>> the irs starting teparty years. the union said targeting virus bonuses trying to make sure that employees started the scandal are not stopped from collecting their bonuses. welcome, everyone. the acting head of the irs wants to block workers from collecting an extra $70 million. but union representing them says that it would violate their contract. tea partier study mill i furious about these. melissa frances is here as well. sounds fair. >> first of all, we have a union within our own government. does that -- that seems really weird. they're having to hire people to protect themselves from ourselves and using taxpayer

dollars. that's my question. charles: a little more upset. their work full-time for the union. even though they're being paid the irs. >> what does it take to get a bonus? you know, you get a bonus because you go above and beyond your job and do something extraordinary. here's my question, to the audit more people, find more loopholes or did they just when the limbo contest? what do you have to do? >> it's a great point because in finance you can quantify exactly what someone does to get a bonus. how much more money made on the money you were given. what to do with these guys? you collected this much more? acting chairman saying this is not a reflection of a quali performance of the work done by you or your colleagues but an unfortunate byproduct of the budgetary situation. what you mean is not a reflection of the quality of the work? that's when a bones.

suppose to exactly reflect the quality of the work you did and did not to. why in the world would not be in response to the poor job they have done? charles: is this just that union, it's like a euphemism. >> guaranteed. by definition about this is not guaranteed. it's an incentive to work harder and do more, stay later, produce more. it is not guaranteed. charles: may be to your point they did do what they wanted. maybe they did turn it. maybe by targeting people like you they get these bonuses and that's of the erin did. >> the stairs in because everyone can make mistakes. you have to file taxes, it takes a phd. charles: i do one sheet. >> was it the fact that they have all these tax dollars because she forgot to file that should put good will the nation's? ag guarantee these are six

figures in most cases are much more than anything if they ever actually collected from people. charles: here we are in this era of sequester, shared sacrifice, government actually trying to do what people watching the show have had to do for the last five years, tighten the belt and go without and maybe lose a house committee lose a job this is outrageous. no matter what side of the political aisle, you should be upset. >> and in the wake of all this serious economists are sanguine need to dramatically overhaul the tax system. this is just the nature of the beast. people are doling oumoney that is not theirs. they don't do it in the same way we would if it is years. when you have government workers giving oer government workers bonuses the more generous with it. that's why you see economists say we need a simpler tax code, something that takes the temptation out of it where it is not so subjective 26 here is the

thing, this isore powerful every day. e more powerful against the more powerful it becomes. might have gone past the point where anyone can run the san. >> nine know why our country is 7 trillion in debt. go look at detro. the reason why detroit is bankrupt is because of the union involvement. show me in case an example that helps the business long term. the majority usually have to close their doors and lose all their workers. look at walmart. now on no where government is in trouble. charles: the president is a friend of the union. what do you think? this it feels like washington is so tone deaf. at least the commissioner stepped up and said you guys will get it, although he tried to couch it in a way that did not imply that they did a poor job. >> however he does i hope that they stand up and don't go through with it. it's darwiniin in its nature.

this is how big government turns out. thus far we have to slim down the tax code once and for all. i hope the silence that and does not distract from. charles: and help ultimately we don't have to it some sort of a brick wall. does this seem like we did in epiphany a matter what the news story is in the become more averages each time. thank you. appreciate it. there is the irs mess, but the press is all but saying that the budget itself is fixed. check out these headlines. the meet growing about the $116 billion surplus. raw that's the biggest applause of five years, taxes are way up, and that's one of the things that helps drive the surplus of. toward that this would give the administration person to hike taxes even more. >> i'm cononcerned because any time there's more revenue in washington, the results of a ta hike or even the result of economic growth, what to

politicians to? they spend it. it's like giving our callers the keys to a liquor store. we have a combination of two things happening. obama is getting more money from a vessel clef, not as much as he thought, but mostly the economy, ev though with the very weak recovery by historical standards we're getting a little bit of additional job growth, little bit of additional economic growth command that spins off to the government and the politicians to be allowed. we are getting free candy. chles: here's the thing. the media reports this. it gives the implicationhat may be the way to go is to just sort of spend willy-nilly compatibility go is to raise new taxes. in the public, when he says we need to continue with this policy of hiking taxes on the so-called rich, maybe of the public behind. >> two things. first, there is appointed

