virginia. and elijah cummings, the former chair of the black caucus and analysis, and chris jeff free lund of digital. i am candy crowley, and this is state of the union. what a difference a year makes, or not so much. last year at this time, president obama was vacationing on martha's vineyard, and that's where he is today. last year he said -- >> a year and a half ago the economy was shrinking rapidly, and the economy is now growing. >> this year he is saying -- >> america will come back from this recession stronger than before. that i am convinced of. >> unemployment was above 9% in 2010, and a year later it still is. more say the economy is getting worse. joining me from michigan, senior obama campaign strategists, david axelrod. thank you for being here. i want to ask you first -- >> sure, candy. >> the president is going to have the new jobs plan and a stimulus that is coming up in september, he's going to announce it. tell us what you know about that, and in particular when we talk about modest adjustments to entitlements, what is that? >> well, first of all, let me say, these are not all new ideas. some will be new and some we already talked about. there are things he has been asking congress to do for sometime, and some of them, for example, extending the unemployment -- the payroll tax cut that was passed in january for another year. that's something that is absolutely critical to do. there are basic things we need to do relative to infrastructure, rebuilding roads and bridges, and that needs to get done. so some of the things will be familiar because he has been talking about them. one of the things that was disturbing to me, candy, was in the last week i saw a spokesman for speaker boehner say we will only pass the new trade treaties and patten reform that the president has asked for, and we will not deal with anything else. how do you let 150 million working people in america get $1,000 tax increase in the payroll tax in the middle of the economic challenges we have but won't touch a penny of corporate tax loopholes or touch tax cuts for the wealthy? it doesn't make sense. i hope over the break they heard from the constituents and are ready to rethink this. >> it seems to me in a sense, what we are hear's from economists and from the white house is in the short term to spark the economy we need more stimulus, including unemployment benefits and you are talking about the roads projects and other things that the economy may need to jump-start itself and maybe start to cut into the jobless rate. at the same time we need long-term deficit cutting. you are trying to do deficit reduction and stimulus at the same time. is that a hard sell? >> well, you put it exactly right. in the short term we need to do things to accelerate -- to accelerate the economy. we have taken big hits in the last six months that nobody could have anticipated, the error spring and the impact on oil prices and the earthquake and what europe is experiencing now has all impacted on our economy and we need to take additional steps to accelerate the economy in the short run. everybody should be able to agree on that. in the long run we also ought to agree to deal with the debt issue. we had a long discussion about it. but we have to deal with it in a way that is smart and balanced and fair and everybody is in, and we're protecteding the things we know is good for the economy, and education and research and development, and yes, rebuilding our basic roads, bridges, waterways, and the things we need to move our goods across the country. we need to have a discussion on both issues and we ought to act. i think people are tired of the games in washington. the only thing that keeps us from acting on many of these things is pure politics. the fact that we can't agree to extend a payroll tax cut for working americans is bewilledering to me. >> you are all putting things out there that you know, particularly the house republicans will not go for so that you can then have that to run on. so you know, there's politics kind of at both ends of this spectrum, is there not? >> candy, i think what you will find when the president unveils the entire program is that there is nothing in there that reasonable people should not be able to agree on. if we make the house republicans and particularly the tea party faction, if we make them the standard, we're in deep trouble. this is the group that almost brought us to the brink of default. one of the problems that i have right now is too few republicans are willing to stand up and say to the group to back off and do what is good for the country and not be so ideology kul and not solve our problems. whachlt is meant by modest adjustments to entitlements which is said to have been included in the package. what does that mean? cuts in medicare? >> again, i am not going to get out in front of the president on this. he has been very clear and clear for months on the issue of medicare. medicare has financial problems and everybody knows it. we extended the life of medicare through the affordable health care act by eight years. but fast upon us is going to come the time when medicare is insolvent and in order to keep our commitment and to make sure medicare is there for american