two terrible places, default and downgrade. >> gentlemen, thank you. that's "hardball" for now, thanks for being with us. chris will be back on monday. "the last word with lawrence o'donnell" starts right now. >> good evening from new york on this night of breaking news from the white house of yet another and perhaps the final collapse in the debt ceiling, deficit reduction negotiations. after yet another week of the president outmaneuvering the republicans, he forced the up to now most patient of republican negotiators, house speaker, john boehner, to walk away from any more negotiating sessions with the white house on a deficit reduction package. you will recall that weeks ago the president maneuvered eric cantor into walking out of the deficit reduction talks to great advantage of the white house in its perception of being willing

to compromise, willing to extend itself, willing to as the president would say frequently, bend over backwards with the negotiations with the intransigent republicans. now the republicans are walking away yet again. after receiving a phone call from house speaker john boehner, where the president learned that the speaker and the republicans would no longer negotiate with him over a deficit reduction deal, the president went to the press briefing room to give his reaction to the american people. >> i just got a call about a half hour ago from speaker boehnor, who indicated that he was going to be walking away from the negotiations that we've been engaged in here at the white house for a big deficit reduction and debt reduction package. we were offering a deal that caused for as much discretionary savings as the gang of six.

we were calling for taxes that were less than what the gang of six had proposed. and we had -- we were calling for modifications to entitlement programs. this was an extraordinarily fair deal. if it was unbalanced, it was unbalanced in the direction of not enough revenue. nancy pelosi, harry reid, the democratic leadership, they sure did not like the plan that we were proposing to boehnor, but they were at least willing to engage in a conversation because they understood how important it is for us to actually solve this problem. and so far, i have not seen the capacity of the house republicans in particular to make those tough decisions. what a lot of the american people are so disappointed by is this sense that all the talk

about responsibility, all the talk about the next generation, all the talk about making sacrifices, that when it comes to actually doing something difficult, folks walk away. here's what we're going to do. we have now run out of time. i told speaker boehnor, i've told democratic leader, nancy pelosi, i've told harry reid, and i've told mitch mcconnell, i want them here at 11:00 tomorrow. we have run out of time, and they are going to have to explain to me how it is that we are going to avoid default. and they can come up with any plans that they want and bring them up here, and we will work on them. the only bottom line that i have is that we have to extend this debt ceiling through the next election. into 2013. >> now the only bottom line is

extending the debt ceiling, and president obama said he would reluctantly be willing to accept what he had asked for from the start, a clean debt ceiling increase through 2013. this is the president now saying he is very, very reluctantly accepting what he set out to get in the first place. joining me now from the white house, kristen welker. do we have kristen welker from the white house? >> hi, there, lawrence. >> hi, there. one of the interesting things the president offered without anyone pushing him to do it is to say i will give you the tick tok. i'm going to give you all the paperwork that shows exactly how this deal is negotiated. we now have a disagreement between the president and speaker boehnor. mr. boehnor saying they had a deal for $800 billion in revenue increases, and the the last

minute the president tried to change that to take it to $1.2. the tick tock, the paperwork will tell us who's telling the truth about that. >> that's right, lawrence, a lot of people are anxiously awaiting the paperwork. senior white house officials just briefed us on more reasons why these talks may have broken down. to your point, both sides agreed toer $800 billion in new tax revenue. let the bush tax g cuts expire, then the issue of extra $400 billion. speaker boehnor said that was a new figure, senior white house officials saying look, this was always in discussion from the first time the president and speaker boehnor were talking about doing something big. triggers to make sure the tax cuts actually did take effect, because remember, they were not going to take effect until 2013, which would require congress to come back to the table.

they wanted triggers to make sure they both came back to the table. one of the triggers republicans wanted, according to senior white house officials, was to get rid of the individual mandate that's part of the health care law. and democrats couldn't come to the table with that. they didn't think it should be part of the negotiations. finally, the talks broke down over how deep the cuts would be in terms of entitlements. one of the big points of contention were over medicaid. those were the three big sticking points. one more interesting points, though, barack obama called speaker boehnor last night, didn't get a response. got an e-mail today saying he'll hear from the speaker at 5:30. the white house called speaker boehnor, can we talk now, the reaction was no, you'll hear back at 5:30. it was at 5:30 speaker boehnor

