>> charlie, i think in the end, churchill's doctrine that the unitedtates does the right thing after exhausting all of e alternatives will probably play out here too. >> rose: but the grand design is off the table, it looks like. there's no longer goi to be a $4.5 trillion deduction over 10 years. >> it certainly looks unhikely. and that's too bad. but let's distinguish degrees of bad. i still am confident, as the president has said, as senator mcconnell has said, that a default will be avoided. what the deal will be that will avoid a default is in some sense not the most important question relative to making absolutely certain that we avoid a default. that has to be the first priority. for me. second priority is making sure the economy grows. third priority is, which we need to address now and we're going to need to keep addressing over the next few years, is, bringing the level of spending in ou country d the vel of revenues in our country back into balance. >> ok. fair enough. what does larry summers think is the red line in which this administration, because it has made compromis

increase the debt ceiling with a view to avoiding a defect -- a dault, which would be terrible for the unitedtates, which would be terrible for the economy at large. >> rose: with an assessmt ofthe. >> it's going to be august 2nd or 3rd, they'll have to do something. if they don't, there's going to be a crisis. the general perceived wisdom is as of today somehow they will avoid that, but what they will do will be very much on the cosmetic as opposed to dealing with the long-term structural problems. >> given erything we've seen over the last number of elections, we are unlikely to see either party have enough strength coming out of 2012 to be able to do what they say we want to do -- they say they want to do. part of the problem we're running into at this moment is that the republicans have overinterpreted the mandate from 2010. so we will have a big debate in 2012. there's no question about that. and an important debate. but i'm not sure that the voters will resolve it finally so that whoever is in power in 2013 can be able to go in the direction that they say they wt to. >> if you don't get the

i think the asians want to see the unitedtates engaged and, by the way, they want us to manage the relationship with china in a positive constructive way. >> rose: can the chinese fear that we're... want to be too big a player in the region and looking the secretary speech in vietnam, for example? >> that's a gd questionnd one that's debated in china and i'd answer it this way. the chinese recognize-- and i've spent a lot of time with the leaders of china over the last too and a half years and that's a very interesting article published boy their state counselor and for your viewers who dot have the chinese foreign ministry on their list serve, you can rea about this in the last chapter of henry kissinger's book "on china." a fascinating discussion. >> rose: he's the most prominent person in chinese foreign policy and he was a participant in the dialogues. >> exactly. so there's a debate in china about this. but i think this is the discussion we have with them. >> rose: okay. >> the united states for over half a century has been a force for security and stability in asia and indeed the platform

cost structure and the agreements we had we hadÑi made with usa, we uld not make kawrltzçó in the unitedtatesit up, e weren't making cars them. we wereñr losingÑi money on alle brkn and a the models. and my first forecast thatÑi i shared in 2006 was a $17 billion loss for the year for 2006.çóñr plan andñr we needed to mov decisively. >> charlie: there's a story which has been repeated often. you're in a meeting with some of the executives who report to you and you saido em, are we doing anything wrong or mething like that. and they nobody raised their hand to say yes, we've got a problem. and you said how can you be losing $17 billion and not have a lot of problems, is that correct. >> exactly, charlie. if i could share a little bit about the story, it kind of shows you the culture change around ford. we had a comprehensive brand to focus on the ford brand. five year plan to profit the growth. we divested all the other brands, we focused on ford and lincoln. we decide to do have a full family of vehicles, small, medium and large. every one of them would be best in class in terms of quality, f

you know, the unitedtates is in that catory but canada, germany and believe it or not some developing countries such as brazil have. cleaner dirty shirts in terms of their balance sheets and ability to grow going forward. >> we have all seen this paradigm shift to th east to asia in terms of economic power. is all that we are going through in europe and the united states simply going to accelerate that ship? >> i think it is. and i think that it's also going to change the perception of what is a safe asset. it's interesting that bill mentioned that. the idea used to be that advanced economies always were the safe asset, the aaa rated ones, they were safer. is is fast changing. if you look at the budget deficits, the debt loads, some of the big emerging economies, better than anything in the rich world and i think we are beginng to see a very profound reassessmentf what is a risky asset. >> i myself am not certain. i'm not sure asia can decouple. >> can i decoup wheel ever happens to u >> we have export lead economies. a lot of the investmen is set towards e export sector. >> if the ma

clinton was president of the unitedtates we had a 62 -- $62.9 billion surplus. now the gentleman makes the point that spending is out of control. the fact is, as the gentleman clearly knows, that when you were in charge of the house and the presidency and the senate you increased spending by more than was increased during the clinton administration by a percentage on an annual basis. so that i'm glad to hear that ur side now, without fail, talks about spending being out of control. as a matter of fact, i have a feeling if your side was spending five cents would you think that we would need to cut an additional five cents in revenues so that we could not pay the bills. because that's why we ran up $6 trillion in deficits you did not pay for what you bought. i'm with those who strongly believe we ought to pay for what we buy. but i also believe that we ought not to put this country on the brink of financial chaos and bring us down in the eyes of the world because we don't extend our debt. now very frankly i think we'll pay for what we bu we call that taxes. whethe