and we'll tell you how long it's expected to last. an end of the world, a massive phone hacking scandal shuts down one of britain's most popular tabloids. new reports indicates the phones of some 9/11 victims were targeted. the latest on the growing controversy "early" this monday morning, july 11th, 2011. captioning funded by cbs >> good morning, welcome to "the early show" here on a monday morning. i'm chris wragge. >> and i'm erica hill. >> big sports news this weekend. >> huge. >> you had to seeing it, everybody is talking about it. women's world cup soccer, after one of the most thrilling girls in the history of soccer, penalty kicks, ally krieger. tied up. everyone saying lights out, it's over, they're going over. they tie it up, shoot-out they take it 5-2 over brazil and now in the semifinals. >> they're going to meet france on twewednesday. just fantastic to watch. i love watching the players, how excited they are. brazil no joke when it comes to soccer. >> 12 years to the day after brandy chastain the shirt -- you remember that. >> i do. i do. first we want to touch on yes, the debt ceiling. starting to sound like a broken record. the deadline is looming for raising the debt ceiling. there were more talks at the white house on sunday. still no resolution. president obama told lawmakers be prepared to meet again today and every day until a deal is reached. cbs news senior white house correspondent bill plante has the latest for us this morning. bill, good morning. >> reporter: good morning, erica. there is another meeting here today but before that, the. the is having, the president is a news covering and the talks were derailed over the weekend. half way into the weekend negotiations house speaker boehner pulled the plug on the so-called grand bargain, a $4 trillion deficit reduction deal he'd been discussing with the president saying he just didn't have the vote. >> to get a big package would require a big tax increases in the middle of an economic situation that's extraordinarily difficult with 9.2% unemployment. we think it's a terrible idea. it's a job killer. >> reporter: treasurer secretary timothy geithner said on "face the nation" said president obama is not going to give up. >> he wants to do the best for the economy. >> reporter: in a word, taxes. speaker boehner encountered staunch opposition from fellow republicans who refuse to sign off on any deal which could be construed as raising taxes. >> the main problem affecting economy and jobs is an overbearing government spending too much, borrowing too much, creating too much debt. >> reporter: with the august 2nd deadline approaching he denies republican claims he's engaged in scare tactics. >> no would say the united states should not pay its bills, it would be catastrophic. there's a lot of political theater in this business. >> reporter: people in the room yesterday at the talks say all the democrats say their members realize a big deal would be easier to pass. republicans of course don't agree. but they also say that everyone in the room, republican and democrat did agree that something has to be done and soon. erica? >> funny, bill, the american people seem to agree to that for a long time. bill plante at the white house, thanks. joining us is maryland congressman chris van hollen, he has been representing house democrats in the debt talks. good to have you with us this morning. >> good to be with you. >> give us an idea where do we stand at five minutes after 7:00 on monday morning. >> erica the united states congress needs to do what the women's soccer team just did which is seal the deal in the final minutes here. unfortunately, the sides are at lagerheads because the president said, rightly so, important to do something that meets two objectives, helps get the sluggish economy going and does something big with deficit reduction and republicans have balked because while they'll accept the cuts and we will, too, they refuse to eliminate many of the tax breaks for corporate special interests, corporate jets, oil and gas companies and folks at the high end of the income scale and protecting those things is more of interest and concern to them than getting the deficit deal. >> the president is coming out essentially and saying let's go bigger, go home, that's not sitting well with most folks. now there's this talk of the president is going to say look bring something that will pass in both houses. is there something that you know of in these talks that would pass in both houses? >> well that's the trouble, erica. i was part of the biden discussions and we did make some progress but at the end of the day as you know the republicans walked out of the talks. why did they walk out of the talks? same issue you're seeing with the bigger deal. democrats agreed to some cuts, but at some point we said you need to have balance here. you cannot be whacking all these programs and of course the republican budget calls for the end of the medicare guarantee, called for deep cuts in medicaid and education. we've said we're not going to be doing those things when you've got people with these big tax loopholes, oil and gas companies. that's why the president is saying in some ways, doing the medium sized deal is just as hard as doing the big deal so why don't we just do a big deal and get something done for the country. >> we should point out, leader pelosi, the democrats in the house drawn the line in the sand when it comes to changes in social security and entitlement programs. there has to be give and take on both sides. you mentioned that potential $2 trillion agreement. is that, i mean is that hanging by a thread? is that still there, you think, at this point? >> well, it was never there. that's the problem. i mean, what we talked about was about $1.1 trillion in cuts and savings. you're hearing grossly inflated numbers coming out from the republican side. in the biden group we did not get close to $2 trillion in cuts and again the gap there was closing these corporate tax loopholes. now democrats have said yes, you're right, there would be tough decisions that have to be made but democrats said we're willing to do it and the president's continuing to press for that. >> we'll look at what happens. a little politicking on both sides. a lot of folks want to get this done. hopefully we'll see some resolution. congressman van hollen, appreciate your time >> thank you, erica. cbs news business and economics correspondent rebecca jarvis joins us to explain the impact the uncertainty is having on the american economy along with what will happen if a deal is not reached. >> good morning chris. >> what happens financially, let's make this crystal clear should they not reach a deal by the august 2 deadline. >> our debt rating gets cut. in the united states we have a triple "a" debt rating, we have the best debt rating in the entire world. that would get cut. on top of that, that would send stock market shock waves through the entire system. you could see it not only here in the united states but around the globe and of course that's an impact on anyone's pension fund, their 401(k) and for the average individual, all of the sudden access to loans gets much harder, banks don't want to lend in the scenario like this, very risk averse and in addition to that, the actual cost of loans is going to go up for anyone who wants to for example get a mortgage, buy a car, expand their business. >> just what people want to hear, interest rates going through the roof. speculation in washington that the president and republican congressional leaders may come to some type of agreement on a short term deal. does the short term deal help us in the long-term? >> not exactly. it kicks the can down the road. the big complaint in corporate america right now is that there's so much uncertainty. they don't know the direction of our economy. they can't sense what the future will be because there's all these new regulations likely coming down the pike and they can't plan their business based off of that uncertainty. that essentially creates more uncertainty and it says we're going