four more years. what's going to happen? what does my crystal ball say about things like marijuana? >> i inhaled frequently. >> what will happen to energy policy? >> it's intolerable, excessive dependence on foreign energy source. >>? who will obama appoint to te court? will his regulation pile grow bigger. >>h i'm told we're going over a cliff, but that cliff is nothing compared to the real threat. what will we see in four more years? that's our show tonight.

>> and now, john stossel. >> i'm ready for the next four years because i've got my crystal ball and i can see what's going to happen. first, over the next few months, pundits will scream about the fiscal cliff, a series of tax increases and budget cuts that amly go int automatically go ino effect january 1st unless congress works out a deal. will they? yes. i can see it here. politicians will meet and hold press conferences and fret and predict disaster and then they'll reach a deal right before the end. it won't solve much. it will just postpone the reckoning, but they'll congratulate themselves and the media will move on to something else. america, however, will continue to ga o broke. am i too cynical? no. it's probably worse than that, says my next guest, congressman ron paul. congressman, predict the future. >> long term the future looks pretty good. a lot of people are waking up and know what we have today isn't workable, but in the short

run the people in charge aren't going to admit it. they're not geoing to admit that we're bankrupt and they won't admit that we're on the vernl of a major, major change in our society, so they'll keep putting it aside and then we'll eventually probably destroy the dollar or have a dollar crisis where we'll be forced to revamp and change our system of financing. it could be pretty big. i mean, i think it could -- it won't be anything quite as bad as like when the soviet system collapsed, but a lot of change would have to come. i think the true bankruptcy would mean that we no longer can maintain an empire around the world. we no longer can maintain promises of entitlement of $222 trillion, so we have to face up to reality. i think i agree with you. don't expect all the solutions to come on january 1st. they'll have some doctored up proposal and people will announce it and the stock market may go up, but ultimately we will have to face up to, you

know, the excessive spending and the excessive size of government, but not for a little while yet. >>go although that see questatin law on january 1st was designed to being a knowledge the politician's unwillingness to make tough cuts, here's how jim angle of fox reported it. >> reporter: the fiscal cliff was crafted to be so distasteful, officials would do anything and everything to avoid it. > >> john: so you don't think they'll say gee, we don't want to cut this money from the military, domestic spending, we're finally going to cut entitlements, make some real decisions? >> they assume they made it so bad d they wouldn't accept it, t i don't think they gave them anything. they're not evenen talking about cuts. they're talking aboubut cuttinga trillion dollars over 10 years, $100 billion. they're not talking about real cuts. they're talking abous t cuts in baseline budgeting. >> john: let me stop you. explain baseline budgeting. i hate it when you politicians talk this way. no normal person understands

that. if i'm going to cut, it means i spend less next year. when you guys do it, it means -- it means what? >> it means we've already written into the next 10-year budget automatic increases, so if you're proposing, let's say, a $10 billion increase for year and you cut it down to 9, they say they're cutting 10%. they're not cutting anything. they're only increasing it 9 instead of 10 billion dollars. it's done on purpose so that people get confused, and the cuts don't mean anything. cuts mean only nibbling away at proposed increases. that's the reason nothing ever happens. they got away with this for a long time because both sides, whether liberals or conservatives, have different reasons they want to spend money. there was a lot of wealth in the country. they could usually get along with it. okay, we'll raise milk subsidies and tobacco subsidies and vote for one or the other. the treasury is there, the

country iss bankrupt, they won't admit it, and there's so much anger and frustration because it's hard to divvy up loot when there's none left to divvy up. >> thank you, congressman paul. n the focus on the media this week is that if the automatic tax increases and 4-5ths of this cliff is tax increases, if they and the spending cuts happen, the cuts total $55 billion from defense, $55 billion from domestic spending into the future. that will be terrible. >> it's a nightmare. >> i'm worried about it, too. >> that's a total disaster. >> which really will create chaos gland drive our economy off the fiscal cliff. >>fo really? >> well, one of the people who teaches me economics says, no, sequestration might be okay. that's russ roberts of the hoover institute. so it's not this big horrible crisis? well, when government spending is about 3.8 trillion, 3.8 trillion and you're going to cut

