problems. >> these should be actual cuts. real reforms to these programs, 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 america's jobs, everything is on the table. >> 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 remember when i was little, my dad took me to a car dealership, ali, and he said, this is how you buy a car. i remember they wrote numbers on a piece of paper and passed them across the table. my dad's number, i'm sure, was absurdly low. that's the only explanation i can give with boehner, is saying a very low bid to hike tup later. that's why i look to guys like tom coburn who is a party of six. you can't question his opposition, he's conservative, but he understands reality. >> i hope you're right, and that's what some people around me at that speech were saying. jean with cnn money. jean, if we want to keep the level of debt at the number it's at right now, not reducing, just to keep it growing from spending cuts, we would have to cut our spending by 35%. that's about $1.2 trillion, or basically our government's entire budgets for discretionary spending, including defense. now, to achieve the same goal of keeping our debt where it is just through tax increases, so forget about spending cuts, the government would need to take in 50% more in tax revenue. bottom line, it seems to me we would have to do both. as i explained earlier it's simply not feasible to attack our debt without spending cuts and increasing revenue, although you will continue to hear some conservatives say this is a spending problem, not a revenue problem. i know this, you know this. when is washington going to start reflecting this? >> well, i think under a couple scenarios. one, if we have a bond market crisis, which is not necessarily likely, but 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 also am willing to pay a little bit more in taxes. there was members of the conference board. 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, you know, or conceding too much. >> it seems like it does feel like that these days. let's bring rowland in. rowland, treasury secretary tim geithner says august is when we run out and default on american debts. i think come august 1st, we'll all be wondering what's going to happen, but it is this climate of fear. is it possible for them to reach a compromise by threatening the world is going to come to an end? don't democrats have some bigger role to play here by saying, i get it, we'll cut for tax issues. >> there are people sitting at home now. they have been extending paying their light bill until the phone company or the light company sends them a notice saying, at 5:00 p.m. on friday, your lights are going to get real. we operate with fear. we wait until the last minute. we're very good at that. we're not very good at planning and going on the offensive. when you listen to speaker boehner, he throws out trillions in cuts, but he won't specify. i think it is dangerous 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. so they tack anything on as a tax increase. democrats don't want to be honest about this area as well. the american people have got to stop sitting here. rail companies were saying it. rowland is right on one point, specifically. winston churchill once said, you can count on the american people doing the right thing once they've exhausted every other option. we need these emergency situations to do the right thing. so yeah, i don't think this is being overplayed. i would say if we do not raise the debt and we force short-term cuts, then you get ready for depression. our economy is that fragile. the debt we've accumulated is that great. the fact is we know. the people you talk to understand that we're going to have toll. >> i toss up boehner's poker hand earlier and what he might be trying to do. whenever you give washington an extra dollar, they need to see that extra dollar of tax increases will go to reducing the benefit. we have no history that's happening. >> the other issue is when you hear republicans say tax cuts are going to somehow spur the economy. it's going to cause people at the top income levels to begin to actually hire, and that's also not true. >> is that true? >> will tax cuts help the economy? >> yes. >> i think democrats and republicans both have a point. republicans say if you raise taxes too much, you can hurt economic growth. democrats think if you cut too much spending, it can hurt economic growth. both right because we don't know, in fact, if that's what it will be used for. both parties have to work with that, because if we come up to a by hart san slukz. and what exactly are you prepared to cut? i think this is a much better conversation to have on specifics than in theory. it's a basic concept, your tax dollars are simply not, so i'm going to show you where exactly your money goes, up next. host: could switching to geico really save you 15% or more on car insurance? host: does the buck stop here? sfx: buck's blustery exhale. host: could switching to geico 15% or more on car insurance? host: does it take two to tango? ♪ male announcer: be kind to your eyes with transitions lenses. transitions adapt to changing light so you see a whole day comfortably and conveniently while protecting your eyes from the sun. ask your eyecare professional which transitions lenses are right for you. female announcer: through the transitions healthy sight for life fund, we support the education efforts of prevent blindness america. learn about protecting your vision at preventblindness.org. 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 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. gee, 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? and before you answer, i'll tell you the reason i'm tackling this is i'll tell you this is a republican scare tactic. that debt is the biggest economic problem we face. >> it's a mass scare tactic. a lot of non-partisan deficit experts say this is a problem. they want to start sooner rather than later, not because we can't make it to 2020 without making any changes. we probably can but we don't know what the consequences will be. we want to make changes sooner than later because it will be less drastic. we want to give people the time to prepare, and we want to reduce the bond markets. >> the risk that eventually everyone who invests in u.s. treasury bonds will say, i'm not sure the u.s. can pay those bonds so i want more interest rather than taking the risk of investing in the united states. >> and they can't swear that will happen in the bond markets, but a lot of people think we're increasing the risk the longer we take to get our bond sheet in order. >> and nobody thought letting lehman brothers fail would send the world markets and economy into a tailspin. these risks are true. jean just laid out the map. is the public -- are we ever going to react to that potential disaster before it occurs? you said a while ago that will said we don't do this until the time comes, but this is very serious. >> let's look at what's happened over the last three years. 