to deal with this problem again down the road and it just means businesses that might think about hiring are still saying i don't know what the future holds. >> cbs news will carry president obama's news conference starting this morning at 11:00 eastern time here on cbs. here's erica. there is new fallout over the phone hacking scandal in britain already taken down one of the most popular tabloid newspapers in the world, threatening to do the same to some of rupert murdoch's top deputies. elizabeth palmer is in london with more. good morning. >> reporter: good morning. the police investigation is getting very serious now. one of the main lines of inquiry is going to determine or try and determine whether senior officers of murdoch's company knew of or were involved in unethical or especially illegal activity. mobbed by reporters in london, rupert murdoch plowed through, all smiles, to have dinners with his embattled ceo rebekah brooks. she'll be questioned by police later this week. there is a scramble inside murdoch's media empire to control toxic fallout from the "news of the world" hacking scandal which could start waves in the u.s. >> there are waves of could it have happened here? there are locks of reporters at any given time on the ground in the u.s., many stories, many of its celebrity stories are datelined here. >> reporter: the scandal broke last week with the case of milly dowler, a teenager murdered in 2002. her parents and thousands of others discovered that personal voice messages had been hacked by "news of the world" journalists hunting for stories. in 2007 a secret internal investigation at murdoch's uk company is reported to have found hard evidence of widespread illegal activity. the question now is, who knew what when? les hinton is currently the ceo of dow jones and pun lish of the "wall street journal" both owned by murdoch. he may have seen that report and rupert murdoch's son james who sits on newscorp offered a $1 million payment to one of the hacking victims. >> i was on the advice of lawyers and that's a matter of real regret for me personally. >> reporter: families are watching very closely. this morning in "the daily mirror" another british tabloid, rupert murdoch issen othe cover a story that a new york stock exchange policeman turned private investigator was asked by "news of the world" reporters for the personal phone details for 9/11 victims. it is a british tabloid, the only ones reporting it so far and the source is anonymous. erica? >> liz palmer in london, thanks. we have copies we should point out of the final edition of "news of the world." they go through a number of the stories they covered inside and a little cheeky inside. >> we comment what the tabloids are like here in the states, it's really nothing compared to the uk. i'm sure it will come back in some other form at some point. >> sadly. >> don't say good-bye to this type of publication. >> we're not immune in the states. jeff glor, don't have to worry about you. >> you look great over there. page three. >> excellent, why don't you frame that one. good morning to everyone at home. we begin with an attack in baghdad just as new secretary of defense leon panetta makes his first visit to iraq. three rockets hit the green zone, panetta was not there, he was at camp victory at the time. leader also discuss keeping an american force there possibly past the end of this year. in russia there is little hope for finding any more survivors from a river boat cruise that sank yesterday. 41 are confirmed dead, many more still missing. 80 were rescued from an overloaded boat which went down with nearly 200 on board. federal authorities are investigating a plane crash that killed seven members of one family, the twin engine cessna crashed in western alabama saturday night after an engine saturday night. the pilot, his wife, five children, all from florida died. nasa says a piece of pass is junk will come close to the space junk but not close now move them. before docking the "atlantis" troupe performed the standard backflip, allowed them to see damage to the heat shield. so far so good. 7:14, marysol castro joins us with a check of the weather. >> it is july but the heat is oppressive. 15 states have an excessive heat warning or watch. not only is it warm, it's also humid, all that tropical moisture from the gulf is making shreveport at 102 feel more like 115 or 120. this stays this way at least for the next 24 hours. it also fuels some severe weather for this part of the country, going to be mostly a wind event but we are going to see the occasional tornado and some hail. rain also associated one to two inches -- one to three inches. it comes very quickly, lasts about the next 24 hours. >> thanks so much. that's your latest weather. over to chris and erica. good morning. >> marysol, good morning. >> good morning. strange good morning, wasn't it? sorry. just ahead women's world cup thriller. the u.s. advances now to the finals. >> a look at the dramatic climax when we return. this is "the early show" on cbs. of moderate to severe rheumatoid arthritis could be another day you're living with joint damage. help stop the damage before it stops you by asking your rheumatologist about humira. for many adult patients with moderate to severe rheumatoid arthritis humira has been proven to help relieve pain and stop joint damage. humira's use in patients with ra has been evaluated in multiple studies during the past 14 years. humira can lower your ability to fight infections, including tuberculosis. serious, sometimes fatal events can occur such as, infections, lymphoma or other types of cancer, blood, liver and nervous system problems, serious allergic reactions, and new or worsening heart failure. before starting humira, your doctor should test you for tb. ask your doctor if you live or have been to a region where certain fungal infections are common. tell your doctor if you have had tb, hepatitis b, are prone to infections, or have symptoms such as fever, fatigue, cough, or sores. you should not start humira if you have any kind of infection. make today the day you talk to your rheumatologist. and ask how you can defend against and help stop further joint damage with humira. make that first step easier, with the nicoderm cq patch. nicoderm steps you down from nicotine gradually. doubling your chance for success. nicoderm cq. three steps, ten weeks and you're free. not only kills fleas and ticks, it repels most ticks before they can attach and snack on us. frontline plus kills but doesn't repel. any tick that isn't repelled or killed may attach and make a meal of us. 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[ male announcer ] chex cereal. five flavors. gluten free. the united states faced brazil in the quarterfinals of the 2011 women's cup on sunday, a wild nail biter adding another chapter to the championship rivalry dating back to the 2004 olympic final in athens. terrell brown has this report. >> reporter: clinging to a 1-0 lead in the second half the u.s. was forced to play the last 25 minutes of regulation plus overtime a player down after defender rachel buehler was ejected for an illegal takedown of brazilian forward marta. the subsequent penalty kick. marat that made a spectacular kick over hope solo gave brazil a 2-1 advantage. the struggling americans caught a break late in the game as the stalling tactics of a brazilian player added needed minutes to overtime. the extra time set up a dramatic leg cross to abby wambach who added the u.s. into a shoot-out. the goal came into the 121st minute of play making it the latest goal in world cup history. solo denied two brazilian penalty kicks as the u.s. went a perfect 5 for 5, earning a trip to the semifinals versus france. >> she does it, the usa are into the last four! it's been a year of miracles in dresden. >> since 2004 the u.s. is 3-1 versus brazil in elimination matches in the world cup. the next go, against france on wednesday in the semifinals. incredible win, huh? >> it's so much fun to watch, every time you watch it. >> all the favorites are out so the u.s. has a real good win. >> i know who i'm rooting for. after a wildly successful visit to canada, the duke and dutch us charm the people of los angeles, beverly hills and skid row. this portion of "the early show" sponsored by discover. it pays to discover. cashback bonus at the pump... and at many of the places their summer plans take them. it pays to switch, it pays to discover. what is that? it burns! it's singeing me! woman: i can't see! it's the sun. get out of the office more often with chili's $6 lunch break combos, featuring texas toast half sandwiches. ♪ chili's lunch break combos ♪ yep! 