>> crystal. >> stick around for the after the show show. >> brenda: pay day, may day. millions of americans seeing their paychks take a hit for the first time this week as the payroll tax hike kicks into full gear. and with 77% of workers in the cross-fire, virtually no one is safe. >> i almost cried because they took taxes, a lot of taxes out of me. >> it's one of those things that nobody is happy about. >> that sucks. >> it's not good to see it go down. >> it makes a little bit of a difference, maybe with a little less spending, fun stuff. >> my paycheck was about $60 less this months, that goes to food and groceries, i am not super happy about that. >> less money in my pocket and less money i spend, less money in the economy.

so are they right? does this new payroll tax hike mean less spending and a weaker economy? hi, everyone, i'm brenda buttner, this is bulls and bears, here they are, the bulls and bears this week, gary b smith, tobin smith, jonas max ferris along with walker stableton and steffen, gary b. it turns out not just the rich, but the payroll tax hike smacking just about all workers, will it smack the economy next? >> i don't see how it can't, brenda. the person in tt little clip summed it up perfectly. it makes a little bit of a difference and a little bit of a difference times a few hundred million people makes a big difference. it's already been studied by economists, they predict 4 to 500,000 jobs lost, 1/2% lopped off the the gdp. if you look around the studio there, everyone that gets a paycheck, like they said in that little clip, sees less he money. that's less money they were going to spend on groceries, at the drug store, the gas

station and that money gets sucked out of the economy, so do jobs. >> brenda: well, now, this does hit lower and middle class americans harder because there is a limit to the amount of income that is taxed. but toby, do you think the higher income americans can make up the spending? >> well, yes. and the fact is, whether this sounds fair or not fair, here are the facts that the top 20% earners in the united states, not the 50% who don't pay any taxes, by the way. but top 20% we look at and measure for discretionary spending because that's the margin, the spending and certainly, gary is right that we will have a reduction, but look it, we've made it out of the depression and we made it out of the 1980's, we didn't cut payroll tax, we didn't come up with some deal. i say man up a little bit here. we've made it, this was temporary, everybody knew it was temporary and the higher income pple are staying at a spending level that will keep us going. >> brenda: and walker, people have less. they spend less. so, businesses make less. is that going to hurt hiring?

>> i think it's going to hurt jobs, brenda. i think when you're talking about, this is really a bait and switch on the middle class in terms of what their expectations were from a policy standpoint, with the changes that were made in this, in, to the payroll tax holiday and that they're actually payingn extra 2% matters when you're making 30 to 50 grand. and it's disposable income they can't spend to go to the movies, can't spend on groceries or go to restaurants and i'm not sure that the higher wage earners will make up the difference, we have to remember they're taxed at a higher percentage as well. and it's worth noting this extra 2% is going to entitlement program in the form of social security that is in bad need of fixing and to go back to the 6% contributions of social security without finding an underlying fix is really not solving anything at all. >> brenda: just to give you some hard numbers, somebody making about $50,000 annually

will have $1,000 less a year to spend. but, stephan, you say in the 15 trillion dollar economy, this is a drop in the the bucket. >> well, more than the a drop in the bucket, but amounts to something like 50 million dollar a year and 15 trillion dollar economy that's not a killer number much. but look for a middle class family $50,000, $80 a month, for slightly well off, $160 a month and it's real numbers and unfortunate shall the disgusting thing about how this went down, what congress really blew it, they could have saved the skin and gen people more warning. and the fact is walker raises a good point, we need to shore up social security and raise this tax again. what we need is a little more fair warning, quite honestly, and give people a chance to play ahead. >> three years is not enough. >> brenda: we were talking about the fiscal cliff quite a long time. jonas, this does raise the cost of hiring, but is that

the full story? >> well, my holidays end, they don't end gradually, i go back to work and this is a payroll holiday. and this is going out of the paycheck, but going to somebody's paycheck at the villages in florida, and buying what other people. it's unfortunate they can't get the imagery tax cut. it was borrowed money to have the payroll, to pay the social security they didn't cut in proportion. and get back to the point of economy long haul, it won't affect people because your wages will go up to adjust for the higher tax and it will hurt employment because employers have to pay more to hire somebody than last year because due to the higher tax rate out there. when there's a tax cut, your wages go down ultimately if you're an employee, the way it works, you're willing to do the job for after tax wage not pretax wage. >> somehow we made it through the 2002 recession and didn't do a tax holiday. and we made it through then in

