the dow is up 217 points, the reason, the jobs numbers for july was better than anyone was looking for. the total number, 163,000 jobs created last month. as you can see, the prediction was 100,000. we need about 125,000 jobs created per month, just to keep up with population growth. so this report does that. but look at the rest of the year. i mean, we haven't been able to clear that hurdle since march. it's been a really grim stretch. so there was a little bit of relief today. the bottom line is this. the american economy only has to add another 316,000 jobs to get back to where it was in january 2009 when barack obama took office. now, that would mean that he breaks even. but remember, in january of 2009, the economy was in a really bad place, and what he needs to do to make people feel really good, like the economy is recovering, is not only to break even for himself, but get back to where we were before the financial crisis. and to get there, he needs another 4,700,000 jobs. that's not going to happen, that's just a fact, barring some unforeseen bizarre miracle -- no, not even that. but he may be able to break this streak, that no president since world war ii has broken, nobody's been re-elected with unemployment above 8%. the latest polls, though, show that barack obama is ahead of mitt romney by ten points nationwide, in swing states, which we have up here, it's a lot closer. 4%. so it's still outside the margin of error, but it is closer. he's down four points in those 12 states that are considered battleground by the pew research center. and in a lot of those crucial swing states, the economy has been getting better. unemployment is actually now below the national average in many, which of course is not helpful when mitt romney's trying to run on an i'm going to be mr. fix-it compared to barack obama. jim steel is co-author of "betrayal of the american dream," doug holtz-eakin joins us and john avalon. great to see all of you. i really appreciate it. doug, this is a tough order for mitt romney. it's not that things are great or anywhere where they need to be, but they're getting a little bit better and the polls seem to be getting a little bit worse when you look at it from mitt romney's perspective. >> well, i think the key is that today's report might have looked good for the topline jobs number, but if you dig inside it, we did see another 150,000 people give up looking for jobs entirely. we did see more people get unemployed. and for those who had jobs, we saw hours of work flat and weekly earnings of production workers actually fall. so the important thing to remember is that the majority of americans have jobs. and for them, the key is income growth, a better standard of living. we haven't seen that in this recovery. disposable incomes grow very slowly. and today's report is another report like that. >> jim, when doug raises that point, it bringse to you, your book, "the betrayal of the american dream." the lack of income growth, yes, more people are employed than aren't, that was true even at the depth of the financial crisis. but yet the way people feel is very grim, right? >> it is very grim, but it's not new. and this goes back a long time. that's what the book deals with. so much of our preoccupation has been the fallout since the great recession of 2008 and so forth. but as we show in the book, and people we talk to, the middle class has been hammered by policies going back really three decades. the meltdown from 2008 was just the latest of what's been hitting them over and over again. and this job report, if you were unemployed on june 30th and you got a job in july, of course, this is a great report. but it's not, certainly, the kind of growth everybody would like to see. will obama get blamed for this? in my book, he shouldn't be blamed for this. part of this he inherited, a condition that was quite unique in this country. and two, you have a congress, half of whom's members are focusing on deficit reduction. deficit reduction should not be the issue right now. deficit reduction will never create jobs in this country. so until we get off that and until we realize we need to make some investments in this country, the economy in our book will limp along, and it's not really his fault. until you get that kind of backing, you're not going to see any significant growth. >> doug, i know you'll probably take issue with that, with that premise, that deficit reduction will never create jobs. >> i think there's a big difference between deficit reduction and the kind of budget reforms we need to avoid what is an impending debt crisis. and so, there you have to focus on the longer term issue, the big-ticket items, like medicaid, medicare, social security. and if we did social security reform, for example, we would have no near-term impact on spending, retirees wouldn't be affected, those near retirement wouldn't affected, but we would control the explosion of future debt, which is the biggest threat to this economy. and that's what we should focus on. i think that's entirely appropriate. and it's also appropriate to recognize that if you do that, you have a lot less pressure on the discretionary spending, which are the core investments. so those are entirely consistent. >> what about the perception people at this moment, though, john avalon, is the economy getting better? you can see florida, ohio, pennsylvania, getting better, those numbers are overwhelming, 66% in florida, 73 in ohio, 65 in pennsylvania. >> that is an undeniable sense of optimism about the direction of the country. and the key thing in presidential election years, it's trend. it's the trend. it's whether people feel things are getting better. and in these three states, you see a pretty clear verdict. in a state like ohio, unemployment rate is far below the national average. these numbers do bear well for the president, despite the fact he's heading into historic head winds. this unemployment rate, if he is re-elected, that will be an historic feat, because traditionally over 8% should be a deal breaker for an incumbent. >> doug, what should mitt romney do? he's got to come out with a clear measure saying, it's getting better, and i celebrate that, and here's what i'm