watch the three cable news channels with each tiny political move and made and key 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. so you have 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 nancy is a little want to take you now to d.c. just so we can show you some live pictures the g.o.p. is emerging from a behind closed doors they're having a meeting about what's going to happen with this banner bill. live pictures of lawmakers in the halls of congress doing nothing believe it or not there are actually other people other important people too meeting 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 don 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 this. the mother of the jordanian doctor who you know blew himself up and killed four people and of course

. you know son did good that's great that's what that's what a good believer should do that is not we're not going to change the jones drone strikes you're going to change that by working with people who. 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 at 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 drone war is president obama mind you has magically escalated that even in the first six months of this year now blair also offered some money saving 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 he 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 raised but for focusing on meaningless political maneuvering and fake 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 u.s. has left to pay its bills while they are you kidding me maybe washington asti 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 percent 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 going to dreamworld but joining to talk about reality is edward harrison 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 talked about how the trillion dollars in defense spending was a made up number that the c.b.l. never meant to actually be used does anybody have a plan that would actually achieve anything is this just bogus the the whole thing is just a manufactured crisis the reality is that when barack obama came into the white house in two thousand and nine the previous projection 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 the financial crisis and the fact that so many people are unemployed so

the end of the day really what we're seeing right now in the united states is the jobs crisis and no one's really talking about that instead they're talking about spending cuts and when you talk about spending cuts your previous points about military. and potentially you know 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 going to solve any of those problem jobs is actually something we talk about a lot on this show i know that the debate on jobs has been eclipsed on capitol hill but i do want to talk about default for a minute and a 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 should

they just pipe down not at all because you know we we saved them in many ways i mean if the government hadn't stepped in to build these companies. 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 resolved and 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 into this mess in the first place in which the u.s. government bailed out and which public opinion in many ways has rallied against as the enemy doesn't 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. makes the tea party look like they're in transit i was just thinking today i was talking to a friend of mine charles krauthammer 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 in a very widely read piece in the washington post you know with the banner bill we could have done this weeks ago. are you getting everything that you want you're getting these getting no tax cuts it's all spending cuts and we get a second by the pool 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 and if you know if troels crowed are 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 the debt ceiling 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 us is something 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 debt americans are 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 reduced if we come to an impasse where i think what happened is that the most likely scenarios 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 bonds 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 stick are going to be the small and medium sized businesses the contractors etc 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

priority and that's something that seems to be the conventional wisdom so my question is with the concerns over china not wanting our debt 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 or not it's where they want to sell those goods and then the question is how are they going to use those dollars that they get are they 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 and 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 but would be the point that if the united states does default or if

the credit rating get decline is that still going to be the risk free asset that everybody has on their books as such. they go to the united states is no longer a risk regret 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 bar and cost the united states 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 and the chinese don't want our debt anymore is there you know enough demand from americans for the united states to keep operating the way that it has been but it's not

a question of whether they want anymore it's a question of if they want to sell to us what they would have to do is they have to change 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 whom i want to sell. more to europeans and therefore we want to wean ourselves away and then you would hear a huge sucking out of the chinese economy into all the other asians and asian economies that compete with china and so it wouldn't get the chinese anywhere and so they're in a bun it's a lot of moving parts a lot of making parts and we don't know how quite are going to play out but thanks for giving us your analysis thank you all right and just ahead here we will continue to discuss the debt issues facing the west tonight we'll look at how state and one city are dealing with ranch a hardship plea back in just a moment. really

believe there's something in. the future. 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 will job creation according to government figures texas gain more jobs in june and this year than any other state in the country now 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 the 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 bogus 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 a fiscally responsible government policy that included filling holes with federal bailout money so here to help me about the truth is patrick leahy is a 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 certainly what it's done in many respects economically certainly with job creation is a model for the states not only other states but for the federal government but why if 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 let's just close it down look at the 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 or so but what do you think it contributed to what you see as this job 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 general low tax burden predictable regulatory regime and also you know. its funny 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 economic success they've added they've increased their g.d.p. by twenty five percent over the decade the funny thing is they don't need to go all the way to austin finds out it's not a secret like i said it's a global tax burden that's a big chunk really it's very yes they have one of the worst deficit problems in the country they're the fourth worst if you look at it in dollars they're the worst if you look at it as a percent of their population and proportionately in the state oh well i think that well i think that to the economic downturn just like every other state taxes will hit 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 money when you a lot you get a lot more we get to them a second look at they did they cut spending without raising taxes again adding to the increase in their predictability right now high school graduation rate is sixty

one percent forty third in the country are you willing to accept a thing like that and actually you had to spend in texas 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 closed a fifteen billion dollars budget gap now they close that gap. spending and actually look at it fifteen billion dollars to help that is that right we know how many that make it up there next billion dollars that right now you know that lobbying to get that money for that make. it up how does that make the case for smaller government 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 a bailouts are bad thing well a number of states used fiscal stimulus money and they don't know a way out of the out how they're making and i think you need to look at the facts they made the next they made the necessary cuts fifteen billion over the previous biennium that's the third time they've done that only the third time since world war two you know what that 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 you don't do anything no individuals because as wages have grown point six percent in texas went over the same period for the nation they've grown five percent while actually you know relative the resonation you got to take into account the cost of government because texas is government could burn the government the tax and regulatory burden is so much lower that 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 and after tax income example of business just by being what does he have been we had one in four people don't just judge somewhere that you just don't just by being their wages let me finish just by being located in texas compared to california ok a business saves increases there after tax revenue by eight percent that's revenue

