>> and your opinion. >> i like mcdonald's the next three or four months to many could back and pay their taxes. >> that's it. know the because of their hamburgers. jonas, bull or bear. >> bear. >> okay. and cavuto on business next. ♪ >> tax hikes? we don't need your stinking tax hikes. hello i'm charles payne in for neil cavuto. the main message for washington is getting louder and georgia voters saying no to a state-wide sales tax increase and in texas, republican voters saying yes for the tea party candidate for senate. this as more american companies are voting with cash, spending more on stock buybacks and takeovers, amid looming tax hikes. if the writing is on the wall. we'll be seeing, and read it. to ben stein, dagen mcdowell.

will d.c. see the writing on the wall? >> i think it has. if you think about it, president obama has not raised taxes yet on the income. he's backed off that income, going back to the clinton tax rates. and i will say this, and when you look at what people want, they-- people obviously hate tax increases, but i think the message and i've not seen the definitive poll on this. when you look at it it's nor nuanced. i think a lot of people wouldn't mind paying higher taxes if at least they made a real effort to cut the size of government. and then, people would say, no problem, but they never do. >> forget about polls, we are seeing people vote. we're seeing votes in california of all places and some of the things i've talked about and seeing evidence that people are flatley saying, no tax hikes period. >> unformer the votes aren't happening down in washington, where there's so much uncertainty about the future of tax rates and you're talking about how corporations behave. do you know how abysmal, the alternative minimum tax and potentially could hit millions and millions of more people

and the tax expired for this year at the end of last year and technically congress has to get on board with just that. and then on top, the bush tax cuts start expiring and people do not want their taxes to go up, but the bigger question, how will the next leader of this country fix our fiscal situation? >> adam, does it come down to that? ultimately, listen, i know that this is something, a center piece of president obama's reelection run, all about taxing the rich and those who don't pay their fair share, but do you think, first of all, that's the solution? and do you think it's going to resonate on main street at the end of the day? >> well, one of the issues of main street is, are these very soft, sort of large issues that you raised, people don't like, they think there's too much government. he think this there's too much-- they don't want it pay taxes. on the other side of that, inequality, the rich don't pay their fair share and so on. i think what you saw in georgia, for example, if you

ask people do you want your taxes raised, they're going to say no. a good example why direct democracy is a terrible idea. we want our representatives to make the decision and say something good about the tea party. these people are running on essentially what is an irresponsible platform. >> that's good? >> and-- i waited to see if you would say something bad. >> guess what? now they'll have the opportunity to govern and face the problems head on and i commend them. this is what they're running on and have a really hard time governing. >> ben, listen, governing, that's after the election, leading up to the election, it's about the tax. and red states and blue states, no more tax increases. >> we have an incredibly fiscal problem in this country. will laffer, a pleasant guy, started us down the road with

the idea you can cut taxes and raise more revenues, that turned out to be nonsense, didn't work for reagan or anyone else, it's not going to work now. we're going to have to raise taxes or dramatically cut spending, phenomenal unbelievable waste in government spending, even if they cut out the waste, it wouldn't be enough. >> you and i both know that art laffer and one day, if you duke it out, if you face facts. let's talk about with respect to taxes, lowering or raising them, if spending isn't cut, it's a nonevent. it doesn't matter, and isn't the central issue, main street gets it and washington doesn't. it's not about higher taxes, it's about washington being responsible. there isn't enough discreti discretionary spending, medicare, military spending, military pensions, government pensions, there's not enough left, have to pay taxes. >> and we should point out

that revenues went up after the reagan-- >> sure, sure, charlie, he raised taxes from 82 tell his last month in office, and a one year-- >> we can debate came first, did the revenues increase because they raised taxes, or the revenues-- >> there's no-- >>en charles. >> hold on a second. get to charlie. and one thing that we do know-- >> we do know that the nation was on a strong spring of amazing economic prosperity. year after year after year after year, reagan cut taxes. that's not true, that's simply not try. >> 90's were horrible. the '80s were fine. the first couple of years of reagan were terrible. carter's d you want. nonsense, and by the way, interest rates were sky high, you've heard of the thing

called the paul voelker and-- >> and let's talk about right now, let's talk about the idea though that americans, charlie, are rejecting this notion that the average person out there does not think that raising taxes-- >> they are, because they don't like the fact -- like i said, i believe that americans wouldn't mind paying higher taxes, clearly, i wouldn't, we don't see fiscal restraint out of washington and why should we raise taxes when the problem is cutting the size of government and one other thing, adam is completely wrong. >> oh, bring adam back in. >> i don't want my taxes to go up. i'm willing to give up something in terms of spending cuts, but that's the-- this country, you want the size of government, and i'm talking about federal spending in terms of the size of our economy, if you want it back down to where it's been historically. >> you're not listening to charles. you're going to have to give up something. and very often it turns to people want to cut spending