going to do. and he comes out with this 12 million jobs number that doesn't seem to bear up to much scrutiny, but the point is, what's the message he should come out with and say, i'm going to do this, and it's going to be so much better, that you want my vision. >> i think he has to say, i can provide for the american middle class. i can make them better off. and that's a more than jobs argument. that, in fact, especially in the swing states, is about incomes. it is about the high price of gasoline, which if your income's not growing, matters a lot. that's why food prices are actually going to be a big deal, as we go through the year. and he has to go to those -- yeah, he's got to go to those pocketbook issues and say, look, you might have a job, but we're not getting better. i know how to make this economy grow. that's got to be the argument. >> but he's got to go beyond bumper stickers. here's the thing, jim's right, the middle class has felt squeezed for decades now. and part of that is the growing gap between the middle class and the super rich in america. it's not enough just to say, i feel your pain. he's got to have a plan. and the problem is, especially in the last republican administration, the middle class fell further behind, while the wealthy were doing well. so there really does need to be a -- >> and i think in his tax plan, it just continues to exacerbate the problems facing the middle class and the inequality in this country. i mean, his plan is to cut the income tax rates to 20%? i mean, you're going to give a further tax cut to those at this very top? i mean, this is just throwing more kerosene on the fire at this point. i mean, we've had this now for year after year after year, and the allowing the 2001/2003 tax breaks to continue, to me, is just outrageous. i mean, that is continuing adding to the problem, it's adding to the deficit. it's not doing anything to create jobs in this country. >> all right, well, we'll pause there. final word, quickly, doug, if you can. i know you rebut this. >> i think mr. romney has to actually point out that barack obama had the house, the senate, and the white house for two years, he didn't put in place a plan that worked, and so the notion that mr. obama's plan is working is wrong, and what's his plan for the second term? not a word. >> thank you very much. appreciate all three of you taking the time on a friday night. and still "outfront," the day is here, today. it's 365 days since u.s. lost its credit rating and there was a bizarre leap year problem going on in this too, so you know, the math was tough. a leading senator, a statesman, out front tonight to say we're on the verge of another downgrade. and mitt romney escalating his tax talk war with harry reid. and chick-fil-a protested across the nation, but are activists going too far? 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[ charlie ] try zinc free super poligrip. all right. our second story out front, put up or shut up. that's again a quote from mitt romney. he said it for the second time to harry reid over accusations that he hasn't paid taxes in a decade. >> harry reid really has to put up or shut up, all right? so harry, who are your sources? >> senator reid says his source is an investor at mitt romney's former firm, bain capital. the two men have been engaged in a war of words over romney's decision to not release more than two years' of tax returns. senator reid is not backing down either. >> the word's out that he hasn't paid any taxes for ten years. let him prove that he has paid taxes, because he hasn't. >> all right. today mitt romney denied the allegations, again, as you saw. political analyst roland martin has been following this story for us. he's "outfront," along with "national review" senior editor ranesh peru. roland, mitt romney is saying, i've paid taxes every year. anyone saying anything to the contrary is wrong, put up or shut up. but senator reid is not backing down. why? >> again, because what they want to do is to force mitt romney to own up to these potential tax shelters, to reveal the information. and, so, remember, his dad set the precedent when he released 12 years of tax returns. so romney is trying to get away with a couple of years, because he doesn't want the scrutiny. so reid has jacked up the pressure by throwing this out there and it certainly has caught the attention of the romney campaign. >> ramesh, have we gotten to a point now where even if mitt romney were to say, you know what, i'm really, really angry, but the way to stop all of this is, here's my thousands of pages -- you know, can he not put out his tax returns without looking bad? >> all of the same critics immediately say, why not three, why not four? what's he siding. what's he hiding? they will never be satisfied. and so i think that romney thinks this is just a political diversion. this is a strategy based on the idea that we're going to get people scared about something in romney's tax returns and they're not going to focus on the economy, which i think is an absurd strategy that's not going to work. >> so what do you think the bottom line is, ramesh? in a perfect world, mitt romney would have done what? >> look, i think i was in favor of his releasing more, but at the same time, i think this is a trivial issue. and i sympathize with his attempt to just brush off people who are not making good faith demands on him. and in the case of harry reid, are telling flatly unbelievable and evolving stories. >> was this actually a -- was it trivial when newt gingrich said release it back in the republican primary? was it trivial -- >> yes, of course -- >> but here's the deal -- >> of course it was trivial. >> here's the deal. you have a number of conservatives who have, on the record, the last two or three weeks saying, look, release the taxes. because what you do not want, you don't want to go into august and september and october with the same questions. that's why in politics, they say get it out of the way early. and so, you have romney -- and look, here's the other piece, erin. we're talking about getting rid of these tax loopholes, in terms of the rich take advantage of, so what democrats are trying to do, they're trying to