1980 and all after sudden we can't do this. >> gary b, the recovery is very, very fragile. this comes at a very difficult time, doesn't it? >> exactly. i'm still laughing at jonas and talking about so many turns, and i lost him at about the third juncture a somehow we managed to make it, it's a good inning, that our wages are going up. but apart from that, brenda, you hit the nail on the head. and toby, to a certain extent. hey, it's no big deal. yeah, normly fthis was the internet bubble not a big deal, but you hit it. we're in a tenuous recovery and every dollar matters. and economists say we're going to lose 400,000 jobs, right now we don't have a lot of jobs to go around. take 400,000 out of the economy, i think that's a big deal. >> we have 140 million people employed in the united stes, gary, 400,000 on a relative basis is going to be replaced anyway by probably better

jobs-- >> how is it going to be replaced? how is that going to happen? >> because. >> with this action right here. >with automobiles, and other parts of the industry that are growing quite well. >> that's not-- >> somebody's paycheck-- >> that's not the point. is everything else going to be better. the point is, does this kind of thing affect the economy? the answer is unequivocally yes, it does. >> if nothing else got better shall yes, it would, but the parts of the economy that-- >> it's nothing, it's not going to make other things better. what, as walker said, you think we're going to fix the social security fund because of this? >> gary is right. and the solution is-- >> go ahead, go ahead. >> although gary is correct, there's no solution where it could stay lower and yet pay off the benefits that it's supposed to be paying off indefinitely either. so the cuts would have to come if not from the payroll tax increase, through social security and hurt the economy through spending as much as it's going to by raising the payroll tax, the fantasy is

making up for the difference of borrowed money. >> we're very good at that, walker, go ahead. >> i do not share at all jonas' utopian view, to redistribute anything in the way of benefits. one of most ineffective and inefficient created. we're in deep need of reform and congress better address that if we want to actually have some economic sustainability here for the future and they're going to get a chance to hopefully when they have this debt ceiling discussion. >> even the democrats, mr. treasurer, and the republicans, actually agrees that this is a bogus thing, that this is a temporary fix, and that the one thing they agreed on, in the fiscal cliff, we need to get back to some normalcy. >> brenda: okay, i'm sorry, guys, that's got to be the last word. weill have a long debate on this for a while, i'm sure. thanks, guys, you get sick and get to work? turns out workers afraid of

losing their job are afraid of that. and that has neil's team seeing why this flu season is so bad. that's at the bottom of the hour. first, 128 million reasons why we're see so in debt. a number growing faster than the population. it's the headline no one else it's the headline no one else is talking at a dry cleaner, it's the headline no one else is talking we replaced people with a machine. what? customers didn't like it.

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touch acquiring nfc. hearing evolving with beats audio. wireless charging activated. introducing droid dna by htc. it's not an upgrade to your phone. it's an upgrade to yourself. word yet how many have to stay behind. i'm kelly wright, now, back to bulls and bears. >> brenda: we may have just discovered why america's so in

it debt. two out of five americans are receiving some form of government assistance. that's 128 million people, a number that's growing faster than the u.s. population. o, until we reverse this trend, will our debt keep going full steam ahead? toby, what do you say? >> of course it will and reverse this trend. remember, 10,000 baby boomers per day of turning 55 in the united states. now, here is the scary number. when a couple, let's say, earned 60,000 a year, paid all that social security, all of that medicare during the lives, they paid in, plus their employer, $124,000, to hold the money in. when the people sign up for medicare and get social security, they will pick 365,000 out of the system. so, who is going to make up the difference? well, the american taxpayer, oh, wrong, we're going to borrow that money and that's why we're upside down. and we have another 80 million people on the dole. >> but there's a difference

between all government programs such as social security for which participants at least pay in part and then other types of aid, which are means tested for people who may in fact need them. >> well, i'm glad you mentioned that, because i'll tell you what about this 128 million dollar, or 128 million people number. it's a big phony nothing, it's like romney's 47%, half of the people in that number are people who paid into social security and are now receiving checks and that's not getting a welfare check or the students who are borrowing money that they will pay back, they're using it to fund their college educations, if you want to talk about, you know, why don't we go ahead and start complaining that too many people are driving on federal highys, that way we can make it feel like % of americans are on federal assistance. the fact of the matter is, it's something like 25% of americans are on, you know, your classic sort of welfare, your hot lunches, your food stamps and just 7% of americans are getting, you know, what you call a real

government handout. those are the numbers, if you want to fret over those, yes, those are up. and with regard to social security, it's relevant. and the scary numbers don't mean anything. >> now, gary b. it does mean something, you are fretting, i bet. >> a couple of points, one, there are too many people driving on the highways, i'm sorry. (laughter) >> and number two, stephan has had a good point. i'm not worried, you quoted two out of five number. that number, that percentage of people getting government assistance has stayed pretty flat or the same for the last 30 years. >> what? >> i'm not concerned about that number. the number i'm concerned about is when i break it down and toby alluded to the makers versus takers percentage. right now 1.2 private sector workers for every government employee or person welfare, so, you've got the one side here, that's producing nothing and not saying they shouldn't get welfare or be in the government, i'm just saying

