animal planet. who is the one in your hand now? >> this is a snapping turtle. a common snapping turtle. i'm going to kiss it for you on the show. >> yes, you are stick around. ernie is going to kis kiss the turtle. >> jobs rocked and stocks shocked. june starting where may left off with a huge selloff. last month, the dow posting its worst monthly loss in two years. and job growth in may the worst in a year. now, someone here seas it is about about to get a whole lot worse. but why? hi, i'm brenda buttner. this is "bulls and bears." the bulls and bears this week gary b. smith, tobin smith, jonas farris along with mike camp. and former dnc deputy finance director david mercer. welcome to everybody. jim, bad and getting worse? >> i think it is getting worse. you have got consumer incomes

that have flat lined over the last several months. consumer spending flat lined and then we look at manufacturing reports out of dallas, out of chicago and the esm number on friday all suggests that the economy that was firing on maybe five cylinders is now only firing on two or three cylinders. beyond that we have political uncertainty and the fiscal cliff that leaves a lot of employers worried about what is ahead and when you are wore relationshipped about what is ahead that means no jobs. >> david, we are seeing private sector is hiring and government is bullin pulling back. that is a good trend, isn't it? >> a very good trend. and i'm glad you pointed out and having 25 months of private sector job growth and creation why is why we should not let one month while disappointing albeit. >> more than one month. >> more than one month. >> teak it as a warning rather than letting the 25 months be overshadowed by one month.

and we need to address the turn around in making it permanent. we need to act on the president's jobs bill from september when first put it forth. we need to help states prevent further firings of teachers and firefighters and the like. and we need to try as the president was doing today to get us in a mode where we are helping veterans find jobs that are coming back from iraq and afghanistan. >> let's stick to the economy high. toby, you are not. >> that is the economy. political economy. >> first off, david, just a little economic thing. seven months are declining unemployment is more than just a blip. that is a trend. the reason it is happening is simple. we have an economy that is running out of steam and it is running out of steam because job creation in this economy is not from government. it is from the private sector. the job machine has always been from the private sector and the

private sector has said given all of the things they have to look at and deal with and are uncertain including on top of which this government who is going to fall off a cliff. >> and in the last three years we had more private sector job growth and less public sector. we lost about 600,000 jobs. >> but david, 'cus excuse me. he have got to get to somebody else now. gary b. going to get better or get worse? a bull are or bear on the economy? >> let me break it down, brenda, into two things. first of all, i'm a little bearish. i kind of agree with jim's viewpoints. i will add in i think the government regardless of what david says has done a horrible job managing the economy. not that they should be managing the economy. but what they have been doing is the wrong thing. i'm bearish on the economy. that is a different question as to whether i'm bearish or bull esche on the stock market. i think the market gets ahead of itself.

it immediately goes from feeling pretty good to ar armageddon and everything will end tomorrow. that is why i think it is time buy rather than zel sell althoh i'm skeptical about the economy. >> jonas, are we going to get better or worse going forward? >> i think we going to flat line and that is better than going down. i think there is a reason why. two drags in the economy. the rest of the world is slowing down. that is a drag because we have to export to those countries as well. that is hurting. and state and local governments are shrinking. that is going to make unemployment rates high for a long time and hurt gdp for a long time. that is not a permanent problem by the way in the local level. we have the underlying economy that has strength and a tech sector robust and growing. other economies do not have that. all the great companies in the last decade have been created

here pretty much and now we will keep our head above water probably out of recession and not going to be off to the races with everybody else going to the toilet but i think we will be able to flat line and our stock market will ten to outperform foreign markets even on the way down you. it will fall less basically. >> going toward what is the most positive thing you see about the economy? what is going to turn the recovery around? what is going to really make it go forward? >> i think again as i had mentioned that we have to look for are action by congress on a lot of different items. >> let's not talk about action by congress. >> i will say this -- >> he will say this. >> let's look at what is in the economy now. >> i will say gas prices where are everybody was na ysaying that gas prices are going to drive us over the cliff that is trending downward. >> they are still higher than they were a year ago. >> still less man show were two

months ago. >> and politics is the problem. we have a fiscal cliff that nobody know hass is going to happen by the end of the year and that creates inaction. hot only that if we get bad problems out of europe that start to fester inner bank lending is going to freeze up and that is going to translatino over here. we have a lot of issues in front of us. i think it will be growth but very tepid. >> i agree with you on that. >> toby, last may we had a rough team last may. >> absolutely. >> europe was the issue again and then we came back. what is to say that we won't again? >> exactly. >> two positive things coming here. one is if we get more clare etan business people the jobs creators get some clarity. forget about europe. think about some policy changes et cetera i think we can get a positive note. are we going to get that in the next three or four months? i don't think so. the stock markets and economies are two separate things. the stock market got way ahead of where the economy was and that was silly and this is a

natural correction. the wigger issue is we still have -- the bigger issue is we still have 700,000 jobs we can't fill in the united states. some jobs being created. the energy economy. the innovation and energy economy are doing just fine. >> let me kind of give the flip side. david made, i know this is a shock. he made one good point and that was about the gas prices. by the way i'm waiting for obama to bring in the speculators and ask them. >> where are they? >> stick to your point. >> we should -- >> stick to the point. >> the point is everyone thought gas prices are going to go to $5. now, they might go to $. the same rationale that everyone things nothing good can come of greece and spain and yet all it takes is one good thing to turn arounded and people to say oh, my gosh it is not as bad as we thought it going to be and all of a sudden things get rolling and momentum going and all of a sudden we see the dow moving back up again.

