because it's so bad. >> neil: what do you think of a home builder pick there, gary? >> i love the stock. i own the stock. the only thing i would tell you is it's had a good move here recently in short order and i would like to see a pull back. >> neil: all right. feel the love. >> the new numbers are in for poverty examine not pretty. 15% of americans are living below the poverty line. this is near a 20-year high. that's 46.2 million people. it comes as government spending on entitlement social security near record high. and some here says that's actually the problem. are they right? hi, everybody. i'm david asman. let's go in with mr. steve forks, author of a book called "freedom manifesto." michael is here, elizabeth mcdonald, rick, victoria, and morgan brennan.

steve first to you, are government entitlements making poverty grow? >> they are. and we've had a half a century of this war on poverty. we've spent 15 trillion dollars on this thing. and we have a high rate today, almost as high as it was a half century ago. even when times are good, david, the poverty rate doesn't fall very much. it encourages all the things that keep you in poverty such as having out of wedlock births and things like that. the only time poverty levels fell were in the '90s when you had on the state level poverty reform, welfare reform. then on the federal level it worked. today we're spend ago trillion dollars a year. 126 different programs. seven cabinet agencies, six independent agencies all for naught, most of it. >> rick, that 1996 act was a thing of beauty created in a bipartisan manner with a democrat president, republican congress. don't we need another dose of that? >> you know, you can always look on how to improve welfare. let's not miss a key statistic.

as you pointed out, it was 20 years ago when the number was just as high. not coincidentally, we were at the peak of a last large recession. when you have large recessions, it naturally follows you're going to have increased poverty. ed good news is it looks like the poverty rate peaked in 2011, looks like we're coming back down as things get better action there is every reason to expect that number is also going -- inform victor y guess what? it turns out when we were in the midst of the recession in the '90s was one of the most effective times in the late '90s, late 1990s, that's when welfare rolls were declines as a result of this welfare reform act. so it's not necessarily true that these things go hand in hand with a bad economy. >> i agree. when you look at things over the long-term examine -- and that half century since we began the so-called war on poverty, the numbers have continued to get worse. i think part of the problem is that we're giving people subsidies, government handouts

and they don't really need it. one stunning statistic i ran into this week is that 40% of american school children are on free or subsidized lunches. 40%. that doesn't make sense. the reality behind that number is that half of those probably really need those free or subsidized lunches. we're subsidizing kids who don't need that help and what happens in the process is that the really poor kids don't get the services they need. so i think we should overhaul our system and focus better services on the people who really need. >> morgan, what also happens in the process is that you develop this culture of dependency. welfare dependency becomes an addictive narcotic. i say that, fdr said that, bill clinton said that. this isn't just republicans saying this. this goes across the board. it can become dependency as a result of welfare can become a very dangerous narcotic for our entire society. >> i think we're actually putting the cart before the horse here.

one of the reasons we're seeing such a record high poverty rate is actually because we don't have jobs. we don't have enough jobs and many of the jobs we do have are very poorly paying jobs. so i would make the argument that entitlements right now are something that's keeping the poverty rate from going even higher. there are a handful of reports that back me up, including the census report which showed if it wasn't for unemployment insurance and social security, the poverty rate would actually be 8% higher than it currently is. so yes, do we need to take a whack at things like welfare down the road? yes. but we need to focus on jobs first. >> just spent hundreds of billions of on guess what, a jobs program. some of these jobs, by the way, cost $500,000. if you lookup wind mill farm, for example, which were extravagant expenses that cost taxpayers much too much money, why don't we apply some of those jobs to some of the welfare recipients? because giving a welfare recipient a job is the best way to get them off of it.

>> as kennedy said, why not direct the entire stimulus toward small businesses to create jobs and not what the government think it is can cherry pick in the way of green energy jobs. i'm not for this it takes a government village to create jobs. i do think that we have been helping poor people and we should. the reason why that the welfare rolls also dropped in the late '90s, because we were in a bubble era of a boom. and the food stamps do help child poverty. i think keep them for those kids, absolutely. i think that sometimes people are very humiliated, those people who are taking food stamps and getting unemployment benefit, they don't want a government life line. they want a job on their own of the they just want an opportunity. but it's -- we can't make a blanket statement that all people on welfare are bad. >> but i think you can make a blanket statement that there is a tendency to become dependent on welfare once it begins. it's a very dangerous tendency. republicans and democrats have

noted it happens. it happens across all levels of society, by the way. i've known people from well off backgrounds who, through no fault of their own, go into welfare and they have trouble getting off of it. >> the problem now is we're in a vicious cycle. the more money we spend as a country on entitlements, the less money is available to invest in businesses and create those jobs that morgan pointed out we correctly needed. obama doesn't understand that. he thinks by increasing entitlements, you'll give people more money and that will revive the economy. that has never worked. what works is investment in businesses that create the jobs. then you don't need to spend so much on entitlement spending. that's the way to go. >> steve? >> and couple of things to keep in mind, the poverty rate was falling very rapidly in this country 50 years ago when the poverty program came in. we made very little progress since then. two, we're spending $20,000 per person on all of these entitlement programs. why not give them the cash if that's what you want to do? i would rather have them go for vouchers, scholarship, school

