>> the unions elect people who give them money and if there is any left these lobbyists want it. >> funding for housing. >> american ford foundation. >> the politicians say no get boo'd. >> we've taken a scapel to the budget rather an machete. >> maybe we need to take one of these because we don't make big cuts. >> john: if you can't pay workers' salaries. what is our future going to be? cuts so draconian you need a chainsaw to make them or sweat shops. we have choices to make. >> john: our government keeps spending. we're already $14.5 trillion in debt but you could say, so what. look around, america is doing pretty well. what is the worst that can happen? >> well, this could happen. these protests happened when greece with was so far in debt they had trouble borrowing money. an economist at the mercada center, she says greek riots is just the most visible. >> greeks still go on and they still serve. >> if you wanted to borrow money for a house or car, the interest rates will be dramatically high. >> greece spends so much by last year they owed more money than their entire economy produced. no wonder they are in trouble. we won't reach that level of debt until, oops, pretty soon. we're on a clear track to a greece type crisis. >> when there is no more money, there is just no more money. >> john: the federal government can print money. >> federal government can printed money up to a certain point. >> john: government has been printing lots of money. don't you wish you could do this. if we do it they put us in jail. when they do. that leads to inflation. >> john: because the more dollars you print the less each one is worth. that happened in zimbabwe recently. it took 25 million dollars to equal one american dollar. you had to carry armfuls of cash. >> you safe money to enjoy life for your old age or leave money for your children. that money will be worth nothing. >> so printing all this extra money, what are the other options? the government can plais raise be taxes or try to spend it. tough choices. politicians are supposed to make these choices. so what does president obama do. >> i'm asking them to make clear recommendations on how to cover the costs of all federal programs by 2015. >> john: he recommended a trillion in tax increases and $3 trillion in spending cuts but the president didn't take those recommendations that your bothered ee even the liberal media. >> the total debt is $7.2 trillion on top of the $14 trillion we already have. how can you say that we are living within our means. >> i'm not suggesting we don't have to do more. >> in your fiscal commission had you a majority consensus it's been shelved. what was the point of it? >> it still provides a framework for a conversation. >> the share of the economy is too hot but look where it's going. >> john: a republican budget chairman came out with a serious plan where the president responded with his own plan. >> today i'm proposing a more balanced approach. i don't blame him falling asleep. it was more of the same. he would say he would eliminate waste and lower the cost of healthcare, but he proposed no specific cuts. raise taxes on the rich. >> millionaires and billionaires >> john: even if the president took every penny that millionaires and billionaires make, it still wouldn't be enough to cover the deficit. >> that is between revenue and spending is so big that no level of revenue could cover the debt. >> john: the problem is spending. it's been increasing so fast, revenue can't keep up. hence, the talk about cuts. >> we've taken a scapel to the discretionary budget rather an machete. >> john: it on won't make it big enough to keep us from falling in bankruptcy so people will stop lending us money and then we'll be as broke as greece. i understand why politicians are reluctant to make cuts. look what happens when they try. about 20 years ago, the democratic chair of the ways and means committee were hounded by seniors to make small medical co-pay. they chased him and surrounded his car. the chairman fled to a gas station where he found his driver and made his getaway. his medicare reform was repealed and for the next 25 years, most politicians duck the issue until congressman ryan's proposal. >> doing it this way makes it solvent. >> john: congressman was hounded too in his own district. democrats say his medicare plan is why this woman won a special congressional election recently because she promised she would >> not decimated medicare. >> john: after she won her supporters command. >> yes, we are all future seniors, that is for sure. >> the message they get don't touch it especially medicare. in fact don't cut anything. give it's more stuff. >> roads and bridges. >> a we're all citizen lobbyists. >> citizen lobbyists descend on washington. >> we went to d.c. to the most recent budget session to find out where the budget grows. >> i've been attending a number of hearings but most of them are appropriations related. >> you have all the lobbyists so they can be close to the power that might give them whatever the government is willing to give away. >> we're just