workers in the future when they reach their retirement, we will have to make some, as the president said, modest adjustments, and he will address that. >> let's go through demographics here, and i know you know them better than anybody else. i want to start with something that maxine waters had to say recently about the president. as you know the cbc and other african-american lawmakers complained for sometime that the president has not done something specifically to address unemployment rates in the black community. here is what she had to say. >> we're supportive of the president, but we are getting tired of it, the unemployment is unconscionable. we don't know what the strategy is. we don't know why on this trip that he is in the united states now and he is not in any black communities. we don't know that. >> you are taking some heat from african-americans, and some of the most loyal supporters you have got saying the president goes on the jobs trip and doesn't go to the minority community where the jobless rate is the worst. are you taking this constituency for granted? because that's what it looks like to them. >> absolutely not, and just because on one trip the president doesn't stop in every community doesn't reflect a policy judgment or a commitment judgment on his part. one of the major negotiations in this last debt discussion was how do we prevent those who are poor from being unfairly and unduly burdened by the cuts we have to make, and that's why medicaid and pell grants for students that want to go to college and several other things, and they were cordoned off. those programs are going to disproportionately help poor americans whether they are white, black, hispanic, so they are all geared toward helping people who are in the most vulnerable positions. obviously the whole array of things, when we have a surface transportation program, which is now stalled by politics in the house of representatives, roads and bridges, people are put to work and those jobs are going to be felt in the african-american community as well as other communities. we're fighting for things that will put people back to work. and the community, the african-american community will certainly feel the affect of those if and when we succeed. this is a battle that we have to win. not just for that community, but for every community. there are things we can do to get people back to work. but the other point, candy, as we also have to do things to prepare our kids so they are not mired in a cycle of poverty, and that has to do with education and proving standards in our schools and making higher education more accessible and improving community colleges and making them a training place for jobs and not just a next stop in a failed education pattern. those are the things we're working on as well. they go to the heart of the problem. >> david axelrod, it's always too short of a time for you, but we appreciate what time we could have this morning. >> thanks, candy. good to be with you. when we come back, two leading governors give advice to president obama on how to get the economy going. at exxonmobil we know the answer is yes. when we design any well, the groundwater's protected by multiple layers of steel and cement. most wells are over a mile and a half deep so there's a tremendous amount of protective rock between the fracking operation and the groundwater. natural gas is critical to our future. at exxonmobil we recognize the challenges and how important it is to do this right. a living, breathing intelligence that's helping drive the future of business. in here, inventory can be taught to learn. ♪ machines have a voice. ♪ medical history follows you. it's the at&t network -- a network of possibilities... committed to delivering the most advanced mobile broadband experience to help move business... forward. ♪ try this. bayer aspirin? it's not a heart attack. new bayer advanced aspirin's for pain. it has microparticles and enters the bloodstream faster. works twice as fast as before. did you invent this or something? dr. eric first, from bayer. wow. [ male announcer ] new bayer advanced aspirin. ever since that ol' broom dumped me here. oh, oh. oooh! will love ever come my way? oh my! ♪ i believe in miracles [ male announcer ] swiffer attracts dirt. swiffer sweeper's new, thicker cloths get deep into ridges picking up more dirt, dust and hair than a broom to help leave your floor up to three times cleaner. you sure are a pick-me-up! [ male announcer ] swiffer gives cleaning a whole new meaning. handle more than 165 billion letters and packages a year. that's about 34 million pounds of mail every day. ever wonder what this costs you as a taxpayer? millions? tens of millions? hundreds of millions? not a single cent. the united states postal service doesn't run on your tax dollars. it's funded solely by stamps and postage. brought to you by the men and women of the american postal workers union. ♪ oh, we call it the bundler. let's say you need home and auto insurance. you give us your information once, online... [ whirring and beeping ] [ ding! ] and we give you a discount on both. great! did i mention no hands in the bundler? bundling and saving made easy. now, that's progressive. call or click today. joining