tv The Kudlow Report CNBC November 30, 2012 7:00pm-8:00pm EST
top lawmakers to try to hammer out a deal. plus 8 pound 7 ounces, 25.inches long. latest stats to vest per elizabeth. congratulations to regina. we can't wait to meet the number member. i will see you monday. good evening. i'm larry kudlow. this is "the kudlow report." so the blame game over the fiscal cliff grew a bit louder today with the president playing part of the anti-santa. going so far as to say he's keeping a list of congressmen. that sounds like an enemy's list to me. we're going to talk some more about that. the president also saying if the republicans can't compromise, the holiday season might be an unhappy one. >> that's sort of like the lump of coal you get for christmas.
that's a scrooge christmas. >> and the republicans they say that the democratic offer is not a serious one. check it out. >> let's not kid ourselves. >> so where do we go from here? and the business world itself is waiting to see if we drive off the cliff. they're taking action right away. deals are being done to sell companies. stocks, homes, dividends, almost anything to avoid a big tax wallop after the first of the year. you see, folks, as i've said for so long, taxes do matter. later on we're going to tell you exactly why. first up the president place santa claus. white house press secretary finds spending cuts deeply irresponsible. for all this and more joining us now is katie pavlich. what speaker john boehner has
always said, a dollar tax increase, a dollar spending cuts. >> president obama who jay carney represents during his daily press briefings at the white house wants an unlimited debt limit. he wants no debt ceiling on the amount of money that he can spend. so jay carney is taking shots at john boehner who has said look it's not a serious discussion about how we're going to solve the fiscal problem unless of course we match spending cuts to the number of dollars we increase in the debt limit. >> do you think that could pass congress in all seriousness? no more debt limit? no more power of the purse strings? >> no. >> that's insane. i think it's in the constitution. >> yes. and although president obama this because he got re-elected has he had has a mandate to do whatever he waumpbts, he forgets that the house republicans were also re-elected to kind of hold the line on spending. so no, i don't believe that would make it through congress. >> what about this utterance by the president today?
instead of blasting congress, sort of saying he's keeping a list of congressmen? is this like a nixon enemy's list? we've seen this before from president obama. >> we have. we've seen multiple versions of the quote obama's enemies list. we saw the truth team, we've seen the white house work directly with the media matters to smear certain people that they don't like. and now we're seeing president obama say he has a naughty and nice list in order to make the nice list you have to push through his $1.6 trillion tax increase. so i think there'll be a lot of democrats who are actually making the naughty list this year. >> if he had actually come out with a program that had some spending cuts and some entitlement cuts instead of all tax increases, katy, maybe he'd be having better luck right now. >> well, of course. that's one thing they think he's forgetting is that his own senate democrats aren't even interested in passing what he's offering now for the fiscal cliff. they didn't do it when he put it into his budget and they're not going to do it now.
so like john boehner said today we're at a stalemate and not really moving forward as president obama would hope. >> all right. many thanks, katy pavlich, appreciate the rundown. both president obama and speaker john boehner took turns today finger pointing on the fiscal cliff talks. take a listen to this. >> it's not acceptable to moo a me to you for members of congress to hold middle class tax cuts to hostage simply because they don't want tax rates on upper income folks to go up. >> the white house spent three weeks trying to develop a proposal, and they send one up here that calls for $1.6 trillion in new taxes, calls for a little not even $400 billion in cuts. it was not a serious proposal. >> all right. so where are we right now? even while the fate of our fragile economy hangs in the fiscal cliff balance, for that let's turn to our distinguished guests. peter goodman. he's the huffington post
business editor on a former "new york times"man. we welcome back republican congresswoman nan hayworth and haddy heath, senior policy analyst with the independent women's forum. okay. so mcconnell laughed at the tim geithner proposal. and john boehner says we're at a stalemate. and president obama himself is kind of getting ugly about this enemy's list. we've seen this before from him. my proposal is, republicans have to come with a counter offer. right now. there's no point in blasting obama. just a counter offer. i want to read from today's newspaper. this is what mitch mcconnell said. "higher medicare premiums for the wealthy, an increase in the medicare eligibility age, and a slowing of costs of living increases for programs like social security. and then republicans would agree to include more tax revenue in the deal but not from higher tax rates." now, let's just look at this for a second. we'll go to you first, nan.
