if not a degree, like mark barton and james huberty. that's our report for tonight. thanks for watching. i'm john seigenthaler. this sunday, america's credit rating is downgraded for the first time ever. it's washington dysfunction that is said to drive the decision. it comes after a volatile week on wall street, with the dow plunge morgue than 500 points in a thursday selloff. the big question now, are we headed toward another recession? high anxiety about america's economic outlook as the july jobs report beats expectations, but unemployment stays above 9%. >> what i want the american people and our partners around the world to know is this -- we are going to get through this. things will get better. >> analysis this morning from austin goolsbee, outgoing

director of the white house's counsel of economic advisers, and former chairman of the federal reserve, alan greenspan. and the rest of our panel, the focus, with the rest of the economy in distress how will our troubles effect the race to the white house? >> when i said change we can believe in, i didn't mean change we can believe in tomorrow. >> with us, msnbcs rachel maddow and alex castellanos. first, the washington debate over jobs, growth and the economy. what can government do? after the toxic debt debate, will america trust their leaders to make the tough choices ahead to cut the deficit? with us, two former presidential nominees for their parties, senator john kerry, democrat of massachusetts and senator john mccain, republican of arizona. good morning.

all eyes will be on the stock market tomorrow after the s&ps announcement friday night of the unpresented downed grade of america's credit rating. the ratings agency called the outlook negative signaling another downgrade is possible in the next 12 to 18 months. officials at the white house and treasury department are critical of the move claiming it was overly political and based on faulty accounting. but this weekend the nation is coming to grips with another story, the horrific loss of u.s. soldiers in afghanistan. saturday, insurgents shot down american helicopter killing 30 u.s. soldiers, some from the special forces s.e.a.l. team 6 that killed osama bin laden three months ago. also among the dead, eight afghan commandos. this was the single deadliest day of the war. the rising u.s. death toll comes as the administration announces a withdrawal timetable and will

raise fresh questions about america's strategy to end the longest running war in our country's history. joining us now, john kerry. senator kerry, good to have you. welcome back to "meet the press." >> thank you, david. glad to be with you. >> i have to ask you, when you see news like this, when you hear of the loss of life among our soldiers, is your reaction what are we still doing there? or is it are we doing everything we need to do to beat the enemy? which is not al qaeda, it is the taliban, the insurgency? >> my first reaction, david, and i'm sure john mccain's also, is an extraordinary sense of loss and a sense of gratitude for the quality of their sacrifice and service. our hearts go out to their families. i think john and i join every single american in feeling as if we lost a member of our family. so the first thought is sadness and sorrow for the loss. john and i, and i think many

others, believe that we are in a transition in afghanistan. the effort that they've making there is one that is important to our national security in this transition. notice there were seven afghan there's, members of a commando force. it's part of the transition that's taking place. so i think, you know, we have to find out exactly what happened. i'm going to be very interested to see who might have been involved in this and what the linkages may be. it's something we need to check out carefully. it's really a loss for the country. >> let me put this into some context and ask a strategic question that has to come in mind in this debate. a sense of where as we put it on the map. this is in wardak province. it is adjacent to the province, kabul, which has become safer. indeed, when i was with general

petraeus last summer, wardak province had a lot of security and political advance as well. "the new york times" put some of the context this way. i'll put it on the screen. saturday's attack came as a surge of violence, the beginning of a drawdown of nato troops. it showed how deeply entrenched the insurgency remains, even far from its main strongholds. american soldiers recently turned over the outpost in the tangi valley to afghans. the redoubts in these areas pose the kinds of problems the military farced last year in similarly remote areas of kunar province, forring commanders to weigh the mission's value given the cost in soldiers lives. the dilemma is if nato military forces do not stay, the area is slipped back under taliban influence if not out right control and the security forces do not yet have the ability to rout them.

we're on a glide path, senator, out of this country. the question is what are we leaving behind? >> well, that's up for grabs, obviously. that is what this is about. nobody is surprised by the spectacular attacks. it is, in fact, very much in the pattern of what the taliban have left, and partly because we have been successful. our military efforts with isaf and our own forces have been extraordinarily successful and created less space for the taliban to be able to operate in, so the taliban are choosing to attack in kabul, to assassinate people individually, to take on this kind of event. that doesn't represent their strength across the country. there's a broad struggle for power in afghanistan between pashtun, tajik, between karzai's folks, others. and of course the network based in pakistan, and pakistan's influence is also significant.