called to let the president know he was pulling out of negotiations. as you heard him there in the comments this evening, the president seemed quite upset. we've heard him speak a lot throughout the entire process. it's safe to say tonight was arguably some of his most heated rhetoric. >> it's heated if you believe it. it's heated if you believe it's somehow politically unprofitable for him to be coming up with absolutely nothing right now. in other words, he's getting to the point now where he's asking for exactly what he asked for at the beginning of the process, which is a clean debt ceiling increase, and he's not suggesting himself politically to embracing a legislative package, that as he put it earlier in the day, would have pain for everyone. this is not something that presidents want to do in reelection years. his performance skills at upset with the republicans are, obviously, very refined. he's been able to rehearse these with the eric cantor walkout.

he did twice refer to john boehner in his statement today, in his press conference this evening, as walking out. his mission tonight clearly in that room was to put the pressure on the republicans for having walked out. he's trying to make them appear to be the irresponsible party here. >> that's right. he's putting the pressure squarely on their shoulders as we have been reporting, he has called congressional leaders of both parties back to the white house tomorrow at 11:00. and to continue to put that pressure on, lawrence, he discussed the fact that look, the markets are watching this. earlier this week we saw the markets respond favorably when there was news of a possible deal, so there's concern of what's going to happen on monday. president obama addressed the issue, they need to get something done, they need to get something done soon. again, you heard the president talk about this grand bargain all along. tonight it seems there's little

hope for a grand bargain. the president, himself, saying he'll increase the debt limit through 2013. >> i've been saying for a couple of weeks there was no hope for a grand bargain. this was all a mirage. each side had a specific thing they wanted to do, the other side wouldn't do it, so they were going to be stuck on taxes from the start. to my eye, it was very easy for president obama to appear, pretend even, if you will, that he was willing to negotiate all of these things that would be difficult for democrats as long as he was demanding this one thing that he absolutely knew from the start was impossible for republicans. and in the negotiation where nothing's agreed to until everything's agreed to, the president wasn't agreeing to anything. >> that's right. nothing had been agreed to. you're absolutely right. there was never really a deal here on the table, something that was signed, sealed, and delivered. and to your point about how much

friction there was in both parties earlier today, democrats were really in an up roar over this idea the president might give in on entitlements without a very hard guarantee about when those tax reforms were going to go into effect. then on the republican side, you have a lot of pressure, especially amongst tea party freshman, who by the way a few days ago gathered outside of the white house, staged an impromptu news conference and said they didn't believe the august 2nd deadline is a real deadline. they don't believe timothy geithner is being honest. so those are some of the sort of worrying parties, the differing fractions we're dealing with here. but again, a huge back and forth, and we are again at a stale mate, which is where we've been every day. >> kristen welker at the white house. get back in and get that tick tock from them. we need it as soon as possible.

joining me now, andrea mitchell. andrea, this is one of those news nights where it feels like the news is breaking on all sides at once, the president comes out with his news conference, john boehner comes out and answers it less than an hour later. the boehnor news conference was fascinated. it seemed at the beginning he didn't want to specify a number. he said we agreed to a number on revenues. then later he said it was $800 billion in revenue increases that he and eric cantor agreed to, they then claim the president, having reached that agreement with them then asked for a bigger revenue increase, which they absolutely couldn't do. that would look like, if that's the way it played out, that would look like in the end the president making sure they wouldn't get a deal. >> we're going to have to see exactly what chris in his brief on and what we get out of the

white house. but seems to me all sides, both sides, all sides, the president saying it was taxes, no-tax pledge. more on that that in a moment. also, of course, boehnor saying the white house was moving the goal post, so you have both sides. i think what has been lost clearly is a lot of trust. we've had a lot of sort of fantasy in this town about the emerging relationship between the president and john boehner and was it forged from the golf course or over cigarettes, secret cigarettes. one of them claims not to be smoking any longer. but the bottom line is, as the speaker said, they are from two worlds, two parties. when i go home, people talk to me about spending cuts and is suggesting the president is in the tax increase mode. the bottom line is also we've had this whole fandango where

