remember that, tied to the train track, helpless, her only hope is that she's rescued before she is flattened, destroyed, ripped to bits, like a penny on the train track. makes me think of the aflac ad. the government added another $60 billion to the deficit in june. so the grand total on money that we've borrowed so far this fiscal year is $904 billion. the real headline, though, is that that number confirmed that we are on solid track to hit a $1 trillion deficit for the fourth year in a row. well, the sky high numbers start to blur in this country. it's trillions here and trillions there and hundreds of trillions. it gets confusing. tonight actually there's a really frighteningly easy way to put that $1 trillion in perspective. so to give you just a sense of how much money we're burning through that we do not have, remember the $1.2 trillion in automatic cuts that coming at the end of the year? the so-called sequester cuts that republicans and democrats alike say will kill us and eviscerate our defense among other things? well that $1.2 trillion in pain is spread out over ten years. so yes, we are burning through that amount of money at this moment every single year. it is money that we do not have. it is deficit money. it is borrowed. to make the point, again and again and again. and it has been going on for years. under presidents from both parties. over the time that you see here, there's been plenty of lip service about the deficit problem with everybody blaming somebody else. >> no one needs to lecture me or else on deficits, because you invented them. republicans invented deficits. >> another area where i hope we can find some agreement is on the issue of getting our deficits and debt under control. >> that's the danger to this country. is the $14 trillion deficit and the $1.6 trillion we add to it every damn year. >> a lot of talk. but no action. at least not on our spending problem. congress is working hard, voting down the health care law for the 33rd time and voting to use the capitol visitors center for an event to celebrate the one-time king of the hawaiian islands. i'm all for the importance of hawaiian history and maybe even hawaiian independence but all the while the clock is ticking on the fiscal cliff. "outfront" tonight, economist and professor at the university of maryland school of business. and the economics editor at yahoo! finance. what is it going to take? when you look at the $1 trillion that we're burning through now. you're already at $4 trillion there. the $1.2 trillion in devastating cuts is a ten-year number. >> well, our deficits gone from about $161 billion before the recession to about $1.2 trillion a year. it's an enormous increase. only half of that can be just fewed by inflation. more folks on social security. medicaid. medicare becoming more expensive. the rest is entitlements. we simply are going to have to spend less money. but also we're going to have to accept more taxes because we're spending 50% more than we're taking in and we simply can't cut anywhere near that much. >> it is a bipartisan problem. president bush with the prescription drug benefit. that was an incredibly expensive entitlement. it was a lot of money spent and borrowed. president obama, certain things. he says he supports the simmen/bowles deficit program, right? romney wants to cut taxes by 20%. neither one of them seem to really be embracing some of the painful things. >> the third big enabler is the bond market. investors around the world are getting away with this. we sold in the u.s. 10-year bonds. 1.46%. so even though we're running up these huge debts -- >> that makes a mortgage look expensive. >> -- pristine balance sheet. on the one hand, people kind of fear that interest rates will get out of control, then we'll be in big trouble. on the other hand, the market is not enforcing a sense of urgency on our political system. >> peter, people talk about this. when money is cheap, you want to borrow it. so that way you know you're locking in this low interest rate. that makes a lot of sense for the country. it does enable this spending and this addiction, as dan indicates one day, those interests can go higher. remember the late 1970s. >> well, they certainly can go to 6% or 7% without much problem. europe will eventually get over its problems. that's why all its money is coming here. the chinese are not going to be able to lend money to us the way we have been indefinitely. when we have to pay higher interest rate on a debt that's more than $15 trillion, then we'll have to raise taxes a lot or we're going to have to really cut spending much more, you know, much more drconian fashion. right now we're being lulled into a sense of complacency we simply should not have. >> dick cheney and paul krugman. the odd couple. krugman is for borrow, borrow borrow. dick cheney said deficits don't matter, don't worry about it. >> this is not the only inversion we see. republicans are saying no, we can't cut government spending, ie, defense, because that will mean millions of job lost, imply that if you cut government spending, you lose jobs. the democrats are the ones saying we can't let taxes go up on the middle class at a time like this. which leads me to believe that movie you showed of the train, i think you should have put up the "titanic." it hits the iceberg and has that kind of crash. going into this election season, there's going to be no grand bargain now. hard to see one happen during a lame duck session. i think we will begin to see some of those sequestered cuts kick in. which will ironically make the budget deficit picture look a little better. >> that's true. they may hurt. maybe, peter, that would make it worth it, we take those sequester cuts. you let the bush tax cuts expire. it's painful, yes. but you do get more money. is it the right thing to do? >> i don't know that it's the right thing to do. we need to fix what's broken in the economy so it grows more rapidly. so we can get along without these large deficits. krugman's right, that we need large deficits to keep the economy going at a time like this. but the trouble is, we're becoming addicted to low interest rates and we're not spending money prudently. i don't know that government spending had an increase so much over the last five years on a permanent and structural basis to justify these dech sits. >> maybe it's time to look at one of those. certain terrible times, you would need to overspend. saying, look, you can only spend this percent of your revenue. this is what you bring in this is what you're allowed to spend. >> we all know what the contours of a grand bargain are, right? some loopholes will go away. some tax rates will go away. it's just a question of -- i think it's a question of when that happens. >> all right. well, thanks very much for both of you. we appreciate it. take to twit, let us know what you think. the big one, when did he actually leave the firm? 