in the one percent except in some difficult times this is not what i would call the fiscal union this is just not possible for every member of the eurozone group to create surpluses so that it is possible to vend the europe the euro zone could be in a an even keel based on the definition of the odds. of america believes in president sarkozy we do need to change stay with you when you are dying and i can say with you in new york a very but when countries join the european union i'm sorry the eurozone he didn't sign up to this kind of economic policy at all did they i mean this is turning into a straitjacket i mean people didn't vote for this they voted to have a common currency the end these were talking about if you're rationally correct because the euro goes a euro project is an incomplete project you cannot have a monetary union without a fiscal union and along the same lies in the united states and you can have

a political union where you know if the powers that is created the euro zone was germany germany and france in the names of francois mitterrand and also john chancellor kohl knew that the project was incomplete and they expected that those who would fall of them will complete the project but what we instead we saw is the development of tremendous imbalances between the interest of eurozone countries huge is not possible to expect the german who will always have a surplus unless other countries such as greece and portugal have deficits ok and therefore this is how we've created the let me growth pattern the region being given here i mean people i mean we just heard that other countries would follow the it would follow the political union thing but people didn't vote for that i think that inherently undemocratic and that giving people a choice ok i mean. what happens when the new one in this case becomes increase

they're going to vote against the the this austerity package drives their bread of course they are and not only in greece we already hear echoes of this and perhaps this is where francois hollande the leading member of the opposition who looks likely to win the next presidential race in france is already saying why do we have to have this us varity and i think this is the key you can see the leaders signing up for it because the exchange is clear in germany you give me the cash to survive given my debt problem i'll give you my sovereignty but will the public actually comply will they agreed to accept the pain of the susteren and will they agree to submit the most important sovereign aspect which is your this school your budget to technocrats in brussels that are not answerable to your population through a ballot box so i think that although there are many europeans who would like to

see a united states of europe there are many who would not and this question is what did we all sign up for the issue today is that the debt burden is so severe that people will sell their sovereignty for cash right now but will they actually deliver what germany is expecting and i fear that we're going to have a meltdown have a breakdown because even though they promised they're not going to deliver. it also in london i mean i've used it where is the political will right here because it seems to me if it is absolutely right you know merkel just wants to win the next election it's not a cosy is praying he's going to get in and then we'll worry about it then i mean it's kicking the can down the road just keep taking it down because the politicians have no political will they have no. fortitude to really deal with this issue because again the at the end of the day is bailing out banks the bankers get paid everybody else gets screwed. well the issue goes back to what we started our discussion on which is the political will and it's interesting the latest couple of

comments because we need to bear in mind that kindly greece and spain and italy story they they have governments that are not necessarily democratically elected technocratic prime minister they both have prime ministers who were technically imposed by germany and france and i'm not sure that if we were having an election tomorrow there the result will be that you know the greeks would like mr top of the most as a prime minister and the would like a million mongers a prime minister you might have a very different result there and it looks like there is a trend develop we mean in some other southern european countries like spain and portugal we've seen the results of the elections in spain that's completely changed what was happening in the prime minister role so i think having a having a union means that you need to think about all your members and you need to be inclusive and at the moment the problem with european union is that although each

initial stages in its inception was going to be an inclusive union giving to the less developed member states opportunities to develop some structural funds through their financing that's the commission of the law established back in the eighty's and we now move to a union which is basically dominated by two if not one country doing whatever they want keeping the common currency low because we need to put that into the equation germany right now has significant exports because their currency the euro is a is a is a low current tell them ok you guys are the same i was going to boss mark i think it was the year it's a little currency it's a long car and see actually four of the four of the for germany looking very high current suitable. if you're really in greece and ireland ok to go this is this or that those are of activity differences i want to say here just be really

provocative here and i don't want to be mean spirited at all but it looks like the germans won the second world war in europe there but what do you think about that well look i think i think that there are a lot of people who are going to look at it that way i think the fundamental issue here is that this is the end of the social welfare state in europe outside of germany not because people are choosing to end it but because they have run out of money to pay for it and i think the critical social question that confronts each of these countries individually is what will be the new deal between the citizens and their state about what is the state going to deliver because the state is not going to be able to deliver retirement at the old age it is not going to be able to deliver the pension benefits that everybody had expected and it's not going to be able to deliver the same size of the civil service that's going to shrink and so these are massive domestic political social questions personally