tax cuts could be repealed. that's a big part of it. and both sides having to agree what we've seen from grover norquist and that wing of the party, and you have 246 house members that have signed the no-tax pledge. a handful of republicans that the speaker could not deliver his caucus. i'm not at all sure the president could have delivered not only the entitlement cuts, but the triggers. it was all about the triggers, and the triggers in one side was if the tax increases or tax reform and spending cuts didn't materialize by 2013, then the bush tax cuts would have to be extended and have to give up the mandate on health care. when you think about the political price this president said for that mandate, to give that up at that stage, that was something they were not going to be able to sell. i spoke to barney frank and he

was livid. >> i think you're right, andrea, and one of the indicators of that on the democratic side is they never had caucus meetings. they never brought anything to caucus meetings in the senate or house to say look, this is the general shape of what you might be asked to vote on in a couple of days. that means there isn't anything serious being discussed, but what the president has won successfully all the way through here is the perception, especially as the polls indicate, the perception among independent voters and swing voters that he is the one that's trying to cooperate. he's the one that's trying to find a bipartisan partnership and he has very successfully, at the same time he's won the perception of being the reasonable man, he has very successfully portrayed the republicans at the same time as being unreasonable, and they always do him the favor of literally walking out as now john boehner has done. >> the timing is not an accident either.

the fact there were four telephone calls from the white house, the president trying to reach john boehner and being told we'll get back to you 5:30. that's friday night. a great man, great writer and producer referred to friday night at the white house "take out the trash night." that's exactly what's going on here. late as possible, jam the president so he'd not be able to spin it his way, and, of course, he also managed to win that round, because he got out first and boehnor was the follow-up. the president saying that there had been attempts to reach john boehner and clearly indicating there had been some rupture in this personal relationship, and boehnor, the speaker used the term the trust had not been irreparably damaged. >> hard to compete with a president who's good at communicates at the microphone. you're never going to get the

same kind of treatment, boehnor can't expect it, and the perception of who's reasonable and who wins this round is determined tonight and even though the tick tock will term who won, but the perception is won tonight. andrea mitchell, thank you very much for joining me tonight. up next, chris van holland worried on msnbc today that the president would compromise too much. he joins me. and how far are republicans willing to go to protect the top income earners? nick christophe with the times is here. in financial transactions... on devices... in social interactions... and applications in the cloud. some companies are worried. some, not so much. thanks to a network that secures it all and knows what to keep in, and what to keep out. outsmart the threats. see how at cisco.com

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and my pharmacist told me it's the only otc pain patch approved for sale using the same rigorous clinical testing that's required for prescription pain medications. proven. powerful. safe. salonpas. there was an agreement on some additional revenues until yesterday when the president demanded some $400 billion more, which was going to be nothing more than a tax increase on the american people. and i can tell you leader cantor and i were very disappointed in this call for higher revenue. >> nbc's kelly o'donnell was with the speaker as he told the press he was walking away before he called the president. kelly joins us from the capitol.

there's a big discrepancy on how this week unfolded. walk us through that. the speaker came out and said they had an agreement at $800 billion in revenue increases, which is shocking. i think it's the shocking news of the night that he got himself and eric cantor into an agreement to raise tax revenue by $800 billion, and then the president wanted to raise it even more. >> well, i can give you a sense of how this unfolded here today. i was over in the speaker's office, he has a group of offices. he walked into a room, there were reporters there, and we asked the speaker what was up, and he said you're a bit early. kind of quiet reference of the fact he was about to call the president. he left the room. we had asked him, is this vote the conclusion of whatever happens here going to be tougher than the tarp vote, that was so politically damaging, he said not yet. the speaker went off to call the

president, we were given insight on how this went down. he said a week ago there was discussion with the white house with broad outlines of what they'd do, a two-step process, they said, sunday there were more discussions, now, republicans said they had had an agreement to change the tax code where you'd had a shrinking of the number of rates so that it would be fewer rates at a lower rate, but expanding how many kinds of income could be taxed. so you would have an increase in taxes, but it would change the formula. now, republicans say the white house agreed to their numbers, agreed to the principles on sunday, then they were supposed to come back with specifics on paper monday. republicans say they waited monday and got nothing. they called again, still nothing. on tuesday, republicans say they believe the intervening event, that's the word they used, was the kind of surfacing of the gang of six again, which had a different formulation, which was working on its own track. republicans say after that went