he wants medicare eligibility, he wants medicaid reforms, he wants spending cuts. then he'll talk revenues. that seems reasonable to me. is he going to do it? will the republicans come back with their own counter offer? >> well, certainly larry those are elements of a long-term approach to our enormous debt. it's a crushing debt. it hams our vulnerability across the world. i think we should look very seriously yet again and the speaker's mentioned it at the 2010 health law, affordable care act. that is a massive cost weight on the american people. it is a deeply unpopular issue. still it was relatively ignored during the election but it's still an active issue. and we have to provide assurance. americans have told us. they told us in the exit polling, they've told us in a number of other forms that they do not want to see burdens increased on our small businesses. >> mcconnell didn't mention that. i mean, that's a different thing.
hadley, let me go to you on this. mcdonnell mentioned -- i'm going to read this from the "wall street journal." higher medicare premiums for the wealthy, an increase in the medicare eligibility age, retirement age and slowing of c colas. he said that's their position. isn't it time for them to come out with that boehner-mcconnell, here it is here's what we want right now? >> from a strategy standpoint i think the republicans should put some counter offer on the table. but i think they tend to lose sight of the forest for the trees when we start to talk about the aspects of this deal, that deal, the other. what we actually need we've heard so much talk about what's responsible fiscal policy. a sponge fiscal policy is a pro-growth fiscal policy. and repealing the health law could be one part of that. i think we should also remember that when we have a pro-growth fiscal policy the benefits are not just for the many unemployed
americans who could come back to work but we have higher revenues as well. >> peter goodman, let's get your take on this. i would like personally to repeal the obama care. i've never favored it. i continue to oppose it. i want a flat tax. i'm a flat tax guy and have been for about the last 200 years. but i don't think in the next 30 days any of that's' going to happen. so what i'm suggesting is, the gop tactically should come out with something like what mcconnell said today in the unified. because i think obama is bluffing. i just want to ask you before i get to the obama bluff, what are the odds that the gop will come out, what are the odds that mitch mcconnell is really leading here? >> i think they're slim because the republican party has been hijacked by a bunch of ideological extremists who don't want to do a deal. they didn't want an economic recovery. they bet on bad economic policy, sabotaging any possibility of an obama recovery. and now that governor romney is no longer and the electoral politics are behind us they're really in a box.
on the one hand they now are tied to the idea that they have to invest in something that's pro-growth. but this idea that you repeal obama care and we get growth -- >> why is it unreasonable for the gop to want to extend the eligibility age for medicare, to want to fix colas for social security? these things have been around for a long time. >> because you're balancing the budget on the backs of vulnerable people. >> democrats have supported these kinds of things. they essentially want to means test medicare. i'm not sure i agree with this but they want a progressive shift in that. why is that a bad thing? >> going after seniors who are now eligible at 65 and bumping up the eligibility age when you're talking about people word in some cases long term unemployed, in jobs where they are making -- can't pay their bills. let's remember where this deficit came from. it came from the iraq war run off budget. it came from a financial crisis that rewarded a lot of executives who are still paying low capital gains tax. >> there's a fabulous article on
the front page of "investor's business daily" which i recommend to you. a fabulous article. i'm going to talk about it on tomorrow's radio show about the benefits of the bush tax cuts which by the way generated higher revenues. let's not go there tonight. >> for who, though? >> for everybody. in fact, the middle class -- >> that's why median wages actually dropped this year? >> just look at the numbers that obama uses. if you repeal the top tax rates you're supposed to make 800 billion. if you repeal the whole bill you're supposed to lose 4.5 trillion. it all went to the middle class. i got to challenge your facts on that. that went to the middle class. but do you think right now that there is a chance, i mean responding to what peter said, do you think that obama is going to cold shoulder the gop? here's why i'm saying this. let me just go one more thing. i think he's bluffing. i think the last thing in the world obama wants is a stalemate that will lead to all the taxes going up. all of them. and will lead to a recession.
