joining me today the man who helped bring the wd game change into common par lens, political analyst and national affairs editor for new york magazine john heilemann. nbc news political analyst former pennsylvania governor ed rendell, "time" magazine's rana fa ru har and mr. sunday morning, "new york times" magazine editor hugo. from the white house to the state department to countless embassies across the globe, the diplomatic community and, indeed, the country reeled from news regarding the deaths of four americans at the u.s. embassy in benghazi. the libyan city america helped free from the oppressive regime of moammar gadhafi. chris stevens was among the americans killed after protesters stormed the embassy last night. demonstrators also swarmed the u.s. embassy in cairo, scaling the walls and tearing apart the american flag. the attacks are believed to be in reaction to a obscure movie

film in the u.s. by an israeli citizen one that ridicules islam and the prophet mohammed. today, flags at the capitol have been lowered to half mast and the president spoke earlier in the rose garden addressing the tragedy. >> the united states condemns in the strongest terms this outrageous and shocking attack. since our founding, the united states has been a nation that respects all faiths. we reject all efforts to denigrate the religious beliefs of others. but there is absolutely no justification to this type of senseless violence. none. >> not content to sit on the sidelines at a critical moment in his presidential campaign, governor mitt romney plunged himself into the middle of this developing crisis, sharply criticizing the president by a written statement last night and doubling down on that criticism this morning. >> when our grounds are being attacked and being breached, that the first response of the united states must be outrage at

the breach of the sovereignty of our nation. and apology for america's values is never the right course. the president and his administration have done something which is inconsistent with the principles of america. >> team romney has thus far focused its misleading attacks on a statement made by the u.s. embassy in cairo before any attacks began. it was a preemptive statement made to quell possible violence in the region. the embassy statement condemned, quote, the continuing efforts by misguided individuals to hurt the religious feelings of muslims. team romney has chosen instead to ignore these facts and focus on a statement taken out of context at a time of international distress. this morning romney used the tragedy to criticize the president's foreign policy agenda. >> i think president obama has demonstrated a lack of clarifity to a foreign policy.

my foreign policy has three branches. >> the only spesty we have is a repeated mantra regarding confidence, clarity and resolve. it is worth noting that if this latest line of attack is aimed at winning romney undecided voters the international stage is not one where he has thus far proven himself to be the greatest actor. previous performances have included calling russia our number one geopolitical foe, alienating much of the united kingdom during the olympics in london, undermining sensitive bilateral negotiations over chinese dissident and failing to mention the war in afghanistan during his convention speech. john heilemann, i turn to you first on this. i think a lot of us were sort of taken aback at the back and forth between the romney campaign and i guess the white house, more specifically as far as the romney campaign and how they've handled this, it seems to be moves that are nakedly political and i think to some degree sort of shocking given the gravity of the situation on -- on the international

stage. >> well, yeah. the first thing to start with before we move to politics is just to -- i think everybody today throughout the day needs to take a pause and recognize like what a really serious day this is, remind s everybody in the cheap back and forth of politics people's lives are at stake. you go and do these jobs and people think ambassadorships are dangerous, you can use your life doing it, he lost his life with three other people and it's important to keep that in mind. on the political front the obama campaign has long been worried mostly about exon nis events things they were confident about winning this election unless the straits of hormuz got challenged, iran, israel, something abroad, europe, we have an external event and these events are events that test presidential candidates in profound ways. their temperament, character, ability to show leadership skills in these moments. we had one a year ago when lehman collapsed and it was the moment that barack obama won the

election largely because john mccain demonstrated the temperament, leadership skills lacking in that moment. i think governor romney's response last night and more pointed his response today this is his lehman moment in a lot of ways. this crisis may not translate to voters in the way the economic crisis did, because it's a foreign policy thing, as a test to think on your feet, be serious, sober, respectful to frame if you're going to have disagreements with the president to frame them in the right way, not seem crass, exploitive he's failed those tests and why you're seeing stores on the web, republican foreign policy people across the board saying this is a really dramatic moment, i don't know if it's the moment that, quote, mitt romney lost the election but a pretty clear window into areas of his leadership ability, character, temperament that i think a lot of voters should and maybe will find really troubling and really disturbing. >> in fact, there have been senior republican advisers who have said on the record -- well

