may lose its aaa credit rating and everyone of course is worried but these ratings agencies were so worried about how the shoddy track record to begin with joe weisenthal from the business of business insiders going to be here to talk about that and don't forget at the same time folks we are still out war a few of them actually at a price we cannot separate from our fiscal crisis any longer yet it is all being overshadowed by money talk we will tell you all the details you need to know about afghanistan pakistan and other places where the u.s. is dropping bombs still plus senators may be sneakily in talks to renew a law that lets by agencies track your location at any time with no oversight we'll have all of that and more on tonight's show but first what did the mainstream media . all right as the fall continues to threaten the country the mainstream media took a break from their coverage of that to report on the horrible fate that has bee fallen a popular game show host take a look. game show host alex alex through back found himself in serious jeopardy when police say an intruder broke in

is aaa credit rating what happens if the u.s. loses it everyone is worried about the three ratings agencies that are threatening to downgrade the u.s. debt and what that means the calamitous chain of events that that could lead to some analysts say that a downgrade is inevitable at this point even if the debt ceiling is raised eventually some like investor jim rogers who i've interviewed many times he thinks the markets already accepted that the u.s. is downgraded but what about the track record of these very ratings agencies that everyone is so concerned about let's talk about japan it's a great example standard and poor's downgraded their rating not one not two but the re times about a decade ago between two thousand and one and two thousand and two and what happened to the markets freak out no the market did not freak out. government borrowing costs did not soar and back there was actually a steep decline in borrowing costs for the country now it's been a decades in japan lost that aaa credit rating and its ten year yield is c

president obama said this morning that we have a aaa credit, but not a aaa government.a certain extent, that's true. although we suspect that we're not exactly a aaa credit either. but, yes, the government has proved itself to be dysfunctional. >> reporter: he says if the u.s. defaults and suffers a ratings downgrade, he would likely buy u.s. treasuries again, because their interest payments to investors would rise enough to cover the risk. >> it would make them more attractive to us. our assumption would be if the credit was downgraded to a doubaa or a aa plus, basis points would rise, not just for treasuries, but for mortgages and corporate bonds and private credit, credit cards. and that's obviously a problem for the economy. but for an investor, it makes it more attractive. >> reporter: so if you would be spurred to buy treasuries, if there's a quarter percent increase in the interest rate or perhaps even a half a percent, as some have suggested, i would assume other buyers would come in as well, so where's the crisis? >> the crisis really is in the long-term. 25 ba

on that threat to the nation's aaa credit rating. let's all watch. >> if we don't come to agreement we could lose our aaa credit rating. not because we don't have the capacity to pay our bills we do, but because we didn't have a aaa political system to match our aaa credit rating. >> david, simon is of the opinion that it falls squarely on speaker john boehner in a political context. i'm in the sure that's how the american people will see this. your response? >> i think the mighty simon hobbs has it right, and i think the key point he was driving at there is that republicans have politicized the debt ceiling fight. which was never politicized in the past. we've heard in the last few weeks again and again and again democrats, republicans, under a democratic president and then republican president, a one-page bill. lawrence has been waving it around on his show day and day again this was a routine matter. what republicans have done now, not just shown we're going to make it into a political circus today we're prepared to do it six mont

but because we didn't have a aaa political system to match. our aaa credit rating. >> the slowing economy also makes maintaining that harder. sluggish growth could add $100 billion to the deficit this year. far outstripping the immediate deficit reduction that's been delivered by congress so far. slower growth also means the next few years can could see lower tax revenues and higher spending for social security and much more. >> on top of it there is unemployment compensation, on top of that, you have snap or food stamps, on top of that you have people who become eligible for medicaid who we anticipate it would not be, it would be covered by private insurance. or what those costs add on the spending side of the ledger in addition to the reduced revenues on the other side. >> reporter: now, susie, of course if we do default or go and have our credit downgraded, that's going to increase interest rate costs which will also have to be added to the deficit making the problem harder. >> susie: well, let's talk about this bill that just passed, house