agents. that is all we are. >> they all want the same thing. >> we need additional funding. >> and so many lobbyists want the money that some pay bike messengers to stand in line for them. >> after all their employers have great need. these insurance company lobbyists want more government guaranteed flood insurance. the career may depend on these lobbyists. >> if a member has a troop of lobbyists coming through thinks office every single day it's still up to them to say no but they love to say yes. they absolutely love to say yes. you want something, i want to give it to you because i need your vote. they have to learn to say no a lot zbloochbh there are so many advocates with so much need. this woman is upset about the governor's cut. >> i am a nurse, he will not give me a voice to advocate for them. >> john: she says budget cuts are racist. >> and people talk about the big lobbyists, boeing and intel, and here but outnumbered 20 to 1 by the advocates of small spending programs. >> a congressman are rare breed in congress. actual budget cutters who resist the lobbyists' plea. >> their patients are going to lose healthcare. you must be cruel to resist this stuff. >> that is the argument they will make. there will always be people asking for more money. >> avoid having budget cuts in housing. >> john: how do you say no? >> i appreciate your issue but unfortunately that is not the role of the federal government. >> restore funding to for this project. >> we're here to say stop the cuts. >> the fact there are any cuts is due to uprising by voters. >> john: they elected dozens of new representatives that promised to shrink government and the congressman -- for years you must have been lonely around here. [ laughter ] >> yeah, but there are more of us now. >> john: maybe there are a few more, but most politicians keep spending money, printing money. what happens when a government can't print more money. i'll show you next. to keep in balance after 50, i switched to a complete multivitamin with more. only one a day women's 50+ advantage has ginkgo for memory and concentration, plus support for bone and breast health. a great addition to my routine. [ female announcer ] one a day women's. the motorola expert from sprint. its powerful tools help you work faster and smarter so you can get back to playing "angry birds." it lets you access business forms on the go, fire off e-mails with the qwerty keypad, and work securely around the world so you can get back to playing "angry birds." it's the android-powered phone that mixes business with pleasure. so let's get our work done, america, so we can all get back to playing "angry birds." the motorola expert from sprint. trouble hearing on the phone? visit sprintrelay.com. >> john: america keeps falling deeper into debt. if we don't cut spending soon we'll have to get one of these and really stretch and all of america will be like pritchard, alabama. >> this woman is angry because her husband worked for the city of pritchard, alabama for 32 years. he held up his end of the bargain. the city didn't send him a pension check for more than a year. an accountant warned the town you will run out of money. the politicians then did nothing. and they admit today. >> right on schedule in 2009 the town went broke. politicians declared bankruptcy and just stopped sending pension checks to retired city employees more than a hundred of them. >> they didn't do anything they were some supposed to do. >> alfred arnold retired from the fire department after working 35 years for the city. he had hoped to relax and travel. so when the pension checks stopped coming he had to get another job. now at age 66 he is a security guard at the local mall. his wife was a city employee, too. >> she was a police sergeant. got two more checks. we put our money in every pay day like you are supposed to and they were supposed to pay us but they did not. >> john: some retirees have died while waiting for a check like this woman this that lived in this house. >> she is no money and there was nobody to see her and care for her. >> he worked for the library for 32 years. now at age 77 she had to start a new career as a school teacher. >> the city knew that this was going to happen and they could have done something about it. >> something like cutting back on frivolous spending, but instead the politicians gave their website a makeover and the mayor of the town.... >> $96,000 a year, why can't he pay us? >> and the city has.... >> all i need is one and they got two lawyers. >> the golf course has been a joke as long as i remember. >> the golf course? it cost taxpayers tens of thousands of dollars every year. city owns several office building and owns office of economic development and they employ 40 government workers. i pritchard's mayor would not talk to us but the city's lawyer would. >> you are cutting into police and fire departments. >> john: the mayor makes almost a hundred thousand dollars a year? >> that is a political decision. >> john: the city has a golf course that loses money every year. the website just had a makeover. isn't