simpson bowles proposal. >> simpson bowles. >> the bowles simpson commission. >> simpson bowles commission. >> the simpson bowles commission did that. why can't they? >> everyone was talking about the commission that heralded the arrival of the recommendations of the commission. but unfortunately, the simpson bol commission couldn't actually agree on a final set of recommendations. however, to be fair, the new supercommittee may have a better chance. that's because if it can't agree, this new supercommittee, if they can't agree on that 1.5 trillion in debt reductions, the new law call for $1.2 trillion in automatic cuts designed to be painful for both sides. on the other hand, one or both side may try to stack the deck with committee members who simply will not compromise. house speaker boehner says he won't approve anyone who'll even consider raising taxes. wall street -- dow plunged 2865 points today. the only bright spot is moody's which had threaten today downgrade america's credit rating keeping it steady at aaa. that may change if the new supercommittee lays an egg. i talked with glo

i think the bowles simpson or the gang of six are balanced approaches, would be more effective in the long-term and would create a fair balance so the wealthiest and best off in america would help, that we wouldn't be giving big tax breaks to big oil and other taxpayers making extraordinary sums of money as we see the disparity between the middle class and the wealthiest in america continue to grow. so if i could look back and say, look, let's focus on bowles simpson more than we did. >> and let me ask you this, how many votes do republicans in your mind need to provide for this deal in the house? >> i certainly think that republicans need to provide certainly 150 plus range for this deal. this obviously fgets them a lot of what they wanted. i think that the leadership is going to be tested to see whether or not they can deliver. they haven't been very good at it on the house side. delivering for what they believe was the best way forward. the speaker had to walk away from two deals he had with the president and the republicans walked away from him in the final analysis on thursday ni

what was involved in simpson-bowles? 18 of us appointed by the president and by the leaders in congress, pretty evenly divided in terms of democrats and republicans, business sector as well as people who work in government. and we sat and considered all the options. at the end of it, and i thought erskine bowles did a masterful job, they said, here it is. and when i looked at it, i thought, at the end of the day, there aren't many options. you have basically three things -- spending, general spending, the entitlement programs and revenue or taxes. and if you don't put them all on the table, you're going to take too much out of one or the other. i voted for it. 11 out of 18 of us voted for it. >> jon: this did not make it to congress. >> no. >> jon: they never got a chance to do anything with it because the group that was formed to make it rejected it. >> 11 out of 18 did. and we were supposed to get 14, but the clock had run out on us to be honest. that's how the gang of six came about. >> jon: that's next step. >> saxby

i'm a member of congress who said he would vote for bowles- simpson. i understand how important it is to get our checkbook unbalanced. that was not easy, but let's do it right. the notion we to make massive cuts right now and not hurt the recovery is crazy. we tried that in 1937 and paid a huge price. let's make the cuts, and then make a focus on what the american people want us to focus on -- let's find a 15 million americans that are unemployed and do things that give them jobs. rebuilding our highways, our bridges, our airports -- we know we're going to spend that money anyway, so why not do it now one we can put millions of people to work? if i were king, that is what i would suggest. host: let's take some calls. nora is a democrat. caller: thank you for your service to the state of connecticut. i am very concerned about a certain trend that i am seeing. i have had reports of this from friends. i am well-grown, but they have talked to me about their children, and how they have jobs in say a service industry, maybe in the casino, where suddenly thei

you know, when the bowles-simpson commission came out, he embraced the general direction.id he has reservations. he talked about defense and also in revenue it went far deeper than we had proposed. so if our suggtion to the speaker was unacceptable, doing three or four times as much revenue wasn't going to be more acceptable. so in the senate when the group... the gang of six came up with 30 something senators, the president embraced it immediately. and it was not... it was clear that that wasn't going to become acceptable in the house republican conversation right away. so leadership... you know, he put out on the table a plan that is balanced. he in negotiations was willing to move farther along the spectrum. he hasn't walked away from anything he's put out there. he remains prepared to be engaged. >> rose: so if republicans step forward to say this campaign will be about the president, leadership and also the congress in part if the president can make it and this that and secondly it was about the role and size of government. do you say and does the president say and do

