us into a double-dip recession, so this is serious stuff and both s&p and moody's are saying, jon, they want to see substantial credible plans, s&p is telling fox business a 1-3 -- one in three chance of a downgrade by 2013 if they do not see a substantial, credible plan to reduce the decifit. jon: let's hope our elected representatives and administration in washington with come up with a plan that avoids this. thank you, liz bed mcdonald. >> delighted. heather: apparently brand new signs that sarah palin may not be out of the race for the white house in 2012. the former v.p. nominee telling our very own sean hannity that she's still thinking about it and that a decision could come in the next few weeks. chief political correspondent carl cameron is live for us in washington. so carl, palin waved her flag for 2012 again. what exactly does this mean? >> she's prove once again that just the slightest utterance can scramble the thinking about what it might be for the presidential campaign in 2012. palin said last night as she has been consistent in saying, that she is still thinking about running for president, she is still wonder

rating agency moody's investor service that came out yesterday and said unless we default, we are likely to keep the triple a. s&p. it sounds like they are going to downgrade and let's say s&p lowers us to a double a . that is a split rating? i covered the bond market all of the time and institutions go with a higher rating. i will say this, neal and your last guest hit the nail on the head. we have a chance right now to do some good things and cut the budget. this august 2nd deadline. >> we are going to be up against the deadline. >> it may not mean anything. we are not going to default. people are going to get their social security checks. >> i am sorry we are having serious audio. and we remind you we are back on sunday with special coverage especially your world. we want to follow this. and that is near term. continuing to watch. you have arrived. sweet belt. e-reader for textbooks. gps. video camera for lectures. game pad. have you considered this ? it's got all tha and more than 200,000 apps. technology to learn and play on-the-go. only at verizon. android powered. playstation certified. the xperia play by sony ericsson. only $99.99. not that long ago, many families

i'm what veteran and many south floridians are veterans so i want to make sure i attend that meeting. but then i'll get to the s & p meeting. it's important we know that s & p and moody's said not just the debt ceiling. but if we don't have a viable economic plan that rectifies this spending we may still see that credit rating lowered. so when you look at what we did with cuts, cap and balance, we address raising the debt limit. we said that's not a problem. but we have to contend with a debt to gdp ratio of 70%. that is what cut, cap and balance tackles. that's what the american people want to see. the senate democrats who have not passed a budget in 812 days are losing their credibility in this discussion. martha: how dedicated is your group in the house to standing by cut, cap and balance and trying to see if they can get it somewhere in the senate which everybody seems to think is not possible. you sort of have been asked to dismiss this idea that passed in the house and move on to something that may be more negotiable. are you up for that? >> i'm up for any reasonable plan and idea. but once again i come back to the fact. 812 days the senate democrats have not pro

s ann p and moody -- they want to look at s & p and moody's. >> reporter: invest yrs say we think we'll be downgrade. we don't think we'll default on our debts. wore very worried about the economy and the trend in the economy. that's coming to the surface today. martha: what about in terms of the next few weeks? what is the outlook for corporate earnings? >> reporter: corporate profits are very strong. companies are making more than half their money overseas. that's where the growth is. that's where the profits are coming from. here in america we are sliding maybe towards recession. but corporate profits are still from overseas. martha: that's the bigger story. thank you so much. bill: some people think we never came out of the recession in the first place. we have got an important lineup of guests throughout the morning weighing in on the debt matter. first we heard about a possible plan b. is there a plan c? we'll ask republican senator jon kyl about that. neil cavuto is here. the democratic congressman who says the president will have to push for a clean debt ceiling vote in the house if we see no deal. does that have a chance? martha: those are a few of the stories. we have a lot of angles on this story of we want to cover for you in america's newsroom. but there are many stories we are covering outside of this. there are other things we want you to know about. where is presiden -- where is pt obama on this issue? a huge story from peggy noonan we'll get to. juan williams will weigh in on how he thinks the president is handling this. bill: are you a hobbit or a troll? republicans caught up in a nasty name-calling game 15-minute with john mccain has that has tea partyers like sharron angle all fired up. martha: it's also shark week. we'll take to you a hot spot for great white sharks, folks. >> i have done this before. 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[ birds chirping ] bill: a fox news alert. in one hour president obama will talk about this debt matter. the critics say he has been absent from a big responsibility. here is senator john mccain with gretta on that. >> the president of the united states is elected to lead. the president of the united states has been not only active in the process but led in the process. that's the job of the president. bill require's juan williams. author of the brand-new book muzzle. the assault on honest debate. check that out. you and hannity last night were signature on each other. put a cage between the two of you. what do you think about john mccain. has he abdicated his responsibility? >> john mccain hasn't, the president arguably has. the argument coming from republicans is the president should have put something on the table. there is no plan from the democrats in the senate or from the white house. the president has been negotiating republicans in good faith. republicans, eric cantor in the house said there were two trillion in cuts on the table. the relationship cans stay write out the plan and put there it so you can be subjected to scrutiny. bill: a week ago he was taken out of the negotiations and members of the congress said we could probably get a lot more done with each other than with the white house. >> from a purely an polical point of view is boehner walked away from president obama. john boehner felt what was going on with the white house was jell-o. they kept moving around their offer that was on the table that was never fully written out and presented to them. they would shift in terms of how much tax revenue they were requiring of the republicans to make a deal. the white house position is, listen, you guys are not willing to negotiate in good faith and guess what? because john boehner can't get his troops lined up behind him -- bill: the white house strategy for weeks was to use the bully pulpit and it has not worked. kraut hammer writes this today in the "post." obama is desperate to share ownership of his failure. if the republicans play along, the perfect out. those crazy tea partyers ruined the recovery. blame them? >> i think charles krauthammer, and senator mccain has said it's time to make a deal. right now the republican party is in a position whereas we approach this four-day deadline, august 2, the republican party looks in the polls as if it's subjecting itself to the greater share of the blame. by right now politically heading towards 2012 you have got to ask yourself why wouldn't republicans who have pushed the democrats to the point where they are fighting among themselves. why wouldn't they claim victory? bill: you brought up 2012. 