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tv   The Willis Report  FOX Business  July 23, 2013 6:00pm-7:01pm EDT

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dennis: tonight on "the willis report." find out why unions are calling it an all-out war. and the food police strike again, taco bell dumping kids meals. what is nice, no more happy meals in a fast food establishment? you can't have a government program without waste, fraud and abuse. this one is hard to stomach all coming up tonight on "the willis report."
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we begin tonight with breaking news. michigan court has put the brakes on three lawsuits trying to block detroit's bankruptcy filing. it is a huge loss to the big labor unions fighting fiercely against cuts in the government pension. the ruling clears way for federal bank of the judge to consider the casee that begins tomorrow. what happens next in detroit could affect cities and towns around the nation. do they have the right to reduce the pension promises it made to unions in good time when it will default on bondholders in bad times. that simple. with us now, an expert at the conservative heritage foundation. senior fellow, you are with us. reporting on foxbusiness.com. you are here, it is an interesting background yourself, you were a goldman sachs guy, not just prounion, before going to goldman sachs you are involved in helping detroit out
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of the last rush in bankruptcy? in 1990? >> that is right. goldman sachs was hired to sell major assets. i headed the team that did that. dennis: did the city try to make any pension cuts back in 1990? >> not at that time. the skill the problem was much smaller. the gap was $55 million at that time. dennis: now we are talking nearly half of the total liabilities. do you think the city has the right in bankruptcy court proceedings to go ahead and start cutting benefits to current and future retirees? >> i practiced law for a while but that was a long time ago.
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i think there is a very legitimate chance the court will actually rule the constitution protects the pension benefits. i think the number is that you mentioned by the way is subject to a great deal of dispute. dennis: tell us, if he is right and it turns out the court will so you don't have the right to cut those pensions, will the city be able to get out of this mess? >> nobody wins a fight, they agreed and more prosperous times to these pensions where you could retire in your 50s after 30 years on the job and get a full pension rest of your life. you had just under 1 million residents in the city. now less than 700,000. the city does not have the ability to pay. i think federal law will trump
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the state law in this case. detroit does not have the money to keep the lights on. they don't have the money to pay the bondholders or the unions. dennis: james just said it is about math, but you say it is not about math at all, how so? >> as a lawyer that dealt with the cleveland situation, they almost went bankrupt. ind(ráy of boston when they almost went bankrupt. i think it is about political will. having been through this before, these kinds of situations with the local governments running into trouble going back to new york city, the real question is the state and the city have to work together not at odds with one another. dennis: is seems the time to show political will would have been when the politicians turned down union demand for higher pension, higher pay, we are losing half hour population to 1970 or something.
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>> the pension benefits were cut by 40% last year. the average worker in the city of detroit, nonuniform worker, their benefit will be $18,000 per year. this is not this grand situation. in obligation of about 4% of total revenues. i think it is fair to say the pension issue has been blown out of proportion. dennis: there is a huge liability across the country from the government pension plans which have never slipped over to putting in your own stuff and invested. kate, we talk about a lot of numbers and the law, you're talking but most of thickly directed. tell us about what you're you ae hearing from these people. >> a breast cancer survivor paid into this plan for over 30
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years, retired at age 63 and is terrified, no idea if she will be able to collect. and then i spoke to another worker, the quintessential union guy who takes people antiunion off. he worked as an electrician come a retired at 50, got a second job in a different invisibility and retired retired after 10 years and got a tenure pension from them. he is collecting to pensions. dennis: the last paragraph of the "wall street journal" ssory when it first broke, what it retire in october at age 50. aren't we bankrupting ourselves if we let government workers retire at age 50? >> the city and the unions make promises to workers that they could not keep. they got to say we got a huge
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pay increase, the city did not have to pay for these increases now. there is just no money anymore. they were lied to for generations. they would not be better off it had a 401(k). they did not have to worry about the city going under. dennis: imagine if the pension plan had money in the stock market in the 401(k) instead of the pension problem rising since '09. one shows how many cities face underfunded liabilities, detroit 5.1 billion, i heard that was 9 billion. another chart that they're going to to show, political spending by unions $1.1 billion through 2011.
