[Costello:] Slugfest in Iowa as GOP candidates pick apart each other not just at President Obama. We'll pick the winner through the power of social media on this AMERICAN MORNING. Happy Friday to you. Good morning. It is August 12th. Welcome back to
[American Morning. Velshi:] Wow. It's been like two weeks.
[Romans:] He heard Friday.
[Velshi:] Yes, I needed to be convinced it was Friday. I thought it was Friday on Wednesday.
[Romans:] All right, you've about got a long time to the closing bell, opening bell and closing bell. Top stories this morning, stock futures are up after a nice rebound on Wall Street yesterday, nice, of course, a relative term. The Dow shot up 423 points. The Nasdaq, the S&P; 500 were up more than 4 percent. So if you look at the past week, the Dow is still down by more than 300 points and down by more than a thousand or 1,500 points since July. Overseas Japan's Nikkei was down slightly. Hongkong's Hang Seng closed up and in London where trading is now happening stocks are higher. Rick Perry is getting in it to win it. The Texas governor announcing his plans to run for the Republican presidential nomination. Perry will make it official at an event tomorrow in South Carolina. He'll be in Iowa on Sunday. Meantime the gang of eight GOP candidates who already declared, they shared the stage last night in Iowa. The debate was dominated by two Minnesotans, Michele Bachmann and Tim Pawlenty who didn't play nice.
[Tim Pawlenty , Presidential Candidate:] Her record of accomplishments and results is nonexistent.
[Michele Bachmann , Presidential Candidate:] You said the era of small government was over. That sounds a lot more like Barack Obama if you ask me.
[Pawlenty:] It's not her spine we're worried about. It's her record of results. Please stop because you're killing us.
[Romans:] All of the candidates are trying to impress Iowa voters ahead of the key test vote tomorrow, Carol.
[Costello:] Of course, that would the key test vote, the Ames straw poll, which is arguably the first major vote of the 2012 presidential campaign. It's often described as a cross between a county fair and a political convention with candidates making their case directly to the voters. It's been around since 1979. The poll is not binding, but three out of five times the winner has gone on to win the Iowa caucus and the nomination. But just one candidate George W. Bush won the poll and the presidency. But the process is just as likely to break a presidential campaign as it is to make one. So joining us now is Al DiGuido, CEO of Zeta International. He's been monitoring all of this online, all of this buzz online and I can't wait to talk to you. Also in Des Moines, Iowa, independent pollster, Ann Selzer. Ann, thanks for joining us.
[Unidentified Female:] Great to be here.
[Costello:] OK, Ann, let's start with you because Pawlenty and Bachmann really tore into each other last night. I mean, they were almost obsessed with each other. Let's hear a little more about what Pawlenty said about Bachmann.
[Pawlenty:] She's fighting for these things. She fought for less government spending. We got a lot more. She led the effort against Obamacare. We got Obamacare. She led the effort against TARP, we got TARP. She said she's got a titanium spine. It's not her spine were worried about. It's her record of results. If that's your view of effective leadership with results, please stop because you're killing us.
[Costello:] So, Ann, a lot of political observers out there say no one came out the winner of this because they were fighting over, you know, what many consider were local issues and why weren't they fighting against Mitt Romney who leads the pack right now?
[J. Ann Selzer, Independent Pollster:] Well, they were all fighting against Barack Obama and then you saw them trying to separate themselves a little bit from the pack. Romney just wanted to come out unscathed. That was his job to do. Michele Bachmann came out of the previous debate with a big target on her back. So it was not terribly surprising that Pawlenty who had the most to gain was the most aggressive in going after her.
[Costello:] Al, before we sat down, you said, this was a great debate. People online love this stuff. So what's the buzz online?
[Al Diguido, Ceo, Zeta Interactive, A Digital Marketing Company:] You know, this story, the Iowa straw poll, is actually the third most buzz story in news over the last three days behind only the debt ceiling and the Dow Jones dropping 600 points. So people are really, really animated about this. The big winner we think coming out of this - they're actually the battle between Mitt Romney and Michele Bachmann. Both of them were garnering a tremendous amount of the volume of buzz that's out there in the market place today. Their positive rankings on both candidates are very, very strong. So it's really, I think, going to be a two horse race between Michele Bachmann and Mitt Romney. Tim Pawlenty was kind of swinging for a major home run, a grand slam. And I think we'll see what happens here in the next day or so as to whether he actually connected or whether it actually get him more harm.
[Costello:] Yes, it will be interesting. Let's talk about Newt Gingrich for just a second because he punched back at the lame stream media last night when he asked about this mass exodus of his staff and campaign spending. Listen to what he said.
[Newt Gingrich , Presidential Candidate:] I took seriously Brett's injunction to put aside the talking points and I wish you would put aside the gotcha questions. I would love to see the rest of tonight's debate asking us about what we would do to lead America whose president has failed to lead instead of playing Mickey Mouse games.
[Costello:] Well, Ann, the first question that comes to mind is can a Fox news person ask a gotcha question to a Republican candidate?
[Selzer:] Well, I think Newt Gingrich is doing his best to take a shot at separating himself from the pack. And he's taking on anybody who wants this to be about the small things, the campaign tactics. He wants this to be about the big things, the big ideas, how to fix government, how to get legislation through Congress. That's where he shines.