41% want president obama reelected. that's down 11 points since the month of may. how much is this crisis hurting him? >> i think it's starting to hurt them all. yesterday rasmussen had the approval rating for the congress at 6%. it's never been lower. the american people are saying throw these bums out. we are sick of these guys, they are not leading. thebill: the republican freshmae heard out of south carolina. you may get significant movement today. >> for john boehner his whole career is at stake. bill: congratulations on the book. what does the new possible debt limit mean for you? at our web site foxnews.com, click on the debt calculator link. you can enter your annual gross income. tell us what you're share of the federal debt would be. and you shall be stunned to hear the predictions. there you go. martha: we have chilling details in this alleged plot to attack fort hood soldiers again. we are hearing from the person who raised the red flag about the suspect and may have prevented another national tragedy. >> the first red flag was the question about the powder. if you don't know what it is, why are you buying so much. labored breathing ] [ coughing continues ] [ gasping ] [ elevator bell dings, coughing continues ] [ female announcer ] congress can't ignore the facts: more air pollution means more childhood asthma attacks. 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[ jasmine ] i'm going to be aediatrician... and i'm going to make this dream come true. a 100 percent. ♪ bill: it was around midnight east coast time when we found out there will not be a vote in the house on the current boehner bill. now the house is in recess. the republicans will get together behind closed doors in 8 minutes. also 30 minutes from now a freshman republican tea party member from the state of south carolina who has been a no from the beginning will be in our program and we'll find out whether he is a yes today or not. stay tuned. martha: this awol soldier in a texas jail at this hour is awaiting federal charges of an alleged plot to kill american soldiers on u.s. soil. this as we are learning where this came from. a man in a gun store alerted the police that he thought this soldier was acting suspiciously. listen to what this man says. >> i spoke with one of the lieutenants down there and expressed my concerns. and i prefaced it, i didn't want to be a nuisance to them, but i felt uncomfort and with this kid's demeanor and thought it would be prudent for them to at least know about it. martha: that man did exactly the right thing this case. kris gutierrez is live outside the jail in texas. where is this suspect this morning? >> he's being held in the kileen city jail behind me. this morning we are learning new information about that alleged plot. the information is coming to us from texas congressman john carter hotels us the alleged plot includes setting off at least two bombs in a crowded restaurant. a restaurant that would have been packed with fort hood soldiers and their families. and as people ran for cover allegedly ab -- o wanted dabdo wanted to shoot at them. he didn't aallegedly attack fort hood because he wasn't familiar with the army post. it spans 350 square miles. we should point out that ab - ao requested and obtain conscientious objector status. >> i don't want to deploy -- >> reporter: he was arrested on a warrant out of kentucky for allegedly having child pornography on his computer and now faces bomb making charges. martha: what are the people in kileen saying about this. >> reporter: i spoke to a retired sergeant from the u.s. army. he was at fort hood when nadal hassan allegedly opened fire and killed people at post there. he tells me this community really got lucky. listen here. >> every american has to be aware that these kind of people are around. they are just as vigilant as the most village lent of us. and -- they are looking for opportunities. >> reporter: he tells me his concern moving forward is who or what is next. martha: great work by that man. when you feel something isn't right. he did exactly the right thing. you want everyone to be that responsive. bill: in new york they drill it into your brains every day, see something, say something. bill: just when you thought it was safe to get back in the water, there is this. >> nothing is more terrifying than the thought of being bitten by a great white shark. we think of great whites as living far out into the ocean distant from people. it make us feel safe. but nothing can be farther from the truth. bill: i feel better. it's "shark week" at the discovery channel and now it's in hd. martha: so many plans. there is so little time on this whole thing it's make our head spin. we'll be joinedly jon kyl who has been there a long time. we'll get his assessment on how this will all end up. premiering the revolution by lg. the newest release with verizon 4g lte. the first phone pre-loaded with access to netflix's massive movie library. powered by verizon 4g lte for an unparalleled streaming experience. see how mobile entertainment was meant to be seen. only with verizon 4g lte. now get the revolution by lg for $199.99 and receive 3 months of netflix free. martha: we are awaiting a house gop meeting. the members are going to get together at the top of the hour, put their heads together after a very rough night last night. so let's go over to the senate side and take a look at this. south carolina senator lindsey graham sat down with gretta and here is his take on all of this. >> we haven't taken the case to the american people. we have had behind the scenes negotiations that ended and everybody is look around with the august 2 deadline. let's get some time to construct the balanced budget amendment and cut and cap program and take it to the american people and see if some of our democratic colleagues will acknowledge if you raise the debt ceiling we are going to become greece. martha: let's bring in arizona senator and minority whip jon kyl who was in on the earlier negotiations. always good to have you with us. good morning, sir. you