100 bill, that's a deck chair on the titanic. it's not really a dramatic change. >> it might be good if they're across the board. >> if they're actual cuts, that would be great.ar across the board would be good. i would cut 10 or 20% if i had my choice, it scares people because they think let's save the things that are important and cut the things that are not so important. that never works. >> it's all important. it's all crucial. the tax increases sound scarier. that's about $4 ho 400 billion. >> we have a trillion dollar deficit. we're already spending for the last four years each year a trillion more than we take in. so saying we're going to raise taxes by 400 billion in one year, well, we're already raising them a trillion in the future, so to me, the idea of raising taxes is probably a good idea. it says this spending that we've been doing is not a free lunch. > >> john: and not just raising taxes by eliminating the bush tax cuts, they're talking about

let's even things out a bit, get rid of some deductions, make the code simpler. that wouldn't be bad. >> well, tax reform would be a really great idea. there's good tax reform and there's bad tax reform. some deductions would be good to get rid of, some not so good for the economy as a whole. the idea of tax simplification, taking advantage of this scary fiscal cliff would be an idea to prod congress into simplifying the tax code. >> if i look at the list of deductions, i can't see congress agreeing to them because it's deductions for pension contributions, that's the biggest, mortgages deduction, earned incomgee tax credit, the for having children, charity.ing children, >> i don't need this to say they're notc going to give that up. >> they're not going to touch those. what they could do is put a cap on the size, the total amount of deductions someone could take, an idea that romney suggested in the campaign. i think that will be appealing certainly to the democrats and maybe to the republicans.

>> 20% of the budget and half the fiscal cliff spending cuts would come from the military budget. russ, you're not a defense specialist, so let's bring in ben friedman of the cato institute. it's almost a 10% cut, i'm told. it's terrible. the republicans are hysterical about this. >> the pentagon is hysterical about it. both parties are hysterical, but it's about 10% which would bring us roughly back to where we were on defense spending in 2006. >> which adjusted for inflation. >> it was not exactly a crisis year in the pentagon. it's really a minor cut. they've gotten very spoiled at thale pentagon. they had years of luxury and big increases, and siso as soon as u cut the budget a bit, they scream to the heavens. >> john: defense secretary leon panetta said it will weaken our defense system, be irresponsible. senators mic mr. being cain and graham. these draconian cuts represent a threat to our national security

and must not occur. >> i don't think that's the best way to cut the defense budget but it could be useful. we need bigger cuts in the defense budget because we do too much. this will force us, i think, to make choices. > >> john: what do you mean we do too much. >> we try to be everything in the world. we try to deliver peace and prosperity to every corner in the world pretending every unstable country is a threat to us. if we cut a bit, we might have to reconsider some of that and prioritize more. >> when president obama in the debate talked about being able to save on things because the military was being forced to pay for things they don't even want, i was kep skeptical. looking it up, these abrahms attention, the pentagon says they've exceeded their space, weight, and power limits. the army chief of staff, warfare has changed. we can't believe we'll ever see a straight conventional conflict again, and yet congress insists

on buying more of these things? >> well, the abrahm abrams tanks built somewhere that's politically important so that people from that state never want to turn it off, so that's built in ohio and somewhat in michigan which has a lot of important members in congress. they keep saying buy more and more. > >> john: russ, let's return to the big picture. they're talking about cuts if they happen. after the cuts spending will still grow over the next ten years by 1.65 trillion as opposed to 1.8 trillion. big deal. >> i think we're sending a signal to the world that we're not acting like grownups. we're not mature. we're not responsible, and i think.6 it would be great if in washington could take the lead and say it's time to act like a grown up. whenn you spend 3.8 trillion dollars, it's not so much whether you're recovering or borrowing. the mosty important thing i learned is what ares you spendig the money on? i don't think we get 3.8 trillion dollars worth of value from what we're currently

spending on. >> john: not from food stamps they're going up sharply. >> the people that receive food stamps like them. >> >> john: how about people that are disabled. payments up sharply for that. >> growing dramatically. >> john: so the country gets safer all the time but more people collect disability. >> that law has been libbalized and the courts have interpreted it to make it easier for people to go on disability. >> john: this scares me. the value of government guaranteed mortgages going through the roof. >> yeah. they're being a little more caution. i'd be more worried about the value ofsa pensions to state employees. it will be very difficult for the government not to step in and honor promises that the states have made. that's 4 point something trildz. we made too many promises we can'tg keep. we've got to somehow find a way to live a little bit closer to our means and to spend our money a little more wisely. >> john: thank you, russ roberts, and ben friedman.

up next, my crystal ball reveals some secrets about the future supreme court. it says that she's old, and so is he. and he. and therefore, he will get to appoint new liberals. what will that mean? we'll tell you when we come back. are old. [ bell ringing ]