>> i thought bowles-simpson's framework was right. they reduced the rates. i would increase them.in other words, i would have had some of the ecifics quite different. i'd goack to the clinton rates for people earning over $250,000. >> rose: they eliminated --dedud reduced the top rate to 25%. i don't remember. i would take the top rate to where president clinton had it. when president clinton raised rates at those levels, he was criticized, and i remember one republican lder went on television and said, we'll have a recession, every single job that's lost is president clinton's responsibily. instead we had massive job creation, as well as increasing incomes and the rest. i would raise the rates. the general framework of doing it n, deferring effective date for a uple of years, robust public investment in areas that we need, yeah, i think that framework is -- and the $4 trillion over 10 years, getting to where the debt-to-gdp ratio goes down. i think that's right. >> rose: if they had eliminatedg over $250,000, the effective rate would have been the same as when clinton was preside

you could envision other recommendations but that would have been a start. >> and the bowles-simpson act that -- commission that you heard chambers talk about just there, that was a panel set up by barack obama to identify ways to reduce the national debt. it's formerly known as the national commission on fiscal responsibility and reform. >>> and lowering the nation's debt rating is sure to impact just about every one of us. coming up at 7:00 eastern tonight, cnn presents a special on the credit rating decision. the impact on you, your children, your future. tonight at 7:00 eastern right here on cnn. >>> and not all the financial news, though, is bad. in fact, the july jobs report, well, it was a welcome surprise. employers added more workers than some had projected. athena jones is live in washington with more on the jobs report. and athena, that was some bright news. 117,000 jobs, which is more than economists had predicted? >> right. so july's unemployment was better than many economists expected but a long way to go before everyone who wants to work can find a job. >> reporter: j

we've got the bowles-simpson commission, which they worked really hard -- >> give it's a chance. >> greta: give it's a chance? >> you get $3 trillion. less than $3 trillion now. you're going to add $7 trillion to the debt. you haven't moved the needle. if this does works the joint committee fails, the defense department gets devastated. >> greta: we haven't had a lot of successful committees. >> i'm with you. >> greta: so you're saying that if the committee fails, it's going to be devastating to the defense. >> under this agreement, it will be. >> greta: as you say, but there's been no history -- >> how much money do we spend on defense at the federal level? defense. under this agreement, if the joint committee doesn't produce a product, 50% of the cuts come out of the defense department. i believe the number one obligation of the federal government is to defend the nation. you should start with a defense budget, get it right, then go to other things. >> greta: this is an interesting piece of information. i realize that you were not the -- you're not in the house, but the chairman of the

but then moved on to a protege of alan simpson of the simpson bowles commission. just bej director but trade commission so he know it. close with ben carden of the house. sow knows bipartisanship but he is a loyalist and he is a real key player. >> warner: now the house democrats, norm i will begin with you but maybe combine it. do we see any mavericks here? javier was era, james clyburn and chris van holden. >> all key people in the leadership close cho-- chosen by pelosi because of their persons, van holden is the ranking democrat on the budget committee at the talks. clyburn also at the talks. becara almost became trade representative. smart shall savvy pros, leaders, they're to the going to diverge very much from what pelosi wants or what the caucus wants but they've all indicated a willingness to cut a deal. >> warner: becera was on simpson bowles also. and yes, these are all people-- . >> warner: so he voted no. >> he voted no, you about he was there. and when it am cans down to a deal like this, when you have such a compact time frame, knowing the landscape

we've got the bowles-simpson commission, which they worked really hard -- >> give it's a chance. >> greta: give it's a chance? >> you get $3 trillion. less than $3 trillion now. you're going to add $7 trillion to the debt. you haven't moved the needle. if this does works the joint committee fails, the defense department gets devastated. >> greta: we haven't had a lot of successful committees. >> i'm with you. >> greta: so you're saying that if the committee fails, it's going to be devastating to the defense. >> under this agreement, it will be. >> greta: as you say, but there's been no history -- >> how much money do we spend on defense at the federal level? defense. under this agreement, if the joint committee doesn't produce a product, 50% of the cuts come out of the defense department. i believe the number one obligation of the federal government is to defend the nation. you should start with a defense budget, get it right, then go to other things. >> greta: this is an interesting piece of information. i realize that you were not the -- you're not in the house, but the chairman of the

