>> the republican still rule the house and elected the same ruler for their house, but it's a messy house and still a big mess for john boehner trying to lead that house. tea partiers who made him speaker two years ago don't much like the way they've been treated since. they're not happy. they're not happy with a budget deal of which they insist the speaker cave and the president whose policies they cannot stand won. they're not happy with tax hikes they say didn't have to happen and not happy with spending cuts they argue simply didn't happen. two years after they stormed this city and vowed to stop kicking the can down the road, these one typer caffeinated tea

partiers feeling their own can getting kicked and wondering allowed what's down their road. so don't let today's festivities fool you. there is a kettle boiling in that house and its tea partiers not one bit happy what's happened to their house. after all, the fact is, tea partiers are spent. but that does not mean that they're still not stewing. and the tea party and mark mekler, katrina not happy, i mean, obviously there are a lot of tea partiers who did vote for speaker boehner and many chasing still. how about you? >> it's all just a big, huge mess, but neil, i'm going to have to tell you like the new senator from last night said politics turned on a dime. i'm excited the tea party is out there and involved and looking forward we're going to have to put an end to the same old same old. >> and i had, governor, on the republican congressman from

texas, he didn't vote for the speaker and one of the arguments he used he couldn't in his conscience vote for him even though he liked the guy and i asked him whether he was fearing he might be punished, you know, maybe off the committee and running the janitorial closet. i was kidding. but his point was there has been retribution for bucking the leadership. are tea partiers in that position now because they buck the leadership or fought the leadership on these cliff issues there's going to be hell to pay for them? >> i mean, we think so. we've certainly seen it in the past and really, that's the normal way of congress, to go along with the leadership or get punished so i would expect to see the same in the future. thank god there are people actually like louie gomer who vote their conference and outrageous we have to say well, there are few of them. it should be all of them voting their conscience. >> well, guess what i got, if you think about it katrina, it was the tea party movement and the 83 congressmen and women who came with it two years ago that enabled john boehner who become

speaker of the house. it's a hell of a thank you two years later to all, but put them to task. >> you know what they tell us, welcome to politics. here is the the thing, we live in a republic, it's not a democracy and as long as we keep our rehe public there will always be a movement of liberty in this country. anytime the government oversteps its boundaries as the current administration is doing you will have people like the tea party which happens to be the name of the liberty movement of today, but this is normal. this is in our heritage and i'm thrilled that we do see who these people really are because then it gets people like me hope to fight more and elect more people like ted cruz might i add and we've had some wins and some losses and we can't win them all, you know, 2006-- >> very good point. i know you and i, mark, talked about the mainstream media. a lot of people get news from the mainstream media, don't watch me enough, shame on them. the fact is a lot of people have

now a more favorable impression of the occupy wall street movement than tea partiers. now, since i've covered both movements, i've never seen a tea party movement ever get violent. last time i checked, every tea party er used showers and never ever acted up to the point of being unruly and having to bring in the police and yet, in the eyes of the general media, it's tea partiers, you guys more to the point, who are the oddballs and some of the freaks of nature who are not. >> billions of dollars in money have been spent to characterize us this way and you've had the speaker of the house actually say negative things about the tea party movement, oh, yeah, those little renegades and we've got them under control now. >> they're dismissive of us and then the next moment we're omnipotent, plan b didn't pass because the tea partiers have control of the house of representatives and the next minute we don't exist. >> exactly. >> the reality, it's not about the tea party as a movement it's about the ideas and all the

polling shows that tea party ideas are in favor. the majority of americans-- >> and katrina, there's no bitterness from you, just a long memory, a sopranos type deal? what. >> no, of course i'm bitter. anytime you commit yourself and your time away from your family and invest in something, of course you're going to be let down when things don't look like they're going your way, but at the same time this is politics and we're teaching people and there are more and more people learning, if the media and the politicians want to ignore us, let them because we're still working. >> now, neil, i'm not bitter at all. i came on your show two years ago just before the election and just before john boehner was about to become speaker of the house. you asked me the question if i thought it was a good idea for him to be the speaker of the house. i told you point blank we're going to get what we've seen in the past and americans want a different leadership and there's no change we got what we inspected . >> lou: there was no revolt among your members because he's still-- >> there actually was, neil, if you look at the vote two years