>> disaster. >> then he would be herbert hoofer obama and his second term and legacy would be completely wrecked. that's why i think obama is bluffing and the gop needs to counter. >> there's a distinct philosophical differences obviously between the house majority, which peter was elected overwhelmingly in 2010 and resoundingly re-elected in 2012. across the country. they have a strong voice. they have a position. the american people have embraced. the president i think, larry, is over interpreting his mandate in his second re-election. i think he feels empowered in ways that he actually has not been by the american people. he's running a very risky game. this is not where the american people want to be. and i think it's definitely up to those who talk about these things in the media and the american people to be aware of the consequences of what he is proposing. >> here's the thing. had licks there's no spending cuts in his proposal. the idea at one point with
simpson bowls was $4 of spending cuts for $1 revenue increase. this one is backwards. this is $1 spending cut for $4 of revenue increases. isn't the republicans' best calling card to insist on strong spending cuts and entitlement reform? isn't that their best counter punch? >> absolutely. one of the reasons president obama's come into these negotiations from what he believes is a position of strength is because he's looking at polls that show that the majority of americans will blame a gop-held house of representatives if we do indeed go off a fiscal cliff. so he's coming into this with basically a list of demands without making any concessions. >> he'll be blamed historically. if he has a second recession on his watch, the history will be written that he presided over two recessions. that's why i refer to him as herbert hoover. [ overlapping speakers ] >> he can't play that game. he can bluff but he can't play
that game. >> it's not a bluff. this is not a bluff. >> you think he would take a second recession? >> well, a second recession? >> if all the tax cuts are repealed. all of them. we're going into recession. that's why the congressional budget office said. you think he would risk a second recession that would destroy his second term? >> i think he understands the law of the land today is that everybody gets a tax increase. he's trying to give 98% of the public a tax reduction and essentially the republican party states its position rather that larry ellisson get a tax cut. >> you want to raise the top tax rate. what i'm saying is will he actually allow all of tax -- you're saying the republicans can stand him off. a stand off means all the tax rates go up. if that happens we're going to have a recession. that's herbert hoover obama. [ overlapping speakers ] >> historically obama will get the blame for it. his legacy will get the blame
for it. >> the pro-growth policy is the only way we're going to get out of this mess. >> we don't just want to avoid the fiscal cliff. of course the parties want to avoid a fiscal cliff. but what conservatives want is to make 180-degree turn in fiscal policy towards lower taxes, lower spending, and greater prosperity. most importantly opportunity for all. >> i love that. i want you it talk that through with peter goodman. peter goodman, appreciate it. nan hey worth. one of our next guests believes the house republicans should dive head first off the fiscal cliff. oh, my god. he's going to have to explain that one to me. don't forget, folks, free market capitalism is the best bet to prosperity. let me just underscore the prosperity part. we need a lot more of it. i'm kudlow. we'll be right back.
welcome back to "the kudlow report." the new york mets agreed to a megamillion dollar contract extension for all star third baseman david wright today. he's not alone in this year-end wheeling and dealing. we're going to explain why baseball's feeling a fiscal cliff tax frenzy. that coming up in about 30
minutes. now switching gears, with just 33 days until the country's economy plummets off the tax and fiscal cliff and there's still no deal in sight, we see today a daily caller op ed suggesting that republicans in congress should dive head long off the cliff. really? i'm not sure i'm on board with that one. but let's talk. maybe i could figure it out. here now is the co-author of that op ed, neil patell of the daily caller and we welcome back texas republican senator kay bailey hutchson. neil, you got to walk me through this, buddy. i think if the republicans jump off the cliff and refuse to negotiate, their political standing is going to be substantially worse than it even is today. >> larry, first we do not say that republicans should refuse to negotiate. that would be political suicide. that's crazy. i think they're likely to get a deal that has a really big tax increase and that also comes
with a bunch of phony spending cuts. they'll either be way out in the out years of count the savings from winding down the wars yet again. and a deal with big tax increases and phony spending cuts is worse than just jumping off the cliff. you're not going to do a better deal unless you're willing to jump. >> senator hutchson, neil may be right on that point. but don't the republicans have to negotiate? in fact in the last segment i argued str arged strenuously they have to come up with the counter offer to the very poor offer president obama just made much where' the counter offer? >> certainly it's easier as you know, larry, as a kpn executive put out a plan. before a counter offer would come we have to have a serious offer that we can take to our conferences and talk about what we would do and not do. but what the president put on the table is not a serious offer. it's not an offer at all. it's restatement of the president's plans that he has wanted to put in place.