the one fault i would have with the president is he should have embraced simpson-bowles in january. > he could have made it his own plan. the only place tonight the plan, you have to go to a website called whitehouse.gov. >> he chose not to do so, in retrospect i think that was a mistake. what we're dependent on if there's going to be agreement in this committee of 12 there's going to have to be one rogue senate elephant. if you don't have any senators that break from the pack -- >> you're not going to have it on the house side. >> you're not going to get to seven votes unless there's one rogue elephant. we'll see who gets appointed. >> it looks tough enough that it seems to be a motivator or else we wouldn't have been held up at the end. everybody thinks the trigger is going to get pulled. is it tough enough? or is this going to be a cuts only? i guess my sense is -- they've already found the $2.5 that they're negotiating with. it's been sitting in the biden committee. the white house wasn't going to agree unless revenues came in. maybe they'll get the oil subsidy and that's it. >> t

asking me that question -- course, senator gregg, was a key member of the bulls a sense and -- bowles-simpson commission, and by far the biggest structural issue in the united states is our fiscal deficit. but coming back to the deficit commission, what they showed, i think to the world -- which i think a lot of the markets already understood -- is we are such a rich country and such a big economy that if we act soon and there is shared sacrifice with and solve this problem by spreading the sacrifice throughout different segments of the country so no group has to sacrifice too much. now, the longer we wait, obviously the more difficult it is going to be. what do we have to do to get our fiscal house in order? i think it comes down to we need growth, and so when we go about -- we have to reform entitlements and we have to reform the tax system and we have to reform the tax system so it will give us the revenues we need and give us growth. i start off by saying, despite all of the criticism and how poorly the government performed and all of that -- and i think the criticism is deserved -- let m

because he could have done more to be in support of simpson-bowles. he could have been out earlier. >> i wish he had. both sides were afraid to uch simpson-bowles. that's pretty clear. it made too much sense. they didn't want to be associated with it. i would say this. in terms of the deficit limit negotiations when the other guy throws the steering wheel out the window, off problem. if you and i get in those cars and i see you throw the sering wheel out, i give up, you win. >> rose: in fact, when you looked at the publican debate the other night and they asked them to raise their hand if they were in favor of a level of spending cuts which were... >> 10 for 1. >> rose: and everyby would not go f that. that was pathetic. i me, listen, i like republicans. i mean if you got democrats o some core issue they'd probably do something just as silly. but when they take that attitude they are really saying, you kno "i want to win this primary." they are saying the country be dammed, i want to win this primary. >> rose: and it means that a certain element of phi

commission, which was bipartisan. >> the bowles/simpson commission that chapelbers talking about was the panel set up by president obama to find ways to cut the deficit. it's formally known as the national committee for fiscal responsibility and reform. and felicia taylor is live in new york. athena jones is live in washington and we'll begin with her. athe athena, right now the obama administration, bad news for them. how are they reacting? >> reporter: well, not well. they're not happy. they believe this was a rush to judgment on the part of the s&p. they wanted them to wait and review their analysis. treasury officials pointed out to the s&p that they'd made a $2 trillion mistake in calculating future u.s. deficit, and that's an important calculation that goes into the whole debt-to-gdp ratio, but they have also pointed out that there are two other rating agencies, fitch and moody's that still have the u.s. as a aaa rating. they're at least happy about that, for the moment, those two other agencies haven't followed suit of what the s&p has done. >> is it fair, then, to say that th

you effectively get simpson bowls. you get about $2.5 trillion in spending cuts -- >> that's why some of the, if i may, hysteria around this conversation coming from my friends on the left of center is notable because again this deal is part of a larger architecture. it's not just one decision ander go everything is decided oopsz. the president has considerable leverage. also, after a presidential election, were he to be re-elected. returning to clinton era tax rates might sound more reasonable -- >> he's still got to be re-elected. this makes what happened last week has made it much more difficult. the political argument has moved on to the tea party territory. they might consider themselves victorious because they haven't got all the bits and pieces they're interested in. many of those are conflicting in any case. they have moved the national conversation onto the fact that you may not raise taxes in any circumstances and you may not do all the measures that the president needs to get himself re-elected which would b