say, okay, mitt, did you actually take advantage of this? what was your tax rate? so it's a dance. is it a policy dance? no. but certainly, it is a political one and the gop will be doing the exact same thing if the shoe was on the other foot and we know it. >> well, that is true. >> it's interesting that roland is not defending harry reid's tactics. >> i don't have to! >> and making these unsubstantiated charges, changing the charges as he goes along, and then saying it's up to romney to prove that the charges aren't accurate? all the while not releasing his own tax returns. >> well, actually, that sounds like the people -- that sounds like donald trump, who's beloved by the gop when it came to the birth certificate, even though we actually saw one that was released. again, this is an attempt to drive romney's negatives up and to also cast doubt on him in terms of his truthfulness. that's exactly what this is all about. it's called politics and it's called big boy politics and you've got to play it. >> i mean, it is ugly, though, ramesh, right? if he doesn't have a source that's a legitimate source, it is a pretty horrific allegation to make. >> well, remember, reid says, first a bain investor somehow knows romney's tax returns, which is hard to believe in itself, and told him about it. >> well, it could have been a senior partner, right? a senior partner who was aware of some of the tax shelters and >> hold on. now he's saying that a number of people have told him this. a number of people. which he didn't say the other day. he somehow forgot to mention he had multiple sources. i think he's just making this up. >> well, there's one way to find out. and that is, mitt romney, release about five years' of tax returns and we'll see. >> is that -- is this the new standard -- >> hold on one second. >> actually, the standard is the one his dad set. release -- his dad was the first candidate to do it. like father, like son. >> so, roland, you accept you can make any charge and anyone, prove that i'm wrong. and you can live with yourself? >> you know what, harry reid isn't paying taxes. >> ask a question and i'll give an answer. it is the saturday that many it is the standard that many folks on the gop side used for three years when it came to a certain birth certificate. all i'm simply saying is this here, mitt romney, use the same standard that your dad used. >> and at the time, will you accept -- >> roland, you make the point that the gop did it over the birth certificate, ramesh, they did. >> what did roland say about that demand at the time, did he say, is this completely reasonable -- >> he may have taken your side, but the guy had to end up forking it over. >> i said at the time the birth certificate thing was ridiculous and i'm saying this is ridiculous too. it's trying to distract people from the actual issues in this election. and if the party labels were reversed, there's not a single democrat or liberal pundit who would be defending this below-the-belt tactic on the part of harry reid. >> and that's politics. but the bottom line is, if the shoe were reversed, the "national review" and the gop would be all over the democrats saying, release your taxes. >> the "national review" said that romney should release his taxes. >> okay! >> that doesn't make this not a mccarthyite low blow on the part of harry reid. you've got to call these things as you see them, not just for your team, roland! >> i do! i'm calling this politics. when you play big boy politics >> so this is just politics? >> that's what it is! >> i don't believe that's what you said at the time. you're not even saying you did! >> ramesh, i'm curious, though, say you're totally right, it's nasty, it's silly, it's stupid, it shouldn't have happen, but it did. and sometimes you've got to lay things to rest and got and go out and say, well, here's what it is, even though you're in the right. >> or you can say, look, harry reid is making baseless allegations in bad faith. i don't think there is a single voter in america who is going to change his mind about who to vote for for president on the basis of what may or may not be in tax returns. if voters want to hold that against me, fine. let's move on. if you want to side with harry reid, fine. if not, i've said what i'm saying on this. >> have mitt romney done what he's supposed to have done back in march, guess what, erin, we wouldn't even be having this conversation. >> we wouldn't, but it was a very enjoyable one. thank you. up next, how good news on the job market is forcing a state to lay people off. we'll explain that one, because it's pretty amazing. and baseball's iron man, cal ripken jr. speaks out for the first time about his mother's abduction at gunpoint. so we invg you can feel. introducing the all-new cadillac xts. available with a patented safety alert seat. when there's danger you might not see, you're warned by a pulse in the seat. it's technology you won't find in a mercedes e-class. the all-new cadillac xts has arrived, and it's bringing the future forward. it's something you're born with. and inspires the things you choose to do. you do what you do... because it matters. at hp we don't just believe in the power of technology. we belve in the power of people when technology works for you. to dream. to create. to work. if you're going to do something. make it matter. so at the top of the hour, we told you the unemployment rate ticked up slightly to 8.3%, but that's the average across the country. and we were curious about the state of the states. so from the most recent breakdown available, and on a state basis, that's june, the highest rate right now is 11.6% in nevada. the low is 2.9 in north dakota. another state that caught our eye was michigan. at its peak in august 2009, the unemployment rate in the wolverine state was 14.2%. but between then and now, michigan has added a lot of jobs, and the unemployment rate is now all the way down to 8.6%. that is a plunge. which brings us to our number tonight, 400. that's the number of michigan state government workers being laid off. and their job, literally, was to handle unemployment claims. so at the height of the recession, michigan received more than 500,000 jobless claims every single we