>> what do you think of when you see at tree? a treatment for cancer? alternative the fuel for our cars? do you think of hope for the environment, or food, clothing, shelter? we do. weyerhaeuser, growing ideas. >> rather than devise a plan of their own, liberals in congress simply want to raise taxes. >> what a sham, what a scam.

>> this week on "inside washington," a lively debate over the u.s. debt ceiling continues, but the clock is ticking. >> and this must act before august 2. >> how about amending the constitution? >> it is not a theater. we are the only ones who have a plan. >> gang of six has a plan, at 2o. the woman who dreamed up to the consumer protection agency is passed over for the job. >> i threw rocks before i got to this town, and i am not through now. >> rupert murdoch call before a committee of the british parliament. >> do you accept that ultimately you are responsible for this fiasco? >> no. captioned by the national captioning institute --www.ncicap.org--

>> here is the deal -- as we record this program, we don't know how the debt ceiling business will play out over the weekend, but we have to put a program on the air, so here goes. president obama said this week that he hopes to elevate the tone of political discourse in washington. >> the way we run campaigns these days, the language used, the demonization of the other side, i think that has broken down some of that trust here in washington. >> anyone who witnessed his reckless spending habits over the past 2 1/2 years or sat across the negotiating table from him the past few weeks can be forgiven for being skeptical of his recent attempts to come across as a fiscal moderate. >> that is senate minority leader mitch mcconnell, who has made no secret of his hope that barack obama becomes a one-term president, but as mark said last week, at least he is honest about it.

some democrats are angry at the president and his people, some republicans are warning boehner, you better hold the line. how is this going to play out, charles? >> if i knew i would be rich. [laughter] the most likely outcome -- it is probably impossible to get a grand bargain. the democrats are not going to give it in to real structural changes in entitlements, you're not going to get republicans, at least right now, to have increases in taxes. what is most likely to happen is that we will end at the last minute with the mcconnell plan, essentially a punt and not that bad. it is a democracy and people will decide in the next election if they 18 democrat or republican, starkly different visions of how the country is run. >> colby? >> if it goes to the mcconnell plan, it will not be the end of

eight. it will become a real political fight, because every time the president moves to increase the debt ceiling, he will get hammered for doing so. we will see a prolongation of this kind of political fight we have seen so far. it is not going to be pleasant. >> nina? >> feel like i'm watching "deal or no deal," but i agree with charles that at the moment, it feels like the republican base, the freshman class will not allow boehner to do the gang of six plan or at least a vote on the gang of six plan. democrats will not allow obama to cave in and only do cuts without any revenue enhancements. that leaves just one thing, mcconnell. >> mark? >> i do not disagree with charles. >> then i retract.

[laughter] >> i am hoping to embarrass charles by agreeing with him. when you have something of this magnitude and urgency, you have to give everybody involved a sense of ownership. right now the only individuals who have a sense of ownership are john boehner and eric cantor, the republican leaders to, to their credit, have elevated the republican house to the key position in all these deliberations with barack obama, president of the united states. republicans in the senate, democrats in the senate and democratic house members feel excluded and are angry, and that is a problem for any grand bargain. >> but i do think for the republicans a is a missed opportunity. they wanted to use the debt limit to get something. if you go with mcconnell, it is essentially a punt. what republicans lost by not agreeing in advance on a single plan and having the president put real numbers on the table,

which he has not done -- what republicans in the house could do -- i talked about this in my column -- half a trillion dollars in cuts, half a trillion dollars in raising the debt ceiling, which gives you a year in which you could negotiate a grand deal. if that past, it would be very hard for the president to explain why he vetoed it and put the country to default. >> i disagree with charles. i will defer to the gentleman -- >> i will do it part of this agreement and leave the rest to you -- part of the disagreement and leave the rest to you. [laughter] unless the deal includes some increase in revenues, there will be no deal. there is no way that the senate or the president will accept a package from republicans without any revenue increases. i yield the rest of this ot

mark. take it away, mark. >> to the best of our knowledge, as we meet here today, the pending deal is cuts of the some $3 trillion, to be followed by tax increases at a later date, the player to be named later. this is a total reversal of what democrats have done in the past, which is we will get out until i now and it may mean budget cuts later, which somehow they never get around to any has been to their advantage. this is not in the congressional democrats' interest, and there is a serious shortage of trust up there. why we are making all the cuts right now with the prospect and promise of revenue increases, tax increases later with a republican congress that is opposed to them i think is pretty dubious. mr. shields yield the balance of his time to the gentlewoman from

npr. [laughter] >> mr. shields is right, you have to get the democrats to have a deal in the senate. there are 80 republicans in the house who say they will not sign anything with any tax increase in eight. the democrats can always filibuster a deal in the senate. you have to have a combination of taxes and cuts in order to get it passed either body, and then to get it to the floor, and you have to filibuster in the senate. >> house republicans say they have a solution -- cut, cap and balance. at what point does a reality rear its head with some of these gonna, becausei t ain't happen?

