[ cellphoneeeps ] [ tires scech ] [ cellphone beeps ] and if you've g cut-rate insurance, you could be payin' for this yourself. so get allstate. [ tires screech ] [ dennis ] dollar for dollar nobody protects you from mayhem like allstate. . forget nationalized health care. some say get ready for a government run housing market. we are just learning that fannie mae and freddie mac got hundreds of millions to help manage the bank bailout program the same toxic twins that are blamed for helping create the crisis. the government is investigating how private banks are foreclosing on homes. is nationalizes housing coming next? hi i'm david asman welcome to forbes on fox. let's go in focus with steve forbes.

we a full crew. steve, nationalized housing? >> sure they are nationalizing the homemore gauge induce -- home,more game industry. it is a de facto takeover. they don't have to nationalize these industries just control them. >> neil, we already have a nationized -- nationalized home country. >> that is true. i don't think you can blame foreclosures on the government. they are robo signers. steve is right about 90% of the home loan mortgages are insured by the fha which previously was in the business of doing this for poor people is now doing this for homes in excess of $700,000 in value. >> a nationalized home market

are we there? >> we are fast approaching. these two are the most reckless companies in the country. they an accounting scandals, they waded deeper into bad primes when everybody was exiting out in 2007. they did not adhere to restrictions. they were handing out retention bonuses when aig was getting smacked around for doing that. the reason why they are so bad they put the u.s. foreign policy into a bind. henry paulison said china was under pressure to dump the debt that pressure forced the u.s. to take them into conservatorship. >> quentin that is part of the story. are we moving towards a nationalized home market? >> no, we are not. those who say that fannie and

freddie have destroyed or socialized would have to explain what cry wide had in this? why they weren't in the risky mortgages until 2007 they came late, they didn't start the problem. if we are guaranteeing a lot of mortgages now, how come when we foreclose those things go to the banks not the gearan fors? the guarantees don't matter. -- >> quinn brings up countryside. -- countrywide, now as a result of that bill written by chris dodd the 300 billion dollar housing bill, a friend of countrywide. >> obviously chris dodd and his friends failed to include fannie and freddie. while they put regulations on private market they let their

friends off the hook. fannie and freddie continue to cost tax -- taxpayers billion. for years they only guaranteed a small per continuing meant to help poor people it won't meant to grow 90% of all more beginnings. >> rich, the fact is there is this collusion between all the politicians and all of these private home owning organizes that are now becoming corporate government organizations, right? >> yeah. you had revolving door problem. this is an easy problem to understand. the government had a policy to get more poor people into homes. that means that more people that were not qualified to get loans, took out loans. of course the banks were forced to take these loans on. of course they were liar loans. of course the banks got rid of these loans as fast as they could to somebody else. now there's confusion over who

actually owns the more beginnings. the government is typical they set bad policy then blame the private sector for the case cross that follows. >> quinn, go ahead. >> rich believes in the free market and you believe in the free market by default except when the free market makes a mistake -- >> this wasn't the free market. this was the government forcing banks to write bad loans. >> you just said they passed them off even though they knew they were bad. >> what would you do? >> hold on a second, steve, we already saw it happening with one group of loans, student loans which were nationalized. will the same happen with mortgages? >> it is already happening, david. the banks write a mortgage today, they won't do it unless they can get a guarantee from fha or sell it off to fannie and freddie. in terms of judgment low loans they are extremely hard to get unless you have a relationship

with the bank. those things are tough to get unless you have a big deposit with the bank now. >> what scares me is i know some people who have mortgages who say if it is so easy to avoid paying your mortgage because the government is going to give you a pass, why should i bother to pay mine? >> that is the fear we are going to see more keys being sent to the bank. fan any -- fannie mae and freddie mac aided, the housing crisis. they were the conveyor belt for all that came out of wall street. all of a sudden they waded in, one year you do not put 1.7 trillion worth of bad loans on your sheet. they didn't get out like everybody else, they were reckless. >> neil doesn't it concern you some might be encouraged not to pay their mortgage bus they see so many let off the hook? >> there's a huge moral

hazard. what we are doing now is compounding it. with the fha, allowing people to get new homes with only 3 1/2% down. we are encouraging people to take on loans they can't afford to pay back. they are giving them tax breaks up to $10,000. if you can't afford a house we've decided we are going to throw bad money after the good and still sell morehouses to people who can't afford them. as a way to support the housing market >> vicious circle going on. >> neil is right david. the big problem is with all this involvement from washington taking over the housing market, it hasn't allow home prices to reset. we still have a housing bubble. home prices still feed to come down to levels of -- >> how much? >> probably at least another 15%. >> problem is fannie and freddie have a formula set up with the treasury's credit pipeline where they get more taxpayer money based on how much losses they report each

