at least the sense of irony would not be lost. that's my "2 cents more" and that's it for tonight on "the willis report." thank you for joining us. don't forget to record a show if you cannot catch us live. have a great weekend and good night from new york. neil: forget about washington, can they ever, ever get a budget deal going? it could be too late because it looks like consumers have already left. ♪ welcome, everybody,i'm neil cavuto, and charlie tells me the president told bankers of the white house this week that the economy is poised for some big things. apparently, that's not filtered down to the little folks because they aren't even doing a little buying, try no buying. last month, retail sales fell forty-tenths of a percent, chain stores, department stores weak, auto sales, electronic sales way off, and now even core sales, take out food and energy, who

needs that; right? it's flat. this could be a bump, but it's been close to a half year bump because not only is the pace slowing, but that slowing is accelerating, and into this environment, the president proposes still more taxing on still more folks who are anything but rich? smokers who will see their cigarette taxes double under his plan and pretty much everyone else pays more at the pump and for their utility bills thanks to the energy taxes stuffed into the very same plan. now, i could go on, but you pretty much get the point. you don't have to be a small businessman to see some very big problems, but it helps to have small businessmen on to see how big the problems could be to small business guys we like to rely on and get a read from, including butch, kenny, ceo, joe, and remember him in the romney ads? and david mcarthur. three guys trying to make ends

meet, now at wit's ends feeling the heat. david, you first. the baker here. you say this stuff keeps up, you could stick a fork in the recovery, that's it; right? >> you know, neil, as i've said previously, i doarmt see a recovery. you know, we just came through easter. easter sales were flat and lagged behind the year before. you know, i think the american consumer is feeling this 2% that came out of the paycheck. they are feeling, you know, here in the midwest, we had a fairly cold winter, so utility prices are nipping at you, and everything's tugging at the wallet, but the wallet doesn't get any thicker, and, you know, i think all three of us are in the disposable income business, and when there's nothing left to dispose of, there's no business, and when a retailer like walmart talks about sales reduced and flat sales, you know, breaking the habit of going to walmart to walk the aisles, that shows where the american consumers'

at. neil: when it comes to me, guys, at least, bakery products, candy, it's not disposable income to me. it's like app impulse purchase. it's not thee purchase, but that's just me. joe, remembering you and your company and the ad in the romney campaign talking about how guys like you really could get hit broadside by the regulations and the new laws, and all the new responsibilities and health care, ect.. we're told the economy is like a coiled spring, and the president telling bankers it's on the verge of some good stuff. what do you see that maybe those bankers were not seeing or the president was not seeing? >> well, neil, you know, when -- greetings from the low tax state of nevada, but, you know what? we see as we saw our march a little bit flat this year, you know, not really understanding why, you know? i think there's indicators out there. we had a fairly good january and february, and then it went flat

and in march could be indicators from the 2% increase in taxes. you know, we've seen a big exodus of people coming out of california trying to get into the nevada businesses because of higher taxes in the california, and what i see is, you know, we're looking at higher taxes and more costs for insurance, which, you know, affects small businesses like ours. you know, we've been relatively fortunate because of what you said, you know, candy is a necessity, one of the only things that sugar were born craving, and as you go along, i think that we're going to be affected by the higher tax rates. neil: you know, there is something going on, butch, and we chatted about this before where everything was moving along, and then we got a weak consumer sentiment number, then a weak, you know, consumer buying attention survey number; then a weak retail sales number. you know, you don't want to glob

on saying, all right, everything's going in reverse, but something is happening. we hit at the very least a speed bump, not that we were going fast, but your business, big indicator in that, what's it mean? >> our business is find, off the storm, half the region were down. we had to get creative, advertising and promoting only to find out the more business we do, the more it costs. it's a catch 22. it's a see-saw back and forth, and i'm there with the customers, i go to the parties, talk to the people, sell the parties, and people don't want to spend money but feel they have to do things, and they, you know, the ones that spend the money said they don't want to. they don't know if their kids get jobs, coming out of college, staying with their parents, people going into retirement age afraid to retire because what happens to their kids? the kids are not spending money because they don't have jobs. the parents don't spend because of the retirement age. it's bad. we try to do something this past

easter. we put out something for all of our guests who say let's have something like comfort food, roast and pot roast and turkey, and just to get the families together and put something out affordable. it was so well had, almost a thousand people showed up because they had not gone out in so long, just hiding in their homes, can't pay the bills, just so scary out there, i don't know what to do. neil: you know, hearing all of this, david, i'm thinking about what's going on in the markets, bumpy lately, but by and large, setting records lately. who is right? what you guys tell me or traders who see, clearly, something big going on, or do they? >> big? >> well, i don't think there's any connect between big business and this world of the stock market versus what the world that we live in. i mean, i just don't see it. our costs continue to go up. our profit mar gyps just are not there. neil: have you seen any pickup in business, dave? >> no.