know, lindsey graham was very interesting when he was talking to gretta. i'm curious what your thoughts are on this. he we need to put something in this deal. it has to say that contingent upon it is addressing the balanced budget amendment and taking it to the states and seeing if the states would indeed agree to some kind of balanced budget amendment. as part of this deal. what say you, sir? >> my colleague lindsey graham is always interesting and i don't equitable with his desire to get a balanced budget amendment passed and the need for the american people to express their will to members of congress about it. they overwhelmingly support a balanced budget amendment. my problem is my democratic colleagues in the house of representatives say no to a balanced budget amendment and we have a deadline approaching of tuesday. so i'm not sure how realistic it is to demands our democratic colleagues that they change their position on a balanced budget amendment. it may take a while for american public opinion to persuade them to support a balanced budget amendment. martha: it feels like from conservatives if you don't get something baked into a compromise that forces this discussion to happen within the next three months. that all will be lost basically for any gains that the tea party might have gotten in terms of putting this whole issue of this nation's debt crisis on the map and basically it will be seen as a democratic victory and will pave the way for a presidential victory as well. >> this is why it many important for those supported by the tea party -- i have had a lot of support from tea party folks in arizona to think realifically where we are. -- to think realistically where we are. we can't dictate the results. the republicans only control the house of representatives. the democrats never having come up with a budget, never having passed anything out of the senate have been in the position of saying no to every republican idea. the question is what can be crafted that senate democrats will say yes to? they are half of the legislative equation. then you have the president in the white house also a democrat. so my tea party friends, i'm sure appreciate this. we don't control the government. conservatives are not in charge. and therefore we are not going to gets exactly what we want. we have to craft something that leads us in the right direction. one thing about the boehner approach is it does put in a couple ways forward after achieving the immediate savings. it doesn't concede the debt kreeling will be raced through the next election. it says that's depend dent on a committee moving forward for additional savings and what they might have decided last night, though we'll see, is to add something about the balanced budget into that equation. if you add that the balanced budget amendment has to pass, that's a bridge too far in the senate. martha: there is an indication from capitol hill that the creation of a plan "c," a compromise deal that harry reid and john boehner and mitch mcconnell can agree on is no longer happening this morning. is that your understanding or, you know -- are things shaping up or falling apart? >> don't read too much into people talk or not talking at a particular time of day. there are always conversations going on. and the media tend to put it into sting categories. the talks occurred, the talks are off. it's not quite like this up in capitol hill. you bump into people in the hallway and you talk for a minute, then you make a phone call to somebody. things up here happen differently than in the sort of rigid way people think. martha: i want to know what your take is. you have been there a long time. you are retiring after this term. is your gut telling you this is didn't this time? are you feeling there is going to be a deal? and if so what is the time frame on wit many going happen? >> my gut tells me we are in a different position we were in a week ago when i was optimistic that we would avoid the august 2 deadline. but i'm less optimistic. the democrats on the senate side said we'll oppose it no matter what it is. that does not inspire confidence that they will agree to anything. martha: there is senator harry reid and moments ago while we were talking to senator kyl, harry reid said the boehner plan is flawed. we don't know how much we can read into that this hour. senator speak on the floor. bill: all the sharks are out on the hilda. they are lean, they are mean, they are eat magazines and they are coming in -- they are eating machines and they are coming into your homes this weekend. the discovery channel bringing us as close as we wants to get to the great white. >> curly stops feeding and heads right for the cage. she attacks the orange buoys, the only thing keeping the cage from plummeting to the bottom with gregg and nick inside. then sheep gets trapped on top. 2 tons of great white breaks one of the bars and springs the door open. gregg struggles to choice. curly slams down on the weakened cage again and again. bill: and again. jeff, nice to see you. i think this is amazing stuff to watch. i have grown up with a phobia of sharks. and i think it's because when you get into that water -- what you can't see you have no control over and that's where the phobia manifests itself. but now it's shark week on discovery channel. you have technology like hd cameras that can take us to a place we have never gone before. how does that change for you in your job? >> when we started 20 years ago, i have been doing "shark week" since 1991. the cameras were primitive compared to what we have today. the cameras shoot at 1,000 frames a second which slows down a 1-second attack. the way they bite seals and fly out of the water and use their body. bill: what can you learn from that? you think this is an education for us. >> filming sharks and seeing them in this detail tells you how they hunt seals. we found out they are learning how to hunt seals. they grow smarter as they get older. they learn where to launch attacks, when to launch attacks. people write them off as dumb fish but they are very intelligent. bill: one thing you were telling me during the commercial brakes they are starting to hunt in more shallow water. this is the host and jeff is on camera. >> he's right in front of me. >> i nearly lost my balance. >> that is one big shark. >> the shark is swimming straight towards me. it would have been interesting if i had fall in the water. bill: you think this shark story is a success story for biologists. how so? >> you hear how sharks are being overfished, 70 million a year being taken out of the waters. by great whites are increasing in population close to our coastlines mainly due to good management. they are being protected. their prey source is being protected. but don't be afraid with that. because they get along with people pretty well. bill: jeff, terrific to have you on today. you filmed all over the world for this. you can see sit on the discovery channel. it runs through august 5 which is the best day on the camera. my parents celebrate their 50th