than three years in the senate. the way to compromise, the house passed budgets. the difference being the house budget would spend $40 trillion in ten years. president obama wants to spend $47 trillion. nobody is cutting anything in total but we're trying to reduce growth and spending and that is important to understand. >> neil: you're right about that. but it's not as if the democrats are all evil. the fact of the matter is this. unless it's fixed and soon, republicans say you can't touch defense and democrats have the idea you can't consider reigning in growth of entitlement, whatever the dogmatic and sure in your heart -- >> guest: neil -- >> neil: listen. we're going to an abyss. you know it and i know it, right? >> guest: fiscal conservative look at the defense department, audit the thing.

we're not oppose to further reduction in rate of increase of spending and defense. but we need to do it more with the scalpel opposed to a meat ax, which is what the sequestration does. it's mindless approach that defense secretary panetta said. we agree with that. >> neil: agree to that mindless approach. john boehner agreed to the approach. we have might not have been wise but everyone agreed to it. >> guest: not everybody. it didn't. nor did jim jordan. we thought it was a stupid deal. it was. playing out to be that way. so no, we need to consolidate the gains of savings, the fact is it's not just doing a deal, about actually putting true fiscal constraints. listening to the other guests there, they're right. the problem is the size of government right now is 24% on trajectory -- >> we're talking about the slowing growth. senator, thank you very much. all right. senator, guys, i know you at home it appears i'm short-tempered with the issue. i did have breakfast. it's not a food thing or sugar thing. i'm telling you, you should be worried about this.

both sides are to blame for this. we have don't get hopping on this right now, we can be dogmatic all we want. you can be red, you can be blue. or you can just blow up. they don't do something in matter of weeks we blow up. more from washington. i had three kids. and she became the full time mother of three. it was soccer, and ballet, and cheerleading, and baseball. those years were crazy. so, as we go into this next phase, you know, a big part of it for us is that there isn't anything on the schedule.

it's about time they take some responsibility here. instead of signing pledges to grover norquist not to ask wealthiest among us to contribute and bring back the middle class, they should be signing a penal saying to the middle class we're going to level the playing field. >> by the way, at that point, norquist of americans for tax reform outpaced sarah palin as the most often dropped name at presidential debates. the aforementioned norquist, thorn in side of democrats and republicans. great to have you.

>> go to be with you. >> neil: people think the tax issue is those op upper income that will go up. as it stands now, all taxes will go up. from the bottom 10% to 15%. you argue that nothing puts chill in the economy more than that. >> absolutely. we ought not to be raising taxes. the pledge by biden is pledge to american people that they'll oppose any and all tax increases. biden wants to pretend it's for the upper income people. for all the taxpayers. one thing to keep in mind. the promise that obama made four years ago never to raise taxes on anyone who less than $250,000 a year has been replaced. biden didn't get the memo. what he said starting august 8 in grand junction, colorado, the new plan is no income tax increase next year.

>> neil: we know taxes will go up, healthcare law, medical devices and host of others. selling a home, assets, et cetera. what else? >> that's what we don't know. he's promising that for one year he won't raise incomes taxes. we know the tax increase in january could have been avoided if the democrats for two years, they could have made the tax cut permanent for foreign people, middle income people, left-handed people. they made it permanent for nobody. that telegraphs the plan. after a year they will let them go up on everyone. >> neil: two weeks ago we got in the issue of what is a tax hike? we were talking about all the special breaks, allowances, write-offs at some businesses and individuals enjoy. the thing that reagan went after in 1986.

if you use these to get away with paying no taxes shame on you. the guy in the building since used it as justification. ronald reagan advocating raising taxes period. that is not what he said. what do you say? do you draw the line that credits and closing loopholes is a tax increase? so don't think about it? >> guest: no. eliminate those that don't serve purpose. >> it's not a tax -- >> it is. it needs to be offset by reducing the rate. re-knew neutral, rates down. >> neil: romney talk it about cutting everyone's taxes by 20% and he is going to create the allowances and as he says make it in the end revenue natural -- >> that is not a tax increase. >> neil: ill's a tax cut. allowing for upper income people might find themselves at best with a wash. some may pay more. >> guest: we are looking for overall not raise tax burden