were to lose its aaa rating?lose its rating, the fundamental effect will be that borrowing costs would go up. now, it depends on the circumstances under which it happened, but basically, it would no longer have this top level, gold plated, rolls royce aaa that enables the u.s. to borrow money in the markets at the lowest possible price. it wouldn't be a catastrophe. the world wouldn't stop turning on its axis. i think it would have a deep psychological access on the american psyche. when you consider the u.s. aaa has been there since 1917 and it has the deepest and the most important markets in the world, not to enjoy the highest level of value would certainly be a down side. >> it survived all those years, including a great depression. a lot of recessions, world wars. and it still has that aaa rating. when could this happen, richard, that the u.s. might -- and it's still a big might. when could it snap. >> you have two things to bear in mind. the first is obviously if there is a default. if there is a default or

is no longer a aaa credit.ard & poor's didn't seem to know that but moody's and standard & poor said they were a aaa until they went bankrupt. >> the question is where should investors put their money? >> i think you'll make more money in other commodities like silver or rice or natural gas, some of the things that are down. certainly you've got to own real assets because all over the world central banks are printing money and whenever they print it. real assets are the way to protect yourself. >> okay. so jim rogers believes the u.s. has lost its aaa rating already. guess what? he's not alone. morgan stanley's stephen roach agreed. >> there's already been a downgrade. one of the ratings agencies, it's beside the point. i think most serious investors wlrks they happen to be sovereign governments from overseas or institutional investors don't look at u.s. treasury denominated paper with the same sense of security that they used to. they just don't truss washington to come up with a legitimate deal, even if there

can't justify giving us a aaa rating speaking of our dad i want to show a little graphic that we have that shows just how much that looks like in dollars so we have that that is our debt in dollars it is a football field. about three quarters of the height of the statue of liberty everybody knows that the debt is monumental everyone is talking about that my question is why is that picture such a big story that this sixteen trillion dollars and loans that the fed gave out pretty much in secrecy because there was not it not a big story that's more than that pile of dollars or will that mean that i mean the fed thinks should be a massive story it's almost as if apathy is the problem because you know someone says it to anybody watching i think even you are sort of starkey and it's like oh you know there were some conflict of interest in what the fed did big surprise i mean how like how could there not be how could there not be one it was fly by night over the weekend deals billions of dollars getting shot all the trillions of dollars getting shoveled out of the fed and everybody in the fe

basing our hopes and our entire sort of like the economy on if we're so based on the government's aaa rating should we begin to assess how we can back away from the interest and principal can we have that discussion yeah i think it's a question i want to how do you go right now i want to ask that sixteen trillion dollars without a bailout for the rich it was you know a lot of it was a that is a bailout of the writers for every foreign entities that fusions is a bailout i mean i would say it's a bailout the banks that don't deserve it. at the time the government saying is a bill for everybody because the argument was if we don't bail out the banks then it filters down into main street ok well where is the bailout for working people because a recent report from northeastern university showed that. as far as people that are getting the wealth and getting the profits from this recovery corporations they corporate profits captured eighty eight percent of income growth between the second quarter of two thousand and nine and fourth quarter of two thousand and ten and everyone else i think ab

our what do you want the feds we'll keep our i want to keep our bond rating that's different ok the aaa bond rating would remember the government and the private sector all borrowed money out of the same pool so if the credit rating goes down it affects us equally equally as badly as it affects the government i don't want to raise the debt ceiling but under the certain constraints delineated circumstances of cut cap and balance raise the debt ceiling begrudgingly put it in the cut cap and balance keeps our aaa bond rating boehner plan that they've already come out and said we will probably going to lower you even if that passes the reid plan probably going to lower us that a double a from aaa if the if that passes what they're looking at they're not looking at us it doesn't make any sense when they the left says we need to raise our debt ceiling limit to improve our image with the creditors the creditors don't want to see us borrow more money they want to. be serious about stop spending they want the government to get permission from the tax the people more in the future to pay them all

going to your point about losing our aaa rating. this is something that countries have gone through before. canada lost it in 1993 but was able to gain it back in seven years because they took some cutting measures. they did have a little bit of a revenue balance but it was 7-1 they were able to cut the amount they were spending and let's be frank. how do you get into debt? you spend. so we really just need to cut the spending. >> i think again this goes to your point. this underscores how important the so-called ratings are. you can look at it two ways but it underscores the importance testify and also shows how much power we are willing to yield the government who are determining what our ratings are or rankings are. i think that's a whole other issue that may be up for discussion. >> our credit score. >> yes. it is a standard you use, obviously. >> i don't think we are going to be downgraded. and this is why. with all of their bellowing, this is the standard of the world. you downgrade us even after we get an agreement, you downg