off the record but attributable to buzz feed, for example, they were trying to score a cheap news cycle hit based on the embassy statement and it's completely blown up who called the romney state a disaster and lehman moment parallel to the moment when john mccain amid the 2008 financial crisis failed to come across as a steady leader. governor rendell. >> the romney campaign fell prey again to misinformation. because the whole attack was based on a statement that was handed out before anyone got hurt, injured or killed. and that statement was very appropriate. as you said in your opening, there was a preemptive statement trying to get the idea across to muslim citizens across the middle east that we are not anti-muslim, cherish freedom of religion and what was done was reprehensible. what united states should be saying at that moment. after the killings, the state department and the president came out with very strong statements. i thought the best statement of all was hillary clinton,

reminding us what the stakes are when she said we have to be clear eyed in the face of grief. and that is correct. we cannot make foreign policy snap judgments. you have to get the facts, find out who was responsible here, before we even decide what the appropriate action will be. and i have confidence that when we do, the president working with the libyan government and the egyptian government will take the right action. >> and to john's point about the sort of risk these diplomats take on, you know, that statement that was released in egypt was as much as anything else an attempt to save lives. >> sure. >> say look, we were a he going to try to put this broken thing back together so that nobody is hurt. and for romney not only to sort of not understand that, but then to use that as a line of attack and criticism, is fairly shocking. you know, the other big looming question is, why romney -- setting aside the sort of political gain he may get from this, i don't know from where,

foreign policy has been a weak area for romney and this cements he's out of his league. >> this is one of the weakest republican ticket on foreign policy in decades. one of the most important ways he seems to be missing the point about how events like this happens. this wasn't a matter of one farmer on the nile delta going to youtube and downloading something. there is an industry of outrage that fuels events like this. the arab world has radio stations and television networks that have their own glen becks and clerics and mullahs that look for things like this and fan the flames. that's important. handling that delicately and understanding that is something he's completely missing the ball on. >> hugo, we talk about the unknowns going into november. the economy is certainly a cipher, foreign policy always held out there as something that may change the dynamics of the race. how long -- the president said justice will be done today which a lot of people are trying to parse what does that mean.

will there be further military intervention. the other problem for the white house on this, libya seemed to sort of be buttoned up in so far as we thought that's going to be in the ledger of wins. this unwinds all of that and creates a different narrative. >> maybe, maybe not. you need to wait and see what happens and give it a little time. what john said was right. we still don't really know the details of what went on in tbeni or cairo and the reactive nature of the romney campaign is problematic. what's strange about it is, maybe there is a point, a good point to be made in a couple days about like what happened and what the, you know, what the security measures were and maybe the lack of preparations or something, who knows, but the point is to jump on it right away, not give people a chance to find out what the facts are, it's -- i mean, it really is like -- it suggests a level of desperations and a real need for an opportunity and, you know, i mean the race is winding down so you understand it, but on the other hand, it's not presidential. >> let's be just clear about one thing. on a couple occasions now we've

criticized the romney campaign for not knowing what the facts were last night for acting out of context not being careful enough. the governor doubled down on those remarks this morning and doubled down now that the timeline is pretty clear. so if last night was intemperate, today is what's more crass because it looks like they are purposefully ignoring and misrepresenting the timeline of when the statement was made. i think the question of whether -- their desperation is what we're seeing. you're seeing a campaign that, you know, coming out of these conventions a -- the filter, the media has latched on to not inappropriately a story line that makes it increasingly difficult for governor romney to win this election. chuck todd referred to this as the kitchen sink strategy, they're starting to throw whatever they can against the wall and in this case, though, that's a grossly irp responsible thing to do. one thing to throw things against the kitchen sink when lives are not being lost or in jeopardy. we still have an unstable situation unfolding over there. there could be more lives lost over the course of the next 24 to 48 hours. to further destabilize the