that wrong? >> wrong by whose definition? the city has obligations to provide some city services. >> john: how much does the town pay you? >> i don't see how it's relevant. >> it seems wrong that the retirees don't get any month money. >> i don't know what the total is right now. they owe me still about $40,000 to $50,000. i've been asked the city out. >> john: but the mayor making $100,000, you making thousands of dollars. it's like you looting the town. >> i strongly disagree with that representation. we're not lighting the town. the city has terrible financial situation. >> john: but the city is only in that situation because it kept spending. now, the politicians have agreed to pay the retirees one-third of what they were promised. >> it was almost the notion it would fix itself but it wasn't. >> you could have done something about it. you could have stopped it. you could have came to us and we have to cut your benefits a little bit but he never did it. >> john: reminds me of these folks in washington who despite the warnings keep spending more than we have, but as our debt gets uglier people will stop lending to us and economists say. >> you end with what happened there, sorry we can't pay you. we're broke. >> we should take our unsustainable federal budget and start cutting now. otherwise, we'll be like the town of pritchard and we'll really have to do something. horrible cuts. think it can't happen to you? think again the wife of a retired fireman from pritchard, alabama. so does is that warn the government and stop squandering our money? no. i'll showour tax money looked like hungry people grabbing pork out of a barrel. you pay to blow up beaver dams in mississippi and eliminate brown tree snakes in guam. they study the immune systems of shrimps and you paid to create this robot that folds laundry. >> these programs create jobs. >> senator harry reid wants to fund frills. >> a cowboy poetry festival. >> john: some are so silly they sound fake. they sent out this woman to ask. is this government program real or fake. >> $2.6 million for this. >> most people thought this was fake. >> i think so. >> you say false. >> actual truth is worth. >> $2.6 million to get chinese to drink it. >> why can would the government pay for this? >> $1 million in stimulus funds to get smokers to stop smoking by giving blackberries. >> to help smokers connect with other people yet. >> you got a blackberry. >> and after they spend your money the government charges you again for how to brag how they spent your money. some spending got through earmarks. that slipped through by individual members of congress who are eager to use your money to win votes back home. president obama signs bills that included 19,000 earmarks. then the tea party movement happened. >> any republican who does not vote to ban earmarks. >> it became enough of an issue that when republicans took back house they vowed not to earmark. >> we are listening and serious about any business as usual. >> then the president says this. >> if a bill comes to my desk with earmarks inside it will veto it. >> john: so they banned earmarks for two years. some people outside my office liked that. >> i'm happy about it. i hope they don't come back. >> it's good if they follow through. >> john: but will they follow through? i doubt it. >> earmarks and spending will come back. john cornyn is quoted as saying they will come back. they are coming back. >> senator reid wouldn't talk to us, none of the other big spendingers. maybe they are embarrassed about their spending but i doubt it because super spending happens every day. i live in one of richest neighborhoods in the world. jerry seinfeld and alec baldwin live around here. the last thing we should get is free stuff from taxpayers. a few blocks to my apartment they are giving away bike helmets. local politicians got a federal grant to help them do this. >> if it's a big success? >> it's a tremendous success. >> john: it's dumb to do this but if you offer free stuff. the line went around the block. >> people can afford their own helmet but why not take advantage. >> why not, it's money flying around. i'll grab all i can. it has to come from someone, the entrepreneurs that create wealth. >> the stores down the street, it's not nice to them that are. >> give me a break. bureaucrats proudly told us they gave away 45,000 helmets. >> why is to take tax money to give away bike helmets. it's a federal grant. it's zbloojts but with our crushing debt some of this shouldn't do. this this is my city councilwoman. >> how do politicians feel they have a right to spend money in rich neighborhoods. this is public money? >> i don't believe that. if you live here there are a lot of people that don't have money. >> this is the job for government? >> i think it is a job for government. days like this is important. this is not a lot of money. >> not a lot of money. that is what politicians think. that is what politicians think. some good new yikes, this color just sucks the life out of me. i was just gonna say that! about this flat haircolor! [ gigi ] try nice 'n easy