of it find out what's going on. thank you to both of you ffr joining us. we appreciate it. that is all we have for you today. we will see you tomorrow on "the willis report." ♪ [music playing] ♪ [music playing] ♪ >> hello, everybody, i am cheryl casone in for gerri willis. today's the start of the lame-duck session. president obama spoke to harry reid over the phone about the fiscal cliff over the weekend. the white house is making it clear today that the president won't sign a bill that extends tax cuts for those earning

$250,000 a year in social security. it will not be part of the fiscal cliff. so we are going to talk about the compromise. we have a congress and to talk about this with us. >> and you for having me cheryl: or a little bill? >> we were waiting and hoping to compromise with its administration. but they they would just never come to the table. >> these democrats want to continue spending on social programs, republicans don't want tax cuts to be touched. you think we can have compromise from both sides on each of these issues? the rhetoric that we are hearing on a television screen is pretty negative.

>> he did say that we want and the republicans will reach out to less. cheryl: after the last election, the november election, it was a referendum on many republicans. some of them walked away and said, okay, we did not get the senate back, we are moving forward. our republican candidates did not win the presidency were many officers. >> people were looking round the waist deep in seeing a lot of their friends have lost. barack obama may have won the white house, but the republicans do have the house of representatives. the american public is saying that we should stick to the principal principle message that we have said.

washington is running way too much money. there may be differences in want of other issues, but on this one, most americans agree that there's too much waste and fraud and abuse and let's eliminate that. cheryl: where do they fit into this scenario? fatcat ceos, those from honeywell, allstate, do you think that that is going to be a positive conversation? will congressional leaders listen? >> i would think that they have been listening to the ceos all along. and even looking at wall street and main street and they all say the same thing. we want certainty out of washington. we haven't gotten it from this administration, whether it is dodd-frank and all the mess that the excessive spending. so i think that wall street and main street will say the same

thing. stop spending so much, put your fiscal house in order. >> let me ask you about warren buffett. warren buffett saying that there's no tax pledge doesn't work. today, and i would like to play this to you over and over, he responded. take a listen to this. >> i agree with part of it. warren buffett really believe what he said, he could do it any other american who thinks that they are not paying enough taxes, he could stop fighting the irs and just start paying

for the irs says that he should be paying today. that is one thing. cheryl: that's true. >> if he believes that the federal government is the way we should be spending his money, then he should not have set up that chervil foundation and he should've written a check to the epa and to the federal government. you must inherently believe that it's better that you spend money through charitable trust and have washington spent his money. >> some of your colleagues are turning against him. in fact, saxby chambliss is one of them. bob corporal, lindsey graham, i have been in office for a number of years and i never see the need for raising taxes on hard-working americans. if you put a dime on the table in washington, they will find a dollars worth of spending it. raising taxes to me is not the answer. it doesn't matter whether you sign the pledge to someone down

washington or not, you really have to make a pledge your constituents at home and what are you going to do for them to all those promises? >> we did some research and found out that if we don't extend the bush tax cuts, we don't have enough revenue to run the government for more than 8.5 days. >> that is correct. it's a drop in the bucket. i think if you pass that one buffett tax and that's only 4% of it. that's not going to solve the problem. it's a spending problem, not a revenue problem. >> well, tomorrow when he returned, it will be interesting. >> okay, congressman, thank you so much and it's great to see you again. he wants know what all of you to get home. here's a question to tonight. congressman barney frank said that voters asked congress to do the impossible. do you agree with him? logons gerriwillis.com and vote on the right-hand side of the

screen. i will share the results of the end of tonight's show. meanwhile, if you think we have seen the worst of this economy, think again. another recession could be just around the corner regardless if congress solves the fiscal cliff crisis or not. one of the top economists, martin feldstein of harvard university, joins me now. >> it's good to be back. cheryl: you were with ben bernanke last week. there were two questioners talking to mr. ben bernanke. he has been very vocal in his call for congress to fix the fiscal cliff. you are a little bit more negative than your colleagues. why is that? >> well, what he said is if we go over the fiscal cliff, the economy will drop into a recession and the fed does not have the ability to stop that. now the question is, what if we do not hold the fiscal cliff but some of the other things that are being talked about, like the