in part because the blueprints are there whether you look at the gang of six proposal or the bowles-simpson report. there are a number of ways to do this, especially when you narrow it down to the remaining issues, the entitlement reform and tax reform that there are only so many ways to get after this and they have been explored. there will be a complete menu for the committee to consider. >> we have a story, bloomberg says former new jersey governor corzine's firm sold -- >> where is this going and how i could possibly answer it? >> corzine's appointment by president obama. my question is governor corzine being considered for any white house jobs? house jobs? >> i have no

and point number two is they could have come up with a fiscal plan, for example, to the bowles simpson commission, which was bipartisan. it had the majority vote and came up with a number of sensible recommendations. you can envision other recommendations but that would have been a start. >> i want to bring in two folks who are a lot smarter than i am, ali velshi and david walker. i know they would like to ask you a couple of questions. david, let's start with you. >> john, thanks for coming on. obviously s&p said back in april that you were looking for something meaningful to happen and up to $4 trillion in deficit reduction over the next ten years, that didn't happen. you know, what are you looking for with regard to the committee that is being established? and if it would get to the $4 trillion target that you were talking about back in april? might that do it as far as being able to regain aaa status? >> it's going to take a lot to get back to aaa because once you lose your aaa it doesn't bounce back in that way. but a key debate will be coming up regarding the extension of the 201

the bowles-simpson commission teed up an option to consider with a broad base and low rates. and benefits for job creation should be front and center. why not now? i'm glenn hubbard. >> tom: just a reminder, you can catch us online at n.b.r. on pbs.org. there you'll find all the market data from the program, and you can watch any programs you may have missed. you can also follow us on twitter, @bizrpt, or my personal feed, @hudsonnbr. if tweeting isn't your thing, friend us on facebook at bizrpt. >> susie: our facebook friends have been busy, posting their ideas for fixing the economy. joy says it's simple; we need "new infrastructure projects like road, bridges and tunnels." eloisa, also keeping it simple, says, "fire all members of congress." sergio thinks we need a top-to- bottom overhaul of the tax code. and lee says its all about boosting confidence and thinks, "the economy will be all right again when people feel good about their jobs, their homes and the wellbeing of our nation." you can join our conversation by friending us at www.facebook.com/bizrpt. that's "nightly

and the simpson/bowles commission. another republican senator walked out of the conversations with joe biden about trying to come up with some big compromise, show, john, i think it will be very tough with what they've got. the issue is going to be if six members of one party hang together, can they pick off a seventh from the other side? and people will be looking at who is the potential break point, who is the potential person who could form a compromise, otherwise you come out 6-6 in the committee and it's a nonstarter and you don't have something to vote on. >> you start on the senate side, who might be the compromise, you have senator kerry, he was a presidential nominee. patty morey, the knocks at the same time she chairs the democratic senatorial campaign committee, she's raising money for the democratic candidates and saying the republicans are killing medicare while she's serving on the committee that medicare cuts might be on the table. and liberals don't like max baucus, and here's an interesting part, you m

. -- we had the bowles-simpson proposal and the gang of six proposal which was similar and now you have president obama making the case recently on a daily basis that we need to compromise and have a balanced package. his idea of a balanced package is cuts in entitlements and increases in tax revenues. is the president fundamentally wrong that that is where the middle ages? guest: i think most americans believe that in fact the president and the democrats have compromised far too much and the republicans have given virtually nothing. i think john boehner said that after this deficit reduction package was passed, he got 98% of what he wanted. i did not hear any democrats boasting about what they got. they did not get anything. i think the record the last half year is the democrats have compromised. let me get back to president obama. when he ran for office, he said a vote for me, not john mccain, because among other reasons john mccain wants to cut your social security benefits. what the president understands and has said and his administration has said is social security has not contrib

not going to put anybody on this super committee that participated in the gang of six on the simpson bowles commission, the only group that's really tried to roll up their sleeves and have real discussions about what we need to get the nation's financial picture and economy under control, when you hear that, you know that the next 16 months are going to be wasted. wasted. i'm not sure we can afford to waste those next 16 months. >> let me ask you a question, though. assume by political analysis, history information, you're more or less correct. let me introduce a new variable, however. the stock market was down 500 points today. the bond, absolutely, was a safe haven. the movement and decline in the bond, ten-year bond to 2.5%, because everybody was getting out of commodities, getting out of stocks. getting out of anything that was perceived to have any risk because they're concerned about the forward prosperity of this country? i get a few more days like this, i know it will snap back a little tomorrow, but if you start to get a financial market that is leaning on the economy. people's 401