aaa says less americans will be driving this holiday weekend and more will be flying. compared to driving especially after gas prices hit $4 per gallon in may, many passengers say they saw flying as a more viable option and domestic airline tickets are not cheap. the three area airports are very busy with passengers rushing to beat up the holiday weekend rush. >> i will be traveling back on the 4th. >> passengers at reagan national airport think the increase in air travel is a sign the economy is improving. >> people having a little bit more disposable income and gas prices have come down a little bit so it makes sense. >> some passengers decided flying was a better option than driving. >> when you purchase tickets a month in advance when the prices of gas were considerably higher it is too late to trade them back again. >> gas prices are coming back down. some can't help but feel frustrated. >> if there was some predictability to, it would be easier for drivers. >> aaa says 52% of local travelers plan to spend part of their holiday at the beach or on the waterfront. t

we know about mortgage-backed securities, aaa.k in 2005, the ratings agencies gave gm junk-bond status, and there were many factors in why they went down, but i used to work in the auto industry. that was like the achilles heel. that was the money making subsidiary for gm, forced to sell 51% control to cerberus, a private equity firm. i could go on about that. basically, it seems like the ratings agencies have some blame, i think, for the downfall of gm. host: kurt schacht, who rates the ratings agencies, and gm? guest: well, i think there are a number of ways ratings agencies are rated. there is required now great deal of information about the performance of the ratings. that is reviewed by the regulator, the sec. and the ultimate vote of whether the ratings matter is between the issuer and the investor in the security. as you recall, back in the crisis days, things were rated aaa that probably should not have been, but price may be to reflect a different type of credit rating. the market has a way of adjusting. the credit rating

b., up to a aaa. they had approximate same default rate as a corporate bond. i would argue that since default rates are three matter, and a rugged and i think matters is paid? based on historic data, absent individual items, then munis should be rated aaa. so are you telling me have addressed that issue and not at all munis address kabul to corpus of? >> we are working to where we are recalibrating, in fact recalibrated treachery or across many areas including structured finance, sovereign governments, and we are also recalibrate our criteria on municipals with the aim and objective sort have comparability of ratings across all sectors, asset classes and geographies. but this is a forward-looking -- >> mr. rowan, has moody's make progress on this as will? >> yes. i wear that since 2008 moody's has recalibrated, formally recalibrated all of the u.s. public finance ratings to move them onto a scale that is comparable to incorporating financial institution. >> based on historic default rates? >> there was a research piece and a lot of analysis around the recalibr

he was saying a downgrade of our aaa rating. what is your response to what he was saying. >> i agree with him. in 1979 when the printing presses went down for a while we saw the basis point go up and it cost us money down the run. there was a technical default in 1979. let's look at happened in japan this january, they went from a double a rating to a double a minus and that sent ripple affects through the financial markets that got the yen to go down and at the same time interest rates went up, so that could be a possibility also for the united states. martha: just a couple of months ago if i understand you directly, you were against raising the debt ceiling. what changed your mind? >> well, what it was is that i do want to raise the debt ceiling, but i want to do some structural changes, something where we can go ahead and help bring down the deficit. for example, if we've got to do this in a bi-partisan way. for example if you look at what reid did, reid got the $1.2 trillion that boehner had agreed to before he walked away o

. >>> americans will be flying more and driving less this holiday weekend according to aaa. i want to show you a live picture of emeryville. aaa is forecasting 29 million americans will travel 50 miles or more from home to celebrate independence day. that is down 2.5% from the 40 million people who hit the roads a year ago. aaa says even though gas prices have dropped recently, there are still about a dollar higher than this time last year and that's effecting the number of people who plan the drive. >>> and where there are drivers there are law e nforcement officers. the sheriff's department, and police departments are all planning to be out this weekend. stepped up patrols, drivers are urged to plan a safe way home with either a designated driver or calling a taxi or taking public transit. for the latest on traveling this weekend, including any flight delays and special sections on gas prices and other items, go to ktvu.com and click on the holiday travel tab. >> ralley's grocery stores have raised money to keep state parks open. they will donate a nickel every time someon

poor's that says even if we raise the debt kreeling if we do not get at our deficit, we could see our aaa credit rating reduced to aa credit rating. so there's pressure to both do something, raise the debt kreeling so we don't default and cut our spending so that we can be on fiscal financial firm footing. >> with that kind of tough talk and that kind of hard stance, where does that leave the democrats? >> mike lee is still talking about cut, cap and balance and is probably the single most radical piece of legislation that i've seen in my lifetime. i think john boehner if he had his way would make a deal of some kind to raise the debt kreeling. he's talking to wall street. he can't educate those republican freshmen. they will just not be educated about this.

