and main street found its fight again. and we, the locals, found delight again. that's the power of all of us. that's the power of all of us. that's the membership effect of american express.

they made money.

it's as simple as that. >> the ad, which will air in five states, echoes a longer video released by the obama campaign this week about a company that closed after bain capital took over. in that ad one former mill worker calls romney a job-destroyer an another calls him a vampire. here's romney's response. >> i've been disappointed in the president's campaign to date, which has focused on character assassination. >> for obama and his allies, staging this kind of assault on romney's financier past is a delicate proposition. obama is trying to paint romney as an unfeeling corporate raider while raising millions of dollars from these same financiers these attacks demonize. hours after its campaign launched its first bayne ad, obama appeared at a fundraiser in the park avenue home of tony james, president of the private equity firm, the blackstone

group. and one of the obama administration's top managers is a managing director at bain. romney was still at bain when it closed the steel mill has raised money for the obama campaign. i want to get the substance over the gst steel and the nature of private equity as fundamentally predatory or a noble steward of creative destruction. we'll talk about it in a second. i want to start with this narrow question of hypocrisy, is it fair for them to go after bain on the one hand while taking money from bainexecs on the other. >> i think in the bain discussion both sides have managed to say nothing interesting. i don't think what romney did at bain shows he's prepared to run

the country. on the other hand, i don't think it's a good reason to think what he did at bain is a preview for how he would govern. in massachusetts, what he did when he went in this was did some big social policy. particularly the romney care bill. but it's not from the bain arguments from the obama campaign is making, you think the next thing he did was pass the predecessor to the obama care. >> it's not just the health care bill that he passed, signed as governor of massachusetts. the entire tenure of massachusetts government is totally erased from his record. he never said i'm qualified to be president because i've been an elected leader. he said i'm qualified because i've been in the private sector. think the legitimate thing to say when you were in the private sector, you have a specific goal, you have one interest you're keeping in mind, the financial health of your

shareholders and that's a fair distinction to draw. >> what makes it something that the obama campaign has to respond to is that romney is putting it out as his primary qualification, for someone who can run the country and create jobs and get us back to the place we need to go. the biggest criticism of his time at bain, i agree with ezra. it doesn't tell us anything about what kind of president he will be. to the extent that it does. what he did at bain was focused on the short run. that's what the job of somebody at bain is. is to figure out how can we make profits? how can we change business in a way -- you know, let's scan the landscape, let's see, things that aren't right where if i buy it up and resell it and you know, tweak it and change it, i can make a profit. that's not actually the way we want a president to run the country. we want a president who is going to take a long-run view. who is going to think about things like what kind of investments do we need to make to make sure the country is in

the right place the next year, and more in 20 years, 30 years, that's not the kind of thing that bain gives romney any experience with. >> you don't want a president to run on quarterly profits. >> i think that's probably wrong as a way to run the country. i think taking a long-run view is probably a bad idea. we don't really know what's going to be true in 40 years. we don't know what's going to be 20 years. i can -- >> i know what's going to be true in 20 years, kids today need to be educated so they can go into the workforce in 20 years. i don't think that's going to change. i don't think we can saw, is it a toss-up whether we can cut education spending today, because those 2-year-olds, 3-year-olds, 5-year-olds, maybe they'll need skills, maybe they won't. >> this goes to criticism of romney's time at bain. it's not clear what it it taught him. creative destruction is an important part of the economy,

particularly an important part of this economy. what would you think somebody like romney, who watched it, who oversaw it in that way would say is yes, we need to clear the way for that. but we need to help the people who get left behind by it. this is the nordic philosophy. the flexi security. you allow for a flexible labor market and help the people that fall out of it. he's had to move so far towards the republican consensus of the ryan budget, is that he can't say we will help the people who fall out. we will have the bigger safety net. >> it's worse than that in many ways, what you learn as private equity is how to get subsidies from the government. so you actually learn how to manipulate the government. that's where most of the profits come from private equity is being a political fixer, right? i don't know that we want that manipulation task, in terms of long-term versus short-term. and creative destruction, creative destruction doesn't come from destroying the

company. it comes from having a superior product. that puts the other company out of business. and there is no case in which romney has actually pushed an idea. in other words he's never been a venture capitalist. said hey, that's a good idea, we should do that. >> bain had a venture capitalist. >> i want to get into 24. because this is one of the things that in the bain record they draw these distinctions between well look at these great, we started staples and bright horizons, a day care, which is the stuff that they tout was much more in the venture capital mode. the stuff that they're drawing criticism for was much more in the private equity mode. there's a kind of distinction between those two. >> bring up the short-term, what he did with venture capital side was finance. >> right. >> so that again is how do we get cheap funds and such. not how to build a better company or a better product. >> to your point, subsidies is a crucial question. we had joe ricketts in the news,

his family owns the chicago cubs and the chicago cubs now on all sorts of government subsidy does renovate the stadium, they want the amusement tax to be diverted into their coffers instead of going into the city. the steel dynamics, the company that bain touts as a success story. got $37 million in subsidies and grants to open up their steel factory. they were getting all sorts of local incentives, lurking behind a lot of these success stories is what we like to call industrial policy. >> to betsy's thing, we know now even right now, so early education pays dividends, we see it paying dividends, if you want to put money into that, it's not a bad thing to do. but to say we've have a big lon-run vision about where america is going to be in 30, 40 years, is not good policy. >> i completely agree with you

and i actually am not a big fan of you know the kind of industrial policy where we say, this is where america is going and we should try to push businesses in this direction. >> i think we need a five-year plan, personally. but continue. i do think that we know, there's basic investments that can be made in the economy in an infrastructure that we're not doing. and i mean those are things where we don't have a lot of questions. like do we need good roads? do we need good internet access throughout the country? do we need kids that have access to education from age two to 22. >> you can see where that is right now. you're saying in 20 years, america is going to be like this and so we need this infrastructure. >> we're underinvesting right now. >> but that's not because of what the administration wants to do. >> let's talk about that after a quick break. we love gardening...

yeah, but the feeling wasn't always mutual. i should be arrested for crimes against potted plant-kind. we're armed, and inexperienced. people call me an over-waterer. [ female announcer ] with miracle-gro, you don't have to be a great gardener to have a green thumb. every miracle-gro product helps your garden grow bigger, more beautiful flowers and bountiful vegetables. guaranteed. so even if... i have all these tools, and i have no idea how to use them. [ female announcer ] everyone grows with miracle-gro. delicious gourmet gravy. and she agrees. with fancy feast gravy lovers, your cat can enjoy the delicious, satisfying taste of gourmet gravy every day. fancy feast. the best ingredient is love. fancy feast. it's time to live wider awake. only the beautyrest recharge sleep system combines the

comfort of aircool memory foam layered on top of beautyrest pocketed coils to promote proper sleeping posture all night long. the revolutionary recharge sleep system... from beautyrest. it's you, fully charged. but when i was diagnosed with prostate cancer... i needed a coach. our doctor was great, but with so many tough decisions i felt lost. unitedhealthcare offered us a specially trained rn who helped us weigh and understand all our options. for me cancer was as scary as a fastball is to some of these kids. but my coach had hit that pitch before. turning data into useful answers. we're 78,000 people looking out for 70 million americans. that's health in numbers. unitedhealthcare.

