this sunday, this sunday, the final showdown of the debt ceiling two days before a potential u.s. default. as wall street braces for a market shock, will congress and the president compromise before the deadline? and also, how much more can the economy take? >> the power to solve this is in our hands, and on a day when we have been reminded how fragile the economy already is, this is one burden that we can lift ourselves. >> but house republicans dig in. >> i stuck my neck out. >> blaming the white house and democrats for failing to lead. >> and it is time for the administration and time for our colleagues across the aisle, put something on the table. tell us where you are. >> this morning, the political

fight, the end game, and the economic fallout. with us the president's senior adviser david plouffe, and then the latest on the negotiations in the senate with senator john thune, republican, south dakota, and senator claire mccaskill, democrat of missouri. and finally the political round table. our focus, the political landscape and the debt crisis, and is our leadership bankrupt, and what high economic stakes mean to you. with us, nbc news special correspondent tom brokaw, and former democratic governor of michigan, jennifer granholm, and host of cnbc's "mad money" jim cramer, and also freshman republican congressman raoul labrador. from nbc news in washington, "meet the press with david gregory." good morn, and still unfolding story here in

washington, the battle of raising the debt ceiling has entered the final hours now and after weeks of negotiations and pointed political debate, some say that plans could emerge as early as today. the senate majority leader harry reid postponed an overnight vote on his own debt measure and announced that the senate would instead reconvene at noon today and hold off to the vote at 1:00 p.m. eastern time. >> there are many elements to be finalized, many elements to be finalized. and there's still a distance to go before any arrangement can be completed. but i believe that we should give everyone as much room as possible to do their work. >> signs of progress echoed by the republican republican leader mitch mcconnell. >> our country is not going to default for the first time in history. that is not going to happen. we now have, i think, a level of seriousness with the right people at the table that we needed, and thought we had as

the speaker indicated last weekend. we are going to get a result. >> i think it is pretty clear and should be clear to all of you that senator mcconnell and i believe that we are going to be able to come to some agreement to end this crisis as soon as possible. >> to the white house now, the chief white house correspondent chuck todd is standing by. chuck, how close? >> well, david, they are very close. they have agreed on if framework as far as we know. and the framework is this, the agreement that the debt ceiling will be raised past 2012. the agreement that we are only talking about cuts only. about $1 2rtrillion up front in the first six months and then $1.8 trillion worth of cuts for the rest of 2012. what had been the sticking point for the last three weeks had been this issue of an enforcement mechanism, and what will force congress to do these cuts? republicans wanted another vote on the debt limit, but that is not something that the white house wanted. so what is agreed to is an across the board cut so that in the super committee that is

created cannot come up with the cuts, there is an across the board cut that includes medicare and include the pentagon and it will be a tough spending cut that will start in 2013 and one that is painful for both parties, david. >> the sticking point is still the house of representatives. they pass a different sort of bill and compromise is not looking good there, and that is a trickier vote. how is it there? >> well, the trickier part is that the house republicans feel good about the deal at this point and the republicans think that they can get a lot of votes and perhaps 180 to 200 republicans and therefore you'd only need 30 or 40 democrats so that they feel good about, but david, we are up against a legislative clock and the default clock, so don't be surprised if the there is a temporary extension if necessary to get the final details done, because they are not done with so some of the details and some democrats are not happy. >> all right. chuck todd, thank you very much from the white house north lawn. i'm joined now by white house

adviser david plouffe. welcome. >> thank you. >> it is overly rosey or that close? h. >> well, we don't have a deal and as chuck todd just reported on there is a legislative clock and default clock so the hours are ticking. what is clear is that there is a deficit reduction on tuesday, and something that the parties agree about $1 trillion of deficit reduction and the second stage is trickier of the entitlement reform and tax reform which the super committee will be appointed to do. and they have top a point members to the committee to drive to yes and get out of the comfort zone. >> let me be clear, what is the president going to accept adds a deal? >> well, first of all, it is clear that the economy is not as strong as any of us would like it to be. this debt ceiling cloud has harmed our economy. why on earth would we want to go through this again in a few short months from fou? >> so it has to be through 2012?

