good evening i'm used to count for tom hartman and washington d.c. and here's what's coming up tonight on the big picture and it's deal or no deal as a stalemate over the budget continues as a government shutdown still looms ahead just tomorrow and republicans have dug in their heels but the economic toll of this whole mess could affect all of us plus we're not the only ones treading in choppy financial waters as portugal just announced that its two means of be allowed to stay afloat so what does all of this

mean for the eurozone and more broadly the global financial system and they did it again as the libyan conflict shows no signs of easing up there's lounging outrage over the second accidental nato strike against rebel forces we're going to talk about what all that means and whether libya is going to become the next and last war. will the badly battle over the budget shows no signs at this point of easing up lawmakers on the white house remain at odds over how to bridge a gap of billions of dollars now after last evening's failed talks president obama warned folks that more than political showmanship is at stake if the government indeed shuts down take a look at the ramifications all across this economy in a time when the economy is. still. coming out of the extraordinary

deep recession it would be inexcusable given the will jubilee. miral differences when it comes to numbers which would be for a reason they get this done. now today the republican dominated house passed a one week funding them to measure the cuts about twelve billion dollars and keep the military funded throughout the end of the year but the bill is essentially dead on arrival as the white house has made it clear that they will veto that legislation and it does seem to me like republican speaker boehner seems to be in a bit of a tough position he's facing a caucus that he can't get control and a caucus that essentially shows very little sign an interest and compromising now a new poll that came out today it's an n.b.c. wall street journal poll shows that sixty eight percent of tea partiers and fifty six percent of republicans do not want a compromise and all those folks would in fact some port a government shutdown and quite frankly judging by recent developments or lack

thereof it looks like they may just get their way now there is very little optimism coming from senate majority leader harry reid today when he spoke on the senate floor this morning take a look at the numbers are basically there but i am not as nearly as optimistic and that's an understatement as i was eleven hours ago the numbers are extremely close our differences are no longer over how much so huge we have on government spending the only thing the only thing holding up agreement here is ideology so why is it that these parties cannot seem to agree and more importantly what are the end of comment implications for this country i'm joined now for more on this by max rather wolf is the financial economist and professor of economics at the new school university graduate program and international affairs max those a mouthful welcome. thank you thanks for having me you know help me understand this

i mean this country is now into sorry three wars overseas we have countless americans who are out of work the housing market is a mess the economic recovery is that best uncertain and our lawmakers are prepared to shut down the government because they can't agree on a tiny fraction of our budget i mean is this just one giant political game and if so who stands to lose by this whole ugly garment was cut from the same unfortunate piece of cloth and that is if your quote unquote leadership is much more interested in its own political future than it is the national future that the country has that everything has to be acid tested against what does this do to me what does this do to my opponent and anything that's really necessary for the nation to come together to congeal to dig its way out of a brutal recession well that's secondary at best and only really gets worked after the narrow personal of opportunistic considerations of my next election and my next fundraiser are able to be put to sleep and if they're not then everything we including possibly even the function of the world's largest most powerful central

government everything waits for everyone's narrow personal and ideological calculation to be worked out first but could there be a blowback effect from the political ideological calculations because as you mentioned we are still in a recession could there be some financial implications for this country if we do see for example a prolonged shutdown that could hurt these lawmakers at the end. so it's very dangerous we're technically in a recession but most people will only not the recession or the recovery but most people will only know it's recovery if they read about it in the newspaper because their lives are still very much recessed from where they need them to be and where they were before two thousand and seven two thousand and eight will there be a blowback there always is but both parties hope to blame the other party and therefore actually gain advantage by the suffering anguish anger and upset that the public ends up experiencing part of the problem i think too for the more ideologically anti government forces here is that the best way to remind people that they need the federal government it's really important it's not just a straw dog in a rage dumpster for all kinds of agendas is to shut it down for two days or

