said i cut taxes for everyone. small businesses he is talking about. 3% top level of small businesses. he is kind of right. 3.5%. but he doesn't tell you that the 3.5% account for 53% of all profits among small businesses. what he is telling you, america, if you a small business and you earn money, 53% of you will increase, your tax burden will increase. those are the same people who create the jobs. adp told us 54% of jobs created for the month were by small businesses. job creators and the people earning money are taxed at a higher rate. he couches it in a 3% number. there is a lot in there. >> kimberly: is he misleading the public? he seems to harken bah to past administrations. look at the mess created we tried to do it their way, and

everything is a disaster. >> dana: i found it mystifying why they decided today of all days to do this. the only thing different previously before this morning's announcement, president obama was for permanently extenting the tax rate. now he is for a one-yeark extension that won't provide anyone the certainty they need going forward. in addition to, that there is no explanation how will it create jobs? there is a missing link. he, himself, had an opportunity to roll back bush era tax cuts if he wanted to, the first three years in office. he had mo jr.ty of the -- majority of the house and senate. in the lame duck session of 2010 he said the worst thing you can do in recession is raise taxes on everybody, whether every i want to exten extend -- clever i want to extent them. we were growing a gdp faster than now. i think they wanted this all

along. last february, speaker boehner offered the president and the white house to deal with the tax cut issue, tackmageddon if february before politics were too hard to get anything done. they rejected that deal. i think they wanted to, to have the political point. >> kimberly: insight to the back story of mechanics of politics. now, juan williams. >> juan: i don't even have to try too hard. clearly the president wants a short-term boost to the economy. everybody wants it. that's why he has gone from saying he wants a permanent expansion to saying it's a one year deal. let's just do what we can all agree on. >> kimberly: how is it going to fix it? >> juan: it fixes it in the short term. how can they argue? >> dana: he says raising taxes doesn't help anything. >> juan: this is not raising taxes.

this is raising taxes on people who can afford it. if he said 98% of people won't get their taxes raised. 98% of business -- >> eric: that's not right. >> juan: is it right. you are an authority -- >> i'm not authority in anything. i'm giving you a number. 53% of all small business taxes will go up. >> juan: no. >> eric: profits. >> juan: now you are clearing it up. jobs come from 98% of small businesses. that's where the job creation comes. let's add more jobs in this economy. >> greg: clearly president obama was not a math major at columbia. this guy believes you can spend your way out of a massive deficit. who is saying that $250,000 -- not suddenly, but saying $250,000 is the equivalent of being a millionaire.

saying three inches is -- never mind. >> kimberly: let's not go there. >> greg: my point is he is becoming the official occupy mascot. taxadoodle. half tax, half poodle. he said we shouldn't spend more on tax cuts that is based on a lie. that's their person. they see this as a personal atm to go to. $14 billion over payment in jobless benefits. this is what the government does when they know they can do it. they have you thinking they are greedy because it's your money, they have won. >> eric: spending, he calls letting you keep your money spending. >> greg: it's almost genius. >> dana: at what point does something that was a tax cut go from temporary to permanent? if it was a tax break for ten years is there a magic number all of a sudden -- >> juan: let's remind

everybody this was put in place in the aftermath of 9/11 -- >> dana: no, that's not true. >> juan: it true. >> dana: tax cuts were put in place to deal with the recession he inherited from the clinton administration. >> juan: yeah, the clinton administration had large deficits. this is when the president said we need to behave normally, go shopping. >> dana: the tax cuts were done before that. >> eric: let's fast forward to what this means. where is harry reid? is he going to bring this to the floor? let's talk about options. where is claire mccaskill who will have a tough night missouri? is she for this? she was in favor of only above $1 million. now it's $250,000. more people get taxed. where is bill nelson? are they voting to raise taxes on this many more people?