>> for the economy, yes. number two, we want to make sure if there is an enforcement mechanism and again the committee is not charged with doing spending cuts only, the committee is chargeded with looking at the entire deficit reduction problem and looking at things like tax reform and revenue. you want something to compel the committee to act. that was part of the president's approach that he laid out to the country a few mons ago that there is a debt cap to enforce action and you want something to compel both parties to act. because i do think that there is a lot of pressure h lately on the committee to produce something that congress can vote on. >> but a lot of people watching this have to be wondering, what is going on today? what is the fighting about? so, first stage, you cut government spending over a ten-year period to raise the debt ceiling, and part of that is a second stage, and another committee in washington that looks like really making the hard decisions, and if they are making the hard decisions something forces congress' hand, and so again, what will the president accept as a consequence to force the

congress' hand? >> well, again, it might be more negotiable to negotiate this with you, but i can't get into a lot of details, but first, you have to agree enob the spending cuts and the process for the committee and make sure it is essential to get the debt ceiling extended, and then make sure that whatever enforcement mechanism is number one one, if were triggered the country could live with, but strong enough to compel folks to act. you will see that this is a healthy debate. i think that the uncan be tcoun learned a lot about our debt and deficit, and where the president stands is where the american people stand. if we are going to do another set of debt ceiling negotiations, it has to be a -- >> well, there is no tax increases in this. the president said it had to have tax increase and had to be balanced and that is not in the deal. >> well, this committee is charged with coming up with additional debt reduction and there is no way to do it without smart entitlement reform and tax

reform. >> so, you only get to potential tax increases as part of a second stage of spending cuts that a committee has to agree to. >> well, the first stage is clear in the first stage what we are going to get is an extension of the debt ceiling and get the first set of spending cuts over $1 trillion and then the committee chargeded with reporting out hopefully a balanced budget reduction. >> what about this balanced budget committee, and you talk about a super committee, and 17 months ago the president convened a committee of the proposals not acted on by president and congress and now another committee and nobody is yet making the hard choices about two-thirds of the budget, which is entitlement spending. so what is healthy about this debate? >> well, it is certainly not been a healthy debate in the short term and the american people are sitting back and saying, you know, i'm going through tough things in my life, and these folks are sitting there arguing with each other

and not compromising to do tough things particularly the house republicans this week. but i would say that the president laid out months ago a $4 trillion debt reduction plan and what we were striving to do with the speaker of the house is a big deficit reduction package that would not have a super committee, but we would have done it right now, and that is impossible. the speaker of the house pulled by the right wing of the party walked away from that, but the president is committed over the next few months as members of congress need to be as well that we need to finish the job here and the way to finish that job is to have a balanced deficit reduction package that does not harm the economy. >> let me ask you some other pressing matters. i have spoken to top figures on wall street who say that this is a code red day. all hands on deck, preparing for a market shock as early as tomorrow. what is your message? what is the president's message to investors around the globe at this moment? >> well, i think that it is that we have to get this solved.

today is a critical day, and we have to give confidence there is a pathway to reduce the debt ceiling, and don't underestimate that debt reduction is an important part of this. >> that is not a serious message to investors and should they be swajed by that? >> well, the only way to sway investors and the rest of the world and most importantly the american people is to solve this problem. i think that in the coming hours and we are literally talking about in the coming hours, it is incumbent on the congressional leaders to compromise the last bit so that we can have a deal that again the house republicans mysteriously and i don't know anyone who watches this thinks it is a good idea wanted us to go through the whole three-ring circus in four or five months and we won't do it because it is bad for the economy. >> if we have a default, who is paid first and how does the treasury make that decision? gel w well, at the approapriate point the treasury department would lay it out but the focus is to solve this problem and if we

don't reach a deal, then the treasury as to report how this would happen. >> chairman mullen is in afghanistan and told the troops fighting there, he didn't know the answer to when and whether they would get paid. will the president insist if there is a default that troops get paid? >> again, the treasury department will -- and by the way, what admiral mullen talked about is outrageous that here we are 60 hours away from the united states of america defaulting for the first time potentially, and the reason that we are here is particularly republicans in the house, but republicans generally have been unwilling to compromise, so at the appropriate point if we get to that point, the treasury department will lay out clearly for american people and most importantly for the investors and the folks around the world exactly what would happen if we default. >> i want to be clear on what the president would accept in terms of cuts in the first stage or the second stage, in other words, that what is called in washington a trigger which means whatever forces congress' hands if they don't continue the cut

government spending something would happen. we know that the president is open to tax increases automatically and would he also accept a deal to cut social security benefits or medicare benefits if congress does not act? >> well, first of all, when you say open to the tax increases, remember what the president is for. closing tax loopholes, making sure that millionaires and billionaires and large corporations through tax reform contribute. what you see the republican party largely wanting to do is to ask the senior citizens and the college students an all of the middle-class to pay the freight here and people are outraged by that, and everyone has to do their part here. so in deficit reduction, and again, the next stage and the first stage is domestic cutting in spending of defense and domestic spending. not easy, but first stage. the next stage is discussion in congress about tax reform and entitlement reform and in our view things like social security and medicaid, you know, they can't be part of the solution here, unless you have a balanced