a day and look at just how important it is in its absence which can be much more profound than the importance of any central government and its presence well is speaking out the shutdown i mean how does this usually technically work once they get what they want and it does seem as we as we mentioned in the intro that there's why support among these tea partiers among the republicans for a shutdown once they get that what's the next step i mean how does that change sort of the atmosphere in the negotiating room they suddenly say oh look we achieved it and now we can think and get back on track. maybe or we can trade barbs and blame each other i think the bigger issue here might be something else which is we're watching tooth and nail posturing and fighting the head of the what's going to be a very expensive over a billion dollars and brutal twenty twelve election cycle and that's what people are really focused on because the amount of money that we're talking about in these debates is ridiculous you're looking at a third of one percent to one percent of the outside maximum of the budget shortfall in the united states so we're literally going berserk fighting each other

risking people's jobs risking cesc risking all kinds of consultants and suppliers and employees of the government and their sort of well being as well as a symbolically terrible moment for us all of this over what is literally amounts to pennies on the trillions of deficit spending that we do each year so this doesn't really move the budget needle but it makes for amazing drama and allows posturing and really plays into both parties twenty twelve election campaigns the drama may be interesting for reporters who are looking for a little washington fight to cover in the short term but this this entire fight over the budget is really just a warm up a dress rehearsal if you well there are a bigger looming fight that's coming up and that's over whether or not to raise the debt ceiling that's something they're going to have to tackle next in a way if these kinds of political ideological lines remain what could be the consequences of not acting on the debt that that ceiling issue partly. well i think you can just probably fall into a couple different folders nonbeing the symbolic one being the real so it's time when united states is involved in at least three depending on how you count

afghanistan and pakistan maybe four wars in which we're barely crawling out of a recession with most of our general public the bottom eighty percent left behind this certainly sends a signal the united states is weak and having trouble running its own business let alone projecting itself or telling other countries how to run their business that's on the symbolic side on the real side about eighty five percent of the employees in the function of the federal government the united states will go into a furlough type mode and at that last more than a few days anywhere near as long as the three weeks of the last to last time we saw this in one thousand nine hundred five then after the parties are to blame each other and try to posture for twenty twelve there's going to be real damage to the tune of hundreds of millions of dollars to the economy and to many people's lives will be caught in the crossfire more or less innocent bystanders caught up in political fighting that has nothing to do with them but risks hitting them in its crossfire but max really quickly i think we can really get to the answer at the last question do you think this kind of infighting could prevent us from acting on the debt ceiling. you know what i think that we're going to see even more vitriol

lots of posturing we have to raise the debt ceiling the same way we have to have a budget we're going to have to go above that unthinkable fourteen trillion dollars for the federal government to function and the matter what anyones ideological opinions are agendas that the world and particularly united states cannot function without the largest central government in the history of the world with all the small government rhetoric notwithstanding a government that does three point five trillion dollars worth of global business every year and reaches in touches every one of the united states and an awful lot of the the globe six and a quarter billion people all right well i hope they are right on that and hopefully we'll have you back on to this mess the details as they develop thank you so much max fred well now whether it negotiation fall then the government just one day away from a shutdown let's take a look back at what tom had to say when these negotiations first came back and came up that in february and what his suggestions were at that time for crafting a responsible budget. president obama spoke about what lawmakers must keep in mind

was crafting a logic take a look. while it's absolutely essential to live within our means. we are absolutely committed to working with democrats and republicans to find further savings it's a look at the whole range of budget issues we can't sacrifice for future of the process. even if we cut out things that we can afford to do without we have a responsibility to vest in those areas that will have the biggest impact in our future unfortunately sacrificing our future is exactly what the republican party is up to i mean this is this is pretty straightforward stuff robert rice for example is no dummy robert rice was the secretary of labor the ministration he's an actual economist he's an actual economist and eases personal cutting social programs is going to balance the budget and and he suggests fixing the entire problem by raising taxes on the rich while dropping them on the world working poor now there's