being american and free market i think this is in one way a very very important episode in history the end of the social welfare state in southern europe is going to give a blast of oxygen to the entrepreneurial class which i welcome but it's a massive social dislocation and therefore we have to understand this can be but you know to go through but you have no choice if you have no money ok dimitry jump in there it's a very interesting thesis we just heard but you know but you know that it's not all the end of the world's fair spade in germany or even friends use all you know end of the word everywhere because we will pause in greece and portugal and ireland and that is not what a euro zone or european union is supposed to be united states or in the united states of america new york sends a lot more tax dollars to the federal treasury they're going to receives in terms of government expenditures on life. delaware but hit by these in the in the opposite direction he does it receives a lot more than it says to the federal treasury so you cannot have

a euro zone with with only one power to dictate the terms of the game so clearly one's one's governments begin to understand its interests a there is an intellectual any ideological shift if you look at the last polls in greece you will see that the left has been gaining as well as the altar right now this is not a healthy situation and i am sure that you will see the same thing in portugal and you will see alternately the same thing in as you're seeing in france for the socialist action the present educated to gain support against mr sarkozy who didn't has no idea what a european leader was spectacular leadership is supposed to be ok so clearly you will see a time for transformations i would to be taking place interesting frank is close and in london i can do what dimitri had to say following on paper is fascinating

because what we have is the center the middle dropping out everywhere and we have going to extremes i mean this whole currency crisis and that is creating a really intense political crisis as well because people are looking for real answers that have not been usually considered in the center. weldon people are looking for answers the problem is that thing in greece for example people are looking to to demonstrate their way that they did things like the government the current government so effectively you don't seem faulting happening because the left or the right wing parties have a solution to offer it's basically a volt i guess the current government and against the current situation so the problem with with all of these southern european countries any goes back to you know what these are started see as what what is that politicians strategy he's all right what is the alternative and we've talked about a common fiscal policy in european union the key question for me there is who's

going to be responsible for that are we going to establish a treasury in brussels are we going to give more power to brussels are we going to increase the democracy deficit that we already have in your eyes anyway to many more questions we have time to answer what i mean all the ideas all acknowledge all of my guests today in london and in new york and thanks to our viewers for watching us here to see you next time and remember cross talk. to. you can. be. good sometimes you see a story and it seems so you think you understand it and then something else you

hear or see some other part of it and realized everything you thought you knew you don't. think. wealthy really. the. markets. find out what's really happening to the global economy with months cancer or no holds barred look at the global financial headlines tune into a report. the official. called touch from the. life on the go.

under my. mind the old costs. just for you in the palm of your. column. on target in washington d.c. and here's what's coming up tonight on the big picture. president obama interviews is this twenty thirteen budget to congress as the budget have her passing there's a deal way also the massive mortgage settlement supposed to help those hurt most by the mortgage fiasco homeowners surprise some states leaving homeowners in the dust and who is reeling painting the ground in the g.o.p. nomination battle rick santorum or his wealthiest backer and how are the corporate

elites with their and will spawns pulling the strings in this twenty twelve election cycle. he did know this and so it begins the battle for the future of america today president obama unveiled his vision for the united states by releasing his twenty thirteen budget proposal remember budgets aren't just numbers on a sheet their priorities and paths for the future they find what investments will be making as a nation moving forward and how we're going to pay for those investments here was the president today pitching his vision the budget that we're releasing today is a reflection of shared responsibility it says that if we're serious about investing in our future and investing in community colleges investing

in. new energy technology and investing in basic research then we've got to pay for it and that means we've got to make here is some of the details or choices that the president lays out the overall spending for the two thousand and thirteen budget is pegged to three point eight trillion dollars it includes significant new investments in roads and infrastructure education and our manufacturing sector it also includes year long extensions of emergency unemployment benefits and payroll tax cuts for one hundred sixty million working americans. then on the side of deficit reduction the president proposes reducing the deficit by four trillion dollars over the next decade he does this by forcing millionaires and billionaires to pay their fair share of taxes and he's letting the bush tax cuts expire for america's highest income earners closing the capital gains tax loophole and forcing people like mitt romney to at least pay the same tax rate as middle class americans and closing a slew of corporate tax loopholes that are mostly taken advantage of by transnational

oil corporations are also a few reforms to cut costs out of entitlement programs like medicare and medicaid and a five percent reduction in the defense department budget over ten years but the bigger picture here is that the president has laid out a vision for america that makes much needed investments to rebuild our infrastructure to educate a new generation of scientists and engineers and to get america back to work building things again all of it paid for by making the super rich contribute just a little more. this is going to be the defining issue of the two thousand and twelve election and it comes down to this are we going to tax millionaires and billionaires who've been paying historically low rates a little more so we can make critical investments to keep the american economy competitive in the twenty first century or are we going to lay those critical investments just to protect the millionaires and billionaires from any sort of tax increase seems like common sense unfortunately the president's budget is dead on