package that includes tax reform. >> so we are at a stalemate when it comes to that in terms of the second stage. another option that has been talked about and there has been pressure from the democrats ist the validity of the public debt of the united states authorized by law cannot be questioned and the president can unilaterally raise the debt ceiling. will the president do that? >> we have been asked this question a lot, and as you come to the closing hours of the crisis, a lot of people are suggesting off ramps, but there is no off ramps here. >> the 14th amendment not an option? >> we have looked at that, and the only way out of this is for con congress to act, and the debt ceiling has been raised dozens of times historically, and it should not take a constitutional crisis for us to pay the bills on the credit card that congress has racked up. >> and the backdrop for this, as

you know is an economy in trouble. the "wall street journal" described it this way in terms of the economic recovery. this was yesterday. the government on friday reported that the economy grew at a rate of 1.3% in the second quarter, failing to bounce back from knocks earlier in the year. estimates of first-quarter growth were revised down to 0.4%, and as a result the pace of economic recovery has been one of the worst since world war ii. and that is is particularly bad news as the economy confronts a threat of default on the nation's debt. is the obama recovery much more like a bust? >> no. what also was reported this week as you went back three years and the depth of the recession that the president inherited was more severe than anyone realized and the worst since fdr inherited the depression. so we had a long, you know, we had growth in negative six and seven and terrible. so, what we have to do is now from those terrible depths, we is made progress and continue to see some positive job growth,

but not nearly as rapid enough, so first of all this debt ceiling cloud, it is not just harm to investors, but clear it is harming consumer confidence and business confidence, small and large, and we have to remove the cloud. secondly, congress can do some things right now. we can pass trade deals to help us compete. we can pass a patent reform so that the innovators have an easier time to get the ideas to market. we can work together to build roads and bridges and put construction workers back to work. we have a payroll tax looming by the way that would expire next year which is a $1,000 tax increase on every american if we don't pass it. so we have to get through the debt ceiling for a lot of reasons, but the focus here in washington has to centrally go back to how to create jobs and how the grow the economy. >> before you go, you are the president's top political adviser, and as you look at what washington has done, essentially a failure to govern, do you now think that a third party is a viable alternative in the 2012 race? >> well, that is up to the

american people, but that is what i would say -- >> yeah, but you are the expert inside of the white house. >> well, i can speak to this that most americans believe that the president has tried to tackle tough problems and i think that they are clear that here is a president who is willing to do some tough things that we took criticism from his own party on. so he has walked the walk on the solving of the deficit and someone who siis willing to compromise. and in the speech last friday asked the american people to reach out to congress and through tweets and calls and demand a compromise, and the reaction was overwhelming. i think that people are very frustrated, and they want the leaders obviously to have strong principles, but at the end of the day as they go through the struggles in their everyday life they can't have the leaders engaged in a three-ring circus. >> does it open up a third party or not? >> well, listen, that is up to the american people. what i am confident in is that the president's leadership was something that was rewarded in

2008 and people think he is the one person who has focused everyday here on solving problems and not scoring political problems and that is is one of the reasons he will be re-elected in 2012. >> thank you, david plouffe. coming up on this, a deal or default? all eyes on the negotiation of the senate as the clock ticks towards a looming deadline. how does a final deal get done? we will get into the negotiations and democratic senator claire mccaskill will be here and republican senator john thune. join me next. supervisor is genius...i transfer. transfer! transfer! transfer! transfer! transfer! hello...my name is... peggy? come on!!! hello? want better customer service? switch to discover. ranked #1 in customer loyalty. it pays to discover. ♪

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coming up, down to the wire on a debt deal. how does this deal coming up, getting down to the wire to get a debt deal done. claire mccaskill andwi join me claire mccaskill andwi join me brief commercial break. geico, saving people money on more than just car insurance. ♪