situation in this way is again not only i think ill advised politically for the reasons you said, alex, not a strong place for governor romney to be on foreign policy but dangerous and reckless and irresponsible. >> i think alex, to double down on what john said -- >> tripling down. >> use the word naïvety but it was disingenuous. they lied to the american people trying to say that the statement that was made before the violence, was the statement that was made after the violence and it showed weakness. look, this is an issue i think americans will be concerned about, because the average american says, benghazi, didn't we save those people from genocide. how could this possibly be happening. >> and -- >> and foreign policy does affect national elections. i think when osama bin laden came out with that statement, friday before the kerry/bush election, i think that pushed a lot of soccer moms who were thinking of voting for kerry to vote for security and vote for

bush. >> when foreign policy affects elections it's really on the fear of american weakness and i think that's where -- that's the bet that romney was making here. >> right. >> here we go. we've got -- here's the obama machines -- that's the only one. the complexities of how the deals get worked out in various places -- >> greg and steve made this point today, romney is trying to appeal to some sort of fick shus shus -- figment of the base's imagination that the somehow is an appeaser and weak on national security. that is -- i don't think that's where the middle of this country is at but this line of attack that the president has been an apologist will win over swing voters, to the point of the kitchen sink -- >> it's been my view throughout this campaign that governor romney should never talk about foreign policy, only time they criticize president obama on foreign policy, in the lead should be this is the the that killed osama bin laden. the president made one of the strongest places in his speech in tampa, was the place where he capitalized on romney having not

mentioned -- >> charlotte. >> i'm sorry, having not mentioned the -- our soldiers who were still in afghanistan. he mocked president -- mocked governor romney for that. that is a narrative about this guy is not fit to be commander at chief. he is an amateur not ready for this job. that was one opening they exploited in charlotte. they will be able to exploit this opening because it is again, rather than being forgetful about the troops this is someone who seems to be acting as i said before in a crave and irresponsible imtemperate way another thing that president obama invoked in all three of the debates on the foreign policy debate will hammer home. not just that he's better on foreign policy than mitt romney but that mitt romney is an amateur and not really fit to fill his chair. >> a dangerous amateur. coming up, president obama used the anniversary of 9/11 to remind americans while the attacks united the nation against a common enemy, that enemy is not islam. >> years ago, memorial services were held for americans of different races and creeds,

backgrounds and beliefs. and yet, instead of it turning us against each other, tragedy has brought us together. i've always said that our fight is with al qaeda and its affiliates, not with islam or any other religion. this country was built as a beacon of freedom and tolerance. that's what's made us strong. now, and forever. >> but yesterday's embassy attacks show that the u.s. still has a highly complex relationship with the arab world. we will ask former assistant secretary of state b.j. crowley about the ties next on "now." ♪ ♪ i can do anything ♪ i can do anything today ♪ i can go anywhere ♪ i can go anywhere today ♪ la la la la la la la

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today many americans are asking, indeed i asked myself, how could this happen? how could this happen in a country we helped liberate in a city we helped save from destruction. >> that was secretary of state hillary clinton earlier today condemning the deaths of u.s. ambassador to libya chris stevens and three other americans who were killed during an attack on the american consulate in benghazi. the assault in libya followed protests in egypt where demonstrators climbed the walls of the u.s. embassy in cairo, tore down the american flag and replaced it with the islamic banner. both were said to be sparked by an obscure anti-muslim film promoted by florida pastor terry jones whose decision to burn a copy of the koran sparked riots in afghanistan last year. it highlights the frayed relationship between the muslim world and the united states. more than a year after the arab spring swept the middle east and replaced dictators in libya and

egypt. peter crowley joins us from washington but first to richard engel who is live in cairo egypt. >> certainly these incidents highlight the strained relationship or the tenuous relationship between america and the middle east. i wonder what you're seeing now in reaction to the events of the last 24 hours? >> i think you can call it a very bad relationship and for the last several decades the united states has worked its relations with the middle east through proxies, through people like the former president mubarak or the president of tunisia or in the gulf, the saudi royal family, and has had a very poor relationship with the people of the region. and now that those leaders -- now the saudi ones, but many of the other leaders, the secular military leaders that were ruling this country, now that they've been swept away, they --