ago, a lot more people voted against john boehner or abstained from voting this round in the speaker vote than did two years ago, so we are making progress, people are standing up 'cause they know people like katrina and i and millions of others will stand behind them when they do. >> all right, guys, thank you both. >> absolutely. >> thank you both, good seeing you again. a new day, a new congress, in reality pretty much the same congress, but not in california democratic congresswoman desanchez has anything to say about it. very good to have you, happy new year. and congresswoman, many in your party feel emboldened now that they've got republicans on the ropes and in two years the house will be theirs, what do you say? >> well that's politics and we're at the beginning of a new session so that's when we really try to put politics aside and we try to work together to do the work of the country. so, i'm hoping that we're not starting a new campaign today, that we are actually going to sit down and figure out what we've got to do to get this country moving again. >> i've got to tell you, a pox

on both houses here. you have a heck of a way of showing it, with this whole-- not you personally congresswoman, but collectively it's like pulling teeth to get a deal done, ultimately one of the deal expected being done. not a lot of spending cuts, a lot of tax hikes and a lot of people throwing up their arms saying if this is the best we've got. >> well, i wished we would have gotten more on the table that we did look at cuts and that we would make appropriate cuts. >> what happened? what went wrong, congresswoman, what happened? >> well, i mean, i think that they're just -- they're just very entrenched interests, quite frankly, on both sides. >> right. >> and so-- >> and addressing -- you were addressing entitlements and not that you would go -- you would make it part of the discussion. >> i said everybody needed to put something on and-- >> many of the republicans did

not. and by the way, a lot of republicans would offer up anything of in terms of revenue and on both sides, but in the end, particularly with this spending thing, it was like nothing, nothing. >> well, that, but we will come back to that spending thing, neil, you know, that. >> no you won't. >> in three months. >> no, you won't. >> we have to. >> you fudged it in this one you'll do it again. >> we do have the debt ceiling issue otherwise we'll have sequestration. >> these automatic cuts, you can move the goal posts. >> well, i believe that 1.2 trillion is a good goal to cut over the next ten years. the fact that we-- >> and that's a rounding error, that's a rounding error worth of medicare. >> 10% off of everything, i mean, there are actual programs where i would like to eliminate and i would like to try to keep other programs, so, that's important. but you know, there were a

couple of things that happened in this deal that we made. first of all, he yes, taxes will go up on those people who as a couple make $450,000, some capital gains and dividend will go up some percentage, but i want to thank those people because they're some of the first to put something on the table and i don't think we should demonize them as the wealthy, it's a great thing if you grow up in america or come to america and strive to make a business or do something or have an idea to become successful and you happen to make money from it, it's even greater and that's what makes america. and so, those people who have, you know, i want to thank them personally for the fact that they're going to help us right now in this time period. there are also the 2% increases going back on to payroll tax. remember we gave that holiday. >> right, right. >> it's now coming back and that's important because that's money that goes into the social security fund. so even the very minimum wage workers are actually putting a

little bit on the table. >> you're right, you do have a cup half full version. the first one i've seen hit the rich and thanked the rich and something to be said. congresswoman you are one of those trying to move the ball forward i think left to right and-- >> we will. >> i hope you're right. >> we have to. we have to. >> okay. >> we have to cut some of that. we have to cut spending. >> yeah, well, we do. >> and there are place toss cut. >> you know what it is, my doctor keeps saying, you have to, you have to lose weight, i never do. maybe you'll have better luck. >> why not, neil? i can help you with that, too. >> please do, maybe have better luck. always great seeing you. >> thank you. >> meanwhile, call him satan sandy. to hear the media tell it john boehner botched it, but instead, around this story, let's say all of this storm may dust up a lot of hot air. and isn't this the kick, the rush, rush, rush, to get a bad deal down so we're not downgraded and guess what? we're still downgraded.

think it can't happen? and folks that moody's just threw out the tea leaves that it must might. and later on, wh he we dig in and hash it out i think you'll know why state government is back and since we won't cut tget ready to pay for it and boy, oh, boy, oh, boy, do i mean pay through the freakin' nose for it. this is $100,000. we asked total strangers to watch it for us. thank you so much. i appreciate it. i'll be right back. they didn't take a dime. how much in fees does your bank take to watch your money? if your bank takes more money than a stranger, you need an ally. ally bank. your money needs an ally.

