following the current law. instead replacing it with is very small tax increase on the rates of the wealthy. lou: i can't tell if you're bragging or complaining. >> he's bragging. >> uncomplaining. i told you, i was going over the cliff completely. this the only way we're going to get a nice chunk of deficit reduction would. >> right before the president got on air force one and headed to oahu, honolulu, as the island he was born, not indonesia. he basically said to pick up the zone. his your daddy. you're the masochist. what you can do. to what the japanese are doing. lou: the last thing i want to do is say this broadcast is that an end, but it's great to have you with us. thank you. thank you for joining us.

good night from new york. neil: forget ringing in the new year. has anyone normally sober up? welcome. i'm neil cavuto. they all have to be still completely plastic drug. wasted. they can even see how much of our money has been wasted. drunk exhibit one this new year, aig running commercials thinking americans for the bailout that the insurance insisted paid out only weeks after the treasury sold off its final state. as if they're is a virtue after locking all taxpayers enough for your spending vice. drug exhibit to. the corner of wall and broad. anti big government. wall street celebrating a much bigger government deal promising 4 trillion more spending, not less over ten years. rallying like crazy. exhibit three, republicans say with a straight face that the president to budge on those tax hikes, but not a word that this deal is 41 times more tax hikes

and spending cuts. start exhibit floor, the president approved the point, got his way talking of the need for more investments and more spending. finally drunk exhibit five. perfectly sober john maynard told harry reid to go as himself not once but twice, proof that the man who can't cry concurs and looking at the deal he agreed to probably did. no wonder pat buchanan. republicans lost an election. he just figured after the holidays, they sober up and enough time to realize they have not lost their salt. i guess they did. >> will we have this up republican dunkirk, republicans got off, but they left behind their helmets, canteens, and rifles and the 2%. they got off the beach. it was a real debacle. i think the reason they did is they felt, you can either pass

this or not pass this, in which case all the bush tax cuts are gone. taxes rise for 70 or 80 percent of the country. harry reid and barack obama write the next tax said bill. i think it was for lack of an alternative that they did. neil: we did not have to go through this rigmarole. they could haveejust done that at the outset to avoid it. >> your talking now about their negotiations orc indefensible. there is no way you can defendant the conclusion the weight came out. as you say, 40-1 taxes against $1 in spending cuts. neil: that problem, that is worse. promising that some decade. it's insulting. >> to add insult, hollywood. neil: absolutely. >> money for windmills. of wholesale defeat for the

republican party. i will say, we are headed down the road now to where republicans are going to have to, after 20 years go broke. raise taxes somewhat in order to avoid going a bit great deal. down the road we're headed for a confrontation after confrontation because of this. republicans can't vote for any more taxes. most democrats will not vote to cut a single dime out of future spending, social security, medicare, medicaid, obamacare which means that the president will come to the republicans and say maybe we hold off on the annual increase on inflation for social security a bit if you give me more taxes. though have to say no. we are headed for gridlock for four years. neil: i think they have their number. i don't think there's any reason for them to backtrack here. i do believe that you lost an election. it does not mean you lost your backbone. something happened, and i think they could be pushed around.

so afraid about looking better being as to the brink that they will do almost anything to avoid it, including selling their souls. >> i think republicans will have to look after, and they did, some of them. they voted for this. there were looking. they said, to prevent a total and complete disaster, at least make it off the beach. total surrender. for going to have to do this. a thing that's going to put some steel in the spine of these fellows. no more deals with president obama. he demands taxes to more not going to give it to one. or going to have to do a ourselves. neil: they didn't do that. i hear you. they didn't do that under the dress of fiscal suicide. they couldn't come up with the deal that was credible where everything was all , what makes you think that in future debt negotiations are god knows what else there will show up from molly have the courage.