wedding anniversary on the 5th of august. martha: we are listening to who is basically saying the -- he's going forward with his own senate bill as things are stalled over on the house side. >> because it's the only option. something on table will never give everybody what they want. john mccain, the republican senior senator from arizona has asked this party to compromise. he did it here on the senate floor. he received it is not fair for the american people to hold out and say we want to agree to raising the debt limit. he called the radical republican approach unfair and bizarreo. it's time we hissen to the markets and his to the american people and sit down and seriously negotiate. former senator fred thompson asked members of his own party to come to their senses. quote, i respectfully suggest you rake in your chips and stuff them in your pockets. that was his quote. he believes they already won. halt discretionary spending. no new revenue. i hope my friend senator mcconnell will come to me bits end of the day. my door is open. i'll listen to any idea that is done in a way that prevents a default and dangerous downgrade to our country's credit rating. time is short and that's an understatement. too much is at stake to waste even one more minute. the last train is leaving the station, and this is our last chance to earn a default. a vote on this compromise will determine whether when earn the frightening world of default. a vote for the senate compromise. i ask my republican friends break away from this thing going on in the house of representatives. 9:30 they finally quit. rumors flying around, mr. president. the "wall street journal" said they put too much money in for pell grants. rumors they needed a balanced budget amendment. rumors the speaker was seen in my office. all these rumors, mr. president. it made no sense. and the scariest thing is late last night, leader cantor said from the house, he said, you have three choices. boehner, cut, cap and balance or default. that's the second-ranking member in the republican leadership said that. we need to honor the financial obligations we have as a country. so a vote against a compromise that i talked about -- listen to what x compromise is, mr. president. no revenue, congressional budget office scored 2.4 trillion which will take us to march of 2013. it can do the country's business. there is a giant committee we set up to see if we dock to good work on a more long term approach. and get back to doing our country's business. i repeat, cbo, omb has scored our bill with $2.4 trillion. dollar for dollar as the speaker says he wants to reduce the debt. so a vote against this compromise will be a vote to default on the full faith and credit of the united states. i repeat to everyone within the sound of my voice, we have the framework of a bill. we are going to change it. anyone has any other ideas, come to me. by the time has come to make a decision. time factors are very clear. there is no more time. would i like to wait until tomorrow to see if there is some goodwill that comes from the republican side? of course i would. but i would suggest to my friend on the other side of the aisle, this is a pretty good deal. as fred thompson said they have gotten everything they want, they should put their chips in their pockets and walk away and declare victory. there will be no time left to vote on another bill and consider another option in the senate. this is our last best chance to preserve the character and credit of our great nation. >> our leader yield for a question? i thank our leader. and leader has outlined it well. martha: here we are, folks. senator basically stand and says, it is time for the republicans to stop worry being the fringe in their party. we need to get this business done. i would love to give it another day. but the deal on the table harry reid is saying has been scored by the cbo at a $2.4 trillion spending cuts. this is what republicans said they wanted all along. it would be a better than dollar for dollar exchange in the at the debt ceiling is raised. raised. what you will hear from the other side is the $2.4 trillion cut includes money that has not yet been spent but was budgeted on the iraq and afghanistan wars and a number of things conservatives will say don't add up to significant real spending cuts. the concern for conservatives is as this bill moves forward other things will be tacked onto it once the house has to vote on it and they do a final conference on this bill, it's possible you could see things snuck in there that would lead to revenue increases as well. lots of speculation about what this bill would look like says time has run out. it's time for everybody to stand and vote for his bill. we'll see where this goes from here. this is a big development in many sways that was push by what we saw last night. and it brought us to this stage of the game. let's listen to that sound bite we had from harry reid, then we'll talk more about this. >> the republican plan is not a solution. as experts say, all too soon we would be back in the midst of partisan rankling with our economy once again held prisoner by extremists in the republican party led by the tea party. martha: he's calling the pea tarty extremists. as you well know, he said several of the congressmen elected strongly by tea party support have said this is a difficult vote for them and john boehner did not get the votes he need to pass this bill, anywhere from 2-5 people have not come over to support the boehner bill. bill: one of the words he used was bizarro. that came from senator john mccain. it took a lot of heat from tea party members across the country. sharon angle is one of them. she'll react to that. house republican members meet in private to talk about the debt ceiling bill. the house this recess for the moment. south carolina republican congressman tim scott will be in that meeting. he will be with us before he goes into that meeting. up to now he has been a no. will he change his mind? you will find out right after this. ma where do you go to find a busess backed by the superguarantee®? only& suonline.s®. on your phone. or in the book. go to superpages®. and let the good guys save the day. >> the republican plan is not a solution. as experts say, all too soon we will be back in the midst of partisan raging with our economy being held prisoner by extremists in the republican party led by the tea party. martha: there you have it, calling the tea party extremists. we are awaiting 10:00 a.m. meaning the capitol hill. you can see the live shot on capitol hill. very 10 this morning there. joined now by south carolina congressman tim scott. he is a freshman elected with strong tea party support. we do appreciate that congressman scott. good to have you with you this morning. it has been said that it is this group of south carolina congressmen versus the world. you are a very tight group. you have been holding firm to your tea party values on this. is there anything that's going to happen that is going change your mind and will this vote on the