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[ female announcer ] only flood insurance covers floods. visit floodsmart.gov/risk to learn your risk. senate majority leader harry reid says mitt romney is so secretive about his finances that he wouldn't make it through a senate confirmation hearing. >> he could not only be confirmed as a cabinet secretary, he couldn'te confirmed as a dog catcher. >> okay, he got a little nasty there. you got the point. democrats are out in full force today. flagging a "boston globe" article that questioned when mitt romney left bain capital. from our look at it, the implication's basically that mitt romney was the sole stock holder in a specific bain fund after he left as ce o, actually that does seem to be fair. but it does seem to add to the drumbeat of questions about transparency in mitt romney's financial history. our guests are all with us. let me start with you. basically, and it is complicated, you know, private equity firms, they'll have bain capital fund 1, 2, 3, 4, 5, 6. this was 6. he left quickly. he basically put his ownership of the firm in this thing and he had no control. does this fly with you? their explainers are very complicated. >> i think the basic story is he was not in day to day charge of what bain capital was doing after he abruptly left to take over the salt lake city olympics in february 1999. the problem is it's a little tricky because there wasn't another person listed on those filing documents as ceo because, again, he left abruptly. so it takes a while to make this transition happen. but then fortune on cnnmoney recently had a story that said we've seen internal documents that said he was not one of the managing partners. so i think the story is correct. the problem is this is really tough to explain. if someone wants to exploit that fact, they can. >> john avlon, let's put up the quote. in the 2001 bain capital sec filing. this is what i think has created some confusion. mr. w. mitt romney is the sole shareholder. everybody, that's what's really important. that is not bain capital. this is bain investor 6. >> sounds like a super hero team. >> right, or it sounds like something that is deeply confusioning or designed to obfuscate. >> this sec filing seems to contradict the previous statements. that mitt romney didn't have anything to do with bain after 1999. there's specific reasons for that cutoff date. that's when he took over the olympic bid. so he stopped, clearly, day-to-day functioning and oversight at bain at that point. between 1999 and 2001 a lot of the things that have been alleged in the ads and things occurred at bain. for example, the outsourcing claim. a company which did call centers. between 1999 and 2001 that call center company merged, really started moving overseas, and then was divested by bain. the kansas city steel company that was the subject of that obama attack ad. it's between 1999 and 2001 where things changed. initially, the bain infusion helped the company thrive. starting 1999, they start losing around $50 billion and ultimately the company goes bankrupt. that's why these dates matter so much. >> the thing is if you want to look at it that way, so he had no control, but he was getting money. at this point, mitt romney is still receiving money from investments that were made at bain that was part of his retirement deal with the company. he's still getting money. >> yeah, erin, you know what this sounds like to most people in the country? outsourcing. swiss bank account. sweetheart deal. for most people in the country, they have no idea what all these things add up to. but is raising questions about mitt romney's business career. he started out being a positive. somewhere in america, there are a bunch of democrats sitting in a room doing the dark arts of campaigns and they're sitting off little informational time bombs on mitt romney every week. at some point, his campaign has got to get a hold of itself and find a way to create a narrative about mitt romney's business career that most people in america will accept or else he will not be elected president of the united states. people will not trust this man to lead this country. >> here's the stunning thing about this. just from a political level. they've had -- mitt romney's political career's gone on for 18 years it first runs for the senate in 1984. 