>> juan: what many more people? it's not that many more people. you are right. a split among democrats between $250,000 and million. republicans bring it up and you did -- >> kimberly: why are you punishing people? >> greg: one side of the mouth they say the tax cuts are bad, prolong the recession, so they are keeping 98% of them. the philosophy has more holes than gut -- [ inaudible ] the reason they are taxing 2% it's a political maneuver. to use a phrase, paying your fair share, we should tax that phrase. if we did, we would be out of the of a deficit every time obama and the guy with the glasses i can't remember his name, gives. we would be in the black. this is a punitive tax. it doesn't do anything. the amount of money you get from the rich a back hair off of alec baldwin naked back. it has no effect.

>> juan: it has an effect with majority of americans support raising taxes -- >> greg: politically, yes. >> juan: i am just telling you the people who pay their share. you are the same guy that will come and say you know what? we have to have cuts and we can't have spending at a time austerity is required. the minute you point it to the rich you say no -- >> dana: the amount of money they would raise wouldn't pay for the overpayment that greg mentioned. so it doesn't raise revenue. president obama said would not be good. to raise taxes in a recession. >> eric: 8-1/2 days of -- >> juan: argument. >> eric: let's talk about politics for two seconds. this is president obama saying you know what? this is a hot potato the tax issue. at the end of the year, the tax cuts expire. $106 billion out of the

economy in spending. economy can't handle this. very good. fiscal clip. >> greg: that was my name in college. >> eric: go ahead, republicans. turn it down. this is a pretty smart political maneuver. that is what itsy. 's politics. not helping the economy. >> juan: it will help. >> kimberly: look at a new poll that came out from the hill. 1,000 likely voters. is america better or worse since president obama took office in 2008? worse! this poll went on to say that people believed that the president transformed the country as well. they're not thinking for better. >> juan: it's 98% of republicans that say things are worse. only one in five democrats say it's worse under president obama. >> juan: look at another

poll. goup will says who do you hold responsible for the trouble of the economy? 60% say george w. bush. >> kimberly: they believe obama. >> greg: this poll over whether things are worse off is misleading. if you are disgust by the idea of western exceptionalism, things worse off is seen as a success. as though america is fat kid that shed pounds of greatness. we're supposed to be injured. that's the point. you look perplexed. >> juan: i am perplexed. shock and awe, greg. [over talk ] >> kimberly: the president has to transform the country since 2009 inauguration. >> eric: i said the republicans -- this is a republican talk point. >> kimberly: we shall see. democratic congressman calling for school to be more like

islamic school. this is our anniversary week. the fox turns one. we kick off the celebration this morning on fox and friends. we will continue this tonight. don't make a move. stay tuned. ♪ ♪ [ feedback ] attention, well, everyone. you can now try snapshot from progressive free for 30 days. just plug this into your car, and your good drivin can save you up to 30%. you could even try it without switching your insurance. why not give it a shot? carry on. now you can test-drive snapshot before you switch. visit progressive.com today. the global ready one ? yeah, but you won't need... ♪ hajimemashite.

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♪ ♪ ♪ ♪ >> eric: welcome back, everybody. first he accused the tea party of wanting "blacks hanging on a tree." now a democratic congressman andre carson thinks all public school should be based on the quran. think i'm kidding? listen to the man many think is the biggest bigot in office. >> america will never tap in to educational innovation and ingenuity without looking at the mod that we have in our madrasah, in our school where innovation is encouraged and

foundation is there. that model that we are pushing in some of our schools meets the multiple needs of studen students. >> eric: you can't say "under god" in the pledge or have a manger theme. you have can't bring a christmas cookie to school. what is going on here? >> dana: bizarre rhetoric. more so -- i have only read it. that is the first time i saw it. when you hear it, you think even more so. one, it's not true as well. in indiana they are doing a great job of different innovation. at a lot of schools. he did try to clarify the remarks later on. but when you look at that. this gives you pause where we're headed. where there might be good madrasahs out there not typically where you want your child. >> greg: taking back some