>> i think they can now vote for future tax increases, even for spending restraint for the simple reason that is the end of the republican party. the good lord put republican sue on this earth to cut taxes. we disagree on so many other issues. if we don't agree on that, hold the line on taxes to pay for all the spending the democrats are doing. there is no argument for this republican party. neil: that is very well put. you're picking up on the new year right where you left off the kneele one. brilliantly. thank you. happy new year. >> happy new year. neil: well, another lawyer to these markets. in the face of a government growing, but another reason for that. it could have been worse. it could have been a lot worse. texas could have gone even higher. you look like you're having a

hell of a hangover yourself. explain that. >> well, it could have been worse. let's say that the president did nothing and let us go off the cliff, regardless of what it would have done to the economy. he would've had a dream come true. taxes would have gone up. instead 99 percent of americans have a permanent test accent's. that is something mr. bush has to be delighted about. neil: that is where they did agree. >> absolutely. but let's look at what else we have. let's look. i don't like this deal. you know that. and trying to find a silver lining. we did see the estate tax, a dead tax at 5 million. above that it went from 35% to 40%. 10 million for families. that is a huge one there in my opinion. all americans taxes are going to

go up 2% because the payroll holiday is going to go way. everyone will pay a little bit higher taxes. more importantly i love the certainty. uni have talked about this for the last year. wall street is looking for certainty. what they have today, they know what they're dealing with. endo there was been 330 billion more. he's spending more money. that means bernanke will keep the money pump cranking away. plenty of liquidity and wall street shows up at the huge rally that we saw today. neil: a very good point to make you make many of them. here is where will respectfully disagree. as you know, i read a prompter on tv. here's my argument. what was weird about today is you had this bastion of capitalism celebrating even bigger government, even more regulation minded government.

grateful that the taxes did not triple, grateful that the state taxes did not go p as much as was feared and affect as many as was feared. we are so grateful for so little that we will buy on squad, and that is what worries me. neil: you're right, but let's look. there were some plans out there that would raise dividend taxes almost 4%. neil: you're right. how can you get a sustained rally. if your going to have the government or the more capital than private capital would love to get its hands on, that is not a long-term promise. you know what i mean? >> i agree. long term and not suggesting that this will stay. there is one word. bernanke, he will keep the money flowing. he has to. neil: that is artificial. celebrating artificial. it's like a nicotine fit.

neil: i agree. we took a junkie, give him a shot of heroin. he feels better. we did not help the addict, but here is the bare. wall street now is in a position where they know the continued resolution is coming. the whole issue of the sequestered. neil: why would financials be up in that environment? is it the bernanke? it certainly can be the fiscal guidance. >> let me tell you why because now the republicans are in a position to strength. they don't have to do anything, and the continuing resolution does not happen. you have a government shutdown. they don't do anything on the sequester, automatic cuts start slashing left and right and you do get the spending cuts. i hope you're right that the republicans get a backbone because if they don't patrick buchanan was right. the republican party has no reason to exist.

i have to believe as easy as they let this thing happen, they are expecting the budget or the ceiling debate in the continuing resolution debates to be worthy show their strength. let's just prayed as the case. i think in temporary rally we saw on wall street is that. neil: always a pleasure. happy new year. coming up, getting smacked down. now they want a certain governor moved out. but on't recall what happened to that guy? doubling down leaves unions on the house. then congress will begin the san the bill, but every horrific thing you've heard, they just say that. that the mainstream media is telling you. when new york daily news cover has it all wrong. a very, very wrong.

time for some fairness.