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joining me is senator john thune, republican of south dakota and senator claire mccaskill, democrat of missouri

and welcome to both of you to "meet the press." this is where the action is right now n the senate. senator thun, as a republican in here, and someone who has reportedly in play, what has to be in the agreement to get you the yes? >> well, i think that a couple of things, david. first, no taxes. spending reductions at least equal to the amount of the debt limit would be increased by dollar for dollar and a pathway to getting a result on entitlement the elements that a lot of republicans are going to be looking for. >> and you heard david plouffe saying that mcconnell is saying no tax increases in the deal, and that is true, but still again another committee looking at making the hard decisions about entitlements and tax reform, and the president, you know, is going to look in that committee for tax increases to be part of that approach. >> well, i think that there will be some who want to see taxes as part of the approach. i certainly don't, and i don't think that most republicans do, and i think that we believe that if tax reform is a part of the discussion of the permanent committee, and it certainly can be, it ought to be with an eye

of broadening the base and lowerering the rates and getting the economy growing again. tax reform can be a useful tool in terms of the economic growth, but tax increases are not certainly on the agenda of any republican in the house or senate. >> can you vet for whatote for taking shape right now? >> i don't know, because i don't know the details. i don't like where it is headed because i'm not a fan of the joint committee, but it is probably as good of an outcome as we are going to be able to get at this time. >> and you have been on the phone talking to constituents and you sent out a tweet earlier in day that caught my eye. spent a couple of hours answering the phones in my office and dominant message is don't cut social security or medicare and no compromise. and what this means is that you cut a certain amount up front to raise the debt ceiling and then a second stage of cuts that come, and there is this committee that tries to agree on those cuts, and if you don't do

it, over this ten-year span, something will force congress' hand, and how do you not put social security benefits or medicare benefits into that potential enforcement mechanism when they are what is driving the debt? >> well, i think they you have to have a lot of faith that the american people are going to continue to weigh in. and here is the bottom line, this fight has not been about nothing. it has not just been political theater, because there is a philosophical difference here on the hill between the democratic party and the republican party and it is pretty simple. they have voted to keep giving taxpayer checks to big oil, while they voted to convert the medicare system for seniors. now it does not con put. that doesn't compute for us. how can you be more willing to push money, public money to, the most profitable corporations in the history of the world at the same time you are willing to dismantle medicare. so that is really the fight here.

so, if they are not willing to look at, and you know, john and i agree that we can do tax reform, but we can generate some revenues there by leveling the playing field, by lowering tax rates for businesses and individuals, but get away from the situation where the people who have power in washington don't have to pay any well, sen ludicrous to the american people when they don't always speak with one voice is that washington is not dealing with what drives the debt which is entitlement spending going on this way and a ticking time bomb since the '60s and democrats like you said, hey, we can't deal with social security and medicare and republicans say, well, sign tax pledges we will not raise taxes and we can't deal with the revenues, and this is ludicrous to the american people and even here if we have a deal, we will solve the political problem, but not the underlying fiscal problem that creates the debt, senator, no? >> well, what drives the government spending more than anything else is basically three

programs, medicare, medicaid and social security and you cannot fix this problem long-term absent addressing those, and what democrats have propose and most of them talking about tax increase as part of the quote, unquote balanced approach, but it is essentially a balanced approach to one side of the problem. the problem is that we spend too much and we have to rein in the spending programs to drive us over the cliff, and that includes entitlement reform which has to be part of the debate and solution. >> so what enforcement mechanism has to be in the final deal for you to find it acceptable? >> well, some of the things that they are talking about right now and frankly in the boehner bill it was another debt increases that you didn't get another debt increase unless you had entitlement reform. and now across the board spending reforms. that puts pressure on both sides to do the hard things to get a result. >> could you live with that.

>> well, we have to be sure there is defense spending in there because we have to have something to make the republicans look at a more balanced approach, and here is the thing -- >> well, shouldn't medicare be in there to make democrats have a balanced approach? >> yes, i have been one of the democrats to say we have to look at entitlement reform, but there is one thing that is telling warren buffett, we will not buy his prescription drugs and converting it into a voucher program. we can do things to preserve them, and protect the beneficiaries and the benefits without gutting them, and that is the case. if we balanced approach, we can preserve the prom gragrad get them to where we can prolong them, and we cannot keep pushing public money to big oil and don't want to address the other issues. >> senator thune, september 28th, 2009 was an important date and debate which was the t.a.r.p. bailout of the banks. s

voted down and that day the dow plunged 728 points and what is your message to the republicans in the house about this debt deadline and the prospect of voting down a compromise? >> well, default is not an option. we need to solve it and do it in a way that is consistent with solving the problem which is not the debt ceiling increase, but the debt. we have to make a dent in it which is why the republicans in the house and the senate have insisted upon dollar for dollar reduction? spending to go with the debt limit. and a pathway to get entitlement reform, and those are theme mel that have to be in the plan to pass the senate and the house, david. >> tonight, on "dateline" we have a special going to the hill to talk about the drama, and he spoke with majority leader reid about the view that so many americans have right now. >> the american people seem to be saying to ladies and gentlemen like you, you can't keep doing this.