until it involves something-- >> and so the ability in washington they will agree to more taxes and adam, you were wrong about the tea party. they have no problem governing, it's the status quo which has a problem. >> one second, guys, i don't want to get off the subject here, but adam, back to the notion of raising taxes, for me it seems more of a political ploy and create this ground swell of envy, american versus american and it's not true economic policy and i can't see where it's worked. it certainly hasn't worked in europe. >> well, what we have are citizens who are deluding themselves that georgia situation is a perfect example. republican politicians said we need this money so you're going to have smooth roads and the taxpayers said no, because they asked them rather than doing what was right. so, we're going to have a great opportunity to-- >> then they don't have to bitch and moan about the bad roads then, their choice. but it's not good government and-- >> you don't live there. >> isn't that what we're

supposed to have representative government. >> and this isn't representative government. >> you know what you want, you want some bureaucrat in washington telling they have to have smoot roads and that's exactly what you just said. >> by the way, adam. we use smooth roads, police, firemen, we use the key things all the time to justify the money that gushes into government coffers that really a lot is wasted. let's be honest, a lot is rejected to crony and paying off political bunglers. don't you think that america has wised up to that. >> at the local level. people have a tremendous amount of control over how their money is spent. if there's fraud in your town. you root out the fraud, you don't say i want potholes. >> let's leave is there, guys, fantastic debate. appreciate it. the dedemocrat says america needs to be more like china and spend more on roads and bridges. the forbes gang, will the road plan is a recovery on disasterment and do you think

it never rains in southern california? think again. san bernardino, they're drowning in debt, declaring bankruptcy. and sounds bad. someone here says it's the best news for american taxpayers. ♪ ♪ ♪ i want to go ♪ i want to win [ breathes deeply ] ♪ this is where the dream begins ♪ ♪ i want to grow ♪ i want to try ♪ i can almost touch the sky [ male announcer ] even the planet has an olympic dream. dow is proud to support that dream by helping provide greener, more sustainable solutions from the olympic village to the stadium. solutionism. the new optimism.™ ♪ this dream

and i thought "i can't do this, it's just too hard." then there was a moment. when i decided to find a way to keep going. go for olympic gold and go to college too. [ male announcer ] every day we help students earn their bachelor's or master's degree for tomorrow's careers. this is your moment. let nothing stand in your way. devry university, proud to support the education of our u.s. olympic team.

trouble with a car insurance claim. [ voice of dennis ] switch to allstate. thr claim service is so good, now it's guaranteed. [ normal voice ] so i can trust '. unlike randy. are you in good hands?

>> live from america's news headquarters, i'm heather childers. new violence in syria's largest city, rebel forces attacked a state-run broadcasting business toed and trying to seize control. fighters had to withdraw because of government sniper fire and shelling. at least 45 people killed in new violence today.

turning to russia for economic aid as sanks take hold. the national guard helping to fight wildfires, burning fires and forcing hundreds from the home. oklahoma city deputies now looking into reports that someone in a pickup truck threw out newspapers that had been set on fire. so far, no reports of injuries. i'm heather childers. now back to cavuto on business and for the latest headlines, log on to foxnews.com. >> another u.s. city is growing broke. this time it's san bernardino, the beautiful city known for the mountains and a mountain of debt. and this municipality to file for bankruptcy since june, it sounds bad, but dagen, you said that going bust in this case is pretty good? >> you've got to do what it takes if you with a nt to get rid of the liabilities, if you

want to cut the payouts in retirement to workers, if you want to right yourself, if you've got to go bankrupt. so be it. it's a warning sign for municipalities across the country of the damage it can do. the people in the towns, maybe till keep people and keeping them from getting drunk on debt. nobody is scared about california one of the best performing municipal band categories in the country this year, second only to-- >> if this is good news, imagine, you get three limits and this is the third bankruptcy, but it's good news. do you agree with that? >> no, i will say this, that california, and muny bonds are doing good in california for technical reasons. >> what about bankruptcy. >> first of all, it's an untold damage done to that city for many, many years, and much higher interest rates and it's a cop-out. i really don't believe that these guys use bankruptcy as a way to cram down better terms with the unions.

if you look at, when was the last big bankruptcy before this, orange county? is orange county now, they want, they went bankrupt because like a swap deal. but the day you use that as an opportunity to reform government, no. >> all right, well, ben, this is your part, your neck of the woods. do you think that maybe this will be a great opportunity to finally go there and listen, these obligations, these promises that were made. they were too lavish, maybe this is the golden opportunity to fix it? >> well, it will be a great opportunity, but they're fot going to fix it, the public pension situation is out of control and will remain out of control. and the public sector unions are unbelievably strong in california and they will do some papering over here and there, as charlie gasperino said. and interest rates will soar for that municipality, but at the end of the day they will have the very high pensions. that's got to give nationally, the state level, the municipal level. it's a shame we love our firefighters, love our police,

we love our prosecutors and-- prosecutors we love the judges, we love everybody, but something's got to give. >> but that kind of sentimentality got the towns in the trouble in the first place because they promised the benefits. >> adam? >> just a sentimental guy. >> and first of all, good piece, an opinion piece by an official in usa today, pointed out there have been five municipal bankruptcy out of 50,000 municipalities and high expenses in the pension funds paying municipal workers is not the only cause of the problems. high jobless rates and falling real estate-- >> and let him jump in. >> because this is really-- >> go ahead, adam. get to the punch line. >> in mammoth lakes, it was a judgment and a lawsuit that caused them to go bankrupt. i'm only trying to point out. you want to make it seem like there's only--