>> we've got a new segment called our media moment. and here is how we're going to do this and what a moment this one is for john boehner more like a moment from hell. in almost every paper leading almost every newscast, the speaker of the house sounding more like the satan of spending. cruelly holding up a vote on much needed sandy aid. 60 billion bucks worth. we're told a tit for tat with eric cantor over the cliff in the house and easier to push the bad boehner argument, i guess.

it's not entirely true though because the reality is the sandy tsunami federal funds wasn't just going to sandy victims. millions doled out for fishery in alaska and roof repairs in washington d.c., not a one, not a one sandy related and perish the thought that the speaker would want to keep the aid package clean and only sandy victims, the ones getting reward. because nothing says business as usual in washington throwing good money after bad in washington and they're very good at that and good at throwing in pork and goodies for themselves forgetting the very folks who don't have much if anything for themselves. a storm wiped that out and new greedy politicians are wiping it out again and john boehner is getting fried. and demanding accountability for millions dumped on states and not spelling out how they're going to use the money, john boehner deserves better than catering to the very forces that

demand this rapid aid vote that he's promising now as we speak. they've got him scared now for no reason. he was just being reasonable and looking out for the victims who were getting screwed. leave it to the mainstream media he's the bad guy because the speaker found that screwy. and to the media center tim graham says all of it's screwy, but not unusual. it's remarkable when you look at the chain of events, you know? >> it's just another one of these things where it's, you know, we all remember those of us of a certain age of president ford to new york, drop dead. it's another one ever those the news media tries to take a republican apart because somehow they can make him look cruel and uncaring. even if it's for 48 hours, and then they do the stories where they say, oh, i'm sorry, speaker boehner, we think the damage is done. now? and they try to create public relations damage.

they're the not doing what you're suggesting, which is let's look the at all the pork that's in this bill. the new york times puts it on page 23, which basically tells the networks, don't bother. and yes, the whole point of this is to separate the republicans to cause what nbc was calling a civil war. that's what they're interested in. that's what the obama white house wants. >> neil: i'll tell you what i don't see the same treatment of democrats. there's a greater deal with the war going on in the middle east and iraq, what have you, to question every penny and every abuse and every piece, that's fine. the question whether money is spent and whether it goes to the wrong tank at the wrong time at the wrong regiment. all fine. but then you've got to be level and fair about it and you've got to look after abuse and waste where it's going. and god forbid in a 50 billion dollar package how they came up with the sum in the tri state

area is beyond me. heaven forbid you question where the dough is going and heaven really forbid if you discover in this process that it's going to places and events and localities that were the not even remotely affected by sandy. you're not doing that, you're helping the people who really needed the money because they're getting screwed out of that. >> well, it's a nice civic textbook idea that the news media would actually look into a bill and see what's in it and tell us what's in it and ask whether it's too much. and would ask how much of this bill is going to be paid by private insurance. but they're not doing that. i mean, again, we have a very politicized news media that isn't thinking about what we call facts. they're interested in creating a narrative. the facts are secondary or just not important. the narrative is the republicans are waging war on each other so you have somebody like congressman peter king who can't scare up a camera when he's investigating the muslim threat,

but if he's going to say mean things about speaker boehner, he gets a big profile in the washington post. >> neil: and what is it, chuck schumer said you ought to tell people to their face they're not getting this money. i'd be happy to go to their face, you're note getting the money because some thieving bastard is. i'm he trying to make sure that you get the money and some other low life doesn't steal it from you. i'm sure that anyone in staten island would agree with that and affected in queens, they want the money for them, to help for them. not some cockamamie roof-- >> the way it stacks up, it's outrage obama, outrage boehner, and then sandy victim. nobody is going to be able to get up and make the point, why does a taxpayer in north dakota or wyoming have to send their tax dollars to manhattan for

disaster relief? you know, it's just not a question that they allow people to ask or discuss. >> neil: no, no, it becomes verboten and the waste goes on and the parade goes on. excellent as always, my friend, thank you very much. >> thanks. >> neil: all right, if you remember, the s&p downgrading us and the markets went nuts, nuts. well, brace yourselves, part two may be coming our way.