more spending, $50 billion stimulus at this point? when we have a $16 trillion debt ceiling that we're hitting? 1.6 trillion in tax increases, which we knew the president wanted to do. but he wants to have a permanent ability to raise the debt ceiling with virtually no congressional input? it's stunning! i mean it's really breathtaking. >> neil pattell, you know, i believe that treasury man tim geithner knows, i believe that president obama knows that ain't going to happen. the debt ceiling vote's not going to go away. the new stimulus is not going to go away. the 4 to 1 revenues over spending cuts. there really are no real spending cuts. none of that stuff's going to work. they know that, neil. i mean, what about the art of negotiating and finding common ground? isn't there still some of that left alive in congress? >> larry, we're running a $1
trillion deficit a year. so any deal that doesn't start to make serious impact into that is not a deal worth doing. so yes, they should definitely negotiate. they should ask for real fundamental reforms to the entitlement system. we all know that's what we need. and if they got a deal that had some real reform in it, sure. they should be willing to give and take on such a deal. there's nothing like that that's likely to be on the table. and jumping is a lot better than a phony deal. >> why are you so pessimistic? before i come back to senator hutchson, obama started out pretty conciliatory. you're very pessimistic, neil. >> obama came to the table with 1.6 trillion in tax increases and no spending cuts. he seems very confident he can bum rush them into a bad deal. i think that's because there's a sense out there, probably from the last two times these guys tangled, that the republicans are unwilling to in this case to allow themselves to go over the cliff. if you're in a negotiation where
your opponent knows that you're unwilling to have that kind of aout come then they've got you right where they want you. i feel like obama thinks he's got the republicans right where he wants them. >> senator hutchson, the republicans were on the short end of the election to be sure. the point i'm making, your leader, senator mcconnell, came out with a pretty good reform planned to regarding medicare for example. i thought that was a very sensible entitlement reform. then he said we can talk revenues. why can't the gop go down that road, get house speaker boehner on there and see how white house reacts to this? >> i think mitch is doing that. as you know, i have a social security reform proposal that doesn't raise taxes on people who are working today and doesn't cut benefits that are the core benefits. that is the thing that we ought to do as mitch said we can do medicare reform. and the reason mitch is focusing
on the entitlement reforms is because those are real reforms. and they would cut spending. and as you know, 54% of the spending that we do is mandatory. it's the entitlement spending. and if we don't address that, we'll never get this deficit down. so mitch is saying we want real cuts. and the real cuts would come from a reform. it will be very easy. it would be a three-month a year increase in the age of retirement. that's something that people can understand. >> a lot of democrats have supported that, too. look. my basic point is it's too early for the gop to drop out of this process. that's all. >> we're not dropping out. >> i think that would be a huge mistake. >> mitch was so stunned, larry, he was so stunned at this so-called proposal which was not a proposal at all. >> i understand. >> that he has now come back and he's said, look, entitlement reform would be real reform.