anti-flat, always dimensional. in one simple step, get tones and highlights built into every shade with nice 'n easy. live from america's news headquarters, i'm gregg jarrett. casey anthony tasting freedom for the first time in three years walking out of lockup overnight after being found not guilty for the murder of her daughter's death. they blew past a sea of protestors and no sign of her since the release. >> we're waiting to see if the white house will be calling for yet another round of talks with congressional leaders on raising the debt ceiling just over two weeks remain until the default deadline. both sides debating various proposals proposals and the white house says there is still time to get something big done. now back to stossel the money hole. for all the latest headlines, log on to fox news. ♪ ♪ >> john: you no know about the protests in wisconsin this winter but do you know they continue? ♪ ♪ >> john: every day union supporters gather inside the capitol and sing protest songs. this man sang about collectivism. >> i thought collectivism doesn't work? ♪ ♪ >> john: and the battle for wisconsin is also being fought in washington. >> that is the point. >> john: the man and congressman they are mad at is scott walker. he won the governor's race saying that unions were throwing money down a hole. >> in a long term, you can't sustain it. >> he asked to pay a little more for pension costs but the unions said no. ♪ >> so now they were entitled to a fixed standard of living and a fixed package. >> the unions eventually said they would pay more of the benefits but walker also wanted to rein in their power to get future benefits. >> they can come back two years from now with a new contract and jack up healthcare costs. >> john: you can say no. >> your hands are tied, tied by collective bargaining rules so he moved to limit those. >> if you are under a collective bargaining agreement no matter what situation the state government is they don't have to budge. >> john: they don't have to budge because government doesn't have any real competition. they don't go out of business when they overspend. >> in the private sector an employer can say if we don't on do this we're going to move to another location and people have to decide whether it's rick go that. you want to take workers rights' away. >> john: one of the senators that fled wisconsin to try to stop the legislature from passing walker's bill. that won the union's adoration. listen to what happened. >> language lands of collective bargaining. in the end. >> if you can collectively bargain you can get more stuff. >> sometimes you can and sometimes you can't. >> john: the current system is rigged to create a vicious cycle meochblt goes from taxpayers to government workers to dues to the union and then from the union to the politicians who promise to do more for the government worker. round and round. >> democrats give kickbacks to unions that elected you? >> like what? >> john: extra good pensions. >> there is no doubt about it. it's the stuff they negotiated over the years with democrats, administrations and republican administrations. the reason puck employees support me is i supported what they are doing. >> he supports mitchell. he heads the firefighters union. >> you elect your own bosses, you contribute to the democrats and then the democrats pay you back with a good deal. they want to take that power away. i can kind of see why. >> away are non-partisan. we contribute to the republicans as well as democrats. >> john: i'm looking at political donations. 92% to democrats last year? >> we contribute to people that are with our issues so in general democrats. >> that doesn't sound partisan? >> if they come back to the good side of town we'll go with them. >> what is the difference? >> public, private president roosevelt said that public sector unions would be a problem for the united states. even fdr says they shouldn't have collective bargaining rights but the public when you do polls today, you are the evil guy who took away their rights. >> the unions poured $4 million and 5 amendment into tv rights and talked about rights. >> there is a radical move the rights of trusted public employees. >> taking away of union rights is not right. >> anything, human rights, civil rights, collective bargaining rights. this is an extensive entitlement >> like the size of bulletin boards. >> this is what you got in the rules to put up a bulletin board. this is why governments go broke. >> how can you do this? >> i can see it may cripple an employer. i'm being facetious. let's get back to the real subject. >> john: like salary and pension deal? does the state senator know about that. >> building painters and school districts get compensation of $98,000. bus drivers make 67 figure salaries. >> do they really. if you take an overall package it's going rich every than what you see in the private sector because the private sector has had to cut back. >> we've absolutely been cutting back. >> cutting back must mean something different for politicians. they do think they are special. look at of their