>> all right. well, the country's off the cliff, but that does not mean that we are off the cliff. credit agency moody's warning the deal congress passed is not cutting it.

but because it it doesn't cut enough. we just added the sound effects just to alarm you. if washington doesn't act over the next couple of months during the debt ceiling debates we might be saying goodbye to another triple-a rating. charles swab chief investment strategist sanders says that another downgrade could come down. s&p is the only one that down grades, moody's skewed that, but hinting not this time. what would be the reason? >> well, look they said if we actually went over the cliff that would probably be a reason not to downgrade because it would have, from a deficit perspective and a debt perspective set us on that path much more quickly in a more meaningful way. >> neil: they would probably like that. >> probably like that. the numbers work a little better on the near term and that's not the case this time. the question, do they wait until they see what happens upon the debt ceiling, if we get the kind of meaningful entitlement reform. maybe they hold off until then. >> neil: only a couple of months. >> only a couple of months away and that's another big fight, but, i don't know that it has

quite the calamitous impact that i think a lot of people assumed it would have back in august 2011. so, we sort of learned, i think, from that experience that it was not an armageddon situation. it doesn't mean we should take it lightly, but certainly, the impact on things like treasury yields wasn't as dramatic. >> neil: and that surprised me. i was pulled out of a nearby restaurant when that news came down and i worked late through the night on that. one thing i noticed never go on air if you've had a lot to drink. >> did you know? >> the other one never make bold predictions and i thought it would be calamitous for us, and timing of the environment, but we might stink, but the world stinks more. it didn't have a big impact. so let's say moody's downgrades. would it have an impact? >> i think that everything is relative. >> it's still relatives in terms of rating and we're the world's so sole, and the cleanest shirt in the pile of laundry, whatever fun phrase, i think it will

continue to apply this time and i think what we found also, many of us policy statements could easily be rewritten to accommodate that because there is still that need to hold that, you know, safety procedure otherwise. >> neil: whether it's triple-a. >> for a double-a we found that it did not cause major disruptions in a mandate. a pension, endowment or foundation. >> neil: changed the rules. and what did you think of the cliff deal? everybody is talking about the 40 to 41 cuts to hikes and something happens from that point to where we started when they were talking, we'd like one-to-one, 2-1 tops. 3-1 was ideal. what happened? >> we didn't make anywhere near enough of a dent in the real problem here long-term. and everybody knows that, both sides. >> neil: and will be satisfied that-- >> something is not done at least on the tax piece we've got some of that uncertainty alleviated. for the most part that was a big deal as part of this system planning out and that's the

relief i think that wall street expressed and i think does make the picture a little bit clearer for businesses and maybe bring back some of the pentup demand. but we're not finished in terms of the whole long-term deficit reduction, debt reduction, that piece certainly comes into play with the ratings agencies is still ahead of us, but i think the tax piece was such a big uncertainty now we know the rules of at least that part of the game, i think a lot of players can suit up. >> neil: what about their attitude, that this is a crowd that in in that top tier and psychologically it's got to affect their psyche? >> not only that, but much has been said about now, taxes are not going up on the majority, but-- >> payroll. >> the payroll tax, people say it's only 2%, but it's 4.2 to 6.2, which is a 50% increase, so, i think that will be an interesting thing to watch in the next couple of weeks, is that consumer confidence has remained fairly resilient. >> neil: better be looking at

the checks. >> when the rubber hits the road and they get the checks, we'll see a follow on consumer-- >> the good news is that things that tend to track with consumer confidence like housing, energy prices, job growth, have all been trending to the better. so, if those things continue to provide that offset, i think we may be able to manage the, wow, my paycheck is less, but i think it will probably make at least a little bit of a dent. >> neil: all right. great seeing you again. >> thanks for having me on. >> neil: happy new year. hope springs eternal. president barack obama, the anti-ronald reagan? not all because he's going full throttle on tax hikes, because of his latest moves to divide congress. one of the gipper's right-hand men on how the president could be making bipartisan anything impossible. [ male announcer ] where do you turn for legal matters?