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enough we can still say kate. >> good morning everyone. president and congressional leaders more budget talks. the two sides seem to be far apart after a rare sunday evening session. the president still pushing for a larger $4 trillion deal to cut the deficit and mr. obama will discuss this at a news conference this morning, see that here on cbs at 11:00 a.m. eastern. in iraq three rockets hit baghdad's green zone this morning. defense secretary leon panetta is in baghdad, first trip on the job. he was visiting another u.s. base at the time of the attack. no one was hurt in the attack. panetta says the u.s. is concerned iran is arming militia. a bizarre break-in yesterday at david letterman's studio. the doors in part of the lobby at the famed ed sullivan theater were smashed here in new york. police arrested the from the red kampt carpet t polo field to skid row, the duke and duchess visited the full spectrum of california. ben tracy talks about how the royal couple visited california and then returned home. >> reporter: l.a.'s skid row is not where you to expect to find a future king and queen but these two are not common royalty. on sunday prince william and catherine visited poor arts. back in england he's an advocate for the arts and kids who are disadvantaged. he even gets his hands dirty. it was a change from the night before when the prips and his princess managed to outshine some of hollywood's brightest stars. >> the biggest stars in the world. >> reporter: these were fund-raisers for the british tv academy. >> when america and british talent gets together, magic happens. let's continue the winning formula. >> reporter: this prince knows something about winning. in santa barbara saturday he led his polo team to victory scoring four points. he told the crowd about his mood before the match. >> completely depends on the result today. i'm not a good loser. >> reporter: his humor catherine's style and ease with the spotlight has helped the pair rebrand the royal family. >> fantastic. >> this visit was will reinvigorating the royal family, new era of the monarchy, before now seen as quite stuffy and old-fashioned. >> we like royalty and there's something about it we still like but we want humble royalty. somehow this couple has managed to pull that off. >> if you met them as a couple and they didn't have all of that you'd really like them as people. >> this is the last event on our tour of north america but to my mind one of the seriously most important. >> reporter: before leaving the u.s. the royal couple stopped at a job fair for u.s. soldiers. >> catherine and i both have friends back in britain who could benefit from a brilliant initiative like this. >> reporter: time to leave the states behind heading back to their future kingdom. ben tracy, cbs news, los angeles. >> the royal visit will have long-term benefits for many. it's estimated the duke and duchess raised nearly $7 million for charity in this past weekend alone. just ahead, 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use this moment to join us today. visit redcross.org. time to mix it up with new philly cooking creme. it'll make your chicken creamier, dreamier, with lots of flavor. spread the love in four fabulous flavors. spoon in a little new philly cooking creme. the nfl lockout drags on, almost four months after it began. with training camp to open in four days time is running out on reaching an agreement. nearly four months after nfl owners locked out players, contract negotiations are said to be close on some major issues including revenue sharing but now bogged down over wages for rookie players. >> the observers want to make sure the high draft picks get paid. the owners say give them the money but after they've earned it. >> the labor dispute began march 11th when the players dissolved the union and sued the league. the owners responded by imposing a lockout. without access to facilities, players conditioning is unstructured and unsupervised by team doctors and coaches. >> i have to be ready physically and mentally to get ready for the season, so for myself i keep training and you know acting accordingly as if we're going to have a season. >> later today lawyers for both sides will meet in new york to continue with negotiations with an expectation deals will be met july 18th. >> some estimate for every pre-season lost it's an estimated $200 million. it's not just the teams and owners. it's the communities, the stadiums and the jobs in those cities as well. >> but in a league where revenues are expected to top $15 billion in the next five years, players still feel they're being short changed by not being offered an equal share in team revenues. >> we still have work to do. we're going to continue to work hard to make sure that the deal is fair. >> i think being patient throughout this has been important. that's what i've tried to do. the lockout hasn't been good for anybody. >> joining us now from dallas is former dallas cowboy and nfl hall of fame wide receiver michael irvin. michael good morning. >> chris, good morning. >> you talk to players all the time. are we close to getting a deal done? >> well, it depends on who you're asking right now. a lot of the veterans that have been around a while and been around the owners and know how things are working, they're saying i'm anxious but let's wait and see. a lot of young guys who haven't made a whole lot of money right now, haven't had a chance to stack their stacks, they're anxiously waiting saying this is good news and looking forward to getting back because of the situation. >> it sounds more and more like they are close. at least the conversations are civil, where at the beginning they weren't. i think the average fan is probably sitting back saying we're talking about splitting up over $9 billion so this is not like the debt ceiling where there is debt. there's a lot of surplus here. why can't a deal get done. can people expect there to be a full nfl season? that's what the fans want to know the most. >> the nfl and the players both want that and working real well towards that. i love the other day after, the judge ruled the lockout stays intact, that everybody came together, put a joint statement out, the owners and players saying we will continue along this course because that is the best course to get things done. the judges and the courts pushed both sides to get that done. >> this deadline this week of july 15, it's kind of a soft deadline but teams need to get together, there need to be some training camp. the first preseason game is the first week of august. is this the drop dead date for the first nfl season, do they need to have it done this week? >> if you're dealing with the guys we have, the egos, i say that in great spirit, egos, some of the great egos, wealthiest in the world, absolutely, these guys have to work together and you better believe they understand, deadlines are very important when you're dealing with these types of men so i'm expecting yes, we're hoping to get something done hopefully pretty soon. >> quickly, what can fans expect as far as the brand of football, teams and players have not been together all offseason, no mini camps, coaches and players can't talk to etch auto other. it will be truncated, free agency take place in about a week, what kind of football can we expect? >> we won't have the brand of football, the caliber that we've had at the beginning of the season because the