good evening, everyone. i'm erin burnett. "outfront" tonight, ooh-la-la. france's most powerful woman sticking her nose in america's business. it is sort of her job to do that. christine lagarde, head of the imf, had a doom and gloom message for washington today. >> economic recovery remains tepid, and downside risks have intensified. what we see is clearly a risk that confidence be eroded. >> and she didn't stop there. she took on president obama, too. in fact, she called his $3.8 trillion budget, which he says will reduce the deficit from 8.5% to 5.5% of our economy by next year as too rapid. among her suggestions, more infrastructure spending, housing initiatives and further extension of the emergency unemployment benefits. now, hey, we're all for ideas from anyone, but this did seem to be a pretty naked endorsement of the spend, spend, spend idea which is in vogue in lagarde's home country of france right now, where they plan to cut the retirement age from 62 to 60. here's how some of that has seemed to be working for france. the country's debt is now 920% of the size of the committee. many economists say that is when it can no longer grow. maybe she is right about america. america is only nearing 70% on that crucial ratio of debt to the size of our economy. so as hard as this advice may be to take from someone who is french, we're being tongue in cheek, everyone, don't get all bent out of shape, is it white? steven morris and gillian tett, u.s. managing editor of "the financial times." great to see you both. steven moore, it may be hard to take it from someone who is french, but, you know, she points out, we have a little bit more room, and when you look at that crucial ratio, maybe she's right. >> well, oui, oui, it is hard to take. she is saying she wants the united states to be more like france. we're at 70% of our debt to gdp, they're at 90%. she wants more spending more stimulus. there are a couple problems with that, one, it didn't work in the united states when we tried it a kippel he years ago. also, why would we want to move in the direction that france and italy and spain and greece have done. we should move away from that model. it's almost like the charlotte bobcats coach explaining to lebron james how to win a championship. >> gillian, i guess you're here to represent the socialist views of the continent. >> i certainly wouldn't defend what people at the french government have been doing the last year or two, but at the same time, what she was saying is, watch out, america. because america is heading towards a so-called fiscal cliff that could be a very nasty shock at the end of the year, if the fiscal issues are left unresolved. and at the moment, the global economy simply cannot afford another shock when we have the eurozone already in progress and china also having warning installation. so it's really in that context she was talking about america. >> and do you think when she talked about the fiscal cliff, which she did specifically, she said, look, the effect on the rest of the world is just going to be huge. is that -- obviously, the u.s. is the most important economy in the world still. but is that fear mongering on some level? >> there is a lot of concern about the impact of going off that fiscal cliff or even a period of bungee jumping, having a deal and going off again, due to global sentiment. the reality is, we have seen in europe what happens when political citizens fail to get their act together. and also, we have plenty of american politicians getting very frustrated with the eurozone. it would be so ironic if at the ends of the year, due to political paralysis here in america, we had yet another shock to the global economy, not out of the eurozone, but out of the u.s. that. >> that is true. that would be a very great irony that would humiliate a lot of people in the united states, steve moore. >> look, the last thing we have to worry about the united states is spebing too little money. we have jacked up our debt by $5 trillion over the last four years. we're spending nearly $4 trillion at the federal level. in fact, i think cutting government spending right now would be very positive thing for the u.s. economy. it was interesting. she didn't mention -- all these things she said that the united states should do, more unemployment insurance, pay more people to stay unemployed, housing assistance, infrastructure. she didn't talk about the one -- and i know, erin, you disagree with me on this one. but i think the big danger is all those tax rates going up on january 1, 2013. and she didn't mention that at all. but i think that does have negative effects for businesses incentives to invest -- >> she said everything else she said, she might as well have gone there. you jump in and tell america how to run its economy, come on, go all the way. >> beside the fact that the imf is there to look after global economy, and america is the world's biggest economy. so obviously, the rest of the world is very concerned about what happens here. and it's not so much the details of any kind of fiscal measures that are worrying people right now. it's a threat there may not be any plan that actually by the end of the year we'll have gridlock and that will really sap business confidence. and it's a confidence issue right now which is key. because we're already seeing businesses freeze for fear of what's going to come out of the eurozone. if it's not freezing for fear about washington as well, that's going to be very bad news. >> i agree with that. i do think, you know, it's still the case, even with all our problems, we're the hub of the world economy. and, look, when we catch a cold, the rest of the world catches pneumonia, especially europe right now. i agree with the sentiment. let's get growth up in the united states. i just think more of the same spending and borrowing is not the best -- >> steve, you're just finishing a study i know you're getting ready to publish, this crucial question right now, if you borrow money and spend it on stimulating the economy or unemployment benefits or whatever else it might be, how does that affect growth? >> yeah, art