choice and improve the public cools by allowing parents to choose the school. >> one thing that was changed by the welfare act, in the old system before clinton signed that welfare reform act, the more people that stayed enroll in afdc, the more money it got. that changed. fixed amount of money went to the states and they weren't sort of rewarded by adding to the welfare rolls. now we're getting word from the obama administration that that may change. we may go back to the old system where, in fact, you get more money if you have more people on welfare rolls. is that right? >> david, i hear exactly what you're saying. look, we've seen studies of exactly what you're saying in places like denmark. in other words, denmark cut the jobless benefits by two years and they saw the incentive for people to get to work. then when you start dropping the dollar amount of unemployment benefits, by the way, we're talking 270 a week or whatever. that is embarrassingly small

already. you can't live on that already. when you start dropping it, yeah, there may be incentive to get that job, but i got to tell you something, we spend so much money on all sorts of different stupid government programs. i'm all for helping the poor. >> to mike's points, we're not giving them money to stir the economy. we're giving them money because they're hungry. i have to say to lizzie that was the greatest speech i've ever hear you make and i absolutely mean that sincerely. >> thank you. >> morgan, is there not a danger, however w giving money to people who become dependent on that gift? >> of course, there could be that danger down the road. but again, the reason we have this high poverty rate is because we have a weak economy and we don't have enough jobs. focus on the jobs. then we can take care of welfare. i've said it on this program before in the past. i think there is a lot of room to reform welfare. we can get creative. but let's focus on the keeping right now. >> it seems the more spend on it, the more poor people we have. you look at the stats, that's what it says to me.

>> again, we sharply slowed down the fall on the rate of poverty when we did these poverty programs. they finance massive political machines that don't help the poor. and so why not do both? have reform and get the economy moving again. >> we got to leave it at that. great discussion. coming up next, a corporate whistle blower gets a windfall of $104 million reward from the irs to a self-confessed diamond smuggler. the irs says it's the right thing to do, but somebody says it's the wrong thing to do for business. you don't want to miss that you don't want to miss that co so... [ gasps ]

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who would you choose ? wow. you guys take a minute. zon, hands down. i'm going to show you guys another chart. pretty obvious. i don't think color matters. pretty obvious. what'sretty obvious about it ? that verizon has the coverage. verin. verizon. we're going to go to another chart. it doesn't really matter how you present it. it doesn't matter how you present it. verizon. more 4g lte coverage than all other networks combined.

see you at 1:00 p.m. eastern. apparently snitching pays off. the irs rewarding a former ubs whistle blower $104 million. the former banker confessed diamond smuggler turning himself and his company in for setting up secret accounts to avoid paying taxes. now usually whistle blowers are called heros. but e mac, you say it's bad for business when the government starts paying off snitches. this is a flip side. >> i understand that the tax code is basically one big giant industrial policy on steroids for corporations. i get that. but ts smells of east germany to me. a piece of the recent statement put out by some in government that we belong, viewers examine taxpayers, that we belong to the government. no, the government works for us. we own the government.

the small business does not work for the government. business does not work for government. we are not a revenue stream for government nor individuals. it's turning us into snitches for the irs, their own little police force for fever factory that's known as the u.s. tax code. >> mike, i'm sure you agree with this? >> i have no problem with this guy getting paid if he helped catch the crooks. >> $100 million and he's a crook! >> the police department, david, uses and pays informants, has long done that and had a loft success with it. so i don't really see if this guy captured crooks and people that have committed crimes, what's wrong with that? >> john, what's wrong with that? >> oh, i have major problems with this. for one, he was helping individuals keep money from reaching the government, which is good for the economy. but beyond that -- >> i like that, go ahead. >> you have to look at whistle blowers as modern versions of ambulance chasers. do we really want disgruntled employees to be able to team up with the force of government that has unlimited money to go

after businesses? if you want to tank the economy, give individuals the right to do this, to take their company down and get paid for it. >> steve, ambulance chases? we don't want to pay people for doing that, right? >> no, we don't. first of all, if you see something being done wrong, you should do something about it. and two, you shouldn't have to be paid to obey the law. do you do it anyway. so this guy, if you've committed a crime, should go to jail. >> by the way, he was in jail. he collected his 100 million right after he got out. >> only 31 months. he gets more than most even the top 1% in this country now. and so 40 million net he got after taxes and legal fees, that's outrageous. you should do what's right because it's right. not because somebody paid you off. >> without getting in the weeds, the irs paying a guy $100 million as soon as he gets out of jail for snitching, it just doesn't sit well, does it? >> well, actually after taxes and legal fees, it's only more

like $44 million. >> okay, right, only 44 million. >> but let's, for a second, the word snitch is whistle blower. what are we? the mob here? anyway, i actually think this is really good for business. i think there is a lot of risk attached to whistle blowing. so there needs to be an incentive for people to come forward in certain cases. i think this is going to encourage businesses to clean up their internal review and make sure and prevent things like fraud. we've seen a handful of banking scandals in the last couple of years and maybe a few people felt more incentivized to come forward as whistle blowers. >> bill, this situation may have been legally clear. i'm not so sure about that. but very often when things are just on the edge, might this not encourage people who work for a company to cooperate with the irs, to ensnare a company that doesn't deserve to be ensnared? >> paying whistle blowers sounded like a good idea when it was invented, but it turned into another looting scheme in which lawyers get rich and everybody else gets a little bit poorer.