aaa countries don't play by these rules. >> chuck todd this speaks to a big concern many the edifice behind you, if they cut the deal, if the aaa bond rating is reduced, it will be on the president's watch. >> right. that's been the issue for this white house. that's why number one, they really want to move this debt ceiling issue away from the next two years. yes, it's a political issue. it's also an economic issue. some really bad gdp numbers came on it. all of this uncertainty, we've all known that businesses right now in the last couple weeks they have gotten a little nervous. people have held back they're not sure what's going on. they're not sure how this is going to end. i think -- look, i still have a lot of confidence that when all is said and done they're going to figure it out. all the leaders are on the same page. all of the leaders are on the same page. yes, they have an unpredictable -- an unpredictable group of lawmakers on their hands. so the one thing that i have as a political person, i would find surprising at the end to have day if they do agree to what this deal'

. >> sean: we've lost our aaa death rating, i'm certain of it.it is -- death rating, i'm certain of it. it is sad. >> more late breaking developments. first new polls show president obama is trailing mitt romney is key battle ground states. is the 2012 landslide beginning to breakthrough? the shocking data and much more coming. [ male announcer ] get ready for the left lane. the volkswagen autobahn for all event is back. right now, get a great deal on new volkswagen models, including the jetta, awarded a top safety pick by the iihs. that's the power of german engineering. hurry in and lease the jetta s for just $179 a month. ♪ visit vwdealer.com today. but when she got asthma, all i could do was worry ! specialists, lots of doctors, lots of advice... and my hands were full. i couldn't sort through it all. with unitedhealthcare, it's different. we have cess to great specialists, and our pediatrician gets all the information. everyone works as a team. and i only need to talk to one person about her care. we're more than 78,000 people looking out fo

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main fear is not so much the debt ceiling, but the whole concept of our debt being downgraded from aaa ratings, to something less. and, s&p says there is about a 50% chance of that happening. and, what does that mean? that means, basically, when your credit rating goes down, you

moody's says it's reviewing america's top aaa debt rating for a downgrade citing the political bickering that's deadlocked budget negotiations in washington and even if the budget is approved it's unlikely that it will offer a solution to america's debt that's according to investor and co-founder of the quantum fund jim rogers. u.s. rating should have been downgraded years ago you know i don't know why they're just now getting around to it but we know that the rating agencies don't have much of a clue about anything buddhism is trying to save itself why don't they go to great portugal three years ago five years ago or greece you know they're just getting around to reality it's like the sub prime mortgages they didn't downgrade anybody until it was already over they had many people who were going bankrupt raters aaa this is political posturing and nothing more something will happen they will announce some kind of deal it will look good on paper and maybe they will even be good for six months or so but six months from now a year from no it's going to be the same old. we're not going to hav

anyway do they really aaa. and they raised a very natural way i mean they don't really believe us were. really sure. where i was. you know. and coming here i believe there's a fifty fifty chance that we don't know your and. truly live we can roll over. if we're going to be interesting. but either way we're going to. actually if you can. but actually all do. we deserve it oh yes i say bring you all who are in their ranks and who deserve that my body isn't the american people that deserve this that it is their doing their civic duty paying their tax dollars or is it the politicians that are going overspending. american. politicians are americans and we all. felt we pulled our we. are living standards are way beyond any that we should look and. see when you have the right expansion of money supply credit bubbles the world who they feeling. great depression. and. a leak little seizure louis arena. i don't. know what. we are some. holy. war. i should say this. is trying to change and if anybody. he think of politici

