hi, everybody, welcome to "the wall street journal report." i'm maria bartiromo. just days until the midterm elections. the economy front and center. what will voters say? will washington listen? and what impact will it have on the markets and your portfolio? and love them or hate them, the tea party is a force to be reckoned with in american politics. we'll talk to the power behind the party and find out what is brewing for america's future. then, will american taxpayers ever get their money back from detroit? i'll talk to the man who helped bring the auto industry back from the brink. "wall street journal report" begins right now. >> this is america's number one financial news program, "the wall street journal report."

now maria bartiromo. here is a look at what is making news as we head into a new week on wall street. the u.s. economy edged up as expected in the third quarter. the gross domestic product, which is broadest overall measure of the u.s. economy grew at 2% for the quarter, just what economisting were looking for. a pickup in consumer spending was an encouraging note. consumer spending accounts for about 70% of u.s. economic activity. after hitting a six-month high on monday, the markets were basically flat midweek. in the thick of earning season, most companies are showing strong third quarter results including texas instruments and motorola and microsoft, all beating analysts expectations. procter & gamble, exxon mobil and 3m came in ahead of expectations. and defense giant northrop grumman, general dynamics and raytheon beat on the bottom line as well. the case-shiller 20 city index

shows prices of single family homes fell 0.3 in august from july. but they were up 1.7% from the same period a year earlier. will economic uncertainty plague the markets this fall? and what impact will that have on this week's midterm elections. my guests diane swonk, an economist with mesirow financial and eamon javers. good to have you both on the program. thanks for joining us. >> my pleasure. >> thank you. >> gdp came out friday showing 2% growth in the third quarter. what does that say about the economy? >> it confirms something we already know. most americans don't believe the economy has grown since the recovery started in june of 2009, and certainly we're seeing growth, but not enough. not enough to bring down the unemployment rate, not enough to make a real difference to most americans, and that will play heavily and weigh heavily in the elections next week. >> so eamon, what are the implications to the president's

economic policy? does he move to the center? two years of gridlock? how do you see this playing out? >> well, he is sort of stuck. he is telling the same story this week that he has been telling all along so far which is yes, we're having growth, but no, it's not good enough. and politically, that's just not a good enough story for the obama administration going into these midterm elections, which people are predicting now are going to be a democratic bloodbath on tuesday. that's really going to present some challenges for obama for the last two years of his first term. he is going to have to figure out what he can do to move the needle on unemployment which is far more important in terms of gdp in terms of the politics situation. it may be that the obama administration is a little bit out of answers and they're going to have to shift to the center a little bit and maybe take their cues from a potential new republican majority on the hill. >> do you agree with that, diane? and also, how do you get jobs create that point in the recovery? >> there is a silver bullet to be shed, believe me, a lot of democrats would have shot it already. the bottom line is there is no easy out here. what i really am concerned about going forward is gridlock.

gridlock is not the answer at this stage of the game. we really need compromise. the only way to move forward in terms of economic policy is to think about the deficit over the longer haul, to be able to think about more intelligent debate. i know that's kind of an oxymoron for capitol hill these days, but an intelligent debate what our priorities are as a nation. where do we agree? we need to start finding out the compromise on where we agree across partisan lines and really find some kind of center. for us to work from. even if it's a pretty hollow center. >> it's a great way to put it, diane. eamon, the tea party. >> yes. >> let's talk about that. it's been such a big story this year. what will be the longer impact of this movement on american business? >> well, you talk about potential for compromise. i tell you, the tea party folks who are going to get elected on tuesday are not in a compromising mood at all. these are folks who are going to feel like they got elected for a reason. business can look forward to working with the tea party on a lot of issues. they're going to like the fact that these are low tax folks.

the fact that they're low regulatory folks, that they want to wind down government intervention in the markets. but business might be a little wary of the tea party on a whole host of other issues including foreign trade, the politically independent federal reserve. a lot of tea party folks want to question the federal reserve. and look, there are a lot of executives of companies that got a bailout from the government that don't necessarily think that you should stop all bailouts across the board. ask the folks at gm what they think or ask the folks at citigroup what they think about government bailouts. a lot of them tell you it's a necessary evil, but necessary. the tea partiers don't see it that way at all. >> a big debate on that, no doubt about it, eamon. diane, a big week ahead. let's talk about the upcoming catalyst for the markets. we've got the fed meeting, the open market committee convening on election day, set to launch a new round of quantitative easing. the jobs numbers of course released on friday. a big week. what are you expecting? >> it's probably going to be more scary than halloween. but i am expecting that the federal reserve will begin its

