show. thanks, guys. lots of fun. happy fourth of july to you. "cavuto on business" up next. [captioning made possible by fox news channel] >> the jobless rate drops as the government talks tax cuts and a better job market but it is not happening here. should it be? happy july 4th. i'm charles payne for neil cavuto. germany has tax cuts and the jobless rate is falling. different story here where tax hikes are on the table and the jobless rate surged to a 26-year high. >> we need to take a cue from

europe. we need to cut corporate tax and individual tax. by cutting corporate tax which could be up to 39%, as low as 12% in ireland, it will let companies expand. more hiring, less unemployment. we cut the individual tax it is a trickle up because we start spending more, that goes to clothing, manufacturing. unemployment solved by kitting taxes. >> trickle up? i thought the president said something about that. what do you think? >> well, first of all obviously we know we are comparing apples and oranges. there is no comparing the history of u.s. taxes with european taxes over the past 40 years. >> we are talking about right now. this time. we have all kind of european countries, communist companies have taken our playbook for financial success and it is working. >> and we are not bauvening our playbook. we have had a few problems with our playbook as well, charles. we have run a few bad plays that

i'm going to get the metaphor wrong that landed us in the penalty box. we are trying to get in order and i know you know we have a bit of a budget problem in this country. we need to solve that, too. so we are going to try to be prudent. i'm not arguing we should try to raise taxes. cutting corporate taxes is a god idea but what the president wants is equity in personal income taxes and we are on our way to that. >> penalty box is hockey by the way, but -- >> i never miss metaphors. >> we have seen tax cuts work in a big way. why is there so much resistance to them but why on the path to hiking taxes? >> in germany there are accounting reasons why the jobless rate has dropped and they have not done the taxes yet. there is a logic flaw. this is happening in france and the restaurant owners there who are, just saw their vat removed,

they say we should be firing. the tax cuts are not going to create international tourism or business. to mat's point, if you cut taxes on the individual we are in a hoarding mentality and there is a shift. all that money will go in the bank, into the referend401-k. >> you make a great point but hoarding is part of the psychological reason is people are afraid. if you start to put more money in their pocket and take away the fear you would think they would spend some of it. >> i think that the headlines every day we wake up or read the newspaper about the next fee, the next potential tax, this administration is trying trial balloons about that tax, taxing on healthcare benefits and people feel that psychologically. for me i believe in the bic picture. you want the big proof? in my hand is from the 1970's

tax schedule. reagan came in, knocked the heck out of it and then unlocked the potential of the great economy in the 1980's. it seems to me big picture we are going the opposite way right now and with government it is the great scam, spend all the money first, tax later in the name of oh, look at these deficits and they blame it on the prior administration. we are in big trouble and hopefully somebody will turn the tide. >> i think that you are vastly oversimplifying though. there are a bunch of moving parts. one of them is that we need regulatory reform. we need to get our house in order in performs of reconciling the banking system and nonbanking system in the country. we have had all sorts of problems and those are some of the problems we have had. >> a lot of people voted for this president not for him to tinker with the banks and give money to failed businesses but get money on main street and it seems that has fallen horton. now the notion that people are

going to be taxed for health benefits is astonishing. >> the president said in the campaign that we had a national consensus at least a majority consensus that the healthcare system was broken and that we needed a national solution to it. that is what he is pursuing. by the way, in a any bipartisan way, in a way a lot of people fe feel, a lot of people on the left are criticizing him for being too open to too many people's ideas on healthcare. >> back to the point he said he would not tax the middle class but this would be a major tax on the middle class. so i think he is going away from what got him into office. hoarding. think about this. americans are very resilient. once things turn around, as soon as had he get better they will forget about how bad things were in wait and that spending will start again. >> this is not the 1980's. this is different. we don't know how long it will

take. this is unlike anything we have seen and obama was very different on the campaign trail. he didn't plan to give money to the banks. no one did. >> you can't tell me at the end of 2008 he didn't know there was an issue with the banks. >> it is our money in the first place. we make the money. we give it to the government. the government is not supposed to take their handout and grab it. number two, the bigger issue again, we have spending and taxing. every day wake up in the morning and read the paper, listen to what obama says. it is the next program and i keep hearing about how they have to spend more money to save more money. makes absolutely no sense whatsoever and i promise you, the economy is going to be like rowing in the north ocean against the wind in the future. this economy will be dead into the wind if this continues. >> lee, how do you defend that?