that's used to create jobs that comes to people in higher wages so you have to look at the 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. 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 that 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 texas does a lot of the 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.'s the top companies the u.s. for the past seven years texas has been running to buy them as the number one place to do business also look at over the past nine years the texas texas really has to worry about c.e.o.'s because c.e.o.'s have been seen seeming to do quite well why that doesn't seem to be the problem i don't mean 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 jobs than every other states combined it's a remarkable record that's why you have. them going nation maybe you would expect that because actual unemployment rate has risen. it's still well below the national average i would have been 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 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 perfect no but i think they've done a lot of good things it's predictable regulatory regime low taxes and then also things like tort reform just this year they passed loser pays and that's horrible stories and i don't know that i should have had limits to their thought and no that's a camera that's going to a bill that's going to close down another of those lawsuits i think you need to go to round ones that are and there's

a reason why lawmakers from the left coast in california went to texas the funny thing is though yeah they're broke to try looking for any rate and you know but if you look at there's a reason why they're broke they spend too much and they have to texas could spending spending more yes they could they did this. they're going to look at putting in the spending cap in the next biennial session they're going to do things are going to be doing to improve it but if you look at where they are overall they're much better than the rest of the country but i don't write in english there are 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 just the last five years there's a reason for that is everything perfect no three in general they're doing the right thing and i think there's a lot there's a lot lawmakers who are all about the cost really to pay we're out of time thank you so much for being here have no 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 the house so we'll have to see what the next where this goes well they were it 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 debt has affected our country on a national level obviously which we've been talking about and on a state level now we want 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 defer taxes to 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 tolls of these things have taken poverty buildings that used to floor a sharp crumbling anasazi is going to go 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 computer to post evacuation chornobyl by others it is a sad thing that really is. very depressing. when you see something like this

in this kind of condition to just continue to be continue to fall apart this is the city methodist church. which today it's an abandoned shell with rusted ceilings rotting junk and graffiti on the parts of sites fall into this kind of disrepair. it's almost like a lot of ones all. historical soul built in the one nine hundred twenty s. first a place of worship leader a community center it is now at the forefront of gary's decline were 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 know six the town of gary once boomed 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 that revenues from the city would go down and so is that accelerated and sort of snowball gary's population has been cut by half as many fled in search of work it is now almost exclusively african-american over eighty four percent up to one third are poor in one of the top ten most dangerous cities in america at twenty nine allen has had no work for three years there's really no right job opportunity here i mean. you know the pay is what you're looking forward to but then again it's. not

going to hear 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 and hold as long forgotten door shut windows locked mom and pop shops abandoned the two growth businesses are strip clubs and. truck stop meeting places city hall stands right across from a former hotel a haunting sight during barry's peak years 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 in 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. makes me sad maybe pisses me off but it's like it's like.

well i think it would be best if i relocate you know the way i see it anywhere better than here nothing here. but legally there is not much to be found elsewhere either while gary is a symbol of collapse industry has been dying all across the us promises of a manufacturing revamp are all the rage while places like this are being a race from the map of america and the 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 all 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 we'll discuss this bill in a moment. welcome

back this is all she coming to life from moscow to headline. poland to make on its arrow called last year's crimes that killed the nation's president and high level politicians next monday about the findings also trying to shift some blame on russia. to grieve and they see spain get a credit rating downgrade moody's says weak growth is also among the key concerns in spreading the risk of debts and they joined in europe even. and across the

pond in washington the democratic controlled senate has rejected the republican bill to increase the nation's borrowing limit which has been approved by the house of representatives. last campout an israeli protest against poor living conditions as some are already drawing comparisons with the uprising in egypt. and there's the headline this second part of the i don't know shows coming up next. well it's been called the jet that cannot be matched by any known or projected fighter aircraft some will like the titanic's rhetoric and interestingly it's

little bit of a similar story we're talking about the f. twenty two when it was built the air force was raving about its capabilities however the f. twenty two hasn't been flying anywhere as of late twenty two years have had a number of problems but recent reports say all of them have been grounded until further notice because of this latest thing get this anti-freeze propane oil fumes guess where those were found they were found in pilot's blood the air force figure this out when they noticed the pilots were acting weird they were acting drunk but this is really just the latest blow to the jet that's been touted as the most expensive and fearsome dogfighter of burr mechanical issues have riddled the f. twenty two his program with everything from pilots being stuck inside the cockpit to navigational problems to rust problems and sadly most of our lawmakers on capitol hill are aware of all the problems the f. twenty two has had but nobody has called for them to be stop being used and.