good evening and welcome to the alone or show where you'll get the real headlines and none of the mersey we're coming live out of washington d.c. i'm of course lauren lyster in for alona and it is friday which is usually good but today it means that d.-day is just around the corner is august second approaches and default looms for the u.s. we will take a big step back from the minute by minute coverage of the debt debate that you're seeing on the mainstream media to tell you what you really need to know and what is

congress getting done told only under the radar with all of the attention being paid to this difficult circus attacks or civil liberties that's what they've gotten sneaked on to the agenda because of the debt distraction and with bad economic news out today and more seem to be on the horizon what model can we look to for salvation will some tell the texas miracle is the success story to recreate but we'll look at what look behind the rhetoric and what's really going on we will have all of that and more on tonight's show but first what did the mainstream media miss . well the designate may seem like the only thing going on in the war old if you watch the three cable news channels with each tiny political move and made and words being spoken and p.r. stunt being made by lawmakers being followed very closely like it is the most

important thing in the world. see house speaker john boehner trying to wrangle enough votes to get his plan through the house and he said first of all it's time for the senate to move whatever's going on in the house is a sideshow it's meaningless so the senate needs to move now bounces a letter once again to d.c. just so we can show you some live pictures the g.o.p. is the emerging from a behind closed doors they're having a meeting about what's going to happen which is the inner bill. live pictures of lawmakers in the halls of congress doing nothing believe it or not there are actually other people other important people to needing and talking about u.s. policies and they may be offering actually more tangible insight than u.s. lawmakers who are still trying to convince each other that they're going to solve the u.s. debt problem and win reelection with a measly nine hundred billion dollars in cuts over ten years let's talk about someone else let's talk about dennis blair he's a retired admiral and former director of national intelligence for the u.s.

now he has a solution both to reigning in spending and improving war policy here it is first round the u.s. drone war in pockets dawn yeah that's right he says al qaeda has proven it can sustain its level of resistance to an air campaign long enough to continue to pose its current threat that's with drones same goes for yemen and somalia now he said the u.s. isn't going to change that unless it can get pockets done in these other countries working with them but instead he says the u.s. is alienating the countries with drone strikes and threatening the prospects of long term reform we're going to change things like the so the mother of the jordanian doctor who you know blooms or for and killed people and. i'm sure there's. some good good that's great. that's what a good programmer should do that but it's not a change drone strikes are going to change that by working with people.

wow we have heard a lot of people say things like that on our shows here on our t.v. the difference is they're usually investigative journalists or lefty politicians or anti-war activists this is the former director of national intelligence saying this and if you're curious he said it in the aspen security forum which happens to be going on right now now if you're wondering about this and in context as far as where the drug war is president obama mind you has magically escalated that even in the first six months of this year now player also offered some nice dating advice for the u.s. he said the country should rethink spending billions of dollars to fight al-qaeda and its affiliates at a cost of get this twenty million dollars per terrorist per year that is blair's figure not mine he says there are about four thousand people who the u.s. considers members of these alleged terrorist groups worldwide so that is how the

money works out according to his calculation and you brought up that according to him seventeen americans have been killed on u.s. soil by terrorists since nine eleven fourteen of those in the fort hood massacre so just in case you want to look at the money proportionately to the threat those are the facts and blair asked himself if that's proportionate and said the u.s. needs to relook at the strategy to get the money in the right places questions we agree need to be raise but for focusing on meaningless political maneuvering and big plans for saving the country's debt problems in washington while ignoring these larger questions and blair's suggestions for both war and spending in the us well that is what the mainstream media missed today. all right i know you hear it everywhere but the united states is one day closer to default the deadline to raise the debt ceiling is tuesday and as it quickly.