richard keep raising taxes so much that you don't collect any more revenue. we have seen that in california. we are seeing it in european countries. charles: california is saying the same thing. we have a surplus. governor brown as a genius of this policy works. what i'm saying is by you understand the curve. a lot of people watching this show don't. maybe we have to get the law of diminishing returns before there is a general epiphany. >> what happened is actually a great example. california voters approved prop. 32, they impose a tax increase retroactive to january 1st. if you're ting people an income tha they already aired there is not a big laugh for curve effect.3 when california will get in trouble is a lot of rich people are going to be movg devastate. with a check like more money for this year and next year that's when they're going to find just like with france's 75 percent tax rate under that crazy president, california

politicians will find, where's the money. and not only that, but even if they collected me money. does this to you automatiially lose money. it simply says you don't collect as much as you think your going to, and in some rare cases you lose money. the point is, they are just going to spend more. that's why i have a simple golden rule, t private sector should go faster than the government. what does that mean? control the growth of government spending. the only fiscal variable at the end of the day that really matters. we seetat in europe. charles: to your point, we should note, spending in june was $170 billion for our government, the lessons of abrupt 2004 which might be the silv lining in all this is right now. every weekend. thanks a lot. >> thank you. charles: microft working closely with an essay take care of over any and all al look e-mails. more permission next. and then the chaos in egypt is

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♪ the. charles: it looks like microsoft may be playing hard to get. the tech giant reportedly gave despite agency easy access. outlook and how mail e-mail service. this new scandal keeps getting worse and worse. i didn't think that it could, but certainly it is unnerving to think thatll of these giantsng e with the government's. >> you know, i didn't think it could get any worse either. you anticipate these things, but to find out that it is actually happeniig is very concerning. also, you have to wonder why the american government is so far strong against snowdon. it sounds likehey're not concerned about what he is giving to foreign entities but are more concerned with what he is telling the american people. charles: or what else he could have. i know he has turned to actually release more information, but my problem is, okay, i expect government spying. i think we have all come to the realization, but the idea that

if i do a search, go on microsoft, if i'm using a look, somehow all of this stuff inantaneously is at the fingertips of the government, how does it make you feel? >> it's very alarming and disturbing. it to be doing personal things. of video diary are adjusted journal itself. they clearly can and will be held against you. more importantly, we had congressman back in the day tell us we had to do these thing in the age of technology and intelligence that tokyo's for national security. at the same time americans and ally wonder what that meant. it is master many questions. think it's time now we are entering a new eleion cycle tt make this immunity away from this national security interest. when people go on skype and talk to somebody, they don realize that video is being catalogued, downloaded, and stored.

charles: in other words, if someone sceptic cousin in, you don't think that's a major serity issue? >> no. i don't think so. what's interesting, just regular americans. what americans need to do is to rise up and say, you know what, we have had enough. the bill of rights are important. we do not cover this kind -- govern this country by proclamation charles: i love the idea, is not about whether you're doing something wrong. it's about your rights and protecting them. when you give them away you never get them back. thank you. >> thank you. charles: i want to say that microsoft actually has issued a statement o this. i want to read tt now. it's on your screen. microsoft does not provide government with a blanket or direct access to this guy drive, i'll look, skype, or any microsoft product. of course all over the internet people are saying the exact opposite preview will continue to drill into that. here is why the health care law

could be a sinking ship. even unions a jumping ship. why some of the president's biggest backers are backing away ♪ ks