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[ music ] >> john: now the supremes before the election, some libertarians said romney, obama, who cares, they're both bureaucrats, not much difference in what we'll do. one big lasting difference will come from obama's appointments to the supreme court. that could affect whether you get hired, where your kids attend school, whether you can protect yourself with a gun. so which should we worry about ors be glad about? let's ask fox's freedom-loving judge. >> good to be with you. >> john: should i worry? >> of course you should worry. actually, i would have worried at either of them appointing a justice to the supreme court, but i would worry far more with president obama replacing retiring justices. let's say that justice ginsburgh

who is not well, who is a serious liberal and who is up there in years. >> john: we have four justices in theirf 70s, ginsburgh and briar, 79 and 74. >> justice ginsburgh is not well. just breyer will sit there for another 10 years if nature permits. if ginsburgh is replaced, it will be a person of like mind but perhaps 30 or 40 years her junior. although the voting would be the same, you'reg removing a rather shy, reticent, unwell senior citizen for a young, aggressive coalition building youngster. that's probably what you're going to get. you'll probably get someone like justice so toe to sotomayor.

>> 30 or 40 years is the norm. when the republic was created, most of the justices were past the average age of the death. >> right. as you know. they serve for life. in the modern era, they have a tendency to end their terms so far as they can control this during the presidency of a president of the same party that appointed them. obviously sometimes nature interferes. to the extent this is a free choice, they will attempt to do that. i think you can soundly expect justice ginsburgh will leave the court by one means or another in theit next 40 years. i don't expect any of the other will. i can't imagineca kennedy or scalia will go under president obama. >> john: justice scalia is 76. justice kennedy is 76. >> scalia is a conservative. they are young. >> 76? >> they are a young 76.

>> john: we've got four people who are going to be 80 years old. let's say they all leave the court for whatever reason, and president obama picks chuck schumer, hillary clinton. >> oh, mya god. >> john: i'm goingc to move to canada. >> what changes in the court? what changes in america? >> if president obama literally were able to replace justice scalia and justice kennedy with people of like mind to the president, that would change the balance on the court radically. that would probably undo the second amendment and return it to the point where the progressives like it which is only the government can own guns. >> john: school choice? >> i would thinllkme that there would be very little left of school choice, that a progressive supreme court would require you to go to the public school, send your children to the public school in the neighborhood where you live and where you pay taxes. >> john: president obama says even if your religious belief says abortion is evil, you have

to pay for it. >> it's not just abortion, it's youth anyway sh anywayyouth ani. we can anticipate a progressive court, a court filled with sonia sotomayor's will be an activist court. they'll look for ways to put the progressive im imprint on the lw of the land. >> john: bad news, thank you, from judge napolitano. up next, do you run a business, create jobs? myco crystal ball says the next four years may drown you. mcchrystal ball says the next four years

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john: look at the depressing turner to it shows what

happens to employment hiring recovered after two years. recovered after two years. >> one employers face thousands of pages of rules that makes it scary to expand because no one understands what those say. betsy mccaughey has heard those complaints following the biggest regulation of obamacare. bob luddy makes these. actually bigger and fancier with ventilation systems like restaurants use to take away bad smells. >> we are making money and

expanding but in this a retirement it is difficult because of human resources rules that don't make sense with those regulations coming into the marketplace the department of energy wants to regulate motors over five hp. john: they want to regulate to make them more energy efficient? to carry out part one, whenever that is to conserve the energy resources of the nation? you just want to make money. >> we're constantly testing finance with the industry organization. john: you try to make it more efficient that will help you sell the fan. >> absolutely. that is the free market.

they don't understand. john: you have been in business 35 years now with a 700 employees it was different before? >> compared to today there was no regulation. now the federal government will being gauged with health care? we don't need their help. >> i have a copy of obamacare. [laughter] john: mine is fresher because i did not read mine. what do they tell you? >> the employer mandate says every employer with 50 workers or more house to provide health insurance though one size fits all plan that will cost twice as much as what to employers

currently off 37 those who have a high turnover will have to get a fancy plans. >> many companies will stop offering insurance. mckinsey and company said over one-third employers are already considering. john: the penalty is cheaper. >> right. the mandated plan adds $1.79 per hour every hour to the cost of hiring and a full-time employer and neurosurgeons it does not matter but intrigue people it does. so employers can stop offering and paid the penalty, they will.

people were getting insurance on the job and had a full-time job. >> we will try to continue covering our workers under self insurance but it will raise the cost for us and employees. john: you may expand a less? >> if the government takes capital you expand less. john: the sens people offshore motors, barings come a filtration they moved offshore? >> many of them have. america should compete with labor cost because modern manufacturing has machine tools but. john: so it is not the cost but the confusion? >> not all.