approaches our country's books are looking officially pathetic to us at least apple as in the maker of i pods and i phones now has more cash on hand than the us has left to pay its bills well they are you kidding i mean maybe washington can ask jobs to pay social security checks next week if lawmakers can't get the money to pay for them and the plans that congress is voting on to rein in the debt well they're looking more delusional by the day they reportedly assume this economy will grow three per cent in their models three percent ok well let's look at the figures that came out today for the economy's growth they are just one point three percent for last quarter and even worse the previous quarter before that was revised to just point four percent the economy barely grew now you don't have to be a mathematician to see that those numbers don't seem to add up and it's looking a little more like washington is really in a dream world but joining to talk about reality is edward harris and he's founder

of the blog credit write downs dot com thank you for being here good to be here ok given this economic growth which has been essentially nothing over the last couple of quarters and the fact that lawmakers are looking at the reaper cent growth factored in their models earlier this week i also talk about how the trillion dollars in defense spending was a made up number that the cvo never meant to actually be used does anybody have a plan that would actually achieve anything is this just bogus things just a manufactured crisis the reality is that. when barack obama came into the white house in two thousand and. the previous projections for the deficit was one hundred ninety eight billion dollars we know that basically that was the baseline that was blown out as a result of that it's a crisis and the fact it's only people room floor so at the end of the day really what we're seeing right now in the united states is a jobs crisis and no one's really talking about instead of talking about spending cuts and when you talk about spending cuts through previous points about military.

and potentially medicare and social security those are the big ticket items in the in the budget and ultimately what we're doing now is only going to make the economy weaker in the short term it's not the solving of those problem jobs is actually something we talk about a lot on the show i know that the debate on jobs has been eclipsed on capitol hill but i do want to talk about gift all for a minute lot of people have warned about this and some of the people including the c.e.o.'s of wall street banks they got together they wrote a note to obama and they said hey you got to do this you've got to raise the debt ceiling otherwise there will be grave consequences do you think that they should just stay out of it i mean these are the guys that are blamed by many for creating the financial crisis that is rocked this country over the last few years and they just pipe down not only because you know we we saved them in many ways i mean if the government hadn't stepped in to bail these companies out you know the united

states would be in a much worse position right now so the question is what's going to happen going forward what they're telling us is we could be back where we were in two thousand and eight this whole situation gets worse or i think that some of that we really have to listen to the fact is that this is a manufactured crisis that is creating a potential armageddon scenario from an economic perspective so if everyone listens to wall street which you know got us in this mess in the first place and which the u.s. government bailed out and which public opinion in many ways has rallied against as the enemy does this make the tea party look like they're taking a stand against wall street by saying hey we don't need to raise the debt ceiling oh it makes the tea party look like they're interested i was just thinking today i was talking to a friend of our drugs crowd him who many see as a very you know right of center individual in washington d.c. he writes for the washington post he was saying just today a very widely read piece in the washington post you know the banner bill we could

have done this weeks ago. are you getting everything that you want you're getting these tats getting no tax cuts all spending cuts and we get a second bite at the before two thousand and twelve you know we can revisit this all over again why are we sitting here doing this it's just complete intransigence it doesn't make any sense and he's saying that if you know if trolls croad him for saying that this is ridiculous then you know that very much this is just you know beyond the pale it is looking at the same time more and more like it's actually a possibility i think people are starting to accept that that might actually happen they get something might actually not get raised i want your opinion on who would be the most impacted if that happens because one of the things that so many pundits and so many. analysts always talk about is how china owns the u.s. how china owns that i mean i talk a lot about actually and that is true when you look at the foreign governments that own u.s. debt but when you look at all of us public that americans own most of it you know

so who really loses if the country defaults what would happen is the question is what would happen if the debt ceiling is not really very impressed when i think what happened is that the most likely scenario it would be a selective default that means that the treasury would prioritize payments and the first payment they are going to prioritize are those gone you know the bonds that are expiring the interest on those bonds and so as a result the people who are probably going to get the short in the stay are going to be the small and medium sized businesses the contractors excedrin who do work with the u.s. government and potentially you know the people who get benefits from the u.s. government as well but i think the bondholders themselves will probably take first prover and that's something that seems to be the conventional wisdom so my question is with the concerns over china not wanting our tech anymore or japan not wanting to buy our debt anymore they're not being