that's why the administration is putting huge effort now into the reconciliation process. the pakistanis, the iranians, the russians, the chinese, the stans to the north, all of these countries can be critical in this, including india. we need a regional approach. we need a great intensity in diplomacy. we need to try to find that political solution that everybody has said from the get go is the only way to resolve what is happening there. our presence must continue to diminish to the point that we have the ability to protect our national security interests as we go forward. we are not getting out completely. we are reducing the level to a point that i think has the ability to prevent the taliban from taking over the country. >> senator, as you know this is part of a debate of america's influence in the rest of the world. now, the other big news that markets are going to be reacting to tomorrow, that is the downgrade of america's credit rating.

standard & poor's issued a release on friday. this was part of its justification. the political brinksmanship of recent months highlights where we see america's governance and policymaking becoming less stable, less effective and less predictable than we previously believed. despite the wide ranging debate, the differences between political parties are extraordinarily difficult to bridge. is this a wake-up call to washington? >> well, it's a partial wake-up call. i believe this is, without question, the tea party downgrade. this is the tea party downgrade because a minority of people in the house of representatives countered even the will of many republicans in the united states stat who were prepared to do a bigger deal, to do $4.7 trillion, $4 trillion, have a mix of reductions and reforms in social security, medicare,

medicaid and also recognize we need to do revenue. i think this is one of the most telling, important moments in our country's history right now. we have had a fairly straightforward economic road throughout the 20th century. now, david, this poses a set of choices not just about a recession. it's about a financial crisis and a structure of our economy, which really has been misallocating capital. we have an enormous amount of capital going into arbitration over the last years, phony deals, commissions, not creating jobs. the real problem for our country is not the short-term debt, we can deal with that. it's the long-term debt. it's the structural debt of social security, medicare, medicaid, measured against the demographics of our nation. that then juxtaposed to the lack of jobs and job creation and growth. that's our problem, structural. what we need is a washington

that stops this bickering, that's getting rid of these hard positions that i noticed even in speaker boehner's comments about the downgrade, politicizing it in a sense that, you know, sort of blaming it on the democrats, the lack of decisions. barack obama put a $4.7 trillion deal on the table. three times he was refused the deal. because there were some people in the republican party, and mitch mcconnell even admitted this who wanted to default. he said there were people in the party willing to shoot the hostage. in the end, they found the hostage was worth ransoming. this is not about ransom. this is about our nation, our country, our growth, about statesmanship. i know john mccain and many of his colleagues in the senate are prepared to sit down and be serious about how we deal with this quickly. because our nation's security and our nation's future is at stake in an unprecedented way. >> the political debate about

the viability of our political system right now, because of these entrenched interests and disagreement still gives way to the more pressing problem. if you look at the unemployment numbers, we'll put a summary of that of the president's term. the unemployment in october, bottom line is, what is a growth plan for washington that washington can actually execute on? >> i'll give you a growth plan very clearly. number one, we have to deal with this debt and deficit and send wall street and the marketplace a message that the united states of america is deadly serious about dealing with this long-term structural debt. that means putting a plan on the table, 4 trillion plus, if necessary, that lays out how we grow forward in terms of our debt and deficit. but we do it, david n a way that doesn't turn our backs on the histories that we've created where we know how to do this without cutting off our job

creation and our economic future. in the 1990s, we balanced the budget. we did it without a constitutional amendment. we balanced the budget, created 21 million new jobs, and we put ourselves on a glide path to pay off our debt for the first time since andrew jackson by next year. that changed when we went into credit card debt, two wars, two tax cuts, we couldn't afford them. boom. you have 6$6. some trillion of the debt goes to george bush, 2.4 to obama. three times to george bush, and obama's was largely in response to george bush and hank paulson asking us to bail out the financial structure of america. we have to get real about what the problem is. the second piece of this, senator boxer and senator inhofe have a terrific highway bill if we were to do that do it quickly, we will save 600,000 more jobs than what the house is setting out to do. three, we need to pass the

infrastructure bank, which is bipartisan, senator kay bailey hutchison of texas and myself have introduced this w lindsay gram of south carolina and mark warner of virginia. we have $2.2 trillion of infrastructure deficit in america. china is putting 9% of gdp into inst infrastructu infrastructure. the united states of america is putting 2% or less into it. we have $80 billion of loss every year just to bail out just to grid problems with our energy structure to highways that are clogged because we don't build a transportation system. we know how to do this. we could have patent reform. there are millions of jobs being wrapped up in the bureaucracy of patent reform which isn't moving forward. we could have regulatory reform so we don't take ten years to get business people a decision. there are countless things we can do. and, yes, we can cut waste.