[Costello:] Newt Gingrich is good at debates. I mean, let's face it. The man has had experience, but he's absolutely nowhere in polling. What about online?
[Diguido:] Online, he's a very, very strong base. He has a tremendous number of Twitter followers and his Facebook likes are very, very high. This is a must-win situation for Newt Gingrich in Iowa. As a matter of fact, the cluster words of people are mentioning most often in their blogs are crucial, critical, must win. So he came out swinging because he knows maybe this is his best shot of gaining some momentum going into the next couple of primaries.
[Costello:] And I want to ask you about Mitt Romney because he's not campaigned in Iowa and he's not taking part in the straw poll. Yet there he was at the Iowa state fair talking to people out there and some might say it didn't go well for him. Let's listen.
[Mitt Romney , Presidential Candidate:] We have to make sure that the promises we make in Social Security, Medicaid and Medicare are promises we can keep and there are various ways of doing that. One is we can raise taxes on people.
[Unidentified Male:] Corporations.
[Unidentified Female:] Corporations.
[Romney:] Corporations are people, my friend.
[Unidentified Male:] No, they're not.
[Romney:] Of course, they are. Everything corporations' earned ultimately goes to people. Where do you think it goes?
[Costello:] OK, maybe there were a few Democratic plants there, I don't know, but it was an uncomfortable moment. What I want to ask you, Ann, is will this really hurt him with the Republican base?
[Selzer:] You know, what Mitt Romney's advantage is he actually has two. Number one, he's been in Iowa before. He won the straw poll last time around. He invested a lot. He didn't feel like he got enough of a bounce, so decided not to play here now. But he's got a base here. I think what he wants to do is let the other candidates slug it out against each other and then he stands above that looking more presidential, more looking for the long term. That can help him because there are plenty of Iowan Republicans who are disenchanted with the nastiness among the rest of the candidates.
[Costello:] OK, Al, I'll ask you. How many hits do you think that video clip will get online?
[Diguido:] I think it will be a lot of hits. I think that Mitt Romney as we've watched on a day to day basis was the clear leader going into Iowa. The words that we're hearing in the last couple of days are mistake, no-show. His base has actually dropped four points in the last couple of days in terms of positive ranking. So although he is pulling out - although he will not be in Iowa, the impact of him not being there is having an impact in terms of his overall ranking.
[Costello:] Great conversation. Thank you to you both, Al DiGuido and Ann Selzer. Thank you for being with us this morning.
[Velshi:] Great conversation. No matter who wins the White House in 2012, they are sure to inherit a staggering debt and a stumbling economy and raising taxes will likely be a defining issue in the race. I had a chance to interview Christina Romer yesterday. She's the former chair of the President's Council on Economic Advisors. Now back in 2007 before she joined the administration, she co-wrote a paper on the effects that tax changes have on economic growth. That paper has been used to make the case for raising taxes to lower the deficit and against raising taxes because of the harmful effects that could it have on the economy and jobs. So I asked her to set the record straight.
[Christina Romer, Former Chairman, President's Council Of Economic Advisors:] Even though I very much support racing taxes for dealing with the deficit gradually over time, now is not the time to do it. Because either raising taxes or cutting spending now would absolutely with very hard on the economy, but that doesn't mean you can't legislate it to kick in when the economy is closer back to normal. Then that's when an economy would be much more able to deal with it.
[Velshi:] You can see my entire interview with Christina Romer on "YOUR MONEY" airing Saturday and Sunday at 3:00 p.m. Eastern right here on CNN. Christine
[Romans:] All right, Ali, how the government manages its books is affecting how you are saving for retirement. As long as world markets worry about America's debt deficits and the political will to fix them, every little news headline about weak growth, Europe's debt crisis, everything, yanking stocks around. So we wanted to give you some perspective this morning. We wanted to show you the Treasury Department's official checkbook register for the month. What comes in and what goes out. In case you're wondering, 9 cents of every dollar the Treasury Department spent last month went to pay interest on the money that we borrowed. Now last month, the government took in about $159 billion. It spent $288 billion. That means we had a deficit of $129 billion. This is the difference of the money that's coming in to the government and the money that's going out to pay the bills. Here's one way to think of it. It's like a family earning, say, $4,200 a month, but spending $7,500 a month. That means the rest of this is put on a credit card to cover the difference. The difference, think of a family spending in that kind of a difference, that's what the American government is doing. But it's a good thing that America's credit card, by the way, has super low interest rates, much lower, I'm sure, than yours. That's one month. This is the whole year. The Treasury over the past fiscal year breaks down how much we're spending as a nation and how much we're bringing in. This is how much we're spending as a nation. This is how much we're bringing in. You see here, the difference is this gap that we have to borrow money to cover up. If you want to see where all the money is going, the Treasury Department every month bring this out. This is where the money is going. Look, you're paying interest on your debt. You're paying national defense. You're paying other nondefense, Social Security and Medicare, that is the biggest chunk of all of the total outgoing money. So there you go. That's the Treasury Department's checkbook for the month and where it stands. And that credit card that we have, it's right up against the limit as you know. They raised the debt limit. So all of that borrowing just moves you right back up to the credit amount on America's credit card. So how does America cover the difference? It borrows it, of course, and who's America's biggest foreign banker, China? So is that country on the verge of becoming the world's next economic super power or did it already happen? It's 41 minutes after the hour.