something has to change. this place is so irretrievably broken. >> we are going through a difficult time and i understand why people are upset. we have to work through it, but we need to come together. legislations are not a compromise. my program they have suggested is a long way towards the problems of the country facing with reducing the debt by $3 trillion. it sets up an idea of where we can even before that is over do is system of the grand bargain that we need. but we need to get beyond this. we can't have our credit rating crash. it would in effect be a tax increase for everybody out there. >> and for somebody who opposes tax increases, do you agree with that, that ultimately if we see a credit rating slip, the prospect of default, it leads to something that is akin to tax increases? >> well, i don't know what the rating agencies are going to do, but i know this, the republican approach to solving this is to cutting government and growing the economy.

and we believe those two are connected. the democrat approach to this is going to continue to grow government, and that is why claire is right, this is a debate, david, a broader philosophical debate about the size and the role and the scope of the government this this country. and republicans came here after last election with a mandate from the american people not to make government larger, but to make government smaller and more accountable and efficient. >> quick question about 2012. we have seen senator mccaskill, washington going to the brink in shutting down the government and washington again going to the brink over something more catastrophic which is a default on our debt. the voters are going to speak next year, and you are up for re-election and what is the message they are going to send? >> well, i think that i hope that most americans real arize that we need more volume from the moderate middle and we have volume from the extremes, and

the cable tv and the post most agitated are most divide and we need those people who need compromise and balanced approach. all of us agree on the cutting spending. this is not a d or r idea, we are all at the table with sig nif cutting, but what we need is that it is not about the tea party and the far left or the far right, and that is when our country shines brightly. >> are you running for president? >> i have made that decision and i'm fine with that. >> you are not. have you ruled it out? >> well, you want to serve the country and put the skill set to the highest and best use. i am not going to rule anything out, but i am focussed on what is going on in the united states senate and today that is to get a deal to avert a crisis in the country. >> thank you, both. deal or no deal, has the damage

for the deadlock caused the damage to be done already fiscally? and has washington come up with a deal that is a leadership deficit? our round table will weigh in. tom brokaw and jennifer granholm, and jim cramer and raul labrador is coming up next. the volkswagen autobahn for all event is back. right now, get a great deal on new volkswagen models, including the cc. and every volkswagen includes scheduled carefree maintenance. that's the power of german engineering. right now lease the volkswagen cc sport for just $289 a month. ♪ visit vwdealer.com today.

we are back with our roundtable discussion. joining me now, host of cnbc's "mad money," jim cramer, we are back with the round table discussion and joining me no is host of the cnbc's "mad money" and special correspondent tom brokaw and former governor

of michigan, jennifer granholm and also the congressman from ohio raul labrador. i want to start with you, jim, people say there is washington gridlock and washington meltdown and they are preparing for the latter and this is a tough day and code red day for many on wall street, and describe it. >> well, a lot of the people are trying to figure out where bills will be paid. a lot of people are trying to figure out what cash is, in other words, there is so much money due, and the government owes so much money in next few days that the banks are wonder bhog is going to pay it? will there be a total shutdown and will the president order money to be print and gold sold at fort knox, and the range is so staggering that many of to bankers i deal with and the ceos have no idea what we will deal with. >> and if we don't have a framework announced today, what could happen in asia and u.s. markets by tomorrow? >> we have to go lower. it is just etched in the cards. we felt by the way on friday

that there might be a deal this weekend, but that kept us from going down 2% to 3%, but it is in the cards 2% to 3% and maybe further if nothing is reached. this is global. global. >> tom brokaw, the cover of the "national journal" was scary this week. it looks like "damage done." there is financial calamity potentially and also a political meltdown and where are we as we sit here now? >> well, this is much more than account org waing or wall stree. this is a critical passage for this country. it reminds me of my freshman year of college that i pull an all-nighter and hope i get it right. and i have to tell you that my freshman year in college was a disaster and i don't want it to be a metaphor for the country, but i am worried. there is a political default already in place not just with this country, but with most of the constituents in the left, right, and in the middle fed up with washington and no longer

have confidence in the system. and then you expand that across the world. when there was a rumor that greece, a bit player in the international economy might default, look at what happened to the markets and happened around the world, because everything now travels at the speed of light. so, this is a sad commentary on our system, and our inability to manage the greatest country in the world, and its place in the international economy, i think. >> raul labrador you are a freshmen republican from idaho and tea party-backed and you have been instrumental in the talks on the house side and including a balanced budget amendment which is a poisoned spi pill in the senate which you know, and are you vindicated that you have stuck to the principles or aptly criticized for what you and your colleagues are doing that leads to the political default that tom talks about. >> well, let's talk about it for a second. we did not create the problem. the problem has been created by