there is waste. we could come together and do that. >> all right. >> but we have to be statesmen here. we have to find the happy, middle ground of compromise and common sense. i know john mccain is prepared to do it. i would like to see the numbers of the house of representatives prepared to do it. and that would avoid the future confrontation. >> all right. we are going to leave it there. senator kerry, thank you as always. >> thank you. >> joining us now, senator john mccain. senator mccain, i want to return to the issue about afghanistan in a moment because of the crucial importance. i would like you to respond to your senate colleague on the issue of the downgrade of america's credit rating, which is an important development. he calls it a tea party downgrade reflecting dysfunction in the system. how do you respond to that? >> well, i agree there's dysfunction in our system. a lot of it has to do with the

failure of the president of the united states to lead. i would remind you, republicans control one-third of the government. the senate and the presidency are controlled by the democrats. and the fact is that the president never came forward with a plan. now, i was gratified to hear that he had plans. but there was never a specific plan. there was always the, so-called leading from behind. look, we could have reached an agreement a lot earlier, but the members of the house of representatives had a mandate. had a mandate last november. it was jobs in the economy and spending. for them to then agree to tax increases and spending increases was obviously a repudiation of the mandate that they felt they had from last november. >> right. senator, you talked about -- >> again, the president has not led. >> you talked about the tea party. you had some critical words. you talked about a russian house

of representatives passed a budget being foolish. there were republicans and democrats saying tea party conservatives were digging in and some used the word hostage. holding the whole process hostage because they would not raise any taxes at all. i mean, doesn't -- you know, you know how washington works. the president was dealing. john boehner was dealing. they were coming up with a plan. they couldn't sell it. was it really failed presidential leadership? >> i think it's failed presidential leadership when you don't put forward a plan, a specific proposal to work off of. previous presidents certainly had one when we're in a crisis. talking about hostages? lately the democrats have been calling us terrorists. we need to lower that level of rhetoric obviously. but the fact is we need to cut the corporate tax rate. we need to fix the tax code. we need to have a moratorium on new federal regulations.

there's been thousands of pages of new regulations. by the way, one has been repealed. i'm sure you know. spilled milk, thank god, is no longer an oil spill. we obviously need to do a lot of things. remember, it was the housing market that triggered this crisis. we put liquidity in the financial institutions. obviously, they are doing fine. they are sitting on $1.5 trillion of cash that they're not spending. but the reality is that the housing market is what triggered this crisis. and it's going to be the housing market that recovers. that means to me, go out and buy up people's mortgages as we did during the great depression and give them a mortgage that they can afford the payments to make. then we will begin to come out of this problem. by the yeah, on the s&p thing, don't shoot the messenger. is there anybody that believes s&p is wrong in their assessment

of the situation of this country? >> there are questions about what their rationale was. i want to ask you about s&p. one thing you said as a presidential candidate and have been saying for a long time, is that lawmakers were spending like duncan sailors in this found for years, and we're not all paying the price. but this was the reaction in part from house speaker boehner. i'll put it up on the screen. he talked about deck raids of reckless spending cannot be reversed immediately, especially when the democrats who run washington remain unwilling to make the tough choices required to put america on solid ground. the administration and democrats in congress had sought an increase in the debt limit without spending cuts for reforms. republicans made clear to the american people would not tolerate that and fought for the largest spending cut possible. do you not see the downgrade as something akin to war that should galvanize political leadership on both sides of the aisle rather than politicizing it? >> i do. i believe this special committee or select committee will have added incentive without the

president's input. this is strictly congressional committee that will address these issues. and the elephant in the room, as we all know, is medicare and social security. unless we are ready to reform those entitlements, we are not going to have a long-term fix for those problems. let's announce to the american people we are going to fix the programs that are unsustainable. otherwise, we end up like greece and unable to provide the benefits. >> david walker, the comptroller general for the u.s., had a discussion with me during this past week, which is available on our website. he is skeptical about the road the super committee is going to take. this is what he said in part. >> candidly, the deal that was done was very modest. we have to do a lot more. they punted on the big four, namely medicare, medicaid, social security and tax reform. we'll see what happens with the special joint committee.

