he said i'm up way too early with a stiff neck looking down at the yankees from first place. you're 10-2 from the yankees. we stole one from you. you are looking down. see you in october. morning joe starts right now. >> i love my work and i think to serve you have to do it. we have men and women dying. we have unemployment above 9% trying to heal the scars of the crisis. we have a lot of work to do. >> good morning. it is monday august 8. welcome to morning joe. with us, we have senior political analyst, mark halprin and economic analyst steve rat ner. thank you for changing your plans. in washington, pat bu can nan is joining us. willie is on his way in.

so much to talk about. >> saturday morning, when we talked about this later at my daughter's birthday party. both of us looked at the horrifying news of saturday morning coming out of afghanistan. coupled with the sp downgrade. as a young girl, back in 1979 when so many things were hitting at one time. it was, i really can't think of another time in my lifetime where i woke up and saw a couple things hitting like that and i don't want to say questioned america's place in the world but certainly thought we lost our way. >> a bleak feeling. we are going to talk about the unspeakable loss in afghanistan coming up and why, when and when it will become a central part of

the political conversation when we talk about campaigns. when it will be front and center of the issue. i don't know when but i'm hoping soon. >> you, let's talk for a second about 1979. if you said, when you read the papers that morning that you had this -- it almost took you back to that dark time. it was a horrible year for this country. >> i was a little girl. in our household, for a lot of reasons, there was a sense of -- it was very bleak. everybody wore it. you got a sense from whatever inside the white house to just reading the papers. how are we going to figure this out? we will. we will. >> we did. we will again. but pat, you wake up on saturday morning, you know about the

downgrade. it's on the front page of the papers. if you are watching the "today" show or listening to news on the radio, you hear 31 americans from this elite navy s.e.a.l.s you aren't is shot down and killed in afghanistan. they are two severe body blows to this country on the same day, on the same weekend at the same time. for a lot of different reasons, i know everybody out there wants to assign blame to one person or one party, but for a lot of different reasons, we are in some fairly bleak times. >> saturday morning was a -- you're right, it was something different. it was a blow to the psyche or the soul of the nation especially the jolt. they said 30 guys went down in the helicopter. it was sickening. you thought about all the bravery of those guys and the loss and everything they

sacrificed. sitting beside this gigantic downgrade, for an older generation is something, you know, you didn't see. the idea america is moving toward deadbeat status. it wasn't the america you grew up in. as much as the ripple economic effect, the hit on the soul of america that saturday was heavy. >> it was a tough saturday, wasn't it? >> yeah. >> friday night i was sitting and my blackberry went and the news of the downgrade went. i felt nauseous, embarrassed and humiliated we would allow our country to get to this place. your analogy that asks if we want an optimistic view of life. it's worse than today. we have hostages inside the embassy. >> you know, mark, in '79, you remember it as well. that was a time where, i know, our teachers in high school were

talking about and you got this every five years, the end of the american empire. this was the end. you had high gas prices, high interest rates. the united states seemed inept across the globe and we recovered. we'll recover now. it doesn't take away it all from how we have seemed at this point to have lost our way as country. >> no question, these are tough times. no tougher for anybody than the families who lost people over the weekend. i was traveling over the weekend. 30,000 people praying for america to help come back. >> were you at rick perry's thing? >> i was. it's easier to see the resilience of the country when you are not in washington. people are concerned about the

future. we came back in the late '70s. we'll come back from this. >> you tweeted endless wars and endless tragedies. a 36-year-old died in the helicopter crash. he was on his fourth tour of duty in afghanistan. he had been back not twice, not three times but four times. it's going to happen over a decade of war. >> it continues, willie. it continues. i think that's what's so frustrating. i guess richard is with us. >> yeah. let's go live to richard engle. the latest is nato says one of the helicopters, this is the latest news, made a hard landing in afghanistan today. officials say the chopper suffered a me canal failure. this comes as new details emerge about this weekend's deadly chopper crash in afghanistan that killed 30 american service

members including 22 navy s.e.a.l.s from the unit that killed osama bin laden. the troops died while on a mission to assist an army ranger unit under fire. the u.s. commando was targeting a taliban leader that was responsible for the attacks. nato confirmed it's begun an operation to recover as part of an ongoing investigation. this crash is the single deadliest attack on u.s. forces since the attack began in 2001. let's go to richard engle, joining us live from kabul. richard? >> reporter: good morning. u.s. military officials are saying little about exactly what happened in that very early morning hours of saturday. we have, however, been able to piece together a sequence of events based on taliban

interviews and witnesses. just after midnight, in the first few hours of saturday, afghan local time, u.s. army rangers were engaged in operation 60 miles southwest of kabul. they were targeting a taliban compound. there were 12 taliban members in the when the operation began. the rangers came in by helicopter. they engaged in a fire fight. the fire fight lasted 30 to 40 minutes. it was quite intense. so intense that american reinforcements were called in. it's when the helicopter carrying 22 navy s.e.a.l.s arrived. initially, it was a successful operation. the navy s.e.a.l.s managed to somewhat subdue the compound. the fire fight dropped in intensity. as they were leaving the area, it was struck, according to the

taliban, by a single rpg bringing it crashing to the ground. they say the sight is secure. they closed off the area but they are still trying to identify and recover some of the remains of personnel and the equipment. >> richard, live in kabul. thanks very much. we'll check in with you later. >> can i just say one thing? >> yeah. >> back during somalia where we lost some men, it was on the front page of the papers for weeks and we had a movie about it, "black hawk down." we had 30 men die a couple days ago. they were in the papers yesterday. it's like, again, i think it speaks to how checked out americans are about this war. this is a horrifying story. it's a devastating body blow to

one of our most elite units and you can find a story about a pitcher in minor leagues in the washington post. it's like 24 hours later, it's going to be pushed off. boston globe has something on the front page. most people going to work today and not thinking about it in the least. there is such a disconnect in this country between the men and women and families suffering for this country and the rest of us. it's sickening. >> think about the guys of s.e.a.l. team six, the ones that did the bin lauden thing. where they are in their home in the united states, most of them are, what they are thinking of their buddies, how traumatized they are, the impact it's having on them, the communities and families. if you will, the rather large

indifference of the rest of the country to the sacrifices made. we have forgotten about the war. it's a colonial war in a far away place. we don't know that much about or care that much about. we are focused in on debts and things like that. tea party versus democrats. it must, however, be a horrendous blow in that community of america. that's the part of america that defends the country. >> no doubt. >> we have to drive this story every day. we'll move on to the other big story we are talking about. markets and lawmakers around the globe are reacting to standard and poors unprecedented decision to strip the u.s. of their aaa credit rating. even after congress and the white house eked out a debt deal, the way it happened was part of this. they call political brinksmanship. the downgrade reflects our view

that the effectiveness and predictability of american policymaking and political institutions have weakened at a time of ongoing, fiscal economical challenges. the move sparks sharp criticism. others call the agencies less than stellar record during the financeable crisis. >> they made a $2 trillion math error and forgot to check their work. the rating agencies that didn't make a $2 trillion math error reaffirmed the aaa status. >> s and p showed a stunning lack of knowledge about basic u.s. fiscal budget math. they drew the wrong conclusion. >> if they forfeited their good reputation if they had a good one to forfeit. they miss it had securities problem under its nose.

if you read what they said, it's a half baked political analysis, criticizing the american system of government. they are entitled to their opinion but theirs is not respect. >> some are calling for the resignation of tim git ner. he said he is staying on. does anyone disagree with what they have said? >> no. no. it is laughable. >> what? >> when politicians come out and say they have no credibility when we have been reckless for a generation, a generation of this country. steve has brought charts in the past that said we have a $54 trillion liability. at least over the past decade, we have done nothing, nothing, nothing to pay it down. democrats haven't. republicans haven't. nobody in washington has.

>> why wouldn't you say the s and p as complicity in this, if they give us a perfect rating when things are ballooning out of control and a bubble blowing bigger and bigger and bigger. they missed everything, now they are right? >> if i'm watching trillions of dollars flooding in, that's okay. money is coming in. let's see what happens. >> oh, okay. >> steve, i don't know enough about them to defend everything they have done over the past decade but you and i both know the united states of america has a $54 trillion -- some say more in liabilities over the next generation. we have trouble cutting $1 trillion, $2 trillion in the budget. they passed a bush tax cut extension in december, everybody pats themselves on the back. you can look at spending over

three years. look at the $7 trillion medicare drug benefit plan and the fact we have two wars going on. this president tripled the number of troops in afghanistan. there's nothing saying we will be out of afghanistan in six, seven, eight years? if you are a credit agency, are you not concerned about this country? >> we have slides with two sides of the argument. the first slide, i have compared us with five european countries. three rated aaa, germ any, france and uk as well as belgium and spain. as you look at a couple of these metrics, you'll see what's called insurance cost, the cost of insuring debt. we are the most attractive. if you look at the deficit, not great, but better than the uk. the gdp is lower.

