paul, jana felt the same way. you guys are amazing. i'm not sure about the kids, but the rest of us felt pretty emotional. i thought back to a time when i understood one more time just how deep the passion is for this this country. and this was at the end of another olympics. you see, we are just ending the london olympics. the games have been spectacular to watch. hopefully you had the chance to see some of those athletes and their courage and determination. at the end of our games in 2002 i invited a young man to come in and sit with vice president cheney to represent the athletes of america and i chose a young fellow derek para. 5'4", hispanic. he was a rollerblader in los angeles and his friend said if you want to get in the olympics you got to pick up another sport there is no rollerblading in the olympics. so he tried on ice skates and went to the local skating club and he was fast.

i guess rollerblading translates well. he skates his heart out and trains and trains and ends up beating a lot of big fellows i'm sure from michigan where i came from, wisconsin, minnesota, becomes a member of the united states speed skating team, long track, bonnie blair, isn't she the best. anyway he is long track so he comes out to salt lake city and skates his heart out. gets the silver and gold medal. fastest man on earth on skates. i invited him to sit with the vice president and as he came in i said derek what was the most meaningful experience in the olympic games and he said carrying in the flag that had flown above the world trade center on september 11th, 2001 into the opening ceremonies. [ cheers and applause ]

>> he was one of the 8 athletes selected to carry in that flag. it is about 8 by 12 feet and torn and burned and can't be put up a flagpole so you got to bring it in who ar who are hor. he said we expected they would burst into cheers but instead total silence and complete reverence. the choir began performing the national anthem. he said mitt it was hard to hold on to my emotion as they were singing those words and i was holding on to the flag. and he said the choir did something i hadn't expected. i knew it was coming because i was in charge of the olympics and picked the version of the national anthem they sang. a 1930s version where you repeat the last line as a reprieve. the sopranos g go up in ob tak.

o, say does that spar spangled banner yet wave op.er the land of the free and the home of the brave. a gust of wind blu blue on theg and lifted in their hands and he said it was as if it the spirit of all those that fought sand died for american liberty had gone into that flag. he said tears ran down my face. as he told me that story tears filled my eyes. we love this country. we know it is an exceptional land. we understand that when the founders wrote those words that said that the creator endowed us with our rights that they were right. that among those rights are life and liberty and the pursuit of happiness. we are a nation given those freedoms. we share them with people around the world. this is the greatest nation the world has seen in part because

of that extraordinary beginning, that idea as paul said. we are not going to change america into something we don't recognize. we are going to restore to america the principles that made america the hope of the earth. we are going to do everything in our power to keep america strong and our homes in our economy, in our military, second to none. this nation has a mission to perform. we are going to make it happen. we are going to keep america the shining city on hill. you are going to help us win the white house in november. we're counting on wisconsin! let's get it done! thank you! >> harris: a crowd in waukesha, wisconsin welcoming home one of its own tonight, congressman paul ryan after being chosen by the presumptive republican presidential nominee governor mitt romney. we heard from both of them in the last little while. governor romney rounding things out with a very, very spirited speech and having to at one

point shout above a heckler in the crowd and remind that person that his is a cam feign that will be listening to those that show respect. the heckler almost drown out if you will by the chants from the crowd screaming usa, usa, usa. before we move on here i do want to tell everybody that congressman paul ryan's home coming tonight was met by this crowd but there were speakers before him. governor scott walker was one of them. as he was introducing mr. ryan he introduced the two families and you can see them there and it was that moment that the two ryanmr. romney and mr. plouffe and to the stage and you you could see congressman ryan visibly shaken by the moment. he was tearing up. people in the crowd reacting to that some what as well. he then shouted hi mom as he began his remarks. reminding people that this is his home. was born not too far away from