candidly, i think the tough choices are probably not going to be made until after the 2012 elections. >> after 2012, which includes the question of whether tax increases of any sort can and should be part of the deal that the super committee works on. >> well, there's a fundamental belief many of us have. why raise taxes and take money from people and give money to the government, which has grown enormously in size or debt went from $10 trillion to $14 trillion. what is the point? the point is that we need to take on entitlements and reform the tax code so that it's flatter and fairer. why is it people are sitting on all this money? it's because they don't know what the next regulation that's coming down on them. they don't know what their future is, so that they can invest. that's why a lot of them are going overseas where they're making most of their profits. this select committee, i

believe, can really do what we haven't had the courage to do in the past. the difference is between it and any other, as you know, it's an up or down vote. i think a lot of us would have the courage to vote for what the most experienced people in congress come up with. >> senator, with a few minutes left, i want to turn to afghanistan. secretary of defense panetta in his statement announced that the u.s. would stay the course to fulfill the mission that these brave soldiers died for. my question to you is, do you have fears that, indeed, your fears of withdrawal of surge forces that are on a path to come out by the end of 2012 leaving tens of thousands of u.s. troops there, is too aggressive, too fast to accomplish the mission panetta says we are going to stay on? >> absolutely. the president's decision to withdrawa on the schedule he has outlined, there's no military recommendation. all our military leaders said it

increases the risk. why would we want to increase the risk to the lives of our men and women serving? the second problem, david, and it's serious, this continued sanctuary that is now in pakistan w the isi cooperation with other organizations including the taliban. and we have to have a realization that the present sanctuary situation in pakistan cannot continue, otherwise it places enormous burdens on our ability to succeed. i believe we have made significant successes. our prayers and thoughts go out to the families of those brave, brave, brave elite of our elite that have sacrificed. but at the same time, we're going to have to address the sanctuary situation and we're going to have to address the problem that the president has created, and that is that out there there's a perception of

afghanistan and other parts of that part of the world that america is withdrawing. that can't be good. >> the reality, we have been at it over a decade now. the sanctuary problem has been with us the entire time. you know there are people watching us saying why are we still there? we don't seem to have afghan solders that are a partner enough to take care of the problem and by the way we want to afghanistan to defeat the taliban -- rather al qaeda, which is not active there. we're fighting against an insurgency, unlikely to prevail? >> first of all, on the ten-year thing, the fact is we have only had a surge for a couple years now since the president announced it, as you know, at west point so we've had a very short time. there's no doubt we have had significant success, particularly in the southern part of afghanistan. the reason why i worry a lot is i'm not sure we have a sufficient number of troops for another fighting season, so we can gain control in the eastern side of the country.

we all know that the taliban cooperated with and assisted al qaeda initially. that's the reason why we went to afghanistan as a result of 9/11. so, there's no doubt in my mind that we would have al qaeda presence and influence in afghanistan and even a return to a base for a tax on the united states of america. also, there's a fundamental question, do you want to condemn the afghan people to the rule of the taliban? i think we should try to avoid that as well. >> all right. senator mccain, thank you for your views. >> thanks for having me on. >> coming up, the state of the economy. the unprecedented downgrade of the u.s. credit rating and a volatile week on wall street, fears we may be facing another recession. we'll have special analysis from the former chairman of the federal reserve, alan greenspan, as well as austin goolsbee.

plus the rest of our panel on how the economy will play in the race for the white house in 2012. with us msnbc's rachel maddow and alex castellanos. ease of cooking is very important to me.

perdue perfect portions is great on busy nights. five chicken breasts individually wrapped, so you can use what you want and put the rest in the refrigerator. and the best part is it only takes 10 minutes. it's my go-to meal.

and started earning loads of points. you got a weather balloon with points? yes i did. [ man ] points i could use for just about anything. ♪ ♪ there it is. [ man ] so i used mine to get a whole new perspective. ♪ [ male announcer ] the new citi thankyou premier card gives you more ways to earn points. what's your story? citi can help you write it. coming up, coming up, with the economy in distress, how will our troubles effect the race for the white house? it's up next after this commercial break.