it would make a difference in the deficits. and then we'll talk revenue. >> larry we're not suggesting dropping out, either. >> neil pattell thank you very much. senator kay bailey hutchson appreciate it. next up lipitor and the fallout. the people who take the popular drug need to know. [ male announcer ] at scottrade, we believe the more you know, the better you trade. so we have ongoing webinars and interactive learning, plus, in-branch seminars at over 500 locations, where our dedicated support teams help you know more
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into the drugs. in a story you followed, larry, a louisiana court has ruled bobby jindal's voucher program is unconstitutional because it diverts money to private schools. no word on whether that will be repealed. >> it just breaks my heart. because those young kids that have a choice to go to a better school and get a better education, but i guess that's the court decision for now. kayla, thank you very much for helping out this evening. up next on "kudlow" could the dollar bill be on its way out? congress considering replacing the green back with the $1 coin. why stop there? why not the return of gold coins that are legal tender? we're going to discuss it all next up.
really matter for everything. to avoid next year's expected tax hike, companies are changing the timing of dividends and deals and capital gains and private equity partnerships and a whole lot more all to beat the tax man. congress is tossing around the idea of dropping out of the paper dollar bill for hard coins. the government report finds the move could save taxpayers nearly $4.5 billion over 40 years. on the flip side of that coin is now the time for a return of a gold-backed dollar as legal tender. let's talk about this. we have the chairman of the american principles project. shawn i can never understand why first of all gold coin, which really circulate throughout the economy, but sort of like contraband. they're not regarded as legal tender and i think they should be. >> it's certainly the constitutional solution, larry. the states have the right to use gold and silver coin as legal
tender. and federal tax law currently prohibits them from doing it. utah has pd th legislation. we're really waiting for the secretary of the treasury to allow them to implement it. >> if you went to a silver or ali aluminum dollar, it's interesting the whole story what are going to put into the dollar. steel, aluminum and zinc. if you had a dollar with steel, aluminum and zinc and a dollar that was gold which would do better in the marketplace in your opinion? >> whatever people have been allowed to choose they choose gold rather than some other kind of money. the competition of the actual coinage is just a sign of the debasement of the money that we've endured over the last four decades. >> aren't there a lot of gold coins circulating now? i mean they're not legal tender. i understand that. you can't give them to mcdonald's. can't give them to a cash register. but aren't there thousands and thousands of gold coins that are out there? people are collecting them but
they're not just antiques, they're investments? >> look people are not going to use gold coins as any kind of currency in the american society. it's going to be used electronically. i think the larger point about legalizing the use of gold as money is it provides competition to the federal reserve. the federal reserve is in desperate need of competition. if they had a little competition instead of only statutory constraint maybe they wouldn't be debasing the dollar as they have been. >> isn't that the key point? they want to provide competition to what the federal reserve is producing. and of course, the federal reserve and the treasury and the comptroller of the currency and all the rest of those guys, they don't want that competition. because the money that the fed is printing is lousy, soft, unreliable money. >> that's exactly right. they have a couple of problem. the first problem is article 1 section 10 of the constitution gives the right. the second problem the american public is catching on to what this monetary debasement is doing. who is it helping? obviously not the middle class. i suppose it's helping the
moneyed class. but that can't be our policy. it may be helping the federal government finance all these transfer payments. we need to have really a larger discussion about the underlying prince of our monetary system. the current says well we have isn't working. >> we had a lot of interviews with ron paul during his presidential run. we talked about gold. what do you make of getting rid of the dollar bill? do you care about that? >> you mean for a coin? >> yes. too expensive to print. >> that doesn't really matter. look, the bigger question we have a lot bigger fish to fry than whether we use a dollar bill or a coin for a $1 note. the bigger problem is the debasement that that represents. the dollar's down over the last four decades. since we went off gold in august of '71 we're down 82%. and to what end, right? is it helping us with respect to employment? obviously not. employment ratios are down. is it helping our financial system? no. the big three banks are in a world of trouble. they all three trade at less than book.