taking the u.s. and putting us next to belgium does not make perfect sense. if you look at the next slide, you'll see why they did this. we're talking politics of it. what bothers them is not so much what's happening now that i showed you, but what the out years look like. their argument is after the $2 trillion mistake, our debt to gdp continues to rise. this is something we have spoken about before. $7.5 trillion in debt. that's what's troubling them. their argument is country's like the uk have been more successful than we have at putting in long term programs, things that bend the curve down and get the debt to gdp ratio. >> show the chart again. the numbers go up and for a few

reasons. nothing to do with pbs or funding of the arts or home heating assistance for the poor. steve, what are driving the numbers up? what is the great risk? >> it's entitlements. that's what's at the heart of this and we need to address this. >> and defense spending. >> and defense spending. >> and tax cuts. >> i was getting to that. here is the irony. my understanding is if the grand bargain got done, the $4 trillion deal got done, this wouldn't have happened. >> right. >> they have said you have made a good faith effort. why didn't it happen? the tea party insisted there was none. without revenue increases, we are not going agree to entitlement reform.

we are in this mess. >> i would disagree politically in this respect. i think if republicans have been wise enough to call the president's bluff on entitlements, i think it would have been the democrats who blinked on entitlement reform. right now, a lot of people are pointing at the tea party saying it's just 20, 3040 members. it's just their fault. i wish they would have said sure. we'll put more revenues on the table. knowing the democratic kau cause in the house as i do and you do, they wouldn't have moved to entitlement reform. >> many would. that was the bargain, to get a compromise in the center to find people who wanted to deal with it. >> we have been talking about

this for a year and a half. you have been predicting for that long they would have entitlements. >> he put a deal on the table. we don't know the specifics of it. clearly had reductions in social security and medicare. >> why hasn't he done it over the past three years when he said he was going to? >> he couldn't do it largely because of intransience of republicans. he would have lost democrats. >> come on. seriously? >> it's two against one here. >> three against one. >> you're telling me barack obama and david axel rod and others are telling me he'd have entitlements and he's done nothing. he talks a good talk. he hasn't done a damn thing. >> we have another chance coming

up when the super committee is going to have to report. >> he won't do it. >> pat. >> joe, you are right. i think full responsibility rests with the president. >> i appreciate it but you have gone way out there. i'm blaming the tea partiers. >> i don't blame the tea partiers. >> i'm blaming tea partiers, democrats, republicans, everybody. >> that's nice. >> i tell you why i'm not. the tea party is -- i believe we can cut entitlements by $3 trillion. i think we should jump together. the tea party won't jump with me, i'm going to lead and show you where the cuts have to be made. we'll do $3 trillion without those guys and we will shame them.

>> by the way, he could have had the votes without the tea party people. >> he had enough democrats. by the way, listen to this. this is funny. people can point at the knuckle draggers, all the things they called us back in '95 and '96. half the tea partiers voted for the deal. the president needed 45 more votes. if he put entitlement reform there, he could have rolled the tea party caucus. he chose not to. why? because he can't do it and won't do it before an election. they're going to demagogue paul ryan's health plan. i don't agree with it 100%, but at least he put a plan out there. where is the budget after all this time? >> missing. >> why is it missing?

>> they are involved in a game of chicken with the other side. >> wait, wait, wait. you mean they are letting republicans -- let's be honest here. republicans have put a budget out. democrats haven't. why? because they are going to demagogue paul ryan's plan, aren't they? >> the president put out a budget, $2.5 trillion in cuts. i think he's been more specific on medicare. i think the president put himself out op the limb whep there's an election coming. >> let me say this. >> this is like the closed caption thing. this is one of my closed caption for the stupid id logs out there. you really don't understand because you are so dogmatic and can't think for yourself. i am not blaming the president exclusively. we blame the tea partiers here for not moving, we blame

republicans and democrats as well. please, i know it makes you feel better, but you know, stop using the tea party as a pinata. the president could have done something for two years when he was controlling the house of representatives and the u.s. senate. he did nothing on entitlement reform. >> okay. >> nor did george w. bush. >> and the cuts -- >> you know they did. the president, by the way, the president extended the bush tax cuts when he could have taxed millionaires and billionaires. >> we have to look at every aspect of the story. also the dynamic of s and p and what their intention was. some believe it might have been the obama administration who really made a vow to go after the ratings. >> the question is, the

bittersweet symphony end. >> i'm going to extend it. >> coming up. >> hold on, willie has something to say. >> you're cute. coming up, mayor michael bloomberg and ed rendell and the chairman of the standard and poor john chambers to discuss his agencies decision and wes moore will join us. up next, why politico says it plays into mitt romney's campaign. keep it here on morning joe. [ female announcer ] goodnight gluttony, a farewell long awaited. goodnight, stuffy. goodnight, outdated. goodnight old luxury and all of your wares. goodnight bygones everywhere. [ engine turns over ] good morning, illumination. good morning, innovation. good morning unequaled inspiration. [ male announcer ] the audi a8,

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♪ some political news here. i read that joe biden will make a diplomatic visit to china. he spent all day trying to read fortune cookies without adding in bed to each one. a new study found that president's age two times faster

than normal people while they are in office. wow. welcome back to "morning joe." joining us now, patrick had a look at the politico play book. hello, patrick. >> good morning, guys. >> 73. >> he lived a longer and happier life. >> we went to the cats. i'm going to move forward. >> if you have an extra cat you would live longer. i heard you got rid of yours. >> gone. >> no comment on that one. >> gone. >> you are reporting a new campaign strategy for mitt romney in new hampshire. it ties to the s&p downgrade, what is he doing? >> three events in new hampshire today. he's going to put out a document that is just opposing or what

took place on friday with the downgrade and what happened in massachusetts under his tenure. the s&p gave the state of massachusetts, when he was governor an upgrade. he did a document that's going against the obama administration singling him out for failing to put the economic house in order. it did not happen on accident. he's going to hammer the 1979 note as well. one statement is in the carter area it was called malaise. under president obama it's called meltdown. he's made the fact he considers himself confident on economics to be -- provide him with the best opportunity to campaign. really hammer home ha he thinks to be his best strength. it's giving him the opportunity to try that out. >> mark halperin, he's in malaise. does the business climate with the market sliding, the s&p

downgrade, does that help mitt romney? >> it helps all the republicans. you are going to see democrats push back very hard and some republicans when he makes the claim. >> within the republican field. >> if he can convince people he has ideas for the future, the record in massachusetts and maine aren't enough. he has to have ideas about the future going forward. >> regardless of who runs against the president, next year, in the general election, this helps republicans politically, in a big way. >> the symbolism of it. >> yeah. the 30-second commercial, the people out of jobs. the downgrade. comparing the united states of america to belgium. >> romney is always going to run on the steam of we are an exceptional country and the

president doesn't think we are. >> we are going to hear more about carter and malaise. thank you so much. >> thanks, guys. extra innings at fenway. red sox and yankees. it was a tough one to watch. sports, next. ♪ [ country ]

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♪ 35 past the hour. a nice shot of top of the rock. welcome back to "morning joe." a quick look at "the new york times." arne duncan will override the requirement of the no child left behind school accountability law that 100% of students be proficient in math and reading. he called it a slow-motion train wreck. senators john kerry and scott brown traded in their suits and ties for biking shorts yesterday. they joined lance armstrong and

thousands of others in a cancer fund-raiser. they trek more than 100 miles from stur bridge to massachusetts. they were raising some $34 million. great event. >> a couple governors passed away. >> yeah. >> from new york. governor back in the '70s that helped stave off bankruptcy and a governor before becoming senator in oregon. 1965 spoke out against the vietnam war. one of the first major politicians to do that. a remarkable man and remarkable career. let's move on to sports and what everybody is talking about in america, everybody. you know what it is. the english premier league

kicked off yesterday. >> i heard that. >> manchester, 2-0, comes back and wins, 3-2. you call it kick ball. >> let's do a real sport. sunday night baseball. >> he's trying to help you here. >> first place in the american league east. patriots leader, chad ochocinco. brett gardner, not known for his own power. a shot to right center field. it gives the yankees a lead. bottom of the ninth. a fly to the left. doubled and move over on a bond on rivera. gave is tied at 2. a blown save. the yanks walked crawford to get to josh reddic. he's been great. he goes the other way. opposite field, down the line.

darnell mcdonald scores for the red sox. they win, 3-2. they are up one game in the american league east. they have absolutely owned the yankees this year. they are 10-2 against them with six left to play. >> josh reddic batting .350, a freshman. he's been a real surprise. it's interesting, going down the stretch, the red sox, carl crawford, ortiz, reddic, these guys are having banner seasons. the yankees aren't on all si cylinders yet. i heard before the red sox owned the yankees because they are all left-handed hitters. that doesn't explain saturday night. what's up? >> the yankees pitching has been shaking. cc sabathia is the best pitcher in baseball.

for whatever reason has done terribly against the red sox. 14 blown saves in his career. if any team has his number, it's them. the bridgestone invitational. the buzz was about the return of tiger woods. he's been sidelined for three months. >> he gets rid of this caddy who is deadweight. that's why he's been losing because of his caddy. that guys not ever going to help anybody. >> the real story, tiger's former caddy was dumped after 12 years with tiger woods. adam scott wins the tournament. a birdie put on 18. williams absolutely elated given the context of tiger's return.

>> i have been a caddy for 33 years. this is the best week in my life. the people here this week have been unbeliefable. all the support from the people back in new zealand. there are a lot of expectations today. i would be lying if i said i wasn't nervous. adam was leading the tournament. it's an incredible feeling. i caddied for 33 years, 145 wins now. that's the best win i have ever had. >> he said over and over, this was the best week of my life, best week of my life. let go because he stood with tiger for the tough two years. he defended him and was cut loose then he wins the day tiger returns. >> what do you think of that, willie? s he said it all.

