cardboard no, delicious yes. so where's the fiber? maybe it's in the honey clusters. [ male announcer ] fiber one. cardboard no, delicious yes. hi, everybody. welcome to "the wall street journal report." i'm maria bartiromo. today i'll speak with legendary value investor mario gabelli. find out how he sees the markets for the rest of the year, and where he is putting his money now. then the man who has been sounding the alarm on america's debt and deficit for years. does he see any hope on the horizon? i'll speak with former comptroller general david walker. and michael j. fox on his battle with parkinson's and funding the research and finding a re. "the wall street journal report" starts 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. disappointing news about america's economy. another look at the gdp for the first quarter by the federal government showed an annual increase of just 1.8%. that's a slower pace than economists had expected, and a sign of a softening economy, even though it is a backwards-looking indicator. the week started off with a blue monday as the markets fell on concerns about europe, but broke a three-day losing streak by wednesday. the markets were back up later in the week. encouraging news about the housing market for a first time in a while. new single-family home sales hit a four-month high. that was a surprise to analysts, and was the second straight month of gains. they increased 7 1/3%, the highest level since december. and small does not mean unsafe when it comes to cars. a new study by the institute for highway safety shows six of 13 small cars tested earned a top safety pick award, and none earned a poor rating. the small car winners, ford focus, hyundai elantra, lexus h

hybrid, nissan juke, and the toyota prius hybrid. mario gabelli is founder, chairman and chief investor of mario investment company. mario joins us with his view on the markets and the economy, and it is always a pleasure to see you, mario. >> it's a privilege to talk about my favorite subject, making money in the markets. >> making money. and how do i do that? >> we have been a practitioner for the last 35 years of a very simple process. find a good business, buy it at a discount from what other people would pay for the whole company, and then just hold it for a period of time. and our bias historically is companies with pricing power. so that's how we do it. and we do it every day. we kind of culled through a lot of annual reports and see a lot of companies. >> let's talk about the week. we had a revised gdp, a little lower than expected. we had 1.8% growth. does that change your view of the growth story, which of course is the fundamental backdrop to how you invest?

>> well, that's a good point, and i'm glad you brought it up. the whole world, all of us on this planet have $64 trillion of gdp. the united states is about 22% of that. but the rest of the world -- and the u.s. consumer is 70% of that. but china, russia and brazil are greater now than the american consumer. well focus not only on gdp in the u.s. but on a global basis. it doesn't bother me. it's the pause that refreshes. >> how is the rest of the world doing? each when you mention china, we're talking about a government that is trying to slow down that red-hot growth. and then when you logistic at the recent decline in commodities, that opens up a question, have we hit a soft spot, or a soft patch in the global economy? >> oh, of course. nothing goes up in a straight line. the chinese said put your foot on the brake on monetary policy, and they basically control thechy saying slow down. the nese had a problem with

fukushima, the earthquake. for example, maria, u.s. passenger car production was schedule at 3.5 million cars. because of what happened in japan, it's down to 3 million. that comes roaring back in the second half. >> what about the fed's quantitative easing program, the so-called qe2 about to expire. a lot of anticipation about june when the fed is not there to buy all those treasuries. do you think the market goes lower? what do you think the chances of a qe3? >> all interesting dynamics. but you have to be proverbially that person from mars not to know that qe2 is end, and all you have to do is read the fed open market committee minutes of a few weeks ago, and they out all of the issues. the more interesting question, is the economy going to slow down so much and is there a miscalculation somewhere that they need a qe3. that is maintain the program, not raise rates, and preclude us

from going into a deflationary period, and i can't answer that. it's a work in progress. >> all right. we've seen choppy trading in terms of the stock market recently. the greek debt story is certainly one worry. and you mentioned the other sort of major elephant in the room, and that is the debt and deficit in this country. so how do you invest with those two negatives looming? >> well, to the degree you want to be a day trader, it was only a year ago, maria, may 6th, 2010 in which there was a real shock to the system because of all these etfs, and the fast trading and all of that. we haven't solved that. so the answer is the market does have volatility. the vix index has come down sharply. and if you're worried about day to day, you know what? don't buy stocks. but if you want to make money or maintain your purchasing power, then you want to maintain your equities and ignore the vibrations. >> let's talk about some of the exciting companies you're looking at now and who has pricing power. what do you like?