ugh, my feet are killin' me. well, we're here to get you custom orthotic inserts. dr. scholl's custom fit orthotic center recommends the custom-fit orthotic that's best for your tired feet. foot-care scientists are behind it. you'll get all-day relief. for your tired achy feet. for locations, see drscholls.com. thank you...

we are back with our roundtable discussion. joining me now, host of "rachel maddow show" rachel maddow, alan greenspan and austan goolsbee. welcome to all. i want to start on this side of the table, chairman greenspan, the markets tomorrow. how are they going to view this downgrade of america's credit rating? >> it's difficult to say. the only test we have at the moment is the israeli market, which is open today. it has tanked. the problem i have with that, however, is that there are riots -- not riots, real significant protests within israel at the moment.

so i can't tell whether it is one or the other. but considering the momentum at which the market went down over the last week, it's very unlikely, if history is any guide that this isn't going to take a while to bottom out. so the initial reaction, in my judgment, is going to be negative. >> are u.s. treasury bonds safe to invest in? >> very much so. i think there's a -- this is not an issue of credit rating. the united states can pay any debt it has because we can always print money to do that. there is zero probability of default. what i think the s&p did was to hit a nerve that there's something basically bad going on. it's hit the self-esteem of the united states. the psyche. it's having a much profounder effect than i conceived could

happen. because the economics of what they're talking about is very clear. and you cannot see any way in which we can go as we were on friday for a vast movement of international funds into the dollar at very low interest rates and then turn on a dime. that's not going to happen. so that this is not the issue that they make it. >> austan goolsbee, you heard john mccain say don't shoot the messenger. don't shoot s&p. yet the white house has been doing just that. in a detailed taking down of the basis for why s&p downgraded the united states, make that case. >> the basic case, they made a $2 trillion math error and forgot to check their work. the rating agencies that didn't make a math error reaffirmed the aaa status. you saw warren buffett say if they had aaaa status, he would put u.s. treasuries in the aaaa status.

i think with the s&p downgrade being based on, let's say, questionable mathematics is the root of why the treasury was saying that. in this case, if you get away from was there a mistake in what they did, the broader point being, we've just gone through a period where members of the u.s. government were standing up in public saying maybe it would be okay if the u.s. government defaulted on some of its obligations. that's a deeply unsettling moment. i think that calls on us to maybe do some of the bipartisan things. you saw senator kerry talking about an infrastructure or free trade agreements or things where there's bipartisan agreement that we could show the world that is not complete dysfunction in washington. this debt ceiling debate made some people nervous. >> before i widen out the discussion to the whole table, let me do one more, chairman greenspan, with the cover of "the economist" magazine.

time for a double dip is the question, and whether we are bracing for a double-dip recession. is that where we're headed? >> depends on europe, not the united states. the united states was actually doing relatively well, sluggish, but going forward until italy ran into trouble. that destabilized the european system and the crisis reemerged. europe is very critical to the united states. not only do we have a fourth of our exports there, but more importantly, significant proportion of foreign affiliate profits, in fact half of u.s. corporations are in europe. and that has been a very important driving force in the overall earnings of u.s. corporations and therefore the stock market rise which has been the most important driver of

economic activity in the united states. when italy showed signs of significant weakness in selling its bonds, the yield is now over 6% which is an unsustainable level. it created a massive problem in europe because italy is a very large country, cannot be easy bailed out and cannot be bailed out. that's what's causing our problem. >> this is a wider discussion. rachel maddow, it does get back to political dysfunction at some level because if americans are wondering where are the jobs, the bigger question is where are the economic growth? like my kids, i like cartoons this is one from role call. the easy part it shows where the parties are jumping over the debt ceiling. the much higher hurdle is job creation, is commission growth. we may be cutting the deficit some, but austan goolsbee and the economic team projected growth for this country which has been wildly off the mark so

far this year. >> we also had a revision in how bad the recession was that the obama administration started with over the last couple of weeks. so we know that the hole we have been digging out of is deeper than we thought. the question is whether or not the stock market dropping 500 points in a day and as much as it did in the past two weeks plus this downgrade will ab political wakeup call. it will change what is politically feasible in washington. the downgrade message, whatever you think of s&p, they made mention for increased revenues and rev enouenues being on the three times. it's a question about whether or not there will be a change in fashion and whether or not it will be a wake-up call that the parties need to work together rather than the republicans fashion right now, which is any deal is a bad deal. >> alex? >> oh, where to begin. i don't think the republicans are saying any deal is a bad deal.