me now to givetheir view of the economy, republican virginia governor, bob mcdonnell in the state capital of richmond, and here governor martin o'malley. both men are chair of their governor's association. welcome to you both. >> thanks, candy. >> let me start with you, governor mcdonnell, and ask you what you most need washington to do or not do in this upcoming battle over a jobs package and a deficit cutting package? >> i think it's crystal clear to every american frankly they have to have a course of sustainable spending cuts. we're in debt $14 trillion and heading towards more, and part of that is these crushing mandates on the states, whether it's in environmental areas or the federal health care reform or mental health. we have got 10 to $12 billion of unfunded mandates under virginia. what they need to do is cut spending and lessen the unfunded mandates on the states, because we can't afford it. >> does that mean, just to follow-up on that, you would be opposed to, say, an extension of unemployment benefits that go out the end of the year and an extension payroll tax cut, and all those things would cost money and those are not revenue enhancers, and those are revenue takers, and are you opposed to all three of those things? >> if they are short term things that are done they can demonstrate it will create jobs and promote economic activity -- >> excludeing unemployment benefits? >> i don't think that creates jobs. it lessens the pain. we're down to a 6% unemployment rate in virginia, and so short term assistance is fine. the problem is we need to have things that create jobs, not just promote benefits for people who are not working. people want work. >> governor o'malley, let me ask you the same question. what do you -- what would most help you in the state for congress and the president to do or not to? >> well, i think the most important truth that we need to recognize is democrats and republicans, candy, is that for a modern economy to create jobs a modern economy requires investments. being fiscally responsible is important and avoiding default is important. the governor and i both defend triple bond ratings, and the debacle of driving our country to the brink of default that all of us witnesses last month is not helpful to consumer confidence or investor confidence. what i hope the congress will come back to do is pass bills that make those investments in infrastructure and research and development and innovation, and yes, in the important work of educating the next generation for the jobs that are available. >> you are talking about spending money at a time when we're cutting the deficit? >> i think we need to do both. we need to be -- >> what about tax breaks for businesses? >> i think it depends on the nature of them. if it's something that actually creates and inspires investment and innovation, i would be for it. but, look, i think that we have to also recognize that this deficit is driven, fueled and caused primarily by bush era tax cuts that benefitted the most wealthy among us. that's 55% of the projected deficit by 2019. another 14% is these wars. so we have to be able both to balance our budget, but also make the investments required in a modern economy if we want to create jobs. >> governor mcdonnell would you agree to a short-term spending to try and pump up the economy. seems to me governor o'malley is talking about research and development and education to pump up jobs and some education funds and some infrastructure, road projects to put construction people back to work. any of those unacceptable to you? >> we tried that. martin and i get along great working on things around washington -- >> but you disagree with all that. >> he's a great irish american, just like me, but we tried that, we put little into infrastructu infrastructure, and we put a lot of other spending in that didn't create jobs, and we went from 7.8 to 9.1% unemployment. i disagree with the governor and he continues to blame bush. the president has been trying that for three years. he had two years with a democratic congress and president and did not address the deficit or the debt or a jobs program. here we are three years in the administration and starting to talk about jobs. here is what i suggest. we look at what the states are doing. i had a $4.2 deficit in virginia, and a $2 billion tax cut that governor kaine proposed, and we now have a $545 million surplus, and unemployment is down to 6%, and we're a right to work state and jobs are coming back to virginia. those are the things that will make a difference, not more taxation and regulation and spending. that's not the path to success. that's what this president continues to try and do. >> i won't even ask the question because i hear you starting a question here. >> i just wanted to say, candy, governor mcdonnell is right in one respect. you know, the stimulus did not go far enough. the governor just criticized it for not investing enough in infrastructure -- >> no, i said it invested in the wrong things. >> and that governor accepted every dollar. and we need to invest in infrastructure and the roads and bridges and things that actually get people back to work, and we can do that and balance budgets at the same time as we