the united states is confronting with trying to establish a new relationship directly with the people and the united states has a major challenge here, not because the united states hasn't done good things for the middle east and the united states has done many good things for the middle east, often times these leaders, military leaders we were using as our friends, were deliberately miseducating and under educating their own populations about the united states as a form of control, as a form of propaganda. this is going to be a major issue that i think is going to plague u.s. relations with the middle east, with the newley empowered peoples of the middle east for the next decade or so. i think particularly you're going to see -- we saw a little taste of it now with this stupid movie that aired on-line. we're going to see a lot more of it if there's ever any real showdown with israel. >> one more question before we

let you go. a lot of attention being paid at what happened at the libyan consulate, a tragic situation there, but in terms of egypt, you know, if we could focus a little bit on the u.s./egypt relationship that was an embassy not a consulate a fortress in the words hufgo here, but the implications are severe. we should keep in mind that the egyptian government demanded an apology from the united states government which then led to that sort of -- the statement, probably a number of reasons why the statement was released from the u.s. embassy there, but the egyptian government has thus far taken a very hard line on this. >> the egyptian government is not the egyptian government it used to be. this is a government of the muslim brotherhood and the muslim brotherhood has been expanding its grip over the egyptian security forces and those egyptian security forces didn't respond quickly when people were scaling up the embassy walls and that's a real problem for the united states. it's a problem about the true

liability, the true intentions of its partner and a lot of people in the egyptian military, the old establishment, are saying i told you so. you, the united states, were too quick to throw out mubarak, too quick to welcome in the muslim brotherhood and you're not going to like what you're going to get. there's going to be more of this. that's what people in the old guard are saying. >> certainly a fluid and developing situation. thank you to nbc's richard engel. stay safe and we hope to hear from you again very soon. >> good luck. thank you. p.j., want to bring you in here. we're talking about the ten news which if not semi poisonous relationship between the middle east and the united states. i wonder what your take away from this is. i thought richards words, i told you not -- not richard's words but paraphrasing the old guard politicians that says i told you so, this underscores the frugality of the relationship if not the great unknowns that remain out there as far as where

american interests are being sort of -- how american interests are being treated in the middle east? >> i think richard gave a decent summary of the complexity of the situation in the middle east. we have turned, you know, decades of u.s. policy on its head over the past year and a half with the so-called arab awakening and this is -- this is an issue on multiple levels. at one level it can be seen as a relationship between, you know, people in the region and the united states, and, in fact, as richard said and hillary clinton has tried to do as secretary of state, moving past just the formal relationship government to government, to establish a relationship, you know, between the united states people and the people of the region, and there are lots of programs that we have and do that. i think there is a reservoir of goodwill towards the united states. there's a like, an admiration of the american people and the innovation and other things we are noted for.

there is a strong dislike of american policy, and that presents a challenge in terms of how we communicate u.s. policy to the region and to the people, for example, of libya and egypt. another level, it is a relationship between traditional societies in the region and their relationship with a modern wod. today, for example, i understand that afghanistan in the aftermath of this episode disconnected itself from youtube. i mean, that's a logical stop gap measure, but it's really not sustainable. ultimately the people of this region have to figure out what their relationship is going to be with a modern world and as they become more connected to their net they're going to find lots of things on the net they're going to like. >> that is a great point, pj. the rapid transmission of information in the modern world. you know, pj underscores the goodwill that exists in the arab world for america but it is important to point out that if you look at approval of obama's policies in the muslim world it

has gone down. a pew research poll shows in 2009, there was 34% approval of the president's international policies. in 2012 it was only at 15%. this is certainly an area where we still have a lot of work to do. >> no. it's absolutely true. i don't think it's a surprise. i mean as soon as arab spring happened, people knew exactly what you've just heard, that this was going to be a period of tremendous change, it's a work in progress. there might be parties elected in that we would be less comfortable with in the short term, but this is part of getting to beater place in the arab world and i believe that and that's why it's going to be so important to handle this. i do think it's going to spread. i think it's interesting that the afghans shut down youtube and you're right, it can't hold, but temporarily, it's almost an emergency measure. i think we may see protests in pakistan. i think it's going to make it very difficult to do this foreign policy pivot to asia everybody was hoping for. >> what do you think in terms of the international policies, is the the drone strikes hurting us

