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Stakes in Debt Battle?

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    Former Senator Evan Bayh examines possible outcomes

  • Duration 4:00
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And Fox News alert I love you back to a show you some live pictures coming out of Washington DC at the House Republican Conference is wrapping up their meeting with the president.

A Wendell Goler told us that.

They ride in a couple big buses and now they're returning to work after this meeting has been described as listening session rather -- as serious negotiation.

How we do expect to hear some comments from at some of the leadership.

And as we await those comments.

We would like to bring in our next guest senator Evan buys a former Indiana senator -- -- Fox News contributor and I senator you've been watching what's been happening over the last 24 hours along with -- It just remind us what what are the stakes here with these negotiations.

When it comes -- the budget and when it comes in the debt ceiling.

Percent of the stakes are huge both in the short run for the economy and in the long run for the solvency of our country.

We're gonna bump up against the debt ceiling the treasury can't do much more to juggle its books after about the first week in August.

If we were to default on our debt that would cause interest rates to skyrocket the amount we have and our debt to.

Go up substantially in the economy probably did double -- back into a recession.

If we don't get something done in the long run of course the amount of money we're -- right now -- the deficits and the debt is unsustainable so something has to get done.

My best guess is what we're seeing here is going to be both parties playing to their bases between now and August.

And a sense of crisis -- then said in which will give each party an excuse to compromise some.

Not -- a long term deal that will really solve the deficit problem at least on a down payment that will allow them to raise the debt ceiling and begin to get our books back into some semblance of order.

What -- -- as as you mentioned that the politicians do -- their base and and that political theater that takes place.

Then in some way senator they're playing with the public's emotions right -- even told if we don't reach some sort of agreement is an economic Armageddon.

-- has also been told that this is simply political theater.

And and it's it's the positioning.

Politicians today so what are we truly believe that if the politicians -- On both sides are not really hadn't haven't said that much -- -- -- get something done.

Well it is brinksmanship as you describe it and I've seen it over over again either in the state legislature when I was governor in the congress and I was in the senate.

What happens is that the basis of the two party -- are just so entrench.

The Republicans of course are adamant about not raising taxes the Democrats are adamant about not touching Medicare -- Social Security.

But that's -- the big money is and so it almost takes that sense of crisis it should not take a sense of crisis.

But it almost takes that for them to then go back to their two bases and say well we didn't want to give an inch.

But look the economy is about to a crater -- we didn't do something so what do you expect and in the meantime the vast majority of your viewers.

And it depends who are independent out there are throwing up their hands and saying neither party knows what they're doing.

As senator just really quick here is the Democrats have said that the president hasn't taken a strong enough role.

And without knowing with a White House's position on the spending cuts the there's no hope of a compromise.

It -- what is your thoughts on that does the president need to take a stronger role when it -- said these negotiations.

Yes he does -- it's a question of timing.

-- my guess is that what the president is doing is is sounding out both sides.

He understands that neither side will be willing to compromise and -- that sense of -- approaching the brink looking over the precipice arrives.

And at that moment then that's a real test for the president will -- come and make some proposals that will I hope to facilitate a compromise my hope and my guess is that he will.

But it's a question of timing EP probably doesn't -- -- -- find himself in the position that congressman Ryan is finding himself in now -- He came out made a proposal is now getting beaten over the head with -- and it's not gonna get an act of the president probably wants to avoid that.

Is senator you've been on the edge of that that precipice that you're describing when it came to -- The bank bailout you were in office when we saw that that TARP was not approved by congress and markets fell hundreds of points and that day and we really saw the repercussions.

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