neil: people with smaller cakes or order less. still ordering, so, i mean, what's changed in the complexion of your clientele? >> what happens for me, and i'm sure butch sees the same thing with the candy order type thing. i still -- my customer count is good, but the amount of business, say the ring that used to be an average of $5.50 ring is now in the $4.30 range. the people that come in the door, but they spend less, but the problem is when you're in business, when i have a decorator decorating a full sheet cake at $70, that labor in that full sheet at 70 is the same in a half sheet at 30, but my profit margins are gone. >> and the product costs more. >> that's the struggle. neil: costs go up, and you can't raise products. >> sales go up, but the product knocks you out. neil: i think of you guys because of the rules and regulations tucked into the president's budget and some directly effect you, others do not, but you are a successful

thieving operation, a lot of workers, and the president is going to demand in short order, not that he necessarily gets it, ahike in the minimum wage and a substantial one, and says that in the long run, it benefits you and those workers. what do you say? >> you know, i disagree. you know, i think nevada's been a right to work state, and we are fortunate here to be competitive, but as a business trying to start, you know, for all the new companies that really drive the american economy, you need to be able to start at a low base, and if all the sudden everything goes up, it requires us as manufacturers, as people that produce products, that the cost is going to go up. it's kind of not like everybody holds prices because the sheet cake or the candy we make cost more to produce. you know, we're going to pass that on to the consumers which then is like everything. it's like these government subsidies of corn going into the food products, going into

ethanol. you know, those things raise the price of food in the united states, and the government needs to be out of private business and subsidizing industries that are not practical because that hurts the american consumer as a whole, and america was great, built on manufacturing and innovation and everything, and what our government is doing is stifling the small entrepreneurs trying to get started that make and create these wonderful businesses that employ americans. neil: well put. guys, hang in there. that's all i can say for the time being because in the middle of this burst, we think we found the next bubble. attention, students. you're it. then if your house is trash, pony up cash. how a big storm can cause a perfect storm of debt. ♪

neil: you notice how experts say the low interest rate thing is a big old bubble, bonds, the whole thing, going to blow up. something the federal reserve manufacturedded to keep these rates as low as they are, and when it bursts, well, get out of the way, but what if the fed is not creating the bul, but those who beat off the bull like congress trying to keep student loan rates low for a long, long time, maybe, like, forever. way beyond the time that which the federal reserve spessedly pulls the punch bowl away, and competing legislation that keeps in place interest rates as low as 2% to 3% on interest lopes no matter the ddbt. that, my friends, is the definition of a bubble that really goes up, or is it? to elizabeth, wayne, adam. elizabeth, the perfect storm to me, what do you think?

>> yeah. it's scary a couple democrats want to focus on the low interest rates when the idea of a set federal interest rate for federal loafns is not helping financially. we had the set federal interest rates since 2006, and they increase since 20 # 11. neil: they come to help, and take nothing away from the government's good intentions, wayne. i take it away from our being stuck with e bill, and i think when they fail. >> well, neil, i don't know why you say the government good intentions. i don't know that the government has good intentions at all or doing this because it's politically popular for a vote, do things to make themselves look good and make themselves look charity l and all of that kind of stuff. that's not necessarily good for the public at all as a whole, and in the case of student lones, interest rates freezing theming at some point opposed to having a floating rate, something that is commercially competitive is insan sigh,

another government give away program that's out of control. neil: you know, whether it's the right or left on the issue, can you blame them? the federal reserve is keeping interest rates as low as they are for quite a while and promises to do so for quite a while, then almost anyone connected to this bandwagon hooks their own; right? >> i think they're right, neil. easy to keep the rates low in an environment like that, and i disagree with wayne completely. first of all, the government is well meaninged here, and giving students a break, you know, helping them get educated is a perfectly good policy, but the trick is to do it well. this has been poorly executed like the public policy of having low rate loans for poor people. that also was well meaninged and probably a good idea, a very poorly executed idea soi think we should pause this rate and try to get it right as opposed