the establishment of washington for 30 years and the reason we have $50 trillion in debt is not because i was in congress for 30 years, but because of the people who have been here and we came to washington to change ta way business was done. the american people have told us that they want us to change the way that business was done. and mike mullen who you quoted recently, he said -- >> chairman of the joint chiefs. >> yes, chairman of the joint chiefs of staff and he said that the greatest national security threat is the debt. >> this is the backdrop, but how do you unwind something so big when there is a real prospect here of financial calamity? >> i understand that, and if you look at what happened last night and this morning, john boehner has been saying this entire week that the bill he first introduced in the house of representatives was actually a bill supported by harry reid, and harry reid has been denying it all week and not telling the truth the entire week saying that is not the bill he agreed to. then this morning we find out that the only difference between

harry reid and john boehner was the triggers. that is the only thing that -- the only distinction and now we know that john boehner has been telling the truth the entire week. the bill he first intro dulsed in t-- introduced in the house s the bill he and harry reid worked on and if he had enough democrats to vote with john boehner, this would have passed on monday and we wouldn't be at the moment of crisis that we are at right now. >> governor granholm, and what at the end because senators are strained by the politics, but what in the end should be acceptable to the president at this point? >> obviously, he wants to see that we don't have an extention of the debate for the next few months and make sure it is taken care of. he obviously has said that we don't want to do further damage to the economy and that you have to have a balanced approach and honestly, in listening to my colleague over here and not my colleague, but the colleagues of others in the house, and i appreciate being here with you, we are talking past one another, and the reality is that what has to happen is that the, i think that the tea party members have

to recognize that they read the tea leaves wrong in november that people sent them here to change, but change the economy, and not put us into default, and not bad change, and not exacerbate the problem, but change the economy by focusing on jobs. people were angry about the jobs and the friday gdp results only inflates that, but now what they are doing is -- it's, it's so irresponsible. so they need to, they, i believe that the president will accept the deal as outlined and obviously in the room and negotiating heavily, but in the end, what has to happen is that there must be a focus on jobs and that is going to require some investment. >> back to tom, because tom has been reporting on this as well in the last couple of days. the reality is that the president wanted tax increases, and that is not part of this, but the other reality is to get an increase in the debt ceiling, they have to leave unresolved some tough questions about, are there going to be medicare cuts

or social security cuts -- what do you do about the big drivers of the debt? >> well, that is a critical issue and everyone has to stand back and realize that we are where we are because we were all-in, and this is not a democratic problem or republican problem and the whole country was in on this to get us to this stage and we were on a huge spending binge in this country and everybody was along for the ride for a long, long time, and president bush started a war on a credit card and going on for ten years and prescription drug benefits for the seniors not paid for, and sec was not looking at what was happening on wall street, and house democrats were pushing homeownership for people who didn't deserve and shouldn't be buying houses and at the same time they were not willing to step up on reform of medicare and medicaid and social security, and the country, itself, they were spending money like crazy and they have gotten used to having washington take care of whatever they needed. so, now we are at a stage where the country has to come together, david, and say, this

is a critical passage and we are. democrats have to step up on social entitlements and reforming them. i talked to governor kasich of ohio, a republican who has his own tough, tough passage in ohio and he was here in '97 as the chair of the house budget committee and he said that we ought the be talking about reform and not just slashing spending. but reorganizing the government and the programs, because as we mismanaged the expansion of government, we can't mismanage now the cutting of government. and that is what i really think. >> well, we are talking about recession. okay. i have never felt since the 2008/2009 period that we would be in a growth mode coming out like many of the trading partners like china and brazil and russia and india, and not us. now we are talking about a recession and the first time it has been on the table and caused by government and not caused by business people. they want to build and lend and do anything possible to avoid this recession. the second half, we will be in recession if this is not

resolved, and recession means many fewer jobs and far few tax receipts and trillion dollars left and ira and 401(k) and trillions lost in job creation and i'm hearing about little amounts saved here versus what is going to be lost in the next six months if this is not resolved. >> congressman, you have talked about something that is fundamental to tim pass and i want to show it on the screen, because some polling shows what americansp oppose and support. this is what americans are for if the you look at the numbers. balanced budget a amendment which you supported. 3/4 of the respondents and the cut, balance and cap plan which was passed by republicans, but also for cuts and tax increases, but also for cutting farm subsidies and cutting pensions, benefits for retired government workers and cutting amount of pensions, and the american people make it hard to govern. >> yes, they come into my office and say, cut spending, but don't cut my program. i hear that every single day, and the reality is that i want

