you know what will be should be a celebration for the american people everyone should be happy tomorrow that at least at least this isn't hearing over their heads. as i ever laid for some but not so fast mr speaker my first guest says the u.s. has to cut or earn twenty trillion dollars over the next decade to even start to get out of this mess so the us stands broke as a joke isn't just doing today. you've been very seen actually tree and. a little bit infuriating. what about it is embarrassing to the country.

that there's no grown ups in washington. well that's the word on the street and we'll have plenty more of what americans think about the debt deal. that we've been done to look up and everybody thinks the united states. fighting to the debt after months of bickering and the works in washington exactly what kind of reception can the u.s. expect on the world stage. that evening it's monday august first time lauren lyster here in washington d.c. and you are watching our team and the country is quickly approaching the deadline for raising the debt ceiling august second that is tomorrow the u.s. is just a little more than one day away from starting to default on its debts and for running out of money to pay its bills what some would say will amount to financial

armageddon but lo and behold at the eleventh hour last night president obama and congressional leaders together with some help from the mainstream media headlines they said how low yeah we have a deal. you know what there should be a celebration for the american people everyone should be happy tomorrow that at least at least this isn't hanging over their heads. the debt ceiling is a done deal. so we do have a deal. but let us begin again with that deal finally reached to raise the debt ceiling. for days now people across the country have been saying stop it and work together. now whether they're actually happy or just relieved having a sigh as the house speaker did after what has been a standoff in this debate for the last few weeks and months we don't know that's up for debate but of course nothing has passed congress has not even voted were

waiting on that this evening the house i'm told in a procedural vote right now but let's look at what exactly is in this deal that's on the table let's take a look at the nuts and bolts so this allows the debt ceiling to rise by at least two point one trillion to as much as two point four trillion now the deal comes in two stages but this was a win for president obama in the sense that there will need to be another major go down and increase until after the elections until two thousand and thirteen so the government can pay its bills through two thousand and twelve with this plan obama would have four hundred billion dollars to increase the debt ceiling immediately and almost immediately there would be a nine hundred billion dollar increase in the debt ceiling in return for this a trillion dollars in savings but that's over ten years so it's kind of a long time c.b.s. says this is a really about nine hundred seventeen billion dollars over that decade and savings and these aren't really cuts analysts are saying as much as their caps on future

discretionary spending now the rest of the savings will come from a committee enjoyed bipartisan committee that is tasked with a identifying an additional one point five trillion dollars in reductions to the deficit now that committee fails automatically cuts would be enacted on agency budgets which would be split between domestic and defense right down the middle but what does this deal if passed even do now remember i said nine hundred and some billion dollars in savings are what it affords for the next ten years what does that look like well let's look all right this is what a trillion dollars looks like it stacked up in hundred dollar bills the size of a football field so that's what would be saved over ten years now that's less than just the yearly annual deficit which is right now. one point four trillion so kind of cancels out right there but let's look at how indebted our country is overall i made that sack that's about fifteen trillion dollars that is a lot of football fields and that's what our national debt is approaching right now

it's fourteen point five trillion dollars i look at this see that building on the far right that's actually not a building those are stacks of cash and that is one hundred fourteen trillion dollars that's how much the u.s. doesn't have funded but has promised to programs like social security medicare and military pensions how much money it's going to have to come up with and it is a hefty bill whether you're looking at those government figures or talking to someone like my guest who was i spoke with earlier he's an economist laurence kotlikoff he's he's an economics professor at boston university and he puts the build of the government owes even higher he has also said in the past even a year ago he was saying that the country is bankrupt so i want to ask him given this deal which in the past he said you know the country can't afford anymore no pain all gain solutions i said is that with this kind of a deal is this a response. yes but this is this is a pretty much of