american schools to other century might be upgrade. madrasah. he meant plaid shirt. schools would be comfortable and summary like a light weight cotton fabric we'd be happier. >> eric: isn't it a drink also? >> greg: cranberry, orange juice and vodka. i'm too cheap to buy one, right? >> juan started it. >> juan: i didn't. i didn't even hear of this drink. >> eric: big drink back in the day. you can't bring christmas cookies to school or put manger scene in front of public building. we wants quran as the basis of the schools. >> juan: i didn't hear that. he says that some of us are visual learners and some of

rus auditory. some learn through touch, feel and experience. he said we need innovation in american education. many of our catholic schools do a better job. someone said catholic schools are better. you are taking about problems in american education. >> eric: the modle in school where innovation is encouraged and the foundation is -- >> juan: argue the bible and the public school is institution. >> greg: schools are already madrasah of liberalism. i want to say something inflammatory. >> kimberly: what a negative connotation. why would he say that? americans are going to associate it to radical islam.

we're supposed to model our schools to that? >> juan: that is not fair to our school. >> kimberly: what school? >> juan: to say madrasah is equal to radical terrorism? >> kimberly: the political reality is it has a negative connotation. >> juan: if i said catholic schools do better job in america? >> kimberly: i'd say no, i win. >> greg: think of all the great scientific achievements that come from islamic countries. >> eric: maybe mr. carson is on to something. maybe faith school is way to go but publi separate from publc domain. >> dana: i think the family should introduce faith. the individual can decide when they're ready to follow it. i have friends going to catholic school who are not

catholic but they like the way they teach. there is another school that i remember does what he is talk about. >> greg: montessori. >> kimberly: they start off in preschools. that starts out with preschoo preschool. >> dana: kids do well there. >> kimberly: a learning tool for children to process information differently. that is positive. >> eric: a fight on the jersey shore that didn't involve snookie or the situation. chris christie going jersey on a guy. >> you're a piece. >> shut your mouth. >> eric: we'll show you the rest of the tape and tell you what got him teed off just ahead.

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miserable. true, right? you seem what happy. >> dana: studied washington in a long time. studies are consistent. >> juan: in the polarized world we live in, if you think you have answers and know what is right and you don't book uncertainty you have a sense that i am right, i'm happy. i'm glad i'm me. it sounded like you! >> greg: arthur brooks, not albert brooks. >> dana: sorry. i follow him on twitter. if you don't, you should. >> greg: that was an embarrassing mistake. >> dana: thank you for pointing it out. greg is being a you know what? >> greg: you called me cheap. >> dana: you are the exception. you're not cheerful.

cheap and grumpy. >> greg:ly take grumpy, but i am not cheap. >> juan: what is going on over there? >> greg: they're happier because we don't walk msnbc. or read "new york times." >> dana: arthur brooks, i read it yesterday. eric, you're cheerful. >> eric: i went through 42 pages of the research piece. if you're married, you're happier than if you are not married. if you're a church goer, you are double as happy than if you are not. white and hispanics a little happier than blacks but republicans are substantially happier with democrats. that is through time. income level also. >> dana: i had a conversation with arthur brooks that told me income wise, the democrats are 9%

higher in terms of overall income they bring it down. you can't bring it just to money. if you think about the fairness point with occupy wall street. they are grumpy folks. >> greg: they are also young. young people shouldn't allowed to vote. they should be in prison for many, many years. i want to go to what juan said? the bigger thing is believing in objective truth or relativism. if you are conservative you believe in good versus evil. ets is a priority for your life. this is bad, this is good. liberalism is on the deconstructionism and relativism that nothing is real, nothing is true. doesn't it leave to am biv louse? and that leads to depression? does it make sense? >> juan: potentially because