every day there does seem to an new program and none of them seems to be aimed at helping the people that put him in office? >> the issue is don't tax cuts help create jobs. on paper it sound simple but it is no. it doesn't mean a company will hire because it gets a tax cut. it doesn't mean that an individual will spend money on the economy, which is the conventional basis for the theory. >> if you were president would you raise taxes or lower them right now? >> i would invest in spending and stimulate the economy other ways. >> did you hear about this, part of the new clean energy bill could have the green people show up and make you pay up. and get ready for a hypocrisy group. e national park service s

the narrow staircase couldn't be safely evacuated. d d charles: did your read the energy bill that passed the house? most members of congress didn't either. if they did they might have noticed a last-minute edition creating a new green police to make sure people meet standards. critics fear homeowners will be forced to pay for renovations and can't sell their homes. >> charms, this is about

headaches, tooth aches, backaches and once again i deal in logic and facts. we have a housing depression and now they are going to put on more onerous regulations on people that own holes. imagine, you may have to retrofit your house to sell it costing you more money to sell it. that means cost of everything goes up. you hurt everything. it is amazing that this administration, everything in mind is about more rules, more mandates, more regulations, at the most in opportuopportune ti. charles: adam, we can call them consequences we didn't think we were going to incur. it seems like every time we open these pandora's boxes we get stuff like this. >> yes. well, you made an important point, which is that so far this is not the administration, this is congress and this is the messy, ugly congress always works and it has to do with lobbyists getting their pet

projects added in at the last minute. this is the house bill. this is not the combined bill. it has not been signed by the president. for what it is worth i don't think this retrofitting idea is good to force existing homeowners to do it. good if it is good policy to require that builders of new homes and commercial buildings incorporate them. by the way, the states can give incentives for people to retrofit but i agree with the idea that it is a dumb idea to force people to spend money to retrofit their homes. charles: what about the idea of a green police? people worried about someone knocking on their door and checking the house to make sure everything is up to snuff. is this the type of stuff to do with any sort of environment? >> that is socialism. i'm not letting anybody in my house to tell me they are not tight enough. that is my prerogative. i pay my own bills. until the country start paying

my heating bills they won't tell me how to retrofit my house. >> we have to comply with certain building codes already. i think this won't make it through. but this is more aggressive than what obama wanted. it has to make it through the senate. with the foreclosure rate and jobless rates we saw they are going to just go right into the foreclosure problem. we will have more foreclosures going forward and i can't see this being, going through. >> the housing market is teetering. as gary made the point, it is is tough enough to sell a house and get a loan if you have to retrofit it before you sell it, that will kill the market. >> it doesn't matter whether it goes through or not. it is the direction our government is taking us. venus more mandates and regulations. this also -- this talks about going after businesses. manual raising cost of business right now in this economy. that raises costs to the

consumer and the economy worsens. it is amazing that the people in washington know nothing about economics. charles: adam, you were doing some blocking for the president a minute ago but he is setting the tone for this to go through. >> the fact is that as lee said, we have things like building codes, we are allowed to have policy at a high level. i reject this notion that it is my house and no one can tell me what to do with it. somebody can tell me to make sure it is safe. i had my save but i don't think the retrofit is a good one but it is not crazy so say as a community we have certain standards. charles: it seems like we are going into this everything belongs to everyone, everything is communal property. are you afraid we are going down that slope because it feels like this shared sacrifice goes beyond rhetoric? >> i'm in the. these are two big themes. the economy is messed up and there is a climate issue that we have to deal with for the

benefit of fort generations. so there's another angle which is the enterprising angle. when we talk about the next jobs, manufacturing is going down a slippery slope. the auto industry is a fraction of what it used to be. the jobs will come from clean energy and it is this kind of mandate and requirement that prompts entrepreneurs to start new businesses and get funding. >> but if you believe in the whole green thing which i second guess a lot of it, why not take it step by step and read what we are doing and think about things, not just throw everything at us in this type of economy. we are not in an economy where we should be spending money and forcing more regulations on americans. >> as adam's original point, this is just a bill and we are a long way from what we will see. charles: the president is push being the national health insurance plan but did wal-mart do something to squash it? the folks at forbes say yes and that is good for everyone.