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>> well, house smous, speaker-- and who needs them at all when the president gets them to cobble together a deal with his buddy joe biden in the same senate and by then the house is a rubber stamp or a convenient foil, a strategy that had democrats thinking they've got republicans' number and just in matter of time they've got the house as well. not a great way to do business, is it? as ronald reagan's former top economic advisor says a far cry from his old boss did business. martin, i was looking that up and could never envision a day where ronald reagan, your old boss would delight in the democrats. >> no, he used to say he started life as a democrat. he was the head for the actor's

union and he liked to talk about that show that he was trying to build bipartisan-- and he was the one who said he wanted to build a monument in washington for fdr and nobody had done it before. so, you know, he was a guy who really believed in trying to be bipartisan and then of course, you had the tip o'neal, ronald reagan tremendous tax cut. >> neil: you think about it, they did the best work in the private residence of the white house and hashed over deals, not that they were every policy co-mates, but they learned how to work with each other. i guess what i'm asking now, is democrats, and i talked to quite a few who are saying, hey, this work, this could work for us, we didn't get any cuts, 41-1, iced the cuts weeks' on fire, week triangulate this, to use an old clinton term, and just leave the house as the last bastion, the last resort for them to look petulant and we look golden. >> well, i hope not. i mean, the republicans certainly did lose on everything

that they said they wanted. >> how did that happen? >> they got painted into believing that the public would blame them if we went over the cliff. >> neil: would they have? >> i don't know. i'm not a pollster, but i think-- >> i argue it could have been worse. let's say they get the blame, right now their poll ratings are low, from 12% to 8%, rights? >> so, they could have, i would have thought they would have said, well, we're not going to go along with the president's half and half tax increase. we're going to introduce legislation for a tax cut for everybody and let the democrats reject that. so then, the democrats would be in the position of turning down a tax bill that came out of the house, but for whatever reason they decided not to do that. >> neil: now, democrats think

they have republicans' number going forward. the president has indicated you're going to make the debt ceiling hostage to spending issues. it ain't going to happen on my watch and here on the brink in a couple of months. >> well, the debt ceiling is a very dangerous thing to play with. >> neil: so will republicans make the error trying to force the issue there? >> i don't know how -- i don't know how you do it because if you -- it's not like this legislation you go over the cliff, the economy slides into recession. with the debt ceiling if you don't have authority, what do you do? you stop paying bills if you're the federal government. you stop sending checks to your suppliers-- >> that hurts the one who made that possible. >> well, in the short run you -- the hospitals don't get reimbursed for their medicare expenses. >> neil: that's the vice that democrats have republicans in, they're afraid of their own

shadow. what's to spell democrats for serious spending cuts if they think that republicans are afraid of even a hint-- >> i think what helps, every expert in washington agrees that the long-term entitlement. >> neil: no doubt. >> changed. >> neil: a lot of american people seem to -- they're far happier with raising taxes on the rich. but what the president says, aim he not going to change social security in the context of improving the budget. i will do it to strengthen social security so the rhetoric will move in that direction. >> neil: but that means it has to be truthful. >> well, basically, the kind of things that the republicans talked about a little bit changing the indexing formula or more substantially changed-- >> that's repudiated as parts of these-- >> and that's right, i think the president says because he wasn't prepared to do it as part of the budget talks, but. >> do you honestly believe? >> i think so.

in his first state of the union and in his second he talked about the fact that social security is not viable the way it is that it needed to be changed, that there were certain things he wouldn't accept. he wouldn't accept cuts on current beneficiaries, no republican suggests that. he wouldn't accept hurting very needy. nobody suggests that, but what that left was a lot of room to gradually transition from our current system to one with lower replacement rates. >> neil: so you think there is room for hope here and that the president is more open to addressing spending than he appears to be? >> i hope so. i think so. >> neil: because you've got the congressional black caucus says don't touch entitlement, you've got 80-some odd congressmen and women who say leave medicare alone. >> he's going to say i want more revenue along with spending cuts. i think he has said, i want dollar for dollar match. that sounds like he's prepared

to do spending cuts. >> neil: but it also sounds like he's going to tax us more-- >> not necessarily rates, but then it's a question on whom. right now, we've got with this new legislation, the top 2% will pay 50% of all the personal income taxes and there's not a lot more that you can get out of that. >> neil: not sustainable. martin, thank you. very good to be with you. >> neil: and why critics are saying that the administration's new immigration push is all about getting more voters.