have on both sides of the potomac. we need virginia and maryland to be creating jobs. this last month maryland had a great month of job creation. on the year we ranked 20th, and virginia ranks 44th in job creation. we both need to be stronger and create jobs. all the states need to create jobs to get our country out of the recession. >> i will ask you both to stand by. we will be right back. up next we wanted to talk 2012 politics, so stick with us. [ mrs. davis ] i need to reach peter, who's falling behind. and challenge janet who's 6 chapters ahead. [ male announcer ] with interactive learning solutions from dell, mrs. davis can make every student feel like her only student. dell. the power to do more. feel like her only student. any questions? no. you know... ♪ we're not magicians ♪ we can't read your mind ♪ ♪ read your mind ♪ we need your questions ♪ each and every kind ♪ every kind ♪ will this react with my other medicine? ♪ ♪ hey, what are all these tests even for? ♪ ♪ questions are the answer ♪ yeah ♪ oh we're back with governors bob mcdonnell of virginia, and martin o'malley of maryland. first to you, governor o'malley. there was an article that we saw that spells out the president's election year challenge. it says the white house's worse case scenario for the economy on election day next year has become wall street's baseline scenario. jp morgan sees gross domestic product growth at 1.5% this year and 1.3% this year, and 9.5% heading into the final days of the election season. how does he campaign? give me more time. it's all the republicans' fault? it's a bad economic scenario. >> what the president has to do is to articulate a concept for making our children winners rather than losers in the economy, and going to congress and fighting for it. there are some things -- >> does he have to be tougher? >> i think what he has to do is have an adult conversation with all of us as americans. we're all smart enough to know that there's a big change happening in our economy. we're smart enough to know when there are changes there are winners and losers. the president needs to articulate as he started to in the state of the union address that in order for our children to have a better shot at succeeding in the changing economy, we need to do what our parents have done in the past and that's to have the courage to invest in our children's education, and invest in innovation and rebuild the infrastructure of our country. you have been probably to communist china, they are out performing us and they are investing in the things that create jobs, and if we are not careful as a nation, and if we continue to engage in the dismantling of all of the things that we used to do together as a people, then we're not going to be able to look at our children with pride in the eyes during our golden years. >> i think you probably heard enough of the democratic response to the economy, and it seems to me that what the white house is going to do this year is the tea party is crazy, and they are not going to do any of the things that governor o'malley just talked about, and they won't invest in education, and will put granny on welfare and that kind of thing. how do you take the harsh edges in perception off of the republican party at this point? democrats are driving hard at republicans have been co-opted by the way conservative wing. >> i think that's very unfortunate rhetoric. we need more civility in politics. martin and i aadisagree on policy, but work well on other issues. we want less spending and a balanced budget and want to keep taxes where they are. that's a reasonable message. but words like dinosaur wing and extremist, it's not helpful to the civility in our country. if you want to look at what is working, i say you look at what republican governors are doing. 9 out of 10 were republicans in the best business climate. and three straiates invested in bonds. and that's a recipe for disaster when we're heading towards the trillions. we're broke in washington and cannot afford the level of spending. infrastructure, yes, and all the entitlements and discretionary spending, we can't afford it any more. >> would you agree with that? doesn't an honest look in washington include entitlements? >> yeah, absolutely, i think we need a balanced approach. >> but that includes cuts in these entitlement programs. >> yeah, sure, and i think the president much to some in his own party has shown a willingness to engage in that conversation, but three different times members of the new era republican party have worked away because of their worship of tax cuts for millionaires and billionaires. we need a balanced approach here. i would disagree somewhat with some of the assertions of governor mcdonnell. if you look at the choices voters made like in florida, and governor christie whose bond rateding was downgraded in new jersey. >> let me turn you quickly in our final minutes to the subject of illegal immigration. the president has said of the 300,000 or so deportation cases now in front of immigration he wants a case by case look and anybody that is not a threat to society and that has not committed a criminal act should stay, and they should just take them off the dockets. is that amnesty, governor