boehner bill go forward today? >> i hope we do have boehner 2.0. as the bill stand today i'm simply a no. it has everything to do with saving the american dream for the next generation. there is very little we are doing do that will pass on to the next generation the american dream. i was born in a single parent household with a mother who had to work 16 hours a day at times. i'm thinking about her. i'm thinking about those who work at the factory 12-14 hour a day in the heat so their children can go to college and have a better future. martha: i have a couple quick questions. boehner 2.0, what would that look like to you? >> we have no balance. i'm hoping we have something thatter than currently today. i'm hoping for more than what we have today. whatever we send to the senate, senator reid already said it will be dead on arrival. so we to make yourer. >> in the strongest negotiating position. martha: are you thinking no matter what you send will be dead on arrival so that why you are sticking to your guns and saying it doesn't make any difference. i want to be true to what the people elected me from south carolina to do so i don't care if the boehner passes. is that where you stand? >> what we do care about is our leader. we are very much in the corner making sure our speaker has the opportunity to have a victory on a bill that leaves the house. we want a bill, though, that is not only a good bill, but we need the best we can possibly have. no one like this bill. boehner himself said this bill has challenges. but the question we are asking is the senate has done nothing. the white house has done nothing and this is our second attempt. martha: you have got a lot of people out there, congressman boehner included and senator jon kyl and political thinkers like charles krauthammer who are telling you you are fighting the wrong battle right now. you already won this battle. you achieved something that has been never achieved before. there are no revenues added. and you have made this ground, you need to sort of move towards the next election and think about what you can get in the big picture. why does not not hold any water with you, congressman? >> i think it does hold water. the on question is. you look at a & p and mood yims, the virtual certainty of downgrading our debt is the current plans we have on the table do not address the long-term spending. if we find ourselves in this position at the end of this year we are not going to be able to look our constituents in the face and say what we did was good enough. that is unacceptable. martha: congressman tim scott, very good to talk to you. good luck to you all. bill: everybody around the world watching this. the dow is down triple digits. it's since come back. we expect premarket trading to be down 140 points. it went that way. but we are seeing a little bit of a recovery. watch that. and senate democrats taking heat for their own debt plan. paul ryan calling harry reid's proposal a bunch of gimmicks. back to the floor of the senate after this. motorcycles, boats, even rv's. nobody knows where he got his love for racing. all we know is, it started early. casey mears, driver of the number thirteen geico toyota camry. geico, saving people money on more than just car insurance. like many chefs today, i feel the best approach to food is to keep it whole for better nutrition. and that's what they do with great grains cereal. see the seam on the wheat grain? 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martha: martha maccallum. bill: great to see you again. martha: great to see you. bill: almost look like each other. good morning, i'm bill hemmer. and you thought the big vote was coming last night and, so were we, it was postponed and, we are four days away from the threat the treasury department says of a potential default on august 2nd, raising the risk of all of the talk of economic catastrophe. and the white house press secretary, jay carney was asked about that late yesterday. >> the measure the speaker of the house put forward, would almost certainly require this -- all of us to go through this again before the end of the year and the most important economic season in the country, and at a time when people don't want to worry about whether or not their interest rates will go up... martha: you heard that from jay carney and we need a deal so people's interest rates will not go up and neil cavuto joins us live, and, look where he is, in the middle of all of the action this morning on capitol hill. he's senior vice president and anchor and managing editor of the fox news channel and fox business network. and he's a very important person! good morning, neil, good to see you. >> i wish that were true, martha. martha: you know it is, sir. >> how are you. martha: i'm doing great. but we're watching this and you are watching it from right there and it is quite something to see how dense thintense things are feel like one second they'll get somewhere and then it is falling apart an jay carney reminds everybody the latratings agenci may have a different take, even if we get a deal. >> and we have spoken to a number of stings analysts over the last week who said, if it is a bad deal, the downgrade is still a distinct possibility. and, it is interesting to note, though, if we see such a calamity coming, the markets have a funny way of showing it. i know we have focused on the 94-95 point drop off on the dow now but i want to move people's eyes to the treasury market without getting too arcane we have not seen a huge sell off in people who own treasury bills or treasury notes and if anything the securities, if you believe it, the prices have gone up and when the prices go up the yields, rates actually go down and that anomaly has been going on today. in the face of much weaker than expected news, i think you guys got into this, we have a very depressing read on gdp in the latest quarter, 1.3%, much weaker than thought and the prior quarter, a gain of 0.04%, and, very weak, very, very bad. so we have really, this slowdown, moving the stock market, and, prompting people to seek out a safe haven and ironic