>> well, in term two it looks like immigration will be issue one. the president saying he will go for immigration reform as early as this month and the administration issuing an executive order that could help

a million illegals to become, well, legals. and that rules of the u.s. citizens and david asman says it's more about finding future democratic voters, david? what's going on here? >> of course it is. the president gets 71% of the hispanic votes. it's interesting that kind of if romney had received as many latino votes as gw bush had gotten, 44%, he would have won the presidency. >> neil: really? >> absolutely, no question. >> neil: it would have tipped it. >> would have tipped it, they don't want that, democrats don't want that to happen. they want to keep the 71% of all latinos. i think there's a way though for republicans to get ahead of all this by attacking the biggest enemy of latino voters ever, and that's ins, the immigration service. the it's a typical example of how big government does work. it's one of the most awful, nonresponsive bureaucracies in the american government and every hispanic living in the united states has a horror story to tell about the ins.

let the republican get in front of this. we know your pain, we're against big government, kind that ins represents. i've got a latino wife and she's got stories and a sister-in-law who lives in nicaragua, she has a c.p.a., started a dozens of businesses in nicaragua, two sisters who are u.s. citizens and she can't get here, she's trying to do it legally. there are hundreds of thousands of people who create jobs in this country who are kept out by a dysfunctional bureaucracy. so republicans focus on that. >> neil: and both are sure how to do this without looking cruel and hamless. >> if they identify with lat continues and say look, we know your biggest enemy is the ins. immigration service. what we want to do is go back to a guest worker program, neutralize the ins. and bring back a guess worker program and bring immigrants here to work. the main thing is we want people to come to the united states to work, not to go on welfare.

>> neil: and who don't qualify for that-- >> the point you make it clear along with this sort of welcoming arms to the people who want to work here, not take care of welfare here, we give the back of the hand to the people who come here just for welfare. we get a lot stricter than we have been sending people back who want to work. most come here to work. most latinos who voted in the election, came here originally because they wanted to work not go on welfare. and you look at the latinos on welfare, fewer than white who go on welfare. latinos want to come here to work and why they come here. >> neil: and what the president is doing right now is cultivating voters not-- >> no, absolutely, but republicans shouldn't just sit back and say, gee, that's not right. and get in front of the the issue hey, folks, we're as against the ins as you are, we want to sort of neutralize this

bad agency by having a guest worker program. allow people to come into work, not to go on welfare. >> very well put. >> thank you, neil. >> neil: and mensa smart. it's like scary. i copied. and give up and just pay up. the age of big government is back. and senior democrats wouldn't promise to extend cuts. and you want more government. three words, open your wallet.

>> all right. well, here is all you really need to know about the appetite for cutting spending this washington. 41-1 the ratio of tax hikes to spending cuts in the so-called cliff deal. 41-1, i can't repeat that, not

1-1, 2-1, 3-1, 41-1 and more gimmicks. and the debt doesn't get smaller it's bigger. 300,000 bigger and next ten years almost 4 trillion dollars bigger and even the line of americans seem okay with that, a small problem if we're going to let the government grow, let our taxes grow, too. if you're not going to cut, you've got to hike and hiking on the rich won't cut it. squeezing 60 billion bucks the latest deal every year, doesn't go a long way towards shrinking trillion dollar deficits as far as the eye can see and then if you took all their money, you took all their money, you'd need still more money from still more folks, that would be you. so, are you in? pay up. with me now, former deputy assistant treasury secretary under one ronald reagan, david malpass, and a former ceo, david, unique distinction today

of being nominated by republican congressman walter jones to be speaker of the house. he didn't make it, but david, that's quite an honor, and he did so risking party wrath because you've got the numbers and appreciated the numbers and away we went with the usual cast of characters, what do you think of that. >> it was a pleasant surprise, neil. he and i didn't talk about it in advance, but i think i came in fifth place. >> neil: not bad, not bad. and david, what's happening here? i know they say, well, you just watch, neil shall the debt ceiling debate comes up we're going to get serious now. are we? >> i think it's going to be very hard to get cuts. what washington doesn't want to do is cut anything, and that was the overriding idea of this debate. and the republicans kind of lost their mojo as they were going along. obama said, if you hold this thing up, i'm going to point a finger at you and republicans should have said, fine, we've got to find a way to cut,