>> and charlie gasperino's point, the main reason, the amazing obligations they can't meet them. >> and those obligation keep the taxes high. >> stockton, they're laying off policemen, there's a spike in crime, and if there's a main-- i need to find out which adam lashinsky rolls out here. one with the heart that cares about every cause or the financial genius, the one that understands that the math doesn't add up. >> there's nothing inaccurate what you're saying and i'm not saying this isn't a problem, i just repeat. five municipalities out of 50,000 is not -- it is not the worst crisis. >> you're right. i mean, we're talking about a minuscule amount of municipal bonds and the taxpayers get screwed a lot of ways because most hold those bonds and-- >> and you and i agree, by the way, charlie, is that a bankruptcy is not good for anybody, and point out-- >> adam, the reason why that

those, those municipalities have fiscal problems, the ones that do, take out the outliar, the guy that -- the one that screwed up on the deal. the reason why, taxes are high. businesses are fleeing california and all you have to do is look at-- >> taxes are high, dagen, i want to get back to you, taxes are high, the obligations, the housing market takes care of itself ultimately, but these obligations the ex-police chief who makes a quarter of a million dollars for the rest of the year after retiring at 54, that's something that can't be sustained. >> i don't think that bankruptcies are a cop-out. if you borrow too much money and can't meet the obligation, if you borrow too much-- >> they did not borrow too much. that's a small part of their payments. their costs are pensions and the size of government and not how much they borrowed. >> it's a cop-out every time a company goes bankrupt.

>> what a pain in the gas. surprises surging and washington doing nothing to help. could be getting relief now?

>> coming up, americans getting kicked in the gas again. and prices higher next month and fuel the pipeline debate all over again. sleep train's interest-free for 3 event ends sunday! it's your last chance to get 3 years interest-free financing on beautyrest black, stearns & foster, serta icomfort, even tempur-pedic. plus, get free delivery and sleep train's 100-day low price guarantee. but hurry, sleep train's interest-free for 3 event ends sunday! superior service, best selection, lowest price, guaranteed! ♪ sleep train ♪ your ticket to a better night's sleep ♪

>> well, so much for a gas pullback. this is more of a jump in the last decade. and canada selling oil to china who wants it. and ben, what do you make of this?

>> what do i make of the keystone pipeline veto. that's recollection, pandering to the most extreme environmental wing of the democratic party. of that being said, they will eventually build keystone, and a slightly different ruling, but whether or not that amount of oil will be enough to change the price of oil, it's dubious, i don't know that it's worked out the algorithm for that. and i don't know if it will change the price of oil. >> and i don't know if that will be a giant step in the right direction. we have to have $4 gasoline before they see the light? >> we don't want them to make a policy change between june and july. right now it's cheaper-- >> how about 2009 and 2011. >> you don't want to get too hysterical about the month any fluctuations.

fluctuations. >> we have the highest price ever in the history in this country for gasoline and right now the average roughly 3.61 gallon and that's higher on average than we've ever paid before. so if that alone is not a wakeup call then you are taking oxycontin and you are out of your mind. >> do you know that the only regressive tax that the liberals like is higher gas prices and that's a-- >> cigarette taxes are regressive and-- >> and a couple of them, but they love this one and they don't mind that the poor and working class of this country gets hosed because-- >> and what you're saying, charlie, they like environmentalists more than the average poor family in america. >> i believe that many environmentalists want higher unemployment and they don't care about-- >> dagen go ahead and defend higher gas taxes. >> and here is the bottom line, we're going to have gas prices, until we start drilling and keystone pipeline may move the dial a little

bit, but making a ton of progress. >> i think as a nation we would take oil from canada a very friendly neighbor versus, you look at syria, can we? and that could potentially destabilize iraq, which oil supplies are increasing there, and iran, what a potential for an oil shortage and that's what we have to be grappling with now. we need to get our ducks in a row and in place. but the facts are we're doing more domestic production with fracking, for example, and conservation and-- >> fracking will be the next target. if environmentalists don't like keystone pipeline, without a doubt they won't like fracking much longer. and i wouldn't be surprised if that was before the administration. >> and ben is sentimental.

>> my thanks to charlie and dagen. and up next, the economy, we know it's shaky, but our gang's stock picks, well, you know, they're always, always strong. [ male announcer ] at scottrade, we believe the more you know, the better you trade. so we have ongoing webinars and interactive learning, plus, in-branch seminars at over 500 locations, where our dedicated support teams help you know more so your money can do more. [ 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.

.

>> strong stocks and a shacky commerks adam? >> unite health care, charles. it is a big health insurance company and not expense and i have pays a dividend. it may go down but not a lot. >> ben, what do you think of that one? >> i love our frind in san francisco. i don't know what he knows that the market doesn't know. >> maybe a new health care law. what do you like, ben? >> no one knows about the health care law. i like spi. you will do great. i wish i put every dime i had from the day i was