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unions represent less than 7% of private-sector workers and 40% of government workers. is this one big self-perpetuating money machine where the unions elect the government people who will vote to keep paying to the unions who get more dues, meanwhile taxpayers, the rest of us are on the outside and we are getting hammered. >> if that is the case, they did a very poor job in detroit. the payout is $18,000 per year is what you get. even though there may be outliers who worked 30 years in detroit, the average retirement age for the average worker in detroit is 63 years old to obtain the benefit. so i think there is a little bit of a misunderstanding of how generous these pension benefits are. indeed the unions and the
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workers have been working with the city all along. dennis: even if unions have the right not to grant concession, they granted no concessions and hostess went out of business and lost all those union jobs. shouldn't employees in detroit in making concessions to help the city get back on its feet? >> the city of detroit unions have made concessions and would make concessions going forward, but what has to happen is a have to be a dialogue between the city and the state. the state cut the revenue sharing last year by approximately the same amount as in taylor pensio imac enterra p. dennis: we're going to have to wrap. i was live got another more, but we look for the rattle rousing on the other side. my apologies, thank you for being with us.
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now we want to know what you guys think. should workers in bankrupt cities lose their pensions? log onto gerriwillis.com, vote on the right-hand side of the screen and i will share the results at the end of the show. a lot still to come this hour in putting tips on the best way to rent your vacation home. and taco bell shocking the fast food world by saying adios to kids meals.
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it could save you thousands in out-of-pocket costs. call now to request your free cision gui. i've been with my doctor for 12 years. now i kn i'll be able to stick with him. you'll be able to visit any doctor or hospital that accepts medicare patients. plus, there are no networks, and you never need aeferral. see why millions of people have already enrolled in the only medicare supplement insurance plans endorsed by rp. don't wait. call now. dennis: taco bell is saying adios to kids meals. dropping kids meals and toys after deciding they are not edgy enough, i do not appeal to millennial's. but did the food police push taco bell over the edge? you follow these issues a lot, interesting thing is sometimes
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you want government intervention and you almost like mayor bloomberg, but other times you argue look, obesity is our own problem in about time the crackdown on ourselves. where do you fall on this decision? is it good for nutrition or bad for nutritiin? >> that is an loaded question. they did not do it for kids, this company brought us the fourth meal, after midnight meal. they did not do anything for kids, what they decided his kids are less than 1% of their sales, their focus is millennial's. i have a happier hour. they're not interested in healthy nutrition, they are not even playing that game. dennis: if it is 1% and nobody notices, you might hold onto it.
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if you keep getting hammered by the food police they may give you another reason to drop it. >> they had a good news cycle today, but the other brands are not doing it. when you asked me before whose responsibility, it is my responsibility to not get fat, it is your responsibility to not get fat. what their role is, in obligation to be transparent. tell me what the risks are. what does it mean to me, and how many calories. dennis: we kind of know a double cheeseburger with bacon has a lot of calories and so it is not as if i see the calories posted i will say i will not have that now. we have an obese america, not caused by america and taco bell.
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do you think they will be more? >> marketers know they can create a tester factor. undermining parents who have to say no. we don't want to be in that position. marketers are adults, trying to establish relationship with the kids. dennis: in my household my daughter refuses to go to fast food restaurants and i'm trying to tell her you can always order chicken. the food police have been on the march about all of this stuff, it seems even the first lady, they want to blame business and
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blame the profit motive instead of blaming us for not being more restraint. >> cry because making us fat and sick. i think be honest with us of what is in the food. government has to make sure everything is safe and we have to be held accountable. i will take out, get fat, you're going to buy my dialysis and scooter. dennis: the scooter thing is a real problem. it means you just don't have to walk when you should really be walking. seems like you're doing a really good job, thank you for being with us tonight. later in the show, new evidence shows some of all streets biggest banks are jac jacking ue price of aluminum cans and beers, but can any really corner
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the market on a global commodity? and next, how do you do that? we will tell you how you can rent your vacation home without riling the tax man. coming up. ♪ [ lighter flicking ] [ male announcer ] you've reached the age where giving up isn'who you are. ♪ this is the age of knowing how to make things happen. so, why let erectile dysfunction get in your way? talk to your doctor about viagra. 20 million men already have. ask your doctor if your heart is healthy enough for sex. do not take viagra if you take nitres for chest pain; it may cause an unsafe drop in blood preure. side effects include headache, flushing, upset stomach, and abnormal vision. to avoid long-term injury, seek immediate medical help for an erection lasting more than four hours.