the auto unit. the auto task force inside the obama white house. went on "morning joe," right after the ad came out and had this to say. >> i think the ad is unfair. bain capital's responsibility was not to create 100,000 jobs or some other numb. it was to make profit for investors, most of whom were

pension fund investors, this is part of profits and life and i don't think there's anything that bain capital did that they need to be embarrassed about. >> this strikes me as an important political threat as we head towards the election. which is i do think the attacks on bain capital are politically effective. if you look at the polling among working-class voters in the republican primary in south carolina when newt gingrich went totally nuclear on the issue, it was very effective. and it's one of the most effective lines, it was what ted kennedy i think pushed him over the edge in a hard-fought race in 1994. if you go back and talk to ted kennedy's campaign people, they'll say, it was much closer until we started running ads at the factories that were shut down by bain. but if they go with the line of attack. we're raising money from private equity folks and we're going to have them showing up on "morning joe." >> one thing about attacking an industry of incredibly mitch, media-connected billionaires, they get access to elite organs of opinion. when mitt romney comes on and

says barack obama, goes around the world apologizing for america, which has been rated false by fact-checks groups. there's no particular industry that mobilizes to say that isn't true. one thing to the political effectiveness of this is that mitt romney's issue is he's never come up with an effective reply. in the republican primary his reply is how can you say that you're a republican. >> that's a great point. this week his reply was, how can you assassinate my character. >> which is not the issue. >> he hasn't come back to say here is why that is wrong. >> can we play the greatest hits, that was by far my favorite through the looking glass moment in the entire bizarre spectacle that was the republican primary. were the anti-bain attacks, coming from fellow republicans, sounding like editors of the nation. here's a clip. >> they sit there and they wait until they see a distressed company and then they swoop in and pick the carcass clean. >> governor romney has claimed to have created 100,000 jobs at

bain and we, you know, people are wanting to know, is there proof of that claim. >> those of us who believe in free markets, and those of us who believe that in fact the whole goal of investment is entrepreneurship and job creation, would find it pretty hard to justify rich people figuring out clever legal way does loot a company. >> rich people figuring out clever legal ways to loot a company. this is the best part of this, just to put the capstone. this is gingrich talking to the "atlanta journal-constitution." you want me to be mad because in some company somewhere romney may have been in fact involved in somebody losing their job? no harm, no foul, no looting, no picking the carcass clean. thy ink you're right, they have not come up with a politically effective response to it i think there's both, there's both an emotional appeal to it, because

people feel the dislocation of the economy. both in the long derm sense of outsource i outsourcing and the acute sense that we still have bad job performance. >> this is only the first shoe, this is the shoe they had to throw because you know, romney made this the centerpiece of why i should be elected. so they had to counter it. but the second piece is hey, didn't we just have an mba president for the first time? how did he get rich? he got rich by being the political fixer for a sports club. and got the local jurisdiction to donate property, which and then they ultra-paid him off, they gave him five times what he was supposed to make. you know, just so that he could become wealthy and such. and have friends. so that political fixer aspect is very dangerous for romney. and that could be the second shoe that they can push.

>> that doesn't seem like that big a deal to me. most political ads are kind of silly, i don't pay nay tension to them. the king of bain thing they put on there. the king of bain. >> the gingrich, that's emotional. i, it's a completely opposite of what i believe, and i see that and i was like -- i don't know if i like this guy any more. it was incredibly emotional. like almost no political ad is. >> and partly that's because there is something and i say this as a reporter and having spent time talking to people who lose their jobs because of creative destruction or dislocation or totally predatory behavior like what happened at enron in the sub prooime crisis. the sudden inexplicable job loss, profound consequences, showing people on the other side of that deal has a real

resonance. >> if they ever link it to the offshore accounts -- >> i think they will. >> it's really going to have a lot of legs. >> i assure you there's no if about that. >> they've already run ads about his sort of swiss bank accounts. they've focused in on that. >> linking it. >> i think there's two issues with bain. one is this you know, do we want, do we want him to run the country the way he ran bain? and the other issue, portraying him as a guy who has no empathy for people. he comes across as a guy who has no empathy for people in many different dimensions, the gay-bashing thing when he was in high school. you've got his wife saying, i don't feel rich. even though i'm richer than 99.9% ofamericans, and they come across as having no empathy for people. >> putting the dog on the car. >> i thought we were going to have this high-level conversation about creative destruction. >> i hear --

>> 20 minutes in, carl smith has the dog on the roof. >> this is going to move no one i know who is not a complete geek. but they put a dog on top of the car. that's going to move people. how could you do that? >> the deep philosophical, ideological and political point here is not only the sense he doesn't have empathy. it's the fact that empathy would have been an impediment to him doing his job at bain capital, right? the point is to be ruthless, to be an amoral robot and pursue profits. it's just too hard." then there was a moment. when i decided to find a way to keep going. go for olympic gold and go to college too. [ male announcer ] every day we help students earn their bachelor's or master's degree for tomorrow's careers. this is your moment. let nothing stand in your way. devry university, proud to support the education of our u.s. olympic team.

you walk into a conventional mattress store, it's really not about you. they say, "well, if you wanted a firm bed you can lie on one of those. if you want a soft bed you can lie on one of those." we provide the exact individualization that your body needs. welcome to the sleep number memorial day sale. where you can celebrate our 25-year commitment to a single mission: better sleep for both of you. never tried this before. this is your body there. you can see a little more pressure in the hips. take it up one notch. oh gosh, yes.

when you're playing around with that remote, you get that moment where you go, "oh yeah" oh, yeah! ... and it's perfect. they had no idea that when they came to a sleep number store, we were going to diagnose their problems and help them sleep better. and right now, you can save 40% on our innovative sleep number silver edition bed-for a limited time. once you experience it, there's no going back. wow. hurry in to the sleep number memorial day sale between now and june 3rd. only at the sleep number store, where queen mattresses start at just $699.

bain capital was the majority owner, they were responsible. mitt romney was deeply involved in the influence that he exercised over these companies. >> they made as much money off it as they could. and they closed it down. they filed for bankruptcy without any concern for the families or the communities. >> it was like a vampire. they came in and sucked the life out of us.

>> that's the the ad from the president's re-election campaign on romney's buy-out of a company called gst zeal. steel. >> the romney campaign has responded, the critics talk about gst steel, they say oh, there's this other steel company. here's their response about another steel company called steel dynamics. >> steel dynamics started with an em tie field and a dream. >> the beginning of steel dynamics -- almost never got started. when others shied away, mitdny's private-sector leadership team stepped in. >> building a dream with over 6,000 employees today. >> if it wasn't for a company like steel dynamic, this county wouldn't have a lot. >> and mitt romney said let there be steel and lo, there was steel. here's what i find interesting about this. if you start putting into a chart, there were two things bain capital was doing. they were doing private equity in the traditional private equity sense.

which was go out, find companies that you think are undervaluedor can be made more efficient or are distressed. you can put a lot of leverage on and you can find a way either to flip them for a profit or extract more profit out of them by changing their operations. then they were doing seed funding. there was part of bain that did things that looked like venture capitalist. all of the things they got attacked for were on the private equity side. and all the companies that mitt romney touts tend to be on the venture capital side. businesses that were essentially seed-funded, staples, bright horizons and steel dynamics. that says something interesting about these different models of financial capitalism. you yourself, bill black, touted venture capital as a kind of example of what good financing looks like, as opposed to the predatory version of private equity. >> except this was owed to private enterprise, but it was a public-subsidized project. that's the political fixer

aspect. that's how you make money in that aspect of the business. the private equity is often a very seamy thing. you don't go in and make the business more efficient. you just take out income. before it goes down. and by adding a whole lot of debt, you shaft the existing debtholders and such. so interesting tax advantages are created. but not new jobs, not better enterprise, not more efficient. >> so it depends on the situation. i mean obviously there are different companies. but in general, let's just say what looks the worst. when you're basically just shutting a company down, selling off the assets, that frees up resources that are used elsewhere. so we're in the middle of a bad recession. it's hard to think about the world like that. but when the economy is doing well, when the federal reserve is doing its job, then when you do that, those are the, those are resources that get used

somewhere else 679 as long as they're trapped in that company, as long as you have bad corporate oversite and bad corporate governance, you'll have these resources that are inefficiently trapped. and someone can come in and solve that problem and free them up and that allows the entire economy to grow. >> that has nothing to do with private equity. >> but why -- >> why not? i mean you're complaining that these shut-down factories and fired people. but shutting down factories and firing people is how you free resources. >> why don't they just take dynamite, then? >> well, you can sell these assets, right? >> that's -- >> explain this point. because i think this is the key point. the argument you're making in the broad sense and it's actually a hard argument i think for mitt romney to make, it's an argument about creative destruction. we went into companies that a lot of times were in bad shape because they were being squeezed by international competition, poor business practices,

whatever. and in the ones that didn't work out, we tried our best but the market -- ended up killing them and you're saying that this basic model of creative destruction, hence of reference to shumpeter is not what private equity is about. it seems to me that private equity can be about both. it seems to me there are cases that, there are cases where it looks more straightforwardly creative destruction. there are cases where it looks a lot more like rating. >> you can't take the propaganda. this was drexel birnham lambert's propaganda. it was all a lie. michael millican. it was all a lie. taking companies that might well have survived and killing them. that's not creative destruction, that's destruction by looting. right? and so that is an enormous part. i agree. sure, there are real things where you come in and you have some expertise.