public and the president sort of embraced it, that the white house then changed what it wanted and wanted to change the formula. when you and andrea were talking about the individual mandate, the republican leadership said they wanted that on the table knowing it was politically important for the president in order to keep democrats to stick to the bargain if republicans were going to have to raise tax rates on the highest earners. they were trying to even out those two things so that if either side tripped, you'd be paying a dear political price. they were trying to get as much as that parody if you would. that's according to republicans. so this started to fall apart. you mention the speaker had not returned the president's call, there was a lot of jockeying. the president was prepared to go for the higher taxes by changing the formula, but did not believe they could sell keeping the bush tax rates for the highest

earners, having those expire so you'd have them job creators paying a bigger amount down the line. that's where it broke down, on taxes and to some degree on spending. what the republican leadership will say is the president was willing to pay a tough political price with cuts to things like medicare, medicaid. they were talking about changing for the eligibility age and a lot of the formulations you know so well, lawrence, so this was a heated thing. the tone of the speaker today was certainly respect of the for the president and walked away from the talks but said he'd be at the white house tomorrow. >> kelly o'donnell, thanks so much for joining us. joining me now, chris van hollen, you were worried today. >> i was worried about the reports yesterday that came out that the white house was not prepared to do a balanced

approach in the sense they were going to do $3 trillion in cuts and no revenue, but the white house was quick to put to rest those reports, and, in fact, despite the fact a lot of our democratic colleagues in the senate got understandably worried, those assurances from the white house were clear and were consistent entirely with what the president says the deal was. which he has said, you need balance, he's prepared to do at least $3 in cuts for every $1 in revenue, but you need to have a revenue piece that's locked in and it's real. >> congressman, i never flinched. i never worried this white house was going to do so crazy as to enter a big deal that did not include revenue, and did not include revenue at least the ratio the president was insisting on. but the deal the president outlined tonight in his news conference, which he said was the deal they agreed to involved $1.2 trillion in revenue

increases. that's 50% more than what speaker boehnor said they'd agreed to, which is $800 billion. and it is not the one to three ratio. it's actually closer to one to one. in the deal the president described, there was $1.6 trillion in spending cuts and $1.2 in tax revenue increases. that was a deal that was impossible for the republicans to accept. that would have violated what they said they were negotiating on in the first place. >> well, a couple things, lawrence. they were adopting the counting rules that applied in simpson bowels, number one, that's been consistent from the beginning. number two, everything i heard with respect to these revenue negotiations which was consistent with the president said. but in addition to the magnitude of the revenue, a very fundamental issue has been guaranteeing it would happen,

the enforcement issue, the issue that got a lot of people nervous yesterday because of the reports the revenue would only come on the basis of a handshake, and i think as we piece all this together, we're going to find that it was a big part of this was the republicans at the end of the day not willing to provide any guarantees that if the revenue didn't come through the normal process, through a tax reform process, that they would still make good on that promise, and that had to be done through the legislative process, because awe you know, you want to lock all that in right from the beginning. >> well, how much reality was there to the democrats and the president's negotiating position if the president never sent any representative to a house democratic caucus or a senate democratic caucus to say to you and your entire caucus, here's the general shape of what we might be asking you to vote on in a few days. it seems to me if that never

happened, the white house was never really serious about closing a deal. >> well, lawrence, in fact, there were representatives to the white house that came before our caucuses over a period of time. in addition to that fact, our members in caucus were made aware of the general outlines of the discussion, that the white house was following, you saw what happened in the senate just the other day when there was a lot of concern because of that information. so i think people were very well aware. that doesn't mean that they were not nervous or worried, but they were prepared to give the president some running room, and what happened at the end of the day was, i think, republicans in their caucus were ultimately not willing to guarantee this revenue piece. it was interesting to hear speaker boehnor say, you know, the $400 billion in revenue was somehow going to be this jobs killing revenue, but the $800 billion was not.