mcdonnell? >> i correct martin on one thing. ohio, michigan and florida just had their bond ratings increased because they had the guts to lead and cut spending. so those are the facts on that. we're a nation of immigrants. martin and i share the same heritage. about 100 years ago, i think irish american. we need to have more lawful immigration in the country. and the problem is, this president -- frankly for decades we have not secured the border and enforced the laws that we have in the states and have not come up with a reasonable path to citizenship for people that are -- >> is it okay with you that these folks are being taken off -- anybody that is currently being looked at that has not committed a crime be taken off, and i just need a quick answer? >> as long as we tie immigration to the economic activity, and so we don't compete with americans unemployed, we need to look at that. >> i think people need to pay taxes and obey the law, and secretary napolitano has done a better job of deporting violent individuals, but we need to create a path to citizenship, so great governors like andrew cuomo can build-up their states and create jobs and opportunities for the future. >> you have great governors as well, and let's put it there and leave it at that. thank you both. up next, signs of tension between the nation's first black president and the lawmakers that represent many african-american communities. ♪ [ male announcer ] you never know when a moment might turn into something more. and when it does men with erectile dysfunction can be more confident in their ability to be ready with cialis for daily use. cialis for daily use is a clinically proven low-dose tablet you take every day, so you can be ready anytime the moment's right. ♪ [ man ] tell your doctor about all your medical conditions and medications and ask if your heart is healthy enough for sexual activity. don't take cialis if you take nitrates for chest pain as this may cause an unsafe drop in blood pressure. [ man ] do not drink alcohol in excess with cialis. side effects may include headache, upset stomach, delayed backache or muscle ache. to avoid long-term injury seek immediate medical help for an erection lasting more than 4 hours. if you have any sudden decrease or loss in hearing or vision, stop taking cialis and call your doctor right away. [ male announcer ] ask your doctor if cialis for daily use is right for you. for a 30-tablet free trial offer, go to cialis.com. [ indistinct conversations ] [ hissing ] agents, what did we learn here today? that lint balls are extremely flammable! well, yeah. and that 15,000 dryer fires happen every year! that's why it's important to regularly clean and inspect your vents! correct. where did you get that?! i built it. [ male announcer ] we are insurance. ♪ we are farmers ♪ bum, ba-da-bum, bum, bum, bum ♪ there is nomore loyal group of democrats than african-american voters and know racial group has been more devastated by hard economic times. 15.9% of blacks are unemployment, double the rate of whites. 26% are living below the poverty level compared to 12% of whites. and there in lies the dilemma for the 43-member congressional black caucus, and 42 are democrats and many angry with the first african-american president for not doing more to help the black community. this week when the president was touring the midwest, many of the black caucus held jobs fares in cities with overwhelmingly black populations and unemployment rates over 10%. point made. up next, the former chair of the cbc, congressman elijah cummings of maryland. every day, all around the world, energy is being produced to power our lives. while energy developement comes with some risk, 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 and using state of the art monitoring technologies, rigorous practices help ensure our operations are safe and clean for our communities and the environment we are america's natural gas. a network of possibilities. in here, the planned combination of at&t and t-mobile would deliver our next generation mobile broadband experience to 55 million more americans, many in small towns and rural communities, giving them a new choice. we'll deliver better service, with thousands of new cell sites... for greater access to all the things you want, whenever you want them. it's the at&t network... and what's possible in here is almost impossible to say. whose non-stop day starts with back pain... and a choice. take advil now and maybe up to four in a day. or choose aleve and two pills for a day free of pain. way to go, coach. ♪ joining me here in washington, congressman elijah cummings, former chair of the congressional black caucus and a member of the congressional black caucus. the impression we got over the last couple weeks of things maxine waters have said is that black lawmakers are pulling their punches because so much of your community and constituents are so supportive of him. is that so? >> there's a lot of truth to that. all the polling data shows the african-american community is very protective of our president. and they see him as their son, as their brother, and they see us and are very proud of him. something else is happening, candy. they see -- they believe that he is being