a customer for our debt is that. every ality and they are it's not even an applicable sort of thing because the reality is that if the chinese want people to buy their products they have to take the money that those people and the chinese are selling to americans and therefore they're getting dollars in return and the question is not whether or not they want those dollars in august where they want to sell those goods and then the question is how are they going to use those dollars if they get they're just going to sit on a bunch of cash and get no interest no they're going to invest it in something stocks bonds whatever it may be. you know for most people's perspective the most safe investment to make is obviously going to be the so-called risk free investment which are u.s. treasury bonds at the point that is the united states debt or at the credit rating that decline is that building and either grand prix at that everybody has on their book that's. going to go to the united states is no longer a risk we create it's not going to be a aaa credit you could see there is the potential at some point down the line that

some corporations aaa corporations would actually have because they have a higher credit rating the united states you know lower borrowing costs in the united states so this whole debt ceiling fiasco is actually increasing the borrowing cost of the united states and as a result it's going to increase the interest rates that we pay across the board the only positive is that you know the chinese they want to sell to us and as a result they're forced therefore to make a choice as to what specific instruments they want to buy and obviously they want to buy the ones that are the safest really quickly if the chinese don't want our debt anymore is there you know not command from americans or the united states to keep operating the way that it happened but it's not a question of whether they want anymore it's a question of what they want to sell to us what they would have to do is they have to change their their currency peg they would have to say you know we want to revalue our currency because we don't want to sell to the united states and we want

to sell. more europeans and therefore we want to win ourselves away and then you hear. out of the chinese economy into all the other reasons of asian economies that compete with china and so it wouldn't get the chinese anywhere and so there's a ban on a lot of moving parts a lot of main part and we don't know how quite other going to play out but thanks for giving us your analysis all right and just ahead here we will continue to discuss it get it to us tonight a look at how the state and one city are dealing with hardship lee back in just a moment. you know sometimes you see a story and it seems so you think you understand it and then you glimpse something else you hear or see some other part of it and realize that everything. you don't. charge because of the.

world you go. through. and you know. let's not forget that we are going.

to. be the one who well. we're never going to as they're going to say get ready because you're going to have freedom. all right as we mentioned the federal government seems to be struggling to come up with solutions for this country's economic problems including growth including jobs now this is led to look to the states and one model that's been trumpeted is texas it's been quite the texas miracle by some and why is that one job creation according to government figures texas gain more jobs in june and this year than any

other state in the country that the texas models added thirty seven percent of all net u.s. jobs since the recovery began why it will proponents say it's the free market it's a business friendly climate no state income tax regulatory conditions are contained and flexible. it's considered fiscally responsible and government is small it's a nonunion state as well now critics say these arguments are both good for a state that has one of the worst budget shortfalls in the country a rate of unemployment that has been on the rise and of fiscally responsible government policy that included filling holes with federal bailout money there to help me evaluate the truth is practically thankee is state affairs manager at americans for tax reform so my first question of course is do you think texas is a model of what works yeah i think you could say certainly what it's done in many respects economically certainly creation is a model for the states not only other states but for the federal government but unemployment has risen in texas and if there's twenty three other states in the

country that have a lower rate of unemployment well even though unemployment may have been rising recently it's still one percent a full one percentage point lower than the national average and then look at the trend over the past decade the big picture private sector job creation which is the engine of economic growth texas over the last ten years has added over seven hundred thousand private sector jobs over the course of this time the nation as a whole has lost just under two million private sector jobs so private sector jobs have been doing quite well although it's just closed it down sort of last five years they've created more jobs net jobs total jobs both private and public sector just over half a million and five hundred million and that is more than all states combined over the same time period last half decade so what do you think has contributed to what you see is this well i think it's pretty clear governor perry is pretty vocal on what the secret recipe has been it's not very secret at all it's a general low tax burden predictable regulatory regime and also you know. it's