i don't know how you square those two things. at the end of the day, the reality was the president was prepared to do, i think, math will show, $3 in cuts for $1 in revenue. and that the breaking point was that in the republican caucus, they just couldn't ultimately provide that iron-clad guarantee on revenue. but we will find out. >> i don't know, congressman. i see the president get a deal, an outcome, i should say, that is the best political outcome he could possibly get, which is the perception of him, as the only reasonable man, the one who is willing to compromise and go against his party if necessary on some very difficult things and he fought and fought and fought and pushed and pushed and pushed and wanted the big deal even after eric cantor want walked out he wanted a big deal, even after the break in negotiations, he wanted the big deal, only one that wanted the

big deal, pushed it to the end, didn't get the big deal, but he got the perception he wanted. now he doesn't have to deal with any of the political consequences of the big deal. that looks like a big win for the president, and it looks like a perfectly manipulated process by the president from beginning to end. >> lawrence, i really don't think this was stage craft. in this case, the perception is the reality, in other words, the president was willing to make the tough decisions. i was part of the biden negotiations, i remember when talk turned to trying to do something serious on the health care issue, we said you need to talk about these issues on the revenue side with the same degree of seriousness. that's when they walked out of those discussions. same thing, when they got to talking about really making sure the revenues were there at the end of the day, the speaker's caucus left him.

look, i think what we'll find out at the end of the day here is that there was no enforceability to the republican's part of the bargain, but we will see, because at the end of the day, and this is the whole grover norquist story and the fact that when it comes down to it, our republican colleagues are more worried about grover norquist than the deficit, because closing those tax loop holes, that violated the norquist pledge. now, having the top rates go back to where they were in the clinton administration, as you just discussed in the previous segment, has been something the republicans hated, and so the question was how do you enforce this deal, and that is part of what it broke down on. you can understand the president and the white house wanted to make sure once they were willing to make these tough decisions on the cut side that the end of the day the revenue would be there,

otherwise they'd seem to be total chumps, and that was why you had that reaction just yesterday when the false reports were coming out this was all cuts and no revenue. >> that's what i think is so brilliant about the president's orchestration, he did reveal the republicans are much more interested in protecting the top end of income tax payers than they are interested in deficit reduction. and deficit reduction, obviously, is going to be a major campaign issue and this whole process has revealed what the republican's priorities are. deficit reduction is a distant cousin to the most important mission, protecting the top tax payers. >> no doubt about that. that has now been demonstrated on all three rounds when the republicans walked out. at each stage, that was the breaking point. that's why i don't think this is stage craft on the behalf of the

president. if they were really willing to make that an enforceable deal, he was ready to make other tough decisions, but at the end of the day they couldn't do it because they are protecting special interest loop holes and the folks at the top. let me make this point, lawrence, they keep talking about this hurting small businesses. only 3% of all businesses would be affected by the president's proposal and many of those are very big businesses like kkr, price water house, good businesses, but certainly not small. >> congressman chris van hollen, thanks very much for joining us tonight. coming up, cuts to medicare and aide to single mothers and retention of tax loop holes.

ordinary folks, who are struggling every day, and they know they are getting a raw deal. and they are mad at everybody about it. they are mad at democrats and they are mad at republicans because they know somehow, no matter how hard they work, they don't seem to be able to keep up. you know, for us not to be keeping those folks in mind

every single day, when we're up here, for us to be more worried about what some funder says or some talk radio show host says or what some columnist says or what pledge we signed back when we were trying to run or worrying about having a primary fight, for us to be thinking in those terms instead of thinking about those folks is inexcusable. >> joining me now, two-time pulitzer prize winning columnist, nick kristof. thank you for joining us. >> my pleasure. >> what we saw is a brilliantly effective appearance for the president in his reelection campaign, which is, people should remember, underway. not that he was intending it to be that, but he has clearly isolated the republican party now as the party that is more interested in protecting the tax

code and reducing it, especially at the top end, than in deficit reduction. the issue they like to claim is their big concern, we've really seen it isn't. it's really protecting the tax code for the rich. >> i think that, indeed, you're right, an awful lot of what is motivating republicans is the notion of starving the beast. this is the chance to just make sure there's no more revenue coming into government, but i also think that there are a certain number of republicans who really are concerned about debt and that, as a result, they may be willing to drive the whole nation over the cliff in terms of preventing the debt ceiling of being raised and the great paradox is that will result in higher interest costst and more debt. there's an element of calculation on their part. >> was it your sense that up to now, up to tonight when actually

the president went into that particular passage of his statement that what he called the working stiffs out there, the ordinary folk, were ignored in this budget negotiation that had gone on all year. there was plenty of concern in both directions of the income tax bracket, there was plenty of interest in how much medical inflation is building into medicare, but i didn't hear until the president's statement tonight a concern for the ordinary citizen out there and how this budget negotiation would affect them. >> oh, they've absolutely been thrown overboard in the whole budget process, one of the things that just appalls me. a few months ago in the budget negotiations we managed to eliminate all the major ill lit raty programs america has. more broadly, look at the fact we're in the worst down turn in