arrival in the house of representatives that's because he's going up against one of the most radical republican parties in our nation's history a party that has a drastically different vision of america from the vast majority of the rest of us there is a cycle of radicalism in the republican party that we've got a laid out here let me walk through. what's in it this is basically the cycle from the twentieth the entire twentieth and part of the twenty first century so we started out at the turn of the century from the one thousand nine hundred seven one thousand nine hundred twenty roosevelt republican president a progressive back then there were progressive republicans in fact there were a lot of them and he had teddy roosevelt pass that bill in act one thousand and seven that made it illegal for corporations to give money to politicians bust that up the trusts the republicans that era were you know quite significant but it seems like every generation i mean literally every generation there's this shift from rational republicans to insane republicans nine hundred twenty warren harding comes

into office in one hundred twenty one actually it is model was more business and government less government business he dropped the top income tax rate from seventy three percent out of twenty five percent deregulated markets which produced of course the the model of the twenty's in the crash of the one nine hundred thirty s. and so in this in this period of time you have the new deal republicans basically during the during the f.d.r. administration and the new. republicans. you know they should take a functionally powerless actually then came in one nine hundred forty six the do nothing congress this was during the presidency of harry truman right after the war and in in this. incredible kong is the only lasted two years they passed the taft hartley act that blew up the right of individuals to form a union to a large extent at that point in time right about here it thirty five percent

unionisation the country was the highest ever half heartly began the destruction of that. harry truman introduced a literally universal single payer healthcare system they blocked that. truman ran against it and was so successful that the republicans didn't take the house again for forty six years so they've they collapse and they were followed by a rational eisenhower administration massive infrastructure investments in our famously said should any political party attempt to abolish social security unemployment insurance and limit it in an eliminate labor laws and farm programs you would not hear that party given our political history as a tiny splinter group of you are the texas oil millionaires and occasional politician or businessman from other areas that number is negligible and they are stupid so that was the rational eisenhower republicans but then a generation later came the irrational goldwater republicans who oppose the civil rights laws thought it was all about states' rights they wanted a belligerent foreign policy which just handed lyndon johnson the daisy ad you know

hey let's have a nuclear war and of course barry goldwater wanted to cut taxes for the rich and the regulate industry he failed to end the collapse and so we got the nixon republicans back to some i rational republicans i mean you could argue it's it was mentally ill but. nixon actually nine hundred seventy three proposed what is almost absolute identical program as obamacare. i mean go back and look at the history of it it's pretty stunning they created the e.p.a. during that time progressive taxation was you know strong in place in fact the top tax rate was ninety one percent richard nixon thought that was fought the nixon rational republicans were followed by the radical republicans again oh reagan rain comes in office created the biggest tax cut for the rich since warren harding which produced and by the way that was so bad i mean that hurt the budget so badly that he also passed the biggest tax increase on working people in the entire history of

the united states he started a war on working people by busting the pac oh you know this was in the spirit of the do nothing congress in one hundred forty six forty seven after the result of reagan's tax cuts massive tax codes and his war and working people was a twelve percent unemployment rate a great market crash these were the worst since the great depression the rate of ministration of the most convicted criminals that any administration in history and produced the biggest debt in history that was followed by the rational republicans george h.w. bush course the radicals didn't like him much they kicked him out of office and they end he was followed by his son the the irrational george w. bush cut taxes on the rich again dick cheney famously said deficits don't matter that two wars of the poison pill and medicare the post office and then the radicals in the zero eight election they lost power again they lost the house the senate and the white house and then in two thousand and ten the tea party better so i guess the question now for two thousand and twelve is what's going to happen with the

moderate republicans it's going to be ron is going to become a moderate republican how is this cycle going to play out i'm not sure but i think our guest might have an idea. so with radical republicans on one side and president obama on the other side how might this budgetary battle shake out and what does it mean for our still very fragile economy for more on this as well as what we can learn from budget woes across the atlantic in greece i'm joined by max fraud will economist instructor at new school university and senior analyst with crest capital max welcome thanks for having me great to see you we've seen some good economic signs in the last month but they are caught in the really sustain the sort of growth without massive infrastructure investments. i don't think we can sustain the growth we've seen