a couple of here's here's actually what he's proposing you see he's suggesting that if you're making more than fifteen million dollars that you should pay a seventy percent tax no you pay you know pay seventy percent below the fifteen and the reason you're on your five to fifteen million to pay sixty percent and your five hundred thousand and five million to pay fifty percent on your two fifty to five hundred thousand you pay forty percent and below that you pay thirty percent on down to one hundred fifty thousand twenty percent to ninety thousand ten percent to fifty thousand if you make less than fifty thousand dollars you pay no taxes at all no income taxes at all and what this what this tax policy does by taking the top marginal tax rate back up to seventy percent or jack kennedy had it were lyndon johnson had it were richard nixon had it actually nixon had it ninety percent where where were truman and eisenhower and and and who've heard and it

was just a whole bunch of add is that it discourages casino behavior what happens is that when a very very wealthy people are looking to pull in twenty thirty forty fifty one hundred five hundred million dollars a year out of their business and they don't have to pay seventy percent tax they say to themselves you know instead of pulling this money out and stick it in swiss bank account or gambling with it i think i'll leave it to business. and when you leave in the business what do you do you build new factories you grow you build a company and what do you do with that you know you look higher and you people if you look back at the history of this country every time the top tax a very wealthy people has been over fifty percent what we've seen is that throughout that period of time there have been no booms and busts and employment or trick particular for the middle class has been strong and steady we need to adopt rather gracious partisans. our daily poll it's your chance to tell us what you think about all the issues that matter now to this question with or without with

our or without a government shutdown how the republicans already won the debate over this nation's budget and your choices are yes because the terrible evil corporate media is on their side and no one is willing to talk about the wealthy having to pay their share or no there's very few options now post a message to tell us why you think the republicans won this debate no matter how the budget battle actually turns out so far over sixty percent of you have said yes of course you can always log on to thom hartmann dot com to tell us what you think this poll is going to be open until tomorrow morning. all right well coming up right and you'll have a close rob overseas as portugal became the latest european country to ask for a bailout but it's not all bad news for europe i'm going to tell you why they may be in far better shape than us.

let's not forget that we are in the fourth quarter growth. well. wherever there's safe. freedom. minimal. woman.

you know sometimes you see the story at the scene so you think you understand it and then you give them something else here's some other part of it and realize that everything you. don't. charge is a big. fat .

well unfortunately when it comes to the economy the financial crisis is truly a problem of global proportions and the european financial system is teetering on the brink of disaster as a financial collapse the devastated greece and ireland is now threatening to take down a slew of other eurozone nations and for portugal after struggling to control control its spiraling debt crisis the country announced yesterday that it also would need a bailout to prevent its markets from imploding at a cost of nearly eighty billion euros they're currently the eurozone has a bailout fund of about four hundred forty billion euros so the rescue of portugal are relatively small nation about ten point five million people should be bearable for european finances but it remains to be seen whether the other larger european countries spain anyone could be at risk of a similar fate now e.u. officials do hope that the rescue package to portugal is going to be the last one needed and that the into. our european financial crisis will somehow finally be

contained but is that really the case for the answer we turn to karl then a tour of the market sector injuries us now from niceville florida carl i always love saying that myself florida sounds like fun now let me ask you i want to get my notes here portugal is now the third country to sort of essentially be toppled and this whole european mess right this is after months of insisting that they don't need any sort of outside help despite their internal deteriorating financial can conditions should we be surprised and more importantly what are the implications for the eurozone in the global financial economy i don't think we should be surprised at all i think the big problem we hear today is a credibility problem we keep hearing that this is all under control it was under control or greece went through there a little miss last year and then all of a sudden it came back up and then you have our window now you know what your goal and frankly i don't see how spain your thought of this a primary issue is that you have banks in germany and france in particular it important from these institutions and from the sovereign nations and now that it

