>> live from america's news headquarters, i'm rick follow balm. the taliban claiming

responsibility for killing two soldiers at camp leatherneck, and they stormed using automatic weapons, rocket propelled grenades and explosive vests. the taliban says they attacked the base because britain's prince harry is there and a film that insulted the prophet muhammad. prince harry was not hurt. and continuing to rock diplomatic posts around the world. and in egypt, they finally sealed off the area surrounding the u.s. embassy in cairo of four days of almost nonstop clashes. i'm rick fulbaum, back to the editorial report. >> paul: mitt romney's failure to get specific about his economic policies does seem to be taking its toll. a new fox news poll has the two candidates tied at 46%

when it comes to which candidates trust more coming to create jobs. it gave romney a 7 point edge. on tax policy president leads romney 48 to 45. and on that month. 44-40%. so, dan, you mentioned the tax reform debate and the president's attacks on romney's tax plan. we've got to add that the obama campaign is releasing this week, let's look at it. >> and won't reveal what's in his taxes and he won't tell you what he'd do to yours. to pay for huge new tax breaks for millionaires like him, romney would have to raise taxes on the middle class, $2,000 for a family with children says a nonpartisan report. you could lose the deduction for your home mortgage, college tuition, health care, how much would you pay? romney just won't say. . >> paul: all right, dan, first of all, let's just say that

the use of the wall street journal in that ad was not sanctioned by this newspaper and we don't want to be associated at all with this argument, which i fundamentally think is false. when we get to that. but what about this ad and what it does to the romney campaign? >> well, i think the -- what the obama campaign is doing is just completely surfing under the zeitgeist, and obama separated himself from the unemployment and low growth rate and people have it in their head and an ad like that suggesting thhad the plan to ta berths that currently exist for people, and in the absence of any sort of counter argument from romney, criticizing-- i don't think he has to get into the details of his tax plan, that's a dead end game. >> one line on his tax plan that he gave in his convention

speech. and by the way, i will not raise taxes on the middle glass, thanks, mitt, great. >> and the response, so much of this is inflicted by romney the way he's not released his tax return, left an opening. the public, you can sympathize with them in thinking, maybe he's trying to hide something here, he has been very scant on the details and his argument if i give them details i'm giving the other side fodder to attack me, yes, but trust the american people that you can make an argument that they can understand. and romney hasn't done that. >> paul: i should say, kim, that this ad relying on the tax policy center study is entirely false because the romney campaign as said, won't raise taxes on middle class. the tax policy center itself says that the study is speculative on that point saying that some loopholes that romney says he might be willing to close to pay for the tax cut, that wouldn't be able to do that politically, therefore, they sort of just

speculate that he would have to raise taxes on the middle class and now, the obama campaign has taken that and says, oh, he will for sure. >> right. >> paul: so, we want to stipulate that that is false, but effectiveness? >> well, it's appalling that they're doing it and would i also note, too, of all of the headlines out there, that took the wall street journal to give them some more credibility, to sort of say even the wall street journal suggests something like this. but you know, the problem here for mr. romney is that mr. obama is filling in the banks, that he's not giving himself. and until mitt romney goes out and talks about what his tax reform is, and explains it from beginning to end, and he can give a couple of examples, for instance, how he would close special interest tax loopholes, things that nobody could agree with in the tax policy, these are the things that really get americans animated and hate the tax code. it's a winner for him, but his refusal to talk about it is

allowing the president to tell americans what mitt romney's plan is. >> and now we look the at mitt romney's no cufocusing on chinad americans jobs. >> this is america's manufacturing when president obama took office, this is china's, under obama we've lost over half a million manufacturing jobs and for the first time, china is beating us. seven times president obama could have stopped china's cheating, seven times he refused. it's time to stand up to the cheaters and make sure we protect jobs for the american people. >> president obama failing to stop cheating, failing american workers. >> jason, does this turn the economic argument around? >> blaming china for u.s. unemployment, no. this is economic populism and it's unfortunate. no one really believes that romney would actually go through with what he's threatening to do in terms of counter veiling duties.