the most, or confidence in the president's policies? what do you think we are doing that is not winning us any friends in the muslim world? >> in the context of president obama's relations with the region, a decline was inevitable. you had the high aspirations that were generated by the president's inspiring speech in cairo in june of 2009. there was a lot of discontent in the aftermath regarding the lack of progress on the israeli/palestinian front. the united states has pursued appropriate policies in terms of responding to the aspirations of the people of tunisia, egypt, libya, yemen, not so much bahrain, but the united states has gotten very little credit for that because, you know, as these societies have gone through transitions, you do have a great deal of friction, a great deal of uncertainty. there's some people within egypt that are longing for the old guard, even as a new government moves forward under, you know,

president morsi. so in this natural mayhem that is occurring, we are going to see incidents like this and in many respects, because the united states remains the most powerful single country in the world, we're going to get blamed for a lot of these things, whether they are actually our responsibility or not. >> it will be interesting to see if any of the $1 billion in debt aid is going to be -- whether that number changes depending on how the egyptians respond to all of this. thank you to pj crowley for your expertise and time. always great to see you. >> okay. alex. >> more on the campaign attacks, foreign policy and what it means for november, that's after the break. we're sitting on a bunch of shale gas. there's natural gas under my town. it's a game changer. ♪ it means cleaner, cheaper american-made energy. but we've got to be careful how we get it.

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this is a time for healing, it's a time for resolve, in a face of such a tragedy, we are

reminded that the world needs american leadership and the best guarantee of peace is american strength. [ applause ] >> that was republican vice presidential nominee paul ryan a few moments ago making a statement about the situation in egypt and in libya. governor rendell, that's certainly far more tempered than mitt romney's remarks. i wonder if that is the romney campaign understanding perhaps they did not act most judiciously -- >> even if what you say it's coming from the vice presidential nominee which means virtually nothing. governor romney made the mistake and to the extent it can be fixed, i'm not sure it can, governor romney has to fix it. >> still not a great moment to question american leadership right now, right today, i don't think, even in those words. it's not the right moment. >> much more tempered. >> and also just insane. i mean, on the level, on this level, on the political level, and you can almost have sympathy for republicans on this because

for so long the republican party owned strength. >> yep. >> democrats owned a lot of other things. the reason that republicans owned the daddy party, and owned strong, was because of foreign policy. that was where their strength was. democrats were better on mommy issues, soft issues, economics, helping people. this is the first -- >> to say nothing of the gender stereotypes, but that's another -- >> just as the alcohol stereotypes of the wine and beer tracker. that is what it was. now suddenly for the first time really in any of our lifetimes, democrats own strong and own foreign policy. and for a republican campaign to be kind of wrong footed and still playing out of the old playbook, what paul ryan is doing there, we must be -- reminds us of the need for strength. most american voters think barack obama owns strong right now. >> and -- and -- >> and -- >> they don't want us getting involved in another war. getting -- getting involved -- being involved in afghanistan is

the right thing right now, in a quinnipiac poll, right thing 31% of the country, should not be involved, 61% of the country. makes no sense. >> that's why romney's convention speech made no sense. he was going along i thought like an a-minus speech and then launched we're going to go to war with iran and bring back the cold war for russia two things the american people desperately don't want. >> it's interesting, that's one of the reasons why to the extent it was thought through, they left afghanistan out of the speech. the truth is americans don't want to have a long conversation about afghanistan. they don't want to think about it. you know,hort of the parent whose kids are fighting there. but it really is a complicated situation. there is no -- there is no result there that's going to make americans feel good about like what we ever did there, what's going to happen next. it's a mess. >> two words oil prices. nobody wants them to go up. >> that's why the israel/iran thing matters more than any of this in terms of the politics the next two months. >> dysfunction junction shaun,