this is not a place that had expert decent in managing. >> there are things that should go away. so palm is hanging on here, producing things, producing things, wasting u.s. resources when they just need to go away and that happens in the world and because -- >> karl smith, to the employees of palm, you're fired. so the management of the company, right, almost never has an incentive to shut the company down. >> there are people who get paid to do the hard work of shutting down businesses that need to be shut down. and they, you know, these guys swoop in and they heartlessly shut down businesses that you're saying need to be shut down. i don't think we should be arguing over that. that's an argument over whether bain should exist. no one in this campaign i think is talking about should bain exist. >> i would love to have that argument. the point is that's exactly the point. that is not the political argument. that's the up with chris hayes

argument. >> but-day think there's this important aspect of what goes on in businesses like that. which is that they do scan the way that the government system works through taxes, through regulations. to try to figure out what are, what are the ways to exploit that. what are the things that politicians didn't think about that we can exploit for a dollar. there's this constant game between -- between business and government where government has to try to anticipate how will business try to exploit this. and i'll tell you, i actually teach that course to mbas, business exploitation -- >> lining your pockets with taxpayer subsidies. >> how to go after the people you teach. >> it's called building stadiums. that's the name of the course. i want to talk about debt in the public sector and the way that we're talking about loading up companies here and tax treatment. the romney campaign the republicans really tried to put debt back at the center of the national political conversation this week. i'm here to unleash my inner cowboy.

instead i got heartburn. [ horse neighs ] hold up partner. prilosec isn't for fast relief. try alka-seltzer. it kills heartburn fast. yeehaw! the teacher that comes to mind for me is my high school math teacher, dr. gilmore. i mean he could teach. he was there for us, even if we needed him in college. you could call him, you had his phone number. he was just focused on making sure we were gonna be successful. he would never give up on any of us.

at a summit tuesday on fiscal responsibility. treasury secretary, timothy geithner was interviewed and said the country will likely hit its debt limit sometime before end of the year. then he said this. >> only congress of course can act to raise the debt limit. we hope they do it this time without the drama and the pain and the damage they caused the country last july. >> hearing this, house speaker, john boehner took to the same stage at the veteran and wasted no time in raising the spector of another debt ceiling fight. insisting that congress would not raise the debt ceiling this time around unless he got cuts greater than the ceiling raise. >> we shouldn't dread the debt limit. it's an action-forcing event in a town that's become infamous for inaction. >> we're seeing not just the threat of another debt ceiling

standoff. but something of a coordinated strategy by republicans. they think it's in their political interest to make debt the center of the conversation in an election year and that's why mitt romney gave a big speech this week. attacking the president's record on deficits, unveiling a gimm k gimmicky national debt clock that he trots out as campaign events. on the heels of that, the republican-controlled house passed the defense authorization bill. adding $8 billion more than last year's budget and $4 billion more than president obama requested. which of course is par for the course. for all their railing against the debt, republicans are almost always happy to pile it on when they're running things, to to me is the key element here. that vote i thought was just remarkable in the same week for john boehner to get up there and say, action-forcing event. it will restrain us, impose discipline and then out of his own house, passes something in excess of what the limits that they agreed to were. >> i think it's really important to say that mitt romney's plan,

the things you can read on his website do much more to increase the debt than to reduce it. he's got trillions of dollars in announced specific tax cuts that he's not offset any of them. he has more than 1 trillion in new defense spending over the next decade. he's not offset any of it and he has just about no specific spending cuts. he talks about block-granting medicaid. he doesn't say what the grates of growth would be so you can't score any of that. republicans do a lot of that. if you look at their priorities, they've taken taxes and defense. they want to add a lot to that. it's not clear where they're going 0 get the savings to not just offset that, but reduce the debt beyond that. >> maybe you know this, how much of -- >> almost certainly. >> how much do they really care? and how much of it is just a talking point? >> i'm glad you're raising this question, this to me is the theme before we get into the wonky parts of it, like let's talk about the dog on the car element. which is the fact that you cannot -- make logical sense of

republican rhetoric around the debt or deficits, which are distinct things, one is a total that accumulates the debt. the deficit is what we are spending more than we're taking in each year. you cannot listen to them on that. and attach the standard semantic meaning to those words and make sense of them or their actions, you cannot think that they're speaking at face value about the things they say they're speaking about. debt and deficits and look at the way they behave. >> is that, is that just dissonance on their part? or -- >> i think they care a lot and have a lot of dissonance. out of power parties often care a lot about the debt. in the bush years, democrats were very, very upset about bush's deficits and -- >> barack obama voted against the debt ceiling famously, now in the obama years, republicans have become enormously concerned about debt and deficits, no not

to the exclusion of other things. it's clear they care more about defense and tax cuts than they do -- this week tom coburn said the problem with the republican party is they may want to reduce the debt, they're not willing to take any second-best compromise to do it. that is not frankly their top priority. their top priority is not crossing grover norquist and doing some of these other things. >> here he is talking to one ezra klein. >> one of my biggest worries is what happens if romney wins. and republicans control both chambers. do they have the courage to do what it takes to fix the country? it's their last chance. if they're given the favor of control and they don't act on it, why should you ever trust them again. >> i don't know if coburn is being disingenuous, or he's believed his own hype. but no one cares about deficits. dick cheney was right from a political perspective. >> coburn believes we'll have an enormous fiscal crisis within a

matter of a few years. i'm not sure i think he's right but he believes there will be an outside fours that comes in and destroys this country's economy if we don't do something quick. >> both parties make no sense on this issue. both parties are saying things that are preposterous economically and internally inconsistth. we have obama running around saying, we're running out of money, we have a sovereign currency. you can't run out of money. we have zero debt crisis. look at what we can borrow money for. we can borrow money for nothing. japan has twice as much in terms of deficit as relative to gdp as the united states. it borrows money for next to nothing. as long as you have a sovereign currency, and you let it float and you have your debts in your sovereign currency, you are not subject to attacks from these bond vigilantes, you will not become greece.

so that's all nonsense. what's happened is they've used this stupidity of this budget debt limit, which makes no sense when you're not -- >> as a procedural matter, it makes no sense. >> every other conceivable way, it is stupid, it is simply a way to extort. and they deliberately extorted something that would impede the recovery. >> they force significant cuts in spending on the soesh side. the already-inadequate stimulus, which everybody in economics told them it was inadequate, got more inadequate. meanwhile, we've allowed a complete gratuitous crisis in state and local government. because the obama proposed the right thing, a republican idea, revenue-sharing. everybody -- >> explain what revenue sharing. federal government gives money to state and local governments. >> state and local governments,

unlike the federal government don't have sovereign currency, they can't -- have large deficits, so the federal government needs to run a deficit to get people employed. it's a great recession. gives big chunk of money to the states and localities, they don't have to fire all the teachers, the police officers, everyone else who services are needed. we don't have that war on women, the republican meem about how women are losing their jobs. why? because women are disproportionately in the governmental sector. >> we've lost 600,000 public-sector jobs. >> so the unemployment rate would be much lower there would be much less grief in the nation. the economic recovery would have been far faster. all due to the blue dog democrats, the conservatives, and the republicans ganging up. you wrote about this, karl, you have a study about this. and killing the bill. but the terrible political thing is obama let it die without a fight. and if he had dug in his heels and say, this is going to

produce a disaster, even if he had lost, he could be able to say now. >> quick break. [ male announcer ] this is the at&t network. a living, breathing intelligence helping business, do more business. in here, opportunities are created and protected. gonna need more wool! demand is instantly recognized and securely acted on across the company. around the world. turning a new trend, into a global phenomenon. it's the at&t network -- securing a world of new opportunities. ♪ mine hurt more! mine stopped hurting faster... [ female announcer ] neosporin® plus pain relief starts relieving pain faster and kills more types of infectious bacteria. neosporin® plus pain relief. for a two dollar coupon, visit neosporin.com. neosporin® plus pain relief. we charge everything else...

maybe it's time to recharge the human battery. only the beautyrest recharge sleep system combines the comfort of aircool memory foam layered on top of beautyrest pocketed coils to promote proper sleeping posture all night long. the revolutionary recharge sleep system from beautyrest... it's you, fully charged. right now, receive two free recharge pillows with the purchase of select beautyrest mattresses. (female announcer) most life insurance companies look at you and just see a policy. at aviva, we do things differently. we're bringing humanity back to life insurance. that's why only aviva rewards you with savings for getting a check-up. it's our wellness for life program, with online access to mayo clinic. see the difference at avivausa.com.

but they haven't experienced extra strength bayer advanced aspirin. in fact, in a recent survey, 92% of people who tried it said they would buy it again. visit fastreliefchallenge.com today for a special trial offer. consider the journey of today's athletes: ♪ their training depends on technology. [ beeping, ticks ] and when their devices are powered by a battery, there are athletes everywhere who trust duracell

so whether they're headed for london or the journey has just begun... they rely on copper to go for the gold. duracell. trusted everywhere. karl, i want to give you a chance 0 to respond to what bill was saying about the travesty that was the failure of revenue-sharing. >> i don't remember exactly what i was saying, but the biggest thing that i wonder is always why, why wasn't the democratic party more into pushing for revenue sharing or doing this. even bhak in the original stimulus, why wasn't there more effort to state and local governments. it seems to me, whatever you believe about how people think about the debt, at the end of the day, what they care more about is what unemployment is like. what their jobs are like, what their families are experiencing. if you know and believe that look, we with lower unemployment by doing this it seems you just take the short-term chatter and you win the election.