to just raising it willie-nilly. nothing wrong being below commercial rate here, wayne. neil: what worries me -- >> well, there is. neil: this is what worries me. you have your car fixed, it's banged up or insurance policy cover it or you cover it? if you say, you, oh, the rate is markettedly lower. whatever the rate of the insurance, it's higher. you can't tell me that goes on in the medical world, that goes on in the education world, and it feeds this sort of run away tuition and room and board college tuition that's gone to the point of, well, if the loans keep coming, the jack ups in tuition keep coming. >> exactly, tuition increases. one study said the average is, you know, 8.8% over the course of a year or so, and so -- neil: our kids, by the way, dumber than ever, dumber than ever, but i digress. >> the other problem is that the

economy is not doing well and the job market is not doing well so they graduate with the debt with no income to pay it back. if congress were well meaninged, they would focus on encouraging the robust economy so the students get on theii feet after graduating. neil: wayne? >> come back to the point that adam was making, which is he says he disagrees. that's fine, but public policy doesn't necessarily because you think it's good for the public, that's -- it may be bad for the public, and you say there's nothing wrong with it. tell me one -- one thing that you know that a the federal government has done by giving away money that is actually produced something that's tangible and measurable that you can -- there's not one. >> the subject here is not giving away money. the subject is the government providing a service that lets, say, either a below market rate or at a rate that you couldn't get on your own so i'll give you the federal interstate highway system which no private company could possibly have built, and

commerce thrived on that. another example, wap, the g iring's bill. we give away educations to veterans as a way of thanking them for the service to the country. by the way, they go on to be productive in society because of the give away from the government. it's not -- >> you're wrong about the highway bill, by the way. neil: bottom line there -- >> the highway bill -- neil: stealing you back later in the show, but bottom line is now we're feeting a bubble, i fear, and whether you like it, goals or not, it could get worse, could get a lot worsement meanwhile, i want you guys to look at this ad. take a very close look at this ad. what if i told you it's a mcdonald's ad? ♪ thank you orville and wilbur... ...amelia... neil and buzz: for teaching us that you can't create the future... by clinging to the past. and with that: you're history.

instead of looking behind... delta is looking beyond. 80 thousand of us investing billions... in everything from the best experiences below... to the finest comforts above. we're not simply saluting history... we're making it.

neil: have you seen this? it's an ad that screams like a cry for help, but what if i told you it's a cry for fries and a big mac and a coke to go with that. yeah, this ad, this ad you're looking at has mental health advocates hitting the roof. it's to get you under the arches. now mcdonald's just about having anything to do with the ad saying it's a local agency that went off on its own, but a lot of folks going off on mcdonald's now. one says they are overreacting. why? >> you know, we have political correctness and hypersensitivity run amuck in the society to a point where advertisers can't do anything these days without worrying to offend you or me or offend someone else. the truth is you can'ting the for how everyone may or may not be offended. we have different backgrounds. we had different life experiences. what offends you is not going to

offend me. this is the goal. if they have to account for all our potential sensitivities, there's going to be bland, very, you know, noncontroversial advertising. neil: i can see that. all this stuff, no interference, and stuff, but just being op how you sell something, i thought it was stupid because i thought, all right, the woman looks clearly, very sad, very forlorned and while i might get that way if i hear of mcdonald's is out of fries, i say this type of reaction for something more ominous. >> it's not necessarily a great ad, but i'm concerned with how hypersensitive everybody becomes about it. neil: penalizing mcdonalds or boycotting is where it goes? >> i'm not interested in that. that's not the person i am. i wish we were a stronger seat. society. we had a backbone, not so sensitive. look at my grandparent's generation, and i say, you know, we're a bunch of wussies now.