there in janesville, wisconsin which is in his district in the u.s. congress. now, we want to go to our chief campaign correspondent carl cameron who is there. he has been with this campaign since its announcement yesterday that mr. ryan would be joining the ticket. electric place to be where you are standing right now? >> it was clear that paul ryan was emotional from the moment he stepped on stage he recognized so many faces in the crowd. within seconds he was wiping away tears. clearly emotionally affect by all of this. and it had an effect on mitt romney. both he and his wife ann were standing behind him as he was making the remarks and they were wiping away the tears. interesting. for paul ryan it is a big home coming obviously. is seven term congressman. popular. with all of the political attention that has been to wisconsin with scott walkers recall victory recently and

shrinking the government budget here in wisconsin this state has been a hotbed of combative politics and they see paul ryan's addition to the ticket as yet another victory for conservatives in what has been a form of conservative victories in the state. there was a moment when you talked about it with the heckler in the crowd got the attention of mitt romney. before that happened there was a heckler right here in front of the camera risers where we sit during this event. that person was taken out and as soon as the cops removed him from the vicinity then the guy right up front right in front of mitt romney only four or five feet away started shouting as well. romney was patient as the youd tried to usa drown him out and it didn't work. as they were removing him he was watching and then mitt romney said young man and really kind of took the guy on. uncharacteristickic for romney in these store o sort of situa. as the individual was being escorted out by police and the crowd was chanting romney turned away from the heckler and said mr. president it is

time for you to get your campaign out of the gutter. that really a reference to what is part of the themes that now develop ised with ryan on the ticket. the romney-ryan twosome is making the argument it is time for a substantive debate and time to put aside the partisan negative name calling attack ad politics dominant for the last two or three months. incredible amount of money spent on attack ads focused on things that really aren't what voters are concerned about in terms of the economy and growth of government, dealing with unemployment and dealing with falling pay. all of these things are what the voters say they want to hear about and it is now what romney and ryan are promising to with the added assertions that the distracts and dave 86 from that are coming from obama and the democrats who want to talk about anything but the last three years. >> if you look at the.

>> juxtaposition between where you are now. that is so different from that scene. >> to the extent that the romney-ryan ticket really wants to now focus the entire campaign debate on the size of government and balancing the federal budget et cetera one can argue that already happened. the sunday talk show circuit was repleat with argue arements right and left about the merits of the ryan budget and aggressive approach it takes to try to tighten the nation's fiscal belt. democrats saying it is extreme and radical. republicans saying where is the president's plan? that has already begun. so far as they said that is what they wanted to do. it is already underway. the president is in chicago and he will be heading out to iowa for three days of campaigning. he did in fact welcome ryan to the race but called him the i

dia logical leader of the republican party. that was the extent of his party today. but the staff members were pumping out attack videos, news releases and sur are row gates all over the place going after romney and ryan trying to kick the wind out of the sails before the vote gets in the water. tonight now that this welcome home rally is done in wisconsin for paul ryan the team will split up. pretty quick for them to part company. only been on the campaign trail the last 36 hours together. tomorrow ryan campaigning in the state of iowa. republicans want to win while romney heads on to florida and ohio. harris? >> harris: from the trail now, campaign carl setting the stage for what comes up in the next few days. mr. romney saying that he chose mr. ryan because he wanted to elect someone with character. someone who would ignite the crowd. as you can see that has happened tonight in waukesha wisconsin. that is how fox reports on this

sunday, august 12. captioned by closed captioning services, inc. [ charles ] when you can make a person smile

when they taste the food that you cooked, it do something to your heart. i think what people like most about the grilled food is the taste. the flavor comes from that oak wood. the shrimp, the fresh fish, the steaks. locks in the flavor, it seals in the juices so that when you put the fork in it, it just goes through it like butter. it's beautiful. [ laughs ] i'm proud to be a grill master. i love food. my name is charles himple. i'm a red lobster grill master and i sea food differently.