laugher and i looked at 30 countries ask countries that had the biggest fiscal stimulus from 2008 to 2010. and surprisingly, erin, we found that the countries that actually had the most stimulus spending actually had the weakest recovery. so there's no evidence whatsoever that government spending causes an economic turn-around. in fact, just the opposite. >> gillian, do you think france will be the country that will lead the way on the responding, as president owe land wants to do? >> i'm not here to endorse uncontrolled spending at all. but at the same time, the one thing we've seen from the eurozone in the last year or two, is that uncontrolled austerity in an unintelligent way doesn't work either. if you cut randomly, that doesn't work either. what they need to do is come together and craft a sensible, moderate pace and carefully planned program for trying to balance the debt and ensure there is growth. i mean, u.k. at least has a plan, it's trying to implement it. it's having a pretty patchy record right now. but the real tragedy is just how few countries across the western world have an intelligent plan at all. >> right. telling people the truth, and the truth can be really, really hard to take and to tell. gillian, steve moore, thank you very much. as always, good to see you. still outfront, how mitt romney is looking like john kerry in more ways than one. one being that he's tan and in great shape. but there are others. plus, her husband charged with killing 16 civilians while on tour in afghanistan. does kerry bales think her husband robert is guilty? 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[ male announcer ] now through july 8th is the perfect time to buy. save up to $200 during our mattress set savings event and up to $600 on tempur-cloud supreme. also get 0% apr financing with up to 5 years to pay on qualified purchases. to learn more, visit tempurpedic.com. don't wait. these offers end july 8th. tempur-pedic -- the most highly recommended bed in america. now our second story "outfront." this video caught our attention today. yeah, who is that? who are those amazingly good-looking people. mitt romney and his wife, ann. and they really are. i mean, you know, sickly good-looking. particularly ann. skiing on a lake in lake winnipisaki where they will celebrate the 4th of july. this scene reminded us of another presidential candidate. actually, much better. ann was driving the jet ski. mitt looked like he was holding on for dear life. john kerry clearly knows how to wind surf. that was in 2004. the question is mitt romney having a wind surfing moment. a very smart man once told me this. >> i think both parties need to pass a rule, neither one of us will ever nominate anyone from massachusetts again. >> that man joins us. eric, you stand by that? >> yeah, you know, if this isn't going well for mitt romney, the interesting thing for him is that eric fernstrom is probably the guy from massachusetts who may need to go. but i'm a little bit shocked by the obama campaign really pushing this out to the media today. because i lived down in georgia. we call those the red neck version of the ski boat. we all have them, and none of us are in the 1%. >> i'm saying, to be fair, the comparison with the wind surfing was mine. i was unable to resist that. but, all right, so you're saying jet skis are not wind surfing. but still, lake winnipisaki, fancy new hampshire. >> this is the same thing, mitt romney going to new hampshire and barack obama going to martha's vineyard. neither want to relate to the rest of america. it's a problem both campaigns have. >> it's true, they both go to very lovely new england lookouts. >> quite notably, president obama is not going to martha's vineyard, that vacation plan called off. the reason this video popped is it does recall the wind surfing moment. and just having fun with it, maybe the message is not nominate folks from massachusetts but avoid water sports when running for president. >> avoid water sports. >> oh, god. >> john kerry is really good. he purposely aimed for that -- i've got to say. >> i'm not quite sure what mitt romney is doing behind his wife on the jet ski, but that's really a judgment. obviously, on a superficial level, you've got a stiff san torrian -- >> she wears the suit. it's the best part about him as a candidate. >> first of all, i'm trying to figure out why eric is standing by with a t-shirt underneath. >> whoa. >> here's the deal. this makes no sense -- >> because i've got my swimming suit on and i'm going to the beach after i get off here. >> if i'm mitt romney, i would channel allen iverson. i would say, jet skis? really? we're talking about jet skis? is it not policy. jet skis. that's what we're talking about? this to me is what drives me nuts. every time we have a conversation where it's -- whether it's wind sailing or jet skiing, the president should also say, golf? you're talking about golf? of all the things out there, you're talking about golf? this is just nonsensical. guess what? americans jet ski. americans wind surf. americans play golf. americans go to martha's vineyard. americans go to jackson hole, wyoming. americans do all these things. so how about this here. if we questioned them on policy, as opposed to silly stuff, that to me makes sense. not a jet ski. >> you know what, that's a very fair point, john avalon. >> look -- >> eric, that was the impassioned defense you were supposed to provide. >> well -- >> but he can't have that patterned shirt. >> i'm looking forward to going to the beach for the 4th of july. >> but this -- this brings me, though, to something, roland, which is interesting. a new poll shows mitt romney and barack obama tied on a crucial issue for mitt romney, who would better handle the economy. 