gwen: battling out in the battleground states, the jobs puzzle. the tea party rises again and who suffers when congress doesn't act? tonight on washington week. -- "washington week." >> hello ohio. >> it's good to be back. >> barack obama and mitt romney search for a breakout message. >> america's not built from the top down. america's built from the middle up. america's built from the bottom up. >> i'm going to make sure we finally have a president that's serious about getting our budget under control and by the last year of my second term we'll finally have a balanced budget in this country.

gwen: but a new jobs report offer noss clarity. more jobs added but the jobless rate goes up too. meanwhile congress leaves town with much left undone. as yet another senate tea party candidate bounces yet another establish candidate in texas. >> when we started they said this was impossible. and you know what, they were right. i couldn't do it. but you could. gwen: covering the week, amy walter of abc news. david wessel of "the wall street journal," susan davis of "usa today" and karen tumulty of "the washington post." >> live from our nation's capitol, this is "washington week" with gwen ifill, produced

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ill. and that's one thing that will never change, prudential. >> additional corporate funding is provided by norfolk southern, and american steamboat company, proud to support "washington week" on pbs. additional funding provided by the annenburg foundation, the corporation for public broadcasting and by contributions from your pbs station from viewers like you. thank you. >> once again here from washington, moderator gwen ifill. gwen: good evening. if you listen closely to the major party candidates for president, you'll see two men at war over a narrative. for president obama it is this that mitt romney is out of touch, will raise your taxes an will not tell you about his. this was the president today. >> at a time when too many working families are already

struggling to make ends meet, they want to give millionaires and billionaires and folks like me tax cuts that we don't need and that the country can't afford even if middle-class families have to pick up the tab for. those are their priorities. gwen: for governor romney it is this that he is the man with the experience to turn the country around without raising taxes or abandoning national priority. >> my plan is clear. i will not raise taxes on middle income americans. and the president's assertion to the country are simply false. gwen: trouble is, neither of these narratives steam be shifting this frozen in place election. new polls show president obama with a slight edge but not a big one. is this just where the preconvention political status quo is supposed to be in august, amy?

>> maybe. but what's the most remarkable about where these two candidates are right now are disliked they are by the american public in august. usually we wait until october to dislike our candidate this is much. i went back and looked, where president obama is with his favorable ratings, how you feel about him personally is lower than any incumbent president going into his presidency than george w. bush. >> really? >> and if you look at mitt romney, you look at the lowest favorable and the highest unfavorable since 1988, i couldn't go back any further with those numbers or since 1996 with bob dole. >> what's driving this? it's more than people don't like him. >> it's because they've seen nothing but negative ads since april. since all of us get to live in the media market which covers virginia, you all know what it's like to turn on to tell

vision and just see the nonstop. it's just negative ad after negative ad. barack obama has known really very early on the way to win this race is to make it a referendum on mitt romney, to make him an unacceptable alternative. they have done that by raising his negatives. they're saying that's the way to make him unacceptable. gwen: but the romney people figured out the same thing. >> but can't they figure out it can't be a referendum on obama. >> it's a great point. the first thing you're starting to see mitt romney tell his own story. speaking of ads, there's a new ad right now, mitt romney riding his own car. driving while talking. at least he's not on the cell phone. where he tells his story in his voice. if you talk to voters, they will tell you we don't know anything about this guy, mitt

romney. the second thing is they believe they have time. they think the convention is when they need to tune in. they will pay attention when we lay that out for him. he's starting to lay out some specifics even though they're not completely specific by saying i have a five-point plan. it's not how terrible barack obama is, how terrible things are urn his stewardship. it is here are the five things i'm going to do to make things better, very vague five things but trying to outline the fact that he has five points. >> they're going to have a big infomercial. what are do you mean? >> they're going to sell the candidate. they're going to use the convention as modern conventions are used. >> right. >> so many things were supposed

to shake the dynamic on the race, the supreme court decision on health care. are there any events that could actually change things? >> so this race is as stuck as it is because americans are as polarized. when you look at these polls an you look at undecided voters, there's very few of those people. regardless of how you feel about certain events or whether it's the supreme court or any other event that happens between now and november, you're going to -- you have already picked a side. so it's going to be mitt romney's fault or barack obama fault. no matter what. i do think in terms of seeing the numbers move, do i think that picking a vice president is going -- we might see little bump there -- traditionally you have had a bump. i think the one issue -- the good news for mitt romney, the one issue he's had is that he hasn't necessarily coalesced