incremental move in the quantitative mad cow diseasing. it's incremental for several reasons. one is we don't need the shock and awe we did during the height of the crisis to stem panic. many people are pretty kweisi about the economy these days. quantitative easing is a wrong way to think about it. they're trying to lower long-term interest rates to encourage more debt restructuring by consumers, to encourage more mortgage refinancing, and to encourage some banks from buying treasury banks instead of lending into the private sector. these are inadvertent ways the fed hopes, we don't know if it will work or not, that quantitative ease cog help. also boosting wealth effects, stock prices and finally the appreciation in the dollar. this is not something directly targeted by the fed. but a weaker dollar does mean stronger exports. and frankly when you're in a low inflation environment, these are not things you mind as a federal reserve. >> well, it's all great points. we will be watching big tuesday and wednesday for markets. thank you so much joining us, both of you.

we appreciate it. diane swonk, eamon javers, guys, thanks. we'll see you soon. coming up next, inside one of the tea party's most established organizations. how much will they be celebrating on election day? and the man who came to the rescue when the wheels came off the auto industry. what went wrong? what went right? and will taxpayers get repaid. as we take a break, take a look at how the stock market ended the week. ♪

[ male announcer ] debating is part of the american fabric. it is who we are and what makes us great. we debate politics. we debate sports. we debate art. and we debate debates. ♪ but when it comes to cars... the debate...is over. the 2011 s-class. mercedes-benz. the best or nothing. i was supposed to retire there. carly fiorina changed all that. [ cheri ] fiorina laid off 30,000 people. and she shipped our jobs to china. and india. i had to pack my bags and i was out the door that night. we even had to train our replacements. she didn't need 5 corporate jets. [ farrell ] one hundred million for herself. fiorina never cared about our jobs. not then and not now. [ boxer ] i'm barbara boxer and i approve this message.

well, the 2010 elections are shaping up to be the most expensive midterms in history. most of the nearly $4 billion cost is being raised not by candidates, but by political parties and outside groups. the network of tea party organizers is the outside group brewing up considerable attention and cash this year. joining me now is matt kibbe. he is chief executive of

freedomworks political action committee. matt, it's wonderful to have you on the program. welcome. >> thanks for having me. >> freedomworks has been chaired by dick armey since 2004. you have done more than just about any other existing political organization to build the tea party cause and engage volunteers. talk to us about it. is anybody in charge of the tea party? >> i don't think anybody is in charge of the tea party. and that's where the real strength of this diverse, broad decentralized movement comes from. and the power in this election is not about how much money is being spent. it's not about how many tv ads are on the air. it's about this network and their ability on the local level to get out the vote, to put on door hangers and all the work that needs to be done to get voters to the polls on election day. >> how do you do it? what's the agenda? >> well, the agenda is what drives the people to act, because we're looking for the government that stops spending money it doesn't have. we're looking for a sense of

humility when it comes to economic policy that not everybody in washington, d.c. knows better than the free market process. and that's the agenda that has brought all of these tea party activists out of their homes. how you actually do it involves real people talking to their neighbors, going door to door, and engaging people that haven't necessarily been involved in the political debate so far. >> this week a supporter of kentucky senate candidate rand paul endorsed by freedomworks was involved in a physical altercation with a woman outside a candidate's debate. how important is tapping into anger for your get out the vote efforts, and what are people angry about? >> well, if you look at a longer version of that same video, it almost looked to me like the activist was trying to protect what looked like a lunge at the candidate himself. i don't know the details. i wasn't there. but i don't think it's about anger. i think people are motivated more by a fear that the government is not listening and a fear that the government is exacerbating all of these

economic problems that we have by spending money and not listening to the people. and that's really what the motivation. >> and i guess the agenda not only lowers spending, but smaller government? >> yeah, absolutely. i think you're looking at a return to the traditions of the constitution that says restrain government so that the market, so that people, so that entrepreneurs can act in a free economy. and that's really an american tradition. there is nothing radical about this. i think what is radical is the notion that government should be involved in everything, every aspect of our lives whether it's bailing out wall street or taking over car companies, or spending trillions of dollars to stimulate government, not the economy. >> and you're talking about cutting spending and looking at smaller government. let's talk about some of the other ideas. what specific ideas do leaders of the tea party movement have to address the federal deficit? everyone is worried about the debt out of control in this country. >> yeah, and i think that's

probably the number one issue that animates the tea party. and the first thing, if you look at how entitlement growths over the out years dominates the deficit forecast, the first thing we should probably do is repeal obama care which is the unentitlement which hasn't taken effect yet, and it represents trillions and trillions of dollars that we don't have. you look at that. you look at programs that don't work lik like fannie and freddi that is a good step towards deficit reduction, towards balancing the budget. >> when people hear now that obama care could be repealed, it just seems like such a waste of time, energy, money, all of that political energy as well as the country's focus on health care over the last year, only for it to be repealed? >> yeah. well, the american people didn't want it, and the democrats and the president ignored what was a clear signal again and again and again from the american people.