president's plan, what would happen then? the president's plan to raise taxes on high income individuals, cutting deductions for high income individuals, raising the corporate tax rate read a long list of that sort. eliminating the payroll tax holiday. that would take about 2% out of the gdp next year. we are struggling to reach 2%. as we would basically be on the edge of an economic downturn we are sure to go into a recession if we go over the cliff and don't turn it around quickly. but even if we don't, if we have something like the obama plan, we could easily slide into recession. it is not nearly as much is going over the fiscal cliff, but it basically would offset the very weak growth, less than 2%

growth that we are having right now. >> you agree with the estimate of gdp growth for 2013? again, ben bernanke, they are very optimistic about the economy. they say 2.5 or 3% for next year. do you agree that overall assessment of the economy? >> i think it's possible. but i think it's hard to see how we get there. this year from the end of last year to the end of this year, we are going to be under 2%. we have defense spending at the end of the fiscal year which perked up a little bit. exploits were surprisingly strong. if you look ahead to 2013, where is the strength of one come from? households have maintained their spending only by driving down their savings rate to just a little over 3%. so there is not a lot more to come their, and household

incomes are lower now than they were a year ago. so i think it will be very hard, even without an fiscal hit to the economy. even without that, it's going to be hard to have 2% growth next year's. cheryl: martin county mentioned that he will tax cuts. it seems that no one really wants to extend that at this point. but that is going to go away on january 1. >> i think that is right. cheryl: what does that mean you? >> is a big number. probably about three quarters of a percent permanently coming out of the after-tax incomes of households. so most of that would be subtracted from spending. >> maybe 1% of gdp? you have to% grooth of gdp, it could be 1%. is that what you're saying in this economy? >> well, 70% of this economy. so if you do that and you do some other things in the name of

avoiding the fiscal cliff, well, we are going to be right on the edge of an economic downturn. >> let me ask you something. do you advise ronald reagan, if ronald reagan were alive today and he was facing the fiscal cliff, what do you think he would do? >> remember what he did in 1986? he sat down with tip o'neill. they agreed that they could have very substantial reduction in tax rates across the board but particularly middle and high income tax rates and offset that base broadening. the result of that was taking the top rate down from 50% to 20%. the impact of bad was to have a significant increase in taxable income. people choosing to take more of their compensation in the form of taxable income and cutting

back on their tax expenditures and deductions and exclusions in working order. so i think that is what ronald reagan would do if he were here now. >> leadership will be key to all this. thank you so much for coming on the show today. >> it's wonderful to be with you. melissa: cheryl: merrie schapiro is stepping down. she helped lead the government and regulatory response to the 2008 financial crisis and took over after the sec failed to detect the bernie madoff ponzi scheme. her last day will be december 14. it was an exit that many saw coming. the one i recently talked with her, she wasn't ready to admit it. >> i don't have any plans. you know, it amuses me that there is speculation about my departure being imminent. so i take this in stride as being more of the same.

>> she is leaving december 14 red president obama is already choosing a lease water. she's appointed by george w. bush in 2008. >> coming up on "the willis report." they called the obama report. i do care, that's right. as the fiscal cliff loons come will nutech still go over your 401k? peter barnes explains what to expect for your retirement savings next year. and today is the day to shop for the internet. we are on the case next on "the

willis report"

the. cheryl: it is back to court for liberty university and their challenge the controversial law. their challenge is the employer mandate and to fund what they call abortion related services for their employees. we have leaders well coming up with more. we know this case very well. >> yes, tardy at the supreme court. cheryl: the argument, is this going to fly? >> with the supreme court said is the first time around, we said that wasn't right. that nobody had been hurt yet. and so the mandate had been in place. so really you cannot argue that. but now what they are saying is that it isn't just an issue

about the mandate. it is about a right of religion and that may be right. will they win? it is a fairly liberal court area. i would be kind of surprised to see them win on these grounds. >> yes. this could set the stage for another go around. >> if they win in a small area and they argue religious rites, vermont we have the hospitals doing that as well, the floodgates open. we are right back to the supreme -ourt. i don't see it happening. but i can see this very narrow way, take a second shot at it. >> a right to free exercise of religion. >> okay. will this will be interesting to follow.