republicans yet. they're not looking around for somebody else. but the enthusiasm for mitt romney is not as strong as the -- among republicans as strong as the enthusiasm for democrats for barack obama. i think the convention will help do that. i think republicans will come home. democrats are already there and those independents depending on where they sit that could move this race. >> do you have a sense that the voters are engaged in theth -- in the presidential? >> that's an excellent question. when you talk to voters, they say we're not paying attention. i'm not ready to tune in yet. i'm not getting the information that i want. gwen: they're trying to figure out where those sideways dancing horses. they're much more interested in that. >> and of course the sin co niced diving. gwen: let's move on because this the first friday of the month as close as it comes to our culture to an economic

yardstick in our struggling economy. the economy added 163,000 new jobs in july. yet the jobless rate picked up from 8.2% to 8.3%. however the economy continues to run in place. but why and what if anything is being done about it? david has a new book out "red ink." so perhaps, david you have the answers. >> i have all the answers. well, it is confusing -- the government has a survey of employers and that survey found that employees added 163 jobs in july which is twice as many as the previous three months. so that was without a doubt good news. it was nice to have good news on the economy. they do a survey on households an fewer people said they had jobs so that's why the unemployment rate went up. the first number is a better

signal of where the economy is compared to last month but the unemployment rate is so high that it just -- think of it this way, there are 12.8 million people out of work. they're still looking for work. that's as many people that live in the state of pennsylvania which is our sixth largest state. there's no way the economy is healthy. gwen: what's that about? >> i think there was a sigh of relieves leif on the markets. people were afraid we were going have another recession. the stock market higher than any time since may. it wasn't good enough news to make the federal reserve relaxed. if you read what all the economists are saying, they're pretty pessimistic about the rest of the year. and there are two reasons. one is -- it was a year ago this time of year last year that u.s. government debt was down graded by standard and poors because congress was dysfunctional and couldn't deal with the deficit. no progress there. we still have this prospect of tax increases at the own the year. and there's a lot of worry

about what's going on in europe which continues to get worse. it's so bad that even the chinese is worried about it. >> is there anything the feds can do to juice the economy right now? >> so the fed told us that they're on red alert. if things don't pick up they're going to do something soon which means september. too late to do anything good for the economy. could they keep the stock market healthy? that's the only effect they can have in the short run. >> so all these events that are going to transpire at the owned the year, the -- you know, potentially these automatic cuts going into effect, is there any evidence that congress is going to do anything to reassure the markets, to reassure the people who are worried that we're headed to another one of these big dramatic moments? >> gwen: or will congressional action scare them? >> yeah, everybody loves uncertainty until -- but look, congress has done one thing. they've inched towards a plan

to at least prevent a government shutdown before the election. congress essentially loaded a gun and pointed it at the american economy and with the hand in the trigger. it's now five months away. there is no sign that they're doing anything to find an alternative plan on the trigger. my guess is they'll take the bullets out of the gun. we'll have to say. most people are saying that unless the democrats and the president say they're willing to trigger these tax cuts and spending cuts at the end of the year that the republicans won't be forced to negotiate. >> that seems that the president -- if the feds can't do much and the congress can't do what we can do to make people feel better about the economy? >> it's their mantra that the president doesn't have a plan. >> the president says here's my

five-point plan. look, the fact is there's nothing obama can do now that's going to make the economy better. every day that the conversation is about something, then the economy is sa day that's good for barack obama. so i expect mitt romney if they have any sense in the campaign will try to steer the campaign back to the fact that the economy is lousy. people don't care why it's lousy. they want to know that it's going to be fixed and if it's going to change, it's going to be really hard for the president to -- gwen: you talk about the political consensus around the debt. is that likely to change? >> i don't think so. in the quote i quoted the head of the budget office which is one of the few institutions in washington that actually works the way it was designed. he sums it up this way, the problem of the deficit is that the american people want more for the elderly than they are willing to send to washington.

gwen: thank you, david. >> you're welcome. gwen: members of congress ran out leaving loose ends ranging from drought relief to agriculture laws and the u.s. postal service. more than 1/5 of the nation is in extreme or exceptional drought. but congress still failed to agree on this. >> americas farmers, it seems like one of those issues it would be extremely easy for congress to find a resolution. part of the problem is the two parties fundamentally disagree about how we solve almost every problem facing this country whether it's how we deliver our mail, our we build our roads or how we help america's farmers.

the house passed a bill, a multimillion dollar to assist farmers with cattle that's being affected by the drought. republicans passed a farm bill. they passed a five-year farm bill something they say will bring down the deficit over the long-term even though it will spend a lot of money up front. and house republicans they don't want to spend money on anything. the best thing republicans can do on the hill is keep their heads down and let barack obama and mitt romney be the focus of american political talk. gwen: even with that action, we didn't expect a lot to happen. but i was is surprised with the things they didn't do especially with the drought. >> everyone's punting. there's this idea that this lame duck session after the election between the next congress there's going to be a furious work period --