mr. president, what are your ideas? and that really never came through in the debate. >> neil: steve, did -- you obviously wanted mitt romney to win and you were working with him and the bottom line, you didn't win. but was thehe election take awa that the americans are saying no to cutting down the government? because democrats seem to be behaving by demanding that entitlements be off the table, by the congressional black caucus demanding medicare be off the table that they seem to be reading it that way. what do you think? >> well, no, the republicans won the house. i mean, and they control the house and the republicans did that because they wanted to cut spending. i think the american people fundamentally in the heartland, in small business understand that we have a revenue issue in in country and we have a spending issue in in country. all right, we tried the revenue thing and that's basically we drove off the cliff and they threw them a bone with revenue. now the cuts have to come. every small business knows in

america you don't raise rates, don't raise prices you have to cut the bill. >> neil: you make perfect sense and david walker you've been bemoaning this and criticizing both parties for years now and you talk about all of these unfunded liabilities that warp whatever numbers you hear traditional politicians talking about. if we're not cutting, let's say hypothetically no one gets serious about this david and i mention this had during the break, the only way to do this is to obscenely raise taxes and that wouldn't do it. >> take the net worth of the top 400 on the forbes list, it's 1.7 trillion dollars. that basically is a year and a half worth of budget deficits, it's 17 weeks worth of our increase in our federal financial hold, if you confiscate all of their money. here is the bottom line, the debt ceiling deal in august was about taxes, and three mandates coming out of the election, the president got a mandate to raise taxes on the wealthy. the republicans got a mandate to

cut spending and the american people said, you people better start doing your job and earning your pay. now what we need to do is to i can steps to try to achieve a grand bargain that needs to be weighted more towards spending reduction, i'd say 2 or 3 to 1. >> neil: good luck with na. i see polls, not all polls, but a poll that says americans are perfectly happy getting the rich, but don't touch my pedicure, don't touch my-- >> in washington, that's what they avoid doing. and washington is filled with agencies that are redundant. that don't have to be there. >> neil: what if the era of big government is back, that bill clinton got it wrong. that big government is back. >> clearly it is. spending has been going up by leaps and bounds and i don't think the rules right now are set up in a way that encourages spending cuts. the debt limit, let's take that

as an example. what happens when you default on the debt or shut down government. you never really cut spending. one of the things i think they should be doing, repealing the current debt limit and replacing it with something that actually forces spending cuts, which is what we don't know now. we never get to the point where washington actually reduces its appetite for money. >> no, you're right. steve, here is what's odd about some of your business colleagues. we've been buying up this market and had a great relief rally and thinking,all right, now we have at least certain-- now we know how certainly we're being screwed so we're happy about that. it's a weird reaction that would fly in the face of what you would think would be logical. >> no, i think there's some confidence that something is going to happen. >> neil: did you see this budget, i don't think it looks like a precursor to-- >> no, it's terrible. we've said tax reform and entitlement reform, but what it really-- they're gambling here with the the full faith and credit of the

united states. and if they drive up to the next cliff with the debt selling limit and they play games with na, what they don't understand is that we're not talking about a bridge here, this isn't negotiations on small stuff, this is global impact, you know, our credit rating agencies have already said, look, guys, we're going to downgrade you, that's hundreds of millions of dollars-- >> i don't know if that carries the same sting. dave walker, let's say that moody's acts on its apparent threat to take away the triple-a rating and s&p did that and not a big deal. >> it doesn't have any impact as long as the federal reserve continues to self-deal in our own debt. >> neil: very good point. >> they're the only person that has appetite for our long-term debt and what artificially holding interest rates down and that cannot last forever. >> neil: and you've got what. >> 640 days, 100 billion a year more interest that's what you've got. if we go back to normal rates. >> neil: did you hear that?

>> already, what we have is business not investing enough to create new jobs, so, i would be happy if the fed stopped buying up the government debt, we would at least be able to get a more truthful assessment of how big the problem is. but the bigger issue is, republicans now have the debt limit coming up and have to have a unified position and i'm worried, we just heard marty feldstein in the previous blog making the point that the white house has lots of the powerment i was the legislative management in the reagan administration, the white house can force those through and i don't think it gives much leverage. >> at all. >> so instead republicans should be demanding the spending cuts. >> neil: and stop the gimmicks, i want to leave you with a quick thought. congressman in washington came up with an idea to have the federal reserve print a trillion dollar coin that's a fall back in case they're up against the

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