lawmakers return to the hill with plenty of finger pointing but little in the way of solutions. luke russert asked speaker john boehner about congress's previous failure at compromise. >> governor romney said that it was a bad decision for republicans to have reached a bipartisan debt [ inaudible ] sequestration. what's your response to him? >> listen, it was certainly a difficult time. i still look at my failure to come to an agreement with the president as the biggest disappointment of my speakership. but i don't think there's anybody that worked harder than eric and i to try to work with the president to come to an agreement. >> we will ask luke about this exchange and the looming fiscal cliff when he joins us next. bob... oh, hey alex. just picking up some, brochures, posters copies of my acceptance speech. great! it's always good to have a backup plan, in case i get hit by a meteor. wow, your hair looks great. didn't realize they did photoshop here. hey, good call on those mugs.

can't let 'em see what you're drinking. you know, i'm glad we're both running a nice, clean race. no need to get nasty. here's your "honk if you had an affair with taylor" yard sign. looks good. [ male announcer ] fedex office. now save 50% on banners. wthe future of our medicare andr electiosocial security. for... man 1: i want facts. straight talk. tell me your plan... and what it means for me. woman 2: i'm tired of the negative ads and political spin. that won't help me decide. man 2: i earned my medicare and social security. and i deserve some answers. anncr: where do the candidates stand on issues that... affect seniors today and in the future? isg .

seven years after hurricane katrina the rebuilding effort continues in new orleans. >> the percentage of residential

properties in the lower ninth ward that were rendered unhabitable was 100%. >> connects with residents who can affords the materials but can't afford labor. >> i would like to say we're sustainable long term. i don't know that that's the case. >> go to paying it forward.nbc news.com. i describe myself as a mother, a writer and a performer. i'm also a survivor of ovarian and uterine cancers. i even wrote a play about that. my symptoms were a pain in my abdomen and periods that were heavier and longer than usual for me. if you have symptoms that last two weeks or longer, be brave, go to the doctor. ovarian and uterine cancers are gynecologic cancers. symptoms are not the same for everyone. i got sick...and then i got better. there are 111 days until the country reaches a so-called fiscal cliff.

but the speaker of the house does not believe congress will be able to strike a deal on the deficit before then. >> i'm not confident at all. listen, the house has done its job on both the sequester and on the looming tax hikes that will cost our economy some 700,000 jobs. the senate, at some point, has to act. and on both of these, where's the president? where's the leadership? absent without leave. >> boehner has essentially washed his hands of his problems, saying house republicans have done their job. talk about absent without leave. after next week, congress may not reconvene until after the election, logging in a total of eight work days from the conventions until november 6th. nice work, if you can get it. and while the speaker says his members did their job on the sequester, his party's nominee for president criticized him this week for even signing that deal in the first place. joining us now from washington, is the sage of capitol hill and my celebrity topple ganger, luke

russert. there's a looming fiscal cliff and these dudes are hanging a gone fishing sign over their office doors. what gives? >> well, alex, we are doing one thing in congress this week, and tomorrow we're going to pass a continuing resolution so that the government stays funded, six-month extension, a long one, so instead of the fiscal cliff, one thing you won't have to deal with is the threat of a government shutdown. they are proud of themselves for accomplishing that. in terms of the fiscal cliff no one wants to move because everyone is hedging their bets on who is going to win this election. republicans think mitt romney will pull it out. if mitt romney is president they will sit on their hands until he becomes the commander in chief and move forward. democrats the same way, confident president obama gets re-elected. the only chance you'd really see something happen, substantially in the lame duck, is if president obama's re-elected and house republican and senatorial republican leaders decide they want to make some serious

changes to the u.s. fiscal policy. but any substantive stuff before november 4th not going to happen. >> you mention the cr and we hear by your account is the 11th continuing resolution since the last budget was passed which is i think officially pathetic in terms of doing one's job, but in terms of the cr, the republicans backed down on the numbers a little bit. tell us a little bit more about that and whether that might be a signal that they could play ball let's say in the lame duck. >> it's interesting. under the budget control act, which is the debt limit deal that was agreed to between president obama and the house republican leaders, the top line number was $104 trillion. conservatives want 1028. the group in the house to have that be the top line number. republicans have said okay, we're going to go with the deal that we had with the president that brought the country to the fiscal cliff a and keep that number in there. so there is some sentiment that once the election is over, and