in that sense, it shares this property with some other legal schemes such as rewarding people who file lawsuits over wheelchair ramps or rewarding lawyers who file lawsuits over volatile stock prices. in the end, the lawyers get rich. everybody else gets a little bit poorer. steve, bill brings out a great point. i'm always suspicious of any scheme where lawyers get the most amount of money. >> yeah, again this is where government gets ahead, the lawyers get ahead and the american people are left holding the bag. again, obey the law. if you don't, you pay the price. but you shouldn't have to be paid to obey the law. >> mike, i can't believe you're going against the watch. you're the boss here. >> my understanding is this guy saved the irs and therefore, taxpayers a lot of money and got -- >> actually that's a fair point. hold on a second. they claim that they saved $5 billion as a result of paying this guy $100 million to snitch. isn't that a cost benefit analysis worth it?

>> yeah. exactly. i hear what you're saying. but, based on what kind of a tax con, what was the tax rule at play? was it fair? i'm so suspect of the saver factor known as the u.s. tax code. do we know is this fair or not? >> david that, 5 billion sounds like government accounting. everything gets inflated. and in terms of the wrongdoing there, they would have found it out anyway. they have access to the books. they have subpoenas. they didn't need this guy. >> you have to rely on trusting the irs and lawyers, i say watch out. mcdonald decide to go do something, cashing in folks say will take the fight out of all businesses in america. find out what that is at the bottom of the hour. first, right here, hundreds of colleges and universities now making money after losing it during a recession. is it time to give some of those profits back to students and their parents by lowering tuition? [ engine revving ]

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>> a brand-new study revealing most college investments and endowments are way up, recouping their losses from the investigation. tuition is way up, jumping more than 8% on average this year alone. so rick, you say those newfound profits should be going to lower students' cost. parents would like that. >> absolutely. these schools have to get their priorities straight. it's great to build new buildings. it's great to have good research programs, pay teachers lots of money, but it's suppose supposed to be about educating kids. if we don't do that, only the

wealthiest people in the country will have an education and if we don't support these kids, who are going to become the lawyers for the future? >> to do get that in f a lawyer. john what, do you think? is it time for colleges to start lowering tuition costs? >> i don't think colleges own whiney college -- owe whiney college students anything. we have to remember what the endowments are for. they're there to get the top researchers for research and dare i say it the top football coaches on the field to get more in the way of donations. if you want to educate kids, you've got to get big donors. if you want to bring in tuition down, the way to do it is get the government out of subsidizing tuition. you'll see it fall very quickly. >> i tend to agree with that. victoria, in point effect, tuition and fees in four-year schools have gone up 300% from 1990 to 2011. inflation during that time was just 75%. so more than three times as fast as inflation. something is wrong. >> something is wrong. and the increase in tuition

prices has tracked exactly with the increase and burden of student debt. so the student debt is the debt that thanks to the government, we've created this wonderful system where it's fueling the fire and tuition rates continue to go up. meanwhile, college accessibility is not really the issue in this country. when you rank us globally, we're doing wonderfully. but our graduation rates stink. so colleges need to lower tuition just because they're absurdly high and then they need to do a better job actually getting kids to graduate. >> bill, isn't it time for the colleges just to step forward themselves? i understand the cause, government's role, et cetera. but just they've got all this new cash, apply it to tuition to keeping tuitions down. >> let's not be naive. let's understand prestigious universities for what they are, giant profit making businesses whose general partners happen to be tenured professors, state supported institutions like the university of virginia. businesses, if they're smart businesses, charge whatever the

traffic will bear. >> steve, you got five girls. all went to college. wouldn't you have liked to have seen those tuition rates go down a little based on their enendowment? spend some money to lower cost? >> then the way you get that done is, again, by what john wants to do and that is remove government subsidies because when subsidies go you up, administrative bloat goes up, sticking point of that, debt goes up. and bay bithe way, david f they don't get their act together, even without reform, you'll see the web do the same thing to higher education what it did to media, turn it upside down. you can get lot of great course now from fine universities on-line for free. >> last word from the guy who had to put five girls in college. coming up, the market running up to multi year highs this week. now get the stocks ready to keep running to their all-time highs. that's coming

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>> we are back with our former stocks. morgan alliance resource partners, why do you like this? >> solid coal company. it pays a really good dividend. >> natural gas is now replacing coal and it will continue to too so over the next 20 years. >> you like national oil well. why? >> they are a big player. they dominate 40% of the pipe that's needed to do deep oil drilling. they are a big player in oil drilling equipment. >> bill, you like them? >> very good company. but watch out. the democrats think oil wells are the work of the devil and