you're not sure how to live your life. if you talk to young people about religion in the country, more than one fundamentalists they want somebody that is certain. >> kimberly: they want structure. >> greg: organized religion went down hill when they introduced the acoustic guitar. >> dana: i love that. saturday evening. >> greg: it destroyed math. >> dana: let me mention another thing. >> kimberly: you are against sign of the peace? what is wrong with you? >> greg: i find it uncomfortable. jus >> juan: to shake hands? >> greg: you don't go to mass to shake hands with strangers. >> eric: my wife and i had this discussion sunday. in mass, kid in front row is coughing, and sneezing. >> juan: what are you going to do? >> eric: time to shake

hands. the guy behind me in front of me shakes his hand. i'm looking at his hand going please don't ask me. he asked me. >> juan: what do you do? what do you do when the cup comes to you -- >> eric: i don't drink the cup. >> dana: you think it's a plague? body of christ. one last point. people at both extremes are more happy than moderates to your point. you feel like you figure it out. liberalism is your thing. >> juan: if you sit next to kimberly -- >> dana: you are always happy! >> eric: the most important part of the pages is dog owners and cat owners are about the same. >> dana: dogs and cats. we can all get along.

>> juan: that is not true. >> greg: ferret owners! >> dana: lovely. arthur brooks wrote this. called why conservatives are happier than liberals. turns out, it wasn't mission impossible. tom cruise and his wife katie holmes reached a settlement two weeks after filing for divorce. details next. ♪ ♪ large metal object hitting the ground) things have been a little strange. (sfx: sound of piano smashing) roadrunner: meep meep. meep meep?

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i'm bret baier in prince william county, virginia, focusing on major swing county in presidential race, across the country. you'll see why this one qualifies. tonight on "special report," the fight over taxes. president obama wants congress to extend the bush era tax cut

for middle class to keep them the same for one year. opponents say it would be a tax increase for people and small businesses earning more than $250,000 a year. a report and brit hume's analysis. mitt romney and the rnc took $106 million last month. $35 million more than president obama and the dnc. carl cameron has the fall-out. house votes wednesday on republican measure to repeal the president's healthcare law. one for says he is not enforcing the healthcare law as written. we'll explain. word of a possible peace deal in syria. special report from prince william county, virginia, starts at 6:00 eastern. now back to new york and "the five." ♪ ♪ >> greg: welcome back.

the worst thing about july. it's hot. just like last year, it's summer and it stinks. it's gotten worse as link fire to global warming. the media reports on thousands of broken temperature records, they egg nore what the meteorologists joe points out that half the u.s. had above normal temperatures in june, the other half was below normal. for manmade co2 causing high temperatures, data shows that the average temperature of the earth between 900 and 1300 a.t. was two degrees warmer. there were no suvs then. wildfires, they note according to the u.s. forest service in the 1930s, the u.s. saw average of 39 million-acres burned each year. in 12 years it's 7 million on average. we are getting better at firefighting for sure. what is the deal in the west has been more successful than the rest of the world so we must be guilty of something.

the most strident believers come from the west itself. west will never forgive us for winning. what better way to convict us than to demonstrate we murder mother earth, itself. be ideal with the heat. bathtub full of ice. eric squeezes the grapes for me. >> dana: does he peel them? >> eric: freezes the grapes for me? >> greg: taking a clean thing -- you ruined it. >> they figured out the earth increase in temperature 1.4 threes every 100 years. if you apply it to the national debt, the national debt is increasing 67,000 times faster. than the earth is warming. work on the debt. >> greg: how did you work that back in? that is almost genius. anybody want to talk about this? >> juan: i have a question.