. >> if we don't come to an agreement, we could lose our country's aaa credit rating. not because we don't have the capacity to pay our bills, we do, but because we don't have a aaa political system to match our aaa credit rating. >>> our team is standing by ready to bring you the latest. we'll begin with bianna golodryga who covers finance and has been monitoring the economic warning signs all day. >> dire signs we got this evening. washington was looking for any sense of urgency to break the political impasse. they got it with today's weak numbers. while america and the world waited for action, they once again saw nothing giving them hope. while the clock has been ticking down toward the debt deadline, so too has the stock market. in just the past week, the stalemate in washington has contributed to a total loss of $183 billion in americans' retirement accounts with the average 401(k) losing $4,300. all this why today's numbers show the economy grew by 1.3% during the last three months. a big disappointment, half of what economists say we need to see a drop in the un

that is all that aaa rating means. if you change the rating, all that means is that the risk level has gone up. it does not mean that it will default. if we believed that, it would change to default status. >> thank you. mr. gellar, is there information to which moody's and s&p have information -- access to that your firm cannot access? >> a significant amount, actually. in addition, there is a lot of information that they have that ratingso's with bond cannot access. i think it is 17g5 that is the rule that created last year or late 2009 a late ability for products or data that is being used for a paid for rating to be shared n and accessed by shared nrso for an unsolicited rating. we do not have any access to that. what kroll would not necessarily have is access to things like the underlying data that goes into collateralized loan obligation, security. very, very close. they are not covered in the accept -- asset-backed securities, and the sec does not a purview over the loans themselves, the underlying collateral, f

to cut deficits to keep its aaa rating. at a congressional hearing this morning, the agencies reviewed to endorse either of the two competing deficit-cutting proposals on capitol hill. standard & poor's president reports his company favors the democrats' plan over the republican bill inaccurate. >> we were misquoted. we do not comment on any specific plan or the political choices or policy choices being made. we are just commenting on what is a level of debt burden, level of deficit that must meet the threshold to retain the aaa. >> agency officials dodged questions of specifically how much congress would have to cut for the u.s. to keep its top rating. s&p only says some of the plans under discussion are credible. now if these agencies downgrade the federal government's credit rating, the u.s. will likely pay more in interest to borrow money and americans would probably have to pay more to borrow money to buy a house or a car or to go to school. bret? >> more on this with the panel as well. rich, thank you. >>> standard &

aaa ratings. why do these credit rating agencies matter? well, investors around the world listen to them and listen carefully. they look at them to judge where they will get the best return on their investment. for governments the ratings agencies have power over the interest rates they can send in bonds to investors. if you are a government like the u.s. trying to raise money you want to pay the lowest amount of interest to borrow that money. so who pays the agencies? agencies are paid by the borrow wur, or from subscribers that received the ratings and want to know how their potential investments can fair, and standard & poor's tells cnn the sovereign u.s. debt rating is unsolicited it, and the u.s. does not pay for its rating. christine romans, cnn, new york. >>> just about 20 minutes past the hour. here is a look at the top stories this hour. police are using a mini submarine and specially equipped votes off the island. suspect anders behring breivik is in custody and confessed to carrying out

if you are aaa and the u.s.owngraded it is not as if you are going to sell your stuff immediately. >> shepard: where would your flight to quality be? >> that's right. i think it is more about long term loss of economic prestige. it does margins make the rest of the world wish they can diversify their assets into nondollar nontreasury based assets. >> shepard: have you been surprised as an analyst how beat the president has been by the right wing of the republican party? >> to some degree yes. i think he prefers to appear like that reasonable person. whether that is the case at the negotiating table or not. i does seem -- i think there might be a calculation on the administration's part. if you get to a point where is no deal or very unsatisfying deal on both parts it sticks more to the republicans than to him. that might be the calculation. >> shepard: that's what the polls are saying. i know hindsight is clear. when they were dealing with the extension of the bush tax cuts, which the president did to the scream

when you default people talk about going down to from aaa to aa. >>neil: but we are not six days from that. >>guest: the president has the power to pay the bondholders. it will not look pretty. we spend a lot more than we take in. we spend $2 trillion a year, $3 eight or nine a year and we take in $2 trillion and we have to make up the difference. and we can pay off bondholders, service on the debt is $200 billion. of the $2 trillion we take in. >>neil: the best way to make an analogy, a spouse or major paycheck earners like losing their job and you pay the most important bills first, represent, mortgage, et cetera, our debt payments are up there, presumably social security and medicare and soldiers and there is still money for other stuff but not as much. ing until we reach a settlement. we don't have to fall apart. on tuesday. on the 2nd. and there are reports that it is not tuesday anymore it could be a week from tuesday they could have more money but the treasury denied that but this are reports--. >>neil: i think it is arbitrary. >>guest: it h