so what exactly are we getting out of all this monetary debasement? the one thing we're getting is a runaway spending in washington, d.c. that's the effect of this unlimited print mag sheen that the federal reserve has. >> let's put some gold into the equation. gold as legal tender. thanks very much to shawn fowler. now speaking of gold, thieves impersonating policemen boarded a boat in curacao and stole 70 gold bars worth an estimated $75 million. sounds like a thriller. authorities say there were six thieves wearing jackets with patches saying police who assaulted the captain and took off the gold in three cars. authorities say the shipment was legal but won't say who owned the gold or where it was headed. now, let's turn and do some stock market work. consumer spending fell in a new report out today. so did real disposable income. could have something to do with
superstorm sandy. weak in yesterday's third quarter gdp report. profits, and these are the broadest gdp profits, covering about 5 million large and small companies really came in pretty good in the third quarter. up 9% from a year ago. so even though business looks weak, good profits could be the backbone of the stock market despite the hysteria of the fiscal cliff. let's talk to don -- for all th hysteria, profits are rising, the economy has got pluses and minuses. i'm not sure people need to pay all that attention to the fiscal cliff. >> well, if you look at what the global stock markets are doing, they suggest that our market would be doing significantly better were it not for the
fiscal cliff. now profits have been good. i think people are getting used to the idea they trust corporate ceos more than they trust those that print government bonds that aren't really worth as much by the time they mature. they're also seeing a yield compression around the world. if you look at corporate beyond yields, they're about half of where they were just a year ago. so i think you're seeing a global asset shift that's more friendly to stocks. you haven't seen a lot of fear in the market. and i think what's holding the market back right now is the fiscal cliff negotiations. >> no question. but there just hasn't been a catastrophe yet. and i think that's good. and i think profits are still the mother's milk of stocks. but there are opportunities out there. i've seen some great research reports saying first of all japan looks cheap. they're reinflating. they're probably going to succeed. some people are saying that china is also reinflating and they had a soft landing. then what about europe? i've seen some people touting europe. if you look at the financial fear indicators in europe, that crisis is basically over.
>> well, yes, it is. i don't know if you can capture in the frame on the camera. what i'm doing here, i'm patting myself on the back. who is it who's been telling your viewers for two years every time there's one of these trumped-up crises in europe to buy it. now there's been a solution. europe has been stabilized. it's actually the brightest place for investors on the planet. i'm sorry you missed the bottom but it's not too late. you look at after hearing that segment on the u.s. government making the decision to debase paper coins by turning them into -- paper money by turning them into junk disposable paper coins? well what would you rather own? the ten-year american bond, treasury bond yielding what, 1.6%? or would you rather have a spanish bond denominated in the strongest currency in the world, the euro, paying 5.5%? i'll take spain over the united states at this point any day. >> all right.
>> so don't agree at all. do not agree at all. look, retail sales in spain are down 9.7% year-over-year. they're seeing the biggest bank run in spain the globe has seen since the great depression. youth unemployment in spain is 55%. there is not a good reason to own spanish bonds here. [ overlapping speakers ] >> last time we were on together you were saying the world was going to end because greece was going to default and leave the euro. it's all over. europe's fine. just give it a break. that was last year's story. [ overlapping speakers ] >> europe is not fine. spain is in significantly worse position. they've taken on more debt into deteriorating economy. you tell me how that translates to this has all been fixed and this is all solved. it's not solved at all. [ overlapping speakers ] >> spain has about the same debt to gdp ratio as germany. that good enough for you?
>> [ overlapping speakers ] >> hang on, fellows. let's not get hung up on spain. what i want to come back to is the usa. because our market has not collapsed, it's really different than it looks like it was back in 2011. i just want to ask, is it better to own those low-rate bonds right now? or jim la camp, i want you both to weigh in quickly. is it better to own corporate bonds or treasury bonds during this tiff over the fiscal cliff, or is it better to own stocks? real quick. >> well, short term we're going to have a lot of gyrations. but those yields are under the inflation rate. you're getting negative real returns on these. that's one of the reasons the stock market has been more buoyant. >> and don luskin, is it better to own bonds during this fiscal cliff tiff? >> yes, december is the time to be risk off folks. the market's in complete denial.