welcome back. as you have seen, cities with big dreams and big bills have come here to wall street for the cash to finance them. but even more towns are going broke not by issuing bonds is but by issuing promises to public employee unions. that story has a new york angle, too. fox business network's lou dobbs explains. >> but it is a good natured sort of labor battle. it was in 1935 that president franklin roosevelt made it easier for workers in the private sector to create unions. when signed the wagner act he see he meanted and deepened political ties between organized labor on the democratic party. >> it doesn't pool enthusiasm for picketing. >> even fdr didn't think public sector unions made any sense. >> collective bar gaining is different for public workers

because their boss is really on their side. >> lies extensively on the roots of america's economic problems. >> they don't want to pay the union mihms too much because it comes out of their own pockets at ford, but that is not true of the government. >> strikes by public employees would be quote the unthinkable and intolerable. but it was within a couple of decades that democratic heirs decided the political upside of public sector unions was worth the risk. the euro caucuse eureka momentd right here in new york city. municipal workers granted the right to bargain collectively. three years later those public unions organize today's reelect him. wagner's unexpectedly strong

showing caught the attention of another democrat worried about reelection. president john f. kennedy. >> he sees how this carried wagner to victory and issues an executive order allowing for the unionization of federal employees. state and local governments picked this up as a cue and you have the rapid growth from there on of public sector unions across the country. >> historian fred siegel of the manhattan institute says the new unions almost invariably worked to elect democrats. >> pay increases and pension increases and healthcare increases. meanwhile the union takes some of the money it gets from the city and invests in local elections. so it continues to elect people who will give the unions what it wants. >> and they also became a political force unto themselves. >> you can't act without their cooperation. >> that is because when elected officials didn't cooperate the

public sector unions that fdr warned about declared those unthinkable strikes. the most memorable case, the summer of 1975 when new york was close to bankruptcy. sanitation workers let garbage pile up in the streets while laid off police marched and shut down the brook le brookly. public employee unions demonstrated nationally when they helped senator ted kennedy challenge to a sitting democratic president they didn't like, jimmy cart. the public sector unions become the get out the vote machine that the old democratic party machine once was. >> carter was renominated but lost to ronald reagan who had the is support of at least one public is sector union, the air traffic controllers. that wouldn't last. months later the controllers rejected a government contract offer they went on strike. but that was not allowed under

federal law and president regan fired them all. >> but we cannot compare are labor management relations in the private sector with government. government has to provide without interruption the protective services which are government's reason for being. >> it is not surprising public unions ally with democrats as providence rhode island fire department union president paul dowdy. >> if you look just generally at the republican party. they believe in a smaller government. as a government worker i don't know necessarily agree with that. >> by the 2* 2008 election, a former community organizer with long ties to one of the largest government employee unions of all -- >> i spent my entire adult life working with sciu. >> a financial crisis would catapult their man to the white

house. but it would also bring those dire warnings about public sector unions from fdr's era. >> union. >> yes! >> back into focus. >> and one other thing, bret. in 2009, public employee unions absolutelily eclipsed the membership of private sector unions. >> thanks a lot. we will see you a bit late. up next, i go across the country to one of those i've been coloring liz's hair for years. but lately she's been coming in with less gray than usual. what's she up to? [ female announcer ] root touch-up by nice'n easy has the most shade choices, designed to match even salon coloin just 10 minutes. with root touch-up, all they see is you. because vitamin d3 helps bones absorb calcium, caltrate's double the d. it now has more than any other brand to help maximize calcium absorption. so caltrate women can move the world.

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you have heard why many fear public sector unions could bankrupt cities and states. it is happening right now in california. let's take a trip down route 66. ♪ get your kicks on route 66