48% for mitt romney, 47% for barack obama. i don't need to tell everybody, this is within the margin of error. more willing -- more likely to get the economy moving? barack obama, 44%, mitt romney, 42%. >> yeah. >> that's pretty damning. >> see that date, june 28th, july 1st? that's the most important thing. these mean nothing right now. okay? we could spend a lot of time poring over numbers -- >> why, because people are in ray good mood because of the holiday? >> no, because so many things can happen literally over the next four months that can totally change this election. remember in 2008, what took place when senator john mccain suspended his campaign, he goes to washington, d.c., senator obama does not. that was october. so so many different things can happen. and so i really don't get excited over who could possibly handle the economy better. it's really going to come down to those critical states as opposed to some overall number. >> look, of course, statewide numbers are what determine who wins the electoral college. and, of course, it's still early. we all get that. but what i think is significant about these polls right now is that it does show the economy is largely a jump ball. and to some extent, momentum seems to be slightly shifting towards president obama at a time when the romney campaign keeps saying it's all about the economy. every day, we don't talk about the economy, is a bad day for us. and so that's why i think these are indicative of the way the winds are shifting right now. >> eric, eric, let me just ask you a question about what mitt romney should do. hold on, i just want to get to this before the end of the conversation. these tweets that are out about the mitt romney campaign. eric, you know, from rupert murdoch saying mitt romney last week, tough -- chicago pros will be hard to beat unless he drops old friends from team and hires real pros. doubtful. he then continued that, jack well much, well-known former leader of general electric. advice on campaign. is it time for a shake-up eric? >> yeah, i'm not sure that it is. because mitt romney has a very insular campaign. one of the problems mitt romney has is very much like what george w. bush had, which is a great deal of loyalty to his staff. and doesn't necessarily cut strings when it's time. i'm concerned about eric fehrnstrom and he gave the etch-a-sketch remark and internally romney people seem to be saying they're upset with him for doing that. at the same time, though, the president up until the supreme court gave him a win last week had a significant series of bad weeks.h? polling isn't going well in the battle grounds. even cnn has him behind mitt romney in battle grounds. and no one wants to talk about should barack obama's team do this. i don't know if it's fair to talk about mitt romney's team when they're neck and neck in the polls and he hadn't done anything wrong in the past few weeks. >> right. and this is a campaign being run out of massachusetts so there are a lot of consultants wanting in. but to change your campaign at this point would be so destabilizing and demoralizing. you want to reach out and grow your campaign is what i think i'm hearing eric say. but when you're in the real heat, that would be i think a terrible management decision. >> final word -- >> mitt romney should ignore people like jack welch and rupert murdoch. neither one have ever run for political office, they have never won. so the way you operate in business is different when it comes to politics. if you shake your team up, that's going to lead to another host of stories about saying you never trusted it. then it becomes this whole thing where it just eats yourself up. stick to your game plan. you move forward, anything happens, you get to september, october, that's a different ball game. >> hey, roland -- >> you don't thing anything now -- >> you're not a consultant for the romney campaign tonight. i'm just checking. >> no. >> i'm just checking. he might need you. >> i'll take some romney money, though. i don't mind another check. >> buy yourself a jet ski. thanks to all three of you. we appreciate it. nothing wrong with having fun, doing whatever you're going to do. all right. iranian nationals are accused of hiding 30 pounds of explosives, potentialing targeting americans, enough to employee blow up a major hotel. we're live to that story. and a top poker player will soon make off with more than $18 million. and that is no joke. brain freeze cake donettes rolling hot dogs bag of ice anti-freeze wash and dry diesel self-serve fix a flat jumper cables 5% cashback signup for 5% cashback at gas stations through september. it pays to discover. i'm one of six children that my mother raised by herself, and so college was a dream when i was a kid. i didn't know how i was gonna to do it, but i knew i was gonna get that opportunity one day, and that's what happened with university of phoenix. nothing can stop me now. i feel like the sky's the limit with what i can do and what i can accomplish. my name is naphtali bryant and i am a phoenix. visit phoenix.edu to find the program that's right for you. enroll now. mine was earned off vietnam in 1968. over the south pacific in 1943. i got mine in iraq, 2003. usaa auto insurance is often handed down from generation to generation. because it offers a superior level of protection, and because usaa's commitment to serve the military, veterans and their families is without equal. begin your legacy, get an auto insurance quote. usaa. we know what it means to serve. you see us, at the start of the day. on the company phone list that's a few names longer. you see us bank on busier highways. on once empty fields. everyday you see all the ways all of us at us bank are helping grow our economy. lending more so companies and communities can expand, grow stronger and get back to work. everyday you see all of us serving you, around the country, around the corner. us bank. our third story "outfront." iranians found with a massive stash of explosives accused of planning a terror attack. now, these are two iranian nationals arrested in kenya for plotting to plant explosives in kenya and neighboring countries. and reportedly, they were targeting u.s., israeli and british interests, including embassies or hotels. our david mckenzie is in nairobi, and i asked him whether there is any doubt that these plots were actually backed by the government of iran. >> reporter: well, the kenyan officials are being very circumspect at