not broad deficit or deficit targets that punt the questions to the future. and with the exception of tax hikes, which in my opinion will destroy american jobs, everything is on the table. >> will, what serious conversation about debt reduction begins by absolutely taking the possibility or discussion of tax hikes off the table? >> not very many serious discussions. i don't know. i remember when i was little, my dad took me to a car dealership and said, this is how you buy a car. i remember they wrote the numbers down on a piece of paper and slid them across the table. my dad's offer was excessively low. that's the only comparison i can make. i look to guys more like tom coburn. you can't question coburn's ideological position. >> i hope you're right. that's what people around me at the speech were saying. it's an hoping salvo. jean, if we wanted to keep our debt at the level that it's at right now, not reducing it just simply keeping it from growing through spending cut, we'd have to cut our spending by 32%, or basically our entire government's budget for discretionary spending, including defense. to achieve the same goal of keeping our debt where it is just through tax increases, so forget about spending can you tell us, the government would need to take in 50% more in tax revenue. bottom line is it seems to me that we have to do both. as i explained earlier, it's simply not feasible to seriously tackle our debt without both spending cuts and increasing revenue. although you will continue to hear some conservatives say, this is a spending problem, not a revenue problem. when is washington going to start reflecting this? >> i think under a couple of scenarios. if we have a bond market crisis, that would definitely inspire people to get busy negotiating and compromising. the other might be if americans stand up and say, you know what? i don't want a third of the federal budget cut. i want to have some of the federal budget cut but i'm also willing to pay a little bit more in taxes. board members of the concord coalition, a deficit watchdog group, said something smart this week. they basically said, look, neither party has the muscle or the public trust to push through a one-sided solution. they don't have the votes for it. so bipartisan solutions are mandatory. it's not an option. compromise shouldn't be seen as giving up or conceding too much -- >> it seems like it does feel like that these days. let's bring roland martin in. treasury secretary geithner says august 2nd is really the day he runs out of options to keep america from defaulting on its debt. part of me wishes he never said that. but it is this climate of fear. is it necessary for politicians to finally reach a meaningful compromise by threatening that the world's going to come to an end? is this not the business of washington? and frankly, don't democrats have some bigger role to play here in saying, we get it, we have to cut a lot and we need some tax increases? >> i'll give you this example. there are people sitting at home right now, they have been extending paying their light bill, paying their phone bill. and until the light company or the phone company sends them a notice saying, at 5:00 p.m. on friday, your lights are going to get cut off unless you pay this bill, then people actually respond. that is the american way. we operate by fear. we wait until the last minute. we sit here and procrastinate. that is what we do. we're very good at that. we're not all about planning and being proactive and going on the offensive. when i watch this conversation, when you listen to speaker boehner, first of all, he throws out trillions in cuts. but he won't specify. i think it is dangerous just to say trillions in cuts. when you also say, frankly, we're not going to have tax increases. now, understand this, you have republicans who will even suggest that if you get rid of oil subsidies, that's somehow a tax increase. and so they tack anything on as a tax increase. democrats also don't want to be honest on this conversation as well. this is the biggest problem that we have. the last point, the american people have got to stop sitting here playing around as well. they can't say, i don't want anything cut. oil companies are saying it. american taxpayers are saying it. and so we have the same problem every single year. >> ali, let me say, roland's right on one point very specifically. winston churchill said, you can count on the american people doing the right thing once they've exhausted every other option. i don't think this is being overplayed. in fact, i would say if we do not raise the debt ceiling and force short-term cuts, you get ready for depression. that's where we are. our economy is that fragile. the debt we've accumulated is that great. we have to cut. >> but your fellow conservatives know that, right? there are some people playing games with, we're not going to do this or that. the people you talk to understand we're going to have to arrive at some compromise both on the debt ceiling and some kind of debt reduction plan? >> yes. i talked about boehner's poker hand earlier. this is the other problem. whenever you have given washington an extra dollar of income, they have made that an extra dollar of spending. it comes in, they spend it out. we need to see that extra dollar of tax increase wills go to reducing the deficit. we have no history to suggest that will happen. >> but the other issue is when you hear republicans say, oh, tax cuts are somehow going to spur the economy, it's going to cause people at the top income levels to begin to hire, that's also not true. >> is that true, jeanne? >> tax cuts help the economy? democrats and republicans both have a point. if you raise taxes too much, you can hurt economic growth. and vice versa. will is right because we don't have the public trust that the tax dollars will be used well. and if our taxes are increases, that that's what it will be used for. that's a hard intangible both parties will have to work toward. >> this is going to be a much easier conversation when we have specifics to deal with. what exactly do you want to go up in taxes and what exactly are you prepared to cut? i think we all agree, this is a much better conversations to have on specifics than in theory. jeanne, roland, stay where you are. will, stay where you are. it's a basic concept. your tax dollars are simply not enough to sustain your government. so i'm going to show you exactly where your money goes and why washington does need a whole lot more of it up next. 