s&p, moody's and fitch. fitch has been relatively silent, but both s&p and moody's have said it's entirely likely 245 they will downgrade the u.s. credit rating. the u.s. has had aaa rating since 1917. now, these rating agencies are important because what they assign your debt determines how much interest you pay on your money. those countries that are the lowest risk or companies that are the lowest risk pay the lowest interest, they have the highest credit rating. so it's important to know what they do because if they do downgrade you, there's a chance, it's not entirely sure, but there's a chance that the u.s. will then pay more to borrow and other people will look at other places to invest their money. >> and speaking of investors, the concerns over a possible ratings downgrade has weighed on wall street in recent days and sxh l. some experts say that the markets will take a huge hit if the downgrade actually happens. >>> deals on paper are one thing. actual votes are quite another. and the question isn't whether leaders like boehner, reed and mcconnell can close the deal, it's whether the base on either side will thet let them. jim acosta explains. >> reporter: the show down over the debt ceiling has stretched the capitol to its extremes with tea party republicans pulling on one side and liberal democrats tugging on the other. >> president obama, quit lying. >> reporter: joe walsh posted a video on his house website arc accusing the president of lying about the possibility that social security checks could be delayed if the country goes in to default. >> that's not being truthful to the american people. >> is it appropriate to say the president is lying? >> again, i didn't call him a liar. in that case, he lied. >> you're basically calling him a liar. >> and i'm not going to walk back from it. >> reporter: but back in the late '80s, president reagan warned the same thing could happen during his own debt ceiling standoff. >> this threatens the holders of government bonds an those who rely on social security and veteran bin fits. >> reporter: sheila jackson lee has suggested republicans are sticking to the president because of his race. >> why is he different? in my community, that is the question that we raise. why this president? >> do you think it could be racial? >> well, let me say this. i'd like to get past the personal and i think -- i pose the question and i think those individuals need to answer the question. >> is it a fair question? >> i think it's a fair question. >> reporter: instead the reason may be pure politics. when george w. bush was president, the congress voted to raise the debt ceiling seven times. so nearly every occasion, dozens of republicans including many of today's gop leaders voted yes. >> i have never seen anything like this. i think it's very scary and very embarrassing for our system of government. >> reporter: alice rivlin says president obama is also to blame for walking away from the recommendations of his own debt commission. >> i think everybody missed an opportunity, both the president and the leadership of the congress. >> reporter: in part, that's because the leaders aren't really leading. one side of congress is answering to conservatives who won't give on taxes. the other won't touch entitlements. it's no wonder they're getting nervous. is it getting scary up here? >> it's pot to the point of being scary yet, but it is heading in that direction. >> reporter: adding to the polarization in congress is the fact that you have a steady stream of centrists leaving the capitol in recent years. the latest democrat mike ross, he's one of the last blue dog fiscally conservative democrats to announce that he is retiring. and republicans up on capitol hill are predicting confidently 45e won't be the last. >> and the tea party has a rally set for this afternoon. what's the message there? >> reporter: well, it's going to be interesting to watch because as you know, many of these house lawmakers coming out of the tea party movement have been very instrumental in recent weeks. we'll be hearing from several of them up on capitol hill today, including perhaps a presidential candidate in herman cain. so this will be attracting a lot of attention and the message up there is going to be to the gop leadership don't let us down, don't receipt tlet the tea part. it is a very big dynamic at play in these debt talks. >> jim acosta, thanks. >>> should congress fail to raise the debt ceiling, one of the businesses that could be hurt the worst, the auto industry. higher interest rates could make car loans too high for some buyers. at the bottom of the hour, reaction from california dealerships. >>> al qaeda on the brink of collapses. you know that headline is pretty catching. and as americans, it's something we love to hear. but how true is it? the "washington post" is reporting that the cia and other counterterrorism agencies are convinced that killing oath b osama bin laden plus years of drone strikes are soon to make al qaeda terrorists extinct.atha bin laden plus years of drone strikes are soon to make al qaeda terrorists extinct.th osa bin laden plus years of drone strikes are soon to make al qaeda terrorists extinct.h osam bin laden plus years of drone strikes are soon to make al qaeda terrorists extinct. osama bin laden plus years of drone strikes are soon to make al qaeda terrorists extinct.osama n laden plus years of drone strikes are soon to make al qaeda terrorists extinct. live and work this islamabad. do you agree with this? >> reporter: well, there's a lot of people in washington especially right wing groups who are still convinced radical islam is the greatest threat to america and for someone to say al qaeda is not a threat, they'll say that's foolish. but i think the "washington post" report is accurate and i don't think it says anything new. based on what we've seen over the four years we've been here, al qaeda as we knew it doesn't exist exist more. and if it does exist, the overwhelming evidence shows it's in shambles, and doesn't have the capability to wage a global strategic war against a super power like the u.s. even so, for the past ten years ever since 9/11, washington has bombarded the american public with messages that al qaeda is a global army, a global network with hadd shadowy sleeper cells. the problem is there hasn't been any hard evidence to substantiate that. this year a number of u.s. officials came out and said the number of al qaeda operatives in afghanistan is in the double digits, less than 100. but the best evidence is looking back at the past it ten years since 9/11. al qaeda has not killed a single u.s. citizen on u.s. soil. they've been linked back to some plots and plans that have been foiled, but even those plots and plans like the underwear bomber, no one's verified that they're linked back to the organization created by osama bin laden. so you put all that together and i think you see why a lot of people are starting to say al qaeda is on the verge of collapse. and we're reporters, we're not here to give opinions, but if someone in america were to ask me if they should be worried about al qaeda, i'd say there's a lot of other things to be worried about in america right now, like the economy, jobs and this budget deficit and a government that can't seem toul we haven't had another 9/11 thank god. so something is definitely going right. reza, thanks so much. >>> this is another story that's trending really high on cnn.com. zain verjee, we're talking about this 14-year-old kid charged in a mexican court, known on the streets as the cloak. the murderers are gruesome and it's one more child recruited by the cartel. >> it's really unbelievable. first of all, he's only 14 years old. and the murders as you say totally gruesome. he tortured and beheaded at least four people. he was asked how did you execute them. listen to his response. >> people are also finding outrageous that he only gets a three year sentence in a correctional facility because of his age under mexican