quarter. it got an -- they've got an open credit line. >> the crazy thing is if they allowed the market to clear within three years we would have a housing boom again. the market -- let the market clear and housing crises will quickly recover. >> no extra money in social security checks for the second year in a row. what's the reaction from seniors? silence. does this scream americans are ready to cut out costly entitlement programs? >> how one tax some lawmakers are pushing could cost 850,000 american jobs. hey, lawrence, my parents want to talk to you.

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can be unsettling. but what if therwere a different sry? of one financial company that grew stronger through the crisis. when me lost their way, this company led the way. by protecting clies and turning uncertainty into confidence. what if that story were true? it is. ♪ . >> reporter: good morning everyone i'm jamie colby. there's a dangerous rescue mission going on now in china. teams trying to reach 16 miners after there was a deadly explosion that killed 20.

the crews dealing with dangerous levels of gas and falling coal that became loose in the blast. president obama heading off from the white house soon. he will make a big campaign stump for massachusetts governor patrick the democratic incumbent holding a narrow lead over challenger baker facing off$qw in a debate last night local papers are reporting patrick fumbled on questions about health care. baker scored bft8y promising immediate reform, they are reporting. full coverage of all races begins with chris wallace 12 noon eastern only here on fox. our coverage continues after that. i'm jamie colby i'll see you at 1 p.m. eastern, keep it right here. what is one day to lose 850,000 american jobs? to force americans to pay a national sales tax. a plan more lawmakers are pushing to raise more money.

a new report says the so-called value added tax will only add more to the unemployment lines. steve you say no vat, go flat. >> absolutely. europeans have had the vat for years it has stagnated their economies. it will be used to pick the pockets of the american people even more if you reform the code get it down to a single sheet of paper, have a single rate, write-offs for children you stimulate the economy and release the americans from a burden of 7 1/2 billion hours a year filling out tax forms. vat means robbing the american people, flat means liberating them? >> quinn, flat or vat? >> this is a political question too. steve you've been talking about this for 15 years. it may make more sense, rationally. but it is at] tough sell. you are saying even if you have inherited money, you shouldn't pay more than somebody who has had a much harder time that may be right.

no deductions, totally honest. that's good. tax consumption, vat works. it is baked in as probably an easier sell in this country. either way get rid of this lousy system, do the one that works. >> i know steve wants to respond. but first rich and the others, go ahead. >> flat, the virtue is out there for everybody to see. it is totally transparent in a time where we desperately need transparency in our government. vat is like a cancer it is hidden, boroughed in, no politician will ever want to take credit for it. every time we try to get rid of it, it will be impossible. it will never go away >> neil we've seen it in europe. they have 20% value added taxes in europe they have just as bad a problem with debt as we do. >> i don't think the world is ever going to be flat. but it may not be bad to have a vat it is a consumption tax.

>> hold on neil, let me define again it is a national sales tax every time you buy something you have to pay a national sales tax that's what a vat is. >> that's what it is. since we consume too much in this country and we don't save enough maybe a consumption tax and reduction in capital gains and dividends taxes will be good. >> what do you mean consume too much? i don't think i consume too much. >> news flash, a flat tax does exist in russia and china and the former soviet satellite states and states in-u this country we have a flat tax. by the way the value added tax, you are right about this steve, portugal, italy, ireland, greece, spain all had a vat they all went into fiscal ruin. a vat is a symptom not a cure for fiscal recklessness. it is like a tangled barb wire catching and hurting people more. it would be layered on top of the state and local tax

systems, recipe for disaster for this country and slow job growth. >> bill, that's the point you know they are not going to get rid of the irs and put in a vat tax they are just going to layer on top of what we already have. >> maybe so let me give you the reasoning for favoring a vat over a flat tax. even steve's one-page tax code, i don't that i is going to happen. en if it were simple we would still have keithers. we would still have a treasury secretary saying i didn't know i had to pay tax -- we will still have the chairman of house, ways and means committee the people that write tax code saying i didn't know i had to pay tax on my dominican -- >> steve these are interesting times we are living in. perhaps in the past nobody would take up the flat tax placard, maybe now they will. any chance any politician is going to stick with this? >> i think you are going to