talking about doing any and anything anything like that those of us who work in you know with the bowles simpson deficit reduction commission and all the various other groups that have looked at looked at that so how you can do it without really hurting military families i know that president obama has said before that he's not opposed to cutting military spending. you know that this is some place that could be looked at and we did hear from him back in april joining us pete on fiscal policy let's listen to a little bit of what he had to say so just as we must find more savings in domestic programs we must do the same in defense and we can do that while still keeping ourselves safe over the last two years as secretary bob gates has courageously taken on wasteful spending saving four hundred billion dollars in current and future spending. i believe we can do that again i believe we can do that again this is back in april have you seen anything that shows that we are going in that direction first of all that secretary gates didn't say four hundred billion dollars he pretended to save it by you kno

one of the things the president has called for, and supported i think i bowles-simpson, et al., and i think by the gang of six is while it's important for us to reduce or budget deficit we know we're doing. we can't go on this way. we need a comprehensive, bipartisan approach. there are things i didn't like entirely by the bowles-simpson proposal but there's a lot of good there. same with the gang of six. we just need to set aside our differences and deal with these issues straight up, tried to do more good than bad. one of the things as we pull back on spending, raise a few dollars in revenue from one of things i think is important is what the president suggested he says if we are going to win the 21st century if we're going to out intervene, outcompete the rest we have, as we reduce spending, the growth of spending certainly that we have to continue invest in three areas. number one, workforce. we're not going to be competitive. number two, r&d. rmd that has the potential been commercialized, new products. that we can make in this country and so all of the world. number three, infra

this is not bowles-simpson, which we of thrown off to the side.this is not a home-grown gang of six effort. the parties have deep stakes in the outcome of this committee and its suggestions, which means if there is going to be resolution, the key question is do the parties seek compromise in their election interests of 2012. keep in mind what paul ryan said yesterday, and this is apparently after he refused to be on the committee -- "we should not have a committee with all politicians, an agreement that redesigns the whole design of the federal government. this should be brought to the american people. in other words, these are issues for the campaign trail, not the joint committee to call if you add all of that up, where does it leave us? -- committee." hit you add all of that up, where does that leave us? i suggest that will be another last-minute deal. do not put the turkey in the oven to early for things given. his there is a deal, it will be leadership-in door -- if there is a deal, it will be leaders in-endorsed. finally, the committee does

and point number two is they could have come up with a fiscal plan, similar for example to the bowles simpson commission which was bipartisan. >> so just how big a deal is this? poppy harlow's here to break it all down. poppy, this essentially kicks the united states out of an exclusive aaa club, but what does that mean, really? >> it absolutely does and there are more and more that are saying right now that that is a wakeup call that the united states needed, that it wasn't on a fiscal path that was sustainable and it does. let's take a look at the countries that still retain their aaa credit rating, the united states not among them now, countries like australia, canada, france, germany, the united kingdom, switzerland, the united states was part of that exclusive club up until 8:00 eastern when s&p downgraded it. it is no longer part of that. just to put this in perspective for you, we're still rated at aa plus, that's still a very high rating, this puts us right in line with belgium. this is still a high rating, but the concern is what does this do on one hand to confidence, to the america

beginning with bowles-simpson and throughout the summer, i think this is the best debate we have seen in my lifetime. as important as cutting is and cutting expenses and that is essential, that alone will not get you there. you need reform. you have to reform entitlements and when you talk about entitlements, think of medicare. that is where the huge dollars are. you need to reform the tax system. i find all this stuff very uninteresting and not terribly relevant about whether the bush tax cuts should expire and what we should we do with the rates. the question that should be asked is since we need more revenues, how do we get them in a way in which we have as little drag on jobs and growth as possible? how can get them and remain competitive? no one who is credible and i have heard defense our tax system. i don't think our tax system will get us there. we need reform. we need basic reform. gg -- your the first one to think of the super committee. the way i look at it, congress took an underwhelming step in terms of the first cut but it was a step. now we've got the super committee an