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♪ >> our presence must continue to diminish to the point that we have the ability to protect our national security interest 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. >> the president's decision to withdrawal on the schedule he's outlined, there was no military recommendation. all our military leaders says it increases the risk. why do we want to increase the risk of the lives of the young men and women serving?

>> joining us now, best selling author and combat veteran, wes moore. we'll start with a piece onafgh globe." afghanistan in the future that we could exit gracefully with our heads held high, even if we were holding our noses. we leave afghanistan to the afghans and wash our hands of the effort that alluded us and our allies for so long. no american would want to deprive our troops of a happily ever after event. whether we leave this year, next year or 2014, we won't be able to control what happens afterwards more than we can control the grenades that bring down chinook helicopters. the loss of the s.e.a.l.s is a

tragedy. so many americans have no clue. it's not becoming a campaign issue. >> this is a huge, not just personal tragedy, this is a huge personnel tragedy as well. you know, when you look at s.e.a.l. team 6 or the delta force, they are nameless soldiers until tragedy happens. we have approximately 300 s.e.a.l. team 6 members. to lose 20 in one day, it's 70%. it's going to have significant implications. are they mostly developed in afghanistan? >> we have about 10,000 special operation forces, about 10,000 of them are stationed in afghanistan. >> wes, do you agree with what senator mccain implied that in effect our policy put these

people in harm's way? >> the point that he makes about fighting is true. afghanistan is broken up into fighting seasons because generally during the winter months, there's no fighting. they go to pakistan, regroup, retrain. that is a legitimate argument. the question needs to be, what are we doing during the fighting seasons and what is the strategy? how does it move the ball up field? that's why there's confusion. we could put 500,000 troops on the ground. what are we hoping to accomplish? >> good question. are we asking that, still? >> in the end, when we leave that land as op-ed said, pat buchanan, the results are going to be the same. see what the afghan rebels did to the russians back in the '70s and the 80s. they shot down helicopters with

these type of weapons. 20 years from now, 30 years from now, if it's india that goes into afghanistan, they will be shooting down indian helicopters. 100 years from now, if it's china, they will shoot down chinese helicopters. i don't understand the end game here, i have never understood the end game here. it's why we opposed the president ramping up troops. what is the end game, pat buchanan? >> the end game is pulling out one-third of the entire force by next september, september 2012. i would ask wes, wes, when you talk to the guys over there that are coming back, what do they say is going to happen when one-third of the force is out and the entire force is out or stands down by 2014? do they think the taliban will win?

>> i can tell you, great question pat. part of the frustration that i have, we have 20,000 troops inside afghanistan in the country during that time period. part of the issue we had is that is a small force to be spread thin when you consider the mission. there are real concerns for the soldiers left on the ground. what does it look like when we have the same responsibilities. wes, in 2005, i had a mother of a young man who was in afghanistan. tell me, start talking about the afghanistan war and how it was and how her son brian would go from village to village to village. they go in, we are americans, this is why we are here. get them on the team.

then leave and go to another village. six months later, they circle back and go to the same village. she said it was a mess. i told he she gets her wars mixed up. it is a mess. it's the problem we are always going to have in afghanistan. whep we leave, when we're gone, we are not going to be influencing them. >> it's funny because part of the frustration i had before is as afghanistan was going on, there wasn't a national focus. when we got our deployment orders, i thought well that will be -- at least it's not iraq. then you get to afghanistan and realize how much more complicated afghanistan was than iraq could be. the fact that we put a focus on afghanistan is a good thing. the question is, do you think about the time that was lost?

that we had had insufficient support op the ground who would really conduct a strong surge. >> we'll get to one more must read. new york times, barack obama blazed like luke sky walker in 2008 but never learned to channel the force. now the tea party ran off with his lightsaber. when he had power, he didn't use it. he wanted to be a transformational president like ronald reagan. reagan showed strength without raising his voice. now, when the high school principal has been browbeating congress to create jobs, he is distracted from that task as he tries to save his own. there's really sering -- there was an incredible pete in the

new york times. what happened to obama's passion. i don't know if it's that fair. >> to follow up with what i said at the top of the show, in passion steve rattner said, when he had power, he didn't use it. as maureen said, we had all these challenges facing us. for people who say the president's administration has been undermined by the pesky tea party freshmen is laughable. they are there because he had power for two years and americans could not have disagreed more with the way he used it or as maureen says, he didn't use it. steve rattner. what say you? come on? >> i think it's more complicated than that. i was in washington.

i worked in the white house with treasury. i saw what it's like to work on the hill. it's gotten stressed. >> democrats were completely in charge. >> not completely. briefly. briefly. very briefly. >> 79% majority in the house. the republicans could have been in paris for two years. >> the president dpot a fair amount of things done. >> you could argument he may not like your prarms. the party that created the snar is using it to tear down the president. we have to go to break. we'll be right back. [ male announcer ] there's more than one of these abandoned racetracks in america today. automotive performance is gone. and all we have left are fallen leaves and broken dreams and -- oh. wait a second.

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to have a negative outlook, a longer time frame from six mons to 24 months. if the fiscal position of the united states deteriorates further or if the political gridlock becomes more entrenched, it could lead to a downgrade. there's a one in three chance of a downgrade over that period. >> welcome back to "morning joe." mark halperin is still with us. joining us now, visiting professor, harold ford jr. and we have ed rendell. reinforcements have been brought in. >> you said reinforcements.

this is a first. you actually feel sorry for me. >> i do. what people have to understand, the executive has to lead. what the obama folks don't get is good leadership. resolving problems is the best way to get reelected. you get the country back on track, you get reelected. >> this is what maureen wrote. barack obama blazed like luke skywalker in 2008 but he never learned to channel the force. when he had power he didn't use it. so, what do you think has happened with this president? >> that gives him such a great campaigner. i think he was a legislature and he didn't understand the executive or what it was to put your own program out, take the arro

arrows, push the envelope has far as you can. take a risk. an executive has to take risks. i don't think it's too late. look at what's happened here. we can disagree with what s&p did but let's solve this problem. go for revenues and do serious entitlement cuts, put $3 trillion to $3.5 trillion on the chart. let's have everybody ticked off at all of us. >> you are saying actually what, and this shows there may be an emerging majority. if you are say whag you are saying and i'm saying what i'm saying, we have ezra klein, a progressive, tom coburn, we can do two things at once. we can raise the revenues, close

the loopholes, cut pentagon spending, drawing down in the war. we are doing that on one side. so the world takes note that we are being fiscally responsible. this is going to be sustainable. at the same time, in the short term, we invest in infrastructure, education, r & d, we make the investment that is the chinese are making now that we have to make. not because it makes us feel good about ourselves morally and not because it will create jobs in the short term, but it will ensure we can stay competitive with china. >> one of the positive things out of the debate is we have the power to fix these things. a lot of countries, they run into challenge, whether you agree with s&p or not. they are probably more right than wrong. we can fix the entitlement problem. we can fix our energy dependency

problem. we can fix our education challenge. the question i have for governor rendell, how would you answer the question -- i have an answer, i'm interested in yours. how do you deal with the tea party? coburn has great ideas. he's been on the show several times. how do you isolate, if you were president or governor of a group of 20 or 30, you have 70 or 80 in congress, what do you do to persuade boehner to bring the other republicans? >> before you answer that question, you don't start with a premise. you don't start with a premise that you isolate anybody. >> joe is right. >> you don't say i'm going to isolate the tea partiers. you say this is where china is. this is where we are. >> if they were stubborn -- >> every day is a new day.

>> i understand. coburn had the right message. if you are tea partiers, what do you say? >> first of all, i do it for joe and harold. nobody talked to these guys. the deficit is important. we are getting the daylights kicked out of us. we can do both. say you are a tea partier. you don't believe 38% of u.s. corporations shouldn't pay no tax do you? of course you don't. let's get this done. >> they don't. pat buchanan, this is what a lot of people in the media missed. the tea partiers, a lot of them, i know this because in '94 we were saying a lot of the same things they are saying today. we weren't for corporations getting a free ride. in fact, we saw big corporations

as much of the challenge as big government if they were getting subsidies. t if the top corporations are not paying taxes, half the tea partiers will support anything to close the loopholes, if presented in the right way. >> the president of the united states should go to tea partiers and say i know you don't like tax increases. i'm not going to get them but i'm going to show you how to lead. we are going to cut $3 trillion in entitlements. get 100% of the tea party. then you go back and say you guys, i know you don't like tax increases, but this is absurd that ge and rich guys and buffett are getting this. cut the rate, get rid of the trash, throw it out. will you support me on that? they would be with you on that.