beaten up every day by the tea partiers and just about everybody. while in spite of all of his efforts, in spite of their efforts, he is still making tremendous progress. they're very protective. there's two parts. on one hand, they are protective, and on the other hand almost every african-american i have talked to said they want him to fight and fight harder. they believe that he sees the possibility of some bipartisanship from the republicans, but they don't see it. their attitude is if the republicans are not going to work with us they will go it alone and stand up, and don't back down, period. they are not going to give you anything anyway. >> and so your community thinks he has not been tough enough, but we love him and he's our president so we're sticking with him but we want him to get out there and fight. >> and fight. >> but what about the tremendously high unemployment rates, which are not new, but that's a community that has been hardest hit. >> no doubt about it. >> do you feel as the representative and leader in your community that you need to be continuing to push him publicly to do something specifically for the community? >> no doubt about it, we have to do that. in a way it's good for him. the president said -- by the way i am a big supporter of our president, but he said during the election process, he said i will not tell you what you want to hear, i will tell you what you need to hear. we need to do the same thing with this president. but i think he has done a lot already. >> what does he need to hear? >> he needs to hear that there are a lot of people suffering, and 40 miles from here in baltimore, we probably have black males unemployment at 40%. he needs to hear that. he needs to go back to the horse that brought him in. when he came in he talked about hope and jobs and talked about fairness and about addressing wall street effectively and efficiently and trying to make a difference. he has to go back to the basic points. that's what got him in. the other thing that he needs to do, and just like -- i kind of believe that there is a silent minority, candy, out there, and a silent majority, rather, and a lot of times they are not being heard. i think that basically what max 18 waters said will cause more of those folks to come out and give the president some backing, and i mean, look at what is happening in some of the republican districts, where they are going to their town hall meetings and people are saying, wait a minute, you are going to cut my medicare and cut my social security, and give the richest of the rich tax cuts? what is up with that? >> that's an argument heard across all communities here. >> what i am saying is for the african-american community, i think we need -- we are leading. we will lead that discussion. i think the more people that look and see what is happening with the african-american community the more impact it will have on those discussions in those republican districts. it's not just the president, but it stops with the congress. we have to get a congress in there that will do the right thing. >> i want to play you a quick -- something your colleague said about lobbying the president. >> okay. >> i want him to know from this day forward, starting with the initiative of the outer party caucus, that we have had it, and we want him to come out on our side. we're suffering. >> yeah. >> so just the sense that he is not on your side, and by that i mean i think he means the african-american community and those in poverty, which includes obviously more than african-americans, so what is "we've had it" mean to you? >> we're totally frustrated, and, again, people need to -- the president, they need to know that the president feels their pain and is trying to create jobs. jobs has got tobt number one -- >> you want something specific for the african-american community, correct? >> listen. we want -- in this country, where they are suffering, when we have major problems, and that's where we go, we go to rescue people to help them out. it just so happens, candy, in many of the african-american communities, the suffering is greatest. twice the number of unemployment people. we want the president to come to detroit and los angeles and to stick with a jobs agenda. what the republicans have done, they argued this thing, taxes and etc., etc., and there are some tax cuts we simply can't afford. >> i need a quick yes or no answer if i can get it. >> yes. >> do you think the president has taken the african-american vote and chun tea for granted in terms of support? >> no, i do not. >> thank you so much for coming. we appreciate your time. >> thank you. when we come back, president obama says there's no danger of another economic recession. our democratic panel weighs in next. about energy independence. did you know that today about a quarter of all new transit buses use clean, american natural gas? we have more natural gas than saudi arabia has oil. so how come we're not using it even more? start a conversation about using more natural gas vehicles in your community. joining me now to discuss recession worries, editor for thompson reuters original, and the economic editor for the economists. i hardly know where to start. but let's start with what