when you look at the what the ratings agency are all saying, standard & poor's or not, it's that we can't maintain an unsustainable level of debt. and republica these republicans in congress are saying how can you grow an economy when you have to service this growing debt? they put their foot down on that. the problem is not republican intransigence, the problem is balance. as the president likes to call for. we have balance. we have republican intransigence and we have to stop spending, and democrat intransigence that we must continue to spend. that's why we got nothing done. >> s&p says the downgrade was motivated by the debate of raising the debt ceiling. it involved a level of brinksmanship greater than what we had expected. that's why they say they downgraded us, not because there's so much debt, but rather that washington is not working. and we did something insane with getting that close to defaulting on purpose. >> the other question is what paul krugman writes about austan

goolsbee. not only are fast numbers of americans unemployed or underemployeed for the first time since the great depression many american workers are facing the prospect of long-term maybe permanent unemployment. it's a human catastrophe. why are we surprised at this catastrophe? where was growth supposed to come from? consumers still burdened by the debt that they ran up during the housing bubble are not ready to spend. businesses see no reason to expand. due to that deficit obsession, government which could and should be supporting the economy in its time of need has been pulling back. >> it could be, if we go too far in that direction in the immediate term. it's taken the focus off where it should be, which, as you said what to be about growth. the depth of the recession and the nature of it, that it's coming out of a bubble, we can't go back to what we were doing, before the recession began, that

makes this particularly hard to get out of. where the growth must come from is business investment, exports, innovation, small business. it can't be just going back to building residential houses and consuming more than we are earning, qwhich were the driver of growth before. what we saw, until the growth started slowing down, we were making progress. we were growing at a moderate rate. you were seeing balanced growth across a lot of industries and we added more than 2 million jobs. when the growth slows down because of europe, gas prices, because of japan, the job engine stalls. and now i think there is a danger that if we just keep saying, well, the number one thing we have to talk about is all about the short run deficit, we are losing sight of the fact that we've got to reignite the engine of job growth. it doesn't have to be just the government driving it, but the government has got to be doing everything it can to get the

private sector stood up and driving to recovery. >> the question is how, chairman greenspan. there's a view on wall street, jamie diamond said this publicly, the ceo of jpmorgan, he said, look, there's a couple la sieve effect to what this administration has done to remedy the excesses of the financial system that resulted in collapse. that cumulative effect of regulation and capital requirements and all the rest may ultimately be depressing economic growth by keeping major corporations from making the sort of investments that austan say are crucial. what do you say? >> the evidence is reasonably strong that that is a correct evaluation. there's one thing we have never discussed, and that is how do we get what is really an excess of $500 billion in liquid assets held in nonfinancial corporations in the united

states largely as a result that they refused or could not find profitable opportunities to invest in so they put in cash flow and liquid assets. how do you create a degree of certainty about the long-term future that would induce the people who hold the liquid assets to invest them in long-term assets because this is the only source of expansion, which is very large, in which debt is not relevant. you don't need to borrow. all you have to do is pull those funds, which is sitting there so because they don't know where else to profitably invest them. if we can get that going it's a major positive. >> the day the debt ceiling fight ends, the president has a press conference outside the white house and says corporate america, the wealthy, i'm coming after you. i'm coming after you with higher taxes. i still think i was right.

fairly petulant statement what does that do if you're out there, if you're an investor and if you're in corporate america? you are going to sit on that $2 trillion worth of cash because you don't know if you need it tomorrow on top of the uncertainty of a health care bill, on top of whether we going into double-dip recession. >> let me have rachel respond to this piece of it. it's important. there was also pet lanulance fr house speaker boehner. the president's leadership through all this, he called it a clarity gap. obama suffered from a clarity gap even his own supporters are not sure what he's willing to fight for. he needs to plant a flag somewhere. i don't color it is, but periodically planting a flag and then lowering it is in no way to

inspire confidence. the president football a clear position on only one issue in the debt ceiling negotiations, he said any deal had to be balanced meaning it had to include any tax revenue as well as spending cuts. in the face of republican opposition, he backed off even that one demand. the reality is, and i talk to house democrats who say we are the enablers here. republicans won the debate and they won the negotiation. here we are. >> the debate in washington, the difference between the two parties is whether or not there are negotiations or whether or not there are not. on the republican side, everything is a hard line, even when they are talking about who they might appoint to this super committee which will have a scary amount of power over fiscal matters coming up. the republicans are saying here are our litmus tests. there will be no negotiations over revenues or over a whole lot of fiscal policy. the democrats position is not on one policy. we would like to talk, negotiate and compromise. i'm a liberal to me, that's upsetting. because i want the democrats drawing red lines but they