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[ bell dinging ] what are you looking at? logistics. ben? the ups guy? no, you see ben, i see logistics. logistics? think--ben is new markets. ben is global access-- china and beyond. ben is a smarter supply chain. ben is higher margins. happier customers... everybody wins. logistics. exactly. see you guys tomorrow. we spend a lot of time on this program talking about the deficit. you might be wondering why it is actually so important. stripping away the politics for a second, without serious measures to cut the united states debt, your world could be very different in just a few years. here's why. by 2020, if nothing were to change, spending on social security, medicare, medicaid and the interest on our debt is on track to use up 89 cents of every dollar that the government collects in federal tax revenue. that means only 11 cents of every dollar will be left behind to fund everything else that the government does. jeanne, if we're on a path that is simply unsustainable, how quickly do we need to make changes? how urgent is it that we actually tackle this? i'll tell you the reason i'm asking. people say this is a republican scare tactic. >> what's the republican scare tactic? >> that this debt is the biggest economic problem we face. >> it's a math scare tactic. a lot of nonpartisan deficit experts say this is a problem. they want to start sooner rather than later not because we can't make it at 2020 without making any changes. we probably can but we don't know what the consequence will be. we want to make changes sooner rather than later to give people more time to prepare and reduce the market risk that eventually the bond markets will turn on us -- >> the risk that eventually other people who invest in the u.s. dollar or in u.s. bonds, treasury bonds will say, i'm not sure the u.s. can pay those bonds, so i want more interest in exchange for taking the risk of investing in the united states? >> that's correct. nobody can swear that that will happen in the bond market. but a lot of people think we are increasing the risk the longer we take to get our balance sheet in order. >> roland, we'll be reminded that nobody thought that letting lehman brothers fail was going to send the market into a tailspin. is the public -- are we ever going to react to that potential disaster before it occurs? you said it a while ago. we get backed into this one, it could be very serious. >> let me use exactly what has taken place over the last three years. that is when you saw individuals, people watching this show right now, make some of the most ridiculous economic decisions and that is trying to own a home and a second home, trying to have jet skis and boats, vacations, huge credit card debt. they saw individually how their lives collapsed economically. and so you can take that same scenario and apply to the federal government. right now, if you are spending -- the money that's coming into your home, if you're making $40,000 and you're spending 80% on housing or you're spending 70% and then the other money, let's say, on food and gas, then you look up and say, wait a minute, i only have 2% or 3% left to spend for my child's education, you're going to have a problem to pay for their education. and so the people at home have to understand like that. how do i apply it to my life? it's the same exact example. and we see now how folks have changed their lifestyles as a result. washington has to change its lifestyle, its spending habits, its ability to deal with the dollar. >> so we're all agreed here that this is serious. will, you and i also agree that simply taxing the rich is not going to solve our problems. there are a lot of rich who need to be taxed more. but name me the politician who is going to tell the majority of americans the truth, that in order to deal with this issue, things need to be cut. but it is also a revenue problem. it's become a republican bumper sticker that this is not a revenue problem. the middle class is going to have to pay more in taxes to sustain the government that we have. >> you have to look for the guys who are willing to tell their own constituents what they don't want to hear. this is where i hold paul ryan in high esteem. nobody wants their medicare touched. paul ryan said, guess what? it has to be touched. i think the honest proposal from democrats in response to that would be, guess what? we can't balance the budget by taxing just the rich. middle class, you're going to have to pay more, too. a democratic politician needs to tell everyday americans, if you want to keep the government the way it's going now, you have to pay more in taxes, a lot more in taxes. >> actually congressman bobby scott of virginia actually said the exact same thing. when they were talking about extending the bush tax cuts, he said, we can't afford any of these, even for the middle class. he's been one of those voices -- >> roland, that's rare. there's not many democratic -- >> i've got two names out of 535 elected politicians in washington. >> that's exactly my point. you don't have people because also the political system we have set up, you have these safe district, then you have the competitive districts. then you have people who are also going to the ideology. that's part of the problem. >> politics is getting in the way of solving this problem. i nominate the three of you to sit down and solve this country's problems. will, jeanne, roland, always a pleasure to have you on and helping our viewers understand this a little bit better. oil companies making billions in profits. so why do they get tax breaks and if we take them away, does that lower the price you pay for a gallon of gas? 