the president is not leading. >> are you sure? >> if pat buchanan would be for it and joe scarborough would be for it, i guarantee you ed rendell you can get -- this is the problem right here. mika that has mind set of the obama administration. we had john kerry, lovely guy, respect him but he came on on friday saying the media should stop covering the tea party. come on. let's climb down from mt. olympus. they are politicians. at the end of the day, if you say if you go home and can campaign about corporations paying 0%, less than you pay, truck driver, i know it, you have done it, they will vote for you. this can be solved if the

president figures it out. >> i agree with your skepticism. it's worth a try. and two, let's assume we try, we do what joe says and the tea party rejects it 100%. then you have won a great political fight. >> you have. >> let's follow up on this for a second, harold. if i were a democratic president and republicans did not want the 38% of the largest corporations in america paying anything in taxes and if they wanted to make sure that warren buffett continued to pay less in tax rates than his secretary, ed rendell and i would go across the country and maul anybody that got in our way. they were not late. >> joe, you made the argument

and governor you did, too. i don't disagree with this approach. i'm saying say it doesn't work and there's evidence it won't because the tea party ejected this early on. they deserve to line share in government spending. if this does not work, there's evidence to suggest the tea partiers are not coming along. how do you figure out how to build a majority with 365 members of congress or 55 members of congress? >> you know -- the blame of this downgrade on the tea party. >> i put it on everybody, mika? >> you don't put it on the tea party? >> i have been around this table this morning and everybody is blaming everything on the tea party. hold on a second. it's how the show began. when i say the responsibility deserves to be shared by everybody, there's an explosion and the suggestion that i am

defending the tea party when i was written editorials for a week claiming the tea party should take the grand bargain. please don't tell me i don't put blame on the tea party. governor, these are the false choices that this president masters in. he says you have to be for the tea party or you are with those of us that like sweetness in life and infrastructure. this is a leadership problem. it starts with the top. it starts with the president of the united states. a strong leader like you could sell this to america. >> i agree but i think mika is right. let's do a test. let's do a test. but, let's do a test. here is the test. you have until november to straighten this out, correct? >> that's soon. >> it's very soon. say mika's proposition, let's test it. let's go to the senate and republican leadership, go to the

house republican leadership and say put people on this super committee who have the flexibility to make a grand bargain. >> right. >> the flexibility to do revenue increases, maybe not tax increases but closing loopholes. what is the response you have gotten from senate and house leadership? basically, we are not compromising. we are putting people on. we are not for any revenue increase. >> dead right. >> some people don't understand and buchanan understands this and i know harold does, too. if your rival does not do the right thing, you set it up in a way where you can kill them politically. if you are my rival and i know that you are too stubborn to take the bait, then i sweeten it

up so much that i give it to you, you say no and i beat you up and drive all of your allies out of the legislative body and i own washington in two years. >> is there an excuse for not putting tom coburn -- >> what would motivate them? >> the good of the country. what's wrong is everything is about politics. >> the question is always asked of the republicans. >> i tell you why -- i'll tell you why. >> wait, i want to hear. >> i want joe's first. why? >> the democratic party is willing to provide enough votes to do a grand bargain. entitlements and revenue increases. >> ask the question of if democrats are putting three or

six people on the committee. let's hear it? >> i think they should. steady horse. >> at least one. >> at least one. it's all you need. if i were nancy pelosi, i would put steny on. >> what they should do is nominate from outside of congress. they won't do either of these. >> can they do that? >> let's get real here, okay. the democratic congressional committee has its number one strategy in 2012 to get back in power demagoguing medicare. that's at the top of the list. we are going to demagogue paul ryan's medicare plan and throw granny out in the street. i'm curious, where does your optimism come that this democratic party is going to be

more responsible than republicans on revenue. >> they were willing to get a bargain. they were ready to strike a bargain that would have taken ryan off the table in 2012. >> what was the plan? what was the plan? >> put entitlements on the table. republicans were not going to put revenues on the table. >> what is the plan? i want to hear the entitlement plan. ha is the plan? >> it was not enumerated specifically. >> what was the plan? >> republicans said -- >> it was no less enumerated. >> 3 trillion of what? it's like harry reid's plan, we are going to get $2.6 trillion

and $1.6 trillion came from getting out of afghanistan. talk is cheap. >> republicans agreed to any tax increases. the republican tea partiers in the house didn't agree to any taxes. >> le's see -- >> they are the most liberal caucus in the house of representatives. >> the president of the united states is saying i can't get any cuts in entitlements because the tea party won't give me tax hikes. yes you can, mr. president. go ahead and do your $3 trillion in entitlement reform. after that, say now we are going to do tax reform. we are going to reduce the rate and we are getting rid of all this. the tea party goes for both deals. >> are you sure about that, pat? >> i'm sure about that. >> let me have my dessert.

>> when this president owned washington, d.c. for two years and did absolutely nothing. absolutely nothing. stop blaming the tea party for earthquakes. it's ridiculous. >> coming up -- >> it's not right. >> i think mark is right. i think there are solid democratic votes for reform. >> all right, new york mayor michael bloomberg is standing by in the green room. we are going to join the conversation with him. next, we are going to talk with john chambers. >> he's been in a holding room since 3:30. >> i have questions for him. >> we'll talk about the decision to downgrade the debt. >> the first hurricane of the season, do you know whose fault that is going to be?

>> s&p. >> we'll call the tea party hurricane now. showers and thunderstorms widespread in new england. yesterday, we got nailed by a lot of heavy rain. warm, humid. nothing has been changed. cooler weather wednesday and thursday. a lot of wet weather in missouri. kansas and st. louis, at times torrential downpours. only 106 in dallas today. tomorrow is 110. 82 up in minneapolis. you're watching "morning joe." [ artis brown ] america is facing some tough challenges right now. two of the most important are energy security and economic growth. north america actually has one of the largest oil reserves in the world. a large part of that is oil sands. this resource has the ability to create hundreds of thousands of jobs.

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i think s&p has shown really terrible judgment. they have shown a stunning lack of knowledge about basic u.s. fiscal math. they came to the wrong

conclusion over the budget agreement. >> standard and poor would have forfeiting their reputation if they had a good reputation. if you read what they said, it's a half baked political analysis criticizing the american government. they are entitled to their opinion on pop ticks. >> oh. okay. >> the director and chairman of the committee for standard and poor's john chambers. thank you for being with us. >> thanks for having me. >> sorry for locking you up in a room starting at 3:30 this morning. the downgrade, we are a little upset about it. >> he was saying, if you read this, it's a half-baked political analysis. the political brinksmanship highlights what we see as america's governance becoming less stable, less effective and

predictable than we have seen. it's become political bargaining chips in the debate over fiscal policy. this is from your report on your website. >> it doesn't sound so half-baked to me. >> well, i tell you this, i wonder if ten years ago at the height of the bubble if you had known what was going on would you have downgraded our credit rating? >> you are correct that ten years ago, we had a procyclical policy and it would have been wiser then at the peak of our demographic profile to have piled away more savings than fiscal savings. at that point, most of the metrics of the united states were in much better shape, either fiscally or externally. what's changed? we did have a deep recession. quite appropriately, the

administration left the stabilizers operate. as a result of that and with the contraction and the economy, you had your level of debt double in size. it went from 37% gdp to all levels of government together up to 75. >> spending and revenue to the government. >> a lot of the spending you want to happen like unemployment. things like that. but things automatically happen. then you had a fiscal stimulus package. that was not the major contribution to the decline in your position. all right. so, we didn't save during the good years. we had bad years. we tried to smooth out the economic cycle. now, we are in a position. we have room to maneuver in the short term. in the medium and long term, because we have used the

ammunition we had, now is the time to reassure markets by putting forway a plan that will be credible. >> governor rendell? >> yeah. i'm not sure all this blame, it's what we do in politics, we blame people. i'm more interested in something that came out in the first segment of the show. five countries have been downgraded and come back. say between now and thanksgiving, everyone gets their act together, we put reasonable revenue increases on the table, entitlement reform is on the table and we cut another $3.5 trillion out of the debt and put significant investments in thing that is are necessary for growth. is it possible as soon as three or four months if s&p saw that action taken we could be upgr e upgraded? >> well, the way you pose the question is in a manner that is

not a realistic scenario. >> we like to dream here. >> yeah, right. >> i think there may be congressmen listening to us now. >> let me talk about a couple things, then we can go from there. >> we assume that the joints of that committee will deliver the goods, the $1.5 trillion in spending. if they don't, this mechanism comes into play. >> meaning automatic? >> right. now we are talking act what kind of additional measures are on the table. the program we have now is back loaded over the ten year period. now that we are in the situation we are in, down to aa plus, we are going to be looking for the actual goods to be delivered. the five countries that lost their aaa rating, that got it

back, they were australia, canada, denmark, sweden. they got it back in nine to 18 years. how did that do it? they under took significant reform that reduced debt to gdp. all of them, except australia undertook economic reforms that got their external position back into balance. i guess the gist of it is, they were both fiscal measures and economic measure that is were inacted. it took time for those to show the fruit. >> let me interpret for one second. a good part of your report were the political failings. let's assume we got together and did the right thing and

corrected the failings, doesn't that justify a re-look? >> if you justified the settings, that improves the stand of the of the united states. the damage that's been done to the credibility of the united states. it is unimaginable for your highest rated government to be in a position where they were ten hours away from a major cash flow problem. there are only a handful of governments in the world that separate the budget from the deficit. we have a budget that has been voted bipartisanly. to have a subsequent discussion over paying the bills that have been racked up. >> you have been criticized by the treasury secretary and officials there for a $2

trillion mistake saying you didn't account for $2 trillion. >> and for not being there for the meltdown of our lifetime. >> this is an issue, a technical issue between what source of baselines you take. are you going to take a baseline that assumes it takes place? that means the lashing of the tax cuts. that the claw back takes place on medicare payments every year or weather or not you relax those. it doesn't change the facts on the ground. the facts are, the control act of 2011 is going to give you a little over $2 trillion in savings. it doesn't change the tets on

the ground. it's now 74%. by the time you get to 2021, depending on the assumptions you make is going to be well over 85%. >> jonathan chambers. are fannie mae and freddie mac at risk of being downgraded as well? >> we'll have a report on that later. >> thank you very much. coming up next, who do we have? >> michael bloomberg standing by. stay here on "morning joe." almost tastes like one of jack's cereals. fiber one. uh, forgot jack's cereal. [ jack ] what's for breakfast? um... try the number one! [ jack ] yeah, this is pretty good. [ male announcer ] half a day's worth of fiber. fiber one.