>> well, many people have what they call an ipad. many people have what they call a phone. that's wireless. why what do i the goebel consumer want? i want mobility. i want speed. i want to have what i want when i can get it. whether it's a video or even watching news. and instantly online. so how does that happen? where are the highways? it's wireless. so who owns the spectrum? who is going to be available? who is going to be the one that someone will say i want to buy you, i want to make love to you, i want to take over your company. companies in the united states like u.s. cellular are likely to be someone that is going to buy the stock's 48. it's going to go to a significantly higher place. next star international. and a wireless company in poland that the government wants to sell it. consolidation in that area. another area, power to the people. electric utilities. i was at a meeting yesterday with el paso electric out of el paso, texas, duh, and basically, it has a really terrific job in

managing the company. they're going to consolidate the area. a company out of virginia that is really a global power play. aes was buying a company in dayton. and so the march goes on. if you want to stay wealthy, if you want to increase your wealth over the next 20 or 30 years, and even over the next ten years, just buy good businesses at a discount. >> great advice as always. mario, it's wonderful to have you on a program. thank you so much. >> what a pleasure and privilege. >> mario gabelli there with terrific insights as always. up next, the debate of the debt celling. the impact our bill should pay as the debate stretches from washington to wall street. later on, funding and finding a cure for a debilitating disease. actor michael j. fox will be with us, turning his celebrity into one of science's most successful money-raising efforts. as we take a break, a look at how the stock market ended the week. back in a moment.

using those market-based principles of choice and competition where the power comes to the senior, not to a government bureaucracy helps us improve this system and lower costs. almost any analysis shows we have $500 billion a year, $500 billion a year of higher deficits because of the tax cuts in the bush era that were never paid for. >> two voices from two sides of the political divide at a fiscal summit i moderated this week at the peterson foundation. david walker is former comptroller general of the united states and a founder of the comeback america initiative. he joins me right now with a lot more on that. it's great to see you david. >> great to see you, maria. >> thank you so much for joining us. the house vote this week on raising the cap on total federal government debt beyond the $14.3 trillion debt ceiling. what happens is that court of appealing is not raised?

>> well, it will eventually be raised. the question is when is it going to be raised, how much is it going to be raised, and in exchange for what? it's absolutely imperative that we raise it, because we're basically paying for past since. we've already made commitments that we need to honor. the real question is what are we going to do in order to reduce federal spending in order to be able to reform entitlement programs, in order to be able to engage in comprehensive tax reform so that we can end up making sure we avoid a debt crisis here. >> a very practical question. if we don't see the debt ceiling raised, and i know you say it's imperative, what are the bills that won't be paid right away? in other words, what priorities go to the top? what priorities go to the bottom of the list. do we pay the military? do government workers not get paid? who doesn't get paid? >> well first, right now, we are taking in about $100 billion less a year than our so-called mandatory spending. social security, medicare, interest on the debt, et cetera, we could lay off the military,

all civilian personnel, eliminate all discretionary spending, we're still $100 billion short. in total, we're short $4 billion a day every day. here ask what happens. the 14th amendment says current bondholders are guaranteed to get paid. they're backed by the full faith and credit of the united states government. so the real question is who is not going to get paid? in reality, the treasury secretary would end up having to decide who not to pay, to delay payment. who is going to end up paying the price of that? well, the taxpayer is going to have to end up paying additional penalties because of prop payment act. in addition to that the president may decide to lay off large portions of the civilian or military workforce. unfortunately, in the past when that's happened, once the crisis passed, they retroactively pay these people. so who pays the price of that? the taxpayers. in addition to that, if they don't solve the problem by the first of the month following the month in which social security checks have to be paid, they may not good out on time. so look, we ought to quit kidding ourselves. we have to raise it.