funny the group of california lawmakers in march came to texas on a fact finding mission that was actually joined by democrat lieutenant governor gavin newsom and they went to texas to meet with governor perry to meet with lawmakers to find out what they did to contribute to this incredible job growth and you cannot. success they've added they've increased our g.d.p. by twenty five percent over the decade if one thing is they didn't need to go all the way to austin finds out it's not a secret like i said it's a low tax burden that's what they've been really very yes they have one of the worst deficit problems in the country they're the fort worth if you look at it in dollars they're the fifth worst if you look at it as a percent of their population and proportionately in the states oh well i've got to think that well i think you tribute to the economic downturn just like every other state taxes would hit your hard just like every other state and they need to do things to rein in spending and to make some corrections in government and what they did in the bill and with federal stimulus what you want you get a lot will get to them a second look at they did they cut spending without raising taxes again adding to

the increase in their predictability prices and high school graduation rate is sixty one percent forty third in the country well actually are you willing to accept that actually that's just spending it's not like spending texas spends more on average per pupil than the national average and also public education spending went up in this recent budget in which they close a fifteen billion dollars budget gap now they close that gap. spending and they actually look at a fifteen billion dollars to help that is that right we know money that a billion dollars that right now you know they're lobbying and then that money goes i mean they get right up how does that make the case first of all they're all right if that's the responsibility when you're talking about your independence but you're taking six billion dollars from the federal government while at the same time saying that bailouts are bad well a number of states used social stigmas money and they don't have a way. out how they're only presented i think you need to look at the facts they made the message that they made the necessary cuts fifteen billion over the previous biennium that's the third time they've done their only the third time since world war two you know if it does that sends

a message to business look even when the economy takes a downturn and affects the state budget your taxes are not going to go up lawmakers are not going to go so businesses and individuals with higher taxes just because you got out of line don't know they don't benefit no individuals because really it has wages have grown point six percent and taxes were. over the same period in the nation they've grown five per cent while actually you know relative the resonation you go take into account the cost of government because texas is government burden of government the tax and regulatory burden is so much lower but the real impact of wages is actually greater in texas i had a friend example professional just move from california to texas exact same pay level he actually realized just by moving to texas he realized a thirty percent increase in after tax income example of business just by being what it doesn't have been in the at all times already is one in foreseeable gallup just you just don't just by being lowering their wages let me finish just by being located in texas compared to california

a business increases there after tax revenue eight percent that's revenue that's used to create jobs that comes to people in higher wages so you have to look at but when it comes to average wages you have to factor in the cost of government and the tax and regulatory burden and when you factor all that in texas do it remarkably well what about their quality of life let's talk about health insurance you know one in four people are uninsured that's the highest in the entire country so there is a cost for these benefits but you're talking i think i think there are clearly challenges that need to be addressed i don't think everything is perfect but i think that texas has a lot of right things that the correct things that the nation federal government and the other states need to look at is everything perfect and i would say that but if you look at job creation. survey of c.e.o.'s the top c.e.o.'s that you know they surveyed over five hundred c.e.o. of the top of the u.s. for the past seven years texas has been ranked by that as the number one place to do business was look at over the past nine years in texas you think texas is going to really have to worry about c.e.o.'s because c.e.o.'s have been seen seeming to

do quite well that doesn't seem to be the problem i don't need to focus on the c.e.o.'s but what i need to focus on is texas is the most attractive place to do business for the people that decide where to locate companies and this relates to jobs and that's why over the last five years texas has created more words. in every four united states it's a remarkable record that's why you have to tell them you're going lation maybe you would expect that because actual unemployment rate has risen. it's still well below the national average i would like twenty three states have a better one so why are we looking at those states that have better and i think i think you'll see that i mean there's still things they can do they can lower the tax burden more they can i mean everything is good relatively if everything's perfect no but i think they've done a lot of good things it's predictable regulatory regime and low taxes and also things like just this year they passed loser pays and that's the. story and i'm going to have limits to their no that's a camera there's certainly a bill that's going to go down another of those lawsuits i think there's going to