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>> well, you'd have an easier time convincing the american people that a unicorn just flew into this hearing room than that these big oil companies need taxpayer subsidies. that's the real fairy tale. >> slamming big oil has become an annual tradition on the hill. leigh, what do consumers worried about gas prices get out of a hearing like that? >> there's a lot of theater here. we saw this in 2008. there was a cry again to tax the oil companies, to tax their bonuses. the interesting thing to take note of is oil company profit margins are actually much, much lower than those of financial services, of pharmaceutical companies, of tech companies, for sure. not that this company needs tax breaks. i would argue that no company in corporate america needs any more tax breaks than they already get. that's the big sad truth about our tax system. but what we're seeing here is theater. and this is topic du jour. this plays very well in people's homes and in people's daily lives. >> alfred, talk to me about this. it does feel like that in tough times, we get angry about profits. is it a little un-american to all of a sudden decide profits are what make you evil? >> well, absolutely. we want companies to be profitable. i've said this on the show many times. we don't want unprofitable companies. but the problem with these hearings is that the target is really the same target as those spamers who send you e-mails saying, if you don't buy gas for a day, it's going to affect gas prices. it's not. what i say is that the oil companies have to do a better job of explaining the relationship between what they do and retail gas sales, which they are not in the business of retail gas sales. it's hard for them to argue they need the tax breaks, they could be doing a much better job of helping people understand how all this works. >> before we tell everyone it's wrong to be mad at the oil companies. what part is legitimate? >> in chuck schumer and orran hatch found something funny about it. manufacturing a tax break isn't fair if it's an oil driller, some say. and the royalties they're paying for drilling our oil out of our land, they try to roll that back in as well as their -- but the bottom line is, when money is running out, you have big deficits and everyone's looking for money. we all start fighting about money. that's what this is. >> that's so many of the feigs we've seen. let's talk about your home prices. according to a new report, they continue to fall. down 30% since their peak back in 2006. the median price for a single family home now just shy of $160,000. if you're a homeowner, you can blame all those foreclosures and empty houses in your neighborhood for bringing down the value of your home. if you're a home buyer, it's good news. why are homes at low prices with low mortgages not selling like hotcakes? one clue might be found in this report from the federal reverse. while overall consumer loans are up, mortgages are not seeing a similar rebound. is this another sign that owning a home may not be part of the american dream? >> i think temporarily and very, very temporarily. but the truth is -- this is a symptom of a much bigger problem. people are struggling to regain income. people are struggling to regain jobs. they're very tentative about taking on something as big as owning a home. so i think this is a snapshot in time of what goes up must come down but also what goes down, must come up. >> we're hearing a quarter of everybody who amriz for a mortgage -- assume by the time you apply for a mortgage, you might have a sense that you'll get one. a quarter of the people are getting rejected. >> the numbers are going in the wrong direction. foreclosures are up, prices are still falling. this is not the way it's supposed to happen. this is really, really a little bit unexpected. there are some bright signs. inventory is going down. but foreclosures are bad because they drag down all prices and the pr prices go down, the more people get under water. and then they default. that adds to foreclosures. >> for some people this is good. if you do have credit and you have enough money for a down payment and you're planning to live in a house, this is the deal of a century? >> the real deals are being had by very sophisticated investors who are going in with cash. 35% of home sales in march were cash home sales. they don't care about lower interest rates and being denied by the bank. they have the money. >> those with money are winning this game. >> those with money are starting to make money on a depressed asset, i start to think, if we could all figure out a way to get in there -- >> might mean these things are starting to get a little bit better. "fortune" had a cover saying the housing industry is coming back. this is very interesting. we're going to talk about it on the other side of the break. being in a good school district might help the value of your home but should the quality of your child's education be determined by your zip code? coldwell banker. we never stop moving. rfrfrfrfaces clean, you'll want bounty extra soft. in this lab test bounty extra soft leaves this surface 3x cleaner than a dishcloth. super clean. super soft. bounty extra soft. in the pink pack. [ woman speaking chinese ] thank you. do you have an english menu? no english. [ speaking chinese ] [ gasps, speaks chinese ] do you guys like dumplings? i love dumplings. working with a partner you can trust is always a good decision. massmutual -- let our financial professionals help you reach your goals. welcome back to "your money." some parents are going to go to extreme measures to ma