reality is as players prepare for a season, they go through knicks and bruises, and all of the things that go on preseason and before preseason starts will be happening during the season as you turn into football shape. we hear people all the time talk about teams getting together individually. there's no way you can bring on the kind of intensity that you get in a preseason game in a regular season game in practice without pads, so there will be some slow time early on in the season. >> michael irvin good to talk with you. thanks so much. we appreciate it. >> chris, thank you, buddy. appreciate it. >> i guess the big question is debt ceiling or nfl season, what happens first? >> it's true. london, rupert murdoch is doing damage control in the middle of a phone scandal that has taken down one of his newspapers. lots of sun, some rain and that's how they get this big and beautiful. our fruit has to be perfectly ripe because it's delivered on the same day. for me? this is so beautiful! edible arrangements. enjoy the most delicious fruit ever. guaranteed. starting at $25. ♪ i'm your venus ♪ i'm your fire ...needs protection. introducing venus proskin with moisture rich shave gel bars enhanced with a triple blend of body butters that create a layer of protection for your skin with every close stroke. leaving your skin beautifully smooth. and your goddess just beautiful. ♪ well, i'm your venus new venus proskin moisture rich. reveal the goddess in you. new venus proskin moisture rich. meet beth, nursery school teacher. lights, camera, activia it's the best job in the world. my students are amazing. but to be there for them, you've gotta feel your best. kids can tell. that's why i love eating activia light every day. so delicious activia light helps me feel good inside. which helps me be my best... positive, cheerful and on top of things. help regulate your digestive system. love how you feel or your money back. ♪ activia as we've been reporting this morning, there is word that phone hacking scandal out of britain that caused the "news of the world's" demise in the wake of hacking allegations, simon hoggart joins us this morning from london, good to have you with us. this paper may be going away, but there is still a large tabloid culture there. the u.s. is not immune either i should say, to some of the tabloidesque stories. does anything really change after all of this? >> oh, yes, i think it will have to after the revelations. they get more and more disgusting and horrible and the latest on my way to do this interview we heard "news of the world" had been paying a royal protection officer to leak news about the royal family. you know, that's pretty bad and what with the anniversary of 9/11, tenth anniversary coming up in a couple months, the fact that if it's true that the murdoch press was paying a private investigator to hack into the victim's phones that's going to bring it over to the other side of the atlantic, too. it cannot go on like this. there will have to be some massive clearout of the stables really. it looks terrible. >> looks awful and we're hearing the reports about the coziness between "news of the world" and the police in the uk. how did it get this bad? does it come down to money? seems there's fear involved in some ways, too. >> money, power and fear certainly, yes. murdoch press is very, very powerful, tabloid newspapers always claimed they could affect the results of an election if they came out for one side or the other that side would win and of course that terrified the other side and of course quite a few politicians their private lives are not perhaps beyond reproach they were scared if the attack dogs from the murdoch press were set onto them they'd be in big trouble. when this came out last week going into parliament behind me, listening to them, they were like political prisoners who just heard the tyrants they've been terrified for so long had just been shot. they realized murdoch c rossed a line with the hacking of the phones belonging to the families of murder victims, of soldiers who had been killed in afghanistan, and somehow they were free, and you've got here a political and a press culture outside the murdoch press and inside the murdoch press as well which is really zeroing in on this guy saying this can't go on, we've got to clean it out as fast as we possibly can. >> he has a huge media empire both in the uk, here in the u.s. as well, fox news, the "wall street journal," he flew to london last night to clear up the scandal, some talks he'd been trying to get his remaining stake of bskyb there. is that under threat? could this limit his reach and the reach of his organization? >> very much i'm afraid. in fact the conservative government has been nagged in the press by almost everyone to postpone murdoch's takeover of the biggest satellite broadcasting network in the united kingdom, one of the biggest in the world. clearly buckling under the pressure even as i speak. you could almost hear them doing it and the latest word is it may be postponed for about three years, that's a $1.6 billion business, a lot more than one newspaper. >> it is a fallout we'll continue to watch including the political wallout. simon thanks for your input this morning. we all want a world with fewer chemicals. we all want the best of both worlds. introducing all free clear oxi-active. a powerful new detergent without dyes or perfumes that helps get out your toughest dirt and stains. its added natural cleaning boosters help 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[ male announcer ] and we think that's the best prize of all. ♪ welcome back to "the early show" here on a monday morning, july 11th, top of the hour. the focus is on the white house today as president obama and congressional leaders try to hammer out a deal to raise the debt limit. welcome back to "the early show." i'm chris wragge with erica hill. debt limit talks taking over the head lines. we have a political roundtable. treasury secretary tim geithner talking about the debt crisis on cbs's "face the nation." >> if they don't act we face catastrophic damage to the american economy and the leadership to their credit, republicans and democrats fully understand it and they have very clear to the president and to me, including last thursday, that they are not going to take that risk. it's tough, tough on him, tough on all of the leaders up there. we have no option except to come together. the question is not whether to have an agreement. the question is do we have an agreement for the economy. >> joining us nicolle wallace, former communications director for george bush, author of "eighteen acres." >> also with us, mo elleithee and cbs political correspondent january krou focrawford. people at home want to know is this going to get done, is this going to get done? mo, we start with you? >> i sure hope so. look it seems like there's a real possibility that something will get done. i think we had a setback over the weekend when the speaker said that he was going to pull out of the big picture negotiations and big picture deal, and i think that's a mistake for him both in terms of the economy and politically, but it seems like there is an interest on both sides to get something done, let's hope they can. >> was that a mistake on the part of john bainer? it seemed li john boehner? it seems like things were going on both sides. >> we write fiction, we hold out hope they're going to step into the ari 2345 and do big dramatic things. the reality, policy reality and political reality for republicans, it is always a loser to stand behind tax increases. >> we keep hearing the word hope. hope seems to be fading. we get closer to august 2nd. you hear tim geithner saying catastrophic for the u.s. economy. last thing people want to hear again another double dip recession and seeing the 401(k)s revap rate. when do the two have to combine and say okay entitlements we have to take a kax increase, maybe have to be a little. at some point they have to get to that point. >> republicans are saying very clear we're not going to have tax increases