administration side or the congress side has learned anything from the pass, the punted on the bowls-simpson committee and you can't put people with 12 different stripes in a room to look at our problem. that's not a solution to 10% or 9.5% unemployment. 20% of the black community, we have got to have some real serious discussions about how to get the economy moving. >> let's talk about one of those because i think every republican member that's been named to this commission is on the record as opposing tax increases. can we do what needs to be done without that? >> we can do what needs to be done if we tackle both problems, entitlements, medicare, medicaid to some extent, defense spending and at the same time have real serious tax reform where you can close loopholes, lower the tax rate, create business incentives to get people spending began. for example, the money that's offshore, suppose the government allowed that money to come in from off shore provided that companies use a portion of that money to invest in small and minority businesses in urban markets around the country. you could s

the great irony and sadness about this process is that the bowles-simpson recommendation is the finalsult. there's another issue here. with all this bickering going on, the economy is slowing down. you can see it in all the data. i don't see a double dip, but i see it slowing down. this deficit problem that is out there is much larger than we calculated. the actual numbers employed by those calculating the deficits are based on a level of economic activity. >> if we are going to be aggressive about deficit reduction, there are questions about how aggressive we are going to be, even if we are, does that get through? or is government in a position where it should be doing more and can't because of the politics? >> first of all, there's a general view that we are somehow going to solve the problem without paying. there's no conceivable scenario. cutting back on government spending will cause some contraction in economic activity. according to the imf, who has done a considerable number of evaluations, they conclude that increases in taxes do curtail economic activity. so do expenditure c

and point number two is it could have come one a fiscal plan, similar, for example to the bowles-simpson commission which was bipartisan. >> huh? we probably need a lot more political analysis about that. but first i bring in poppy harlow, this essentially kicks the u.s. out of a very exclusive aaa club. >> it does, don. up in the about 8:00 eastern last nights, we were part of 16 countries to have that pristine aaa credit rating, we no longer do. we still have it from moody's and fitch. i want too talk about the countries that still hold that aaa credit rating. australia, austria, canada, denmark, finland, the united states not part of that anymore. we still have a pretty high rating, aa plus, just knocked down one notch. we're rated higher than china. china has a aa minus rating. this puts us on par with a country like belgium for example. and this by the way has happened to other countries like canada, that have after a few years gotten that aaa rating back, don. >> so which factors did s&p use? i know there was some back and forth about it. but what do they use to come to their decis

let's remember something, on a serious note here, the bowles-simpson commission was initially supposedcally go to congress, but they had to do an up-and-down vote. >> obama rejected it. >> no, it got beaten back in the senate. it ended up being a commission. this is a select committee like watergate. >>sÃuvç bob, why was it also jua commission? the president never even brought it -- >> you're right, it should have been, but this committee that they formed, a select committee, like watergate was, for example, and they have to report out, it has to be a vote within a certain number of days, up and down, no amendments, no filibusters. let's just hope that there's a possibility that there's some entitlement reform and oother things in that that might cut spending. >> sean: i have to give the tea party a lot of credit. they've shifted the debate, changing the country in a positive way. they're calling attention to a severe problem. but the vice president of the united states, to call them terrorists, for democrats to call them terrorists, you, on your program, have called them anarchists. >

and point number two is it could have come up with a fiscal plan similar, for example, to the bowles-simpsonssion which was bipartisan, although it didn't have a super majority vote. it did have a majority vote and came up with a number of sensible recommendations. you could envision other recommendations. but that would have been a start. >> the fallout from the credit downgrades being felt from washington to wall street to main street. let's bring in fleeelicia taylo and athena jones from washington. we heard this guy, but do we have a full feel for why standard & poor's reduced america's credit rating? >> we heard a couple of things. number one, they were looking for the raising of the debt ceiling which actually happened but didn't happen in a timely manner. so that's frustrating to see and watch the wrangling continue in washington. the other thing they were looking for, which was very specific, was a credible plan to tackle the nation' debt. they didn't really get that. they were looking for a number of $4 trillion. so far, we only have spending cuts of about $900 billion. there's a bi