a another smokescreen they really haven't made any major changes in time and. you know obviously this will inflict some pain on some people but we need to do something much more massive than this we're talking about you know to try to get our troops physical picture and under control we need something like a twenty million or adjustment over ten years not to shoot you in the interim i don't just mean every ten years now i use that you thought about twenty trillion dollar number it's then pretty widely quoted now even when there was a big deal being hashed out by congress that was for a four trillion dollars deal so why is your projection over what needs to even be the beginning of a deal so much higher when we have two years what are we trying to balance what groups are we trying to balance and the idea here is what i'm saying is that we need to look at our long term expenditure obligations and compare them with our taxes and the difference is what we call the fiscal gap we're on a mess that's about two hundred eleven trillion dollars large to close that we need

to come up with about twenty two to start closing down to zero we need to come up with about twenty trillion drugs over the next decade so the budget balance is not really the right measure that we should be looking at budget balance we should be looking at generational balance and you cheat to achieve generational balance you have to eliminate this fiscal gap so what why do you think that that that people are looking at that bigger number there's been a lot of estimates for what i'm kind of liabilities are some analyses put that number at just about sixty trillion dollars as a usa today analysis did you put that number as you mentioned that two hundred and eleven trillion dollars why is your number so much higher and why aren't more people referring to this is the reality of the debt that you asian. well they're looking at the cash flows and in the short run the baby boomers who are seventy million larger number haven't yet retired so the cash flows look relatively ok in the short run over the next ten years but there is there they go up are awful so

we're looking to short term that's part of the problem we need to have a long term fiscal plan here and is trying to get these cash flows in balance is not really working long term enough that's that's the basic problem you know the unfunded liabilities of so security and medicare and medicaid are going to go up by more than and two trillion this year the probably go up by four trillion so in just one year they're going to go up by four trillion that's my sense so here we are trying to reduce expenditures by two trillion over ten years when the unfunded liabilities are going up by four trillion in one year yet you tell me here we're looking at the wrong numbers look at the wrong numbers but yet these are the numbers that politician i think people looking at here are calling for a more long term solution they need a lot more cuts what we've seen in the last few weeks is a lot of debate holding up the debt ceiling over what is going to amount to nine hundred billion dollars over ten years straight away so if that's the only compromise that lawmakers can get to is what your calling for ever going to

actually happen as a reality is that even possible. well it's going to have to happen because if we don't fix the things fundamentally the government's going to be forced to print lots and lots of money to pay these bills and what and i wind up in high inflation if not hyper inflation so we have to come to grips with this reality we can't keep putting it off now what i'm proposing in terms of policy reforms i think is a lot simpler than may seem because what we really need to do was for example in health care is give her body a basic plan and keep it ten percent of g.d.p. the total expenditure as we're now spending we can just keep a little mad he did ten percent of g.d.p. which is what switzerland spends on all its health care that would be fine going forward so we can we have to rationalize these fiscal programs so security health care a check system and get to something that's efficient and their workforce or resign i will let me make this possible gap so there is a way to do this without enormous pain which is that politicians are just and

they're not. you know discussing that they're making points against each other they're saying you know game of who is right as opposed to let's let's focus on our kids really concerned here isn't as for their children it's not we whether it's politician that politicians are elected or elected next year. so they don't what point is that actually be a bad issue that's unavoidable like what you're talking about because you mentioned you know it's that way they got right that's going to have to print money and print money to avoid if that's what the government's been doing i mean the paddle reserve has shown its willingness to continue to put gas into the economy entail do you more round of quantitative easing i mean how long can that be a lot because right now it's going on like that. yeah well i think of it going up on traders and it will gross from time to go as a side of us bond market either when you're gone. traders suppliers you know of

china trade other conch countries are getting sufficiently nervous they really understand a one term projections and they will start dumping our bonds and interest rates shoot up even though they have we have as debt deal it won't be enough i mean i expect we'll get downgraded by waiting companies if they're doing their job and we should probably hate gang raped by substantially given a true picture you know we're just balancing the wrong books it's that simple. that was arts college off professor of economics of boston university now even though this bill may be touted as a deal by some u.s. leaders and has a good deal by your people i guess it has absolutely not been praised by all at home no way critics on the left say obama surrendered critics have called this a republican wall street plan progressive lawmakers in the black caucus say they'll oppose the deal and on the right of course tea partiers in congress who've resisted past deals are expected to bring about