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dennis: renting out your vacation home without paying up to the tax man. how do you do that? details in 60 seconds.
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dennis: the summer may be halfway over, or maybe not, but not too late to rent out your home tax free.
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how do you do that? thank you for being with us. i thought if you have a home and rent it out, that is it, you have to declare it as income. >> if you rent your home for less than 15 days the irs says you don't have to include it again. you cannot deduct any expenses. less than 15 days it did not have to report any income. dennis: versus if i do more than 15 days now i have to declare it as income. 39.6% as regular income? >> reported on your income. and then you offset that any deductions you might have relative to the rental itself, and allocate your expenses between personal use and your rental. the allocated between personal use on your itemized deductions,
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and the remaining amounts offset rental income. you can't have a loss created, cap take more deduccions. dennis: don't i get better cash flow benefits to avoid paying taxes on it? >> appreciate the property on the income basis. it will depend on how much money thtimeyou rent your property. one/six of that year is allocated to rental purposes and you can depreciate your value. dennis: congres congresses despy searching for ways to raise money and soak the rich. deductions are kind of coming up, the first target may be
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allowed on a second home. >> it is tapped at $1.1 million. that is an area they are focusing on reducing the mortgage interest deduction amount so interest on the loan may be 500,000 rather than 1.1 million. capping how much of a deduction at what rate you might be able to get the deduction. there has been proposals to cap the mortgage interest at 28% so you will only benefit even though you pay taxes at 39.6%. dennis: now, if i rent a second home and i want to rent that baby out at a profit, do i have to declare that as income? >> that is a good question. in that case you have to see if it allows for a sub rent.
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i would say yes, if you're receiving income, i would say you report that as income offset by the expense for paying your landlord. dennis: i am renting from someone and i will not be renting it out to anyone else in case anybody else is watching. time now for a look at stories you are clicking on tonight on foxbusiness.com. it'll directiin, stock market flip between gains and losses and managed in record territory anyway. and nat gas blowout today forcing evacuations of 47s aboa, authorities saying natural gas, not oil is flowing uncontrollably from the rig.
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at least it ain't dirty. detroit may be bankrupt but by continuing to prosper. hiring 3000 salaried workers this year as the demand for new vehicle grows. sales up through june. starbucks getting into the greek yogurt craze. teaming up with an expert. the financial terms a deal were not disclosed. those are some of the hot stories right now on foxbusiness.com. coming up, the fight over food stamps giving another example of waste, fraud and abuse in the system. what has happened to apple? making less money, the stock on a downward spiral. should you still be bullish on apple? is it time to take another look? when we made o commitment to the gulf, bp had two goals:
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♪ >> are our fox business studios in new york, here again is it. ♪ dennis: apple's shines again. a lackluster quarter. handley greeting estimates. even with more than 31 million iphone sold, year-over-year growth has fallen. good news and bad news. senior equity strategist. thank you for being with us. what do you think about the >> it was next. remember, you have to put this in the context. there were some mornings. the ipad sales were light. but the guidance was also weak. if the stock was up because expectations have come down so
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bad, of having a tough time. at the company has failed to innovate or the past year-and-a-half. we are still hoping for some new products and i just read this as everything is copacetic, everything is okay. looking in the future, i am concerned, and i do think that apple could rise. i don't think it goes much higher. dennis: the stock popped nicely after hours. up three and a half percent. >> yes. trading just below 440. apple is fighting a losing battle. the iphone is still there big baby. that is there golden child. remember, all smart phone sales have been a slowing because not as many people are upgrading their phones. the average sale price has come down dramatically and there are expected to keep coming down. the question is, can apple, but the product that will knock our