you can't do anything without offending someone. talk about whether it's smart advertising, and it it's probably not because we're hypersensitive so they offended people so they pulled the ad. from a business perspective, is it smart? not necessarily, but from a societal perspective, i think we need to sort of map and woman up and not be so easily offended by everything and everything we encounter. neil: but can you see why there is mental health groups and those who have mental problems of their own reagent the way they are, like, wait a minute, mcdonald's making fun of us, using us as, you know, an advertising pitch, or -- >> they shouldn't reagent that way. i don't want to be insensitive to people with serious mental health department issues. obviously, it's a serious issue and the gun control debate, we focus op mental health, but they were worried there was a number at the screen that linked to mcdodged's customer service, and they said, well, if someone is in a crisis, they could be

confused, see the number, and call, and it could be problematic, well, yeah, but the ad refers to a big mac and you can't hold advertisers accountable for people not realizing the ad or what context that americans or people might infer from the ad so i think it's putting a lot of weight on an ad, and we have to put -- shift responsibility on to people. neil: you, by the way, when there's a big fit with the abercomobie and fitch, kids, various stages of undress, and parents say is that a way to sell clothing, maybe we shouldn't have the kids shop there because of the message being sex, sex, sex. >> when you involve children, that's a different category. i don't like them being exploited or used in a way for marketing purposes. that's a different issue. neil: but attractive young person also depressed, but clearly telling you to get a big mac, would you be as offended? >> i'm not easily offended i'll

admit across the board. that's not my nature. it's a problem in the society we're easily oivedded. if you don't like the ad, don't buy the product. voice concerns as many consumers in massachusetts did. that's what the free market is about, and advertisers respond, but if we get to a point where you have a heightened level of hypersensitivity about everything, the society leads in the wrong direction. neil: maybe the message was if you're depressed, eat, see what happens. >> maybe big macs taste good, i don't know. neil: thank you very much. >> thank you so much. neil: the times in which we live. oh, man, oh, man, the tax money coming in. that's good, but this also just in, and man, oh, man, is the money going out faster. that is bad. to alice rivlin dancing here on why there's no dancing around the seriousness of what is going on here. she's next. ♪

hmm. [cell phone beeps] hey! [police whistle blows] [horns honking] woman: hey! [bicycle bell rings] turn here. there. excuse me. uh. uh. [indistinct announcement on p.a. system]

so, same time next week? well, of course. announcer: put away a few bucks. feel like a million bucks. for free tips to help you save, go to ♪ feed the pig here's the crawl space, the hole --

that's what saved our life. but that night, immediately, the red cross was there. that volunteer, he didn't even know us. he just knew that there was a family with two younger kids who didn't have a place to go. that was the red cross. i knew that's what they stood for. they help people. neil: here's what happens when you pay taxes, the government gets your tax dollars, a record 3.73 trillion from americans and u.s. businesses this year. i guess that's great until you realize the president's budget calls for $4 trillion in spending this year. in other yeahs, more than a trillion bucks going out versus the close to $3 trillion coming

in. at this rate, we can never dig out, of course. to former directer, alice rivlin. alice, you know the numbers well. that is not what you call ideal math. what do we do? >> well, i think we're doing it. the deficit's coming down. we've ran up a lot of big deficits in the recession. the recession's getting better, as you noted, where the economy's growing, and that means tax revenues are growing, but the economy's not growing fast enough, so tax revenues are not back to normal by any manner of means. they fell to app all-time low as a percent of gdp. now they're back to about 17% of gdp. normal over the last 20 years or so has been about 18.5. now, we spend more than we take in, but the deficit's coming

down, and the real problem is, as you look ahead, what do you say? well, you see baby boomers retiring and being lizabeth jill for medicare and medicaid, so we're going to need to slow the growth of those programs and, i believe, raise some more revenue from a reformed tax system. neil: that might all work and happen, but this is a stone i cast on both sides here. drat creative when it comes for coming up with ways for washington to get the money, but not creative for ways for washington to start, you know, slowing down all that spending of our money, and that psych key has not been really broken in any dramatic sense. the latest budget confirms enoughty ways for money, whether you double taxes or raise a lot of money in the aviation field for security taxes, and it's not a lot of stuff to just simply be

diverted into getting the deficit and debt under control. >> well, that's your take on it. mine is that this was really quite a moll budget from the administration -- neil: what was bold about it? what was bold? tell me something that was bold. >> yeah, major reform of medicare that actually saves more money in the first ten years, probably in the second ten years as well than the ryan budge. they are serious reforms in medicare which will accumulate over time. that's important. neil: wait a minute, a lot of people are looking at that as a -- that whatever you save in medicare, are, in fact, going to just make for bloated, more health care system. >> no, i don't think so. i think we're on the track to improving our health care, making it more cost effective.