70 years, we have historically high unemployment rates, yet the issue on the agenda isn't unemployment and how to address that, rather, it's long-term debt and what to do about, say, the carried income tax loop hole for billionaires. the republicans, i think, have been very successful of driving that narrative, and that's a tribute of the wisdom of which they've crafted it, and also some fault lies within the white house and those of us in the news media. >> let's listen to what the president said tonight about millionaires and billionaires. >> we think it's important to make sure that whatever additional revenue is in there covers the amount of money that's being taken out of entitlement programs. that's only fair. if i'm saying to future recipients of social security or medicare that you're going to have to make some adjustments,

it's important we're also willing to make some adjustments when it comes to corporate jet owners or oil and gas producers or people who are making millions or billions of dollars. >> your column the other day was called bonuses for billionaires. if the president succeeded and got his way with the last tax pieces he was trying to get in negotiations, this would have been the first negative outcome for millionaires and billionaires in quite awhile, wouldn't it? >> yeah, it would have been. we have to remember the back drop here. right now we're in a situation that is exemplified by two data points that drive me wild. one is the four wealthiest americans earn more in assets than the bottom 60% of americans and the other is the top 1% of americans own more than the top

$90%. this is historic equality, in a time if you look at measures of enequality, we are now more unequal in the u.s. than a lot of the traditional banana republics. so it seems to be worried about more how to extend unemployment benefits and a little less concerned about, say, writeoffs for private jets. >> nick kristof, thank you very much for joining us tonight. >> my pleasure. >> coming up, our panel weighs in on tonight's breaking news. david corn, richard wolffe, and david frum.

what had become apparent was that speaker boehnor had some difficulty in his caucus. a group of his caucus that actually think default would be okay. and have said they would not vote for increasing the debt ceiling under any circumstances. >> joining me now, richard wolffe, also david corn, and

washington bureau chief and former speech writer for president george w. bush and founder of frumforum.com, david frum. richard wolffe, i've been suggesting for the last couple of weeks there were just too many incentives to get nothing here and that nothing was a very likely outcome under the circumstance, the president has successfully portrayed himself as the reasonable man, willing to make compromises that were very painful for him, and in the end he doesn't have to make any painful compromises at all because john boehner walks out, the deal's blown up, there's the president, the last man standing asking to be perceived as the most reasonable man. i think he's won that perception. how does it look to you? >> very cynical and turns out quite realistic of you to think that way. the white house has planned this out for many months. not just weeks here. first off, they wanted to do the

deal, they wanted to be reasonable, not just look reasonable, they wanted to reach out and find the common ground and deal with deficits, but in the event of failure, which they expected would happen, this was the most favorable outcome for them, which is to test the proposition that republicans had laid out that they were the serious party about deficits, to see whether they could have any kind of leadership, be reasonable. there's one more hoop to jump through in terms of responsibility, but yes, in terms of being the grown-up in the room, he's there. if the deal had gone through, i would argue being a grown-up in the room doesn't help you because irresponsible children know there's always someone to bail them out. and in this case, the collapse of the bigger deal actually in some short-term, and it is just a short-term aspect, helps the president long-term, of course, helps all of us. >> david corn, was getting the deal the right thing to do for

the country? call me old fashioned, but i'm finding it hard to see yes, cutting spending during a weak recovery is good for the government to do. >> i would think the obama white house found itself cornered by deficit fever. it's quite clear that at this point in time, and larry summers was blogging about this the other day, this is not the time to contract government spending when the economy is fraj yiel and anemic, but the white house has lost the public debate and hasn't found a way to punch back. it was their strategy to accept some of the premises that we have to deal with deficit and debt immediately rather than down the road to get street cr derks d, credibility, to extend the payroll tax and do stimlative measures for the next six months to year and a half.