rating aaa rating be downgraded. well so that had a long time to go and as a matter of fact if the s. and p. five hundred down res ny state or speak did raise the debt ceiling at me they have exactly. if we actually raise the debt ceiling that would be impetus for me to downgrade united states because we were fourteen dollars worth of debt that we already have and they say that we raise the debt ceiling that's at least some sigh of relief really i think if they don't raise the debt ceiling straight wonderful dips this will be a staircase billionaire. so when you think that americans actually realize i mean what do you mean when you say austerity and let's break it down first we two and what would that our stare to be if the debt ceiling isn't raised and what would it actually look like for average americans if the credit rating of the u.s. was downgraded well you know who cares about its credit rishi anyway day rate rate aaa was. late and they raised very much like i mean they have no credibility whatsoever lawyer or

aaa admits the survey may not be completely accurate. it was done at the end of may when gas prices consider 40- cents higher. >> although the projections indicate a decline we could see it not to be as significant as expected. >> reporter: more positive news? 60,000 madison square ,000 marylanders are expected to fly this weekend. high gas prices were going to stop this woman as she fills up for ocean city. >> we are happy they went down. >> reporter: so many marylanders are chosing to stay put. >> hanging out at the house and doing a cookout. >> we'll sleep and eat. >> reporter: aaa expected to be a busy one. >> this is probably still the fourth highiest 4th of july travel holiday that we have seen over the last ten years. >> for instand updates on the forecast and traffic conditions over the weekend log on to wjz.com. >>> putting bad guys behind bars. successful program that's locking up violent criminals and the worry for other criminals out there. >>> guess what you can buy through the mail starting today. >>> coming up, we think ma

if no deal is reached this week america will lose its aaa credit rating. that could cripple our struggling economy costing every american family. jake tapper at the white house. what we're seeing is classic use of the tactics. >> reporter: he will talk about how the house will pass a bill that probably can't pass the senate. the senate is about to pass one that can't pass the house and say the time for this deadlock is over and there needs to be a premium on compromise but there is a risk here, george. in the sense that the president is not going to be presenting any new plan and he is complaining about washington's dysfuncti dysfunction. here comes the president now. >> good evening. i want to talk about the debate we've had over the national debt. the debate that directly affected the lives of all americans. for the last decade we've spent more money than we take in. in the year 2 n.o.w. tho2000 ha budget surplus, and the money was spent on trillions of dollars in new tax cut, while two wars and an expensive prescription drug program were simply added to

moody's investors service announced it might cut america's aaa rating due to rising chances the debtceiling may not be raised in time to avoid default. that sent stocks diving in late trade. earlier in the day stocks flew after congressional testimony from fed chief ben bernanke suggesting the fed would consider additional stimulus measures. two previous stints of the fed buying hundreds of billions in bonds, which finished in june, was supposed to lead to expansion and jobs. about the only clear thing it led to was a sustained rally in stocks. so, the mere suggestion the fed was considering another round led the three majors higher. >>> energy and material shares were the top gainers. copper and gold jumped 2%. oil was up, settling once again over $98 a barrel. >>> scandal battered news corp. was most active on the nasdaq. up almost 4% after giving up its pursuit of total ownership in a major english pay tv network. jpmorgan chase and google both slated to deliver earnings tomorrow, slightly higher. after the bell yum brands rose on better than expected profit and a boosted outlook.

joining us is aaa's lon anderson. so we're finally seeing some of the gas prices coming down, but usually it's the summertime when the demand is high and prices go back up. what do you think will happen to gas prices? >> we think they'll continue to trend back down, only because they started so, so high. the economics weren't supporting $4 gallon gas, and they should be coming down, and now they are. last week we had the authorized release of petroleum from the fuel reserves, that ought to help continue the trend. they dropped another penny overnight. right now the average is $3.60 a gallon. i was in richmond yesterday, filled up for $3.30 a gallon. they've come down 8 cents in the last week, and come down 26 cents in the last month. so they really are falling. so put a smile on your face. true, they're about 80 cents higher than they were last year, but nobody's asking, are we going to hit $5? >> and those pennies add up, especially for families on a budget. do you think we'll see these prices continue to stay low th