but we have to cut spending for 2012. that's a real cut. we have to bring back tough statutory budget controls with automatic enforcement mechanisms in order to make sure that we deal with the real problems that they're not dealing with right now. >> you made that so easy to understand, so thank you. because i think viewers want to understand what the implications are, who doesn't get paid, where the bills are going. so the treasury is certainly not going to want to default on debt. let's talk about the hard choices to come. much of the money is being spent on those entitlements, medicare, medicaid, social security. is that where the money should be cut? >> well, ultimately we're going to have to cut that, and we're going to have to put the 88% of spending that was not on the table for the continuing resolution debate and the need for comprehensive tax reform on the table. >> how do we increase federal revenue? >> well, we have to engage in comprehensive tax reform that will broaden the tax base. in other words, eliminate,

consolidate, better target existing deductions, exemptions, credits, and exclusions. lower tax rates so we end up generating more revenue in the aggregate so decisions are made more on basic economics than tax considerations so we can eliminate a tremendous amount of compliance costs. >> this is a very important point, because then you eliminate all the stuff that we don't even really know exists in some corners in terms of these tax expenditures. and that broadens the base. >> and maria, we may also have to figure some form of consumption tax once we put tough statutory controls in place for several reasons. one, a large part of our economy is underground, both legal and illegal. you can't get that through an income tax. secondly, wealthy people don't just consume out of their income, they consume out of their wealth. and thirdly, 51% of americans don't pay any income taxes right

now. so they're getting a free ride on the constitutional -- >> 51%? >> 51%. they pay payroll taxes but they don't pay income taxes. essentially all the constitutional roles of the federal government are paid by income tax. so they're getting a free ride. >> why don't they pay income tax? >> because the way our tax system is, there are large portions of people who are exempted from the income tax. we have the earned income tax credit. so not only do you not have to pay the tax, you might get rebates back, okay. so we've exempted a lot of people from the income tax. >> that's a great point. david, it's great to have you on the program. >> good to be here. >> thank you so much. david walker putting it nice and simply for us and accessible. up next on "the wall street journal report," it is the fight of his life. actor michael j. fox on raising funds for parkinson's research. and his philanthropy's new business model. >> i didn't want to raise a bunch of money to raise a bunch of money, kind of si

diseases of the brain, a growing worry in america's medical community. and when it comes to curing parkinson's disease, michael j. fox means business. the actor's foundation has become the world's largest private funder for research into the degenerative brain disease. the philanthropy is directly involved in translating any and all scientific discovery to patient treatment. >> biology is hard. science is hard. but we need -- we need to help create a system where we could

move the translation along and free up basic science the nih and free up from pharmaceutical investment dollars and get academics and research to share and collaborate and share ideas and create a new paradigm. things like biomarkers. if we find biomarkers we can chart the progression of the disease. i got symptoms in my pinkie 20 years ago, 80% of the cells in my brain were already dead. if we can identify it to a biomarker, people who have or are likely to have the disease, it opens the whole area of research. >> more than $200 million has been raised by the foundation. and walk us through the way you spend the money, and how you ensure that the money is spent in the most worthwhile ways. >> we're going to be in business or go out of business. i don't want to be a bank and have an endowment. i don't want to raise a bunch of

money to raise a budge of money, sit on it and pay little bits of it off. i wanted money to come in and go out. so i identify the best research at the time and the most efficacious way to spend that money. >> we have a staff of ph.ds at the fox foundation. having our own scientific point of view really enabled us to move much more quickly and look at the opportunities we're looking at worldwide and not really recall expert from time to time once a year jeez, tell us what you think, but rather interact daily be key folks all over the world. and our staff of strategists are running a portfolio of activities. over this ten-year period we've come to know more about what is going on in parkinson's science than any single entity in the world, which in some ways feels remarkable, but in others speaks to a little bit of a vacuum which is we're focused every day thinking about new treatments. and while we rely on the activities of investigators at academic institutions and companies all over the world, we're really the only ones every day thinking about how to get