charles: from the file of do as i say, not as i dork the largest union for public employees is slamming citi for dishing out pay hikes. they are not tied to the bank's performance. but is it hip critical? >> it is. first of all they don't want to have the performance base so they are going to a not

performance base. plus the union said they don't like short-term compensation because that makes you do risky things on wall street. by giving the base salary that is not short term. let the free market figure it out. if people don't want to own citigroup they can sell. if they don't like the pay, sell the shares. charles: one of the big problems with the american public is pay on merit and i think that is where the union, even though some of their things may be hypocritical they have a point. >> i'm not a fan of any government mandated rules on compensation. i think it leads to too many unintended consequences. where i think the union has a point and we are overlook something there is a big difference between setting pay for rank and file and senior brass. they are two different subjects. the rank and file is where the union is on solid ground. the senior brass is where they have the issue. charles: i don't think it

mixing apples and oranges. the bottom line is government interference, you have the government controlling the top 100 jobs at citigroup they are trying to stay competitive with the rest of their peers. >> i'm not defense attorney for citigroup after what they have done the last couple of years, but you have to deal with market forces. if you are not paying well enough to one company, great talent will move to another company. i want the market to bear itself out and wages and commissions or whatever they get paid for will work itself out over time. if you get -- once again, governor mandates will screw it up. as far as these unions, what is it their business? they have nothing to do with it. i don't know why they are talking about it. let them make the dollars they make on a daily basis. charles: and the unions though, going by the same policy, there's a lot of hypocrisy. >> you could make that argument but i think i actually agree with gary. in terms of citigroup's position, how is this company

going to attract people and get new ones. we are not talking about the top 100 employees. they are subject to the pay czar regulations. but this is just a matter of marining business as usual and keeping the people that you have. >> but we have 9.6% urn employment and higher underemployment. i don't think too many companies need to worry about retaining employees because they are going to go somewhere else. where? >> they try to maintain the employees that make money. there are some that should be out of jobs. >> citigroup is now competing with the other firms that paid back the tarp money that can pay whatever they want charles: even though you want to compete, isn't there somewhere where you draw the line? shouldn't pay be based on merit? >> it should be based on merit. charles: no one at citi i don't see who is really there who has merited a higher pay rate? >> that is up as to citigroup. if i want to pay more than the

person next to me that is up to me. because i run the company. if people don't want to own shares of my stock they do not are to own it. charles: in this case, the american public owns a beg chunk of citi. so, should the american government have a say? >> yes. that is what i was shouting over you. we do own 36% of citi. as long as we do we go get a sa. >> why don't we get government out of the way and let private businesses do like they have been doing for 100 years. charles: i have a concept, too. we stop giving these companies money we don't have to worry about this. coming up, celebrate the freedom of america by giving yourself some financial freedom with our crew's all-american winners.

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charles: celebrating red, white and blue by making green, green and green. >> lincoln education. unemployment is rising.

this is a for-profit cool that prepares you to go out into the workplace. first quarter revenue record. all-time high this past week. expecting revenue to grow 35% this year. making money. charles: adam, you didn't like educational stocks three weeks ago. how do you feel now? >> i still don't. it is pricey and i don't like this group because it is a momentum kind of group and it is not my style. if people agree that it is not their style they should stay away from it. charles: what is your style, bud? >> funds, as you know. a little bit of departure today. american funds new economy fund owns a lot of big tech stocks. these companies are about the best protected. typically i don't like front-end load funds but if that is your style, good and i wanted something with the word america in it. >> gary k? >> as far as this fund, i don't mind it. i'm just not a big fan of fund. they have not outperformed for 10 years and this one has been

averaging about a percent a year. charles: what is for you, bud? >> mcafee. we have had one of the worst recessions in decades and their earnings are in the 20's and 30's. one of the strongest stocks in the market. holding up very well. dominates their space. charles: lee, this has been rocking. >> you will pay for that. it is pretty expensive and p.e. is about 32 far higher than the rest of the markets. i like mcdonald's. can't get much more american than that. this is not a recession story. they have been cranking the past five years delivering 20% each year and forecast is great. the fund manager says it is the press price in 10 years. >> it is americana. i don't eat there personally but it tough to go wrong and they make more overseas. charles: appreciate you guys giving me an easy time today. i want to talk t