and i agree with you, mike, there will be a deal. this is washington they'll. ush it to the last minute but there will be a deal. what that deal looks like no one knows, too soon to say. what we need to think about is a fundamental disagreement about the direction of our government. republicans say no tax increases, let's cut spending. democrats say we're going to have to raise taxes and at the end of the da i we may not know who is the winner in this deal until next november. it's the voters who are going to get to decide who comes out of this looking the strongest and it's a ratification on what they want their government to look like. >> republicans are open -- what we have now is a failure to communicate. republicans are open to structural tax reform. tom coburn, john mccain are open to fundamental tax reform, we close the loopholes and lower the corporate individual tax rates. i think that's where some things got lost in translation when republicans heard closing loopholes they believe it must be lowering tax rates. democrats were close loopholes, raise the revenues and we'll do some entitlement reform. >> it's interesting how much of it is politicking and rhetorics and the way things are labeled. you can be talking about the same thing but one says closing loophole and the other is you're raising taxes. >> there were fundamental differences in that $4 trillion plan that republicans and i think john boehner had the pulse on the conference and presidential candidates and the republican party they were not going to have the tax increases. >> i'm not sure how much of that was john boehner had his finger on the pulse. john boehner seemed to be a reasonable, practical guy ready to negotiate and get some of the loopholes closed but got pulled back by his own caucus when eric cantor and the rest said no way. >> the biden and everyone else as well. >> really reflecting the voice of the caucus. >> we have to shift a little bit, too, because this is all obviously setting us up for 2012. how much is this going to reflect on how this turns out for the president on where things go for the democratic party in 2012? >> well i mean i think democrats want to see the president doing what he's doing and frankly most americans do, that the president is actually working hard to bring both sides to the table to get a deal done that will spread the sacrifice and responsibility across all parties. i think that's what people want. i don't think people agree with the republican caucus that says no revenue, we're not going to deal with the loopholes. if the president keeps fighting for that i think he ends up being okay in 2012. i think the republicans are setting themselves up for a hard fall if they don't change their tone a little bit. >> as far as tone and now job numbers, the mod again very dark in washington, two straight months of anemic job numbers and unemployment rate at 9.2%, we know the history, 9.2%, tough to get reelected. nicole, republicans saying this is our chance to pounce. >> where republicans won over the independents who delivered president obama his victory in 2008 was on the issue of the national debt, the size and the role of the federal government so where republicans have an opportunity to stand for a smaller government, they also have an opportunity to hang on to the independent voters, who sure they want to see their government work. everyone wants to see their government work but republicans and increasingly independent voters are deeply skeptical of these demands from our leaders in washington that we must continue to grow the size of the federal government. >> isn't one of the challenges for the republican party, granted we're a ways out but the candidate who could do the best for the party in the primary is not necessarily the candidate who would do the best for the party when it comes to the best for the election, two best there. >> people thought hillary clinton would have made a better general election candidate than barack obama, so people say that every four years and usually it works out for the side that wins. >> jen, a quick question about 2012 in here, cover of "newsweek," sarah palin who has not really put her foot in the ring just yet, says "i can win." that's the takeaway from the "newsweek" article. are people sitting on the sidelines waiting for this woman? >> no question. i was out in iowa when the movie about her life and leadership premiered, had a chance to watch her interact with voters. i think she's going to run. i think people around her are supporting it. she said her family is on board with this, she's been giving us these hints over and over and over again that she is going to get in the race so i really, it could just be a matter of time. the one thing i look for, she has said a couple different times on the trail that she's kind of weighing her options to see what someone else is going to do, texas governor rick perry so she's looking to see what rick perry is going to do, so we have to wait and see. he's also possibly in. >> so much to talk about but sadly we have to go. thank you to the three of you. we appreciate it. jeff glor is standing by with a check of the other headlines. >> good morning to you and good morning to everyone at home as well. in russia the death toll following a cruise boat disaster continues to rise. the boat capsized yesterday on the volga river killing at least 41 people but many more are missing. cbs news deputy foreign editor anna reale is near the scene. >> reporter: there's almost no hope of finding survivors. this disaster is coming to focus. families of those pushed to the port to find out. for some, happy reunion, for others anguish. the cruise ship was supposed to carry 120 was crowded far beyond capacity. rush media reports say of those rescue rescu rescued dozens of children remain missing. a large wave washed over the deck. the boat sank in just 18 minutes. tomorrow is a national day of mourning. anna reale, aboard the volga river. this is a day of rest for the tour de france and they need it. two were clipped by a news car. one of them slammed into a barbed wire france. both ended up finishing sunday's leg of the race. ten minutes past the hour. watch out for the news vehicles, marysol castro, very dangerous >> those news vans are p persnickety. so far, 20,000 lightning strikes across omaha, making their way to chicago. we turn to the southeast, it's hot, sticky, this is normal, it's july. we also get some rain and the state of florida needs it, so does macon and pensacola. elsewhere further up north, the northeast, what a weekend, barely any humidity, the humidity and the heat move in today, temperatures on the rise for th this weather report sponsored by subway, try the new subway $3 flatbread breakfast combo today. >> thanks so much. that's your latest weather. here's erica. just ahead talk in washington of deep cuts to medicare and medicaid. our "early" investigation shows how that could affect cuts for millions. this flat-out delicious -- the new $3 flatbread breakfast combo. 