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socks off that will be, this is completely different than anything we're used to, just like they did with the iphone. the answer i have is probably not. again, the question still remains which is why the stock is higher. dennis: you talked about something that has been bothering me. only in recent weeks i have heard people in the business start to talk about smart phone business the way we were talking about laptops. it's just not a growth market anymore. i am shocked at how quickly investors are taking on this attitude of the smart phone market is not high growth. a the only untapped market left is developing world where they have to do jeep phones that have much lower profit margins have. samsung is much better than apple as competing at the cheap end of the market. >> they are. don't forget nokia. the lost name in the business which at one time was the king of all phones. they are good. and apple, remember, people love
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them because they make good quality stuff. big, fat margins which is why we buy their stock. go into their stores and everything is high-end. i don't believe that they will be able to compete with the likes of samsung or nokia. even the likes of blackberry which is on the verge of bankruptcy. dennis: if i at the buzzer. you don't think apple will be able to compete. okay. you are disqualified. not even close. nokia is dead. two points, one about love and the other as product cycles. apple is a victim of bad timing. people are not buying quite as many i funds because they know and a few months they're coming out with anyone. love, you know, apple tin years ago was somewhere around two or 3 percent of the value of text -- text doc. that win up to 17 percent and it felt like a certain amount of that was not so much based on pnc's earnings but investors
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fell out of love. back? >> i think steve jobs was the originator and the perpetrator of that love. sounding sort of weird, but you look at what happened from 86 to 97 when steve jobs first lets the company. they fell out of favor in this still innovated. steve was a magician. the way he presented the product to the people, the way he created this bond. while coke is a fantastic gentleman, i don't think that he is bringing that. again, if they bring in a tremendous product and bylaws was something magical, that can come back. but you love the man and you love this creativity. he was behind the company. was he that drove it. dennis: i saw something yesterday. twenty-seven of 30 have a downgrading for a hold or sell which alone could be a good and that says apple will come back.
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the old contrarian indicator. thank you. appreciate it. and now on to goldman making you pay more for beer and soda. that is what some in congress and the national media think. the beverage companies are saying it. goldman was manipulating the price of aluminum, adding fractions of a penny to the cost . ultimately costing consumers billions of dollars. it is only going to cost $0.2 for all the beer you can drink in the year. new york times, go after that. taking this one lying down. i love this. they keep smacking back, and it is blasting back at those accusations. rich edson joins us now with the latest. >> reporter: good afternoon. defending itself, still the beverage companies say bank-owned warehouses are slowing aluminum deliveries to turn a profit. subsidiaries control a network
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of aluminum warehouses. cutting back deliveries to increase storage fees. brewers say the banks are cleaning up all they are stuck paying more. 60 percent of its beer goes into aluminum cans. the company says the increased aluminum price is costing its customers. >> the increased cost that we encourage takes away from innovation and new products, other qualities. >> aluminum costs are forcing them to delay facility upgrades. they deny the existence of any scheme. they only control 5% of the aluminum market. they delivered aluminum prices. the warehousing system is not
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driving up the price of aluminum. whether the government should permit banks. currently they are allowed to and the government regulates. dennis: thank you very much. my vote on that is that goldman is right and government guys are wrong. that is my personal view. with the possibility of beer prices going up which states could be the most effective? which states during the most beer. that list is tonight's top five. number five, wisconsin, a quarter of adults are considered binge drinkers in this state, the highest in the country. the state tax is $0.6 per gallon. the second lowest. number four, a south dakota. despite having only jamborees in the state residence during
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nearly 39 gallons. the number three, montana, contributing over one-half percent to the state gdp and supported more than 5,000 jobs.@ no figures are not lost productivity from hangovers. residence during nearly 44 gallons and don't have to pay a direct tax on beer. wholesales and burst pay that tax. and the number one state that drinks the most beer is north dakota. residents trying nearly 46 gallons with only ffur breweries in the entire state. the second fewest in the entire nation. do something about that. other states include nevada and vermont. and when we come back, if netflix is really as good as everyone says it is, what about the stock? is it time to invest? we are looking out for you and your money next. ♪ peace of mind is important when you're running a successful busine.