see it in 2012 as people realize we have to do something to get this economy back on track. around the world 26 countries from hong kong, china, ukraine, big countries, small countries. as for people in country you have generous exemptions, under my proposal your first $46,000 is exempt only 17% above and no tax on savings which is good for capital creation. >> neil, you said we spend too much. the problem now we are not spending enough? >> unfortunately, the rules and economics are such that what helps in the long term is not necessarily what helps in the short term. ultimately, we don't save enough so we don't invest enough. that's the problem. that's how we are losing our power internationally because we don't have money and we need borrow it. >> quinn, what about the fact that where there have been vat taxes they have terrible

trouble with their deficit like greece? >> isn't that a spending issue? it is not a question of how they got the revenues, it is what they did with the spending. >> true. steve, would we get enough revenue from a flat tax if we saw rates come down the way you want them to? >> you get more revenue if you make it, you pay it. no place to hide it. you have lower rates which means a better economy. in russia, when they put it in 10 years ago they doubled revenues in two years. >> okay, in flat tax, steve forbes. next, a controversial plan to save taxpayers money. a plan so risky that some at forbes are shocked it is on the table. find out what it is and if it could happen in your state. . [ whistling ]

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is it just a scare tactic. >> as gold soars to

a new debate over early prison break outs. states facing 125 billion dollar budget holes this year may be following washington state's lead, that state is pushing a plan to let prisoners out early for good behavior. a plan it claims will save taxpayers $100 per day, per inmate. steve you say it is a scare tactic to secure more bailout money. >> sure, if you go up to a person with a gun and say your money or your life. you gil to jail. a politician does it, it is seen as a good thing. release prisoners or give us more money. that way they don't have to face up to their bloated pensions, bloated spending and all the other transgressions they committed against taxpayers. >> steve is just saying your

money or your life because he has never met my wife. >> oh! >> i think, look i think the states are serious. they don't want to tackle serious pension reform. california's budget that it just passed was a joke. i think they are really gonna do this, i really do. i'm not saying i think it is right but i think they are serious about it. >> what would the vice president of the united states, elizabeth mcdonnell neil cavuto's chosen candidate. >> i would cut the pensions, cut the bloated spending. we are running neil and i, our motto is, why not us? this is a tough call for the stays, very tough call having to shutdown prisons as they are doing in michigan under duress for sometime. the associated press has analysis out there that possibly people, felons who

have committed assault, battery and attacked children and the elderly in california this is a serious issue. go after those bloated pensions and bloated state worker pay, first. >> it is true in california they are releasing some violent criminals. you wouldn't be in favor of that. if it is a nonviolent criminal, perhaps? >> true 6500 prisoners leased over the next year expecting savings over 100 million dollars. one prisoner released, a nonviolent prisoner the next day was arrested for attempted rape. i don't know if this is the direction we want to be going. i agree with liz what we should be doing to save the most is pension reform for the prison guards and privatizing the prisons. >> there are 16,000 people incarcerated in the state of washington. it cost $100 per day that's 584 million dollars per year. bill, is this a way to save money? >> it is a scare tactic. washington monument syndrome.

the parks department is threatened they say we'll shutdown the washington monument. we are not going to have violent people put out to save money. we might have nonviolent people put out. it is a willie horton situation now. >> what bothers me is that a judge makes a decision about sentencing. you are changing what the judge has decided in court. shouldn't we stick by the rule of law here? >> we should. there's a deterrent factor longer sentences have more deterrents. what we could do, if they commit another offense that amount that they were let out early should be added on to their next sentence. >> okay i think i follow that. gold! shattering record highs this week. you don't have to own gold to make money. next our informers have names stocks that are as good as gold. and inside that box is their financial life.

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we are back. gold roaring to a new high

this peek. stock picks that might be as good as gold. neil, first to you dollartree. >> if you search on google for silent dividends this retailer is one of the winners. it pays through the backdoor by buying in shares. >> people are buying cheap right now. >> dollartree is more like dead treasure. over the last six months the stock has shot up from 30 to 50, executives sold 260,000 shares. >> adp they do that process. >> only one of the four triple a companies in the united states paying a 3.2% dividend. the more complex our tax system gets -- >> very complex is this a good buy? >> no the stock price is high and the company's gross margins are -- margins are collapsing. >> if you believe the fed is killing the dollar you a pick. >> the fed is killing the dollar. this fund will continue to do well as the fed