18 years to get this story straight. to have a strong clear answer that voters can understand about what is objectively a hugely impressive private sector record. this guy was a leader in business and very successful. that's something americans generally root for. the flat footedness about clearly explaining this, that's where the question comes in. >> john and jamal are making a very fair point. this guy has known about his ambition to be in public office and president for a very long time. for at least the past eight years. why are they getting hit, seemingly punched in the face every week, by this stuff? >> we have an eerie convergence here, which is a consensus among the three of us. mitt romney has a story to tell about dynamism. income private equity means essentially what you're doing is you're a guy who is taking on corporate insiders. you're taking failing companies, infusing them with cash, so they can then take on fat and lazy incumbents. and that's ultimately a good thing for consumers. it tends to lower prices. it drives productivity gains. here's the thing. that's a very big and complicated idea to explain. from the romney campaign's perspective, they think they don't have the room, the media echo chamber in order to get that story across. rather, they have to fight 30-second sound bite to 30-second sound bite. that's why they feel they can't tell that story about why dynamism is good. >> he's not sitting down and doing in depth interviews on these interviews. >> he's afraid -- >> right, but the only way to represent is to sit down and do one and take the tough questions and then come out -- >> look, requires a level of trust on the part of your intermarketer. i think a lot of republicans believe they're not going to get a fair shark that's why they engage in a fairly nickel and dime tactic. you could actually say, wait a second, outsourcing, trade, these are things that make america stronger. but that's really tough to say if you feel as though you're not going to get a fair shake. >> it's also tough to say if your sec filing says look this is perfectly explainable if you're running a private equity fund. that's tough to understand. >> final word quickly, jamal. >> the facts have an uncanny way of coming out. ask george bush about his drunk diving record during the 2000 campaign. they've got to find a way to just let it all out, get it out on their terms, telling their story and get moving. >> -- outsourcing by the way, didn't work then, we'll see if it works now. >> people will listen. he's got to give people credit for being smart and being able to understand this stuff. otherwise, actually insult people. thanks to all of you. the big news today, the freeh report and its damning criticism of joe paterno. his son jay is "outfront" tonight to answer to that. next, something about the rolling stones you probably won't believe. our third story "outfront" tonight. sea drones. the u.s. military has been bulking up in the persian gulf in case of a conflict with iran or a war. today, we find out that the united states has deployed submersible sea drones to clear iranian mines. we're going to explain in a moment. add them to the the two aircraft carriers already in the region, mine sweeping ships and a ship that the u.s. could use as a forward staging base and you start to see some of the very significant build-up the u.s. military is putting into the persian gulf and the strait of hormuz in response to the iranians threatening to close the strait because they're upset about sanctions on their country. thunited states in fact announceded more of those sanctions today. expanding them against iranian companies they say are involved in the country's nuclear program. cnn contributor fran townsend is a member of the cia external advisory board. can you explain what those are? we all have a concept of what drones are in the air, but what are sea drones? >> this is a commercially available product that obviously is going to supplement. you talked about the mine sweeping ships. a sea drone which what you don't want to have happen is have a mine sweeper miss a mine and go over it and have it detonate. so these sea drones are used. they can go to deep depths. hundreds of feet. they go in front of the ship and around it. so they -- they're sort of the canary in the mine, if you will. they go under water, very deep, look for these mines. if they find it, they detonate it and they destroy themselves and it protects the ship. >> sort of hovering in the water with sensors. hence the word "drone." the u.s. military seems a little schizophrenic to me, to be honest. they brag about it, then they don't want to talk about it. >> as you list the assets, they're hard to hide, right, aircraft carriers, mine sweepers, forward operating bases. >> right. >> so it's pretty clear. we shouldn't be surprised frankly. when you look at the negotiations between iran and the west fell apart. july 1st, the oil sanctions, which were long noticed, but they actually went into effect then. today they came out, they announced companies that are subject to sanctions because they believe they're front companies for the potential movement of oil around those sanctions. >> right. >> so as this progresses, given the critical nature of the straits of hormuz in the movement of oil throughout the world, not to be surprised that we would move military assets in there. >> final thing, "daily telegraph" front page tomorrow morning. british intelligence saying they had -- m 16 agents foiled iran's attempts to build a nuclear bomb in 2008 but they say they're two years away from getting one. you take that seriously? >> i do. works very closely with u.s. and western intelligence. take disruptive actions all the time. and so not surprising, and two years is consistent with what we've heard from general petraeus at cia and leon panetta before him. that's the lower, the sooner end of that scale, but not different really from what we're hearing from western intelligence. >> a little longer than israel's thinking, which might be a good thing. fran townsend, thank you. i am from baltimore south carolina... bloomington, california... austin, texas... we are all here to represent the country we love this is for everyone back home it's go time. across america, we're all committed to team usa. but they haven't experienced extra strength bayer advanced aspirin. in fact, in a recent survey, 95% of people who tried it agreed that it relieved their headache fast. visit fastreliefchallenge.com today for a special trial offer. delivering mail, medicine and packages. yet the house is considering a bill to close thousands of offices, slash service and layoff over 100,000 workers. the postal service is recording financial losses, but not for reasons you might think. the problem ? a burden no other agency or company bears. a 2006 law that drains $5 billion a year from post office revenue while the postal service is forced to overpay billions more into feder