>> jonas, you think we are going to flat line but there are two issues that make people feel richer and that a it the stock market and the home market. neither one of those seems to be picking up so where does that leave us? >> the stock market is still a lot higher than it was a few years guy. because of the recent crisis interest rates have plunged and now a mortgage under 3% interest rates. >> if you can get a mortgage and qualify. >> a lot of people can refi and that is money in the economy and a lot of corporations can borrow at even lower rates because of the falling rates and they will be more profitable and companies still can raise a lot of startup capital. the months of private sector juice the economy and as longso as that is there we are not going to fall into some debt spiral that other countries may. i think we willle keep our head above water. >> jim? >> you want me to react to that? okay. here is the problem. here is problem.

all of these things have happened over and again the last two years. we we ran out of stimulus in 2010 the market sold off and then we started going back up. when we ran out of stimulus in 2011 the same thing happened. the thing is, though, the federal reserve board is not talking about stimulus now. either is the ecb and we are running into a debt wall. now, these debt walls have -- we kicked the cans down year after year after year but now we have got this giant aluminum death spiral waiting and it is visible and we will see harsh defaults. that is deflationary and one reason prices are going down and that will impact the stock market. >> teared me right up. >> thatle be the last word. thanks, gees. with hundreds of thousands of americans losing their unextended unemployment benefits this year someone on the cavuto gang says that could be the best way to bring jobs back. that it tough love message at the bottom of the hour.

first all eyes on the badger state this tuesday and the underlying issue is bigger than you think. why someone here is saying a vote to recall this guy could be a vote against the recovery for the entire country. for the entire country. he will explain. you decide. and investing in communities across the country. from helping to revitalize a neighborhood in brooklyn... financing industries that are creating jobs in boston... providing funding for the expansion of a local business serving a diverse seattle community... and lending to ensure a north texas hospital continues to deliver quality care. because the more we can do in local neighborhoods and communities, the more we can help make opportunity possible.

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[ rodger ] at scottrade, seven dollar trades are just the start. our teams have the information you want when you need it. it's anothereason more investors are saying... [ all ] i'm with scottrade. this is a fox news alert. i'm kelly wright. major developments? egypt. ousted president hosni mubarak sentenced to life in prison today for the killing of protesters during last year's uprising. state media also reporting that 84-year-old suffered some sort of health crisis while being transported to a prison hospital in cairo. meanwhile, mubarak's two sons were' quitted of similar charges sparking this courtroom scuffle that you are looking at. and new reports of a u.s. missile strike in pakistan. it happened in the country's northwest. intelligence officials there saying a u.s. drone hit a motorcycle killing two suspected militants. the fifth strike in less than

two weeks despite protests over the u.s. campaign. the strikes further complicating negotiations over supply routes fors you ply nato and u.s. troops in afghanistan. i'm kelly wright. we take you now back to "bulls and bears." >> we are just three days away from the wisconsin recall election. republican governor scott walker feeing for his job. since his bold fiscal policies took effect, the badger state is rebounding. unmany ployment falling. personal income increasing and tax revenue rising. without tax hikes and toby says that is why every taxpayer should hope walker wins on tuesday. explain yourself, toby? >> look. this is a blueprint for success. and to deny that is really as irrational and anything you have seen. you want this to win. you want to vote for america and you want to vote for a

reasonable economic plan that is prove ton work. not i think it is going to work. maybe it is going to work. it is working. to kick it guy out is a preamble to november and i don't want to go down that path. >> david, what to you think of that? >> i think it is a total phoney and fabricated store arery and and! anecdote and has nothing to do with reality. wisconsin is ranked 50th among allstates in terms of the recovery. all other states, ohio and michigan or whatever are seeing an uptick and wisconsin is at the bottom. unless you are looking to be part of the race to the bottom economically. >> they were before. relative to what? >> wiz as a model going forward and i think he will suffer for it and that it tuesday. >> gary, he has turned things around, are hasn't he? >> where are the numbers he has turned things around? >> we will allow gary to respond. >> job numbers are up. tax revenue is up.

