congresswoman bachmann. don't you have to beat her saturday in ames? >> no, i don't. i think we have to move from the back of the pack and show progress towards the front of the pack. these things sort out over a long period of time. everybody's records are going to get scrutinized. people want to kick the tires, hopefully they limit it to kicking just the tires. i feel confident about our campaign in iowa. i think we have to show progress. then we will be in a position to win caucuses next january, february that's the ultimate objective. >> chris: as we just said you

are third in the polls now, somewhat distance. don't you have to finish at least third in ames to remain a able candidate. >> i thought you said i was not third earlier? >> chris: no, i said you were third. the demon register poll is a credible been. mark poll in iowa had me in 6th7th place a few weeks ago. our goal to something closer to the front. we need to show good progress and i'm confident we will as that record from minnesota continues to get out. >> chris: governor pawlenty thank you for joining us. we will see you thursday night in ames for the fox debate. >> i'm looking forward it to, thank you chris. >> chris: we are too. >> our sunday panel weigh in on the gop field and who is likely to come out on top in

>> everything president obama and his appointees believe this is bureaucratic socialism where they want to micromanage the country from washington, d.c.. >> this president has destroyed the credit rating of the united states through failed economic policies and his inability to control

government spending by once again raising the debt ceiling. >> the president: yes we can, thank you. if i don't have this done in three years, then there's going to be a one-term proposition. >> chris: well, some of the republican presidential field ramping up rhetoric president obama as they prepare for a big week in iowa time for our sunday group. byron york of the washington examiner. susan ferrechio also from the examiner. kirsten powers columnist for the "new york post." and fox news political analyst, juan williams. byron and susan will be two of the questioners at the fox debate thursday. right -- byron break it down who has the most riding? >> i think tim pawlenty has the more riding in the straw poll without a doubt. he said we need to show good progress. he gets to define what good progress is. mock mcin the lead. -- michelle bachmann in the

lead. somebody other than michelle bachmann and romney will be in new hampshire. he has pulled himself out of this. look at the results of straw polls in the past. sam brownback, tancredo, ron paul were top finishers earlier. forbes, dole and bower finished two, three and four in 1999. sometimes it doesn't tell you who is going to get out in the caucuses. >> chris: right the person who rib wins the caucus recently hasn't won the republican nomination. but we are still going to cover it. susan, one of the big story lines in the debate and straw poll is pawlenty versus bachmann. both counting on a strong showing in ames. they both appeal to tea partiers and social conservatives. what are you looking for from those two? >> pawlenty has probably got

the better ground game, more organized. he's been there longer, working harder. he could pull off a surprise placing, first, session or third and steal the spotlight from bachmann even if she does better. she is newer at this, not as well-organized. as well as she is doing in the polls, the iowa straw poll is about organization. it is about getting people out. it is difficult to get people to come to this and vote. that will be the real fight. who is better able to get people to the polls? at this point, people are looking at pawlenty as someone who can pull off a win, because he's been working harder and he has a good ground game. >> chris: if you think the caucuses are an organizational battle, the straw poll is only a matter of a few thousand votes and it is who can get people to ames, iowa to an auditorium on buses, they went space and hold barbecues to get people to eat and vote.

if somebody gave me food, i would vote for them too. it really is an organizational battle and can be a test of not just general support in iowa, let alone the country but of who can get people saturday afternoon into ames. i want to talk about somebody else who is not participating in the apes straw poll. the front-runner the poll -- in the ames straw poll, the front-runner in the polls, romney who hess held few public events hand flown under the radar. politico website talked about the mittness protection program, good line. so far it didn't seem to be hurting him. do you expect his rivals to go after him in that debate? >> he is the one to go after. i think the debate is going to influence was in apes as well. not just organization, -- in ames, as well. not just organization.

pawlenty last time didn't go after romney, i'm expecting him this time to come ready to go after him, people need to start going after the front-runner. what pawlenty was doing if the vine -- in the interview with you taking swipes at bachmann i think will backfire. he should be going after obama and romney. >> chris: juan? >> i think it is goingf rough ride for romney if it is ever going to come. i've been hearing he is supposed to begin a new stage of his campaign, come out of the cocoon. i think people in arizona may have some feelings about what you said about hiding in arizona. >> chris: that is where a lot of those mobsters end up, that's all. in no way did i mean to disparage you. >> i think he's going to have a rough time. pawlenty made a huge mistake last time. he came on this program, with

you chris and debuted this term looked like he was a meek, mild fellow, lacking spark, did not appeal to the tea party folks looking for someone to bash president obama. the question is on the establishment side of the ledger is he going to emerge as sufficiently strong to go forward against romney? he has to take on romney. you guys are going to have nine people on the stage wednesday. >> chris: actually, eight, rick perry won't be there. >> this is going to be difficult for if i of them to make a strong impression. they have to be -- focused like a laser in terms of criticism. my bet is the entire target is romney. >> chris: byron, texas governor rick perry, we are all talking about is he going to get in? yesterday he held a big prayer

rally in houston. let's take a look. >> our heartbreaks for america. we see discard at home. we see fear in the marketplace. and for that we cry out for your forgiveness. >> chris: perry is a devout evangelical. from a political standpoint, should he be focusing, the first time a lot of americans have seen him, focusing on that or more on his strong record of job growth in texas? >> i watched his performance. i think he raised the bar among candidates. going to find out he's not really cup of tea for a lot of republicans. a lot of economic republicans are not going to really love that. but as far as iowa is concerned, the last caucuses were won bay a preacher.

george w. bush who in a debate in des moines said jesus christ was his favorite political philosopher. so that is not going to hurt him in iowa >> chris: we have to take a break. when we come back, the 1st down grade of the u.s. credit rating ever. we'll talk about the fall out and what i means for tomorrow's market open. tomorrow's market open.