on people. >> neil: i want to be clear. you are on board with the rich carrying a bigger chunk of the burden if their deductions are phased out or limited? >> guest: as long as rates don't go up and the overall tax burden doesn't go up, the tax reform is perfectly acceptable. that is a good idea. >> neil: okay. grover, thank you very much. he is a svengali. he is more popular than sesame street character. lizzy macdonald, interesting what he said that potential middle ground could be how you define a tax hike. allow extension but make sure you are setting it with the real spending cut. that might be a way out for republicans who feel boxed in. i don't know. you have been hearing from powerful financial folks including the head of black rock who isn't sanguine on any

deal and fears the worst. >> we're tracking this out of black rock. larry is at an international monetary fund meetin meeting ino this morning. remark he's making about the fiscal cliff, as you report earlier up to 10% correction. is what the guys at black rock are pricing in the market. that could cost the investors a lot of money because of the fiscal clip problem. what he is saying is this. this is why people listen. this is the biggest money manager, 3.6 trillion in asset about the size of the gdp of germany. he talked about it replacing timothy geithner if president obama wins re-election. on the phone with tim geithner about 50 times in the last year-and-a-half. he is saying that the fiscal cliff for the u.s. is taking up time at the imf talk this morning and problems in spain. new breaking numbers out of what black rock is saying about the contraction in the united states economy if we go

over the fiscal cliff. new numbers saying up to 5% contraction. that would wipe out 1 panth% gdp growth and contract the u.s. economy by 3% more. meaning $807 billion ticking out of the u.s. economy pretty much immediately. he is saying that yes, the markets are not pricing in at correction. they're not pricing in, the u.s. going over the fiscal cliff. they are expecting 11th hour rescue. the federal reserve is printing money and easing the way. he said it would undo the monetary money printing right now. we have to walk out for this. jittery market for next quarter. >> neil: this is why we call you wicked smart. all right. thank you very much. >> sure. >> neil: she is the "b" in fbn, the brains of fox business network. to put what she said in perspective, they try to talk

about getting behind the market and mba soothsayers and the harvard educated and wharton, you know, endowed brainiacs and what makes them tick. fear and greed makes them tick. they are afraid right now. they are afraid. they are going to take the money off the table because they're afraid and certainly not committed because they're afraid. the essence of the market is just that. i wish i could tell you what i do is some sinister supersecret. it is not. they are run by emotion and they're afraid. that's why they the best they do with the money is buy dividend and stock. they are afraid. the folks who invest in the company are greedy enough to think no deal is made in washington. sayonara. but we're not saying sayonara. that's what they are saying to the economy if it happens. we're going to stay here in washington. outside the white house. probably pop over for latte or

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>> neil: welcome back, everybody, from the nation's capitol, where your capital is at stake an we are here. everyone is fixated on the race for president, the guy who lives in that building and the guy who wants to eventually take his place in that building. but we are facing a combination, confluence of events, perform storm, whatever you want to kate at the end of the year that could tryst nation invens seconds after the election is settled where obama is re-elected or romney becomes president-elect. i told you about the tax rate that expire and the spending cuts that tick in simultaneously. remember the ronco commercials? wait, there's more! on the healthcare thing alone this is interesting. the medicare payroll tax hike

goes to 3.8% to 2.9% for those earning over 250 grand. 2.3% excite tax kicks in on sales by medical device make makers. 3.8% investment tax for couples making more than 250,000. threshold for medical expense deductions to write off for your medical expenses rises to 10%. soon after that, the individual mandate kicks in. the individual mandate going to 2018 and the other part of this. we already now know that 6 million have to pay a penalty for not having coverage. you pay penalty to get coverage. it could be a mess. jonathan bush, the ceo there knows how big a mess. we forget about the health portion of this. >> guest: good morning. how was the latte and

coziness? one of my favorite lines. >> neil: the gate was locked. but you know -- >> they don't know you well enough! >> from a distance i look like hannity. we are working on it. >> part of the cliff is 20, 25% of the federal government spend that is healthcare and president 40 to 45% -- approximately 40 to 45% depending who you read does not get us health security we think of as part of healthcare. so the cliff, you know, the good news is that there is room to spend a lot less. and still be safe. the bad news it doesn't look like we will do that by the end of the year or soon. most of what we see kick in for the end of the year, foment the obstacle and makes them tougher and more fierce.