unionized operations is a big issue but for modern manufacturing is highly capital intensive and labor house to be skilled. we have the most skilled labor and the free world. john: the employee cannot be asked to cover more than 9% of their income in premiums. >> household income. this will be a nightmare. as an employer you have to ask every employee what does your house -- has been the wife make? so if you hire somebody you may want to hire somebody that makes more money so they can contribute more money to the health insurance. it is a nightmare. john: but the health savings accounts the employees have

more skin in the game. >> abell go out of business. @he way the law is

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john:. >> we double the production

of clean energy. >> the most important thing we can do is control our own energy. john: to idea is more clean energy and control it it does sound important. now that obama got four more years zero happen? jerry taylor's today's energy for the cato institute. >> i would like added that could be affordable but without subsidies it would not be there. the wind energy tax credit is disappearing most projects are collapsing. it is more expensive and of not to we would not have to subsidies. john: control our own energy? >> i am not sure what the point* is if our oil came from alaska or texas if of supply a disruption in the

middle east will will disrupt the supply of us as well as them and if an angry foreign country cuts us off the set of buying from them we would play a game of musical chairs to buy from somebody else then displace somebody else. that was the scenario in 1973. it did not reduce imports. it is a global market for go the same reason could grain embargo did not keep it out of the market once you sell it to somebody will go to where the market dictates. john: the front page of the wall street journal the u.s. will overtake saudi arabia by the largest oil producer. john: that is good news. i am old enough to remember president after president promising bring us closer to

energy independence. >> 1980. 1985. 10 years. 2025. >> it is always on the horizon. they're really worried about imports of crude oil and we will still be dependent on foreign crude to seven mostly import from mexico or canada. the president takes credit for the boom of production. >> we have increased will production to the highest levels in 16 years in natural-gas the highest over decades. john: we? he made it happen and? >> a buy-out for brief firewood say at least he did not screw that up. he could have. john: he said this is off limits. you cannot build the keystone pipeline. >> you could say he has

approved more permit applications than the bush administration but oil production on federal land is up and he did not screw that up. he is opposed to the hydraulic fracturing but so far he held a benign position. in this senate he voted for the law that exempted hydro fracturing from those laws now they're trying to repeal those in the administration will not back them. john: it sounds like he did it but it was people discovering new ways of. >> george mitchell spent over a decade to figure out ways to improve on hydraulic fracturing and hit the jackpot.

in 2006 everyone believe natural-gas prices would only go higher dow dupont moved people to believe there would never come down some people say they know the energy future remember that even of the revolution of hydro-fracking everybody was betting on high prices. even corporations spent hundreds of millions to bet they would skyrocket t the crystal ball is not always correct. john: or sympathetic to the president but he said he will keep doing what he has been doing a. >> building wind turbines coming clean energy sources. mill company profits make

money hand over fist i want to support energy jobs of tomorrow. john: of the technology like wind torso lurk or ethanol had merit it would not need subsidized. if it did not have the economic merit it would not get we have been subsidizing nuclear power 50 years it is still the most expensive and ethanol still cannot compete. it would disappear without the preferences. the tenth and village industry is make us feel better but it will not advance the technologies. we don't get any greater progress. we have seen it time and again. john: jerry taylor from the cato institute. my crystal ball will predict the next four years.

john: now that the election is over what will four more years bring? looking into my magic ball i see lindsay lohan back in rehab. justin bieber reaches puberty and the regulatory state will grow by another 12,000 pages.

yesterday beater reaches puberty in health care costs more than the international debt will be up to $20 trillion over four years. the mainstream media will say that the democrats didn't accomplish what they thought because they need more time come and of course the republicans have obstructed the progress. i don't think i need a crystal ball to see that. but wait, let me turn is over. there is some good things that happen. more states legalize weed and the feds will start locking up people. gang members find useful work, drug use is no longer cool, and taxpayers save millions. >> i pronounce you both married.

stossel: more americans are married. school choice becomes an issue. bureaucrats couldn't stop it. parents demanded. americans learn practical economics and military spending is lower. that is because the pentagon have to ask hard questions like what is our mission? america is no safer. we are richer because we have a simple flat tax and because people finally rise up and say, these rules -- they don't do what he promised. they mostly stop us from doing good, new things. they waste our time and title vii of spiderweb of freedom killing red tape. so these rules will be gone, these complex taxes, too. forty years from now, we will live without those in a prosperous, free country. it says so right here in my crystal