the american people to understand two things today. we will solve this problem. i'm tired of hearing the media talking about how this is a crisis. we will solve this problem, and it will actually happen and today we will have a plan, and it may not be a plan they agree with, but today or tomorrow we will have a plan and we won't go past this date, but the republicans actually proposed to get rid of the loopholes already and the people in the media never talked about it, but the ryan budget that was passed over whel mingly by the house ma jor any in the house actually has a plan for getting rid of the loopholes. i am for getting rid of the loopholes and i think it is fundamentally unfair that g.e. paid no taxes this year. i think that most of the the american people agree with me. but what we need to do is to lower the tax base and broaden the base and everyone is treated equally. >> okay. let me pin one thing down, if p your speaker votes for the compromise that they are voting

on today, will you support it? >> i have tok laot ate. >> but what has to be in it for yes? >> well, the balanced budget amendment is important to me, but there are enough members of the house to support it to be passed. the votes are there. >> the votes are there in the house. >> that is important. >> and the votes are there for it, because the majority of the house voted for this similar plan. i think that the votes are there. >> but no balanced budget amendment which is a sweetener. >> but lose a few vote, and it will be out of the house of representatives. >> but the tea party caucus vote no? >> i'm not a member of the tea party caucus, but i'm here to represent my constituents and the people of the united states. >> can i e ask you about idaho, because i have been looking at the numbers across the country and what states are the beneficiaries of the federal aid and you are because you have the national forest land and the last numbers i saw you get $1.28 back for every $1 you send to washington and of that 28 cent

premium, how much would you give back? >> well, if we got rid of the premium, we would control our own destiny, and so it costs us to use that premium and if you look at the schools and the radios and every time you do with the federal money, and because of the regulations, it costs you more. >> and you had a balanced budget in michigan with balanced budget, and did not make you popular. and republicans spent a lot of money on the wars in the last decade and prescription drug benefit, but this is going on since the '60s and the road to downgrade was this piece by 2010 federal entitlement payments to individuals were 60% of the federal budget up from 28% in 1965. we now spend $2.1 trillion a year on the redistribution programs and the 75 million baby boomers only now starting to retire. and even if we have a compromise to get us out of the political mess right now, and the

short-term financial mess, we are not dealing with the fiscal problems and they are pushing it off because nobody in washington can make the decisions. >> well, the entitlement question has to be addressed, but david, i cut more out of a percentage of government than anybody in the decade and where is michigan in terms of the economic growth? cutting did not result in economic growth. what results in growth is making sure that you have a good business climate for businesses to grow and prosper, and so we have to cut where we can in order to invest where we must in order to grow the economy, and it is that investment side that i worry that those who are affiliated with the tea party or who are on the far right don't realize that other countries are co-investing with businesses in order to create jobs in their countries. if we do nothing more than just cut, that will continue to accelerate the lack of growth in gdp gdp. so we have to realize that the

strategy here has to be specific. yes, you have to reform entitlements, but you to reform the entitlements and invest and grow, and the quickest way to take down the invest is stop investing in growth. >> but in michigan, governor granholm supported the highest tax increases in the history of michigan and unemployment went from 6.8% to 15.3%. >> when i took over michigan and let's not get into an argument in michigan. >> well, it is a reality, and at the same time you had the governor of texas who actually supported tax decreases and more broadening of the base, and actually we had the fastest growth in texas and than any other other states. >> this is a great point, because michigan's economy is emblematic of what is going on in the nation. a global shift of manufacturing jobs and michigan had seven times more automotive manufacturing than other states in the country and we saw the jobs leave because of the global shift, so that the question for america is what can our nation do to make sure that we have

advanced manufacturing jobs in our country. and yes, michigan had a huge concentration of them, and that is, and you know, the biggest bankruptcies in the competitive globally. >> let me ask jim cramer about the president's leadership in all of this. to show you how toxic this is, peggy noonan wrote the following over the weekend about the preside president. the obama is losing a battle in which he had superior forces, the presidency, the u.s. senate. in the process he revealed that his foes have given him too much mystic. he is not a devil, an alien, a socialist. he is a loser. pretty strong language. from your vantage point, how is the president pulled through this? >> i want to talk about the media exacerbating or causing the problem. we were all hopeful in wall street and main street that the president would come out and say a few things which said