so i think it's almost a duty to repeal it. and from a budget point of view, understand this. we simply can't afford a massive entitlement like this. the congressional budget office and other official forecasts have traditionally gotten the out year projections of things like medicare and social security and medicaid. they've missed the mark by thousands of percentage points. and that's just a fiscal time bomb we can't afford. >> people want to know how the funding is broken down. what is your primary source of funding, matt? what is the breakdown of donations? under $10,000 and over $10,000? >> the vast majority of my donors give anywhere from 25 to a thousand dollars. we have 50,000 donors so far this year. and the makeup of my donor base is almost exclusively individuals. we do get a little bit of corporate money. it's a nominal percentage. we do get some money from nonprofit foundations.

but it's primarily individuals who share the values of limited government and fiscal responsibility. >> it's certainly been a popular movement. how do you take a protest populist movement that makes heroes out of and in some cases outsiders and being an effective part of the government that already exists. >> understand that almost every one of these new republican candidates who will get elected on november 2nd will have signed on to something what amounts to a tea party manifesto, the contract from america. it's a ten-point policy plan that focuses on reining in spending, respecting the constitution, repealing and replacing obama care, and passing an energy policy that allows for the production of american energy. we're going to start to see them introduce bills. we're going to start to see them offer legislative ideas. and from the outside, they have this machinery, the tea party movement, that is going to push them to get that legislation over the finish line. >> matt, great to have you on the program. we'll be watching on tuesday. thank you so much for your time today. >> thanks for having me. >> we will see you soon. matt kibbe joining us. up next on the "wall street

journal report," he took the wheel after detroit suffered a crushing blow. is it smooth sailing now for america's auto industry? we'll talk to the chief engineer of the

each day was fueled by thorough preparation for events to come. well somewhere along the way, emily went right on living. but you see, with the help of her raymond james financial advisor, she had planned for every eventuality. which meant she continued to have the means to live on... even at the ripe old age of 187.

life well planned. see what a raymond james advisor can do for you. [ technician ] are you busy? management just sent over these new technical manuals. they need you to translate them into portuguese. by tomorrow. [ male announcer ] ducati knows it's better for xerox to manage their global publications. so they can focus on building amazing bikes. with xerox, you're ready for real business. steven rattner is a famous figure on wall street. he started out as a reporter for "the new york times," moved to investment banking, and then founded the legendary private equity firm quadrangle securities.

his next step was washington, where he was chosen to head up the rescue of the auto industry. now he has written an insiders account of what just happened called "overhaul." he joins me now with more on that. great to see you, steve. >> nice to see you, maria. >> thank you so much for joining us. as the engineer of the auto industry bailout, the state and the fate of detroit is clearly close to your heart. how do you think chrysler and gm are doing now? give us the state of business today. >> gm i think is doing quite well. they'll soon report their third quarter profits. they made a profit in the first two quarters of this year for the first time in three years. their market share is holding up. their numbers are very good and they're going to go public some time in november. and that's going to be a seminole event in showing how successful this was. >> we just spoked to the tea party political action group and he was very critical of bailouts. do you think american taxpayers will be repaid the money that they lent to the auto companies? >> we put $82 billion into this whole sector for gm, chrysler as

well as the suppliers, things like that. and i believe if we don't get back all of it, we're going get very close to it. i think people are very critical of t.a.r.p. and the bailouts have no idea what the consequences would have been had we not done that. had not saved gm and chrysler, we would have had a complete meltdown in the auto sector, suppliers. ford would not have been able to get parts to make cars. there would have been two to three million jobs lost in an instant. >> so what do you say to the people, though, that say look. they made their mistakes. maybe they should have gone down and new auto companies could have come up. >> i think the chances of that working in a timely way in this kind of an economy are remote. remember, nobody was build a out personally. the shareholders of gm and chrysler lost all their money. rig wagner lost his job. the debt holders lost most of their money. there was a lot -- the uaw had to agree to major concessions in their contract. the people who were responsible for this problem paid the price for being responsible for the problem. we simply didn't want the country to suffer the consequences of their mistakes. >> let me ask you this, though. you left the obama administration after six months