china is one of our largest trading partners and starting a trade war with one of your largest trading partners is not good for american prosperity. >> paul: dan, we've watched campaigns over the year and seen this protectionist argument offered time and time again, most often by democrats and it always polls well when you look at the polls, but it doesn't drive votes because somehow people look the at it as a sour and make the same kind of judgment as jason, you know what, blaming china for our problems, that's not what we need. we need to improve american competitiveness. >> that's right. there's no example of this trait gab bit working. he is in effect, giving obama-- letting him off the hook, separating saying it's not my fault, it's george bush's or the chinese. mitt romney's got to run straight at obama's specific policies and take them apart and explain why obama has contributed to the high unemployment. >> paul: kim, briefly. is this ad aimed at i guess,

working class voters, anxious voters in ohio, pennsylvania, places like that? >> it is, except for it strikes me, it's an ad from a weak campaign, okay? when you have to resort to talking about american anxiety, whipping up the voters over, you know, the china menace, you're not making a case for your own presidency, it's disturbing that they've gotten to this at this point in the campaigns. >> paul: the polls may be looking up for the president, but the hard numbers paint a different number. and some bureau findings spell bad news for the administration and for the american middle class, we'll have the details when we come back. bob... oh, hey alex. just picking up some, brochures, posters copies of my acceptance speech. great! it's always good to have a backup plan,

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>> recent polls may show president obama with inroads on the economy. new numbers can't be good news for the administration, according to the u.s. census bureau median haus hold income fell and americans living in poverty, and we're back with dan henninger, jason, and mary. not a good story from the census. >> no, as you you mentioned the poverty rate itself not much moved, but income down again, despite productivity increases, paul. and again, it's more evidence that the problem is the

slowness of this recovery. >> yeah, nobody expected obama to bring us back to where we were prior to his election, but how are we doing in terms of the recovery? more evidence that it's just not there. it's just not there, mary? >> i'm a little surprised that anyone is surprised because if you look at-- what's driving this is unemployment and you're out of work uyou're not having an income your household income is going to fall and unemployment over 8% for an extended period of time. we have underemployment around 15%, we have 40.7% of people who are out of work have been out of work for more than 27 weeks, fewer americans are working today than they were in 2000. and even though there's 31 more million people. >> that's an aamazing statistic. >> this is going to make people poor. >> well, jason, it's true that the property statistic didn't change that. but according to the sen cecens

46 million remain in poverty, the highest since the bureau has been collecting this statistic. this is what happens with a low growth economy, life grows flat. . >> paul: but the administration says this report also shows that obamacare is working because the health care, number of people covered increased marginally and the number of people with people 0.6 percent. >> paul: the obama people are exploiting the numbers. and on one hand it's working and on the other hand there's anxiety on the land and census bureau proves that and i'm here to provide you with more subsidized health cares and infrastructure. >> the poverty rate in america, 15%. for blacks, 27%.

median black host hold incomes also fell and the poverty rate among blacks also went up unlike for the rest of the country and i say this because this president is making a concerted effort to turn out the black vote, calling republicans racists for favoring voting i.d. laws and the like and sending the attorney general out there and the vice-president out there to make blunt racial appeals, but when you look at his actual record, how blacks have fared under his presidency, this is what you see. >> i should point out in health care, the obamacare didn't kick in with the subsidies until 2014. >> i'll tell you dan's point about-- or you made the point that more people are covered bye health care, who are the people? those are the 20-somethings who can't get job lying around in their childhood bedrooms and carried on parent's insurance. >> or on medicaid. >> that doesn't seem to be the-- >> a triumph. >> a success and also, i think you should point out that poverty is not up from last year, but since 2007, it's up

to more than 2 percentage points, so, people are poorer than they were in 2007. >> the other point i would make is that inequality has increased and remember, what is the big, and the big focus of this administration? reducing inequality. but when you don't focus on growth, you get less growth and you get more inequality. and you focus on growth, you do better by everybody. when we come back, stocks hit a four year high this week on news that the fed is planning its biggest stimulus yet. your 401(k) might be you up, but is it good for the economy long-term?