cheryl: okay, we are going to fire you if you don't get a flu shot, that is what they're saying. they did, they fired a number of employees for not getting flu shots. can you do that? >> legally, yes you can. if you are an employee out well, you're not part of the union,3 they can fire you for not following their rules. there are certain exceptions if you have a religious aversion or if you have a disability or something where you can prove with a doctor's note that you are taking a flu shot can actually be dangerous to your health. if you are not any union, the court can a subject of these flu shot. >> okay, so the to be fair, they gave in november 16 deadline. they said it's a health care company. [talking over each other] [talking over each other] cheryl: they are in a hospital and the idea is you could be

making other people sick or the other side says even if i don't take a flu shot, i won't come to work as i have and i will always wear a mask. what they have also said is we have required all 10,000 -- did he prove that you got your flu shot, you get her job back. no job, but images are mitigated. if you're in a union, you can negotiate this. again, it's very important. to make the distinction we're talking about health care providers, hospitals and that sort of thing. i but i have to admit you, not as a lawyer, but it issa little strange to have employers that you must ingest something. a flu shot this part poison. it is partly being injected to you. >> you must take something into your body that you don't want it's a little strange. >> all they have to do is say

it's against my religion. [talking over each other] [talking over each other] cheryl: was well, thank you very much. my question is was it legal? but all right. a lot more to come during this hour. including a major shift from the gop. are they leaving their grand policies behind? biker goodland gives us his take. and the fiscal cliff will be talked about. stay with us

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cheryl: lawmakers have a new target. as they try to fix the fiscal mess, is your retirement plan about to change

cheryl: we have been reporting a lot on what tax deductions may be on the chopping block. the latest tax break up for discussion. one of the biggest ones. and that is your retirement plan. the amount of money that the irs allows you to contribute into your 401k is a $17,000 per year. that will probably change. peter barnes joins us now with the details. >> hello, that's right. both republicans and the president is talking about putting all kinds of tax deductions as part of talks on tax reform and the fiscal cliff

and, as you may recall, the president has already proposed doing this for higher income earners. he did it in his budget for 2013 that he released back in february. some retirement tax breaks are expected to be on the table in these fiscal cliff talks. each year, washington awards more than $100 billion in tax breaks to encourage americans to save more for retirement. 61 billion for 401k and similar plans. 46 billion for regular pension plans. 18 billion for other tax retirement plans and 12 billion for iras. probably, is there any any restrictions on these, limits in these kind of things, it would affect higher income earners. but there is a new twist on this today. some researchers argue that all these tax breaks don't make a difference in overall retirement savings anyway, which may give new ammunition to those who want to curb and limit these tax breaks. researchers at harvard used

savings data from denmark to study the impact of these kinds of breaks and researchers found that the danish tax rates, which is similar to the u.s., increased retirement savings, but that for every dollars that workers put into government incentives, they reduce the savings outside of plans that do not have government help by almost the same amount. so almost no increase in retirement savings. >> so those would be taxable accounts? obviously, they are saying what is my taxable account look like. let me ask you this. >> yes, pretax versus postdocs. cheryl: you know washington so well. are there different types of loopholes -- mortgage deduction loopholes, four o. one kays are now? think of those will be the real

deal? >> do think those will be the types that will be truly the final deal that we get instead of the overall arching, everyone gets taxes raised? >> yes, i think they will probably end up with a mix of limits on tax deductions. with some tax increases. but i think that those making over 250,000, those families are going to bear the brunt of all this. i know that everybody enjoys their mortgage deduction. peter barnes, thank you very much. it's good to see you. >> thank you. >> black friday weekend, breaking records all over the place. will cybermonday do the same? after getting a bad beating in the election, the grand old party may be trying to reinvent itself. the new face of the gop and we have answers next.

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so i know how important that is. cheryl: the numbers are beginning to come in. her sonorous and he ran up a 42 billion-dollar bill on the empire state. the cost included $32 billion for small things alone. they are working on its request to draw up federal delegation made. long island residents who spend weeks in the dark will not be getting a break on their electric bills. the bills have been sent off in the normal amount. con edison, covering most of new york city, has said that they will get customers the money back from the days that they were powerless. another one for the private

sector, well, if you are con ed anyway, a growing number of republican leaders are saying that times have changed and the party is trying to reach middle-class voters. what do we make of this overall talk? michael goodwin is here with us today. what do you make of this? i mean, it would make sense if they were nervous after what happened. but what you do about it? >> i think to find a solution, we first need to understand the problem. when we look at the numbers, the defeat of the republican party was not massive. it was not across the country. it was not wild. for example, in the electoral college, the president ran away with it. there were four key swing states that he won. ohio, florida, virginia, and colorado, by a combined total of