>> i love the way you pose an objective question, att ributing insanity it to a republican plan that passed the house. this is a fair and balanced program. >> well, we do our best. we don't have the resources of our barack and fox news -- [laughter] >> but on a shoestring you introduce a lot of bias. cutting is a good idea, capping is a good idea. the balanced budget amendment is a problem, i have a problem with it, joe biden, who is a democrat, supported one in the 1980's. -- the 1990's. it is not a good idea to introduce at the last minute. >> the cap is 18.5%.

model reagan's 8 budget -- ronald reagan's 8 budgets or 22% of gdp of the economy. the gipper would be drummed out of the party -- >> 18.5% is the average postwar -- >> it is absolutely not. you are wrong, wrong, wrong. >> i blame both parties for the stalemate. >> all the people responsible for this are elected to do their job. if i did my job like that, i would be fired. >> citizens interviewed by cnn on the endless debate on the debt ceiling. 61% believe that if the debt ceiling is not race, the nation will be in more hot water now. 52% believe the president has acted irresponsibly, 33% believe republicans have acted -- 52% believe that the

presidents has acted responsibly, 33% republicans. >> there is a growing sense of disgust and disappointment with the political process, parties and in general. but on who cares more about ordinary americans an average families and is more willing to compromise, the president has the decided advantage over republicans. >> what about the gang of six? is anybody listening to these senators? >> initially there was a positive response in this and it. senators stepped up and said they liked the idea, and were initially smiles from the white house. but then you started to hear from interest groups, the labor groups, health groups, saying that this was going to be hard on senior citizens, devastating to people who rely on medicare. you certainly had anger in the house, this idea.

i think thursday was probably the high point for the low point of this debate. listen to rush limbaugh ranting almost to the point of apoplexy over the grand bargain that may be developed. he is taking phone calls from boehner trying to assure him there will be no deal, getting text messages from cantor, and then you have the democrats on the senate side apoplectic about the deal. >> every time you look at the television screen, there are elderly people standing there in commercials warning, don't mess with medicare, we vote -- >> there is no doubt that the gang of six recommendations are painful but they are not nearly as painful as the alternative being proposed by republicans. if we end up with more severe cuts, the backlash from voters

will be, i think, just enormous. remember this, whatever congress does today, it can undo tomorrow. this is not a constitutional amendment. if there is a huge backlash, it could wreak havoc by making more fiscal irresponsibility. >> charles, how is this playing with independence, which is where the action is? >> there is a lot happening in the interim which all of us inside washington are affected by. in the end, independents will be swayed by how this thing is resolved, not by what happened in the three weeks of the run- up. i think is most likely to be a punt, probably as it should be. obama has a vision of america. he introduced new entitlements, health care, had an increase in discretionary spending of 24% in two years. that is massive. he has that vision of america that is different from the republican idea of a smaller

government, reducing entitlements, living within a budget, because 10% of gdp is our deficit. a is utterly astronomical -- it is utterly astronomical. a punt -- we lose a year and half in solving our problem, and it is such an issue that has to be decided by having a divided government if republicans succeed -- >> i would only offer this pithy thought -- in the year and half of trying to pull out of the worst recession we have had since the great depression, that took a lot of time, energy and resources to try to do that. but we also have operating here such an anti-obama mood that it is difficult to get anything done. for example, listen to rush limbaugh. his concern is that republicans should do nothing to help obama.

there was no reference to saving the country, no reference to avoiding disaster with the debt ceiling. it was a question of helping or hurting obama. >> just to charles, the republicans' last minute battlefield conversion to fiscal sanity was not on display in the last 20 years of republican presidents, during which we had unbalanced budgets in every single one of them. the only balance budgets we had worked with that fellow from arkansas, you remember him. bill clinton. >> there is a problem with this recession and how much cutting you want to do during the recession and what that does to feed rerecession. >> let's talk about republican presidential politics. >> mitt romney has had is an enthusiastic lead all the way through, but second place -- this unenthusiastically all the

way through, but second place it was donald trump, then a herman cain, pete's that fellow, and now is michele bachmann -- pizza fellow, and now is michele bachmann. she handled the charges of the migraine headaches very well, was very responsive, never played the victim card. quite adept on the first time they went negative on her. >> they are coming after her husband because this clinic he runs where he claims he can convince gay people they can become straight -- >> i will put a cautionary note on the way she handled this. >> ok. >> we have not seen at medical records, and those of you who remember a long time ago when paul tsongas did not really come clean about his medical condition, and as a person who

has had a few migraines in my life, i certainly don't think i could be president. if she is really having those and they are not controlled and it happens while she is on the stump, it could be very debilitating to her candidacy. i am not saying it will, i am saying it could be. >> pawlenty tried to get a little ground on this. >> yes, but for the record, there was a statement on the capitol hill physician saying this is very manageable -- >> he is a capitol hill physician is all i can say. >> what are you suggesting? >> exactly what you think. >> paul tsongas had cancer. i think there is a big difference between cancer and migraines. if we are going to hold up the standard of if you have a headache that knocks you out for an hour or two or whatever it that you cannot be president, i think fdr, kennedy who had