>> that has not -- somehow that has not penetrated the consciousness of politicians in washington. wouldn't you agree? >> i don't agree with that a all. they felt like they couldn't get it passed. they brought up revenue-sharing bill and state and local bill. they had f.a.s.t., the jerry bernstein idea. they had the saving teachers program. they did during 2010 and 2009, they tried to pass state and local bills. it wasn't popular, it didn't get through congress. there's an argument, maybe they should have figured out a way to go through budget reconciliation again. but everything got filibustered. they will 60 votes in senate during that time it was unpopular as the health care bill. thought they should take the short-term hit for the big bill, but they couldn't get it passed. i remember them trying, it's not like it didn't happen, they couldn't get it passed. >> they couldn't get any traction.

lots of time and energy was spent even figure out you know how you could sneak it through. like you know, hiding vegetables in a cake for kids, they're trying to figure out how can we funnel more money to the states. >> do you do that with your kids? is that a parenting thing? >> chocolate asparagus cake. >> put some broccoli inside. >> as soon as they accepted the 60 votes, they crippled the administration. >> i'm possibly the largest opponent of the filibuster you'll find in the media today, but it is like rule 22, i don't know how you don't accept it. >> because the republicans would have killed it in these circumstances. >> you're saying they shuf ended the filibuster? that's, i think the filibuster needs to end. but i think it's hard to do. according to senate rules, you need a 2/3 vote. >> it's a constitutional argument -- >> only at ginting of a new session. you couldn't do that today.

>> if you flip the parties, it would have been done. >> no. >> they did walk closer do the line. we should say this as an historical matter, the biggest frontal assault of a filibuster in the last ten years did come from republicans. but even there, they ended up backing down on a limited part of it. >> to pursue the filibuster to its natural conclusion, the history of the filibuster reform and it changed a number of times, is because it is a non -- not something you bring to the supreme court. >> common cause just brought it to the supreme court. >> i doubt they'll get -- >> it's not going to go anywhere. or likely not. >> because you're dealing with the situation in which there is no higher authority, right. let's say the court's not going to rule on it the things that provoked it in the past are essentially brinksmanship. you know what, we're killing this thing and that's what produced reform. >> regardy reid came out a week ago and said i was wrong to think that we could get by with the filibuster. the filibuster has been abused

and abused and i now agree with those who say it needs reform. it's tough to do, because in part in the middle of a session, when you see the bad mid-term coming up. none of the democrats who thought they with going to be in the minority. wanted to get rid of the filibuster. >> why it is that given the argument you made about the logical consequences of short-term stimulus, of not firing teachers, why the politics of the debt retain their power or if they do after this. time for your the "your business" entrepreneur of the week. mariah is founder of citrus lane. customers sign up for a subscription and once a month get a surprise package of baby products. she did her own market research. focus groups, testing and surveys to fine-tune her products and packaging. for more, watchsunday mornings . ♪ [music plays]

♪ [music plays] ♪ [music plays] of all our different items in our festival of shrimp. the crab-stuffed shrimp are awesome! tequila lime tacos. [ man ] delicious! [ male announcer ] it's festival of shrimp! for $12.99 try any two shrimp creations like new barbeque glazed shrimp. offer ends soon. we're servers at red lobster. and we sea food differently. want to hop in the back and get weird? no. family vacation... vegas. ♪ no. no. give it a big yank! really? yeah! [ knock on window ] no! no. ♪ ugh, no! [ sighs ] we can have hotdogs for dinner?! yes. [ male announcer ] in a world filled with "no," it's nice to finally say "yes." new oscar mayer selects hotdogs. made with 100% beef and no artificial preservatives. it's yes food. made with 100% beef and no artificial preservatives.

♪ [ lauer ] this is our team. and unlike other countries, it's built by your donations, not government funding. and now, to support our athletes, you can donate a stitch in america's flag for the 2012 olympic games in london. help raise our flag, add your stitch at teamusa.org. i will lead us out of this debt and spending inferno. we will stop borrowing unfathomable sums of money we can't even imagine from foreign countries we're never going to visit. i will work with you to make sure we put out this spending and borrowing fire. >> that's mitt romney, giving his big debt deficit speech on tuesday. this line i found so hilarious and inskrutable.

stop borrowing unfathomable amounts of money that we can't even imagine. if you're borrowing from kirk stan, you're in trouble. if you're borrowing from canada or france, you're fine. here's an idea that joe s wiesenthal said we have a jobs deficit, we're mired in sluggish growth. the fed isn't providing what they should be providing. karl you've written eloquently on that point. if you believe an expansionary policy, if you think that's the way out of the mess, if that's what you're voting on, you have a better chance of of getting expansionary policy, out of mitt romney, despite the noises he's making about austerity. than you do out of president barack obama. the reason being all of a sudden the republican house would be willing to engage in expansionary policy once they had a republican president. >> i don't know. >> you can't say that, we're on

cable news. >>fy firmly believe they were lying and cynical, i would go for that and i would be happy with that. people say all sorts of things to get elected. but what matters in the end is what happens to real people. i would support romney and support the house by thinking they 0 would do expansionary policy. more and more, i get slightly convinced they're believing their own bs and that worries me, right. once you really start to believe that we need to cut the debt, then you're dangerous, as long as it's just a lie, you're okay. >> are they, how bad is the faith on this conversation? because it actually really does matter. is this completely disingenuous? or do they now believe it? >> not only do i think they believe it. i think it's important to, we have a problem. we say mitt romney will get elected. what happens if mitt romney gets elected, a republican senate and a republican house. i firmly believe this for better or worse -- >> you say if mitt romney is elected republican senator to the republican house.

>> tips that way. i think through budget reconciliation there will not be a filibuster, it will just be a budget bill. they'll pass the paul ryan budget. the house and the senate spent two years taking vote after vote preparing to pass the paul ryan budget. he's not going to come in and saying, oh, ha, ha, we're going contai keynesian. >> they do think about how to get the infrastructure into that package. they do think about how to get the -- >> there is a keynesian divide in american politics. in another world you might see romney go to short-term tax hits. congress am republicans really believe the one thing to expend political capital on is the ryan budget. >> they've convinced themselves that the political case they've been making is that debt stands for a symbolic token of the way we've lost our way, the way we lost our virtue, the thing that's accelerating our

decline -- >> they don't think it's symbolic. >> right. there's evidence they don't believe it and romney doesn't believe it and i want to show that evidence after the break. for three hours a week, i'm a coach. but when i was diagnosed with prostate cancer... i needed a coach. our doctor was great, but with so many tough decisions i felt lost. unitedhealthcare offered us a specially trained rn who helped us weigh and understand all our options. for me cancer was as scary as a fastball is to some of these kids. but my coach had hit that pitch before. turning data into useful answers. we're 78,000 people looking out for 70 million americans. that's health in numbers. unitedhealthcare. if you made a list of countries from around the world...