a possibly another standoff today with this vote so what to american people on the streets think about all of this artie's christine friends i went out and she found out. all right so if you turn on the mainstream cable networks what you're going to hear a lot of regarding this debate with the debt ceiling is what the president says and what lawmakers say are what people who work here at the department of treasury think what about what you say regular taxpaying american well we decided to ask you the surprise how long. not really i'm never surprised by congress and strangely its name all the congressional members are usually in that upper class to begin with so i guess just like they're unwilling to lower their own paychecks they're unwilling to pay a little bit higher taxes and they'd rather put it on the rest of the american people longer char's understand our credit rating is going to get worse not surprising for our government to do something like that but the debt ceiling argument we're going to be still going on too long and i think it's kind of in beer

scene actually country. a little bit infuriating you're talking about cutting a trillion dollars when you need to talk about cutting six or seven trillion dollars in there haggling over the little stuff in it's ridiculous and it's politics and bureaucracy and it's very annoying to see our government run this way you have to compromise we dissent and that's a gun fight. and we send them there to do so walk come people i think it's fairly what i expected i mean it's sort of a negotiation but between two different sides so that they have both taken you know kind of a. difficult stance initially and then they come together so i think healing is maybe politics as usual yeah i think so yeah there's you know grown ups in washington still it is those people here in washington that are charged with coming forward deal finding an agreement and one thing can be said about all of this most

people will be glad it's over and almost no one is happy with the results in washington christine for his own party. so you hear that on the street you see mainstream media headlines that say i deal is done and it's our mind everyone that nothing is done because nothing's been voted on there's no deal right now and as we mentioned in the last report i forgot the democrats and tea party republicans may vote against it so here to talk about what exactly that means about compromise and if this is the compromise that wasn't senior writer and editor for alternate taj mahal. thanks so much for being with us thanks for having us yeah absolutely so this deal has no tax increases that's something the democrats wanted so has obama failed as some critics they have the surrendered. well a lot of progress as are very unhappy with the administration's bargaining tactics and they feel that they cave out too much and conceded some of the leverage that they might have held over these negotiations early on so the president said that he

would take this so-called constitutional option off the table a lot of progress as i'm hearing from are saying well that was something that was a fallback position that could have. pressured republicans to be more conciliatory and what we've ended up with is a plan that is very very skewed towards republican priorities deep cuts in spending no tax revenues and the above administration is telling progressive's that the deal isn't that bad because it protects social security and medicare that may be the case but aside from the politics i think it's important understand the economics in part with this which is that we have a very weak demand in the economy consumers are spending they've lost an enormous amount of wealth and this is jill no matter how you slice it it's going to take a significant amount of money out of the economy at a time when it's needed most so then what would you suggest defaulting in order to

get a better deal. well you know default has been everybody agrees that default is a worst case scenario the question is whether the administration might have. played hardball to a greater degree and gotten something that was who are in the middle now how long are they supposed to play hardball right now they're voting and it's the day before the country is going to default. that's true although the estimated that tomorrow is only an estimated date and it may be the treasury can keep going until the fifteenth of august what we're seeing and i can see this point i think most progressive as readily admit it is the power of having one party that's willing to push that limit beyond the tapes so what we have is a tea party caucus in the house that was saying we don't care if we default and democrats had to move very very far towards their position because at the end of the day they did care about averting default and they wanted to make sure that we

didn't see that scenario come to play so would you have been willing to push the country further towards default even if that deadline so that democrats kind of got a little bit more what they wanted. well the obama administration has taken a number of ways of getting around the debt limit off of the table and these ways are you know there's been a variety of creative proposals for avoiding the debt limit we talked about a constitutional option it's important to stand that congress has given the obama administration conflicting constitutional mandates there is no provision in the constitution that allows the administration to pick and choose which appropriations they pay and which appropriations they don't pay at the same time they have a debt limit that they are not constitutionally empowered to just go over so that argument is that the administration it could have simply said to the american people look congress has given me two conflicting mandates i cannot i cannot do