surroundings. the cameras always focus on the protests but look up. the wisconsin state house is insured for $200 million. the politicians who built it used 43 types of stone from six countries. they copied what royalty built in europe. this is not unusual,s are grand. when you spend oth people's money, you tend to spend a lot. >> when you looking look around here, this is frugal wisconsin. this is place is a palace. >> that is why we don't add things to on it. >> but they wanted more benefits for everyone. >> the question we have been asking ourselves around wisconsin, why do they have the healthcare benefits and why the retirement benefits. the question we should be asking you, why don't you have access to the same kind of he'll choices that a public employee has. >> john: because if we all, did we would be deeper in the money hole. but there is another approach, one a few places have tried and the results, prosperity. that is next. ♪ with diabetes, it's tough to keep life balanced. i don't always have time to eat like i should. and the more i focus on everything else, the less time i have to take care of me. that's why i like glucerna shakes. they have slowly digestible carbs to help minimize blood sugar spikes, which can help ler a1c. glucerna products help me keep everything balanced. 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[ dad ] i choose being strong and active. i choose new and improved boost. >> john: today there is something new in america. a few politicians, like governor chris christie, governor rick scott and john kasich in ohio. but there is another governor you may not have heard of and faced angrier protests. this happened in puerto rico two years ago. the houses of union members clashed with police for days. they went in front of the governor's mansion because the governor proposed cuts far bigger than wisconsin but the governor just smiled. they say he had to make cuts because puerto rico's economy was a mess. >> we didn't have enough money to make our first payroll. >> his predecessors had grown the government point that one out of every three workers worked for the state. and the state was generous about giving out contracts. >> they couldn't care. their vendors will raise the prices and they would just buy the contracts. it was not the money. it was the taxpayers' money. >> john: puerto rico was broke. he decided the government would handle money differently. >> we have to handle as if was our money. >> john: new conservative majority the first in puerto rico in 40 years passed law 7 which shrank the state. what did you cut? >> i started with my own salary. i froze all salaries across the board. >> john: people must have screamed. you let 17,000 workers go. >> if you can't pay their salaries, what are you going to do? >> they say he should raise taxes instead of cutting government. what we've heard that before. >> our taxes as it is was as high as it could be, higher than most other countries. what we've done is the opposite. >> john: he reduced corporate taxes from 35 to 25%. he reduced individual income taxes and he privatized entire agencies. >> bring in the private sector. they will do a better job. they will do it cheaper. >> and government workers lost jobs. >> the unions felt threatened. >> john: they were threatened. they you cut 17,000 jobs. >> some of them wanted to work with us and some of them lowered expenses and saved jobs but others refused. >> one former employee threw an egg at the governor? >> i ducked. bottom line they will try to push back but a lot of people would rather stay in the comfort zone. there was a lot of red tape and made it hard to open a business. >> 28 business regulations and permits to open. >> crazy. we got one regulation. >> didn't bureaucrats say, we need all this stuff. >> of course they did. >> there is a permanent government that is common everywhere. government employees hundreds of thousands of people often just to shuffle paper and those people lobby to keep their jobs. like the police officers who did nothing but approve liquor licenses. >> there were 250 policemen and women handling that. >> just liquor licenses? >> just to guarantee that you don't have a prior criminal record. >> john: this entrepreneur is mad because to sell it out of her house she had to spend a year to get government permits. even though her business is in the room government rules required having an acceptable bathroom. and this person help restaurants wade through the maze. now, the new permit office says rules are much easier. >> it's helpful to have it all in one place. >> now it only takes two weeks to open a small store. >> this is my version of that. this one was in delaware. >> delaware was said to be the most busy friendly state but it took me a week to get permission to do this. in hong kong it took one day. so the two week wait in puerto rico is still a handicap but much faster. >> do you hear from businesses responding to that? >> of course. it's expanding significantly. >> john: 600 construction permits have been issued in the last few months. this drug company has