you'll see some of the real sort of tea party freshmen who were elected in this wave, perhaps they'll be -- they'll dissipate a little bit, maybe there will be more of an emphasis to try to work together and not carve lines in the sand. but this far out, alex, that is wishful thinking. the one thing we have seen so far from republicans they don't have any appetite for new revenue in a substantive way which democrats would actually reform entitlements. so it's -- it's dicey at best i would say. >> i want to bring in our panel here. the obstructionism is really interesting, in so far as now the republicans are trying to paint democrats with that brush. it is worth pointing out the romney campaign released a statement addressing the moody's potential downgrade saying president obama's failure of leadership is what ruined america's perfect credit rating. president obama inherited our triple a rating and responsible for the only downgrade in our history and moody's is warning

another is on the way if we don't fix this problem which is breathtaking given the role republicans played in the initial downgrade. >> can we do a fact check. >> yes. >> here's why our rating is at risk because of political gridlock. this is what's interesting and what differentiates us from europe. they've got real economic problems over there. we have problems that are solvable, but the politicians won't come together to do that. that's certainly as much, if not more a republican issue. and that's the issue that business people worry about going forward. it's interesting because the s&p rises when predictions of obama's re-election goes up and i think that that's because business people know, we need to create some real growth in this country. ben bernanke is out of bucks. >> there's still not yet real pressure on the political establishment by the bond market. until there is that's what's forcing in this europe, the bond yields went crazy and the -- and there's not that. i mean the u.s. treasury bond is the last safe haven in the world. >> there's no real market crisis yet for u.s. debt.

so -- >> what is your day job? >> i like that. >> i thought you were still working in journalism. >> bond yield. >> he's on the the desk, on the trading desk. sounds like alan greenspan over there. >> i'm the cochair of the campaign to fix the debt with judd gray and we've got over 2,000 of the 5,000 major corporations signed on to the campaign -- >> still buying triple bonds. >> we've raised $26 million for a pr campaign right after the election to try to get people to focus. i think the american business community is going to weigh in with republicans and say, enough, we want this done. >> that would be a bold strike by the business community. >> i knew there was a reason hugo had a tie on today. work on wall street now. >> before we let you go, you know, the president talks a lot about the fever breaking. i know you gave us a sort of pessimistic view of the next couple months but do you think the fever could break inside the republican party come next year if he is, in fact, elected? or re-elected?

>> the question we talked about a few days on your show, if mitt romney loses what is the catharsis within the republican party? do they become more conservative and say we nominated a guy who is way too liberal, way too moderate or do they say, you know what, we need to reform ourselves and not be so rigid. and that's honestly i think a question that's very hard to phantom which direction they'll go. >> don't you think, luke, don't you think if the president is re-elected he can frame the issue by saying, i want it to do simpson-bowles, do it now, let's get in and do our job. then the republicans have a real choice. >> if both sides agree to jump into the deep end holding hands. but you've seen, is there the impetus to get to the magic number, 217 votes in the house, it's hard to say this far. >> but the democrats are on board. >> if they're on board in terms of raising the medicare age, possibly. i mean then you could say that

the republicans would be out in the woods for the 2014 mid terms. >> tough shape. >> but it's tough. we thought this would happen in the summer of 2011 and saw that deal died and mr. woodward wrote a whole book about it. >> some questions are even too difficult for the sage of capitol hill to know the definitive answer on. luke russert, thank you, sir, for your time. >> be well. >> coming up, state of the unions, the chicago teachers strike pits education reformers against labor unions. we are going to look at how the battle could reverberate into november, that's ahead. welcome aboard! [ chuckles ] ♪ [ honk! ] ♪ [ honk! ] ♪ [ honk! ] ♪ [ male announcer ] now you'll know when to stop. [ honk! ] the all-new nissan altima with easy fill tire alert. [ honk! ] it's our most innovative altima ever.