law, that's the maximum that he can get. he alsos h has to pay a $400,00 fine. the legal proceedings were closed to the public again because he's only 14 years old, but prosecutors called about 43 witnesses and he had zero witnesses. the people described him in the courtroom as being pretty calm and pretty relaxed. there are also report that's tried go to tijuana so that he could flee across the border back to the u.s. but this is really just something that underscores the fact that drug cartels are beginning to recruit and use teenagers and kids to do their dangerous dirty work. >> they pay him a lot of money and they give him a bunch of false hopes and we see what happens. >> right. exactly. and it's just becoming a more pervasive situation as the drug cartel situation spirals out of control. and this is a really disturbing element, this level violence. and the degree of youth also now being recruited. >> zain verjee out of london. thanks. sgloot army's flagship hospital closing its doors after more than 100 years. we'll talk to one of our wounded warriors, one of our heros. he's back on his feet thanks to the folks at walter reed. that's at the bottom of the hour. . >>> plus are you ready for football? 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[ professor ] good morning students. today, we're gonna... >>> sad news across country. police in utah say that jarrett speedy peterson has taken his own lfr. you may remember last year in vancouver, he owon the silver medal in the free style event. he was just 29. >>> in memphis, kids will go back to school despite the money war. the school board threatened to delay classes until it got 55 million buckses from the city. overnight, board members decided to let school start if the city meet as few conditions, including a $12 million payment by august 5th. >>> and in seen nick, south dakota, a saloon, dance hall, train depot, even a jail can all be yours for under 800 k. you probably could be the mayor and sheriff, too. the 12 acre town about 50 miles east of rapid city is for sale on buy scenic sd.com. put in your bid. >>> we told you about walmart, the store known for doing everything in a big way. now it's got a new strategy. everything possibly in a small way. >> exactly. what a change, right? and depending on where you live is where you'll see these sort of smaller walmart stores. one is opening in chicago today. it's wacalled walmart express. it sits in about 15,000 square feet. that's about the size of a walgreen's. but the average of one of those super centers is 185,000 square feet. so think of it this way. the one in chicago is the first walmart express to open in an innercity area. and they say it's a big test to see if the small format works. and if it's successful, we could see the express stores open in other cities. we've already seen it in rural areas in arkansas and north carolina, and keep in mind of course these stores aren't going to carry the full product line that you see in the super stores. the smaller ones will family size food, health and beauty products. >> so what's the deal, is walmart downsizing? >> it's not downsizing. what it's trying to do is try to stay competitive, trying a new strategy. because the fact is walmart sales have been dropping for about two years. also opening up a super center can be tough in a big city because there's less space available. also we've always reported on this, all the opposition from local businesses. that's led to zoning restrictions. so this is a way for walmart to get into the big markets without making a huge splash. >> all right, a quick check of the markets there. >> we are in the negative column. the dow down 102, nasdaq off by 48. investors still waiting on a deal yet on the debt ceiling. investors getting acts nervouses about this. they are hoping for one, so the selloff isn't huge. we also got a down beat durable goods orders report, not making investors too happy today. >> allison are than, thanks. >>> it can be tough it find a job, but you can give us your 30 second pitch right here on the air. tell us why someone should hire you. send us an e-mail to 30 second pitch at cnn.com and you may get a chance to make that pitch right here on the cnn newsroom 10:00 a.m. eastern time. >>> the debt cry snis washington, the cost may be driven home next time you shop for a car. we'll explain. >>> also, alec baldwin's tweet-a-thon. we'll tell you what he revealed to fans. >>> and don't forget if you're walking away from the tv, it doesn't mean you have to stop watching. you can get cnn streaming live on your phone, computer, or maybe your ipad like i have up here. check out cnn.com/video or just download the app and go. you name it. i've tried it. but nothing's helped me beat my back pain. then i tried this. it's salonpas. this is the relief i've been looking for. salonpas has 2 powerful pain fighting ingredients that work for up to 12 hours. and my pharmacist told me it's the only otc pain patch approved for sale using the same rigorous clinical testing that's required for prescription pain medications. proven. powerful. safe. salonpas. >>> alec baldwin going on an hour's long binge on twitter. some of the details, pretty revealing to say the least. "showbiz tonight" host a.j. hammer live in new york with baldwin's tweet-a-thon and more going on in the entertainment world. hi, a.j. >> hi there, kyra. you know you have a lot of time to kill when you're working on a movie set. it does look like alec baldwin is having fun with his more than 220,000 followers on twitder. alec is on location in roam shooting a woody allen fill and while he's there, he's been taking questions from all of his fans. and he's been posting some very interesting answers. let me run down for you a bit of what i've learned. the film he's done that he's most prowl of is the hunt for red october. his first movie crush, racquel wel welch. and his favorite republican, teddy roosevelt. here are other notable questions he's been asked of course the perennial boxers or briefs. his response was a thong. we assume he's either kidding or very uncomfortable. one fan happened to ask why are you so sexy? his response was a witty due to the generosity and blurry vision of people like you. so, kyra, if you've ever wanted to ask alec baldwin a question, get on twitter. >> you and i should come up with a couple. he's a piece of work. a yat sense of humgreat sense o. hugh hefner's ex-fiance is spilling more than just the beans. >> yeah, hefner's run away bride crystal heiress decided that the howard stern show was the place to kiss and show. she said the world's most famous playboy doesn't quite live up to his reputation in the bedroom. the almost wife said that sex lasted, and i'm quoting here, two sends. harris is 24. she jilted the 85-year-old hefner a few days before their wedding and went on to tell howard stern i'm not turned on by hef. sorry. she also said they had sex just once and she's never seen him naked. which makes you wonder why she accepted his proposal in the first place. i do need to report that hef has just