addison's disease, and eisenhower, who had a really bad heart, would never be president of the united states, and i am not sure that as a position any of us would want to take. i think her answer was good. based on the evidence -- is their behavioral evidence of this woman not being able to handle yourself? >> just being cautionary -- >> well, cautionary is fine. >> i don't know the capitol hill physician, but i don't think is fair to imply that this is a less qualified individual. >> i am not saying that. >> what about rick perry? >> looks more and more like he is going to come into the race. he is showing in the polls as well. mike huckabee, the conservative a finalist in 2008 against john mccain, has already taken a shot at him, pointing out that if he is going to be the champion of

all traditional values and high morals, why did he, rick perry, endorse rudy giuliani, pro-gay rights new york politician in 2008 for president? there is a preview of things to come. >> was the foot he showed wearing a marcos shoe? i don't think a supporting giuliani is going to have any effect whatsoever on perry. he is not even in the race. the fox news opinion poll that came out on thursday showed romney at 17 and i believe perry at 12 or 13. the guy has not campaign yet. >> that underscores the point that romney has hardly solidified his lead. >> i think it will end up with perry and romney.

>> the consumer protection agency and the controversial woman who dreamed it up. >> nobody is looking out for american families. >> harvard law professor elizabeth warren with abc's jake tapper. the consumer protection act is under siege and behind schedule. wall street doesn't like this, charles. >> how is it working out with 9.2% unemployment? the regulations that are yet to be written on this all going to take years and years and introduce nothing but uncertainty into the market. add obamacare, unbelievable uncertainty. nobody knows what the rates are going to be. you are surprised that businesses aren't hiring? >> the consumer protection agency is not responsible for that. >> dodd-frank bill is -- >> could i finish?

look at your credit card bill -- >> i'd rather not. >> you can see what it costs you if you don't pay it off. this agency is tit make -- is to make us, the buying public, able to see what the costs are and make a judgment as to what kind of mortgage we want, what kind of credit card we want, and it seems that those are eminently sensible. >> elizabeth warren's argument is that consumers are protected buying toys for their children but not in these financial instruments. >> this has played out before. we saw this with the carter administration trying to get the consumer protection agency through, and we had esther peterson in the fight. she survived, but the agency did not. in this case, the agency

survives but elizabeth warren does not. what is next for elizabeth warren? that is one of the more interesting aspects of the story. >> she was passed over for the top for a former ohio attorney general richard cordray -- >> why would she pass over? >> because she could not get confirmed. >> now there is talk she will run for the senate in massachusetts against scott brown. >> this is a perfect time for her to announce she is. we would be happy to mention it on this show. scott brown is formidable -- having been in massachusetts recently talking to democrats who think it will be an uphill race against him. let's make one thing clear about richard cordray, outstanding attorney general of ohio. it is not just elizabeth warren and they are trying to sink, republicans. dick shelby says he is going to

filibuster him. they don't like this agency. >> they at never have. they don't like consumers very much. >> they don't like the revenue stream this agency has. >> that's exactly right, because it gives them autonomy -- that congress not >> let me explain to the viewers out there that this segment is three massachusetts democrats of the elizabeth warren campaign for senate, to a polling place -- >> did you read "the new york times"? >> i liked mark's endorsement of her. >> she would make a good candidate, but so is brown. >> i feel like a sign language interpreter on this show. i have to explain what is really happening. >> this replaces the sarah palin

segment of the show. [laughter] >> this is the most humble day of my life. >> these actions do not live up to the standards our company aspires to everywhere are around the world. >> rupert murdoch and son james before british parliament this week. both apologized profusely for the phone hacking scandal that has engulfed the company. the next day, their stock went up. what did you take away from this, colby? >> that if i were a witness in a hostile situation, i would love to have wendi sitting behind me. >> murdoch's wife. > this is no sam alito's wife weeping. she took matters into her own hands. >> but this is across the atlantic now and the fbi is involved. >> james has already been contradicted by two of his

former top executives saying that he knew far more and misled parliament. i am a little dubious about what the fbi will find. apparently they are investigating possible computer hacking could i have to say, every time i think this scammell cannot get worse, it does -- this scandal cannot get worse, it does. >> this is the imelda marcos of scandals. there will continue to be shoes to drop. this man is humble, modest. this is the despot. i pledge to you, members of parliament, i will find out who is running this company. this is serious and getting more every moment. >> murdochs were serious and had a lot to defend. i thought their presentation was rather good. murdoch runs a company that is

unbelievably diverse, and this one at paper is relatively small part of it. it looked like the committee had sort of accepted his protestations that he was not aware of all of the shenanigans. but what i found really interesting, however, was the way committee conducted itself. here when you have hearings, like that ollie north hearing, the inquisitors are on the podium looking down on the defendant. there it looked like the british parliament cafeteria meeting. a lot more pointed, less pompous, more effective. >> ok, good review. last word. see you next week. for a transcript of this broadcast, log on to insidewashington.tv. broadcast, log on to insidewashington.tv.

its auto insurance customers for over 70 years. more information on auto insurance at geico.com or 1-800-947-auto any time of the day or night. >> the standoff over the debt ceiling turnings toxic.