both of these things i cannot hope will my duty to execute the laws passed by congress by by going both of these directions right up to choose from among these two options and then he could have said that he is instructing the treasury to continue to issue checks and you know because that is the least damaging way forward for the economy as a whole so then what do you. this is really about i know some progressive had been writing and complaining about this plan has said that this is a wall street republican plan and said that this benefits essentially business and benefits the rich so do you think that there was how other considerations driving obama's decision to not do what you just said he could have well i do have a good deal by administration has taken a read of the political environment and concluded that there is a large group of independents who are paying a lot of attention to these issues and are you know the so-called swing voters i want to see significant deficit reduction i think the obama administration has made

the calculation that they want to but she cuts a big package of cuts that they can go into the two thousand and twelve campaign saying look we're the fiscally responsible ones and i'm not sure if they're right about the fact that there is this large group of centrist swing voters that are are looking for the for deficit reduction is a priority i think that you know the american people are really looking for the establishment focus on job creation hurting the foreclosure crisis etc etc mitigating the foreclosure crisis so i'm not sure if that was not a very severe miscalculation on the part of the administration when you're talking about kind of the progressive platform of jobs i want to play a little bit of a real quick piece of sound kind of a tea party on the tea party challenge that we've seen captured the mainstream media. so you answer with courses of we'll talk about movies all day i want to answer you do you have playwright interrupted you have you why that if you answer

the question i'll give you plenty of time you feel like you have made your point and now do you think people are going to think that you're overreaching and that maybe we're going to ruin the clout that you already have in this because you've got here's the problem is that i'm not trying to make a point i'm trying to do what's best for the country so tea partiers if that had a country need to default and whether they've been met with criticism or with praise they got a lot of attention they came out in vote they showed up in two thousand and ten you progress is need to rally the same kind of all the way and that translates into. elected officials and order to get their platform of jobs more heard. i mean i certainly think that that is something progressive have to do and are trying to do you know this narrative that the tea partiers have deficits are causing our economic woes is exactly opposite of the truth. you know a recent a recent analysis by bloomberg news found that almost twenty percent of the dollars in americans pockets last year came from one government program or another so here

we have a situation in the economy where we have a real demand problem that's the fundamental core issue in the economy companies are going to be hiring if there aren't customers looking for their goods and services and so when we're taking a lot of money out of these programs out of the public sector while the private sector is still deeply in recession it's the exact opposite of what we should be doing from an economic standpoint and from your economic standpoint there's a lot of different takes but we'll have to see what ends up on the table and how that affects the political field as well thank you so much for analysis that was senior writer editor for alter net joshua holland now beyond washington of course we're all focused on the beltway here but there is a huge amount of people that are watching us from afar that are affected even though the default may be averted at this point has the damage already. been done to the u.s.s. reputation the world over there as has dragged its feet over agreeing to pay bills

that it has already promised this is money that's already been spent and then they said hey but we're not going to raise the debt ceiling to spend what we've committed and the same time washington has put their aaa credit rating of the united states in danger u.s. bonds are consider the risk free asset around the globe they're in everybody's books so people are paying attention to this in china or pensioners all over the world and the beltway it may seem that crisis can be avoided as marina part niamh makes the case damage has already been done beyond u.s. borders and help us avoid default debt ceiling nation default and this crisis time's running out the entire world is watching it's been a public spectacle filled with the bickering grandstanding and lack of compromise i devise it could be over raising the u.s. debt ceiling created an unprecedented climate of uncertainty over america's so-called sound economy the damage has been done but what happens now everybody really thinks the united states isn't so secure it isn't so safe even if the