responded on twitter. this is what he posted about all this. crystal lied about our relationship on howard stern, but i don't know why. is she trying to impress a new boyfriend? so be they truth or lies, we now know everything you have been wanting to know about what may or may not compago on in the pl founder's bedroom. >> you know what, i want to keep the image out there. i don't want all those details. the rumors about the caves and all that, let the legend live on. that's what i say. >> exactly. >> well, if you want all information including all those scathing details on hugh hefner, a.j.'s11:00 p.m. every night on our sister network hln. >>> the nation's debt crisis, washington boggs down, you may pay up. we'll go to a car dealership for some of the hidden costs of the deadlock. sure, but let me get a little information first. for broccoli, say one. for toys, say two. toys ! the system can't process your response at this time. what ? please call back between 8 and 5 central standard time. he's in control. goodbye. even kids know it's wrong to give someone the run around. at ally bank you never have to deal with an endless automated system. you can talk to a real person 24/7. it's just the right thing to do. excuse me? my grandfather was born in this village. 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is reasonable cuts, similar to what moody's and s&p are asking us to do so this is not a partisan bill. >>neil: but it is weird whoever arranged the meeting with the s&p folks, what they will say is we risk financial armageddon if we default, and the aaa credit rating goes away, association obviously, i would assume it was meant to scare republican members who were there. >>guest: i don't think so. if you read the statements we have from moody and standard & poor it says if we raise the debt element without credible, significant long term deficit reduction, they are going do lower our bond rating so they are not after us just raising the debt limit they know we have to do this. >>neil: all right. putting meat behind it. you have been a critic as you have written in your book, about this sort of facade. when we constantly raise the debt ceiling. we are in this jam because we keep doing this. you go back through administrations, democrat and republican, 17 or 18 times, through the reagan administration alone, to what end? the debt keeps piling up, regardless, and i wonder ... what we solve with a quick agreement? >>guest: we did not need to panic and

to fool anybody like moody's or s&p and every republican from senator lindsay graham considered a moderate by some say we can't vote for this. >> why do we listen to moody's and sey're the same organizations that got us in trouble with the subprime thing, remember? and triple a rating on the mortgage debt the day before, it collapsed. why listen to them? >> ok, that's one thing. but also, the big political question is which party would be held responsible. if the debt talks collapsed, if the august 2nd date comes and goes, if somehow the u.s. inches closer to default, which party is held for responsible? cbs news released a poll yesterday that had some stunning results and that is, apparently, 71% of the respondents and by the way, that's a little suspect which we'll get to in a moment say they would hold the republicans in congress more responsible than anybody. only 48% say they would hold president obama responsible. now, the reason it's a little suspect is because they polled adults rather than likely voters or registered voters and if you don't vote, you know, you sort of don't have a say, brian. >> because the children were at the pool. i mean, that's cle

s&p 500 giving up 7 and the nasdaq down 17 unsornty wb, what else, the debt ceiling weighing on stocks. the market expressing concern rating agencies like s&p and moody'smerica's credit rating. that fear driving another nominal record high, gold. gold up 8% this month. and there were pockets of strength in stocks particularly the tech secretary perp apple clutching $400 a share for the first time and hewlett-packard winning a $1.1 billion i.t. contract with the department of justice. finally two were reports out after the closing bell. netflix shares tumbling after missing on techs and that is it from cnbc, first in business world wooi worldwide. now back to "hardball." >>> welcome back to "hardball." as we inch closer to the iowa straw poll disaugust -- coming up. august 13th, i believe. the republican presidential field is as long as ever but no loesser to generating enthusiasm seen in elections past. how is the gop not found a compelling candidate for all of thoseç donors and they're base out there? michael steele, former chair of the republican committee and now an msnbc political analyst and well received. and working out of the center nor americ

and he is not wired that way. alisyn: you know, as we just reported s&p said they were considering a downgrade of the u.s.'s rating. moody's also said something interesting, they were considering a downgrade if the debt debate didn't go forward if the debt ceiling weren't raised. now they are saying something different which is they may downgrade the rating any way if they've lost confidence that the u.s. can actually tackle its budget problems. what does this mean if we're downgraded from a aaa rate stph-g. >> it means we'll pay higher interest rates especially on our 30-year mortgages -- excuse me on our 30-year credit securities. fanny mae and freddie mac will pay a lot more for money as well. they are guaranteed by the u.s. government. mortgage rates will be higher. and that will mean the housing market won't recover any time soon, or sooner than whatever it will recover. so it's very dill louisian dill. i was amused just now by what nance pelosi said, that's the way meetings with presidents end. check the constitution, it's the house of representatives that decides how much the people spend through their government, a

moody's, s&p and fitch have all threatened to downgrade america's rating. from aaa, the most secure and stable in the world, s&p suggested last week, to d, to junk bond status. mr. president, i suggest america is not a junk bond nation. it puts us at risk, as a nation, as a people, as an economy. when we are mentioned in the same sentences as ireland, as greece, as italy, as countries currently wrestling with fundamental failures to meet their obligations as a country and we are better than that. all of us in this chamber, all of us, mr. president, are challenged to come together and to put our economy and our country back on solid footing, to restore certainty to the markets, to give confidence to retirees, to families raising children, to small businesses about getting serious about putting a plan on this floor next week and passing it. because, frankly, if we allow this country to default on its sovereign debt, to fail to meet its moral commitment, both financial and to the people of the united states, the consequences will be desperate and lasting. mr. president, i suggested a few weeks ago that we should