looks like it's going to go bad so you have the eurozone in the e.c.b. stepping in to put together this rescue and they're essentially going to backstop this debt but that doesn't make it good it just means that somebody else would pick it up or right now it's essentially the same game that's been played here in the united states i don't see the end of this intell somebody takes the loss in we haven't decided who's going to take a loss here but can't you argue that the financial positions for the eurozone would be devastating if we allow further they allow for example portugal to take the loss and knock some sense rescue. sure but at some point somebody has to eat the loss the loss happens when you make a bad loan it doesn't happen three or five years later when you do fall so it happens at that time well we have learned to allocute in who gets to take it and that's the primary issue we have is there from a credibility standpoint we keep hearing this is sold and yet if you see what's

going on in order and we thought everything was ok you know always sort of there are these conditions including the property tax that have been put into the bailout package that the urge people to really did no problem now you mentioned spain or earlier and i do want to sort of get get back to what would happen at spain as gnats now you know spain and portugal there's a world of a difference is a huge economy we're talking about one point five six trillion dollar economy if spain turns belly up i mean i don't know if the euro zone could absorb that kind of financial strain could we see the dissolution of the eurozone if if that does come to pass. i think that's very likely goes down i think you were the phone. at some point the germans are going to ask in the fridge to a lesser extent why should we keep pouring money into these countries that do not have their act together basically what's happening here is that the germans are being asked to subsidize the crocus e.u. these purple lesions you put spreads into spain and they've got a major problem with their property bubble that has not been reconciled then i

think you have something you can't be go with anymore in the possibility refraction of the euro was very real and i want to broaden the discussion to touch base a little bit on the united states and i want to play for you something that we saw on television today there is a john silvia who's the chief economist at wells fargo and he's talking about how he sort of saw this crisis coming here let me play for you what he had to say. to me in europe for a few days the plot and greece and portugal sounds an awful lot like the same plot that's going on united states but the characters have different names and i think in the united states that the challenge is coming to grips with more moderate pace of growth that doesn't change the generate the revenues that are necessary to pay for these entitlements and right well you know i'll agree with them in a sense that yes it's probably not the best idea to spend more when you're not taking enough revenue but really entitlements do you agree with that tape is that the problem in the united states. if you take justify big entitlement programs in

the federal budget that would be social security medicare medicaid unemployment and welfare are primarily food stamps and section eight housing that in total adds up to the entire revenue base all of the taxes that the federal government collects so if you say we're going to cut spending in discretionary programs if we're going to cut defense spending for example you're not going to make a difference noticed what has been left out there not only things like defense but we haven't even pay the interest yet so yes there is an issue and we need to solve the revenue side of the fence at the same time that we saw the spending but in the united states the federal government has never managed to collect more than twenty percent of g.d.p. in taxes that would put us at about two point eight trillion dollars in tax revenues but we were four trillion dollars budget so even if we were to increase taxes we would not be able to make this work and what about the big corporations but essentially raking in billions in profits and get away scot free what's happening if you go back to you know the financial system we had happened one

hundred fifty is when you had corporate taxes you set out for one third of the u.s. government's revenues today it's seven percent you know you have companies like g.e. raking in fourteen billion dollars in profits not paying anything on that and we keep talking about how we need to cut you know food stamps and freshly cut money from the poor the working americans who have done nothing to get this not and we're not talking about where we can generate revenue from the big corporations that continue to profit at the expense of our worth at the expense of our financial crisis right there. even during the one nine hundred sixty s. we did not take in more than twenty percent of the revenue from a standpoint of g.d.p. so yes we had higher tax rates but unfortunately what that generates is avoidance behavior the majority of the problem in the federal budget today is coming from the medical expenses it is not primarily coming from things like food stamps and even social security is very easy to fix medicare and medicaid are an entirely different matter and there is no. we just sold through the existing medical system in the

united states you're just using the mathematical way to make it work and it's bad now it's going to get much worse over the next twenty to thirty years well i don't know if i agree with you on that but from a moral standpoint though don't we have some responsibility to look out for those folks in the system in this country who you know essentially have worked their entire lives who are trying to make ends meet who are trying to survive in this situation when the companies that took us into this mess are raking in the profits and getting away with that. well remember the all taxes are ultimately paid by the people when you tracks a corporation and since we go to the present of the present whatever it is they're selling so i do believe that we have a problem with corporations abating taxes a new jeeves examples would more egregious ones but that does not change the fact that the system from the standpoint of spending it is entirely our control we spend twice as much as a percentage of g.d.p. in united states on health care as opposed to canada and here to use the first