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 clashed economically. so you can take that same scenario and apply to the federal government. right now the money that's coming out of your home and you're spending 80% on housing or you're spending 70% and the other money on, say, food and gas, you look up and say, wait a minute, i only have 2 or 3% left to spend for my child's education. how do i apply did to my life? it's the same example. and now we see how folks have changed their lifestyle as a result. >> so we're all agreed here this is serious. will, you and i also agree that simply taxing the rich is not going to solve our problems. >> no. >> 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. there is an amount to sustain the government that we already have. >> this is where i hold paul ryan in high esteem. nobody, republican or democrat, wants their medicare touched. paul ryan said, guess what, it has to be touched. we can't manage the budget by just taxing the rich. middle class, you have to pay, too. if you want to keep the government the way it's running now with these high entitlements. you have to -- we can't afford any of these, even for the middle class. >> but that's rare. >> between the two of you i got two names out of 535 elected officials. >> that's my point, ali. you don't have enough people because also, this political system would be the safe districts or penny. i nominate the three of you to sit down and solve this country's problems. we'll get some straight answers. always a pleasure to have you on and helping our viewers understand this a little bit better. here's something you can understand. oil companies making billions in profits, so why do they get tax breaks? and if we take them away, will that actually lower the price you pay for a gallon of gas? i'm going to check that out, next. >> - up to 60% off. i am familiar. your name? > naomi pryce. >> what other "negotiating" skills do you have? > i'm a fifth-degree black belt. >> as am i. > i'm fluent in 37 languages. >> (indistinct clicking) > and i'm a master of disguise >> as am i. > as am i. >> as am i. > as am i. >> well played naomi pryce. you think i have allergies? you're sneezing. i'm allergic to you. doubtful, you love me. hey, you can't take allegra with fruit juice. what? yeah, it's on the label. really? here, there's nothing about juice on the zyrtec® label. what? labels are meant to be read. i'd be lost without you. i knew you weren't allergic to me. 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[ heather ] businesses need a reliable financial partner. one who can stay in sync with their moves. my job at ge capital is to get bobcat all the financial and business support they need. we provide financing for every bobcat dealer in north america. together, we've rolled out over 100,000 machines to small businesses all over the country so they too can grow. ♪ ge capital. we're there for bobcat every step of the way. ♪ personal pricing now on brakes. tell us what you want to pay. we do our best to make that work. deal! my money. my choice. my meineke. welcome back to "your money." christine romans joins me now, and lee gallagher. let's talk about gas prices, like everybody isn't already. when gas prices go up, people are quick to point out the profits of the oil industry. they're big. take a look at this. this is just for the first three months of this year. exxonmobil nearly $11 million. bp, $7 billion. shell, chevron, about 6 billion apiece. adds up to big dollars in just three months. ceos from the five major oil companies were grilled by senate democrats on whether their company should be getting billions of dollars a year in tax breaks and subsidies when they're looking at profits like this. testimony was sketchy. they said the tax changes under exploration are descriminatroy. >> you'd have an easier time explaining a unicorn just flew into this hearing room. >> slamming big oil have become a big thing on the hill. where do gas companies get off doing that? >> we saw this in 2008, there was a cry again to tax the oil companies, raise the taxes, tax their bonuses, things like that. the interesting thing to remember or take note of is that oil company profit margins are actually much, much lower than those of financial services, t pharmaceutical companies. not that this company needs tax breaks. i would argue no corporate america needs any bigger tax break than they get. what we're seeing here is theatre, and this is topic duh jou. i would think that in tough times we get angry about profits. is it a little unamerican to suddenly decide profits are what make you evil? >> absolutely. we want companies to be profitable. i've said this on the show many, many times. we don't want unprofitable companies. but the problem with these hearings is the target is the same target as those spammers who send e-mails saying if you don't buy gas, it's going to affect opinions. i think it's hard for them to argue they need the tax credits and tax breaks, they could do a better job understanding for people to. >> what part of this is legitimate? >> the funny thing for me is there is a headline of gas prices. what is wrong about tax bricks and the like. some will say that a manufacturing tax break isn't really fair if it's an oil driller. and some people will is a that loyal try to view that owl on the of our running out, we have big deficits and everybody looking for that. >> let's talk about something else that matters to people a lot: your home prices. they continue to fall, down 30% since their peak, by the way, in 1986. the price of a median single family home, just shy of 166 that are's honda. you got mortgage rates at low prices with low mortgages not suzie be. mortgages are up. alfred, is this another sign that owning a home may not be part of the american dream? >> i think temporarily, and very temporarily. the truth is a lot of people -- 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 to take on something as big as owning a home. i think this is a snapshot of time. everything that goes up must come down. >> let's assume that bit time you apply for a mortgage, you have some sense you might get one. a quarter of a million americans applying for a mortgage are getting rejected. >> they're going in the wrong direction. foreclosures are up, prices are still falling. this is not the way this was supposed to happen. we were supposed to be out of the woods for now on. inventory is going down, but foreclosures are bad because they drag down all prices and the more prices that go down, people get more underwater because their homes aren't worth much anymore. >> this is good. if you do have credit and you've got 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, though, are not being had by regular people, they're being had by very sophisticated investors. so as people come in with money, they don't care about lower interest rates, they don't care about being denied by the bank, because they have the money. so when i see those started making money on a depressed asset, i think. fortune had a cover story on it recently to say the housing unit is coming back. i'll tell you why i'm interested. being in a good school distri district -- we'll check it out next. 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