they've got the bulk of the 1.2 people supporting all that other, and that number is going to get worse because as toby alludes to, more and more people are going to get on welfare, that's how greece got started more and more people taken out of the economy and the percentage of people making the money to take from is going to get smaller and smaller. and we won't be able to pay our bills because of it. >> does this speak to the character of the american people or to the character of the lawmakers who don't have the bravery to actually tackle this whole issue of social security and medicare entitlement? >> well, look, i think your-- i think my concern with this issue is economic growth and i think the point was made, which is a good one, is that this is-- we have anemic gdp growth here and you're shrinking the people that are going to need the catalyst of economic growth. the only way to get out of the problem and stagnation and unemployment we're faced with in america, if we grow our way out.

we need to focus on the catalyst of economic growth. businesses, the only way you're going to focus on businesses, helping to grow us out of the economy or through a tax policy that incentivizes people. if you're redistributing from taxpayers to government subsidies, towards the dead end, you're not going to grow out of anything, you're focusing on the outputs of the economy rather than the inputs the stimulus of economic growth. >> brenda: jonas, weigh in here. >> decisions are important, but two parts to this, demographics, that's one problem. the unemployment rate was twice what it was in 2000. that comes along with more food stamps, more unemployment benefits and all that. that will go away with economic growth in the long haul and in some ways we don't have to worry about that. the demographic situation is getting worse, you need more workers paying in and-- >> and that's not going to happen. >> it can happen with a clever immigration policy with moving the the retirement date out so more people are working and paying into that system longer

and less proportionally in retirement or raising the rates and those are the only solutions to this problem that everybody knows about. it's got nothing to do with the economy and it has nothing that has to do with the workers paying into the retirement. >> all right, thanks, guys. up next. >> i'm a college graduate. >> i didn't know you were a college graduate. >> new college grads getting slammed by the jobs market, and all of their student loans are helping drive consumer debt to a record high. that's why someone here says, families should skip college and save.

>> i've been interviewing a lot and had some really amazing opportunities and keeping my options open. >> so what you're saying is, you're unemployed? >> okay, well, if you're a new grad, you know that's not too far from reality. and this week we're finding out the college loans are helping push consumer debt to a new high. jonas, that expensive diploma mightot be worth the investment anymore. >> somewhere in the last 20 years, school is overpriced for the value and over inflation and the value at best is flat. i'm not saying buying a car rather tha education. but today you can start business without a college degree. and the government is making it easier to pay off if it's

not as valued ab students are overdeaded that online degree isn't worth $40,000 and i'm never going to pay this off and bad for the economy in the long run. >> walker, is this investment worth it? >> i think it's worth noting that students are forced to go back to school because of the state of our economy right now. it's also worth noting that we're in a pervasive low interest rate environment right now and i'm concerned at some point, and we have been for successive quarters of us having an interest rate spike, if we have an interest rate spike and we've got inflation, all the loans outstanding, 85% by the way which the government holds, students have a heck of a time paying off the loans in a high interest rate environment, are we creating a debt burden on the students and being unfair to them at the end of the day and that's my main concern as far as this issue is concerned. >> susan, an alternative way to think about this, you don't automatically go to college and wait until you know exactly what you want to do or don't go at all. >> yeah, that's right. i mean, i think there's a case to be made if air not absolutely sure, you know,

take your time. my wife, who is much smarter than prettier than i am you know, waited until she was 24, and really figured out what she wanted to do. went off to uc berkley graduated from straight a's and proved that, you know, you could benefit enormously. but there is, for a lot of students, west point is vi, trade schools are much better deal and we're seeing a new world of online education that is less expensive and maybe the right choice for young people. >> brenda: a lot of people think that a liberal arts degree is worth something, teaches you to speak, to write to think. >> when i talk to people in the technology industry, that's key. the pew center did a report on economic mobility, off the census 2010 and applied it towards this recession and clearly, the people who had graduate degrees, excuse me college degrees did substantially better than people who did not have degrees. >> gary b, you've paid a lot

of college bills. >> yes, i did. i tell you what, brenda, i think for the vast majority of people, the college degree is not worth it. look, 40% of the undergrads don't graduate in six years. we have undergrad degrees with bar tenders or taxi drivers. we know it, not true for my kids, well although maybe. it was four years of great partying. and if you come out, i think if you come out of college with a skill like you're a chemist or an accountant, something like that, it's great. otherwise you should go and get a-- >> bar tend something a skill, too. >> six best years of my life, college. >> brenda: thanks to walker for joining us, coming up, a wakeup call for the boeing dreamliner, and fixing the jumbo jets mishaps and take your profits up, up and away

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