gwen: anyone ever seen that happen? >> in the last lame duck is when they extended the bush tax cuts. there's this trend in politics that congress can't act unless there's a real threat whether it be defaulting, shutdown, that we need some real consequence to force their hand. and chairman lucas the farm bill chairman said go home to your districts and build the momentum so that these guys feel like they have to act. >> but where is the political incentive to get anything done? everyone' just promising they're going to -- everybody's just promising that they're going to stand by their principles and never waiver. where's the reward? >> in these cases the farm bill and postal reform, they pass -- by large majorities. right now it's the house. the house tends to be the place where americans are working

themselves. republicans are divided. john boehner, the speak of the -- speaker of the house doesn't want his party on display and becoming a distraction to mitt romney. republicans think that mitt romney has very good chance of defeating barack obama. they don't want to do anything to screw it up, so their resolution is do nothing at all. >> do you think they know that the polls show they're less popular? >> i think they do they're so low that i'm not sure they're not going to go any lower. it's not going to affect them anymore than it already has and by the political outlook, republicans aren't confident they're not going to lose their majority. they put them on a 10-seat law on the high end and they're ready to take that. >> in the olden days you would say grass roots lobbying.

call your congress person and make sure they're doing what we told them to do. are they hearing it or not hearing it at all? >> i think they're hearing. there are congressmen who want to move this bill. >> is the problem there is no immediate impact in people's lives? >> yeah. >> they put in a stop-gap for instance or the postal service is going to default -- >> your mail isn't going to stop in august there. 's this idea we can deal with it later. and if there's no immediate threat, i feel like congress doesn't want to do anything. there's just a gridlock that's frozen in place. >> can anything change that? is this a congress that can deal with a real crisis? >> that's a great question.

kevin mccarthy said he fundamentally thought congress couldn't do any big piece of legislation. the way to address big problems is by smaller piecemeal legislation. >> and yet people still want to come to congress, shockingly. they want to come and increasingly there are new faces who want congress to do less not more. the latest is texas republican senate ted cruz who with tea party support came from behind to win and defeat lieutenant governor david dewhurst this week. >> tonight is a victory for the grass roots. >> it is a testament to republican women, to tea party leaders and to grass roots conservatives. gwen: so was this the return of the tea party clan or was it never gone?

>> well, it was certainly a big victory for the tea party because ted cruz was their candidate and his victory was extraordinary. he defeated david dewhurst who has been the lieutenant governor of texas for almost a decade who outspent ted cruz by 2-1 works put $11 million of his own money in the case. gwen: who was endorsed by governor rick perry. >> there's a lot going on in this race. there was the tea party support but there is also a lot of this kind of outside money that we have seen come in since the citizens united decision specifically an anti-pact organization which is not an anti-establishment organization put in $5.5 million which really helped to level the playing field a little bit. ted cruz also benefited from the fact that this election date was delayed not once but between thanks to court action over redistricting. and finally i think a lot of

people in the state understand but people outside didn't, there was some kind of a family feud in texas which could be described the old bush organization and the organization of rick perry. and this was really the revenge of the bush. ted cruz had been part of the bush administration. he never ran for office. but he did have a lot of support from people who were y line with the bush operation. there's a lot of tension between them and rick perry. >> so how does ted cruz a guy who was the attorney general get to be the outsider and the grass roots candidate? >> no, he was -- what does that say about what is the tea party? gwen: that's a good question because in indiana it was the state treasurer who goeses up. >> but ted cruz -- the solicitor general is not a job.

but the tea party is interesting because it's not really a party. about in many ways it's not really an organization. i sort of compare it to a weather system. if all the barometric indicatorses are just right, it can cause real storm. it in nebraska where deb fischer is the republican nominee state senator, he was the only candidate in that race who did not have any tea party support. and she beat two tea parties -- >> even though she was endorsed by sarah palin. and you keep reading in the coverage, tea party candidate. no, she was not. >> it looked like they will have a bigger contingent in november. is that going to make the senat work even better sm richard murdoch knocked off dick lugar,

long-time senator. they are coming saying we're going to do that and not compromise. i think these are going to be people and whoever else is left in the senat is going to be looking over their shoulders. like you don't want to get on the wrong side of the tea party. i they're not going to be listening as much to mitch mcconnell as they are worriedability having a -- worried about have it. >> do you think they are going to be fair? >> there's a tea party candidate in missouri next tuesday. sarah steelman backed by sarah palin. gwen: you were just in wisconsin. and you think tommy thompson who was the equivalent of david due hust. >> a four-time governor who had

a double digit lead. three way dogfighting with a hedge fund guy who lived in the state for 24 years. gwen: thank you. everybody here. there are so much more we couldn't get to. as usual we'll pick up where we left off on the web cast. you're possible talk about the olympics but about harry reid at pbs.org/pbsweek. we'll see you again right here next week on "washington week." good night. >> funding for "washington week" is provided by -- >> one line helps communities

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