in the world is -- i hear so many reasons why businesses are not spending. they are worried about regulation and worried about, you know, what is going to happen with health care, or they are not selling anything, so they are hoarding their money. what gets the private sector to step in. >> i think the first thing we have to recognize is that the recovery, if you can call it that, that we're going through is somewhat unique and comes after a financial crisis. and what we know is that recoveries are difficult and slow because people have debt left over from the bubble years and they are trying to pay it down. >> and you don't mean corporations, but people? >> yeah, people that have houses that are no longer worth as much as when they bought them. it's reality. >> i agree with greg. business has to make a really sort of cold-hearted assessment of the economic prospects, and that's assessment tells you right now if you are doing business in america or in western europe, the economic recovery is really, really strugish, even if you don't believe there's going to be a double dip recession. the economy is growing slowly. in that kind of environment, it's the wrong decision to invest. >> we're looking according to some of the folks ayear out to a very slow economic growth and very high unemployment, would you both agree with that out look for 12 or 18 months from now? >> it's hard to disagree with it. >> i think the question right now that people are wrestling with, is it's slow growth or a slow decline back into a recession. >> is it? >> people think the odds of going back into a recession are 30 to 45%. if you look at the stock market you would say we're in a recession right now. and the economy is still growing. we have had a bit of information for the month of july, retail sales, employment, manufacturing production, all doing better than expected. the thing you have to worry about, volatility, which is not based on events in the united states but in europe is scaring people. the businesses who are about to invest, about to buy the home, hold it and wait this thing and wait this thing out, and that's a self fulfilling prophecy. >> the one area where people are worried and we had data that reinforces the worries is housing. if you think about the economy as a bowa constrictor, that rabbit of the housing crisis, that's holding down u.s. households in all kinds of ways. it means there's less mobility in the labor market and people cannot sell their homes so they cannot move to a place where they can get a job, the construction industry is absolutely dead, and we have not seen that go away. in a lot of ways it's getting worse. >> so this brings me to two questions i wanted to ask. first to you, because you brought up europe. as long as there are huge problems in europe and they have not figured their way out of the huge debt, can the u.s. economy recover? >> yes, it can. we are replaying what happened a year ago when the greek crisis exploded, it created volatility in the markets and people stepped back and said hold on, i am going to take a break. and things ramped up again. one of the big problems here is not withstanding the out look was going to be sluggish, we have a sear aefz self inflicted wounds. policymakers in europe and here in the united states are perceived not to just be able to unable to respond, but unwilling respond, and that chips away confidence as well. >> to the housing part of the equation, has housing bottomed out or are we in for more bad news in the housing department? >> i think we're still in about to hear more bad news. a lot of people bought houses they could not afford and a lot of banks lent more money than they should have. and the foreclosure problem has not foreclosure problem hasn't been worked through yet. on europe, i actually think, greg, i don't want to be the big doomster here. i think greg may be a little too optimistic on europe. >> i get that a lot. >> how sad, eric. >> i think as long as what we see on europe is problems with then get fixed. then that isn't a break on a u.s. recovery. but it is possible that there is a real crisis in europe, and we haven't yet seen from europe, particularly from germany, a solution that solves the sovereign debt problems in the weaker european countries, not just like greece and portugal, but also now like spain and italy. until we see that solution, there is a real possibility of a full-blown financial crisis coming out of europe. >> let me move to what the president or congress or the fed might be able to do to at least ease the slowness or speed up -- whatever it is we need them to do. the fact of the matter is most people look and say, they've run out of ammo here. we're now kind of running on fumes in terms of what can be done by any of the policymakers. is that true? >> i think you would say, yeah, they're out of bullets and bazookas and down to broken pool queues and baseball bats. there are some things, and the first thing you can do is do no harm. if you look at what's baked in the cake, we'll have a fiscal tightening worth 2% of gdp just as the temporary measures implemented last december run out. t politically and realistically it's hard to imagine we'll get a lot more than that. that would be