>> your industry is underfire. we don't care if there are shades in between who provide insurance or backup finance for this system. we see the premium going up and the guys are jumping the gun and using the healthcare law as an excuse. confirms our suspicions about you and your crime. what do you think of that? >> i think the covered lives in the united states, the villains are even more annoying as a would-be villain myself. to me, the humanity, the thing missing from healthcare not missing for most of the economy is one thing we're great at as a society. that is shopping.

people don't shop for healthcare. in boston we have easily seven times as many mri machines as we use. no one is using them at 2:00 a.m. marginal cost is 11 bucks to change the paper, the covers on the bed. >> it's bipartisan rapt. you're president bush's first cousin, right? >> right. >> yes. nothing wrong with that. wonderful human being. >> the wrap against the last president bush is he had a prescription vista that wasn't paid for and in other words the republicans and democrats created a mess. we are notting it. do you think we can? >> absolutely. >> companies need to get more company, getting information liquid so we can shop. if we can shop we can spend

more to get great healthcare. >> neil: always a pleasure. thank you. what we're trying to say here, right or left is where we stand. in the middle of the pile of green that we don't have. that we're going to have and if we don't do something by december 31, we will have nothing. oh...there you go. wooohooo....hahaahahaha! i'm gonna stand up to her! no you're not. i know. you know ronny folks who save hundreds of dollars switching to geico sure are happy. how happy are they jimmy? happier than a witch in a broom factory. get happy. get geico. fifteen minutes could save you fifteen percent or more. oh, hey alex. just picking up some, brochures, posters copies of my acceptance speech. great! it's always good to have a backup plan, in case i get hit by a meteor. wow, your hair looks great. didn't realize they did photoshop here. hey, good call on those mugs.

can't let 'em see what you're drinking. you know, i'm glad we're both running a nice, clean race. no need to get nasty. here's your "honk if you had an affair with taylor" yard sign. looks good. [ male announcer ] fedex office. now save 50% on banners.

>> neil: welcome back to washington. i have a question to ask you, and you can e-mail. we are responding to your questions and i personally had quite a few of them this morning. if you're unsure about your job or your spouse's job or illness hits your family, what do you do? are you going to go out and spend a lot this christmas? are you going to plan as big a vacation or vacation at all?

if your child is looking to go to a pricy private school, do you ratchet him or her down to public school? in a way we all do things based on whether we're upbeat about the future or anxious about the future. the business community is anxious about the future. if you think in that scenario you restretch a little bit, they restench a little bit. your bosses across the country are concerned. who know that better than jay timmons with the national association -- [ inaudible ] big ceo. that cuts to the chase, doesn't it? they're apes. >> they are anxious. they want to know what is coming. they hoped that the fiscal cliff would be dealt with before folks left the campaign but it wasn't. so all eyes are on the time period between election -- >> neil: that is what they're doing on the factory floor and they might not expand? >> won't invest, won't grow or create jobs.

they don't know what rules are in place. two fronts, taxes and regulatory policy. taxes are uncompetitive and folks talk about increasing taxes on job creators that make sense. no other country in the world is doing that right now. i'm not sure that that is the right example. on the regulatory front, 2,000 regulations on the manufacturers in the last 30 years makes it hard to compete in this country. >> neil: so this continues and that do you see happening? >> there are several things that could happen if we go off the fiscal cliff. question ses tration occurs -- sequestration occurs and tax increase. they did a study of the defense manufacturing sector. and found that we would lose a million jobs if the defense cuts took place. if we weren't looking at anything else, broadly. we just said okay, let's cut defense. on the tax side, you know, manufacturers are corn concerned. we did a study that showed 55% of the businesses today would not start their business

because of the situation in washington. let alope what might be coming. >> neil: thanks, i think. pat buchanan on what he thinks happens after that. >> at the election center. >> neil: back after this. but with three kids, being home more really helped. man: so we went to fidelity. we talked about where we were and what we could do. we changed our plan and did something about our economy. now we know where to go for help if things change again. call or come in today to take control of your personal economy. get free one-on-one help from america's retirement leader. nature valley trail mix bars are made with real ingredients you can see. like whole roaed nuts, chewy granola, and real fruit. nature valley trail mix bars. 100% natural. 100% delicious. check out all the great deals on great gear at bass pro shops, like...

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