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dennis: is netflix over? some analysts say the company's stock has gone too high and too fast. shareholders may be in for a nasty shock. one of the better performers in the market of more than two under%. the stock was a hit today, down more -- down almost 5%. now we will talk to rich, one of the analysts who says watch up below. the painful story because you had the nerve, the courage to come out and say that apple basically is a short and as a price target of 80. netflix, i'm sorry. now $250 even after falling 5%. stick with that $80 price target. >> a reasonable price than you would pay for a stock, some
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estimates on wall street are much higher than our $4, but here is the thing. 2017 is a long time away and we have really negative body language. dennis: tell us about the body language. what would you see or hear? >> first of all, on page four of their ledger they said that they are going to change the amortization schedule on their original content costs which means that content that they only have one and two-year contracts on that there amortizing ver four years is going to bring back to two years which means the content cost on that particular piece hazy since lead double which compresses the earnings. dennis: that will let the earnings. >> yes,. dennis: you have all read. a promised hollywood close to 4 billion. a couple billion more. how is it they are allowed to do
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that and others don't? >> well, every media company will amortize contents. it is just, this is taken to an extreme level. dennis: in terms of what they're pushing off the balance sheet. other cryptic line is a lot of buzz for the original programs, house of cards. nine emmy nominations. they also did arrested development. did not get an emmy for best comedy, but they say that an established sure that you bring back helps there on like a brand new show. >> most of their effort is for brand new original production, almost a minute that house of cards had no impact in boosting. >> we think it had about 500,000 subscriber impact verses the prior quarter. we think that arrested development had a one-and-a-half
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million impact to the positive. going down. the business outside of all of this type is going down. why? is going down for a couple of reasons. a, anneals like you're in turns. every millennial that i ask does not have their own netflix account. they can borrow. there are squatting. second point is now we're starting to see the emergence of netflix user password generators . to modern 50,000 or you can sign up for this now where and kate netflix, basically -- to get you in free. gerri: how much is this costing off of the revenue line? >> they don't give you user estimates. you cannot triangulate what is going on. dennis: it is kind of problem.
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>> growing affection -- fridge. -- and friction. dennis: the stock has gone up. they are all latter-day hbo. >> they are buying it, but let's put it this way. it took fox and hbo about 20 years to get to this point. rita hastings thinks he will get to 90 million subscribers at the end game. add 90 million at the rate that we got last quarter, 630,000, it will take in 20 years. so investors are wait too optimistic about the subscriber numbers. this is a company that is going down the chain. 22% margin, international, he will have less margin. dennis: i still don't understand
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why this streaming internet business is lower profit than dvd. the physical dvd, i don't get. >> and not paying for just the content. dennis: that you. thank you for being with us. stay with that $80 price target. you are brave. still to come, outrage over food stamps as a new report says many are using government aid to buy food and ship it back on to other countries. we have a debate coming up after the break. ♪
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dennis: shipping taxpayer funded groceries overseas. the new report says food stamps are being used for people living in the caribbean.