round lines that are and there's a there's a reason why i want to hear from the left coast and california went to texas the funny thing is though yeah their approach to health care is probably looking for any reason if you look at there's a reason why the groups they spend too much and they have to add taxes could spending taxes were spending more yes they could they did this session they're going to look at putting in the spending in the next biennial session they're going to do things are going to be doing to prove it but if you look at where they are overall they're much better than the rest of the country and i don't read any way share other states that are doing better and that's why over the last decade they surpassed new york they are now the second largest economy they added twenty five percent of the g.d.p. again they created more jobs in every state combined in just the last five years there's a reason for that is everything perfect no but in general they're doing the right thing and i think there's a lot there's a lot of lawmakers who are all about to cause really to pay we're out of time thank you so much for being thanks for going head to head with me and just so you know the better bill has passed so we did want to update you on that house so we'll have

to see what the next where this goes well they rate will they get this through the senate it's been said that they will not but we will have to see and we've shown you how to get it back to our country on a national level obviously which we've been talking about and on a state level now we're going to look at a local level we want to look at the city of gary indiana. the facts of the economy have taken a huge toll on cities unlike the federal government obviously cities can't print money and states deferred taxes just cities which can also put them in a bind cities can't do that they have no one to defer taxes to gary indiana is an example of what some of the tools of these things have taken poverty buildings that used to florida are crumbling and a song she is going to she takes us there to show us the ghost town it has become. this is america's ghost town. just twenty five miles from downtown chicago gary indiana dubbed the symbol of urban blight by some compared to post evacuation sure

noble by others it is a sad thing really is and very depressing. when you see something like this in this kind of condition to just continue to age and continue to fall apart this is the city methodist church today it's an abandoned show with busted ceilings rotting john and graffiti on the force of sites fall into this kind of disrepair. it's almost like i look like the one soul. historical soul built in the one nine hundred twenty s. first a place of worship leader a community center that is now at the forefront of gary's decline what used to be a symbol of architectural might and brought the people of gary together is now an enormous space filled with ruins where the only form of life for the pigeons that flying through the walls and the ceilings urban explorers historians and architects are saying that the chances of this place ever being rebuilt are close to zero so

it looks likely that this place as well as many others throughout gary are on their way to completely seizing to exist. founded by u.s. steel corporation in one thousand and six the town of gary once with manufacturing jobs but competition from overseas led to a ninety percent cut in the workforce the one industry urban center came crumbling down once the steel plant. suffered its loss of thirty thousand jobs. that meant that the population would grow smaller the revenues for the city would go down and so and so that accelerated and sort of snowball gary's population has been cut by half as many fled in search of work it is now all my. exclusively african-american over eighty four percent up to one third are poor in one of the talk ten most dangerous cities in america and twenty nine allen has had no work for three years there's really no right job

opportunities here i mean. you know the pay is what you're looking forward to but then again. the downtown area is now no town the main commercial street and urban desert as the economy here collapsed so did countless businesses small and large creating a town where sites like this a common hope was long forgotten door shut windows locked mom and pop shops abandoned the two growth businesses are strip clubs and. truck stop meeting place and city hall stands right across from a former hotel a haunting sight during gary's he clears places like this would become a temporary home for out of towners visiting this place the hotel is now deteriorating there are no windows left and the police cars outside making sure squatters don't get it there's no other hotel left in this town there are no investments flowing into this area nowadays instead there's only hopelessness

building up to makes me sad because you know what it's like it's like. well i think it would be best if i relocate you know anywhere better than here nothing here. but lately there is not much to be found elsewhere either well gary is the symbol of collapse industry has been dying all across the u.s. promises of a manufacturing revamp are all the rage but places like this are being a race from a map of america as they see turkana party gary indiana. now still ahead here we like to highlight the bloated spending on defense here in the u.s. tonight we have yet another example and while everyone is focused on the debt ceiling congress is moving forward with a law that requires internet providers to track your history for a year will discuss this bill in a moment.