when the controversy over pay to play involving quadrangle and new york's pension fund came to light. you called this the most painful time in your life. where does it stand now? >> it stands now in the process of hopefully being resolved. and there is not much i can say about it. but look, i've been in business 35 years in one form or another. i've never had my integrity questioned or honesty. i've certainly been criticized plenty. it was painful for me. it was painful for my family and i hope it will be over soon. >> president obama meanwhile has been criticized for not having any business people around him. you said that you saw qualities in him that a top ceo would have. talk to us about that, because certainly from the outside, it looks like he is anti-business. >> well, you have to separate those two points. what i said was that his management style, his management skills, the way he made decisions, the way he picked people, the way he went about his business reminded me of the best ceos i had seen. and i think the guy is a natural to have that kind of a role. he is not a business person by background, and that is part of what people are unhappy about.

i don't believe this administration is anti-business. i know there is that sentiment out there. a lot of it is reflecting what the country feels, which is intensely anti-business. i would love to see the administration push back more on that anti-business sentiment in the country. but he has to live in the real world. and that show people feel. he has to reflect that as well as part of his job. >> what you expecting from the midterms? and do you think what happens in the midterms pushes him either to be more business-friendly or change his agenda in any way? >> well, i think business first of all has to separate the rhetoric from the reality. i don't think there is very much this administration has actually done that is anti-business. and certainly very little, if anything they have done that they didn't tell before they got here he was going to do. he campaigned on health care reform. he campaigned on regulatory reform. this was all part of -- there is no surprises here. there shouldn't be, anyway. look, the election is probably certainly going to be ugly for the democrats. i think we will lose the house. i think we'll keep the senate. but that's not particularly

insightful comment. so just as happened in '94, they'll have to be compromises in order to move any legislative agenda forward. >> the partisan politics, though, born out of his agenda in some cases. did he make a mistake by sticking to the ideology that health care should be the number one priority for people in an environment when actually jobs and jobs created should have been the number one item on the agenda. >> i think jobs was very high on the agenda. the stimulus package, which was widely criticized, he pushed through congress with an enormous effort. i think every serious economist who study it said it has saved or created a very significant number of jobs. the economy would be much worse off without it. at the root of what is going on in the political world at the moment in my view is people don't have jobs. their incomes are stagnant. they're worried and they're scared and they're taking it out on the party in power. that's all very natural. but you can't wave a magic wand and have unemployment go from 9.6% to 5%. when you go through major

surgery, which is what we went through with this financial crisis, it takes time to recover. i understand why people are impatient. but there is no magic wand to wave over these problems. >> steve, great to have you on the program. thank you so much. we appreciate your insights. congratulations on the book, steve rattner. up next on "the wall street journal report," a look at the news that will have on impact on your money. happy holidays for the ghoulish everything. 40% of adult be donning costumes this year. will you be going gaga for halloween? rule the bedtime. rule the upload. verizon built america's most reliable network to make a more powerful you. rule the air. verizon. right now at verizon, you can get a new samsung intensity ii free after mail-in rebate. only at verizon.

for more on our show and our guests, check out our website, wsjr.cnbc.com. and investor agenda at cnbc.com. i hope you will check it out. now a look at the stories coming up in the week ahead that may move the markets and impact your money. third quarter earnings from pfizer and kraft as well as bp, starbucks, toyota, and warren buffett's berkshire hathaway. monday u.s. total personal income and spending day will be reported by the commerce department. on tuesday, november 2nd, it is election day. big event as well as on wednesday the federal reserve's open market committee will wrap up the two-day meeting with its announcement on interest rates and what we've been waiting for, quantitative easing. monthly auto sales will also be reported on wednesday. and then on friday, the highly anticipated jobs report will be out. we will find out how many jobs the economy has cut or gained in the last month. finally today, americans will spend close to $6 billion on halloween this year.

price tag aside, it's the costumes that can be downright scary. if you went gaga for lady gaga's meat dress, new york's longest running steak house has a rare opportunity to celebrate halloween in style. old homestead's meat costume made of only the finest usda prime steak. this isn't your basic skirt steak, from head to hoof. it's a one-of-a-kind outfit, and it costs $100,000. now that is scary. that will do it for us today. thank you so much for joining us. my guests next week, golf's great annika sorenstam tells me about her life off the links. keep it right here where wall street meets main street. have a great week, everybody. i'll see you again next weekend. i'm among 30,000 employees who used to work for hp.

i was supposed to retire there. carly fiorina changed all that. [ cheri ] fiorina laid off 30,000 people. and she shipped our jobs to china. and india. i had to pack my bags and i was out the door that night. we even had to train our replacements.