♪ welcome back to "morning joe." joining us now, the mayor of new york city, michael bloomberg. good to have you on. >> this is exciting. >> i have a problem. ed and i have a problem. we have a problem with new york and we are going to pick it up with the mayor. >> tell him. >> you have so many people coming to the city. >> it's crowded. >> i can tell you how to fix it.

>> yeah? >> raise crime, stop cleaning the streets. >> okay. >> have you ever seen anything like it before? you are going to set a record i bet. >> around 11:30 times square was packed. you could not turn left. >> it's tripled in times square, harold square. >> how much are billboards going for? >> a lot. one store has 50,000 customers come in every day. they sell dresses for 25-30 bucks a piece. >> i'll have to head down there. ed and major bloomberg, you have an infrastructure report. you are putting it together. falling behind. the ideas of building a future. >> we are behind. we managed to do it in education, infrastructure and

sanity in the capital. you read the headlines today. >> no question. and the mayor always said when the recession first hit, the mayor said because the economy is in trouble doesn't mean we stop investing in growth. the plan we are laying out is get an additional $200 billion a year for ten years. remember saying infrastructure doesn't work because short term stimulus doesn't work. every major country that's done infrastructure, ten year program, $200 billion a year, we can use that to create 5 million well paying jobs each and every year. >> it's insane. go around new york. talk about all the people coming to the city. you drive around outside of manhattan. two lane roads where they should be eight. drive-through connecticut, two

lanes. >> airports can't handle it. our ports can't handle the new ships being built. i think five out of the biggest eight ports are in asian. panama is building a new canal for ships that can't enter our harbors. >> you start out and listen to the dialogue in washington. they start out on the bottom to the top. the way government works is the way business works. what do we have to have, not what we would like, but what we have to have. what is it going to cost then find ways to pay for it. we are going to spend this much money. it's insanity. >> say your company wasn't extraordinarily successful. pretend you have had one or two bad years. would it not be insane if you

are having a hard time to cut r & d, cut education and the thing that is are going to make our systems. you can take care of long term debt. >> there's no short term tomorrow. you can't do that. if you look at what new york did in the 1970s, they got in trouble and cut back programs. it reduced the tax base. the time to go and invest is in the tough times. concrete is cheaper. steel is cheaper. labor is available. >> why not go to fifth and 34th and look at the empire state building. the building we are in now. all the great buildings were built in the down times when people had the courage to do it. at the top is not the time to do it. that's when everybody says now we can afford it. when things are tough, we can't afford the run.

it's what capital budgets are for. borrow in the down times because you don't have the revenues coming in. make the investment sos when you come out of it, you have the infrastructure, a school, building or bridge. in the good times you will generate more economic activity. >> new york city is having problems. certainly, the portrait of dysfunctionalty in washington. >> new york is doing well. we have our problems. tax revenues are not what they were in '07. we have, for example -- i look because we were going to talk about infrastructure. we have bridges in new york city. only four are rated poor. all four of those are being redone. we have redone 200 bridges in the last ten years with city taxpayer dollars because the government didn't come through.

it is our money. what's interesting, you look at which states are sending more to washington than they get back. that's one of the great inequalities in our country. new york is -- new york, illinois, ohio, states like that spend a lot more, kentucky and a bunch of other states get it. you can blame the congressional delegation. the federal government doesn't do everything wrong. we say everybody's got to get something, otherwise you can't get it through congress. that's not true or the best thing for your future. sometimes the big port cities have to have more money otherwise the economy nationwide is not going to be good. even though nothing is built in one state, what is built in another state you can't do that. >> let's talk about another investment. i made the argument you can

strip the morality part out of investing. republicans have always said let's do the right thing. strip the do the right thing out of it and talk about our competition with china, brazil, india, other emerging nations and start thinking, we have to do this for our own protection to make sure this century we are going to thrive. there's also human capital. we can no longer say we are fine with one-third of african-american males being unemployed. a growing number of his fans unemployed. you did something a week ago that focuses in on the problem. >> let me point you, you talk about china. i think one of the problems in our country is lending everything on china. >> china is a rival, not an

enemy. >> the new learjet is being built in mexico. mexi mexico's economy is better than ours. people will go where they can get jobs. the program we talked about, we put in tax money to take a look and see if we can't do something for a group of young men say 16 to 25 without educations, a lot of them with criminal records who have no prospects for the future unless we do something. forget about whether it's right or wrong or whether they are where they should be. we are here. what we have to do is make these young men productive. otherwise, they are going to go back into jail, come out into crime. three quarters of all the kids we send to prison come back to jail within a year after they get out. it's a time bomb in our society.

we have always said well, they deserve it or there's nothing you can do about it, whatever. >> it's an example of stripping the blame. getting rid of the blame game and saying we need all hands. >> look at immigration. we are worried about 11 million people who broke the law. we deliberately broke the law. we can't focus on what to do now. we need more immigrants. i said this before and i got vilified for it. you want to fix the problems in the big cities, it's simple. the federal government gives visa's for people to come here. you are going to go to city x. you have a visa for seven years. how you make a living, i don't care. it's up to you. you can't take money if you get picked up. if you survive, we give you and

your families full citizenship. the immigrants know how to start companies and create jobs. >> mayor bloomberg, thank you very much. really nice to see you. come back soon. >> by the way, we need it on the other side as well. it's amazing we send ph.d.s back to india and china that want to stay here. it's unbelievable. it's national suicide. we are deliberately sending the future overseas. >> we are. >> oh, my god. >> are you happy? >> thank you, mayor. [ barks ]

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welcome back here. if you hear the sex mipistols roger must be here. men in blazers. this is a show, willie geist that will change the direction. >> i like the title. >> played the expectations down. >> save western civilization from a miserable death. so, yesterday, speaking of miserable, explain to americans what it is. >> it's no women's soccer, but we'll take it. kick-off classic of the premier league. in this case, manchester united against the a buddha by against tampa bay. these two are great rivals. it's normally a calm game. this is feisty. united, one of the big question

marks of the season. they will replace the legendary goalkeeper. a pair of rubber neckers. he led. united -- seven minutes into the second half. >> 2-0 is a dangerous lead. >> it is. look at this. first goal. >> that was a great one. >> backward pass here. steal. >> a big season for that gentleman. changes down with benny hill. >> oh, my! joe. >> joe is great. he should have gone out and speared him about this point

right here, you come out of the box, tackle him. better to have a penalty kick than this. >> spend a fortune on this team, the abu dhabis did, and they really deserve him. >> roger, your top four, american waits with bated breath. >> you can predict pretty well that one of these top four will win it. it's going to be united. they have winning in their dna. manchester city, the billionaires from abu dhabi, they will come in second. chelsea, they needed youth. the only young person that's turned up in the off-season is their manager. the doogy houser of soccer. >> thank you so much. >> roger's got it all wrong, i was to say. >> mika piece been studying the

books. >> chelsea! >> and then man u., then liverpool, then tottenham. >> i think reverend al has been helping you with these. >> willie, she picked the miami heat first. >> and the redskins. >> i'll give you my top five, roger. manchester united first, chelsea second, liverpool third, manchester city fourth, and arsenal fifth. but their fortunes are falling. >> i think that's possibly true. beautiful soccer doesn't always win. looks like a grim, grim, grim season ahead in london, where the riots will be the only warm thing. what's the state for the -- >> what is he saying? >> what's the state for the bet? >> we'll figure it out.

>> if you win, i will take you to liverpool. >> i want to go! >> i'll wear a liverpool shirt. if you win -- >> i want to meet your mom. >> the -- on a body part of you choosing. >> coming up, does michele bachmann have what it takes to be a front-runner? what's up, smart?

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you guys seen the new copy of "newsweek"? >> oh, my lord. >> wow! >> what's going on? it's not quite out yet, it's the august 15th issue. a lot of people talking about that photograph. the queen of rage, the michele bachmann is the piece, but it's the photograph that they chose to show. >> yeah. >> of all the pictures in all the world, i'm not sure you should show that one. >> that is just not fair. >> some of her supporters suggesting they chose a photo that makes her look a little, well, googly-eyed. >> suggesting? suggesting? no, seriously, if you want to prove she's the queen of rage, do it in words, not -- >> it does call to mind one other famous photograph, almost exactly the same. >> yeah, i don't know. >> i can see the comparison. >> show the other one.

>> he's not cross-eyed. >> kind of a similar -- >> you think so? >> a similar gaze. >> it's a cheap shot. >> didn't need it. >> he doesn't part his hair that way. >> did anybody see bill maher on friday, by the way? christina romer, got a little salty. in fairness, she was drawn into it by mr. maher. >> there's a segment on this show called how [ bleep ]ed are we. ♪ i didn't expect that there, but -- just before we went on the air, they said our rating got downgraded. >> so pretty darn [ bleep ]ed. i've been hanging around timothy geithner too long. >> does she swear like a sailor? >> oh, like a seventh grade boy. >> there you have christina

romer worked in the white house until about a year ago, saying we are pretty darn blanked. >> and she burned tim geithner too. >> just for the language, though. we'll be right back with "morning joe." i'm good about washing my face. but sometimes i wonder... what's left behind? [ female announcer ] introducing purifying facial cleanser from neutrogena® naturals. developed with dermatologists... it's clinically proven to remove 99% of dirt and toxins and purify pores. and with natural willowbark it contains no dyes, parabens or harsh sulfates. dirt and toxins do a vanishing act and my skin feels pure and healthy. [ female announcer ] new purifying facial cleanser from the new line of neutrogena naturals.