teacher, teacher, me, me, me. are you a denyer? >> greg: i read both sides. i spent a lot of time. i hate this topic. to write about it you have to read about it and it's a pain. you are obligated because if you don't people ask questions and you don't have answers. >> dana: most people who write about it don't read. the headline is alacious. the forest fire peace. over time, environmentalists lost logging and brush clearing and that fueled fire for problem. >> greg: bigger story from kimberly's perspective, a week since katie holmes filed for divorce from tom cruise, the couple settled. so the national nightmare is over. this is keeping you up at night. no real details on what happened. we assume katie had a lot on tom. am i right? >> kimberly: what happened realistically maybe that is

true. they had prenup and came to settlement that was favorable for katie and had it worked out. what chi, work it out with attorney. they make the announcement that they are splitting once the details are finalized, if they can manage it that way. >> greg: she left him and scared him. she scared him and left. he was like i don't have control over anybody. >> kimberly: were you following them on your bicycle so that is how you know? >> eric: the church of scientology may not like the divorce or may not like it public. put pressure -- >> dana: make it go away. >> eric: the easiest way to make it go away is cash. >> greg: juan, you were talking in the break over how heart broken you are over this mess. >> juan: is that right? what does katie holmes do?

>> greg: she's an actress. >> juan: is he is successful? >> kimberly: in "dawson creek" and batman movie. >> greg: an underrated film called "grow." >> juan: she is no tom cruise. >> greg: tom cruise is free, kimberly. put him in the k.g. cage. i don't know what i'm talking about. coming up, chris christie seaside showdown. we show you the latest shouting match with the heckler with an ice cream cone in his hand. if you leave now, i'll cry myself to sleep. ♪ ♪

♪ ♪ >> juan: oh, boy. new jersey's tough talking governor is at it again. this time, chris christie gave

a heckler a piece of his mind on the jersey shore. >> you're a real piece. keep your mouth shut. >> keep walking. keep walking. keep walking. what do you make of that? >> kimberly: that is why the boardwalk can be dangerous to bring children. i like the guy. i like his politics that he can speak his mind and stick up for viewpoint and val that he believes in. he would be a good v.p. choice to get after it with obama. but this is not behavior that is fibe. this is counse someone could be president of the united states. i'll take his side. >> eric: i'll take his side. it shows passion. he was calling him out. what he is doing with the teachers is saving the state a

bootload of money there. -- boatload of money. good job. good job. >> greg: you didn't see the second part of the tape. selectively edited. he then punched snookie in the face. disgusting. we have can't have political leader punching american hero like snookie. i have been defending chris christie and his adorable behavior but now it's a one-trick pony. >> kimberly: it's a banned phrase. >> greg: a one-trick unicorn. we get it. you are aggressive and obnoxious and that's cute and different. but after a while -- >> juan: he's supposed to be a grown man. >> greg: falling in love with his youtube videos. i like him. just i love what he is doing with the schools. >> kimberly: you are a supporter of that. >> juan: i am. but he should have walked away. >> kimberly: what about

dana? >> juan: i'll ask her about this. columbus, ohio, little league baseball. here is what happened. >> hey! [ yelling ] what are you doing? >> dana: that never happened at the debate tournaments i went to. imagine if chris christie was there. this is appalling behavior. if you read the story it says one team had music they were playing too. loud. bothering the other one. tough guys and have a big fight. pathetic. >> greg: this is a common problem. a team visits and extra

boisous and then someone like me will show up bringing livestock and it goes bad. >> eric: in my town there is a little league brawl, like this. the father went to his car and took a bat and hit the other coach. the kids are looking at the parents. they're imprinting the most aggressive kids. kids of the parents. >> juan: my kid was a hockey player. the other day, a story a hockey mom literally got on the ice. >> dana: we did that story three days in a row. what is going on? one more thing. my favorite part of the show coming up. this is our anniversary week. "the five" turns one on wednesday. the celebration takes off right here, right now. join us as we take a trip down memory lane coming at you. ♪

♪

>> greg: every single thing i regret in my life occurred after four melon balls. >> what is that? >> greg: medori. >> i would have to drink 50,000 melon balls. >> oh, man.

all right. >> you are the strangest human being i've ever met. god bless you. no, no, no. melon ball shooters. that you take and put in your mouth. >> you are both so red right now. >> okay. >> hmm. well, "the five" will be one on wednesday. that is one of several flashback pieces you'll see this week as we celebrate the first year on the air. you know what melon balls are now. >> dana: you wouldn't believe what i have learned. i learned about urban dictionary where i go after the show to see what greg was talking about. >> kimberly: that is a cake from the cake boss who helped us celebrate the anniversary week for "the five" on fox and friends. it's gigantic.