won't. the republicans are saying no negotiations, our way or disaster. that's the difference between the parties. i say lack thereof of ongress. job performance, 82%. one of our producers asked me in a question that actually made me laugh, then i realized it wasn't so funny. what happens when it's 100% disapproval. this is the problem here. >> we put a question on a survey a couple years ago. if you could get rid of everybody, both parties and start over, would you? and it was something like 70%. >> where is the political will to engage on tough choices that both sides wanted to avoid. republicans wants to avoid tax increases. democrats, despite what the president was talking about in his deal, wanted to get away from some really tough choices on entitlements and social security. >> we have intransigent differences on how to grow the economy. republicans are not against more revenue. republicans in congress will tell you they just have a better way to produce them. that's planting the seeds of

growth in the fertile free market, not in the concrete of washington. >> what revenue also republicans agree to increase? >> the same way to grow revenues that john f. kennedy did it, bill clinton and george bush. when you cut taxes you grow the economy. >> come on. revenues is a sin synonum for taxes. >> when you have top 2,000 corporations in america paying 70% of the corporate tax load, when you have -- you are not at a competitive position globally this is not the time -- >> the republicans would argue -- >> the thing that's distressing about this discussion, there are 100 things the parties in washington disagree on. but before we got into the debt ceiling debate, there were at least a handful of important things they could agree on. the free trade agreement and

bipartisan infrastructure bank. we could look at extending the payroll tax cut for 150 million workers. we could change the patent reform to try to encourage innovation. let's do those things. how can -- even with the jobs numbers coming in better than expected on friday, it's still a wake-up call. it's still not a good report. if this was six months ago when we were growing, we would have said it wasn't that impressive. we've got to get back to that. if we could at least show that washington could do something, they could agree on something, i guess i just keep asking, for the sake of the economy, can we wait on the things we are going to yell at each other about and start on the things that we agree on? >> starting doesn't happen, alan. this is the problem. you have potential default, and yet what does this congress do and the administration? you create another super committee.

17 movrnths after this uber commission and the recommendations that were tough were not acted on. >> they eventually will be. there's going to be a solution to this. the great irony and sadness about this process is that the bowles-simpson recommendation is going to be the core of the final result. but there's another issue here, with all of this bickering going on, the economy is slowing down. you can see it in all the data. i don't see a double dip, but i see it slowing down. this deficit problem that is out there is much larger than we calculated. the actual numbers employed by those calculating the deficits are based on a level of economic activity, which we are not achieving. >> is a solves -- in other words, if we're going to be aggressive about deficit reduction, there are questions about how aggressive we are going to be, even if we are, does does that get growth back or is government in a position

where it should be doing more and can't because of the politics? >> first of all, there's a general view that we are somehow going to solve the problem without paying. there is no conceivable scenario in which that is true. cutting back on government spending will cause some contraction in economic activity, but according to imf who has done a considerable number of evaluations of related issues, they conclude that increases in taxes do curtail economic activity. so do expenditure cuts, but significantly less. >> there's an issue, alex, too, that you now have republican candidates in this field piling on when it comes to this downgrade. they want to make this the president's downgrade of the credit rating. this is more ammunition, in their point of view. >> if i were advising them, i would say don't do that. big problems give you an

opportunity to be a big leader. this is the time to get everybody around the table and say we may have differences on how we achieve this, but now we need a plan for growth. every republican candidate should be at the insta print right now with the strategy for growth for this country. that's what's going to get us out. >> who is the front-runner right now? mitt romney. he couldn't have been farther away from what happened in congress over the debt ceiling debate. in the end, he says i'm against the deal is that leadership? >> it's like a newspaper editor, riding out of the hills to the battlefield after the battle is over and shooting the wounded. i don't think it's productive. i think it's something that mr. greenspan said that is important this is not going to be without pain. alcohol, drugs and government spending, it feels good at first. when you stop, it feels less good. republicans out there politically are saying take the pain now. don't pass it on to the next generation. that's why they are being so

firm. >> i suspect you disagree with that's their view. >> to the extent that we are taking the s&p downgrade as a serious thing. that we believe that s&p has the credibility to have done this and this does levy a blow to the credibility talks. honestly, we should talk about the aaa ratings to reach the doorbell and ask. they do not have the most credibility on this. if we are going to take them seriously, take them on their word about why they did this. they said they did this on brinksmanship over the debt ceiling. they said they did it because of republicans holding the debt ceiling. >> what is a rating? a rating is simply an estimate of the probable of default. the probability to default on treasuries is ear y s iies iy i. it's the safest asset in the world by far.