craziness subsides it seems to have got real close and who knows whether the next month next year this won't blow up again since the underlying causes economic problems are getting worse in this country club point five trillion dollars of america's borrowing is owed by foreign countries experts say washington's mismanagement may cause investors to abandon the devalued dollar and their partnership with america it's like being married to someone to serve a year or so when you're the richer you want to know what'll i do how much can i put up with this relationship you know the u.s. is. the only game in. making noises chinese making noise is what you know we're alone now in our ability. as a touring for financing in the world the result. could spark a replay of the two thousand and eight economic meltdown except this time washington not wall street would be responsible for the first time in history our

country's aaa credit rating would be downgraded leaving investors around the world to wonder whether the united states is still a good bet interest rates would skyrocket on credit cards on mortgages and on poor loans which amounts to a huge tax hike on the american people as the countdown near zero all repeat creating giant movies fitch and standard and poor's threatened america's hollowed triple ace or unless a deal was hammered out and that fourteen point three trillion dollar debt getting higher and economists say america's unsustainable budget deficits are the biggest threats to the nation it's like the batteries worn out this part was don't work the tires are flat all of this and so what we're trying to do is say we've got a little bit of money in the bank let's pay that down but we're not doing anything to fix the economy and so we're putting ourselves in a bigger and bigger hole not just because of the debt but really because we're not

creating any way to get around it that instead of us president repeatedly asked americans over the past week or two during the campaign to borrow and spend more make a phone call it's an e-mail tweet keep the pressure on washington and we can get past this all the eyes of the world's have been following the heated saga of playing out between u.s. politicians the main problem not going away is america's debt and a growing realisation that elected officials may never be capable of a green on how to solve it. r.t. new york and earlier to assess the view from outside i spoke with pepe escobar he's a correspondent for asia times. well the villagers already the fact that look i spent the last to two months two and a half months across asia in all this press few weeks of people start seriously

discussing the american that the chinese for instance they are in an awkward position because the the economies are totally interdependent they know that a lot of hot money is going to be in flux in china after this never ending that ceiling debate which is not going to solve anything as the best american economists include including paul krugman in a very very good new york times column has already warned if you read that they've that harvey's latest book which doesn't get a lot of traction in the u.s. but david harvey it is read by the best my and the brightest minds in europe and in china for instance this is basically a real arrangement of capitalism of durable capitalism and the victim is now being passed to china the problem is you know how that. just just to finish this is how the ruling elites in the us and india west in general

the ruling atlanticist elites will organize or not organize or refuse to organize this specimen of debate on from wall street and from the financial system in the us to china as a pillar of the world economy china for instance cannot have a financial system s. . marty's courses this is the west otherwise the whole world economy would implode but i think time no you know you or i can't just go invest tons of money in china businesses can invest tons of money in china as stock markets not open in the same way so what is really the concern of china i now because from i understand it's not like you know what if you are getting that how can that money off line to china. how and what are they going to do with their surplus of american treasury bonds for instance they have been diversifying their reserves from dollars to euros and they

are doing swap deals using the you one people like to trade that with the south americans of america for instance in their own currencies like the brazilian reality or do you one itself they already buying oil from iran. you once so are the only scape route that the chinese know off and they already wark in on their special mechanism inside the bank of china organizing this transition is today versus five their portfolios or the they're buying more their rules using more swaps with countries currencies and the u. one and they are logging heart inside the i.m.f. inside the g twenty then inside the brics arrangement of five brics countries of which they are the natural leaders we can say for a basket of currencies but until this happens and i will say this won't happen within the next five six to ten years realistically it's going to be an enormous

debate in orders of the the american financial system and war street in the washington establishment the resistance to the core but that's the only way to go for the international monetary system through really work if you lose needs and of course if they don't get up there is a very big appreciated nothing that we've heard just that a lot moving away from the dollar as a reserve currency and bric countries of course talking about that and get eyes like joseph stiglitz but it does this because do you think that this debt debate will factor ended a conversation and that will mean that a lot. look i don't see it let's see what happens in the next g. twenty meeting for instance after the chinese are being very cautious about it for instance be have not antagonize the i.m.f. directly they could have put their own candidate for the i.m.f. through three months ago in fact when like god the winds will be jig she managed to convince the chinese.