total complacency. the fiscal cliff will create a crisis like the debt ceiling negotiation did that led to the bottom 16 months ago. going to be another buying opportunity. but stocks will be significantly lower. by the way that's what creates buying opportunities. but face it it's going to happen. >> jim la camp, will the stock market vigilantes be necessary to get an agreement in washington? >> i think we're going to see more volatility. >> don and jim, thanks very much. up next why the biggest headache right now for a baseball general manager might just be taxes and the fiscal cliff. don't tell me taxes don't matter. it even affects baseball all next on "kudlow."
dominos have a problem with obama care. they claim it forces them to post signs with nutritional information on every product. domino's says it's done the math. there are 34 million possible combinations costing thousands of dollars at each location which of course will be passed on to customers. this is nuts! massive overregulation. and i think it's another reason why we should say goodbye to obama care. now let's go from pizza to baseball. america's greatest pastime is
also feeling the pain of the fiscal cliff tax hike. professional baseball players and major league owners in a fever pitch to finalize contract negotiations before year's end. brian shatner steps up to the plate now with that story. >> reporter: the potential for marginal tax rates to go from 35 to 40% is a big deal for major league baseball. i want to put it all in perspective. the minimum salary in major league baseball is just under $500,000 a year. right now we are smack dab in the middle of free agency. it's pretty clear players and agents are trying to get as much money as possible in 2012. just like special dividends we're actually seeing a lot of activity this week. usually baseball only gives big bonuses to draft picks. but on thursday when outfielder b.j. upton signed a $75 million deal with atlanta, what was included? a $3 million bonus. payable, mind you, by december 31st. it absolutely jumps off the page.
his former teammate in tampa, evan longoria signed a $100 million extension. including in that 1 million in bonus money payable on december 15th. the reason that this stands out so much, it's so against baseball's culture. it's actually more known for deferring salary instead of front loading. and larry, there is no doubt that the pattern relates to the fiscal cliff. back to you. >> all right. many thanks, brian schactman. wall street rushing to make deals, dividend payouts, private equity, venture capital distributions. don't tell me taxes don't matter. they are affecting financial behavior everywhere. we're going to show you why next up. what about updated equipment? they can help, but recent research shows... ... nothing transforms schools like investing in advanced teacher education. let's build a strong foundation. let's invest in our teachers
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a front page "wall street journal" story today explains how companies are scrambling to offer deals and special dividends as the january 1st tax threat of the fiscal cliff nears. 173 companies have moved up their dividend payments to beat the tax man. private equity shops, venture capital assets and even block traders on wall street are changing their behavior. so please, don't tell me that tax rate incentives don't matter. we're looking at it before our own eyes right now. let's talk about this. nbc contributor and former presidential candidate howard dean, steve moore of the "wall street journal" editorial board, author of "return to prosperity." steve, i begin with you. we have from the "wall street journal" editorial page costco's
dividend ta dividend as tax epiphany. taxes matter, steve. even though there are a lot of people in this world who think not. >> they matter a whole hell of a lot. it was very predictable these companies would be starting to pay deluges of dividends now. if you pay them now your shareholders only pay 15%. if you wait six weeks they have to pay as high as 40, 42, 45% depending on where that rate ends up. so taxes do matter. it's affecting behavior. let me sayhist my good friend howard dinos this, laimplarry. when he was a governor he cut taxes not raised them to make his state more productive. you should be advising this president not to raise those rates. >> steve i was hoping to get some help from you. you know very well, one of the things we can both agree on the deficit is out of control. >> that's for sure. >> you know as well as i do that the best deal for deficit hawks,
leaving aside what goes on in terms of taxes or revenue cuts which we can disagree on, is going over the -- i was going to call it the fiscal cliff really a fiscal slope. if they come to a compromise the politicians in washington, both republicans and democrats are going to reduce the size of deficit reduction dramatically. my argument will be let's go right down that fiscal slope. let's raise the revenue and make the cuts that have to be made which nobody in washington is willing to make. and let's take a big bite out of the deficit and restore confidence to our markets. >> that's going to kill the economy. this is one of the things i agree with. >> it will not kill the economy. >> if you do those tax increases it will. >> i want to make sure. this is a little different point. i hear you on the fiscal cliff, howard. i appreciate respect of you as much as i may disagree. what's really at stake here, one of the things at stake here, steve moore, is the idea that changing taxes, for example raising tax rates on capital and dividend and private equity firms and individuals and small