>> stocks soared to a four-year high after fed chairman ben bernanke announced a new round of

so-called quantitative easing, its third since the financial crisis began. so, we're going to turn to our monetary expert mary o'grady explain briefly what ben bernanke proposed to do? >> ben bernanke is trying to stimulate the u.s. economy. and in qe3, what he will do is create money and use that money to buy mortgage-backed securities. >> paul: what is it supposed to accomplish? >> the goal is to push down long-term interest rates and by that he thinks that people who have-- investors who would otherwise be buying bonds and capturing a higher interest rate will say, oh, there's no return there, i'm going look for something that gives me a higher return and hoping they will employ that capital in a real economy and that will stimulate growth. >> okay, so, third time the charm here, dan? he tried it twice and might have worked arguably the first time to get us out of the panic, the second time not

much obviously. but what about this time? >> what reason is there to believe it would happen this time? >> he said this time it's unlimited. not going to end. every year, 40 billion a month right now, if that doesn't work, we'll buy another 40 and we'll buy another and another until it finally works. >> two things have to happen that haven't happened in the last four years, banks have to take this money and start lending it to productive projects. >> instead of sitting on the balance sheets. and borrowers have to take risks by taking out loans and putting them into productive projects. why hasn't that already been happening the past four years? there's no reason why banks shouldn't be lending and borrowers shouldn't be borrowing. there is a reason, that's because they're uncertain whether they will make money on both sides of the loan. >> because of the tax, the tax policy, regulatory policy and other government policies, which are separate from monetary policy. o mary, the stock market is

jubilant. happy days are here again on wall street. why is wall street so happy? >> well, i should point out this isn't the first time we've seen this phenomena, and we know that when the fed has an easy money policy, often times you get what we call asset inflation, a lot of money going there. but, the problem is that as dan says, it doesn't seem to be affecting the real economy, and the risks, quite apart from whether bernanke can actual youly achieve what he wants and we see that that's not working, there are also costs, there are consequences to it. and those come in the form of, first of all, the federal government is borrowing at very cheap rates and has no motivation to, you know, basically become more disciplined. >> if it's free money, you might spend a little more. >> exactly. if you're in the government and then there are investors who, you know, they might want to say, oh, i have to lock in those low rates. now, they hear from ben bernanke, i don't have to do

anything because the rates are going to be low for several years. so, i don't have to take any risks, i'm not sure about the economy. i see lots of uncertainty there. so, i think that it delays -- it reduces the incentives to actually go out and take risks and lastly, it punishes savers. >> paul: who get low rates. and who we saw with the second round of qe, helped the stock markets for a time, but went into our asset prices and you can't guarantee which are going to increase, energy prices which flowed into food surprises, commodities in general, which affected consumer purchasing power and well-being, and raised costs for business. that has a countvaling effect. >> i'm heated up on this subject of bernanke. look, we're talking about the entire american economy and

ben bernanke taking accountability for it. while the the president of the united states says none of this is my fault. we saw the photo of ben bernanke with the american flag and why don't we put him in the oval office and get the guy who is there out. because the guy with the federal reserve seems to be running the country. >> paul: bernanke seemed pained at the press conference seemed to say, the economy needs the help. i give bernanke the benefit of the doubt on the political motivation, but there's no question that this is a tacit admission that everything they've done for four years hasn't helped, and the economy still stinks. >> i felt a little sorry for him. what he said is no panacea, and it almost seems like he was apologizing and saying, look, i'm cornered. there's nothing else i can do because washington won't do it. >> paul: so we're going to try this. one more break and when we come back, hits and misses of the the week.

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