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[ male announcer ] ask your doctor about pristiq -- a prescription medicine proven to treat depression. pristiq is thought to work by affecting the levels of two chemicals in the brain -- serotonin and norepinephrine. tell your doctor right away if your depression worsens or you have unusual changes in mood, behavior, or thoughts of suicide. anti-depressants can increase suicidal thoughts and behaviors in children, teens, and young adults. pristiq is not approved for children under 18. do not take pristiq with maois. taking pristiq with nset pain relievers, aspirin, or blood thinners may increase bleeding risk. tell your doctor about all your medications, including those for migraine, to avoid a potentially life threatening condition. pristiq may cause or worsen high blood pressure, high cholesterol, or glaucoma. tell your doctor if you have heart disease, or before you reduce or stop taking pristiq. side-effects may include nausea, dizziness and sweating. for me, pristiq is a key in helping me treat my depression. side-effects may include nausea, dizziness and sweating. finally, there's a choice for my patients with an irregular heartbeat called atrial fibrillation, or afib, that's not caused by a heart valve problem. today we have pradaxa to reduce the risk of a stroke caused by a clot. in a clinical trial, pradaxa 150 mg reduced stroke risk 35% more than warfarin. and with pradaxa, there's no need for those regular blood tests. pradaxa is progress. pradaxa can cause serious, sometimes fatal, bleeding. don't take pradaxa if you have abnormal bleeding, and seek immediate medical care for unexpected signs of bleeding, like unusual bruising. pradaxa may increase your bleeding risk if you're 75 or older, have kidney problems or a bleeding condition, like stomach ulcers. or if you take aspirin products, nsaids, or blood thinners. tell your doctor about all medicines you take, any planned medical or dental procedures, and don't stop taking pradaxa without your doctor's approval, as stopping may increase your stroke risk. other side effects include indigestion, stomach pain, upset, or burning. if you have afib not caused by a heart valve problem, ask your doctor if pradaxa can reduce your risk of a stroke. in this morning's "healthwatch," possible changes in the government's health insurance program. a new proposal would cut reimbursement rates for doctors cutting medicare by 30% in 2012. susan koeppen reports the cuts are raising concerns for 100 million americans who rely on the program as well as the doctors who treat them. >> people are dying because they don't have simple access. >> reporter: for more than 30 years dr. david ansell has been treating patients who can't get help anywhere else. >> i've always taken patients regardless of their ability to pay. >> reporter: he says he's seeing a growing number of patients with medicaid or medicare who can't find physicians willing to treat them. he says the main problem is the government's low reimbursement rates. >> i don't fault the doctors. i fault the system. >> reporter: one study in colorado found a doctor earning $100 through private insurance would be paid about $71 through medicare. and only about $50 through medicaid. >> doctors just want to see patients, but they also want to be paid fairly. >> reporter: his patient 64-year-old wallace harris, came to him when he had nowhere else to turn. >> specialists refuse to accept my medicaid card. >> reporter: some would consider harris a hero. he was shot while trying to help a woman who was being attacked. >> take a deep breath. >> i've worked over 50 years in this country and i paid taxes, so why shouldn't i have some kind of benefit when i need it? >> reporter: and it's not just medicaid. 73-year-old retired school teacher jean callahan thought being on medicare meant she would be protected. >> medicare is our insurance for people who reject it, i felt stymied. i just felt helpless. >> reporter: we wanted to find out how widespread the problem is. so we called 40 primary care physicians at random across the country. >> would you accept united health care? >> reporter: 95% told us they accept new patients with private insurance. >> do you accept medicare patients? >> reporter: and most, 78% still accepted medicare patients. >> you don't accept medicaid? >> reporter: only 13% said they would see patients on medicaid. >> these results don't surprise me at all. >> reporter: ron pollack is executive director of families usa, an advocacy group for health care consumers. >> clearly we have a real crisis right now with respect to medicaid. >> reporter: but health care providers on the front lines like dr. ansell are concerned that with more cuts on the horizon, the crisis could spread. >> the first baby boomer hit 65 this year. there's going to be 78 million baby boomers, and they are going to come flooding into this health care system and we ain't seen nothing yet. >> reporter: susan koeppen, cbs news, new york. a first of its kind study released last week found me id cade benefits are received physically and emotionally as well as financially. up next, whitey bulger's girlfriend stuck with him and now facing serious charges. why would a judge free her on bail? we'll tell you when we come back. 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[ female announcer ] nourish plus. only from aveeno. kathryn agreeing, girlfriend of james "whitey" bulger is expected to ask the judge to release her on bail but that may be a tall order considering she spent 16 years on the lam with bulger. elaine quijano has the story. >> reporter: prosecutors initially argued kathryn agreeing was a flight risk when the notorious couple first appeared in court last month but at today's bail hearing agreeing will make the case that's not true. >> in an ordinary case the only question at a bail hearing, is this person likely to return and if you look at what kathryn greig is, never let her out. she's highly likely to avoid the justice system, that's what she's been doing. >> reporter: days before the know anotherious couple was caught living comfortably in santa monica, the fbi focused on greig in a television commercial. >> the fbi is focusing on this woman. >> reporter: the fbi might be willing to make a deal to lessen the charges against her. >> if it's true that catherine greig had anything to do with whitey bulger's capture, she will be released on bail and a lot of people will then infer that it might have something to do with a deal that is already in the works for her. >> reporter: recently her lawyer, kevin reddington, a specialist in watered women's cases was asked about his client's relationship with bulger, but he would only say this. >> i think it is going to be a streamline simple case. i think that we're going to be looking for a speedy trial and trying to move it through the system as quickly as possible. >> reporter: officials say greig, a former dental hygienist went on the run with julyier in 1994, charged with 19 murders. elaine quijano, cbs news, new york. according to her attorney, catherine greig will offer to put up her south boston home along with her twin sister's property as collateral. she's also expected to agree to wear a monitoring [ female announcer ] they've been off limits to dieters since time began. not anymore. ♪ fiber one is bringing brownies back. at 90 calories, the only thing between you and chocolaty brownies is a nicely designed package. ♪ now you can have brownies again. new fiber one 90 calorie brownies. in the granola bar aisle. and enjoying it less and less? stop paying for second best. upgrade to verizon fios and get tv, internet and phone for just $99.99 a month for a year. want to save even more? call now and we'll add over 60 premium channels, including showtime, starz, epix, and more for 12 months. fios is a 100% fiber optic network. it delivers superior picture quality, the best channel lineup, more hd, plus america's fastest, most consistent and reliable internet. and there's no annual contract required. why keep paying for cable? move up to the best. get fios tv, internet and phone for just $99.99 a month for a year, plus over 60 premium channels for 12 months. don't wait. call 1.877.729.fios. call the verizon center for customers with disabilities that's 1.877.729.3467. at 800-974-6006 tty/v. or for other great fios offers, visit us online. get the network that delivers more. get fios. a network ahead. welcome back to "the early show." coming up, hollywood stars are often referred to as america's royalty but over the weekend, celebrities came face-to-face with the real thing, the duke and duchess of came brimming ended their trip with los angeles that included polo, a jobs fair and a fund-raiser for the british film and tv academy. >> not too shabby. we'll get to that later. broadway to ballet to the symphony, enormously valuable to so many lives but budget cutbacks, many programs in jeopardy. we'll look at what exactly is in danger and what has found a way to flourish in this difficult economy. first here this morning bottom of the hour a judge in new york has cleared