neil: well, out of the woods. moody's, the big credit rating agency saying right now, it is not encouraged by the direction all of this is putting washington end. for that matter, the fiscal outlook has really not measurabby changed. that could be a preview to of possible ratings downgrade. keep in mind the movie's never changed their aaa rating. maintained it. speaking of, the rival ratings agency, at it as it on a double a-plus which is a notch below aaa. so far the overall fiscal environment has not altered one way or the other. that could signal that s&p has been inclined to change things. imagine that. all this fuss and excitement over getting a deal done. still downgraded. well, meantime unions and not giving a buzzer and fight in michigan. we are hearing their is a push

to recall those for governor rick snyder over his signing of the right to work. get them out of there. risk -- wisconsin went to five ringing a bell. our union battle segmenn. public policies. go ahead. make this date. how likely do you think that is. >> i don't think is likely. it already tried twice and fail to get the signatures to get it on the ballot. if they learned anything, anything in all from wisconsin, they know this is going to fail. it tried recalls. they tried to go after the lawmakers in indiana in the past tried to work in that state. guess what, republicans, both houses, increased margins. if they want to try it, let them flush down the toilet been given members more reasoned dissent and a choice to forget about it neil: it's a lot harder michigan

. any eligible voter can get the signatures on. a lot stickier and tougher to do so in michigan. let's say they try. you think their failure >> well, if history is a lesson, it looks like they're probably going to fail. wasting resources and what they're going to do, part of what health the backbone for the lawmakers in michigan is seeing what happened in wisconsin and what happened in the ana where those lawmakers that shows freedom ahead of the special-interest were not chastise and be to my gaining strength. other states and lawmakers may actually take note and save they can do it in michigan, what can we do here. neil: is the difference between them and wisconsin and the world now. a lot of unions, whenever the growing weakness, they did put

barack obama over the finish line. given the president, they did really deliver for the president. so you would have a president, a democratic party being emboldened to help them. the union's help them. that's a different factor. >> not really. i mean, let's look at wisconsin, michigan. the second most important thing on the ballot. the legislature and effective veto over legislation, government union contracts. that went down by almost 15 points, yet michigan still reelected barack obama, santa democratic senator to washington d.c. wisconsin, barely a year after the voters resoundingly rejected governor scott workers recall by ten points, wisconsin voters

also reelected obama, also said a democratic senator to the white house. a disconnect between voters voting democrat and rubber stamping union issues. so they can really hang their hat on that. maybe something else. neil: thank you very much. we'll see how well pans out, but i would think it would be a suicide mission. i've seen them before. well, they guy behind his kate upton had, remember this one, might have to cut back and settle for someone not so pretty this year. a big mama of all tax hikes. and it's not just hitting the rich. it's hitting everyone in the mother. kate or her. ♪

>> protect terminal class and everybody's trying to get into the middle class. protect as many american families and small businesses as possible. >> particular class families tomorrow. >> our goal here is to prevent taxes from going up on anybody. >> we are there for the middle class. neil: you heard it once, a brazilian times. the old deal, this will cliff thing was about protecting the middle-class. the middle class in the middle finger in the end because is not just the very rich getting hit by tax ax. the majority of americans are coughing up more. people making 50,705,000 camping at least another 822 bucks a year. that's the bad news. it could be bad news for the economy. the payroll tax cut that just went by my.

by definition that affects 80 plus percent of american households. there will be paying on average 800-$1,000 more. would that have an impact on your establishments? >> hopefully it won't have an impact on us. good to be your. but sometimes we trade down from restaurants that have higher prices. you trade down the fast food. think it's bad for the economy because people have less money, they spend less and have less money to businesses and to perform, they don't hire. the economy gets bad, and then everybody suffers. this is -- this tax hike, it's really people making under under and $13,000 will see a flat 2 percent increase in taxes because of the payroll tax. if you make of hundred thousand they're going to be paying two and a dozen more in taxes than you did last year.