...with the best math scores. ...the united states would be on that list. in 25th place. let's raise academic standards across the nation. let's get back to the head of the class. let's solve this. of how a shipping giant can befriend a forest may seem like the stuff of fairy tales. but if you take away the faces on the trees... take away the pixie dust. take away the singing animals, and the storybook narrator... [ man ] you're left with more electric trucks. more recycled shipping materials... and a growing number of lower emissions planes... which still makes for a pretty enchanted tale. ♪ la la la [ man ] whoops, forgot one... [ male announcer ] sustainable solutions. fedex. solutions that matter.

you could spend as much as $200. olay says challenge that with an instrument that cleanses as effectively as what's sold by skin professionals for a whole lot less. olay pro x advanced cleansing system. sven's home security gets the most rewards of any small business credit card! how does this thing work? oh, i like it! [ garth ] sven's small business earns double miles on every purchase, every day! woo-hoo!!! so that's ten security gators, right? put them on my spark card! why settle for less?

testing hot tar... great businesses deserve the most rewards! [ male announcer ] the spark business card from capital one. choose unlimited rewards with double miles or 2% cash back on every purchase, every day! what's in your wallet? here's your invoice. from new york, i'm chris hayes and with me, bill black, the author of the book "the best way to rob a bank is to own one." and formerly with the federal home loan bank board. betsy stevenson, former chief economist for the obama labor department and now assistant professor at the wharton school. and karl smith, and ezra clikle with the "washington post." >> we're discussing about republicans putting debt and deficits front and center through two different means,

mitt romney gave a speech about the debt and deficit. he's unveiled a debt clock, like the one midtown a few blocks from here. which is essentially meaningless, it gives a nominal value of the debt, not in relationship to gdp. john boehner also at the fiscal summit threatened another debt ceiling showndown. on the romney point, one of the things we're discussing, we're trying to understand whether republicans are making these debt and deficit arguments in good faith. and the reason there's reason to doubt they will, because in the past they have expanded deficit and debts, and in fact the romney plan calls for in some ways even though it doesn't call for expanded deficits and debts, it's unclear where the spending cuts come from. as evidence of the idea that they're being disingenuous, here's mitt romney also speaking on "morning joe" on january 16th, 2009, talking about the proposed recovery act stimulus from the president. >> the president's plan for economic recovery including a

stimulus bill, which includes a healthy dose of tax reductions is something which i think showed a willingness to actually listen to some of his own economic advisers that have pointed out in their research that tax reductions have a bigger economic spending money infrastructure does. that's encouraging. >> first of all, we should say all the literature i've seen shows that tax cuts are inefficient in terms of multiplier fact and stimulus, but that was mitt romney praising expansionary policy, even done through tax cuts, maybe that's an argument we're in favor of the fact that he would be expansionary. >> i would believe that about him. what he said there. i would believe that mitt romney believes that and that if he doesn't believe it quite now. that his economic adviser could convince him. but it is the house and the republican house, people that it's scary. that they have convinced themselves of their rhetoric and that they're going to --

>> as a psychological matter i don't think you can overestimate how much the last two years for the republican party have had a radicalizing sort of anti-keynesian effect. all their sort of intellectual organors, think tanks, they've come up with a million arguments about why the stimulus doesn't work. and more like why the key thing here is long-term, structural unemployment. they've come up with a 100 very sophisticated and interesting arguments about why they shouldn't believe the things they believed in 2009. >>. i was with you until the last sentence. >> i'm not saying i find them persuasive, but they do. people convince themselves of what they need to convince themselves of. people do not like to feel insincere. >> this is true of lawyers, right? i always marvel at the psychological fact. if can you sit all day, working 16 hours a day. you're billing 15 hours, working on a brief and maintain the belief that you're totally wrong

and preposterous, you're a social sociopath. >> will someone come forward and say hold on, guys, let's remember ronald reagan. we don't worry about the deficit, just need to cut taxes. >> no. >> and that will not sell. >> but what will happen quite possibly is europe will be in a state of disaster because of austerity. and that is going to cause the business community to come en masse -- >> yes. >> and say you will not do this, ryan budget and destroy america. >> i think -- we fund you, clowns. >> the business community never does this thing that everyone expects them to do. >> and says -- >> they never do that. >> they do in crises and they did for example when they voted down t.a.r.p. the first time. >> because the markets exploded, everybody saw and the same thing

is about to happen. >> that, that brings -- >> it happened in the first place. which was unbelievable, right. >>. you're saying that t.a.r.p. got voted down in the first place. >> businesses weren't whipping that initial vote. >> and you could, i remember the experience vividly, watching -- >> that was an amazing moment. >> you're just gueraranteeing everyone this would not happen. >> all the letters and phone calls were something like 80/20 against on t.a.r.p. so there was enormous pressure. plus we had ex-fdic folks, bill isaac go in front of the blue dogs and say, it's free. you don't need anything. you just lie about the numbers. i'm serious. you just lie about the losses, and there will be no crisis. >> but the more recent, the more recent precedent for this, the t.a.r.p. is the debt ceiling. because that's actually the first place, we actually ran this experiment once.

what happened was, there was this tremendous brinksmanship. unprecedented in american politics that produced concrete real and measurable negative impacts on the economy. i mean the economy took a hit because of it. and if the chamber of commerce were acting in a rational fashion and putting the thumb on the scale that you're indicating they might in the future. i don't think we would have seen that. what that moment to me showed was that their ideological commitment even outstripped their commitment to their sort of corporate people. >> but -- the really frightening thing is i think the biggest risk our economy faces is this fiscal cliff and the debt ceiling debate. there are too few people who understand that. >> you're on tv right now, so explain that. >> when -- >> when you say, when you say fiscal cliff and the debt ceiling, what are those two things? >> the fiscal cliff the upcoming fact that we have a lot of expiration of tax cuts that are

coming up. we also have expiration of unemployment insurance benefits. so what we have basically is a contraction, a fiscal contraction of $600 billion, which is basically like taking $2,000 per person of the united states out of their pockets and asking them to hand it back to the government and asking them to do it within the first four months of the year, most of this stuff will come due in april. if i ask them to hand me $2,000 tomorrow they're going to have to immediately curtail their spending. if they immediately curtail their spending, they're not going to the coffee shops and buying coffee. they're not going to the movies, they're not doing stuff and that's going to be a massive contractionary effect on the economy. >> let's talk about the other half after the break. but centurylink is committed to being a different kind of communications company. ♪ we link people and fortune 500 companies nationwide and around the world.

and we will continue to free you to do more and focus on what matters. so i test... a lot. do you test with this? freestyle lite test strips? they need just a third the blood of onetouch ultra. wow! and the unique zipwik tab targets the blood and pulls it in. that'll make testing easy. and you can save on these strips monthly simply by joining the freestyle promise program. and i think i know exactly where those savings will go. call or click and join for free. test easy. diarrhea, gas or bloating?

get ahead of it! one phillips' colon health probiotic cap a day helps defend against digestive issues with three strains of good bacteria. hit me! [ female announcer ] live the regular life. phillips'. [ female announcer ] live the regular life. last season was the gulf's best tourism season in years. in florida we had more suntans... in alabama we had more beautiful blooms... in mississippi we had more good times... in louisiana we had more fun on the water. last season we broke all kinds of records on the gulf. this year we are out to do even better... and now is a great time to start. our beatches are even more relaxing... the fishing's great. so pick your favorite spot on the gulf... and come on down. brought to you by bp and all of us who call the gulf home.

the great future island band out of baltimore, you should check them out. you were talking about the first half. there's two components to the terrible disaster towards which we may be rushing and that disaster towards which we may be rushing happens after the election which is part of what makes it so strange politically. because it's all going to take place in the lame duck session. which i think adds, i would say adds a lot of uncertainty. it adds uncertainty of who is going to -- we mow hoe will be sitting in that body. but how many of those are going to be essentially walking dead. the first part of it is the fiscal cliff. which is the expiration of a whole bunch of tax cuts. the expiration of people with unemployment insurance. are there sequester elements which kick in? >> there's all of that together is about 6.8 trillion. not that much over one year but ten years. that's the hit that the market will be expanding the economy over ten. but what's important here is the

sequencing. the debt ceiling happens by january 2nd. all of that comes due by january 2nd. we don't hit the debt ceiling, we don't breach it until february or march, we expect. so what will happen is we actually get to the debt ceiling. what it will mean is we didn't come to a deal on the huge hit betsy was talking about. so the financial markets are freaked out already. americans are paying more money, we're in the single-largest government-induced fiscal contraction in american history. and now on top of that, on top of that demonstrated inability to agree on that and on top of the economic hit. we got into the financial chaos of the debt ceiling. there's not like august 2011, where there was only one thing, the debt ceiling. this is four or five different massive hits to the economy coming on top of one another and we have no idea the level of financial chaos. and that's before you talk about europe this is layman-like event this is an event where you reshuffle the way the market thinks about america. it is significant. >> well that's scary.