world country we use the same situation exists with your example france which here is the entirely socialized medical system we spend twice as much here and there's surges growing all right i think we're going to have you back on an interstate about the health care system cause i definitely disagree with you on some points there but carl thank you so much as always great to hear from you now before portugal it was ireland's financial collapse that was the talk of the town but as tom explains ireland's i can own it wos threatened the entire european union let's take a look at what tom to say today ireland is in the process of completely reinventing itself as a nation they have no choice their banking system is in complete turmoil their banking deficit is thirty percent of g.d.p. and in order for there are economists to survive in any way they had to receive a bailout from the european union actually it's more like ireland had to receive a bailout in order for the whole european ache on a me to survive ireland as a nation is a systemic risk to the entire european union it's

a complete mess so who's to blame earlier in the week i pin the blame on an out of control banking sector it took too many risks and ran their country to the ground. then they got off scot free without a with a with a bail out kind of like what happened in the u.s. two years ago but today thanks to a report by think progress want to also condemn a certain political ideology. these guys check out what prominent conservative think tanks and politicians have to say about the way the old irish were doing business back in two thousand and two the heritage foundation pretty much the policy writing wing of the republican party said this ireland already has shown that tax cuts are a recipe for prosperity thanks to reagan's tax rate reductions including a corporate income tax rate of just ten percent ireland has become the celtic tiger and is now the european union's second richest country. and again in two thousand

and six the heritage foundation all economic success over the past fifteen years can be ascribed to a range of domestic and international factors it was not a fluke ireland has long had it intends to sustain low tax rates to attract investment. the cato institute another conservative one group back in two thousand and seven said this the key to our own success has been an excellent tax climate for business ireland establish one of the lowest rates in the world just one third of the u.s. rate low business tax rates have helped ireland attract huge inflows of foreign investment and in two thousand and seven the conservative american enterprise institute had this to say the real credible large irish disco policy beginning in the late one nine hundred eighty successive irish governments pursued vital spending cuts and tax relief which have made it a magnet for powerhouse firms and quote in two thousand and eight g.o.p. icon sean hannity in an interview with senator john mccain you are right about ireland's tax rates they did large tax rates on businesses and it's been

a big economic boom for them and finally potential g.o.p. presidential hopeful mitt romney in two thousand and eight said quote you take a nation like ireland for exists for instance they cut the tax rate i believe it's less than half the tax rate most of the other european nations and they have moved from a basket case economy to a booming economy well now that booming irish economy has collapsed into a festering mess of debt unemployment and social chaos all thanks to those very same policies to fight it touted by republicans so from now on whenever you hear these guys calling for deregulation and corporate tax cuts as they do practically every single day just look at how well it worked out for ireland and look how well it worked two years ago here in the united states it's all pretty simple they just don't know a damn thing about economics and they briefly and truly don't i mean it's it's truly a profound and deep problem here in the united states. but

a. few weeks. ago just from listening to the supreme court during. this new york congress. it's a case of the killers took a battering because the twenty three. to six. yes or no chill big government the speech at six o'clock go back. and grab their retro you see your child ok let's go. to the polls. the killing. took place like exception to the constitution pictures for job the reception will be. ok look the duke lacrosse team took

a break from practice to record a little song i'm kidding of course but yes that was a rather catchy but a little disturbing tune from the young cons i believe which is the g.o.p. is the answer to how to get us out of this problem blame a bunch of democrats and make terrible rhymes i don't really wrap it up folks now coming up it could be it could have reinstating the draft be the answer to our country's addiction for war going to debate the issue in just a few minutes. was number given we have an apartheid regime bringing her.