although we've seen four or five months of relatively better and better news on employment which is a big and important help we haven't really seen the news improve on wages which i think we can sustain without and we haven't seen the housing issues sort of begin to work themselves out and i don't see a long term sustainable recovery without that what we are doing better credit where credit is due it's certainly better to sit here and talk to you tonight with five months of relatively positive employment data as opposed to when last we spoke when we were still worried if we'd ever get relatively positive employment data three four five months in a row so that's probably positive on the other hand we have a kind of economically reductive agenda floating around out there for huge budget cuts and i think we really do have a pretty serious risk to a fragile recovery both from budget cutting inside united states and also from fairly severe austerity passing really all over the european union even if are most likely to see it discussed around greece with the riots in the streets of athens but in places like ireland in the united kingdom portugal and spain we're seeing

a pretty serious recession take hold and what is the world's first or large first or second largest economy that depending on how you count it up and i want to get to that right after the break but first just to kind of wrap this up what's the real economic effect of raising taxes on millionaires and billionaires when we hear all these dire warnings and yet it seems like the time when they're there they're top cash it was ninety one percent was the time of greatest growth in this country . yeah i mean i think we're going to see a pretty pretty aggressive increase and given them tax rates and that might be where we'd see a little dislocation in general what we're doing is going back to the present bush tax cut levels which are still both internationally and historically low so affluent americans will still be paying less than they did in most of modern american history and most more than you know much less actually that most of their counterparts in other developed countries so we're not looking at a high tax regime or an enormously progressive tax regime we're just kind of looking at the undoing the regress seventy and the drawdown in tax collection that

we've had since two thousand and three so it's more of a return to baseline and i don't know that will be short term helpful for economic growth there's no long term shock and shoring up the situation of the federal as well as some state local governments so all of them are in very dire condition will probably do a lot more good than it will do harm. bax i'd like to i'd like to get into the whole thing with with you about what's going on in europe and increase let's take a quick break and we'll come right back that's. coming up athens is on fire so what can we learn from austerity in greece as republicans try to bring it to america more or economist next prod wall afterward. wealthy british scientists. sometimes.

the markets why not come to. find out what's really happening to the global economy with my next concert no holds barred look at the global financial headlines tune in to the report on our.

three. for your media project. welcome back i'm speaking with economist and instructor at new school university max fraud wolf max let's move on to greece there are massive riots all week as the greek parliament passed another austerity measure to pave the way for bailout number two while the new york times is reporting today that quote

a quarter of all greek companies have gone out of business since two thousand and nine and half of all small businesses in the country say they're unable to meet payroll the suicide rate increased by forty percent in the first half of two thousand and eleven nearly half the population under twenty five is unemployed max is this disaster capitalism at work. i mean this is an ambiguous the a disaster this is a sort of accelerated greek depression shock being delivered to greece we've never really seen anyone cut their way to prosperity in fact this is reminiscent of the least successful most painful and often politically destabilizing programs associated with the i.m.f. structural adjustment policies all over the developing world in the one nine hundred seventy s. and eighty's and one had kind of hoped that by the ninety's we had learned our lesson in fact even the i.m.f. had often begun the process of discussing the mistake in nature of trying to force a country that obviously can't pay back creditors at the cost of denying its future

its most vulnerable citizens of its youth the opportunity to succeed and of course pay for a functioning social safety net we've never seen anyone cut their way of prosperity and the cuts being pushed through in greece send the country into something like a receivership and are fairly savage in terms of their political impact their physical impact on the population and of course their political impact which we literally see alumina in the night sky in the form of burning buildings around the parliament every time one of these parliamentary push through votes x. you know pretty much yields to the pressure from the troika of the european commission the european central bank and the international monetary fund max how does the republican vision here in the united states a balanced budgets and cutting spending correlate with the greek austerity program . it was pretty hard to imagine any government imposing austerity program as harsh as the one being pushed on the greeks internally without an external pressure that

being said i think we should be watching greece and to a large extent ireland which we talk about less than the u.k. which we talked about last even if they're less severe as the ghost of christmas future if we follow the sort of scrooge approach to try to balance this budget you simply can't cut your way back to prosperity you need growth you need opportunity and casting off a generation of young people their dreams their aspirations their educations and offering them no opportunity i mean greece is pushing through one hundred fifty thousand more public sector job cuts across the board double digit wage cuts for people who've already seen two rounds of these this is now the third attempt to cut your way to strain on the last two attempts to cut your way to strengthen greece less savage than this one produced a deteriorating economy which is now contagion is sort of skipped the border and is sending a signal greece is clearly being made to punish as an example to other countries and the idea here is do what you're told we'll end up suffering what greece is suffering so it's a demonstration of fact.