what is the -- >> europe is far bigger than layman. we're talking about the two two largest economies in the world, smumtly, taking out a gun, aiming it at their head, pulling the trigger. it will have catastrophic effects, they're going to happen at the same time. and we will have actually, it will be europe pulled out the gun, shot itself, we saw -- it do that. and said, you know, that's a great idea. >> the keynesian case for mitt romney in my view, is not that he'll do more keynesian spending, is that there will not be a debt ceiling crisis. >> it strikes me as a deep, deep political issue, right. a deep problem of se self-governance. we were talking about polarization. i used to not worry about party polarization, i wanted to crush

our foes and you win elections and get enough people and you get your program passed. i worry more about polarization, partly because we can't do the big things we need to do in this current environment. the debt ceiling to me is the acute worst microcosm, the essence of what this kind of polarization, particularly asymmetric polarization where republicans are willing to be far more extreme, take far larger risks, drive the truck off the cliff at a far faster speed -- that's what it looks like. the question is what has broken down in the accountability system that it's politically possible, feasible, possibly political expedient to go before the cameras at the fiscal summit, with everyone knowing what happened the last time the debt ceiling, knowing there were real effects, concrete negative macroeconomic effects, and it didn't make that much news. there doesn't seem to be any sanction. what, what has broken down and

how do you restore, what could make them accountable? >> what is very scary is we actually all have the same incentive here on the debt ceiling. there's not republican and democratic differences, nobody wants us to default on our debt and be -- >> i don't know if that's true. let me just say -- >> it's no good for everybody. >> that's true, that's a distinction. but in terms of what ezra said, sorry to interrupt. i want to put this out there. don't underestimate sincerity. the last time around the debt ceiling, there were republicans saying we should default. they were going out and saying, actually that is an eventuality to be wished for. >> when they say that, they can't understand what that would mean. >> to be sure, politicians don't understand things. but how is it that -- breaking news. >> how is there no elite in america to come down on them and tell them that look, can you do whatever you want about all these other issues. >> mess with all your other

stuff, cut food stamps, do your thing. >> but -- you are not going to destroy the republic and you're not going to destroy the global economy. that's off limits. >> when they come to that choice, i think it's important to remember what it looks like when they come to that choice. they never say, we just shouldn't raise the debt ceiling. they have said we have given you this perfectly reasonable package which cuts $2 trillion from medicaid or whatever it might do. if you won't sign it, you are the one who is making us breach the debt ceiling. and that ends up being the justification. >> that's what they say to their interest groups. if president obama wants to breach the debt ceiling and give us dollar for dollar cuts that is him. >> the first time around that was a more effective argument than the second time around. >> the problem is bipartisanship. bipartisanship on deficit his tearian. >> in terms of rhetoric or votes? >> rhetoric, votes. the obama administration has

made it incredibly difficult to push back. because of his accepted the general idea that we should be cutting the deficit right now. >> i think that was, i think there was a high-water mark of that kind of rhetoric. but i think it has come down substantially in the last six to nine months. >> do you see some major effort out of the administration publicly, where they try to explain that we're not -- >> they did the jobs act. >> the jobs act is a disaster. >> but the american, the american jobs act was a concrete and discreet piece of expansionary legislation that the president made a primetime speech over. >> it's a pure scam. it has nothing to do with creating jobs. >> not the jrk-o-b-s acronym. the actual jobs act. two different jobs acts. the j.o.b.s. acronym for joining our business start-up.

that got passed and we had you on to talk why it is a scam. the actual jobs act, the american jobs act, that was a concrete discrete bit of expansionary policy they tried to put forward. he did the primetime speech, he did all the things, it went nowhere because whatever you say about partisanship at a policy level one party is implaquably committed. >> obama has put social security on the table to be cut under the theory of this phony crisis that doesn't exist. >> right? >> and as soon as he did that, and we now have a good 30%, 40% of progressives saying we need shared sacrifice and we need to get our fiscal house in order. it's all nan senonsense. and europe has proven that. >> i agree with bill in that the rhetorical bones that were thrown to the austerity argument in the long-term have made

short-term, making the short-term argument much harder. you just talked about europe. watching them put the gun to their head and austerity there. i want to talk about what going on in europe. i think we don't understand it that well in america and how much it will affect us. high schools in six states enrolled in the national math and science initiative... ...which helped students and teachers get better results in ap courses. together, they raised ap test scores 138%. just imagine our potential... ...if the other states joined them. let's raise our scores. let's invest in our teachers and inspire our students. let's solve this. ♪ what started as a whisper

every day, millions of people choose to do the right thing. there's an insurance company that does that, too. liberty mutual insurance. responsibility. what's your policy? and i thought "i can't do this, it's just too hard." then there was a moment. when i decided to find a way to keep going. go for olympic gold and go to college too. [ male announcer ] every day we help students earn their bachelor's or master's degree for tomorrow's careers. this is your moment. let nothing stand in your way. devry university, proud to support the education of our u.s. olympic team.

[ male announcer ] we believe small things can make a big difference. like how a little oil from here can be such a big thing in an old friend's life. purina one discovered that by blending enhanced botanical oils into our food, we can help brighten an old dog's mind so he's up to his old tricks. with this kind of thinking going into our food, imagine all the goodness that can come out of it. just one way we're making the world a better place... one pet at a time. vibrant maturity. from purina one smartblend.

a group of eight economic superpowers, the g-8 yesterday at camp david pledged to revitalize the european economy through stimulus, investing to encourage growth. austerity measures are implemented and also still on the table. and the g-8 did not say how this balanced approach will affect the most vulnerable and volatile eu member, greece. it's not unthinkable if things don't change swiftly, greece could potentially bring down the eurozone and with it the fragile u.s. economy. >> a stable growing european economy is in everybody's best interests, including america's. europe is our largest economy partner. put simply, if a company is

forced to cut back in paris or madrid, that might mean less business for manufactures in pittsburgh or milwaukee. and that might mean a tougher time for families and communities that depend on that business. >> as the gross domestic products of the big european nations indicate. the austerity imposed on greece as a condition for loans from its european neighbors hasn't worked. the sharp cuts have accelerated the staggering erosion of greek gdp. you can see it falling off the chart there greek unemployment has soared to 21%. at the time that funding for pensions, health care and education have been slashed. not surprisingly, the economic devastation has created intense political unrest. two governments have collapsed and into the power vacuum comes among others, the neofascist gloelden dawn party. on the march yesterday chanting traders, scoundrels, politicians fight back with the national resistance and foreigners out of greece. golden dawn along with the far

left party helped kick out the incumbent centrists, balking at the harsh terms of the bailout they've threatened to default opening the door it a full-fledged continent-wide economic and political crisis. don't bet it will stay contained. here's uk prime minister david cameron making that case. >> either europe has a committed stable successful eurozone, with an effective firewall well capitalized and regulated banks, a system of fiscal burden-sharing and supportive monetary policy across the eurozone, or are we in uncharted territory. which carries huge risks for everybody. >> at the conclusion of the g-8 summit, obama waxed optimistic. >> there's now an emerging consensus, that more must be done to promote growth and job creation right now in the context of these fiscal and structural reforms. >> angela merkel had not budged,

insisting on holding greece to the original terms of its loan. if greece leaves the euro it will be like pulling on a small thread, one that may lead to the unwinding of the entire european project. once that unravels, who knows what comes next. how terrified should we be about the situation? let me give my sense of this. i think for americans particularly of my generation and i think for a generation that aren't the greatest generation, we think of europe as conservatives think of it as this nanny state place where they've got lots of regulations, liberals think of it as social democratic paradise and broadly people think paris is awesome, there's old buildings, they've got it figured out. but it's basically stable and maybe they face a demographic problem. i think what the history of the continent, the fact that the most horrific evil and bloodshed in the history of human

civilization took place in one small plot of land in the span of about 35 years. it was -- and that in the wake of that, in the blood-soaked soil of europe, they slowly but surely built up a set of institutions to make sure that would never happen again. and these were institutions that they wanted to put in place to create stability. to avoid crisis. because crisis would bring on extremism and fascism. and to promote peace and cooperation to make it possible, to disincentivize the constant nationalistic, militaristic conflict that had roiled the continent for 1,000 years, and that's what the project of the eu is. i think in america we don't appreciate it as sublime at a certain level because it's full of euro crats and they're in belgium. you hear a story about hair salon regulations that will be all over europe. but it is the most effective