300 30,000 votes. now, had mitt romney won those states, we would be talking about what a genius he was. in fact, any other democrat would have lost this election. i think that barack obama is unique. >> i believe so. i believe that barack obama's record was a loser's record, but he managed to win in part because romney was not a great messenger and obama wasn't a great messenger for his ideology. cheryl: i said this, i'll be gentle is coming out and saying that the gop has got to speak more to the middle class. is he right? >> yes, i think there are always ways to improve what you are saying and how you say it. but i don't think it's a fundamental issue. i don't think that the republicans should become more like democrats. therefore, we don't have a two-party system. we just have a big government

party. i think republicans have to sharpen the message and i think that they have to practice what they preach. to many of the republican constituents are sort of clamoring for government programs rather than denouncing the government programs. when a capitalism, for example, there has to be a little bit more purity in the practice. that is wiping the republican governors are the future. there are now 30 of them. and they can show, it's chris christie has shown, if they can continue to show improvement, even in blue states like wisconsin, that scott walker is doing, i think over time, that will resonate more. i would also add quickly that i think the democratic governing model is broken. we see with the debt and deficit -- the democratic party cannot go on this way. it is also going to have to accommodate itself to the physical reality, and i think

that there is a lot of the mainstream media that is focusing on republicans and tax rates. and what does the president have to do about spending? he's never been serious about cutting the deficit. is he really going to leave office with a 20 trillion-dollar debt? cheryl: if you look at this poll, and this is actually going to surprise you, when voters were asked, if the fiscal cliff heads, who do you blame? obama. of course. 29%. >> that as president obama effectively we using the soap box. then i say this. if this was a referendum on higher tax rates, was a ballet on obamacare? the public is opposed to obamacare. is the president going to put obamacare on the table for spending cuts? they do have some principles to fight for and i think it would be a waste if they can act and

caved in on everything. i think that the government needs more revenue. because of the recession, government revenue fell. but that doesn't mean you have to tax rates. we are going to need economic growth. if you raise the rates, history shows they don't get new growth. cheryl: before you go, have to share this. people are asking, 67%, that is what we are dealing with here. >> that is the view of congress. 28%, it more or less doubles the favorability rating. they are getting better even that 28%. >> that is kind of what that romney was standing on as far as the balcony goes. >> thank you for being here. >> it is my pleasure. >> what should you expect from the markets? we will have answers for you and

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cheryl: this shopping weekend was a big one for retailers. shoppers spent a record $59.1 billion. that is up from 52.5 last year. on black friday alone, consumers spent more than a billion dollars online. that is a new record and 26% up from last year. were they buying? the answer is tonight's top five. the number five most popular

item with gift cards. that is an easy one. nearly one third of shoppers bought the most requested gifts in 2012. number four is why toys "r" us opened on thanksgiving day. 35% ventured out to buy the new top toys. and number three is always a popular present. consumer elect hiram consumer electronics. number two was books, tvs and video games, and the number one thing is clothing. clothing and accessories for nearly 50% of shoppers. cybermonday is expected to almost double that. my next guest says both google

and amazon are partially to thank those numbers. consumers, again, it was all about the online sale on friday. a huge jump for those. a new record. we make of it? >> it was a big weekend for our clients. we served a serve a portfolio of 500 of the largest retailers nationally as well as locally. and we saw sales up on thanksgiving day, 32% year-over-year. we saw things decline a little bit on black friday to 23%. the data for the first alf of today coming in at 20% year-over-year growth, which is still incredibly common and it is dwarfing the retail. >> i can't help but wonder if we are going to see the ceiling from black friday.

many websites, wal-mart, target for example, they offer the same deals on their websites as they did in the stores. >> yes, there is no question that thanksgiving took some of the market timing and move it forward this year. the other thing are these poor buster promotions in prior years. they are so very important. again, today is going to be the largest online shopping day ever. but we are seeing the industry give way to a new model. and that is retailers are increasingly automatically pricing their products based on real-time information that they are collecting on competitors and that shoppers are seeing on tablets and other accessories. cheryl: do you really get a better deal? one of the producers was looking for a particular item that was a

watch. it was $125, it was $125 of this watch everywhere. it had nothing to do with cybermonday. happening here with retailers,. >> i don't think it's a trick so much as consumer savvy is catching up with retail merchandising. shoppers are realizing that they don't have to stand in line for 12 hours to get a great deal. they just need to do a simple google search or an amazon search. more than half of all off-line purchases were first research online. when you look at the influence of websites like amazon and google, almost half of them begin with a shop shoppers searching for product on one of those two-sided. cheryl: eric, it's great to have you on the show and it's very interesting, as you can see. we are always talking about cybermonday and black friday. we will see what it does for the economy. thank you very much.