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♪ dennis: in food stamp nation. according to the new york post recipients are using food stamps to buy groceries and ship them to relatives overseas. big barrels of the grocery stores. here to weigh in on this, diana ross, senior fellow for the manhattan institute and joe berg is with us, executive director of the new york city coalition against tiger. why don't you start us off. anytime a government money floods into an area, it seems like fraud source along with spending. president obama increase spending almmst 50 percent in his first year in office. >> he really did. he expanded eligibility, expanded the amount. whereas i think it is making a great sacrifice, they sit down tohe ciban swshat b of rllne the odtas. and wte shold d i iol the proam t the state te
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the od smp mey, gew yo is parin new erseyts shar cifornia its share. get them to administer the program because that way they will have an incentive to make sure that just the neediest get it. other programs to help people i? the fact that they are shipping this food overseas is a sign that they obviously don't need it on. >> notes. my staff proved that that story is absolutely fabricated. a member of my staff that the managers on record. the new york post did not "a single person by name, and the tree to the matter is even the stories of the departed and the barrels over a month. unless members of the store staff for actually following people home and hanging out in their kitchen over a few weeks or months you would never know. the story said that they spend $70 to ship overseas. most low-income people don't have that. the program has 1 percent fraud. increased dramatically under
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president bush. phar-mor fraud on wall street. phar-mor fraud in defense contracting, 2% in the united states as a representative. dennis: a couple of things. they did not "anyone directly, i don't think that proves the case. why did you think that the supermarket to buy supermarkets is selling 55-gallon barrels? not to serve their customers who are suffering the meant shipping amount. >> no. low-income more middle-income and grim new yorkers are sometimes shipping through to the home nations, but they are not using food stamp benefits to do it. dennis: on food stamps. >> prove that the people doing in our on food stamps. >> i will go ahead if he will let me. quite apart from that. we have seen food stamps used decline over time during the recovery. this one we have not seen.
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we have 107 million americans on different kinds of programs. this is part two much. this is clearly not being directed in the correct way. we need to have states making sure of eligibility, setting their own requirements and telling them, it is their residents. they get to keep it for other things. dennis: frankly, i am astounded that there is only 1% front-end to stamps. my neighbors i know. the storm manager in my neighborhood devises people on how to get the highest and that they can. running radio ads saying it is so easy to get on food stamps. how can you say there is only 1% from? >> the inspector general of the u.s. to part of agriculture was appointed by president, republicans have hearings. dennis: when would you trust anyone appointed by president bush? >> a different number. that is what the official invested is a pound. house republicans at a hearing. it did not find a single eetra
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interest. the state should have some flexibility. the house republicans, the first farm bill which failed actually took away flexibility from states, took away the ability of government to allow people to develop a efforts to move out of poverty. >> when the obama administration comes in, 47 percent and increases the dollar 115 percent in four years but the number of people getting the money, 68%. do you think that we have a 47% interest in need in a single year? >> yes. i find it very curious. they want to take life preservers a life of a drowning. dennis: i find it unbelievable that anyone would think aa47% increase in spending, 1 percent fraud. that is just not -- there is no way it is true. we after rapid.
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thank you for being with us. sorry. we will be right back. >> of me ask you one honest question. dennis: we have to go. ♪ ♪ ♪ ♪ [ male announcer ] if you can't stand the heat, get off the test track. get the mercedes-bz you've been burning for at the summ event, going on no your authorized merces-benz deer.
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dennis: the federal court overseeing the bankruptcy case said the first-ever tomorrow. after the sears and to stop halting plans to restructure. millions of dollars in debt and liabilities. it should workers in bankruptcy is a pension. here's what some of your posting. there would be a disaster since most of plan their lives accordingly and are too old to@ start over. time to sell off assets, change current contracts and that the cities of red. michael disagrees. i think whoever bankrupted the cities, they are responsible. the people should not lose their pensions. the responsible party should be investigated. we also ask the this on gerriwillis.com. 68 percent said yes. government workers to lose the pension.
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32 percent said no. the sure to log on to gerriwillis.com for our on-line question every weekday. does it for tonight and "the willis report." thank you for joining us. have a great night. breezy being here. ♪ lou: good evening. thank you for being with us. america creating new enemies in the middle east. kiki -- key congressional into teeseven reignited the of obama administration efforts to arm syrian rebels fighting the regime. the obama administration has been widely criticized for is the from behind policies in libya, egypt, afghanistan, now providing small arms and ammunition to some of that 1200 different rebel groups that have been identified in syria. we don't know which groups the united states will arm, but we do know -- excuse me. we do know groups and elements of the opposition you d

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