project of transnational governance in the history of human kind on the planet that is not an empire, that democratic and we are watching the possible unraveling of it. the currency union and the political union are distinct things. but i think the stakes need to be planted in the ground for americans about why this matters. because i really think it does. >> i agree did matters enormously. when ways in germany i went there to report on this a couple of months back, the other thing i came away impressed by, the thing that we don't understand, for us who look at the economics, the market turmoil, is their commitment to that political project. that is why they can't let it fail. that is why to them it's not a simple calculation of how much it will cost. but the problem at this point is it's not clear they can make it succeed, either so they're in sort of gray zone between being able to do enough to make it succeed and never wanting to let it fail. in the history of the euro

crisis so far has been we keep getting near failure and people say things like, ten more days, ten more days. they pull it back for a certain amount of time. the question is, at what point do we get a systemic solution or a crisis that unravels faster than they can pull it back from. >> the euro is the greatest threat to european union. >> the currency union? >> the currency union, it was inherently designed in way that exposed it to precisely this kind of disaster. and trichet, just a few days ago, the former head of the bank. said it was set up in a fundamentally flawed way and second, the only answer to it is to be able to put national member states into bankruptcy, and go michigan on them. you know like benton harbor. >> emergency managers. >> emergency managers who come in and run your fiscal affairs. so greece gets to be both the birth and the death of

democracy. >> well, this point about the death of democracy is an important one. even though i said the eu is a democratic project. it doesn't feel like democracy to greece, greece is at the whimsy of its creditors and they, what's happening is you are seeing a democratic, a democratic rebellion. which if you say to people we're going to impose horrible misery on you, would you like that? people go to the polls and say, we do not like that, no thank you, we will vote for whoever says we don't like that. and the biggest party that's gained is the left party, serisa that says we're not going to take the terms of this deal. i want to play nigel ferage a member of the a euro-skeptic party. giving his articulation of the skeptical case of what the currency union and the eu is doing. take a look. >> the eu "titanic" has now hit the iceberg. it is a european union of economic failure. of mass unemployment, of low

growth, but worst of all, it's an eu with the economic prism of the euro. and this now poses huge dangers to the continent. we face the prospect of mass civil unrest, possibly even revolution. in some countries that are being driven into total and utter desperation. we are headed the wrong way. we must break up the eurozone. i want the euro. but a europe based on trade, a europe based on cooperation a europe based on our sitting around the table and agreeing sensible rules on crime and the environment. we can do all of those things. but we cannot do it if we're asked to rally behind that flag. i owe no allegiance to that flag, nor do most of the people in europe, either. >> a case for breaking it all up. i want to get the panel's feedback on whether that sounds like a good idea or the road to disaster after a break. opedic ds recommend most for arthritis pain, think again. and take aleve.

it's the one doctors recommend most for arthritis pain. two pills can last all day. ♪ oooh, what's her secret? [ male announcer ] dawn hand renewal with olay beauty. improves the look and feel of hands in just five uses. [ sponge ] soft, smooth... fabulous! [ male announcer ] dawn does more... [ sponge ] so it's not a chore.

but when i was diagnosed with prostate cancer... i needed a coach. our doctor was great, but with so many tough decisions i felt lost. unitedhealthcare offered us a specially trained rn who helped us weigh and understand all our options. for me cancer was as scary as a fastball is to some of these kids. but my coach had hit that pitch before. turning data into useful answers. we're 78,000 people looking out for 70 million americans. that's health in numbers. unitedhealthcare.

karl you're making a point about -- >> you're like i don't know if i want to say it on tv. that you know, this is not genuinely democratic. that this, i said it's not an empire. >> so it's as practically speaking it's a german empire. germany is the largest economy, they're driving the eurozone. and right now it's falling apart because they're not acting like the hegemond of europe. acting like this is our responsibility. we have to take care of our project. we have to pay what's necessary to keep our empire together. they have a wayward province, greece is doing bad things, they're acting like we're all partners, we have to follow the rules. when you're the boss, that's not what you do, you do whatever is necessary to hold the empire together. we have this vision for what europe wants to be and it costs money. it costs money to buy that vision, so you pay.

>> but the other side of that, i find politics can get so byzantine. but they're fascinating. the other side of it is that angela merkel has her politics to worry about. can you imagine if t.a.r.p. was directed entirely to mexico. >> the politics of turning to germany in a big way. her party just lost a big election in a province i'm not going it try to pronounce. they lost it to the social democrats. and the social democrats want more european integration. they want more european help. more stimulus, more growth. i mean it was an it has been taken in germany as a sort of anti-austerity election and since then, merkel has been speaking much more about growth. whether or not she'll follow up on it, but she's been speaking more about growth. >> merkel made that state election explicitly a referendum election. >> and she lost. >> deliberately. and she's lost seven of eight state elections. so you know, you said two

governments have gone down. every government that's adopted austerity and gone to the polls has lost. from either the right or the left. >> it's not an ideological rebellion as much as it's a rebellion against misery. >> it's a policy where you handed a gun and told to shoot yourself. eventually people say, now why exactly should i do that type of thing, so whether greece has been good or bad, the policy is stupid. >> the other thing that needs to be emphasized here is because america is going through economy and we're muddling along and we have the great recession. and we have elevated employment, it's tempting to thing things are bad there and bad here. spain has 21% unemployment. 8% is bad, 21% is devastating. that's a devastated economy. greece has 20% and growing, it's only going up. >> one of our sayings is because we fear becoming the next greece, we're making ourselves

into the next japan. >> explain what that means. >> so we are nothing like greece. greece doesn't have a sovereign currency, we do. but we're acting as if you know, hyperinflation or something that's just around the corner. therefore we have to have austerity ourselves, that puts us into a long-term muddling along, weak recovery/recession bounce in bounce out. >> famously, many years of zero growth. >> you don't think that's true? >> no. >> japan is a monetary failure. >> go i want to emphasize. >> we all just talked about how we were making it worse than japan. about to shoot ourselves in the head. >> this point about using wait that greece gets invoked. it's become rhetorical to say we're headed in the direction of greece. here's mitt romney making that point on friday. >> we have behind us a greek

chorus and -- i say that because they remind us that this president is leading us towards greece. one reason we're going to get rid of it is to make sure we don't continue to have the kind of deficits that lead to greece. my guess is when the president speaks at the democratic convention in charlotte this year, he will not have greek columns behind him. because he won't want to remind people of greece. >> are we greece, ezra? >> i can't stand this. i can't stand it. the european -- it is a bad analogy all the way around. both on what europe needs to do and what we need to do. as bill points out, greece is a tiny nation that cannot control its own currency. that is completely uncompetitive. they are ranked between el salvador, it's unbelieve low on the international competition rankings, their fiscal situation is unbelievably bad. their growth prospects are nil. we are the largest, safest, best-respected economy in the world, with the most-understood

political institutions in the world. we do have this debt ceiling problem. but eurozone has been around for ten years, it began in 1999. greece came in in 2001. we did not come into -- we did not come into existence ten years ago. so what people are pricing in in europe is a belief about political failure. a belief about the future survival of this currency. we have nothing like that. this means they need to do things we don't. we think of austerity in this country and we think stimulus. stimulus is ha they need. and that's a bit of it. but it's bigger there. they need to be willing to deals with levels of inflation. they need to create the equivalent of treasury bonds, euro bonds, they need to do big-governance things. we did them hundreds of years ago. >> right, right. i want to talk about elite failure in europe and elite failure at home. i think that in some ways is the resonant theme across the two. and what it looks like when

elites fail. because i find the fphenomenon f the rise of the golden dawn in europe terrifying. (female announcer) most life insurance companies look at you and just see a policy. at aviva, we do things differently. we're bringing humanity back to life insurance. that's why only aviva rewards you with savings for getting a check-up. it's our wellness for life program, with online access to mayo clinic. see the difference at avivausa.com. every communications provider is different but centurylink is committed to being a different kind of communications company. ♪ we link people and fortune 500 companies nationwide and around the world. and we will continue to free you to do more

and focus on what matters. it's time to live wider awake. only the beautyrest recharge sleep system combines the comfort of aircool memory foam layered on top of beautyrest pocketed coils to promote proper sleeping posture all night long. the revolutionary recharge sleep system... from beautyrest. it's you, fully charged.

one of the things that happens in these, there's, the check crisis produces political crisis. we've seen across the continent. rebellion against austerity and the discrediting of the center left and center right parties that have been the stewards of that austerity. in greece it was the socialist party, the long proud tradition in greece that was the one to implement the austerity. their government collapsed. the serisa party, a far left party did not have a lot of seats in parliament until recently, now 25% in the latest election. they're now saying we don't want the terms of the deal. but to me the most worrying aspect of the greek political unrest, a country let's remember that fought a civil war between fascists and anti-fascists.