>> on old route 66, san bernardino was known as the last stop before l.a. ♪ san bernardino >> with freeways and major railway station it was the ideal hub linking the ports of los angeles and long beach out to the rest of the country. san bernardino symbolized the promise that economic growth held for middle class america. it was even the location of the first mcdonald's. but today, this city of around 210,000 has a shortfall of $46 million. over a quarter of its entire budget. unable to fund enough cuts to close the gap, san bernardino on august 1 filed for bankruptcy. >> you called this a stain on the city? >> oh, yes. >> patrick morris has been mayor of san bernardino since 2006. >> how did sweard ge san bernat

into the predict ament? >> it was a perfect storm economically when this hit in 2006 and 2007 the bottom fell out. >> in the perfect storm, morris says san bernardino property values dropped by 65%. seven car dealerships shuttered and the city lost tens of millions of dollars of sales, income tax and tax receipts. >> we have major cash flow issues. >> he names a great recession. every city in california has been through the great recession. >> republican state assemblyman mike mor morrell rejects morri' perfect storm analogy at least that a sear reof factors came together to devastate the city. >> they had five years of warning that this train was coming down the track. >> that is morell's preferred metaphor.

a freight train fueled by public employees salaries and benefits and it hit town right on schedule. >> approximately 75% of the budget goes towards fire and police officers. they are not going to be able to pay those pensions nor are the salaries they have been paying. >> we have historically in the city been remarkably generous with our labor contracts. >> generous, indeed. in 2010, a san bernardino $317,000rgeant maided 3 h in a city where the average household income is less than $40,000. but it is not just the top salaries that have brought down san bernardino. it is the average ones. >> san bernardino firefighters are making about $130,000 a year. police around $95,000. with pretty generous pensions as well. >> did anybody say hey, you know what, we are not going to be able to afford this down the road? >> those are very problematic

agreements that were made at a time when life looked rosy. >> morris admits it has been in good times and bad that san bernardino's public unions had powerful influence over the politicians. the politicians they help elect. morris says that is just the way its. >> in a blue collar city as old as we are unions have a presence in terms of funding for candidates for are city council and they are present at the table during labor negotiations. >> those negotiations in some cases have bound san bernardino to pay employees just as much even after they retire. >> that is not going to work. it is not going to work. >> you cannot retire people at the age of 50 years with literally full pay and bridge their health benefits until medicare. >> the salaries and benefits you are saying have to be renegotiated. >> you bet. >> why has that not happened yet? >> it will happen under the

guidance of chapter 9. >> in other words, bankruptcy court. but public is sector unions are saying not so fast. they point to state precedence that suggests their pensions are are untouchable. however, morris, a former judge believes that in this unprecedented crisis the courts will allow cities to it modify at least some of their contracts. meanwhile, he is dealing with the day-to-day trials of a city gone belly up. >> now, you don't really have any credit. >> that's right. >> cash for things. >> carry.d kari. >> you vendors who leased equipment who may way to to take that equipment back. >> yes. >> and that is a daily thing? >> we deal with it daily. >> bankruptcy in the short-term is the easier thing to do but the long-term you affect lending condition, housing conditions and jobs. >> and that morrell says will make things worse for the

already beleaguered citizens of san bernardino. >> were there other options? >> there always options. the city could have balanced the budget with a massive cut of services. when you are looking at a city that already cut 20% of its staff that is a really difficult choice to make. >> san bernardino's modernistic dark glass city hall completed in 1972 was once a sign this town was look to the future. today, however, the last stop on route 66 may be on its last legs. >> coming up, the biggest local government bankrupt icy in u.s. history. and it is not in california. after the break. [ male announcer ] it's a golden opportunity... to experience the largest, most efficient line of luxury hybrids on the road, including the all-new esh. ♪ while many automakers are just beginning to dabble with the idea of hybrid technology...

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to dream. to create. to work. if you're going to do something. make it matter. and i thought "i can't do this, it's just too hard." then there was a moment. when i decided to find a way to keep going. go for olympic gold and go to college too. [ male announcer ] every day we help students earn

their bachelor's or master's degree for tomorrow's careers. this is your moment. let nothing stand in your way. devry university, proud to support the education of our u.s. olympic team. live from america's news headquarters i'm craig boswell. republican presidential candidate mitt romney and his newly named running mate paul ryan are criss-crossing the nation. they are in wisconsin at this hour for an evening rally that

just wrapped up. the gathering a home coming for congressman ryan. president obama campaigning in chicago today reacted to romney's pick saying it highlights america's fundamental choice. a u.s. navy guided missile destroyer colliding with a japanese owned oil tanker outside the strategic strait of hormuz. the uss porter had a gaping hole in its side. tensions are already high in that portion of the persian gulf since iran began threatening to block tanker traffic in retaliations for its sanctions. i'm craig boswell. now, back to fox news reporting cities going broke. for all your headlines log on to fox news .com. you're watching the most powerful name in news. now, the biggest local government bankruptcy of all. $4 billion. it took some doing.