this payroll tax that they you been getting used to, it's going bye-bye. you're going to pay more. i think people see that in a paycheck that started the year. it does have a psychological effect. dramatically alter consumer behavior. >> take somebody making $50,000 a year and you give them a thousand dollars, that's meaningful. you take a thousand dollars away and that's also a meaningful and is exactly what this, it's amazing that they can characterize this as a tax cut when they have literally increase taxes on everybody. i think when you look at the spendable dollars, the dollar's the people have to spend, people that can hit the worst by 90 percent of american workers that it -- report less than 112,000 year in texas. the big hit, get hit hard, and

it's just amazing to me that it could be characterized the way have been able to. neil: i could deal with taxes going up to my own included, if there was some quid pro quo. tit-for-tat in that. as of a comparable cut in spending to offset well was happening. these other taxes going up. i don't see that. with the ratio at 41-1, the fact of the matter is that a lot of folks are just feeling it's a waste and that they are now paying more and getting less. all country is going end up getting less. >> as you noted earlier, those cuts they're talking about are in the future. right now spending is going up. taxes going up, spending going up. we didn't address the complexity of the tax code. we did not address the deficit problem, we didn't do anything to reduce our debt. neil: if we couldn't do it under -- if we couldn't do it under extreme duress like the environment around this whole

cliff thing, my gosh, what would make us change our behavior? add all see anything that would do it short of nuclear armageddon. >> i had a discussion with a group of people and a former president. he was clear. congress can lead. congress is not built to lead. they can leave the country. you need a president to take a position on these issues. if he doesn't on reforming entitlements and tax cut, it's not going to get down. happen eight. >> the president does not like to be involved in politics. buses leave it there. a very good guy. neil: okay. talk about your industry. you're always very magnanimous. i can't imagine it's an environment which people would feel compelled to spend.

they did not do so over the holidays. i see little incentive, even with big sales and discounts for them to do so now, up especially when it gets mullen. >> exactly. less cash, more difficult to get the things they like. for our industry, faster and in particular, convenient and a fast, you can get food for about what it costs to it digress restore. sometimes when there's an economic decline we can see our industry do very well as opposed to some other segments. this is scary for everybody. when people have less money it's bad for the economy, bad for jobs, better for everybody. neil: it does not have to be if you bring back a decade at an answer. >> we have one coming into your going to like. i think of find it a great ad thank you very, very much.

neil: anyway, you hear the outrage over this send the bill that never made it to a house vote. only one group to blame for the continued suffering of these innocent victims, the house majority and their speaker,. neil: he can do anything right. i think it's time i spend the real outrage if the house had passed this, anything but.

♪ >> how can we treat an entire region of the country this way? republicans in congress brought this to a new low last night. this is a disaster on top of the disaster. we are americans. this is what separates us from everyone else. >> i can't imagine that type of indifference, that type of this

regard, that cavalier attitude being shown to any other part of the country. neil, down, shut up, and listen up. contrary to all the hand-wringing, these guys should be celebrating, that's right, celebrating the death of a relief bill that offer little in the way of real relief for those actually hit by sandy. you heard me right. this measure will show for reason. it was unreasonable and stupid. laden was part for projects having nothing to do with sandy and all. roof repairs at the smithsonian museum, tree plantings and a mile, none of them having to do a lick with the storm that happily guandong like pigs at a trough. and poor sandy victims simply waiting in line for crumbs to come their way. god forbid republicans in the house made sure rescue aid goes to those who need the aid and not those are trying to steal the aid. but now, speaker is making

attention and put into a vote in two installments starting this friday. the rest of the 60 billion by the 15th of this month. ceo wondering why an emergency bill would be filled with pork in the first place. it always sounds are less. you would be more offensive, any legislator who votes for this knowing full well that a good chunk of it is not going to get to the people in need it. >> absolutely. this is part of the problem with washington. you take these bills and they realize that these bills, public perception, the need to get past. people want to see this past. public messaging on this. what we add on all that little pork, all the candy for district and really it the end of the day by $60 billion, about 80 percent of it was pork. only about 21% was actually going to the victim's. and the amazing thing, they're calling this an emergency bill.