>> and had a coup. >> there's a history there of political violence and instability. there's a party called the golden dawn, which is an explicitly fascist neo-nazi party. here's the golden dawn leader, nicholas nicokiakos, after electoral victory walking through the streets. >> all day in the greet illegal immigration, out, out of my country. out of my home. >> you see that's the symbol there, that sort of swastika-inspired symbol on the right is the symbol of the golden dawn party. it's serious stuff. these guys are explicitly fascist. they have significant heil. they won 7%. and there's going to be another election in june. things get worse, people are going to be desperate. i find it ironic that the problem with greece being immigrants. it seems like not really the

right diagnosis of the progress, that's a little immateriel. this to me is the most worrying part of this. because there's a history of fascism on the continent and it tends to thrive and flourish in times in which the major institutions get discredited and crisis. when you said you visited germany, that the their commitment to the project is a commitment to the project with that in the back of everyone's mind. >> i saw a speech by helmut schmidt, about world war ii and the great historical sweep of this project. it's not unpredictable, we think of the great depression leading to fdr as an historical inevitability. internationally, all different things happened. parties that were left that were in replaced by parties very far right. people vote against misery. they don't like to not have jobs

and very unpredictable things happen when misery continues for an extended period of time. so both of the major credible centrist parties get discredited. >> right. >> people have this tendency to try to find a scapegoat, who is at fault here. i mean it's absurd to blame the greece problems on immigrants. it's something they don't want to say, we've been, we lied to get into the eu. we've been over-consuming for decades. i've been getting too much. you know, nobody wants to say that. so they've got to find somebody to blame. >> there's a certain appeal. what's interesting here is that nationalism can take both in the greek instance, we're seeing nationalism take left and right varieties. the neoliberal, banker class, running the eu, we're going to repudiate them. the explicit position of serisa and that party has been explicit about the fact that we're in

solidarity with working people all over the continent. they don't have this quasi-ra quasi-racist vision. but there is a right-wing vision that says we need to restore greece dignity and pride. that's an enticing vision. >> the washington consensus was not loved by the people of latin america. who were the guinea pigs for it. and you can see the whole succession of political leaders who have come to office an an explicit anti-austerity. anti-privatization policy and a lot of anti-american aspects as well. this is the berlin consensus. the same thing is happening in many parts of europe. but you have to also look at the, what's happening on the german side. so i told you about trichet's proposal. well, trichet's proposal according to press reports, got from "reuters," got a fabulous

response in the conference that was the run-up to the g-8 meeting that you're talking about. including from prominent german former finance minister types, who said you know what's really attractive? it has strong leadership. >> right. well you should know for the news week ahead after this. stud. that's why programs like... ...the mickelson exxonmobil teachers academy... ...and astronaut sally ride's science academy are helping our educators improve student success in math and science. let's shoot for the stars. let's invest in our teachers and inspire our students. let's solve this. at home, i challenge that in one easy step with olay. total effects tone corrector. 7 anti-aging therapies for younger looking skin including an even skin tone, instantly.

from olay. olaf's pizza palace gets the most rewards of any small business credit card! pizza!!!!! [ garth ] olaf's small business earns 2% cash back on every purchase, every day! put it on my spark card! [ high-pitched ] nice doin' business with you! [ garth ] why settle for less? great businesses deserve the most rewards! awesome!!! [ male announcer ] the spark business card from capital one. choose unlimited rewards with 2% cash back or double miles on every purchase, every day! what's in your wallet?

quick update. i mentioned that the fascist greek political party was influenced by the swastika. my point was to note the resemblance of the symbol. what should you know for the week coming up? you should know what happens in europe this week and the months ahead matters. it matters just not for the greek people who are suffering through terrible economic contraction and dislocation but for the global financial markets and the immigration. you should know the spirit that

animated european integration was a desire for peace and cooperation in the wake of the worst manslaughter in human history and that's a spirit worth preserving. you should know a dissagts feed elementary student with access to the internet can be a powerful thing. she was so frustrated with meager cafeteria lunches, she started a blog in which she'd uploathe pictures every day and rate them on the basis of taste, and hair. you should know that embarrassment and public shaming continue to be powerful forces in the hands of ordinary citizens. you should know that democrats are down permobilizing against governance in many states. you should know house democrats have introduced the voter empowern't act which would create national standards for

elections that would preserve access. you should know the republican party is limited at every level of limiting and curtailing that exercise to that right. you should know that right wing billionaire and mitt romney continue to wine and raptd about regulation. it can actually save businesses money. they found that those work sites subjected to random safety inspections reduced injuries by 9ch and saved 26% in workers' compensation costs in the four years following the inspection. the study found no negative impact on profit and sales. you should know that not only it can be good for workers an come sew i want to find out what my guests know. we'll start with you bill black. >> spachblt everyone agrees

greece is a special case, but spain coming into the crisis had bushlgt surpluses and was praised. it has a bubble in residential real estate that was roughly twice as large ads the u.s. bubble and has been pretending that everything is hunky-dory. so it's been hiding massive bank los angeleses and unemployment is 26%. in southern spain, 30%. youth unemployment is over 50%. >> in any event, everyone's going to focus on spain. >> it's a massively bigger economy than greece and will cause a systemic crisis. >> betsy? >> what people should know is we've already had a lot of government cutbacks at the state, local, and unemployment revel. estimates suggest we would have an unemployment rate of 7.2% or even below if we put all those

government jobs back. and as you're talking about it, there's been a lot of jobs on these jobs or jobs that women hold. we should note that the bls issued a correction and actually they forgot a lot of the women government workers. a coding error led them to miscount. >> this is important because mitt romney used a statistic. it turns out it was wrong. carl. >> as bad as things are financially and internationally, least part of the u.s. is doing really well, the manufacturing sector. and even better than we thought. the census bureau did a rebenchmarking that shows it's much larger. >> what those two are facing is a political crisis, not knowing that understands fundamentally how they work and the only way is if the doft defaulted on the debt when it doesn't have to

saying investors did not understand how the government worked. >> i want to thank you all and thank you for joining us. we'll be back next weekend, saturday and sunday 8:00 eastern time. you can stay up to date by checking on up with chris on facebook and my list of appearances and talk about my upcoming book. coming up next is the one and only melissa harris-perry. what have you got for us this morning. >> >> i've got bill bradley. i'm skeptical. we're going to see. also we're going to talk to a group of teenaged girls. i have a panel of young women who are going to talk about what this current vitamin looks like for kwung women thinking about voting for the first time and ai'm excited about the civil network decision yesterday.

i'm so very excited. >> i'm, too, very excited. >> that's melissa harris-perry coming up next and we'll see you here next week here on "up." ♪ surf's up everybody get your boards and your wetsuits ♪ free-credit-score-dot-com's gonna direct you ♪ ♪ to check your credit score before it gets too late ♪ ♪ and you end up strapped for cash ♪ ♪ patching your board with duct tape ♪ ♪ so hit free-credit-score-dot-com ♪ ♪ find out what credit's about ♪ ♪ or else you could be headed for a credit wipeout ♪ offer applies with enrollment in freecreditscore.com™.

and people. ame so, it comes down to the people. because, bad weather the price of oil those are every airlines reality. and solutions won't come from 500 tons of metal and a paint job. they'll come from people. delta people. who made us one of the biggest airlines in the world. and then decided that wasn't enough.

it's so great to see you. you, too! oh, cloudy glasses. you didn't have to come over! actually, honey, i think i did... oh? you did? whoa, ladies, easy. hi. cascade kitchen counselor. we can help avoid this with cascade complete pacs. over time, the other premium pac can leave cloudy, hard water deposits, but cascade complete pacs help leave glasses sparkling. shiny! too bad it doesn't work on windows. okay, i'm outta here. more dishwasher brands in north america recommend cascade. in north america (female announcer) most life insurance companies look at you and just see a policy. at aviva, we do things differently. we're bringing humanity back to life insurance.