expanded coke co-la has begin construction on a bottling plant that will employ thousands. >> a number of restaurants are coming in. >> did you ever have a fired worker, you know i worked in the bureaucracy for 20 years and you fired me, but now i'm glad because i'm doing it. >> people like that woman selling marmalade. she on used to work for the government. being fired was hard. >> i feel bad because i have a big family. >> now she started her own business, being fired was good thing. >> i am my own boss. >> so good she named it's after the law that fired her, law seven. >> you drew the line. so we have the policemen and women out on the streets. >> john: still lots of people are mad. especially the government workers who lost jobs. recent polls that if he ran for reelection now, he would lose 47-25%. he says so what. >> i don't need this job. i need to do this because i want it. >> what do you mean? >> i come from the private sector. i enjoy what i was doing. >> john: you can go back to? >> that i can go back to that. >> and over time, puerto rican voters may come to like his conservative government. ronald regulate's popularity suffered when he made cuts so did johnson's in new mexico but all were re-elected by big margins. >> i knew how it was going to be. i was in washington in the reagan's a first term. know how it was the first two years but he was doing a lot of the right stuff. he won by a landslide. >> john: his advice to leaders who want to shrink the state. >> do what they need to do quickly, swiftly. just do it and move on to better things. >> john: coming up next, the country that is nearly went off the cliff but came back stronger than ever. >> they fixed it. to keep in balance after 50, i switched to a complete multivitamin with more. only one a day women's 50+ advantage has ginkgo for memory and concentration, plus support for bone and breast health. a great addition to my routine. 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[ male announcer ] you don't makeby pressing a button.cken it takes a cook. we're kfc and we've got a certified cook in every restaurant freshly making the colonel's original recipe, today and every day. 11 herbs and spices, hand-breaded, hands down the world's best chicken. today is a kfc day. so bring home a real meal -- 10 pieces of that famous chicken, 3 large sides and 6 biscuits. enough real food to feed a family of four or more, just 20 bucks. today tastes so good. @@ ♪ sing polly wolly doodle all the day ♪ ♪ hah @ >> john: what can we do? there is another country not far from here that figured that out. just a few hundred miles north. canada, the country of cline, hockey and logging. when i thought of canada i talk about big government, government healthcare and all that. in fact big '90s, finance minister said we are in debt up to our eyeballs. their debt level was just a as bad. almost 70% of their economy. >> just as much debt, that is correct. >> but they fixed it? >> they fixed it. >> john: he is a canadian that left canada before they fixed their debt problem. he watched as they went into deeper into debt? >> "wall street journal" called the canadian dollar the peso of north. that was scary because with the debt the canadian dollar was falling and moody's put the canadian dollar on the credit watch. >> they had a safety net that was more like a hammer. >> when i was growing up in canada, people were on unemployment insurance, you could work as little as eight weeks and take the rest of the year off and play hockey. >> john: no work for most of the year. so in 1995, canadian leaders cut unemployment benefits and other programs and as you see here, canada's debt stopped increasing. as canada ran budget surpluses, its debt has been going down? >> the economy boomed in the '90s. think about with a government does, government wastes most of what it spends so having that money being in the hands of people means it will be used more valuablely. >> but government decreased 12% to 6%. unemployment is still well below ours. canadian dollar went worth $72 to above the value of the american dollar today. >> job losses mount in the u.s. in canada there is actual job growth. >> they did also raise some. >> but the spending cuts were much bigger. six to one. agriculture 22%. natural resources almost 50%. >> john: in the united states they never use numbers like that. >> we should learn from canada's experience you can cut government substantially. it is so big and wasteful. there is so much to cut without causing much pain at all and not just not causing pain but helping your economy grow. helping people become better off. >> john: we're throwing more money into the money hall and take that money hole. in some states you can get unemployment benefits up to 99 weeks. that is positively french. it's more serious here. we need to move quickly than the canadians did. unfortunately, it looks like we're moving more slowly than the canadians did. >> exactly and while canada found it, we south of border pour more money into the money hole. that is our program. thanks for watching. good night. ...