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good morning. it's 8:00 on the east coast. as you take a live look at new york city, welcome back to "morning joe." back with us on the set, mark halperin and steve rattner and pat buchanan in washington.

>> there's so much to talk about. and, you know, saturday morning, and we talked about this later at my daughter's birthday party, that both of us, from two different perspectives, looked at the horrifying news of saturday morning coming out of afghanistan coupled with the s&p downgrade and i went right back and i bet a lot of people did, i know you said you did, even as a young girl, back to 1979 when so many things were hitting at one time. it was -- i really can't think of another time in my lifetime where i woke up and saw a couple things hitting like that and, i don't want to say questioned america's place in the world, but certainly thought we had with lost our way. >> pretty bleak feeling. we're going to talk about the unspeakable loss in afghanistan coming up. and also, why, when -- when it will become a central part of the political conversation, when

we talk about campaigns. when it will just be put front and center of the issue of the 2012 campaign along with jobs. i don't know when, but i'm hoping soon. >> but you -- let's talk for a second about '79. 1979. if you had said when you read the papers that morning, you had this -- it almost took you back to that dark time. that was a horrible year for this country. >> yeah, i was a little girl. in our household, for a lot of reasons, there was a sense of it was just very bleak. and everybody wore it, you know? and you got a sense from whatever inside the white house to just reading the papers, like, how are we going to figure this out. we will. we will. >> we did. and we will begin. but pat buchanan, you wake up on saturday morning, you already know about the s&p downgrade, it's tonight front page of the

papers, but if you're watching the "today" show or you're listening to news of this elite navy s.e.a.l.s unit shot down and killed in afghanistan, and those are two severe body blows to this country on the same day, on the same weekend, at the same time, this is, again, for a lot of different reasons, i know everybody out there wants to assign blame to one person or one party, but for a lot of different reasons, we are in some fairly bleak times. >> joe, saturday morning was a -- you're right, it was something different. it was a blow to the psyche or the soul of a nation. especially the jolt of those, i think it was, they said on saturday, something like 30 guys had gone down in that chinook helicopter. it was just sickening. and you thought of all the bravery of those guys and the loss and everything they had sacrificed, and that's sitting

beside this gigantic downgrade, which especially for an older generation is something that, you know, you didn't see. you know, the idea of america as somehow moving toward a deadbeat status simply wasn't the america you grew up in. and i think as much as the ripple economic effect, the hit on the soul of america that saturday, i think, was very heavy. >> that was a tough saturday, wasn't it? >> yeah. and friday night i was sitting and suddenly my blackberry went and the news of the downgrade came across and i felt nauseous that our country had come to this place. i think we want to take a slightly more optimistic view of life. we had hostages inside the embassy in tehran at that moment in '79. >> and mark halperin, in '79, i know you remember it as well, that was a time that our teachers the in high school were talking about, and you got this

about every five years, but the end of the american empire, that this was the end. you had high gas prices, high interest rates. the iranian hostage crisis, the united states seemed inept across the globe, and we recovered and we'll recover now. but that doesn't take away at all from how we have seemed at this point to have lost our way as a country. >> no question these are tough times, they're no tougher for anybody than the families of those who lost people over the weekend. we're thinking of them. i was traveling over the weekend. i spent my weekend in houston with 30,000 people praying for america to find defiivine help come back. >> oh, were you at rick perry event? >> i was. it's easier to see the resiliency of the country when you're not in washington. people are obsessed about the future, but we came back from

the late '70s, we'll come back from this. >> joe, you tweeted something, endless wars bring endless tragedies. here's "the boston globe," front page, one of the navy s.e.a.l.s, a 36-year-old named kevin houston died in that helicopter crash. he was on his fourth tour of duty in afghanistan. so he'd been back not twice, not four ti three times, but four times and that's going to happen over a decade of war. >> and it continues, willie. it continues. i think that's what's so frustrating. i guess richard is with us, isn't he, mika? >> let's go now live to richard eng engel. the latest on this is that nato says one of its helicopters, this is the latest news, made a hard landing in the southeastern part of afghanistan today. officials say the chopper suffered a mechanical failure and crash landed, but adds there were no casualties. this comes as new details emerge about this weekend's deadly chopper crash in afghanistan that killed 30 american service members, including 22 navy

s.e.a.l.s from the same unit that killed osama bin laden. eight afghans were also killed in the crash. military officials say the troops died while on a mission to assist an army ranger unit that was under fire from insurgents. the u.s. kmcommandos were targeting a taliban leader that was directly responsible for the attacks. nato confirms they've begun an operation to recover the remains from the helicopter as part of an ongoing operation. this is the single deadliest attack on u.s. forces since the war began back in 2001. let's go now to nbc news chief foreign correspondent, richard engel, joining us live from kabul. richard? >> reporter: good morning. u.s. military officials are saying very little about exactly what happened in that very early morning hours of saturday. we have, however, been able to piece together a sequence of events based on interviews with taliban, interviews with witnesses, and it appears that

just after midnight, so in the first few hours of saturday, afghan local time, u.s. army rangers were engaged in an operation about 60 miles southwest of kabul. they were targeting a taliban compound. there were 12 taliban members, at least, inside the compound when this operation began. this rangers came in by helicopter. they immediately engaged in a firefight with the taliban members who were in the compound. the firefight lasted 30 to 40 minutes. it was apparently quite intense. so intense that american reinforcements were called in. that's when this chinook helicopter carrying 22 navy s.e.a.l.s arrived. initially, it was a successful operation. the navy s.e.a.l.s and these reinforcements managed to somewhat subdue the compound. the firefight dropped in intensity, but as that chinook carrying the reinforcements was leaving the area, that's when it was struck according to the taliban by a single rpg, bringing it crashing to the ground.

nato officials say that the site is secure, that they have closed off the area, but that they are still trying to identify and recover some of the remains of the personnel and the equipment. >> all right. richard engel, live in kabul, thanks very much. >> you know, back when -- during somalia, where we lost some men, it was on the front page of the papers for weeks and we had a movie about it, "blackhawk down." everybody talked about it. you look at the front page of the papers today, we had 30 men die a couple of days ago, and i know they were in the papers yesterday, but it's kind of like -- and again, i think this speaks, pat buchanan, to how checked out americans are about this war. that this is, it's a horrifying story. it's a devastating body blow to one of our most elite units and you can't have a story about a

pitcher on the front page of "the washington post," but 24 hours later, it's going to be pushed off to the side. >> "the globe" has it. >> "the boston globe" has something on the front page. butly s li will say too, most p are going to work today and not thinking about it in the least. there is such a disconnect in this country between the men and women and the families who are suffering for this country, and the rest of us. it's sickening. >> joe, think about the guys of s.e.a.l. team 6, the ones that did the bin laden thing. back where they are at their home base now in the united states, as i understand most of people are, and what they're thinking about their buddies over there and how traumatized and the impact this is having upon them, with those communities, those families, and if you will, the rather large indifference of the rest of the country to the sacrifices that are being made. we've sort of forgotten about that war. it's sort of like a colonial war in some faraway place.

we donate know that much about or care that much about. we're all focused in, as i guess we should be, on debts and things like that, and tea party versus democrats, but it must, however, be a horrendous blow in that community of america, and that's the part of america that defends the country. >> no doubt. >> we've got to drive this story every day. we'll move on to the other big story we're talking about that is on the front pages of all the papers. markets and lawmakers around the globe are now reacting to standard & poor's unprecedented decision to strip the u.s. of its coveted aaa credit rating. friday's move coming even after congress and the white house eked out a debt deal, just before last week's deadline, and it seems the way that debt deal happened was part of this decision. s&p calls political brinksmanship for the cut and the s&p says in part, "the downgrade reflects our view that the effectiveness, stability, and predictability of american policy making and political institutions have weakened at a

time of ongoing fiscal and economic challenges." the move is sparking sharp criticism in washington and beyond from what the obama administration says are mistakes in s&p's calculations to what others call the agency's less than stellar record during the financial crisis. >> they made a $2 trillion math error and forgot to check their work. so the ratings agencies that didn't make a $2 trillion math error reaffirmed the aaa status. >> i think s&p has shown really terrible judgment and have handled themselves very poorly and shown a stunning lack of knowledge about u.s. budget fiscal mess and have drew the wrong conclusion. >> standard & poor's would have forfeited their good reputation if they had a good reputation to forfeit. it having missed the entire mortgage backed securities problem right under their nose. if you read what they said, it's a half-baked political analysis

criticizing the american system of government and how it works. they're entitled to their opinion, but their opinion doesn't have any kind of represent. >> some republicans are calling for the resignation of timothy geithner. the messenger is questionable, but does anybody disagree with what the messenger, s&p, has said? >> no it is laughable when politicians come out and say that s&p has no credibility, when we have been reckless for a generation, a generation in this country, steve has brought charts in the past that shows we've got a $54 trillion liability, and at least over the past decade, we have done nothing, nothing, nothing to pay that down. democrats haven't, republicans haven't, nobody in washington has. >> but why wouldn't you say that the s&p has come complicity in this? if they would give us a perfect rating when things were just

ballooning out of control and a bubble was just blowing bigger and bigger and bigger and bigger and they miss everything. and now they're right? >> if i'm s&p and i'm watching trillions of dollars flooding into they -- i'm like, okay, well, money's coming in, we'll see what happens. steve, again, i don't know enough about s&p to defend everything they've done over the past decade, but you and i both know, the united states of america has a $54 trillion -- $54 trillion, some say even more in liabilities over the next generation, and we have trouble cutting $1 trillion, $2 trillion from the budget. barack obama and republicans pass a $1 trillion bush tax cut extension in december and everybody bat pats themselves oe back. you can look at george w. bush's $7 trillion medicare plan.