greed, income p incompetentencd ol >> bank run to the tune of 4 billion. >> what words would you use to describe the financial situation in jefferson county? >> hopeless. at this junk fuhr. >> hopeless? >> hopeless. >> jimmy stevens is jefferson county's district three commissioner. he was elected after the crisis began. >> how did it stop to go after the rails? >> they attempted to build a cadillac when a chevrolet would have worked as well. >> this is not a tale about cars but sewers and the sort of mess that seens to the surface when local politicians with big ideas get mixed up with wall street bankers looking for big fees. a financial sinkhole in a swamp of corruption. it begins back in 1996.

jefferson's sewer system was leaking raw sewage into rivers and streams and the county signed a federal consent decree to fix the problem. the costs huge, estimated at between $250 million and about a billion dollars. >> where did the county get the money to undertake such a massive project like this? >> if went to investment bankers, went to the bond market and made their pitch and it was underwritten and sold as a good investment. >> at this facility alone the county spent more than $200 million on improvements and repairs earning jefferson county the nickname of having the taj mahal of sewer systems. >> i think in a lot of ways this facility is emblematic of the problems the system has. >> david denar has been in charge of running the jefferson county sewer system since 2008. >> the building we are in now what does it do? >> this is a peak flow pump station. >> it was built in 2004. soon thereafter problems began. >> we had to spend $35 million

in repairs. >> what did the building cost originally. >> 50 million. >> and had to spend $30 million to repear it? >> to put it in regular operating condition, yeah. >> when did go wrong there? >> the people did not operate on a budget and used local engineers to manage a problem that required a lot more expertise than was here. >> some of the sewers green lighted were not even included in the consent decree. how did that happen? >> jefferson county won'ted to bore are a super sewer underneath to get to area that would be developed. when they got to the point the outcry from environmental or rate payer groups was so loud they killed the project outright, leaving jefferson county with the tunnel to no where. when it became clear the county wouldn't be able to make the payments on its bonds officials went back to wall street

looking to refinance. >> original debt service represented $2.4 billion. 98% of that was fixed debt and investment bankers said we can go to a variable rate interest and add derivatives to that to synthetically make that lower. >> the new instruments that wall street had generated were so complicated that the average person even the finance person could not understand it. >> tony patellas is the jefferson county manager. he said those instruments exploded jefferson county's debt without any one realizing. >> it we were overextended by 85% and the folks that insured our bonds should have known better. >> when the market crashed in 2008 jefferson's bonds dropped to junk, allowing lenders to demand payment in full. >> they called everything in and we were unable to pay. today, jefferson county is debt

over $4 billion. we are in bankruptcy. the largest bankruptcy in the history of a local government in the united states. >> did wall street really take jefferson county for a ride here? >> i leave they did. >> a federal criminal investigation of the sewer deal found that was the case. but wall street got a number of help from a number of people with their hands out. >> we had 21 people that either plead guilty or went to prison. commissioners, employees and contractors. >> that included former commissioner and birmingham mar larry langford. sentenced to 15 years for accepting thousands of dollars in cash and gifts from one of the bankers. former commissioner gary white. ten years for accepting bribes from an engineering company that worked on the sewer lines. mary buckaloo probangs after lying to the grand jury. chris mcnair serving five years for bribery and conspiracy to solicit bonds. bond underwriter jp morgan