compromise. he came out and panicked the heck out of us. he talked about the higher interest rates for mortgages, spiking credit cards, about how hard it will be to get a student loan. it took us all aback because we felt he would be a compromised leader. instead, he created tremendous fear. tremendous fear means uncertainty. uncertainty means no spending. uncertainty means no spending by businesses, no hiring. it was a setback. he caused the panic, not the media. >> but, tom, the reality is the president got very close to a deal working it himself and that blew up. he obviously took a different tack here. >> he was working the deal with john boehner. a lot of people thought they were going to get that done. the big, grandz deal. but the speaker couldn't sell it and the house of representatives. i think it's really kind of foolish to talk about winners and losers at this point. there are no winners that i see on this landscape at the moment. we're going to have to kind of work our way through a very, very swampy piece of washington real estate to see if we can get

to the high ground or not. but obviously this has not been a great time for the president. it's not been a great time especially for the speaker. if the house does approve the harry reid bill, that will be a little bit of a comeback. but if they reject in the house the reid bill, boehner has had a couple of tough weeks to say nothing of the president. >> i'm sorry, i have to disagree with all due respect. in the house of representatives we actually passed a budget. we passed two bills that would have raised the debt ceiling. and i want to show you this morning you actually saw on this show the failure of leadership of this administration. you asked david plouffe a very simple question -- will the military be paid? instead of telling you the truth, what he did is he demagogued. i want to show you real leadership. in 1985 the president of the united states, ronald reagan, was asked the same question. his treasury department said, the secretary of the treasury does have the authority to choose the order in which to pay

obligations of the united states. this is an official document from the department of treasury. we are aware of no statute or other basis to conclude that treasury is required to pay outstanding obligations in order which they were presented for payment unless it chooses to do so. and this president has not been willing to tell the american people that medicare recipients and the military will be paid as long as we receive sufficient money in the treasury. we have to solve this problem. i want to solve this problem. but there has been a failure of leadership from this president and all he's doing is demagoguing and scaring the american people. >> we'll take a quick break, come back with more of our roundtable in jojust a moment.

final moments with the roundtable and a review. david plouffe senior adviser to the president on this program talking about the key sticking point. will there be tax increases as part of this deal or not? this is what he said. >> what's clear, you know, where the president stands is where the american people stand. if we're going to do another set of deficit reductions, over $1 trillion, they'll insist to be balanced. if you're a middle class family -- >> but it won't be balanced. there are no tax increases in this. the president said it had to be balanced. that's not what's in this deal. >> this committee is charged with coming up with additional debt reduction. there's no way to do it without smart entitlement reform and tax reform. >> is this left congressman deliberately gauzy? will there be tax increases when

the speshl committee comes together, comes out for recommendations with more cuts that are on the back end of this deal? >> that's actually one of the problems i have with the deal. i think it is opening the door for tax increases. i think there should be tax reform and i think every member of the house of republicresenta on the republican side believes there should be tax reform. i think every person should pay the same rate, across the board and fair to all americans. >> jim cramer, again, are treasury bonds safe as we sit here? >> absolutely. don't panic anybody on that. still the last resort place to be both for china, who owns -- they he have the preponderance of our debt and us. don't ever want to take that off the table. full faith and credit of united states will be good during this period. >> tom, a digital conversation is going on as we reference every week. it is disgust with washington. i know as you travel around the country you hear it. from facebook, eric writes, i think we have elected officials afraid of their support bases.

why does it seem that "compromise" is a dirty word? from tim hear, i have never been less confident about the future, which is loaded on so many terms. i remember election night in 2010. you talked about independent voters being a moveable feast. what kind of message are we heading for next year in the election as a result of a near-government shutdown and now near-default. >> it's so very much in play. but i would say for the tea party, for example, they play by the rules of american politics. they got angry, they it got organized, they got here and they got what they wanted. and they did it with discipline. whether or not in the long haul it's good for the larger universe is a very open question at this point. if you want to change washington, that's what you have to do. you have to get organized around your passions and interests and you can't say, as the congressman indicated earlier, i want you to cut but not my programs. this is a critical program in the 21st century, and we're talking not just about the

markets on monday, we're talking about our grandchildren and we're talking about the future of this country as it goes forward in a hotly competitive international environment. during ronald reagan's time we didn't have china, india, oil was manageable at that time. it's a much different environment. >> we're going to leave it there. thank you all very much. a "dateline" special tonight, "taking the hill inside congress." nbc news sent cameras to capture the drama of this debt fight as our own brian williams was there to see it unfold. that's at 7:00 p.m. eastern tonight. more updates throughout the day as they become available on the negotiations. that is all for today. we'll be back next week. if it's sunday, it's "meet the press."