it's going to be a long road, but -- neil: but do you think it's a longer and more expensive road than even you, alice rivlin, envisioned between the premiums going up, the medical device taxes, that is pricier than it was built. >> no, i don't actually agree with that. neil: oh, come on, alice, come on, you most certainly do. >> i do not. i don't know what -- if you ask me to be here just so you could make a speech about what you think -- neil: no, no, but alice, weave talked about the savings from health care, and you say that that is panning out. the numbers so far do not justify that. you say they do. >> i think the numbers in the president's budget are a good start on reducing the rate of growth of medicare, which arianbly is already happening. we -- the cbo projections on

health care spending have come down over the last few years. there's a lot more to do. i'm not say it's all fixed, but the president's budget took a major step in the direction of reforming medicare, and social security, not as much as i would like to see, but just poo pooing everything he does does not help us get to a solution. neil: i'm not poo pooing it, but commend him on what he tried to do on social security, commended a lot of things he does in financial reform, but i also cited pretty, you know, bipartisan eyes here that there's a great propensity to keep increasing taxes. i guess as someone who has a good idea what the tax level should be, i'd like to ask you at what rate do they risk paying their fair share? >> no exact answer to that.

i actually think that the narrow view that we only tax high income people, although i'm for that, is unrealistic. we are going to have, in this nation, more than half again as many seniors in ten years as we have now. that's a lot of people to absorb without tax increases. neil: beyond just the one we have the taxes on, you're saying? >> i'm talking about the baby boom generation, retiring and how expensive that is going to be. neil: so am i. those people, in order to take care of those people -- you're right, you hike taxes on more than the people we hying them on just to now; right? >> yes, i think that the definite -- we only hike taxes so far on people who make more

than $450 ,000 for a couple. that's an awful lot of money by the standards of most people, so i think we're going to need to reform our tax system to make it more progressive. i'm for that. neil: right. >> but also to raise more revenue over time, and you sound like you're against increasing the tobacco tax. that seems to me like a good idea, but i'm not a smoker. neil: neither am i, but it's disproportionally putting the weight on that, i don't care you smoke or not, but misleading people to hook it on the rich. i was enlightened to hear you say we have to expand the pie. >> two different conversations. neil: they are. >> the reason for taxes tobacco is to discourage smoking and make it more expensive is one way to do that. neil: doing that since they found out it was dangerous;

right? >> yes, and it's working. we have less smoking. neil: tax them to death and kill them off. kidding, of course. good seeing you. thank you very, very much. >> thank you. neil: cypress already getting helped out. jcpenney looks for help as well. ♪ cypress could be a better bet than jcpenney. ♪ our new business blitz is next. ♪ @í

heyyy, you're going out like that? yeah, why? well, what would the neighbors think? i see you! c'mon, get mister feather! look what i have. mister bird. remember? quack quack quack! we're just playing! we're just playing! i'm trying to get you out of there! even still... announcer: you don't have to be perfect to be a perfect parent. there are thousands of teens in foster care who don't need perfection, they need you. neil: well, now it's come to this, jcpenney begging for pennys. a tech rep you won't see coming, but we are warning all in the business blitz. now bumming, all that's missing is a board reading "we'll offer home furnishings for cash."

reduced begging investors the one week it gave a hot shot ceo the boot. they want a bill bucks from anyone they can fine. they don't see anyone lining up. charles? what's going on? >> well, they brought in ron johnson,ing thought he had the magic touch. he was -- listen, he had great success at apple, but tried to remake overnight. neil: using the apple model. >> i don't think he step foot in the jcpenney. that might have been the base of the problem, but i say this, longer term don't write them off. it was under ten bucks back in 2000, but it's a brand name. it could be a buy. they need someone to realize you sell people good quality things, and don't take away sales. neil: and brought back cue pops which could be the start, but for investors, worth taking the plunge? >> you know, i think what happened here is kind of like victoria's secret going into the