♪ charles: another day, another health care blow, another union saying it is not happy and it is launching answer show it. a big electronic workers union blasted president obama over the law saying he is not delivering what he promised. not a good way to end an already tough week for the health care law. >> the unions, this is a huge steel. out in force to support health reform and now we have unions and retail construction transportation and firefighters stepping up and sang we will

break ranks. we did the math and see that health reform is driving up our insurance costs because the will have to cover pre-existing conditions and all sorts of things. the unions are saying, we want subsidies for our lower income workers because the cost is torn up. the administration takes note of that. the other thing, the unions fear that the workers are going to be dropped from company's insurance come to put on test data exchanges. why would it you need a union strike would obliterate the need for unions because they do collective bargaining for of insurance. charle and so we all have to find out what was in the bill will forecasted. now it doesn't seem like anyone is happy. it's a shocker the unions are reacting this way. >> it is and isn't. millions o americans can expect that their employers are going to sunset there up insurance plans. obamacare states that any

employer that provides employment to more than 50 workers us to provide health insurance coverage that means that is essential requirement coverage statedn the law. if they don't dare find to t 3,000 per worker. that is something that most companies c follow. maybe mcdonald's can't, but we know that companies like darden restaurants, denny's, public jounce pizza, they're all finding ways to deal with the risk of whether cutting employees, making more part-time ,dding surcharges to the customers. this is a very alarming thing. this was from my perspective a great blow. charles: we saw some of the things right after was passed. loopholes, waivers. always felt like the unions, the president have the unions back. maybe doesn't. maybe it will be at the mercy like everyone else. >> well, i am willing to find

the good news here. as a journalist sometimes write a story and find out the bulk of the sides the road about a your story. as the out virginity to pat yourself on the back and say you did a good job. i think the fact that unions and managementre upset about this legislation tells us that maybe it is accomplishing exactly what it set out to do. i need to remind everybody says it has not been said once, adding tens of millions of more americans to the roles of people who get health insurance. one last point to make. it should not come as a surprise that the people are upset about the way some of it is going to play out. >> she makes a good point. everyone has to buckle up and say we're covering more. the pson did to you get to keep your health insurance as it is, but that is what -- that is now happening for us right now.

this is danrous. charles: one of many promises. >> and i think he's getting to a point that a lot of the supporters of obamacare sank bella is good, but is being implemented poorly. this is a fundamentally flawed law tt is also being implemented poorly. i don't think that it is a simple issue of administrative failure here. charles: let me just say, first of all, we know there is a distinct difference between health care insurance and quality health care or even real access to health care, but this was sold as somhing of an economic elixir. and that was pasd and everyone said d't worry about the cost. it's a about the humanity of it. it's not the humanity of it does not work. >> i understand your point. if you say that it was sold as

an economic elixir, not going t disagree with you. that is ner what -- that's never why i liked it or why supported it. furthermore, i don't think that's why you or against it. i don't know where sabrina has been, but i only need to set of know what your position was. i know you have been against this all along. i have been for a long. i don't see this as an economic elixir. i see it as a way to give more people of the insurance come getting real people of insurance is good. >> i want to give more people of insurance, but i don't think this is an efficient or effective way to do it, and there are lots of ways that we could have tweet our existing health-insurance system on the margins to have made some drastic improvements. think that this is goi to be a miserable failure. charles: well, you started this. ready think it's going to go? more unions would get upset? >> i think they're going to get

upset. there are already action plans. hey, wait a second, thi is what health reform is doing. it could drive up your own insurance coverage. , 10%. when they got rejected for subsidies for low-income workers and their jobs the union said we have to take action. charles: the bottom line, i has been a bad week for the new health care law. speaking of bad weeks, the mess in egypt is costing taxpayers in egypt is costing taxpayers billions of dollars in aid. there is a pursuit we all share. a better life for your family, a better opportunity for your business, aetter legacy to leave the world. we have always believed in this pursuit, striving to bring insight to every investment, and integrity to every plan. ware morgan stanley. and we're ready to work for you.

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it is illegal but congress will vote next week to overturn the laws of the means the moneyill flow in a matter what jeff batters as many to cut off the funding. how welcome to the show. this is an astonishing development to circumvent the of raws. >> we have done it a couple of tis in the past to give waivers but the law is very clear. with the military coup overtakes holidays suppose of the democratically elted government we cut off aid. we should cut off aid

because morsi was radical islamic government and how egypt is like syria there are no good guy icehouse. charles: having said that report ourlves in between a rock when and a hard place we could not support the muslim brotherhood even though i stinkhorn the president wanted to support morsi. >> either way we're in an awkward positionbecause obama has chosen deliberately and willfully abandoned american power in most of the world. how people will say we will send morehou foreign aid they ask a questioat this point we do not have the ability to influence your outcome so for that reason alone we should not give it money. charles: so it feels like the more we put into the