the way for a controversial islamic center to be built blocks away from the site of the world trait center. michelle miller is the at the site of the proposed center in lower manhattan with more. michelle good morning. >> reporter: good morning chris. battles over real estate are nothing new to the city but this particular battle over the location and building just behind me has at its core very deep emotional ties to the attacks of september 11th, 2001, nearly ten years ago. it was just over a year ago anger at the proposed mosque erupted in lower manhattan but it hasn't always been that way. six months earlier in december 2009 the "new york times" ran a story about the proposal. it went unnoticed but months later, the conservative blogger pamela geller wrote "what could be more insulting and humiliating than a monster mosque in the shadow of the world trade center," that sparked the protest. soon the issue went national. >> this is a slap to innocent victims who were murdered that day on 9/11. >> reporter: by september, terry jones a florida minister grabbed headlines when he threatened to burn the koran if the center wasn't moved. the debate divided the relatives of trade center victims, ken and diane fayerbit lost their son, keith. first responder. >> they should have a place to pray, educational center, i have no problems whatsoever, definitely not there. >> reporter: donna marseo connor, pregnant daughter vanessa was killed does not agree. >> i am not afraid of my neighbors. i don't want to be afraid of my neighbors. >> reporter: new york mayor michael bloomberg took a strong stance. >> if we shout down a mosque and community center because it is two blocks away from the site where freedom was attacked, i think it would be a sad day for america. >> reporter: but as the rhetoric cooled the developer of the site continued to move ahead. he says completion of the project is years away. years away because while the legal challenges have been removed, there's still obstacles, chiefly financial ones. the developer admitted he hasn't raised much of the $100 million he needs to build the center here. chris? >> cbs's michelle miller in lower manhattan, thanks so much. that is the big key looking for $100 million, don't have anything close to that. >> a lot of money. >> to build in lower manhattan not cheap. >> jeff glor standing by with a check of the day's other headlines. good morning. >> your talents don't come cheap. >> $100 million is all it takes. >> we can afford it. >> good morning everyone. "news of the world" is no more, after 168 years, britain's scandal plagued tabloid published its last edition yesterday. rupert murdoch shut it down after disclosures the reporters hacked into many cell phones. news international's ceo rebekah brooks, a murdoch favorite will be questioned by police about that hacking scandal this week. the family of a murdered school girl whose phone was hacked is calling for brooks to resign. the battle for libya, france said today it wants libyan rebel leaders to negotiate with moammar gadhafi on the ground the rebels were pressing on toward tripoli. mark phillips reports from the battlefield. >> reporter: this is an area called qualesh in the western mountains of libya, runs 100 miles from the tunisian border, right through, drops toward tripoli. this here was until a few days ago until the latest rebel push a gadhafi militia checkpoint, they apparently left here in a hurry, the place is littered with ammunition, littered with blankets and food stuffs as well. you can tell by the look of some of these things, pretty extensive fighting here and here. interestingly, in this load of artillery, shell casings for 107 millimeter rockets. the consignment is from the ministry of agriculture in tripoli, sold about 15 or so years ago. what the rebel leaders here say they continue to make gains like this, nipping if you will at the flanks of gadhafi's forces but in order to get over that ridge and down across the plain and toward tripoli, they need much more in the way of weaponry, much more in the way of communications equipment, of course, training and men, but also, they stress, much more in the way of coordination with the nato air forces giving them cover from the skies. i'm mark phillips, cbs news in kualesh, libya. the fbi is investigating the discovery of a stun gun on an airline in new jersey, a cleaning crew found the weapon this weekend tucked into a seatback. somehow somebody got it past airport security, possibly in boston. reassuring. now here's marysol castro with a final check of weather, 36 minutes past the hour. good morning. >> good morning, jeff, good morning everyone at home. we take a look at the national picture, here's what's in store for you, the west coast is gorgeous. here you can see a large swathe of severe weather lasting over the next 24 hours. it's really fueled by heat, the bigger story across much of the land. there are 18 states experiencing some sort of heat watch or advisory. kansas city, st. louis, you get the bulk of it. new york city you could see a heat advisory by day's end. when you factor in the heat and humidity, feels 10 to 20 degrees warmer than it is. the west coast as i mentioned is picturesque for today along its coast. temperatures are mild, the further inland you go feels warmer but very, very gorgeous at least for the next thanks so much. that's your latest weather. over to erica with a little royals situation? >> love me some royals as many of you do at home. the duke and duchess of cambridge, pretty used to celebrity. tough to get anybody star struck in los angeles, unless you're the duke and duchess of cambrid cambridge. polo for the prince as well, they dazzled hollywood, the british academy, victoria arbiter is here with more on the royal newlywed's first official u.s. visit and much like canada was a success, this was as well. >> this trip has been an enormous success and not just for william and catherine for the british royal family as a whole, it promoted their interest, put them right back at the forefront of media coverage and so i think william and kate can go home very happy, having raised $5 million for charity. >> a recap of what they did over the weekend, a little polo match for prince william, he was asked how his mood was, it's going to depend because i'm not a good loser. >> he's very competitive but he's a good player, he and harry. i'm delighted to say his team did win, he scored four points. catherine presented the cup, we did get to see a little kiss. >> kiss on two cheeks, a kiss-kiss, still very nice, and then of course the big event, where all of hollywood seemed star struck, celebrities standing in awe of the prince and catherine. >> you're right, nicole kidman was positively giddy at the idea of meeting the prince. she thought she might be too shy but her mother was very proud she was going. the idea was to take 42 up and coming british artists, whether they were writers, actors, set designers and put them in amongst hollywood's movers and shakers to give them a head start and william is keen to focus on the needs of young people and give them a chance in life. >> the pictures don't get old. they also spent some time yesterday with some kids, very young kids of inner city arts doing a few charity events as well. >> yesterday really was the heart of the trip. they went to inner city arts, a program on skid row. skid row is considered the homeless capital of the world. 