. >> harvard professor ken rogoff is a former chief economist for the international monetary fund. ken, listen to this with me. republican senator kay bailey hutchison said we're about to find out how serious the obama administration is about reducing spending. listen to what she said. >> you do the thingshat are essential. this is where the administration is going to be tested. if they start doing the chicken little thing by not paying social security recipients or people in our military or interest on our debt and instead choose to cut the things that will hurt the most but not the things that they could cut responsibly, that's going to be the test that they're not serious. >> ken, she's talking about a test. is this a logical test? if you strongly believe that spending needs to be cut or taxes need to be raised or somehow the budget needs to be dealt with, is this the way to keep the administration's feet to the fire? >> i think this is nuts.

>> suarez: mario calvo-platero and ken rogoff, gentlemen, thank you both. >> thank you. >> ifill: now to 2012 politics-- president obama's busy fundraising schedule appears to be paying off. the obama campaign announced today that, combined with the democratic national committee, it raised $86 million over the last three months. that record-breaking total leaves his republican competitors in the dust. as we reported last week, the entire g.o.p. field combined raised a total of $35 million- $40 million. here now to help us go inside the numbers is "newshour" political editor david chalian. david, welcome back. hui does the president's fund-raising measure up? >> well, you've got to call a win a win. it is a record-breaking number, as you said, that $86 million. but notice how the campaign is putting it out there in this top line. they want to show that combined dean see and obama campaign number because those are the kind of events-- combined events-- that the president has

ken rogoff joins us. congress has raised the debt ceiling 78 times since 1960. but with a fierce debate over tax cuts versus spending cuts. the national debt totaled $14.2 trillion. this is 100% of the american economy. this is our debt pile. we're fast approaching rates we haven't seen since world war ii when our debt was bigger than the side of the economy and back in the great depression. this is what economists call a debt crisis. why? we are a borrowing nation, bottom line. we borrow money. right now for every dollar the government spends, 38 cents of it is borrowed. if the debt ceiling isn't raised in time, the u.s. could default on some of its payments and that's the last thing we need when we're recovering from a recession. ken, you have the financial crisis expert. would failure to raise the debt ceiling trigger another global economic disaster? >> well, it's playing with fire, there's no question about it. the foreign investors, investors are not expecting the united states to default. if they were, we'd be paying way higher interest rates right now. b

and ken rogoff, economics professor at harvard university and co-author of "this time is different-- eight centuries of financial folly." professor, as we reported, the concern has been aimed else where, the emergency meetings, the bailout plans. suddenly it's italy. why italy and why now? >> well, i think the proximate cause it was dispute between berlusconi and his very well respected finance minister tremonte. but at a deeper level people are stating to say wait a second, if greece is going to default-- which an increase last week has seemed inevitable--s where it going to stop? why should i keep my none a bank in italy at 1% when i can have in the germany at .5%? that's what's putting the pressure on. >> suarez: mario, is that a good comparison? isn't the italian economy about six times the size of the greek economy? >> will, in a way it is. but, you know, i think we're also have to start to define what default is because there is lots of confusion. the markets are very volatile and investors get worried. so, now, for example as part of the negotiations germany and france would l

ben white, ken rogoff, jean sehati. thank you coming here to grind this down. boy, has it been ground down in washington over and over again. jean, first question here. is it time to simply say let's go for the possible in washington? everybody has all these grand ideas about what they want to do. nobody can get the support to get one of those through. do we have to look for just the possible? >> i think mission number one is to raise the debt ceiling. they cannot get away without doing that. saying they're going to downgrade you. but they left a bit of an out. if you raise the ceiling but give indication you're on the road to getting a deal, we'll keep you on credit watch negative but take you off and affirm your aaa rating if you get it done within a couple of months if we see that possibility. so that's -- that seems to me to be the fallback plan for congress. weather they take -- senator mcconnell has put a fallback plan in that neither seems to like to allow the president to raise the debt ceiling a couple of times. politically it would make him look bad.

ben white is a wall street correspondent for politico, ken rogoff joins us and jeanne s sahadi joins us as well. jeanne, first question, is it time to simply say, let's go for the possible in washington? everybody has grand ideas about what they want to do. nobody, nobody can get the support to get one of those through. do we have to look for just the possible? >> i think the mission of everyone in congress is to absolutely raise the debt ceiling. they cannot get away without doing that. the s&p has been the strongest credit rating agency. they said, we're going to downgrade you if you don't come up with a plan. but they say f you raise the ceiling but give us indication that you're on the road to getting agreement on the deal, we'll keep you on credit watch negative but we'll affirm your aaa rating if you get it done within a couple of months, if we see that possibility. that seems to me to be the fallback plan for congress. whether they take senator mcconnell's plan, neither the republicans or the democrats seem to like it. it would allow the president to raise the debt ceiling a n

harvard economic professor ken rogoff explain s to us why it could come crashing down. >>> but, firstst, with bill karins. >> it's been bad. it's one of the hottest mornings we've ever seen on i-95. we're breaking records out there this morning. temperatures already, the heat index, is approaching 100. we're 97 in boston. we're 97 in new york, and 98 in d.c. later on today, again, this is the temperature itself, not the heat index, the temperatures will be 100 to 105, the heat index will be 110 to 120s in the big cities on the east coast. saturday it will be lower. it will still be oppressive, but not as bad as today. on sunday, we get relief through the northern half of the country, but we'll suffer with heat wave through the midwest next week. you're watching "morning joe" brewed by starbucks. ♪ knowing what this world is about and you can scream let me out ♪ north america's natural gas producers are committed to safely and responsibly providing decades of cleaner burning energy for our country, drilling thousands of feet below fresh water sources within self contained well systems

it is done by the economist ken rogoff and carmen reinhart, they look at different economies and term what happens when debt gets too big as compared to the size of the economy. and their view is that when the debt gets to 90% of the size of an economy of a country, it has a substantial negative impact on the economic growth and jobs in that country. their data suggests that bh it gets to 90% of the economy, there is a 1% reduction in the economic growth. so instead of in the first quarter our u.s. economy growing at 1.8%, if we didn't have 90% of debt to our economy, it should have grown at 2.8%. and when does that mean? that 1% growth that we would otherwise have means 1 million jobs. so if we didn't have this huge debt, right now it is at about 93% or 95% of our economy -- it will be at 100% of the economy this year -- then we would have more jobs. if you look at what rogoff and reinhart have said, we would have about a million more jobs in this country. could we use those jobs in yes. there is a connection between this overspend and the huge gap we've got between revenues and spen