>> thank you. cheryl: if you are wishlist includes the items on the christmas carol for 12 days of christmas, they will cost you 6% -- excuse me, three times% the rate of inflation for monster. the five gold rings are jumping to $750. and a partridge in a pear tree, that is only going to cost about $15. the pear tree will send you back just a bit. but the rising cost of prices of birds, soaring. the seven swans swimming are

thousand dollars apiece. three french hens are also up about 10%. but there are some reasons to cheer. the six items mentioned in the song have not gone up in price. the 11 were sleeping, nine ladies dancing, and eight maids a milking. calling birds, two turtle doves, and the partridge that i mentioned earlier in your tree. my entire family, if you are watching him you're all giving gift cards. coming up from the 25 days of christmas could be a major indicator of what the markets will bring in the new year. advice on what to do with your money is coming up next

cheryl: a critical determining of the market next year. details will come in 15 minutes.

cheryl: it was a rough day for markets. the dow jones dipping below 13,000. my next guest says she remains bullish and next month will be critical to determine the market's direction. here to explain is hello replay to hilary kramer. what is going to happen? >> i believe that this summer will be a very big rally. third-quarter earnings, it is really disappointing and moderate at best. the market will struggle in the

coming 12 months. like unfortunately the defense sector is in for a rough patch. they have already begun to start more than anyone realizes. the equation of the fiscal cliff, if the cuts we are going to see. >> sequestration i can understand. also, we just finished going through earnings. if you look at the s&p 500, only 40% on revenues. it wasn't like these revenues were blockbuster. a lot of the earnings of this quarter in the past five years -- going forward, there was a lot of inventory that had to be pushed through the pipeline. there were expenses that were

taken. we have seen massive layoffs in very big numbers. whether it be twinkies or whether it be inveetment banks. of course, technology companies. hewlett-packard going forward, it's so tragic. however, we have so many innovations in so many areas that are growing and are so important globally. like biotech, medical devices, technology areas, your previous guest talked about data mining and the whole industry in itself, collects information on consumers to a big shortage in this country. cheryl: the analysts today are beating up on jcpenney and target. >> the retailers have a rough day today. we are going to see that 2% increase in sales, the problem

is we might see up to 50 or 60 basis points. a half precent margin that it's going to be eradicated in companies like wal-mart. those retailers cut prices. and we have heard this. the prices are cut so much and with such a high cost for all of those inserts that we saw on the newspapers, yet they are not as effective today because people are online. >> another company at sears. you were saying in your research that people were going out for things that they need. they are not going out for luxury mattress from your absolutely right. this is the season not of indulgence but if practicality. it is about outerwear and appliances. of course, it's going to be stocking suffers and food products and i have already received a big chart of cashew

nuts. so we are going to see a very big switch here of clothing for children. not so much the toys. cheryl: hilleary, thank you so much. it's wonderful to have you on the show. we will be right back with our answer to a question of the day. outgoing congressman armey frank. asking voters to do the impossible and we agree. we met we do our best. i am not troubled. [ male announcer ] at scottrade, we believe the more you know, the better you trade. so we have ongoing webinars and interactive learning, plus, in-bnch seminars at over 500 locations, where our dedicated support teams help you know more so your money can do more. [ rodger ] at scottrade, seven dollar trades are just the start.

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cheryl: well, if congress continues to bicker over the fiscal cliff, barney frank said yesterday voters asked lawmakers to do the impossible, referring to compromise. here is with some of you are tweeting. @gerriwillisfbn. only if you think that being

responsible is impossible. another agrees. voters asked them to do their jobs. we also asked this on gerriwillis.com. 5 percent agreed. 95 percent said that they disagree. all right. here are some of your e-mails. john wrote in and said the house raided about the republican controlled because members are elected by different areas of the state . well, a statewide vote is have the -- heavily dominated. four more years of a trickle of poverty from america's sugar daddy. how long before the country goes bankrupt? finally tonight, who does not love a parade? this year's thanksgiving day extravaganza in new york city was the most watched in six years. now there is a bit of a scandal brewing. some of the confetti was actually shredded up police documents. a manhattan attorney an