i agree with richard. if there was a deal to be had, i think the president was eager and drawn to the idea of making a difficult compromise. i mean, right now, he gets the benefit of saying well, i wanted to do that, i was sincere, and, you know, it's what they used to say about bill clinton sometimes, if you can fake sincerity and do it well, i think he was sincere, it's coming across having political benefits for that and they are still going to figure out what to do regarding deficits and debt once they get past the debt ceiling issue. >> my experience forbids me from believing a politician is willing to make the difficult deal until the politician makes the difficult deal. call me old fashioned on that one too. david frum, are you shocked by what i consider the giant news of the evening, the real news here. i am not shocked or surprised by

the collapse of the talks, but john boehner came out and said in public that he and eric cantor agreed to $800 billion in tax revenue increases. i am stunned that eric cantor went along with that. >> well, we don't know what they were, but we have some hints they are not the kind of tax increases that headline -- that go by the name in the headlines. they look like stronger enforcement activity, perhaps efforts to bring cash deposits that are held overseas back into the united states where they would be subject to tax. he used the word revenue over and over again, not tax, certainly not tax rates, and i think what the president did was change the discussion at the last possible moment and that maybe lent credence that the president was bluffing all along that having got $800 and now upping the ante and asking for

more because i want to drive you to no. >> richard wolffe, back of the envelope calculations as the president spoke. he said they reached an agreement on $1 trillion in discretionary spending cuts and an extra $650 billion in cuts to medicare, medicaid, and social security, he said. he then -- did not, by the way, did not hit current beneficiaries of those programs, so there you have $1.6 trillion in spending cuts matched by, in the president's description, $1.2 trillion in tax revenue increases. now, that is not the ratio that they had been talking about trying to get with the republicans. that's a much better ratio than what they'd been trying to get with the republicans on taxes. >> right, although we pointed out it was less than the gang of six was recommending tax revenues. >> richard, what did the gang of six have to do with anything?

why was he inserting the gang of six in his announcement tonight as if the gang of six was in any way part of his discussions and baseline discussions with john boehner? >> because it was a pre-buttal to somehow when the gang of six came on the scene, the president moved the goal post, so the president was saying yeah, i moved away from that position, i moved towards the republican position. these are funny numbers. let's face it. it's not a trillion this year, it's spread out over time, what's the baseline here, what, as david frum points out, are we really talking about? in the end if they wanted to do this deal they could have done it. it comes down to both the question of leadership that the president and the speaker were both indicating, but also the politics of how this gets played out from here. the talks are gone. you have the speaker talking about process, talking about who left the table first and where the next steps are.

you have the president talking about the working folks in america who are struggling to make things meet. that's election rhetoric around a complex subject. we're away from the details of the negotiations now. >> david corn, the president sounded convincing to me in his press conference that he volunteered to release the tick tock, the paperwork of how this unfolded. now, in those negotiations, the treasury staff issues every day at the end of negotiations, a spreadsheet summery of how this would look like. that's what the republicans say they were waiting for and it never came. if that's true, there isn't a real excuse for that, because those are generatable fairly quickly, but do you think we'll get to the point where the tick tock, paperwork from the white house, will give us some sense of who's telling the truth about

how this tax piece of it all broke down? >> well, i'm not sure, tick tocks come in all different forms, i get them every day, sometimes they are more general and not detailed and they support the premise of the side generating the tick tock. boehnor gave us -- we heard kelly o'donnell giving the gop tick tocks, so there will be lots of tick tocks coming out. you have to step back, lawrence, and not get caught up in the tick tock. we'll be interested it, but look at the big picture. the big picture here is the president had decided to play on the republican field of deficits, spending cuts, and only, you know, somehow squeezing revenues in at the end and intermittently. the republicans -- i just got a speak from speaker boehnor, as did everyone else, our position is no tax hikes.

we won't lift the debt ceiling with tax hikes, then he walks away. so listen, you can keep talking. if there's a $1.2 trillion versus $800 billion difference, it seems to me that's still negotiatable. there's other things that came up, triggers and so on, but we have -- how many days left before the august 2nd deadline? i don't understand why boehnor finds it politically to his advantage to leave the table rather than complain publicly, but stay in there. >> richard wolffe, david corn, david frum, thank you all for joining us tonight. >> thanks. >> we will continue to learn more details about how and when this deal broke down and reactions from all sides are still coming. stay with us. our breaking news coverage will continue right after this. introducing the schwab mobile app.

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