as it currently still only 15 percent of that money was going to be distributed. so much for emergency. as you said, it looks like there will be split into two votes, one on friday for 9 billion another on the 15th for 51 billion. it's my sincere hope that that 9 billion will be directed for sandy, those affected by sandy in that all the poor club and cut out and put into a $51 billion bill. neil: i don't want to be jaded, and you are much more obama's than i will ever be, but i do know a little bit about history of relief measures. katrina comes to mind. and even haiti, a look at ha we raised. i was just in haiti, it is still he

blank check we're doing everything wrong. >> it would be my hope, it is not just one lump chunk of change. there would be stricker oversights even with th the $9 billion. but stricter oversight, and my hope we'll have offsets for the spending, for 9 billion spent we're file 9 billion to cut. in the end of the day the problem in dc is not the revenue it is the spending. neil: that is a pipe dream right there. to offset it with real responsibility does not happen. in middle of which chuck schumer weighing in on what should be done about it. >> i heard darrell issa say today that the bill did not move in the house because it was

filled with pork. i'd like darrell issa to sit eye-to-eye with the home owner who lost their home and their life and tell that homeowner to his face that is pork. >> i would have no problem telling a homeowner that you are not getting squat because somebody else stole that money from you. >> only 15% of that funding was coming to you in 2013 anyway, my hope is that, you know. 9 billion would be for the sandy victims, and accelerated to be most to be spent in between 13, and -- 2013, and a honest look at 51 billion, i suspect most of that 51 billion would be pork unnecessary. roofr repair for the smithsonia?

do we really need to spend on that right now in we do not. neil: ultimately the folks that need it need the money directly to them, not various routes. >> and now. neil: they need it now. >> they need it now, let's not push off spending to 2014, let's be sure that money is spent responsibly. neil: thank you very much. very well put. >> thank you, neil. neil: taxes are going up, tea partiers are fed up, all of this putting the g.o.p. itself on life support. úúúúúúúúúúúúúúúúúúú

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72 remembering what my friend pat buchanan said at the outset of the show, i think how likely is it that republicans would get better deals now? how much more likely does that

mean they will be able to exact more concessions from a president who might have their number right now to the money manager bob suess act, i have -- cusack, i have my doubts. >> the president feels emboldens, maybe in 2013 his rating approvals will drop, and republicans bumbling along, could not pass the fiscal cliff bill through the house. neil: why did so many republicans, say no this is not acceptable. why weren't there more of them? were they afraid of being struck with the label of you raised everyone's taxes, and they would fight a clearer better battle another day? >> i was surprised by how many

conservatives voted for the final bill, a lot concern of the payroll tax fight warehouse republicans balked at what the senate did, and they had to cave and get a worse deal later on, they felt this is terrible, let's just turn the page on 2012, and get stronger in 2013. neil: they knew they were put in a box, it would be in place, but look at that, there is the house obstructing the way. so they were in a no-win position, it comes to my initial question, would they be in a stronger possession, -- position when they raise debt issue and all other things that come fast and furious their way? >> i think they might be because you have taken a lot of revenue issue off of the table and said okay, now we are to get serious about cuts, you know how congress works, they say we'll do spending cuts later, once again, a month ago, house republicans were talking about

2.2 trillion in cuts now a bill that cuts 4 trillion. neil: how did we get there? i talked with so many congressmen who said, neil, i could swallow my pride, go against my dna and raise taxes, but i hope i get something in return, not only did they not get that 3 to 1 cuts they were proposing less than a year ago, but something like 41 to 1 in favor of hikes, spends cuts coming are well delayed. and more than 300 million more this red ink this year? >> the house republicans, and senate republicans knew after the election they would lose the fiscal cliff negotiation, they did not think they would get trounced like they did. some on the left are not happy, but many, many on the right are not happy, they lost leverage, house republicans lost leverage when they could not pass their

own fiscal cliff plan b bill, and obama predicted several weeks ago he said that house republicans and senate republicans will cave on taxes, they did, we knew it was coming, cannot believe there were more spending cuts in the final bill. neil: i saw the caving on taxes, i would argue that the president had it coming, he did win, that is the consequence of it, but i thought there would be some quid pro quo. >> right, and they said, well, the public polling show nas republicans would get blamed, i was shocked by how much conservatives voted for it. neil: bob happy new year thank you. >> happy new year. neil: did you like today in the market? feels like another day in the market. ago, when washington got a deal