hand gun business. it doesn't makeceps for the customer base, and i think, you know, like charles said -- neil: i don't know about that, but go ahead, i get the drift. >> cut off the sales. jcpenney customer wants sales. they are not like a ferrari customer insulted by things on sale. they want sales and deals. it was the wrong road. it reminds me of k-mart back in the early 2000s or softer side of seres, remember that mess? they got back together. i think charles is right, moving forward, there could be a place for jcpenney,, but right now, this is not the time to be pumping your chips in the stock. there's better issues out there. jcpenney has a long road ahead, and the debt, whatever they decide, however they get the money, it's going to cost them. it's not going to be easy. neil: continue blitzing here. issue two, twitter, itunes could have competition. twitter wants to branch into music. i don't know whether the lyrics are limited to 140 characters, what's going on? >> they are grasping for straws.

talk about victoria's secret selling handguns, it's twitter. google did the same thing, but google had credibility. every time google said we get in something when they went public, the stock went up. facebook has zero credibility so this makes them look desperate. neil: but twitter has a lot of folks to tweet; right? what's the big leap to get them to sing? >> you know, it's -- we'll see how they revolutionize the industry. it's about monetizing all the people that you have. neil: leverage. can they do that, eric? >> you know, i don't think so. i don't think the music business is going to help them. what they need to do is get public, sell themselves as soon as possible. i think twitter is, if they diversify, they got way too much competition, number two, do so much on line, facebook, tweet it, google plus it. they got a niche, hang on to it, perfect it, sell it.

they can't integrate music. they bought vine. neil: i forgot about that. issue three, dove tails off issue two, is tech coming that will be a wreck. or at least traditional tech wreck. you have to wonder and we learned pc related sales down double digits, and microsoft's vaulted window 8 got reviewers, and apparently consumers, is that a different world? >> microsoft is a four horse mapp stocks that i have not touched it in a decade. the company's op a pile of cash, unimaginative, come out with windows 8, a disaster, -- neil: i love it. >> are you serious? you're smart, you're smarter than 98% of the people, i got confused and intimidated. the fact of the matter it was more or less dead on arrival. neil: traditional pcs are going the way of the dodo bird?

>> the high growth before will never materialize. a point in the cycle where emerging markets will be a good place for them, but right now, new tech, cloud computing, i think the cloud stocks took a hit, but look at them in the second half of the year for the huge rebound. >> you know, consolidation is the key here. think about it; right? your phone does everything. it's a camera. it's a phone. it's a word processer. it's a computer. i think the place to look here is the guys that supply the innards, not just the smart phone, but tvs. most tvs have a computer inside of them, the chip makers, the qualcom, skyward solutions, look as thought. consolidation and moore's law dictates things are powerful but cheaper, those hurt traditional tech companies and apple, look, they are cheap from a pe basis, but they suffer and will moving forward. neil: thank you, charles, i think you're a blitz, by the way. kidding, kidding. >> i like windows 8. >> there you go. there's two.

tornadoes and hurricanes and sink holes. when they hit, i'm telling you, you're sung, but get a lot of this, you are very much on the hook.

♪ neil: the house is gone, but the bills are not. this florida home swallowed by a sink hole. the guy inside was killed; then the county tore the place down, but the mortgage company is not standing down. the owner says his insurance company paid the bank the $130,000 to pay out the loan, but now he claims the bankments another $4500 to close the deal. what's the deal when the house is trashed by sandy or a twister or gobbled up in a sink hole,

why are you stuck in the hole? attorney on whether this is even right. is it? what do you think? >> well, right and wrong versus legally behinding contracts is really the issue. neil: you're right. >> here's the thing. the buyer has an agreement, a contract with the bank, and regardless of what happens, you still owe the bank for any kind of damage, whether it's an act of god or catastrophe, and that's what happened in this case. now, if you're insured likethis man actually was insured, he got a check from the insurance company for, like, $130,000. it still, if it doesn't cover the extent of the contract, you owe. that's what we see here. neil: it seems odd, though, that not only is the house destroyed, but in this case, it's a brother, he lost his brother, killed in the sink hole, and the bank is selling them details,

details, you owe us $4500. i know what you are saying, and it's right to say the difference between what's legal, morally right or wrong, but this seems icky, period. >> well, unfortunately, i think the problem is that we see all of these tragedies and, like i said, agents of god, hurricanes, sink holes, whatever it may be, and the banks, you know, how much are they going to lose? how much do they put their heart on the line or where do they make a business decision, and, you know, another thing that's interesting about this case, neil, is that this was a nontraditional mortgage which means that it was risky for the bank to take in the first place. maybe the guy didn't have good credit, whatever. neil: right. >> how much are they going to go after him for $4 # ,000. maybe nay just say it's a wash. neil: yeah, i guess. there's a bigger point about homes destroyed by natural disasters or hurricanes or a tornado, what have you.