>> and because of this trouble, we may lose our aaa rating.why don't you tell the auto club to mind their own [ bleep ] business. >> so both sides switched and everybody caved and nobody agreed. democrat harry reid's new plan is now to the right of republican john boehner whose new plan says, this plan sucks so much, let's do it again in nine months, and the question to congress and many americans may be sharing, do you want out of this relationship so bad that you don't have the [ bleep ] to leave so you have decided to act like such giant [ bleep ]s that you have forced us to break up with you, so if so, get the [ bleep ] out. >> aaa ratings to all of the comics. next ezra klein helps us to do the math on boehner's new debt ceiling plan. ♪ you have got to carry a zero ♪ so benny, i'm proud of you. welcome to the 21st century. thank you very much. you're on e-trade. huntin' down stocks, bonds, etfs. oh i love etfs. look at you. why don't you show me your portfolio? i'd love to... i already logged out. oh no, it's easy, actually, to get back..

aaa says there will be a 1.7% increase in air travel among californians this weekend. >> it is a trend that people will travel, maybe closer to home. people are still going to travel and especially for 4th of july. >> she says the 4th is second only to thanksgiving. people we spoke with seconded that. travelers say the economy makes them cut back, just not when it comes to the 4th of july travel. >> 4th of july usually it is a whole more -- family comes together as a household, some family's member's house and we just have a get together. >> a must do weekend. >> yes. >> for one couple it is about more than the birth of a nation. >> going to see my girlfriend's family for the first time and going to michigan and should be a new experience, should be fun. >> despite the expected decrease, 3.6 scale foreignans will drive at least 50 miles or more this weekend somewhat surprising more people are not driving given the fact there has been a six cent a gallon decrease in the price of gas since last week. >>> aaa estimates people will take other modes of transportation and they say those numb

he could be the first president in american history to preside over a downgrade of our aaa credit ratingthat'ses aes a growing probabil john. and the kind of disgust that you ran in to at your gathering is widespread across the country. and i agree with you. there is shared responsibility and shared blame for this. yeah, there's been a lot of republican intransigence. the democrats have not yet proud a budget. they don't pass budgets. the president hasn't produced a plan. but this could be a case study, as you well know in colleges, for years to come of how not to lead. >> and how not to lead, how not to act, and, again, the president has principles he's standing on. some of these new tea party men and women, gloria, they say, look, we won an election months ago, this is what we promised to do, and now you are telling us we have to break our promise. >> but compromise is not a dirty word when the government is standing on the brink here, and i think that's why john boehner was so tough with them. because not only is his leadership on the line, but i think the republican party is on the l

we are the international aaa market. right?we all of a sudden go away and people can't buy our debt, mutual funds and investors and people who are mandated by the conditions of their investment to buy aaa debt, it's a global economic problem. now, we will, as i said before, start to see our individual interest rates rise. right? it's like a big family credit downgrade if the united states gets downgraded. >> the republicans, a large body of republicans, say that raising taxes is simply unthinkable, unacceptable. most financial experts outside of america say of course you should raise taxes, the taxation here is not that high compared to places like britain, for example, and they should be doing this now, that is how actually to deal with cutting spending but raising taxes, that is how you get out of this mess. do you agree with that? >> it's true. it's absolutely true. and i think you have to look at what's on the table now. what we have is not what the president has proposed, which is a balanced approach. it's an approach wher

you are governor of one of the eight states that has a aaa credit rating. maryland, virginia, iowa, delaware, north carolina, and utah. but when you got your credit rating reaffirmed, there was a warning that came with it. tell us about the warning. >> it was one of these good news/bad news e-mail, chuck. and my budget director says, good news. because of the tough decisions we've made, we've had our aaa bond rating reaffirmed. the bad news is, all the bond rating agencies are coming back around in the next couple of weeks to all those aaa states, the eight of us, to discuss how a national federal default would affect all of the bond ratings of the states. when we were together in utah, all governors were talking about this. there was a cloud over the national governor's association. and it was the extremism that is keeping a resolution from happening of this debt ceiling issue. >> is the assumption if there's a default even for a day or two, but, of course, enough to shake the credit markets, that all of you will lose your ratings? >> i don't know that tha

doesn't include significant progress in getting this country's fiscal problems under control, that aaa rating will be in jeopardy. >>> overseas the scandal grows and so does the anger surrounding the media empire of rupert murdock. the phone hacking scandal has already taken a big prize away from him. his company, news corporation, badly wanted to buy the big satellite network bskyb. today they dropped their bid. there's no telling where this case ends, but this is all new territory for this huge media figure and for great britain. nbc's stephanie gosk is in london again for us tonight. stephanie, good evening. >> reporter: good evening, brian. well, news corps got beaten up all day today by british politicians both before and after they dropped out of the bid. one of their fiercest critics, former prime minister gordon brown, who accused murdock's papers of law breaking on what he calls an industrial scale. >> order! order! >> reporter: in parliament today politicians for once found something they could agree on. rupert murdock's news corporation, they said should drop its bid for bri