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neil: from the pink to the storm, stocking shooting up, washington got a dial done, never mind it the leaf us deeper in debt. -- it will leave us deeper in debt. take a look at this, dow soaring over 300 points today, gold and oil also spiking, but is it

going to come crashing down? moody's warning of a possible downgrade. i say we deserve a downgrade. i am not appreciating the side by side, but that is okay. well manager toben smith is with me predicting a good year. you think we'll lose the top rating. >> i think it is a fate accompli. we're the most en debted nation in the planet there are all reasons to keep our money on the sidelines not least of which we cannot payback the money we owe ourselves in terms of entitlement, this is an issue for this country, this is an embarrassment.

neil: toben, i know that guys like you need closure and certainty, i can appreciate that. i can understand part of the rally. but what seems certain to me is that taxes with payroll thing will affect 80% plus americans, and health care law kicking in it is going to be a hit on our economy, i would love to be wrong. i don't think they am. your take? >> well, neil, remember we have a couple things behind us for last couple years are headwind of the you know real estate market upside down, and headwinds of banks upside down, those and dissipated in a lot of ways, number three, you know we sort of knee-jerk reaction around gasoline prices if prices are up 10-cents or 5-cents or whatever, we taught ourselveses that does not kill our economy, 20% of the wage earners in u.s.

are responsible for a majority more than 60% of discretionary spending. at the margin that is where i think that the economy you know, stays fine, let's not forget, that i'm sure we'll have a blood bath in the market to end of march, but i would use that as a time to acquire stocks. last thing i would want to do is think we're not getting flew this procedure you know -- through this procedure it going to be ugly, but that does not change a company -- let's not throw the baby out with the bath water. neil: what do you think? >> i think that toben is on to something. neil: i think he is on something. >> that may be true, but right now the united states is the best looking horse in the glue

factory, we can't go there. >> you taught yourself into a frenzy, regardless of your math may be right, it is about 80 trillion of unfinded liabilitiy but that south to 2085, let's talk about the next 6 to 9 months. >> that is the present value of all money we have voted to give ourselves. >> understood. >> at one point we are to own up to the responsibility. >> you could have made that argument 5 years ago, or two years ago. neil: essentially we spink, but the ref -- stink, but the rest of the world stinks more, you can't hang your hat on that. >> i can hang my hat on a couple of things, that their has been a bull market that everyone hated since the beginning, worse than

rodney dangerfield, it gets no respect at all. because they are waving the flag of net value, that is not you on business people make decisions, the musicking run out if we stay in this static wave, but thankfully we live in a republic where at some point in time it will be so main pull we'll do something -- so painful we'll do something, we have the benefit now of a little time with such low interest rates, to push panic value, of something out almost 75 years is not a good invest gam strategy. >> look, last time i checked you have to have cash to open the doors tomorrow, whether this is true for individual -- -- >> not if you are u.s. government. >> or federal reserve. >> this the problem, this is government at the expects of the american -- expense of the

34-r7b public, if earnings slowed down, that is marginally above inflation, we have cost of living adjustment, budget continue to have pork added to them when the true portion of what should be allocated is not spent in the first place. place. >> your macro, hac macro, macrou would have never bought stocks in 2009. neil: bottom line, two different directs we could g one of you is right. whoever it we'll bring back, thank you both very much. >> which proves two things because you are from goldman sachs back does not mean you know everything, but does prove you still have to be drunk, you have to be hor e horrendously sf

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it. neil: let it be written this is the day wall street so this off for a nice price. we shall pay a price. we were sold down the river celebrating bigger government, endorsing higher taxes. trying to avoid a cliff only leading the country into a serious chasm. but wall street did so knowing the deal in washington will drag us down. we always suspected higher tax cuts but 40 times more is something even i in my most cynical never expected. and $320 billion deeper and