i understand the argument even though the house is destroyed, the financial only doesn't go with it. that would leave a lot of people hit by the storms and tornadoes was like a double calamity, and the banks, whoever, you know, own that home or owns what is left of that home is then perfectly within the rights to demand money sering right? >> well, right, and that's what insurance is for. in florida, in two other counties, there's 66% of the sink holes in florida, and so the state legislature said that you have to dn an insurance company has to offer sink home coverage. if you don't take the coverage -- neil: like flood coverage and the rest, you need that as backup; right? >> right, right. this man was living in hills borrow county, and he took the sink hole coverage. if you don't, well, then, you're the idiot who didn't insure yourself, but you can't blame the bank for making you insure.

neil: wow. thank you very much. good see you again. >> thanks. neil: you spend a lot on a per capita@í

neil: when what you are making is glorified by what the government is spending you know, your sentence. total government spending is $50,000 per household in 2010 the most recent year data is available nevertheless that same year the average income per household was $49,500. the government on a per-capita basis spending

more than the average american takes in. the first and that has ever happened. now back with our guest. what you say? >> with the biggest questions are americans getting there money's source? the government is spending 20,000 more dollars than 2,000 and i don't think they say their quality of life has improved that much. >> in 11 states where they have spent more on welfare the and people who are employed. i think it is a total of $168 per day spent on welfare if you are working if you are below the poverty level. however with the median income of $1,309 per day. so why should i go to work by could make more from the

government? >> there is also is the things we're not talking about, 2010 was on the heels of the financial crisis. we know we were spending more on purpose i assume these numbers will adjust. neil: i wonder because certainly the numbers keep going up on a per-capita basis, but i never see in reversing i would be surprised to see if the government exceeding per capita spending ever slips below what americans are making. >> to give you an example where the trend line reverses we know savings rates were ridiculously low in the united states and debt levels were ridiculously high. by the way it is possible people were spending more than the government was spending even if the income was lower but we have seen those savings rates reverse

and i would not be surprised to see this reverse. neil: if the trend line does not reverse because i will respectfully quibble i will brave this that there past to be something very, very wrong with the government spending to that degree we have seen the buildup of deficits we're not slowing this down. alice rivlin and others say it is coming down but i just know it is piling onto our debt. the president released a budget that does not balance over the next tenures and says it is not crucial if it does. i do not see a cause for alarm with the officials in washington. >> they really have not done anything except talk. the heritage foundation did a study for its annual

spending in 2012 but entitlement spending was 2. $4 trillion, global on tear one headed 15 billion and in 2010 americans are spending three times more than they were on national security and the government hasn't done anything to reverse the trend. neil: if the trend continues , i know see a very sustainable system. something has to give. higher taxes or someone gets the wisdom to cut more spendinbut it is certainly not sustainable the way it is going. >> that's true but with all due respect to adam wants everybody to have as much money as possible, but we don't run a charity.

we're trying to run a free market system to determine how the economy should be run. and there are more people on welfare they and people employed in 11 states of the united states. that has grown. we're on a trend that is very bad. neil: look at what is happening now and to the president and alice rivlin credit says he is addressing entitlements but the propensities seems to be finding ways to raise mre money. might issue is not left or right issues since i raised it with president bush with the bank bailouts it is a slippery slope. once you start taxing you do not get enough then you have to go down the food chain to get more from the middle-class and the pork because you don't have enough money to sustain what

you don't have. >> look get your household budget to operate under the exact same principle and you know, if you're not willing to cut in certain areas then you will run into problems. unfortunate as it seems like congress needs to take more economics glasses because they are not very responsible when it comes to this. neil: have we rounded the bend? because the deficits will start shrinking. >> i love the way you say it deficits are going to shrink [laughter] tomorrow is the cherry blossom festival. i think all of those in the congress are sniffing to many cherry blossoms. when we talk about shrinking a deficit as opposed to the total