we've with got two wars going on. this president tripled the number of troops in afghanistan. there's no reason to believe we're going to be out of afghanistan in the next five, six, seven, eight, ten years. if you're a credit rating agency, are you not a little concerned about this country? >> let me show you, if i could, we have a couple slides, the two sides of this argument. if you look at the first slide, i'll try to compares to five other countries. and what s&p has done is taken us from being up with the germany, france, and uk is put us down with belgium. if you look at a couple of these metrics, you'll see what's called insurance cost, the cost of insuring debt. we are the most attractive of all of theory sovereignse sover. if you look at our deficit, not great, but lower than the uk, and our debt to gdp, lower than all the rest. so on the face of us, taking the u.s. and putting it next to

belgium would not make perfect sense. but if you look at the next slide, you'll see why the s&p did this, the economics basis, anyway. what really bothers the s&p is not so much what's happening right now that i showed you, but what the outyears look like. their argument is that even after the $2 trillion mistake that austan goolsbee correctly pointed out, our debt-to-gdp continues to rise for the next ten years. this is something we've spoken about before, $7.5 trillion more debt that would come on our books even with this deal. that's what's really troubling the s&p. their argument is that countries like the uk, with its parliamentary system, have actually been more successful than we have in putting in long-term austerity programs, thing s that actually bend this curve down. >> snow the chart again. the numbers go up and they go up for a few salient reasons that have nothing to do with pbs or the funding of the arts or home heating oil assistance for the

poor. steve, what are driving these numbers up? what is the great risk to america's long-term solvency? >> it's obviously entitlements. that's what's really at the heart of this. and we need to address it. >> and defense spending. >> and the tax code. >> let's talk for a minute about the politics of all of this. here's the irony about all of this. my understanding if the grand bargain had gotten down, the $4 trillion deal had gotten done, we wouldn't have had this happen. the s&p would say, we've made a good faith effort, we'll stick with you for a while. why didn't it happen? the tea party insisted there would be no revenue increases whatsoever in this deal and the obama administration said that without revenue increases, we're not going to agree to entitlement reform. so for lack of that little last gap between those two, we are in this mess. coming up, we'll go to the floor of the new york stock exchange to see what's in store for the markets today after the historic s&p downgrade. plus, some are pointing

fingers at the tea party for the u.s. credit downgrade. we'll bring in "the new yorker's" washington correspondent, ryan lizza, who profiles congresswoman michele bachmann in the magazine's new issue ahead of this weekend's big iowa straw poll. but first, here's bill karins with a check on the forecast. >> bill? >> good monday morning, mika. i don't think anyone wants summer to ever to end, but i think we want it to come down a bit. the heat and humidity has been a little bit ridiculous. let's start in the northeast, humidity levels are very high, a lot of moisture in the air. pretty easy to pop up some showers and thunderstorms this afternoon, especially in new england. just a slight chance for new york to d.c. it's only a slight chance. let's talk about dallas. it was 106 only yesterday. i say only, because tomorrow's going to be 110. 100 plus temperatures, 37 days in a row, only five more to go to break the all-time record. and we're above 100 all the way through friday. looks like we have a shot at it. the worst weather this morning heading for kansas city. some heavy rain will be over the top of you as we go throughout

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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 senate. >> when you have a democratic

senate, that will not produce a budget, a president who submitted the most irresponsible budget in history, who's continuing to talk about spending more and investing more, whose secretary of education was demanding a 13% increase in the department of education next fiscal year, beginning october 1st, you know we are in denial. >> congress ultimately owns the credit rating of the united states. they have the power of the purse in the constitution and they're going to have a chance now to earn back the confidence of investors around the world and, of course, they're going to have to do that. >> this is just more vindication of our actions. we passed a budget, which according to somebody from s&p yesterday, would have prevented this downgrade from happening in the first place. >> welcome back to "morning joe." with us at the table, mark halperin, harold ford jr., governor ed rendell, wes moore, and pat buchanan down in washington. also joining us from new yorker there, ryan lizza. he profiles congresswoman

michele bachmann in the magazine's new issue. ryan, good morning. thanks for being with us. >> thanks for having me. >> the ames straw poll this saturday. we know that michele bachmann by some polls is leading there in iowa. if she wins that poll, what does it mean for her and for the future of this race? >> well, i mean, i guess the way that expectations are set for her, you know, she has to win or come in second, so it's a big week for her, but i don't know. i frankly think that we place a little bit too much emphasis on the ames straw poll, which is really just a kind of silly carnival fund-raiser there in iowa that republicans use to make money. >> let's put the poll aside. let's say in a few months she wins iowa. let's talk about what that would mean for the race. >> that's a big deal. that's a big deal, right? you know, what happens if she wins iowa? i would guess that considering her background and views, there would be a concerted effort by

what's left of the republican establishment to rally around one of her opponents, either mitt romney or perry if he gets in, pawlenty if he survives iowa. and you might have to -- the race will narrow to two-person contest. >> you spent a lot of time with her. what did you find that you liked about michele bachmann? personally very warm and friendly, immediately exudes a charisma and charm and someone who you want to spend time with. even her biggest critics, you know, and she has quite a few, said the same thing about me. i said, what will it be like when i meet her? what can you tell me? and they pointed that out and i had the same reaction. and also, her husband, marcus, who is a very funny, almost hysterical guy, had a lot of fun with him on the campaign plane. >> pat buchanan's with us in washington. pat, michele bachmann has been mocked by the left, but she's going to be a real player in

this race. >> i think so. and i think the iowa straw poll, i think it's going to be pretty important, ron. i think she has very high numbers, about 22, 23% leading in the polls in iowa, but she's had only weeks to organize whereas pawlenty has had well over a year, i guess. let me ask you, what is your take out in iowa on how well pawlenty's going to do and how well she's going to do? the reason being, if pawlenty runs a poor second or third, i think it pretty much finishes him, doesn't it? >> yeah, look, expectations are incredibly high for pawlenty. he got in this race really early, professional organizations spent a lot of money really early. one of the most remarkable things, i didn't really get into this in the piece, but one of the most remarkable things about her campaign is how quickly she put it together. and i was struck when i first jumped on the campaign trail in late june, how professional it

already was. and how well put together it was. i don't know if that translates into a very aggressive, organized ground game in iowa, but we'll see in ames this weekend, that will be the first test of that. >> what's your bet? >> my bet is she does very well. i bet she either wins or comes in second in ames, but frankly, that wasn't the focus of the piece, was her ground game in her campaign in iowa. it was much more a piece going back and reading what she's all about, what's in her head, what the people who have influenced her and where she comes from ideologically. but you know, if she does come in first in iowa and she wins that, she looks to me if she wins that, then she becomes a favorite in the caucuses. and if she does very well there, in south carolina, and i think you're right, you've got a romney, as of now, a romney/bachmann race. >> that's right. i think in that contest, everything i know about the

republican party is that a lot of people who are on the sidelines rally around romney against bachmann. but stld certainly be a fun contest, wouldn't it? >> harold ford jr. with us. >> you argued in your piece, you said two main risks to bachmann's candidacy are her willingness to talk about some of her radical intellectual influences and her tendencies to speak before she thinks, garbles world, and says things that don't make sense. could one with argue that in 2000, george w. bush could have a second characteristic? not saying he did. but if that's true, how much will that hurt her if she turns out to be the nominee? >> we all new bush sort of stumbled on his words, occasionally, but bachmann, it's a little bit worse than that. she is remarkable -- i've never really covered a candidate of her stature who gets so many facts wrong. i don't mean to be harsh, but i've been covering -- this is the fourth presidential campaign

i've covered, and i've never covered someone like her who is so careless with the facts, and in important ways. on the intellectual background, if you really look closely at what influence bachmann intellectually, very, very different than george w. bush. >> no, i'm saying not the first one, but what are some of the things we do on the east coast, and i'm from the south, we sometime believe on the east coast that people who have -- whose views are informed by their religion or informed by some cultural effects are somehow either radical -- not to suggest that some of her views are not -- but how do you think voters will draw the line between what we describe or you describe as radical and they may see as at least different or not normal. >> you have to look at the views and the voters have decide whether those views correlate or not with their owns. for years on her personal website, she's had a list that's called michelle's must-read

books. books that she recommends. one of those books is a neoconfederate take on the civil war that defends slavery. >> that's radical, i would agree. >> that's pretty out there. >> and she also had the famous misstep about slavery, with regard to the founding fathers working tirelessly to get rid of slavery. i want to get ed rendell in here real quick on michele bachmann. your take on her, governor? >> i think michele bachmann, if she became the republican candidate, you know, there's the slaughter rule in little league. if a team gets ahead by 11 runs, they would have to call off an obama/bachmann debate because of the slaughter rule. >> now we know where the governor stands. pat? >> yeah, governor, you think obama would be beaten that badly, governor? >> i knew you were there, pat, i knew you were there. >> that's good, pat. hey, ryan lizza, thanks so much.

the piece is in the magazine, new issue of "the new yorker." ryan, thanks so much. up next, 2011 may well be remembered as the year of the hack. "vanity fair's" michael grossman takes us inside the raging u.s. cyberwars. we'll be right back. ♪ ♪ ♪ [ male announcer ] more people are leaving bmw, mercedes and lexus for audi than ever before. experience the summer of audi event and get over 130 channels of siriusxm satellite radio for 3 months at no charge. meet pnc virtual wallet. it comes with a calendar that shows you all your finances at once. it lets you know when your money's going out.