3d version of our "the five" star logo. he made sculptures of all of us. he said funny stuff about it. we were laughing about how we look. juan, as andrea said -- [ inaudible ] compliment. >> dana: bob lost weight. greg and eric excellent posture. >> greg: that is not me. >> kimberly: roll from this morning. how we celebrate the week. >> kimberly guilfoyle you worked on the longest. you have to make the curves. it takes time. you did a good job. >> i'm definitely going to watch it tonight. >> you know what? that are like this. i can only imagine when you are mikeed up. >> kimberly: what do you think? you wonder why we were still doing, this mning.

just my gosh! you bit his head off. >> kimberly: you turned this in a horror show! >> juan: now he has a spike -- >> kimberly: greg, one more thing besides eating your head off there. >> greg: it's been a week. time for greg dreams of my five. >> dreams of my five. >> last night we are sitting around the table ready to do the show. we all looked down and we had no papers and there were no stories and it was 5:00, we were all freaking out. governor huckabee walks in and goes don't worry about it. he gets on the phone and in walks burt reynolds. so i go to shake his head and burt fist bumps me. so i realize i have to get home fast because my notes were there and i get in a car but i don't have a driver's license. i get pulled over and they

take to jail. but it's an old house in allen town and i'm on the floor eating loafs of wonder bread in balls and eating it and eating it and eating it. it woke up. >> kimberly: can we get a psychiatrist, mental health intervention. >> dana: i'm going to think about that. good luck. please be careful. a fan of "the five" is running with the bulls tomorrow in pamplona in spain. he went yesterday and sent us pictures of other people getting hurt. your mom watches too. be safe. >> eric: we heart about tom-kat breakup. every chant they're ends, there is that one. new one begins. wish happy couple representative barney frank and jim ready. yea. they got married. >> greg: i am happy for them. >> juan: last week i had a piece in "wall street journal"

while my dad brought the family to brooklyn many years ago. miff son and i appeared on fox and friends last thursday to talk about that family histor history. >> gave me a chance to see how far my dad had come. i'm so proud of him. because of him and knowing the story my chance to go back and see that. every sacrifice he made is for me, for my generation. what i could do is make equal sacrifices for my children. >> he might inherit your seat on "the five." just he could do better than that. he's a big-time. >> greg: he is a right winger, isn't he? >> juan: both of my sons are republicans. >> kimberly: they learned something. also, i want to bring this up. i want to bring up something that we talk to you about friday that the senior producer porter barry, there he is, the man. with his dad bob and ran in -- triathlon.

we want to say congratulations. porter, we are super proud of you. none of us could do that. dana could. >> dana: i couldn't do it. i could do a yoga thon. >> kimberly: it will be a great week on "the five." stay with us to see all the clips. they're good. thank you for watching. see you back here tomorrow. have a great night, everyone. ♪ ♪ >> bret: welcome to a special edition of "special report." i'm bret baier. coming to you live from prince william county, virginia. important swing county in an important swing state. the commonwealth of virginia expected to be a major battleground for the 2012 presidential race. the election could come down to a few swing states. inside each state there are swing counties. we have identified 37 of the swing counties and 12

battleground states on the voting pattern, key issues and demographics. they're marked with yellow push pin on the map. "special report" will hit six of the swing counties across the country. the red pins will tell you where we take it live. expert analysis from the reporters who cover the area. we have talk to voters. indiana, housing is a major issue. and other places where falling income has people on edge there. my colleague bill hemmer is doing the same. talking to six other counties. cumberland county, north carolina, where military families are seen as key. orange county, florida, a place hit hard by the housing crisis. prince william county voted for statewide winner the last 12 presidential elections. lyndon b. johnson in 1964 was the last democrat to win here before barack obama did in