business, that that doesn't matter. and what i'm saying is, when you see how the financial world is reacting, we just reported on how the baseball world is reacting. in other words, these tax rate changes have a profound effect on economic behavior. does washington understand that? >> no, they don't. and we have so many pieces of evidence. and that's one of my favorites is the fact that you look at these states, larry, that have low taxes like texas and tennessee and like florida. and they're doing much much better economically because they're getting jobs and getting businesses that are moving from high-tax states like new york and new jersey and california. so we have mountains of evidence that proves this. and my concern is look, if we raise these tax rates, we're putting the united states of america, this great great country of ours, at a more competitive disadvantage and it leads to outsourcing of jobs. we all want to see jobs brought back to the united states of america, not leaving our great country. >> let me respectfully disagree with my good friends larry and
steve here. the fact of the matter is, our tax is a high tax state even though i did cut taxes. our unemployment rate never went much over 6.5%. it has been consistently much below the nation's unemployment rate the entire time. secondly, what you're seeing in wall street today is short-term behavior. bill clinton's tax rates, what we're going back to if we go down the fiscal slope, had no negative effect in the economy. in fact the economy was a whole lot better when bill clinton was president than it was under george bush or barack obama. so i think your case is good in the short term, not so good in the long term. i think the best way to restore confidence in wall street in the long term would be to show we're serious about the deficit. i don't think any deal they strike will be as serious about the deficit as this fiscal slope. >> i just think that era, you're right. the economy boomd especially in the mid 1990s and late 1990s. i don't think it did so well a couple years after bill clinton raised taxes. that's one of the reasons 1994 republicans had the biggest election they've had in 100 years. people wanted an end to the kind
of liberalism. but the president better put some spending cuts on the table here. because if he doesn't, i just think the whole thing blows up. larry i'm afraid now we are going to see a potential going over this cliff. and even the president is saying that's $2500 per middle class family. >> i think the risk howard, i want to get rid of deficit, too. question is ways and means. you look at what's happening with these financial players. they are anticipating higher marginal tax rates. and they're acting accordingly. my point howard is that just as the financial world anticipates, work effort is affected by this. risk taking to start a new business is affected by this. i think this is a part that many people don't understand. changing tax rates changes behavior. that's why the major league baseball players are trying to do what they're doing with their contracts. that's why venture capital. >> larry that's short term stuff, though. >> it changes behavior.
any reasonable person would move income from one year to another if they knew it was going to be taxed at a lower rate. what we need is consistent tax rates. clinton as i said before, the rates under clinton did not have a bad effect on the economy. i agree if you're going to raise things up to 70% or take $5,000 from a middle class family, yeah, that's too much. but the tax rates that bill clinton had were pretty good for america. we need to balance this budget. i am not opposed to more spending cuts. i am not. i am not opposed -- i'm against cutting medicare benefits but i'm in favor of payment reform, which we desperately need to do to control costs. so we can do this. but i don't see any particularly harm other than we are going to go into a recession if we go over the slope. >> if you don't think tax rates matter, why is it that over the last 30 years when ronald reagan became president tax rates all over the world have fallen? they've fallen in europe, asia,
south america. i mean, it's happening everywhere because countries want to [ overlapping speakers ] >> i have never said tax rates don't matter. [ overlapping speakers ] >> governor howard dean. >> i adegree, howard, we need stable tax rights. i agree with that. i'd just like to have a flat tax. steve moore, thank you very much. i appreciate it. folks before we go i want to send my very best wishes to my long-time friend and producer donna mizlocky moving on to new opportunities for the next leg of her successful career. donna, thank you and good luck. that's it for this evening's show. [ abdul-rashid ] i've been working since i was about 16.
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