aaa rating might not necessarily go down. is interesting. i'm glad i have the chance to do. so i spoke to an investor, very influential investor who had a chance to sit down with s & p. he said the reason, he was suggesting is that. it is unclear what they would actually do but suggesting that they felt this way, it was really about the size of the plan. not what is in them. i think it is important to emphasize that most people think both of the plans are really band aids and don't deal in any significant way with the spending and cost issues in the country. the issue was that speaker boehner's plan does not cut enough spending right away. harry reid's plan would cut about $2.7 trillion. just because it is bigger than speaker boehner's plan is really the reason the boehner plan may trigger a downgrade. as we indicated, some investors, and this is a very subjective view of what would happen. think you could see the increase of a quarter percent to a half percent. if you remember, a year ago, when california had to issue those

as the hours tick guy, it becomes increasingly likely the united states it be stripped of its aaa rating by the rating agencies. in other words, it means the rest of the world will say, you are more of a liability to lend money to than singapore or hong kong or germany or britain or indeed canada, and believe when this historical episode is written, michael, they will lay the blame squarely on the part of the republicans and personally on john banenoehner particularly. we've known for ten years of the public, trade deficit. we looking at a bipartisan approach on that. you've had various commissions in that regard. what republicans decide to do, up the ante, accelerate things and have the fight now. what in effect did they do? use the debt ceiling. that means they're saying to the rest of the world, you know thathat $14 trillion? we may not pay the principle and hold the rest of the world ransom subpoena what did they get in return noor? remember here from s&p, $4 trillion of spending consults or revenue to bend the kurn down. when obama was talking to boehner a few weeks ago, we getting

for as long as you and i have been around, america's credit rating has been the best of them all, aaa, basically saying that america's debt is essentially risk free and it is priced as such. but the credit rating agencies are now saying that even if there is a global solution to the debt ceiling talks, that if the congress and president can't come together on a longer term fiscal stability plan, they may downgrade the debt and that will mean that the debt is riskier. what does that mean in practical terms? first, it means that borrowing costs for uncle sam, for taxpayers like you and me, are likely to go up. by one estimate according to jpmorgan by some $100 billion a year. interest rates over the long term might go up by three quarters of a percentage point. it doesn't stop there. all interest rates basically in our system are benchmarked off the treasuries. the borrowing costs for states, for municipalities, for municipal bond issuers like school districts, water districts, universities, they would go up as well. moody's says it may be $130 billion worth of municipal bonds would los

avert armageddon the leading credit rating agencies are already threatening to downgrade america's aaa credit score for the first time in over ten years they say there's a risk the u.s. could fail to resolve the deadlock quickly or effectively by seek mellor from the business insider website says both democrats and republicans understand the danger is further borrowing the dangers of whether. the impact on the u.s. economy the world economy in the global economy really depends on what the credit agencies do. you know we heard from moody's on wednesday and then from s. and p. both warning severe consequences if the government doesn't raise the debt ceiling in time including a possible downgrade from the government's aaa rating and that increases the cost not just for the federal government but for seven thousand across the country the united states i don't think anybody thinks united states is getting away with this any longer there. sort of reached the point where every everybody in both parties agrees that the debt is just too high and they're just they can't borrow any more you can't

under this president he risks the aaa bond rating of the country. you want to talk about an instant tax increase that would be worst-case scenario if we don't deal with the underlying problem. how should the republicans make that case? >> this is all democratic baloney. there is no chance that we are going to go into default there is no chance we are not going to send out social security. >> sean: but they are scaring the american people. >> because they want to protect the burden s that work in the epa ab -- and state department, justice department, white house staff and our embassies and ice and all of those agencies. they are using social security and default as headliners because that is going to attract the currency. if the republicans pass a bill, it will be their position, and say every dime that walks in the door, you use to avoid default, pay the military and social security. if by some chance enough doesn't come in, you can borrow extra money, if every penny goes to averting default and there's no other source of money. do that, you cut th