settled with the sec, paying the county $25 million and the sec and a. the bank alleged to have bribed friends of jefferson county commissioners. >> there was definitely malfeasance in the whole use of the swaps et cetera. >> but the president and ceo of assured guarantee which reinsured. so sewer bonds says the sins of wall street and corrupt politicians shouldn't let jefferson county off the hook. >> i didn't vote for that project, they did. >> what really steams federico is that they killed a deal that would have avoided bankruptcy. bond holders offered to forgive a billion dollars of the sewer debt if state lawmakers allowed the county to raise taxes to pay the rest. now, assured guarantee has to pay up. we should work together. >> at a certain point when you

can't meet your financial obligations and the settlement that we had was getting farther he away instead of closer to us we had no choice. >> is it a cautionary tale for other counties across the country? >> absolutely is. you have got to live within your means. >> welcome back. lou dobbs from the fox business network. the president of assured guarantee said his company was going to be able to be fine even in the current environment. if there was a lot of defaults would it be like a domino effect in a a worst case scenario? >> if it reached co con tagion levels that would be a l calamity. >> how bad could a municipal bankruptcy be for the people who live there? questions? anyone have occasional constipation, diarrhea, gas, bloating? yeah.

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if your town had out of control debt could that truly affect your life? you wouldn't ask if you spent some time in stockton, california, like dan springer did. spend a night on the tough streets of stockton and you really sense the stakes for the city. >> do me a favor. just take your hands out of your pockets for me.

>> and the people that live here. pretty much life and death. >> if the officers disappear the gang bangers will be here in a heart beat. >> since 2010 the city has had to slash a quarter of its police force because they borrowed more than it can pay and promised more to unions than it can deliver. police can't respond to all 911 calls and that meant more crime. serious crime. >> we have seen a spike in the violent crime and in the homicides. >> stockton is falling apart. it is a horrible thing to see. >> fred siegel of the manhattan institute has written extensively about cities like stockton going broke. >> stockton is a city in the midst of terrible social breakdown. not justice cal collapse but social collapse and the two are intertwine. >> stockton in the middle of the fertile farmland of california's central valley.

also an inland seaport connected to san francisco bay. a navy base here anchored a bluent 20th century blew collar economy. but by the 1990s, the base and many of the factories were gone. stockton's signature waterfront had become a place to avoid. an johnson was on the city council then. >> the council and mayor at the time said we need to fix this problem in the heart of our city. >> with taxpayers' money and a seemingly limitless ability to issue municipal bonds stockton tried to spend its way back to prosperity. >> it was going to be remade and part of the greater bay area. >> $24 million for a minor league baseball park. $150 million for an 11,000 see the arena. 30,000 per slip for a yacht marina next door to new million

dollars town homes. >> risky and expensive projects but at the same time your city employees were getting extremely generous packages in pay and in benefits. why didn't anybody put up their hand and say wait a minute, this is insanity. >> there was a failure in leadership. they felt that the money would continue to roll in and property values would continue to rise. >> and then in 2008, the stock market crashed. real estate prices plunged. the city was suffering double digit unemployment at the same time property and sales revenue went off a cliff. when the city moved to reduce staffs and trim salary, benefit and pension packages the police union not only resisted. it launched an ad campaign that johnston look as a little short of a threat. >> they put up billboards which said welcome to the most dangerous city in california stop laying off cops. >> we wanted something to grab their attention. >> bill huddle is the vice

president of the president union. >> what about the blood splatter running tally. >> to let everyone know this would cause more crime and havoc and violence in the city. >> totally irresponsible and totally bullying. when you don't have the money you don't have the money. >> last february, stockton defaulted on $32 million in bonds. it declared bankruptcy. the biggest u.s. city to do so. meanwhile. >> we have is to stay locked up. >> folks we spoke to sense that for them life in stockton was likely to get worse. >> when we return, fixing a city that is broke. two democratic may 84s trying to get it done -- mayors trying to get it d max. this is the plan that revolves around you. introducing share everything. unlimited talk. unlimited text. and a single pool of sharable data