30,000 kids live within a three-mile radius of the center. william took on princess diana's patronage of center point. much of what they do in city arts compliments the work of center point and kate painted a fabulous red snail and william asked to help with a giant red tortoise, got clay on his set and hand prints. >> it seemed they were having a good time. one of the things that shocked me, we talked about this at the break and a number of americans would be surprised, too, they flew home commercial just like you or i would, sort of. >> people are often surprised to learn the royal family do every now and then fly commercially. they would have have their entourage with them, flew first class. they were in the front first two seats and entourage would have acted as a buffer between the rest of the passengers but they're proud to fly british airways, for kate's mother, former british airways flight attendant it comes full circle. >> you said they do it fairly often. >> they do, they really do because they need to get home just like everyone else, no need for them to fly a private jet all that way ben british airways has a flight going in the same direction. another way to support british industry which was the whole idea of this trip. >> nice for the folks to say yeah i flew home with the royal newlyweds, duke and duchess of cambridge, new bffs. >> i love it when the flight attendants close the curtain! shakespeare's metaphor for life, all the world's a stage and all the men and women players. our weak economy is putting the squeeze on performing arts. katrina szish is here this morning. >> nice to see you. there have been considerable economic challenges and the life arts are managing to survive, evolve and some cases thrive in the face of our changing society. ♪ >> i don't think that life is full without the arts. >> you can explore human emotion and possibility through your body and movement and see someone do that is also a transcendent experience. >> reporter: throughout history, the performing arts have influenced and improved our quality of life. ♪ stimulating, challenging and allowing us to see ourselves and our world in diverse ways. >> they really are a chance to celebrate our common humanity. it doesn't matter what language you speak, what politics you, they resonate for all of us and remind us that we are more alike than different. >> reporter: do you think the arts are in danger? >> oh, absolutely. i think they're threatened on all levels. i think it's a cause of great concern. ♪ >> reporter: many of the country's performing arts organizations still suffer the recession, facing deficits due to dwindling donations in ticket sales and stronger competition where entertainment is at our finger tips. the philadelphia orchestra filed for bankruptcy in april, the first major orchestra to do that. the new york city opera must move out of its lincoln center home, cut staff and reduce performance schedule and in february kansas became the first state to eliminate all state funding for parts programs. while the future is uncertain for some, others have found ways to flourish, often with contemporary twists. the american ballet theater's recent revival of "swan lake" sold out every performance, following "black swan." on broadway, show attendance increased by more than 5% this year with the help of celebrity fillings and discounted tickets. >> we hope that people who go to a broadway show leave either experiencing pure joy -- ♪ it's the circle of life >> -- or that escape from seeing the show and all of the excitement that that brings. >> reporter: out west the los angeles philharmonic is experience a renaissance. >> reporter: adding orchestral matchups to reach wider audiencaudience s and when "60 minutes" interviewed gustavo, he stressed the importance. >> when music, it changes the life of society. ♪ >> reporter: nowhere is this more evident than at the boys' club of new york. >> one, two, three, four. ♪ >> reporter: the nonprofit shares the gift of music with more than 400 children. through accessible instruments and tutelage. >> i would not be able to afford music lessons without this program here. >> reporter: why is music important for kids? >> it gives them depth and knowledge and a well-rounded person. >> reporter: from challenged public schools with eliminated arts programs it is their only exposure to live arts. ♪ can you imagine your world without music in it? >> unh-um, no, i can't. i really can't. i can like imagine it, but the image i see is not very happy. ♪ >> reporter: thoughtful words that remind us whether making music for the first time or dancing before thousands, the experience for performer and spectator is in the end equally inspiring. and important. >> serious young man there, too, a young man who is obviously very talented but is in a threat of losing the music classes that mean so much to him. >> this is what we're talking about, claudioious could be the next gustavo dutemel, that could be threatened for everyone. >> mr. singer, my high school guide. >> i had mr. geller. >> they had a great impact. thanks so much. up next construction play ground for adults, the new way to get your thrills in vegas, you're watching "the early show" on cbs. like you need more ways to get thrills in vegas. these sweet honey clustery things have fiber? fiber one. almost tastes like one of jack's cereals. uh, forgot jack's cereal. [ jack ] what's for breakfast? uh, try the number one! i've never heard of that. [ wife ] it's great. it's a sweet honey cereal, you'll love it. yeah, this is pretty good. are you guys alright? yeah. [ male announcer ] half a days worth of fiber. not that anyone has to know. fiber beyond recognition. fiber one. for millions of americans, las vegas is the ultimate getaway, it offers something for everyone really including grownups who just want to act like kids with full size toys playing with giant sand trucks and other equipment. just from the headlines sign me up. >> me, too, as the city of las vegas builds itself into one of the premiere party destinations, construction zones became common destinations. a construction zone is now the main attraction for someone, called dig this. each year more than 40 million visitors descend upon vass vegas, nevada, built to last. some find it at the tables, others in a theater. but the industrial minded among us may discover the ultimate thrill ride comes from steering 15 tons of metal through the dirt >> dig this is basically an adult sitzed sand box. >> reporter: colorado resident ed mumm is the creator of the first heavy equipment playground. inside the five-acre theme park adults live out the construction fantasies they acted out as kids. that's how inspiration struck mumm. in 2004 the former fencing contractor rented an excavator for a do-it-himself project. >> i thought to myself if i'm having this much fun amazing the amount of people who don't get the opportunity to do this stuff. >> reporter: three years later he opened up dig this in steamboat springs, colorado before moving the operation to las vegas earl whier this year. two bulldozers, three excavators and giant obstacle course, people spend three hours digging trenching, scooping basketballs and tossing tires. the appeal is simple. >> what guy wouldn't want to come out and play with these huge toys and dig in the sand box. >> you feel the earth move under you, picking up this mass of dirt and the machine is moving and it's a sense of power. >> reporter: their play date in the dirt was a surprise birthday gift from curtis to his father. best birthday gift ever? >> best ever. thanks for the birthday present. great. >> reporter: we're going in. as macho minded as construction work can be, it's not just men having all the fun. right in. oh, to the right. wow, look at that. nice. 50% of the customer at dig this are women. >> for me this was a day just to chill out. >> reporter: instead of a therapeutic day inside a spa sheryl discovered an afternoon behind the wheel of a bulldozer delivers the dose of relaxation she needs. >> i like to be challenged so it was great. >> reporter: want to do it again? >> absolutely i want to go on an excavator next. >> so much fun. dig this costs $400 per session, that will get you about three hours behind the controls of one of the giant machines, anyone is welcome, regardless of ability but you must be at least 14 years old. >> only 14? >> only 14. >> my son is counting down right now, ooh, 9 1/2 years. >> they say in las vegas especially after an hour you should not operate heavy machinery. >> very good. >> nice job, too. we love what you're doing on the apple store. >> a lot of construction on the plaza. have a great day everyone. see you tomorrow. your local news is next.