helpful. it doesn't in some sense make matters worse than they already are. they give the economy a little breathing space. the fed has done as much as it can do, could probably do a little more. let's face it. now that you have ten-year bochbd yields at their lowest in i think like 60 years, it's not clear that the fed doing more will accomplish a lot. the final thing, we've been talking about housing. there's a lot to do to help housing, to get people's unserve visible debts down and perhaps take a little break from all the litigation and regulation which is making things worse in terms of the lending community. >> are we out of ammunition here and as an adjunct to that question, can you have stimulus spending and deficit reduction in the same policy which is -- it seems to me that's where the president is going here. >> sure. i think that that would be the consensus view of mainstream economists, is that's what you actually need. it's not as contradictory -- >> force more money into the economy while cutting government spending. >> in the medium term. i think if you had economists as dictators of the world -- and that's not necessarily a good thing. if you wanted to appoint them as dictators of the world, what they would advocate is more stimulus. that's impossible only because of american politics. and do that in conjunction with a medium-term binding deficit reduction plan. the idea would be that then you would have the markets be really confident and investors be confident, the medium term fiscal problems are going to be resolved. greg talked about the bond -- u.s. bonds. people aren't worried about the credit worthiness of the u.s. today. but you would have stimulus right now to get going the economy that we've been talking about is incredibly weak. >> i can hear republicans saying right now, excuse me, we spent almost $800 billion trying to pump up the economy and we now have a higher unemployment rate than we did to begin with. you said growth was going to get better, it got worse. you said unemployment was going to come down. it didn't. in 30 seconds, is that a correct analysis? >> it is. but we saw last december if a package can be put together that basically hits on the sweet spots of both republicans an democrats, you can get something done. in a supper committee trying to come up with a new deficit package, it might be the vehicle that gets it done. the silver lining, if there is any of what's been going on in the markets, that concentrates on the near-term threat to the economy. >> we'll see. cooperation in the political system, we believe in miracles. >> greg is an opt mist. >> greg ip and chrystia free land, thanks so much for coming. up next the top stories and then "fareed zakarka gps" at the top of the hour. gave us your approval. so we thought, why not give a little back. the chevy model year wrap up. get in on our greatest model year yet. and now, very-well qualified lessees can get a low mileage lease on a chevy cruze ls for around $169 a month. our greatest model year yet is wrapping up. and those people are what i like to call wrong. take metamucil. sure it helps you keep regular, but it doesn't stop there. metamucil is the only leading fiber supplement with psyllium, which gels to help remove waste and reduce cholesterol. it can multi-multitask. it's so 2012. look at it! it's doing over a million different things right now. metamucil. ask more of your fiber. and see katie before she goes home. [ male announcer ] with integrated healthcare solutions from dell, every file is where dr. ling needs it. now she can spend more time with patients and less time on paperwork. dell. the power to do more. 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. two of the most important are energy security and economic growth. north america actually has one of the largest oil reserves in the world. a large part of that is oil sands. this resource has the ability to create hundreds of thousands of jobs. at our kearl project in canada, we'll be able to produce these oil sands with the same emissions as many other oils and that's a huge breakthrough. that's good for our country's energy security and our economy. [ male announcer ] they'll see you...before you see them. cops are cracking down on drinking and riding. drive sober, or get pulled over. time for a check of today's top stories. libya's government and rebels are offering very different views on what's happening in that country. the son of moammar gadhafi to day said opposition fighters are losing every battle. he insists the gadhafis will not lead. a leader of the transitional national council says rebels have taken their fight to tripoli and are moving toward the god compound. the families of two people sentenced to eight years in prison is asking for them to return home. they were sentenced to spying. the families say the men have never posed a threat to iran. in a written statement, secretary of state hillary clinton expressed disappointment in the sentences and she says the u.s. will continue to work for their release. hundreds of egyptians gathered outside the embassy in cairo demanding israel's ambassador be expelled. the demonstrators were protesting the deaths of three egyptian security personnel in the ga sa