world a less like us how. >> that has always been true but no more than it is now because the predent is giving up. he is willfully abandoning american power and allies have been left twisting in the wind so we're not in the position to say you should do this because nobody will listen to us anyway. obama had given up. charles: i thought when you're g with libya happened we saw the creation of the obama doctrine. he said he would not allo leader to kill his own people with resources resources, intelligence and manpower to stop that but supposedly the reason we went into libya. you brought of syria. i can imagine 100,0. he is killing his people. what do we do about the

obama doctrine? >> it sort of is a doctrine but it is false. i know what we can do other than electing a president because he is dedicated to the idea to throw american power away homeland only differing quite literally to the wind and nato to decide whether we do or don't get involved in the war. this is knight exercising american power. charles: i have to let the audience know 1.6 billion cover of 1.three is a military the rest of economic assistance. but we're out of time but we appreciate it when you come:. thank you. the turmoil in the least is actually putting we'll overrun hundred dollars a barrel and gases of $4 a gallon in some areas.

he wl talk about if it will get worse because i think we're bracing for the worst. we'll coming gasoline, we saw it come down man weeks in a row it is hard to believe that was crude oil at one '07 to be in the same neighborhood it is now. >> no. it will go up and follow crude eventually but the good news is we are in the long term trend down of oil and natural gas prices because of the shale drilling plus domestic production is up in the u.s.. ironically as the wti and the bread spread comes together that was $20 higher one year ago, so even as like egypt do spill over into the u.s. crisis but

remember we export oil today. if we have a major mideast eruptione're not inoculated from it but it does affect us even though egypt is not a big producer itself and i don't think the suez will be closed but it underscores the real problem today which is this a venetia split after former gas to said there are no good guys. charles: and we seem extreme violence in iraq also. why is domestic oil starting to move higher so rapidly? >> because we are tethered to the world. anybody who analyzes the oil market will say look at saudi arabia with the 10 million barrelser day of oil, 40 percent of the

population is portia and arrester suny. 30 percent of the eastern zone where they produce the oil is portia, i recommend azerbaijani and iran has a big shia population and the struggles that we see in egypt going on alson syria with president morsi said estrange leave lycia was a greater threat to the mideast dan jews when an arab leader says something as inflammatory as that it tells you how bad the split is. charles: you talk about the idea not knowing who to root for with no good guys it is frustrating the maybe because of our economic miracle here we do not lead to get up caught in the fight for crude oil. thank you.

you should not count apple out yet because now looks like the competition is taking itself out.

charles: ups? hard times for microsoft in the white people could be lugging -- running to sprint. first ups delivers bad news for all of us saying it grew less them last year gary b. smith is with us. i this day the market was still up it could be a ups problem tryi too throw the rest of us under the bus. >>. [laughter] it is not just their problem i think that next said the

same thing. isn't etfs the ultimate economic indicator? if you have any large packager box id you want to ship, what is your alternative? you will not shut down your business. you will say i don't want to spend that on ups, whaelse will you do? that is why i like them as the long term stock but but,hey say business is slow we must be in big trouble. charles: they did mention four things that customers were choosing to the alternative but they were not clear about that. what are the alternatives? butthe stock to pay huge hit but it did not impact the market. i thought that was curious. >> never won the alrnative is stuff like this people figure how to send a large data pack aross the internet the of the bandwidth cost is almost nothing for that is a

realistic concern. how will that cannibalize their business but specifically is ups becaus fedex has to negotiate in decreasing parking planes th ups has not started to do yet. if they're serious we will see over the next quarter. chles: let's hope it isn't for the rest of us because we have to come out sooner or later. on the surface it seems microsoft is launching another restructuring but also with the huge price cut steve pedd big microsoft has to worry because they are doing themselves in this is why ballmer does not have to be at the head. you cannot compete on value or product or technology. this i proof here we go again.