>> the president: when i said change we can believe in, i didn't say change we can belief in tomorrow. not change we can believe in next week. we knew this was going to take

time. because we got this big, messy, tough democracy. >> chris: president obama trying to buy more time this week for his economic policies. we are back with the panel. we tacked with the market experts -- we talked with the market experts. the question is how big a deal will the downgrade be in the political arena? juan, what do you think it will be generally here in washington? will the president get most of the blame, because rightly or wrongly, he's the pan in charge? >> he is the man in charge. i think we are at the point where people have to make some judgment about his ability to handle this economy. by my estimates he did get a bad economy. he was handed a bad deal when he came in economically. going forward now the question is, who gets the blame? if you look at polls now the american people don't think well of president obama's handling of it. his numbers are down. i think his numbers are

historic low by 40%. "new york times" has him higher. who gets smashed in the polls, chris is the congress. they are at 8%, 6% in some polls. everybody thinks was here was a travesty. it is basically throw the s you. people are sick watch is going on in -- throw the bums out. people are sick of what is going on in washington. i think thats the important of the s&p thing, it is psychological, symbolic as we said earlier. what it does suggest if -- what is the moment here in terms of american history. people think the political leadership in the country at a moment of high unemployment, economic crisis overseas italy particularly at risk now, think this government isn't able to respond effectively. >> chris: byron the buck may stop with the president. but, republicans drove a hard bargain in these debt talks. and the polls seem to indicate

voters don't approve of that. let's put this up on the screen. "new york times" poll found 47% of obama's handling of the debt talks. 46% approved. 66% disapproved of congressional democrats. 72% profld of congressional republicans. byron, public opinion towards the tea party is turning more negative because they were driving a lot of the hard bargaining. >> it is. the polls are what they are. the public does not like the way republicans are performing in this. on the other hand, even though david beers said he thought the market reaction or the interest rate reaction would be minimal from this -- >> chris: this is the s&p official. >> the s&p analyst. there are parts of that report that read like punditry. saying they don't like politicians bickering. there are other credit ratings that have not lowered the u.s. rating and said what politicians say is important, what they do is more important. the fact is, this

republican-driven plan has come up with a plan to reduce spending by significant amounts over the next 10 years, which should help the debt situation. >> chris: susan, juan referred to this as general disgust with congress. in the times poll 82% disapprove of congress that's republicans and democrats. the times pointed out was the highest number since they tarred asking the question in 19 7. i -- i know it is -- started asking the question in 1977. are we headed towards another election we had in 2006, 2008 and 2010 where voters want to see huge turnover in congress and the white house? >> if the economy doesn't improve we are at risk of that happening in this next election. people are impatient. no one is working. housing values have dropped. what they see in congress is a lot of fighting. they don't see anything

getting done. i'm there, i tell you things get done but it takes effort both sides are so divide . raising taxes, bringing revenue into the treasury or cutting takes -- cutting taxes and spurring economic growth. every time they try to move forward they come to a big stale may that's what the public sees. the end result, people are still out of work. they say time for someone new. >> chris: we saw in 2008, when tarp was going to be passed and the house defeated tarp. i will lever forget the split screen showing action in the house defeating tarp the first time. and the stock market going down 780 points. i think everybody got terrified, including politicians. could you see a combination with the downgrade, a negative reaction from the markets, where washington -- and i

include everybody, republicans, democrats, the president, everybody gets scared straight? >> that is right. yesterday s&p warned there could be a second downgrade. this first necessarily going to i had you in your pocketbook. they are warning things could get worse. the warning is congress do something, fix this. i think that's the thing that can get them past their usual gridlock. they did past the tarp. they stumbled first then passed this massage package in record time. it is that kind of thing that gets congress off the gridlock, something really scary economically to get them to move and say put the right people on this super committee they are talking about and come to a compromise and i believe it will include bringing in revenue as well as big cuts. >> chris: kirsten? >> yeah it is scary when you consider the fact what you were saying it takes that to get them to focus.

i think that was so much this report was about it want them saying the u.s. economy is necessarily a bad economy. i was them saying we are looking at the future. we are looking at the debt and we are saying you people are not capable of fixing this problem. that's the concern. if this dealt with in the future that the country is going to continue to be in decline. you had warren buffet saying i think the rating was wrong. i would have given the u.s. a quadruple "a" rate going i could. it is not where we are now, it is about team saying people in congress and the president need to figure out how to work together. -- >> chris: what do you think the chances of the combination of the downgrade and maybe, we hope it isn't, negative reaction on wall street will shake congress and the white house and get them to come off the dime? >> i would say it is 50/50. they've been so irresponsible the chances are equal they

could not do what they need to do or do it. >> chris: thank you panel, see you next week. our group picks up with our discussion on our website. we'll post video before noon eastern time. up next, a special programming note. am note.

>> with sure to watch our fox news washington examiner presidential debate next thursday from ames, iowa. we will be asking questions while brett moderates. that's 9:00 p.m. eastern next thursday on fox news channel. and next weekend we will be reporting from ames with the results of the straw poll. our guests will include c