that cure for pd patients. >> google co-founder sergey brin and his wife announced a major gift to the fox foundation. can you tell me about that donation and what it will mean to parkinson's research? >> they've been significant supporters of ours, having funded over $100 million of research at the fox foundation thus far, which is extraordinary. and by issuing a new challenge grant for $50 million worth of new funding, that will really enable us to extend our reach. if you only have a little bit of money to spend, you're doing things in sequence. and we have a lot of ideas where we want to be tackling things simultaneously. and so expanded funding like this can really make a difference in how fast we can get to answer. >> the development has been really much easier since we've had a bit of a track record. and this has been great, has been not just the person making a contribution, but really the investor, someone who wants an outcome and is making the best investment they can towards that outcome. it recognizes that the bang for

the buck with us. >> michael, a minute ago you said ever since i saw the first symptoms in my pinkie, can you tell what's those symptoms were and how the disease has developed? >> yeah. the thing about parkinson's is that it's very -- everyone gets their own version. so for me it was -- i was 29, and i noticed the pinkie, a tremor in my pinkie. and i thought nothing of it. and it progressed to be a shoulder pain in my shoulder and pain across my thoracic. and i thought it was sports injury. and finally through one connection or another went to a neurologist who diagnosed me with onset parkinson's and said pretty bluntly you have ten years left to work. i made the public that i had it. and at that point it was getting hard to conceal it. i first regretted the decision i went public with it. very quickly because it was kind of a new story i wasn't comfortable seeing. but quickly the story changed from me having parkinson's to what is parkinson's, and then i

started to go on the online community, the pd chat rooms and see this community that i didn't know i was a part of. as my disease has progressed, but i've been fortunate. i've plateaued. and that may change. that may not change. i may have found the right cocktail of medications for me that is working pretty well. as you see, i'm drastically different than i was at the beginning of the interview. it changes. and i'm able to do things that i wouldn't have thought i would be able to do 20 years out from diagnosis. i'm free to do this work, and i'm still physically capable of doing this work, and it's a great privilege. >> and you have helped so many people. >> most foundations want to do the kind of work we're doing. and they say what motivious, what keeps you going. and simply three-word motto, which is purely motive. we have one target.

it's get this answered. get this solved. and we know the agenda. we don't a big building, we don't want a campus. we don't want a procedure, restaurants, we just want to stop parkinson's. >> my thanks to michael j. fox and debi brooks. up next on "the wall street journal report," we'll take a look at the news this upcoming week that will have an impact on your money. and more about the latest business stories. i hope you'll follow me on twitter. look for @maria bartiromo. [ male announcer ] for fastidious librarian emily skinner, each day was fueled by thorough preparation for events to come.

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for more on our show and our guests, check out the welcomes, wsjr.cnbc.com. now a look at the stories coming up in the week ahead that may move the markets and impact your money this week. monday is memorial day. all u.s. markets are closed for the holiday. on tuesday we get the latest reading of consumer confidence. on wednesday, the first of june, monthly auto sales figures will be released. and on friday, the layup labor department releases the jobs report. and finally today, our condolences to the family of mark haines, a pioneer in the cable television industry, and our colleague here at cnbc, where this program is produced. mark passed away suddenly this week at the age of 65. in addition to being a professional and a gentleman, he was my friend. we launched the show "squawk box" together in 1995. we were proud of delivering something new and valuable to

viewers. mark fought for the individual investor, and fought hard. he was not afraid to poke holes in your story or in your interview. if it didn't make sense to him, he told you so, because he spoke for his viewer. he was a mentor and a hero. his highest point of his professional career i believe came on september 11th. he delivered the tragic news of the terrorist attacks without emotion or hysteria, but with calm and accurate information. but every day he popped around to different stories and exchanges and made business news interesting and fun. we are all heartbroken here at cnbc. our thoughts and prayers to his family. all miss my friend and my colleague mark.