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this hour we have told you about cities bankrupted and

lives shattered by folly, greed and corruption. can any one turn the towns around? meet two democratic mayors trying and aair rently making progress. even cutting union pensions and benefits. >> the private sector is doing fine. where we are seeing weaknesses in the economy have to do with state and local government. >> both parties worry about cities going broke. but they seldom agree on how to fix the problem. >> because i'm sure that the president of the united states is not getting his talking points from the big government union bosses in washington. >> now, torn between the party most powerful supporters the realities of the city budgets. >> they are bumping up against

liberal interest. not enough money for basic services and roads. >> that is the case in san jose, california whose democratic mayor are chuck reid took office in 2007. >> what role did the public sector unions and their contracts really play in your fiscal crisis? >> most of our costs were driven by increasing salaries and pension benefit and those came out of the '90s in the go-go years when we had money. >> the average cost for a police officer and firefighters was $200,000. >> a year. >> what steps did you take to stop the bleeding. >> we cut everybody's pay by 10% starting with me all the way down to it all of the unions. everybody took a 10% pay cut. >> he cut city services, too. but that still left a $115 million deficit. it was time for a desperate measure. or as it became known, measure b. >> what exactly was that? >> measure b was a ballot when

slur to' lou the voters to decide whether or not we are going to ten to cut services or bring down the cost of pensions. >> it would save the city billions over time but voters had to approve it first. that was hardly a slam dunk in a county that vot voted 70% for obama in 2008. reed pushed his case hard, demonizing city workers says firefighter robert s api en. >> trying to convince the public things were bad in the city because of employees. in some cases people have been accosted in grocery stores. >> from the firefighters and police officers perspective have you heard the stories they have been verbally abused and treated with scorn? >> there have been some instances of that but the facts are difficult and the facts are we have cut services over and over and over again to fund very expensive retirement benefits. >> last june despite strong

union opposition, 70% of san jose voters, the same number that supported president obama in '08 vote the for measure b. reed got his victory the same day scott walker easily is survived a union led recall challenge. but the san jose democrat bristles at the comparison. >> lots of people tried to draw the parallel with san jose and wisconsin. it is not a good analcy. >> analogy. >> he says he wants to force the union to accept cuts while walker curtailed some of their bargaining rights. >> in san jose we negotiated with the unions hundreds of hours and they are are still an important part of what we have to deal with. >> in providence, rhode island, mayor tavares feels the same way. he took office in 2012. >> i came into office expecting the deficit just not one of the magnitude we found. >> he acted quickly, notifying

all 1934 providence teachers they could lose their jobs come summer. eventually he struck an agreement with the teachers' union that saved almost all of their jobs. and tens of millions of dollars. >> good to see you. >> nice to see you. >> he then approached the police and fire unions and got them to it agree to big cuts as well. >> he said i need your help. i can't do that without you. >> paul dowdy is president of the providence firefighters. >> if you have any solutions that you think will help please i'm open to them. i will do almost anything and that was over a sandwich. >> the unions knew they had to deal with tavares says nicole gelinas. >> they said if we don't vote for this we may get a lot worse if the city goes bankrupt. we would rather give back a little now than a bit later. >> the unions have not yet come around to that way of think back in san jose.

>> no part of measure b will be implement. >> instead, firefighters and police sued claiming measure b is unconstitutional. reed is standing firm. >> what is the one thing that keeps you up at night. >> the long-term fiscal impacts of these problems. spend the money if you have it. if you don't have it, don't spend it. >> we began this hour from this spot because wall street is the center of modern finance. but we end here on a different thought. behind me is federal hall. that is where our national government first met after the constitution was is ratified. one of the framers gravest concerns is that the nation could be profoundly weakened if debts run up by the states were not handled in a responsible way. not everyone agreed about what to do then and, yes, the issues are different today but two core ideas of the founders still apply. first, out of control debt can destroy is country's ability to

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