personal income is up. david is right, wisconsin ranks 50th but toby pointed out and the fact is they ranked 50th before he started. the same argument that da david and the left would make for are obama is what is happening with the trend and the trend is turning around in all of the metrics that matter. so what the real question is. >> come on, gary, where are you geting that information? >> you got to let me finish. >> hold on. >> what we are really deciding here is free market versus managed economy. governor walker basically is opposed be unions. what the unions want is to manage the economy. it works better for them. what governor walker wants is more of a free market. what happened with the freer market? as we pointed out 30 seconds guy all the metrics are starting to turn in the free market's favor. >> i got to get everybody in here but then i will give you a chance to respond, david. jonas, go ahead. >> every state in the union pretty much has a better employment picture and tax revenue picture are and personal income picture than they had two years ago. it is not just, ohio.

i will say that the movements. >> wisconsin. >> it is going on in new york, too, by democrats by cuomo is good in the long run. i don't want to overdo it in the short run. you are talking about benefits which need to be cut but not in the sluggish economy. the government can borrow for ten years. i think maybe in two or three years we drill down and wipe the problem out. right now let them take the overpayment. >> there is never a good time. the politicians are never going to say now is a good time to cut benefits. hey, the economy is good let's cut benefits. i think garry's point is right. this is about free markets versus managed economies. about harsh realities of a tough economy versus the smoke and mirrors of populist politics. >> i don't know why they are withing a recall. >> because he made the hard

decisions. >> i want to say the smoke and mirrors is scott walker. he promised 250,000 jobs in creation and he has lost 60,000 and he couldn't even get and it has not been verified the new numbers he has put out which are fabricated just on the eve of election and to have us debating it it when in fact he has had job losses. he is no paradigm for us going forward. >> i think we proved that some of that was not true, david but i had to give you a fay that will chance there. >> where is the proof, be brenda, come on? >> you can hear from governor walker as he joins neil nor the special recall coverage. then at a new time on prime time on the fox business network at 8:00 p.m. eastern. up here next, everyone is weighting for the supreme court to issue its verdict on the healthcare law this month. but you did small businesses just issue the verdict that really counts?

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is without equal. begin your legacy, get an auto insurance quote. usaa. we know what it means to serve. coming up, small versus supreme. which one just gave its verdict on the healthcare law. and we some say it is the only

>> the healthcare law verdict is in. not from the supreme court but from small businesses. the government accountability office saying just 170,000 small business owners out of 4 million have claimed the health insurance tax credit. and gary b. you say that is the only verdict that should matter. >> exactly, brenda. once again, the government just doesn't understand business. they don't understand the free

market. why do small businesses not want this basically free money? because in many cases it costs more for them to hire an accountant to figure it out than the tax credit they get. not only that, brenda, the rules to get it are so onerous. ten or fewer employees and average making less than $25,000. i'm not sure your local coffee shop would even qualify. i'm surprised at the number that have taken the credit is as high as it is. >> why do you think so few are taking advantage of this? indicatek the numbers end kate that promoting it and getting the word out why is why i am glad we are covering this subject. i prefer a more encouraging or positive takeaway which is to say to small businesses listening now get your tax credit and be competitive because others are getting it and why leave that cost savings on the table especially when your costs per insured employee

is 18% more than what a larger firm gets. get in the game. don't take our word for it. go and investigate and get that tax credit. >> i'm fairly sure that you have not run a small business. >> i have run a small business and do. so don't disqualify me without any informatio information to e contrary. >> most people have disregarded this because a, it is so complex it makes no sense. b, to be able to take the tax credit you spend months of private sector any you could get a better return on elsewhere. i don't care whether it was not advertised and communicated well. it is an insane law and shows how insane the whole 2800-pages of the thing are too. i'm sorry, i got to get everybody in. jonas, should it actually be easy to get a tax credit? >> everyone is acting like they are mad it is not more lucrative and more costly to taxpayers. the reason is your local coffee bar is probably a starbucks or

dunkin donuts. very few businesses qualify probably less than we thought which means it will cost taxpayers less than they think. >> jim, last word mere. >> there is so many clauses in there that indicate that crafters of this thing don't really understand small business. small businesses and most of me clients are small businesses they are family oriented. they are run by families and you are disqualifying all of them. it is just written by somebody up in washington or some where that just does not understand the nuances of owning a small business and gary is right you is to hire an accountant or are lawyer which you have to do anyway because of the complicated tax code written by the saad or something leak that. >> you want more businesses to get this thing is what you are saying. >> all right, guys that has got to be it. thank you all and thank you to david for joining us. we appreciate it. >> le sure to be with you. have a good weekend.

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predictions. gary b you are up. >> i will go contrarian. i think gas prices turn back up. buy exxon right now. up 20% by the end of the year. >> i like gold. they will print. i don't know if it is tomorrow or six months from now. the wrong medicine but they keep applying it. i look the gold etf. >> the federal reserve is going to present you mean. >> jonas, bull or bear? >> super bear. >> oil down 20% in the recent crisis. great for airlines the biggest users of oil. fidelity, select, air transportation about 25% in the year. >> jim, ball or bear. >> i don't think so. we have consumers running out of m