we have just gone through and experienced that anybody looking at it has to say whoa, maybe somebody might default if we go to the edge of insanity. >> let me get in here. i want to take a break. when we come back, i want to talk about the debate over afghanistan. the tragic loss of our soldiers this weekend. we'll look at our trends and takeaways what was said here today and what is coming in the coming week. so how about this weekend we learn some new tricks of the trade... then break out our doing clothes and get rolling. let's use some paint that helps us get the job done in record time and makes a statement when we're finished. we're lowering the cost of a new favorite color. more saving. more doing. that's the power of the home depot. take your painting skills to the next level at one of our free paint workshops. is now honey nut cheerios! yup, america's favorite. so we're celebrating the honey sweetness, crunchy oats and... hey! don't forget me!! honey nut cheerios.

make it your favorite too!

our final moments now with the roundtable. the trend tracker, the big political stories we'll be following today, we'll put it up on the screen for you. washington's anger over the credit rating. rick perry and the prayer rally he had. the question is whether he is a u.s. presidential candidate. quickly, is rick perry someone who gives mitt romney a run for his money? >> he will give him some challenges, but only for a while. people think he's a coffee table book, sarah palin with a skirt, not a substantive candidate. republicans don't think that governors and governments create them. they think businessmen do. he's running against businessmen. and he echoes the last campaign, which i think we lost, which was obama ran against george bush in

many ways perry is a lighter copy. >> rachel maddow, the conversation going on on twitter online generally this morning is this debate over afghanistan after the loss of our soldiers. this on twitter. the real question is what will it take for the war in afghanistan to be part of the 2012 election conversation? the irony is, despite the stakes, neither party wants it to be there. and for democrats, they don't want it there unless it's talking about how to get out. >> the president is slightly to the right of his party on afghanistan, i would say. the substantive question is whether the continued u.s. presence in afghanistan does harm al qaeda. whether or not leaving now poses a challenge to afghan's government. but the president -- democrats, i think, would vote unanimously to speed up the withdrawal if they could. the president would dissent from that. the republicans are split on

this issue. i don't think any presidential candidate other than jon huntsman wants the debate to be about this. >> we talked to john kerry earlier on the program did the downgrade. he reacted to it this way. >> this is the tea party downgrade because a minority of people in the house of representatives countered the will of many republican and the united states senate who were prepared to do a bigger deal, $4 trillion, have a mix of reductions and reforms in social security, medicare and medicaid and also recognized that we needed to do some revenue. >> alan greenspan, about 15 seconds what is the prospect that this super committee gets to some of the hard questions that senator talked about? >> very low. it's going to require one person amongst those 12 to switch positions that their party has held very strongly over this period. >> we don't know who the 12 are yet. that's going to ab question of

who gets on there. thank you all very much. before we go, a special edition of "dateline" premiers, "the road back." a story that follows three families through the war in iraq. it's tonight, 7:00 p.m. eastern on nbc. next sunday, we are live from the state of iowa. the straw poll as our "meet the press" candidate series continues. i will interview michele bachmann, and we'll have complete analysis of saturday's straw poll results. it's from iowa next sunday. check your local listings. our thoughts and prayers are with the family members of our men and women in uniform on a very difficult weekend. that's all for today. if it's sunday, it's "meet the press." all-white meat, breading that is whole grain with omega-3 and no preservatives. it is my goal to make the highest quality, best-tasting nugget on the market. i want consumers to go, "dang, that's a good nugget." and all we need to do is change the way

we're thinking about them. a couple decades ago, we didn't even realize just how much natural gas was trapped in rocks thousands of feet below us. technology has made it possible to safely unlock this cleanly burning natural gas. this deposits can provide us with fuel for a hundred years, providing energy security and economic growth all across this country. it just takes somebody having the idea, and that's where the discovery comes from.