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as 26,000 chicago teachers enter the third day of their strike there is no sign of an agreement between the union and chicago public school officials. secretary of education arne duncan is calling on both sides to come to a deal. policies that the obama administration supports are at the root of this dispute. the teachers are to the pushing for more pay, but instead are fighting evaluations that are tied to student performance. this is always governor rendell, a tricky matt mat ticks, if you will. the question of education reform versus teachers unions, obviously a place for both. it's particularly tricky for the administration, given the fact they definitely need the support of labor going into november. >> i don't think this issue in the state of illinois will affect the electoral vote of illinois but it's an important issue because rahm emanuel is showing again, that democrats can stand up to unions when their demands are unreasonable. i hear it's not economics. the economics in this contract are good for the teachers.

it's the demand that's untenable and the american people think that teachers like everybody else should be valued. >> what i'm guessing rahm is betting on the thing that will resolve this, the power of the chicago parents association. >> right. >> which i'm guessing is supremely unhappy day three of their schoolchildren, i think they're getting baby sat four hours a day and then let out into the, you know, to where. >> he happens to be right. teachers should be evaluated. what the unions should be doing is trying to work with them to frame the evaluation in the fairest way possible to their members. that's what unions should be doing. >> it's worth noting what the chicago is proposing, student performance on standardized tests count toward 25% of teacher assessment would go to 40% in five years. it's hard to say look, we don't want to be evaluated. you just need to keep paying us what you're paying us. >> a shockingly untenable position. there really are at this point in the world of teachers unions those getting with the program and those that are digging in their heels and resisting the

program. there are unions that have looked at race to the top, the fact that a lot of the demands unions have made in the past have gotten in the way of things we should be focussed on, kids and their education, and working with reformsers to be adaptive to the new realities. others have dug in their heels. the chicago union looks ridiculous. rahm will win this battlep. >> i would say that one thing is for sure, it is very hard to be a chicago schoolteacher, so i think the fact that like they have fought for a lot of these games, will they have to give up some of those things i'm sure they will. >> but eat valuations -- >> nobody is asking to give anything up. >> they are asking them to give up a 4% pay raise. >> they are. as you noted in the break, making an average of $76,000. >> look -- >> let me say one thing. the na ir narrative is somehow the teachers unions do not have the children at heart. >> correct. >> no, absolutely.

i think the bottom line is going to be a long and high stakes game of chicken and worth remembering what happened in washington where there was a similar game, reform was pushed through in part because there were pay rises but the mayor lost his job. >> i'm not betting against rahm enan null on this one. if there's someone i don't want to find in a dark alley at night to play a game of chicken with, rahm emanuel. >> smart woman. >> thanks to john, governor rendell, rana and hugo. see you back here tomorrow at noon eastern when joined by aaron baits, richard wolffe, peter beck and tony danza. until then find us at facebook.com/nowwithalex. "andrea mitchell reports" is next. >> good afternoon. coming up the fallout and political firestorm after the death of ambassador chris stevens and three other americans killed by a mob of protesters in libya. joining us ambassadors nicolas burns, and richard williamson, senior foreign policy adviser

for mitt romney and house intelligence chair mike rogers and democratic congressman steve israel and new york city mayor mike bloomberg, all that next on "andrea mitchell reports." i'm weather channel meteorologist todd santos. the weather continues across the country, boston, new york, d.c., sunshine the dominant feature. towards miami may see a few showers, isolated thunderstorms by later this afternoon. looking good in dallas. denver a good chance for thunderstorms. notice some of the cooler temperatures there. phoenix looking better with temperatures in the lower 90s. safe travels. my name is adam frucci and i'm the editor of splitsider.com.

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droid does. get $100 off select motorola 4g lte smartphones like the droid razr. today many americans are asking, indeed, i asked myself, how could this happen? how could this happen in a country we helped liberate in a city we helped save from destruction? >> right now on "andrea mitchell reports" president obama orders increased security at u.s. embassies around the world. after violent protests in egypt and libya leave four americans dead, including the united states ambassador to libya. chris stevens. >> as americans, let us never ever forget that our freedom is only sustained because our people, who are willing to fight for it, to stand up