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rnchts welcome welcome back to "morning joe." if you think the "news of the world" phone-hacking controversy in great britain is big, our next guest says another hacking scandal is going on right that dwarfs that scandal. cyberhacking has attacked google and security giant rsi and fingers point to china as the culprit. in the new issue of "vanity fair," contributing editor michael grossman gets a look at this sib war. michael joins us right now. just a fresh off of a weekend of partying with the hackers in vegas. >> serious note taking, actually. >> is that what it was? first of all, who is a hacker? where does he come from? why does he do what he does? >> i think the broadest

definition of a hacker is somebody who tries to get into places that you're not supposed to get into. computer hackers are in the business of transgressing the boundaries of the computer networks that are trying to keep information safe. once they get in, many of them turn around and try to sell to their victims the secrets of how they've just defaulted them. >> and these ones we're talking about now, we keep hearing about china. fingers pointing back to china. where do these ones come from and who exactly are they going after? >> one huge piece of news this week out in vegas was the announcement of something called operation shady rat. this is the most comprehensive, lengthiest campaign of organized cyberattacks in history, that's been made public. we're looking at a campaign that lasted at least five years, hit at least 70 companies and governments in 14 countries. they were exfiltrating,

stealing, information including government secrets, design schematics, negotiations for business deals. all the things that it takes to gain competitive advantage over their adversaries. >> and we're talking about defense, american defense. how high up does this go? what kind of information are they stealing? could it compromise us in some way? >> oh, absolutely. it goes very high. and there are plenty of examples of -- specific examples that have been made public of stealing the plans for delta rockets for the space shuttle, for new fighter jets, and then in some cases, even replicating their own versions of these technologies. >> and it seems like this latest round is much more nefarious than what we've seen even in past months when the senate site was hacked or pbs. what does it also say that mcafee was the one who really served as the last line of defense on this? that, you know, things weren't discovered before they were the

ones to bring it up. >> well, a number of other firms have actually been tracking these same attacks for a while, but mcafee was just the first one to go public with the news. there's a lot of controversy within the industry about their choice to do that. you know, this is an industry where secrecy reigns, and secrecy also provides cover for business development. >> broadly speaking, what's the america government's strategy for combatting this? >> the american government is choosing a strategy of collaboration rather than confrontation. we've seen other governments like germany, where angela merkel also confront ee ee ee e jiabao about the hacking to have computer officials. others said that didn't work, so

we're going to concentrate on creating rules of the road and working with our allies to establish a set of norms that maybe china will come in and fall. whether that's going to work, we really don't have a whole lot of early signs. >> is it safe to say the american government tries to hack into chinese computers? >> you know, we spy on the chinese government, the chinese government spies on the american government. that's, you know, that's what grown-ups do. but what's different about what china is doing is the trill focus of their cyberespionage. we don't spy on companies in other countries to give our own companies a competitive advantage. that's what they're doing. that's the cheating that's going on. >> pat buchanan down in washington, i know you avoid hacking by just sticking to the trusty old typewriter. >> they can't get into it. michael, let me ask you, you're

talking about massive intellectual property theft and national security secrets theft. and the government of the united states, you sort of say, have got a cooperative approach. have they threatened any of these institutions in china with really keeping their products out of the united states? any kind of retaliation? this looks like a wholesale criminal enterprise the chinese are conducting against the united states. >> i think that's a fair statement. you're seeing now a situation where this theft of intellectual property has become a key part of the chinese economic development model. and business doesn't want to talk about it, because they're afraid of jeopardizing their share of the exploding chinese markets. government doesn't want to talk about it, because you don't want to punch your mortgage broker in the face, and the press can't talk about it because the security establishment generally won't tell us about it. >> you're absolutely right. when i made the comment about us being a nation of wussies, i

talked about us standing up to china. it shouldn't be surprising that there's hacking, because they've been stealing intellectual property of american companies and we do nothing in return because we're scared. but we're still their biggest customey scared of? >> and until there's some cost, they're not gong to stop. >> michael gross, great piece, the article in the new issue of "vanity fair." thanks for being here. >> thanks for having me. >> up next, business before the bell.

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question everyone's asking after the downgrade on friday, what does it mean for the markets on monday? let's check right now with

cnbc's simon hobbs. how's it looking? >> we'll get a lower open here, probably 200 points off the dow, and that's coming off a two-week period where we lost 9 .25%. there were a huge amount of meetings held around the world to try to work out exactly what this downgrade means. >> and whether or not there will be forced selling or not. still, as we discussed a couple of weeks ago, in the short-term, it may not have a huge fallout, partly because it's a split downgrade, only s&p has come through with it. and more majorly, because we are talking about, as merrill lynch said on an emergency call last night, a one in three chance of a recession. so people are piling back into treasuries as a safe haven play and that brings the interest rates back down. what we don't know are the second-round effects. will fannie and freddie, may, for example, be downgraded? we have a conference call starting with s&p now.

they've said there'll be nor announcements today. could there be hundreds of municipalities that are downgraded? we don't know that. more importantly, we have the shadow banking system, which is a derivative through purchase market, that uses treasuries as a glue for what it does. if those treasuries are going to be worth slightly less, does that mean you'll be able to borrow less on the basis of the treasuries that you have? and that would mean that mortgages or car loans would rise in price. there are a lot of unknowns at the moment, but it's a very difficult trading environment. things would be a lot worse had we not have the announcement over the weekend that the european central bank would go in and buy spanish and italian bonds. that is actively, today, and that has put a bit of a lid on the losses. >> and we had john chambers of the s&p on this show a few moments ago and asked if they had downgrade fannie and freddie, and he paused for a moment, and said they would have news on that shortly.

the white house totally poo pooed this report, criticized their numbers, says it was a flawed organization. does wall street share that sentiment? how does wall street feel about the s&p downgrading -- >> the rating agencies are discredited because of the fact they didn't pick up on subprime. but the s&p telegraphed beforehand that this might do this. there's an excuse to be slightly in denial about the whole thing. that's what people of the nation downgraded too. but it is an important moment in time. and the merrill lynch bank of america said last night, they expect more downgrades, one by november/december into year end and moody's res reaffirmed today while they think everything is fine for the moment, that rating agency may also indeed downgrade. this is an important moment and many in the market who know the figures say this is the time, this is the instrument to hold the politicians' feet to the fire to do something.

>> interesting. just important to note, though, that s&p missed a lot in the past decade and we ought to just look at that and and maybe even question their credibility. pat buchanan, do you have a question? >> simon, i want to ask you, last thursday we went down 575 points, whatever it was. it was italy and spain and the possibility of downgrading default there. do you think this european central bank entry, is that a permanent solution or just a band-aid? >> it's a band-aid, but it's an important band-aid, because they have the firepower, we hope, to stop the contagion. giving the people enough time to make for fundamental moves to try to shore up the situation. it is a band-aid, sir, but it is an important one. >> simon, i just wonder if they do downgrade fannfannie and fre, at what point? and what do you make of the political side of s&p's decision? do you think they've missed the

point, is it overcorrecting were or getting f ting the president for saying he was going to go after the ratings agencies at the beginning of his presidency. >> if that was it, that would be a courageous thing to do, to put the red rag to the bull. there was a moment where treasury said, you've got your figures wrong, and the s&p made some corrections. as we've said many times -- and there was no reason for the united states to default. the debt is denominated in its own currency. you have a huge untaxed, taxable capability and a sovereign central bank that can just print money, but the debt ceiling is an issue, if you bump up against that debt ceiling, you might get this sort of reaction. i don't think the s&p is totally in the wrong. >> i'm not sure many disagree with what they've said. it's just interesting to look at the messenger with a clear picture.

>> it is political. undoubtedly, it has more of a political confrontation more than an economic one. >> simon hobbs, thank you very much. see you tomorrow. back in a moment. ♪ ♪ ♪ when you're resonsible for this much of the team, you need a car you can count on. ♪

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time now to talk about what we learned today. i have mine to add. >> i yield my time to mark halperin. >> we have talked about a need to invest as we cut the deficit. this report about building america's future, funded by the rockefeller foundation, lays out why we're falling behind and why we need to invest, and by investing in infrastructure, we're going to create millions of good-paying jobs and get this economy moving again. >> okay. >> mark, the war between the s&p and the white house is not over. >> wes? >> i've learned that not only the war between the s&p and the white house, but also if you look at what the s&p is going to do next, it could be very real ramifications. >> fannie and freddie. pat buchanan? >> i learned that ed rendell is terrified of the prospect of