i don't know how they can compete. >> i hearr that they go back far. does he have photographs? how does he keep the job? [laughter] >> to have at expression of me to we were getting to do this microsoft has a tablet? [laughter] and then you see the apple store and now microsoft has the knockoff store it is the same store but they're wearing different color shirts. is so silly to get a tablet you will say i had the i applied with the negative i will get the ipad. charles: i know we tyler microsoft but i went the knockoff store i is night and day the peopleho work the had no clear. i don't know anything about computers but i was helping

them. with the all y can use data eppley and now a spread looks like to make headway against verizon and at&t to offer the cheaper of limited data plan. the others are pushing so do you thin they will run to sprint? >> that is a great question. it sounds wonderful be all you can eat buffet. number two, you just wondering if customers know how much they spent on their data? i see a phone bill it is pretty much the same matter what i do with my family. i don't know really come in maybe i am just the 1 percent that is totally ignorant so if somebody is offering that i don't know if i am saving money or not

maybe it is too much of a hassle but maybe people bell and it is a great deal. charles: read about loss leaders mccann the entire company be a loss leader? >> that is an interesting concept i tnk the phone mpanies don't like you to understand because then you did have the ability to make a choice this like airline sees that will get smaller and cheaper to 61 $70 for the clean blanket i don't know where the hook is. charle. >> i will pay it. mower issues for boeing. another problem for the dreamliner. no passengers aboard it had be parked for a several hours. >> is. there are always to arguments. that this 787 is still new with 6 million parts with 45

different suppliers the, etc., etc.. things will happen just the odds that things will break maybe this is a big problem and customers will want money back because they cannot fly the planes that they built. whenever i see the overreaction i think the company is always in better shape. think it is a buying opportunity if you're interested in boeing i don't underscore -- did not disagree with the stock but three years late, the plane had the first six of the battery problem really think it has going for it is one world competitor a round of world but this is not good news. >> no. the stock lately is all about perception. i don't care if it has 6 milln partsr flown by leprechauns but if you have problems and they're catching on fire that is bad

for the stock. i think it is at a critical juncture if boeing does not get this problem licked they will have a perception problem and so with the chinese aviation companies coming up. charles: but if they go on twitter to dropper rumor? they nd to do for attention. the stock took a big hit but the fact is it is worrisome. >> is everything. i fly lot of miles every year i went to get on the airplane doubting my equipment i want to know that i will get there at the other end is safe nd securely. it is the eipment that is the issue. charles: talk about the chinese entering the market if the wet pad busted batteries in the chinese

plan any day. >> i will be curious the next time he flies says c.c. what manufacturer the airline is flying? if this is veto i will my do that. your choice is limited. >> but your point every time i fly my 15 year old looks at the permission and knows exactly what kind of airplane i am on and coincidentally he said you were supposed to fly the dreamliner air. charles: you can tell me if the pilot is on his flight for the first time that i love. please let me know we could set up with site tomorrow. another one bites the dust. i am embarrassed to admit i do not respect the women who wo for real with the in the times they had to admit -- a psychologist on

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>> i begin today by apologizing to have diminished the office you have elected me. the charges made to bear serious when a friend is compelled to call f resignation came clearly doing something wrong i have reached into my heart and soul and realized i must change my behavior. charles: democratic sid professial help for his treatment of women accused of sexual harassment going to the list of disgraceful headlines so what is the

pile up of philandering politicians? let's ask. cooper, what do you make of it? is all part and parcel of the power tripp? >> that is the least part of it because we treat them like celebrities of a behave like celebrities. they work for us. we expect them to be civil servants if they spend so muchime worrying about themselves and what makes them happy. charles: i do think in general the term civil servant we will have to stop using the but mayors, governors, does it help or hurt the c go away for a little while then come back? in new york we have to high-profile cases coming back and they're both doing very well in the polls. >> it's weird you cannot change yr personality but you talk about people who are high with a narcissism.

so it is that sense of entitlement that i can do things that you can't do i will not behave that way myself. charles: the narcissist point aside as a possible what drove the bad behavior in the first place? will anthony weeder pick up a camera phone again? >> let's hope not i think he will be more careful because people are so compulsive if we give them power they will get in the same frame of mind they fe they are entitled to does have to be more careful. charles: so there is a cycle that is beginning and mark stanford came back to be governor. the be people say is sincere but it does feel like now you can make these gigantic mistakes to come back but actually that has to

encourage the initial bad behavior in the first place. >> of course, . there is no consequences. no one steps away. they think i got away with it. that is the problem we treat them like celebrities. charles: if we treat them that way. >> we have to stop. it is not our fault they cannot control their sexual urges but it is our fault that we vote for them. charles: it isur fault that we vote for them. do think the mayor steps down? >> you have to do the mikulka. may yet coulter was. >> but what is his game plan ? >> he has to come back then worked at a women's shelter that makes him look as he is

compassionate that he would never do something like that ever again. charles: mr. mays street is moving in a totally opposite direction of women's rights and respect is like a fferent direction but yet we do hold the elected leaders accountable to the direction the country is moving. >> maybe this is a great time to start votiig for more women. we have not heard of a lot of women. maybe this is a great speech for you. charles: be pting your hat in the ring? >> o god no. with all due respect what they do isery difficult with a lot of pressure. the people around and make them feel entitled. charles: bill clinton became the super super star but for many he disgraced the oval

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charles: victoria's secret models, we are not. out of 100 countries we are number 94 in our tax system below mexico egypt and japan and zimbabwe. our tax code is busted. >>. [laughter] with this we have dropped steadily over the last two -ecades.

let me back up instead of government spending. charles: we were number three? >> in the mid-90s. why not turn it like ireland to get that corporate cash back here at home? time and again with that 24 century pork barrel is the tax code because congress likes to give out favors. they think the tax legislation is progress but not. >> they'll talk about dick seeing that tax code it feels like it gets larger and more cumbersome in the start to fall down like this in the rankings. >> tax reform is a great idea eliminate the loopholes and eliminate the giveaway that may rest an increasing taxes.

t to liz's idea to make it into a tax haven like ireland that is a terrible idea. we're not a little country like ireland or zimbabwe. >> canada did it. no, no, no former satellite sovi states did it in revenues came in with economic growth. >> just one quick point and there is no guarantee whater you advocated to eliminate the loopholes on corporate taxes that all money would be repatriated and investment is the economy. charles: the word reform means different things to different people. we do know high taxes at some point has the law of diminishing returns and we just have to look at the europeans.

>> our system is complicated and leads to perverse choices about working, a marriage, or buying a boat. i don't know but i feel sympathetic to the flat tax idea you get rid of the tax favoritism to have a certainty to stimulate economic growth and job creation and this study shows we're oseold to the social democracy the in europe. >> i hear what she is saying but i also hear what adam is saying. charles: he is talking about raising taxes. >> he has the poin not all 2 trillion would come home. bbv wipe out some deductions some corporations and individual taxes will go up

but when you sit down to your tax return you feel that you make stuff up because it is so complicated it has made more liars out of the american people and golf. >> not only all of this money to make us feel like criminals to know how much time it takes to comply? 7.6 billion hours are spent every year complying with the tax system. that is unbelievable. >> avenue with a flat tax is the right idea but i completely agree with the tone. simplification, less cheatingnd stping encouraging people to cheat would be good. charles: what about loweri taxes? you have certain entities komer hedge funds or loopholes whose taxes are too low.

charles: you talk about a handful of people chilling yell in the hamptons but for the small business to keep the economy going don't you think the taxes are too high ? >> yes. lower the taxes. >> the top by percent paid 37% in 1980. now is approaching 70 percent so we do have a progressive tax system in place but congress likes to change it becau they get favors in exchange. charles: will anybody get serious but. >> doesn't have to start in washington but in california is over 13 percent i am thinking maybe we should move out here and he says absolutely not. i don't know how you would start a business out there or sustain life it is extremely high.

charles: if you go to california you better be a good actor or have the engineering degree. ida you are going to tom: it used to be when politicians were caught in a sex scandal they went away but something has changed this year. is there no shame anymore? why are voters okay with it? we're talking about voters dismissing sex scandals right here, right now. >> tom: thanks for joining us. here at the top of the stack. mark sanford woon a seat for congress and elliott spitzer and weiner is leading in his quest to be mayor and spitzer is ahead for his desire to be