bastianich kirk eichenw restaurateur restaurat hi everybody, welcome to "the wall street journal report," i'm maria bartiromo. a radical proposal about america's debt. the well-known, , well-respecte former governor who says we should just go over the fiscal cliff. and microsoft's lost decade, and the lag, and whether it is too late to fix it. and the recipe for success, building a bnd, an empire and a huge empire. mymy conversation with lydia bastianich. "the wall street journal report" begins right now. this is "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, some encouraging news for america's economy this week, the u.s. trade deficit in june was the

smallest it has been in a year and a half, as lower oil prices curbed imports. america imported 42.9 billions worth of goods than it exported. and trade is a c componenen gdp, and that could mean a stronger gross domestic product. we'll see about that. and a stronger melt, the dow having the first winning streak in more than two months, and the window up for a fifth day in a row. first ti it happened in nearly five months, the markets up again on friday. and we're toward the end of -- the news court met estimates, the retailers, macy's, kohls, and nordstrom beating expectations, jc penny fell short. and the postal service reporting a loss of 5.2 biion for the third quarter, a sign of deepening problems, and mail volume is declining, the post

office has expensive obligations to the retirees. and a massive refinery fire in richmond, california during the week exexpecteded to push ps up to as much as 4.25 a gallon. we're moving closer and closer to the fiscal cliff, a bundle of tax increases late this year. and early next year that will go into effect. they will slash the federal decit by 600 billion. if there is no agreement between congress and the white house on another way to reach cutting the deficit. the federal reserve chairman, ben bernanke says look out for what happens if that happens. >> if the spending cuts were allowed to take effect, a scenario widely referred to as the fiscal cliff, a sllow recession would occur next year, and about one and a quarter million fewer jobs would be created in 20 then. but my next guest says not so fast.

former chairman howard dean says falling off the fiscal cliff may not be so bad. thank you for joining us. >> well, here is the upside, clearly congress can't get its act together. there is no way that congress will agree to cut medicare and so forth and so on, without raising taxes. and i don't think the republicans are interested in that. so here is what you get if we go over the fiscal cliff, chairman ben bernanke, who i have enormous respect for is right, it could be shallow, they say we could be out of it with a growth of 2.2% at the end of the year. in exchange, we get cuts w whic we haven't had in 30 years, going back to the clinton tax cuts, to balance the budget. and we do have entitlement changes. so everybody has something to dislike in the fiscal cliff, the reason i dislike it, i always believe the deficits are bad for the country. this is the first step towards doing something serious for the country, i think it is worth doing. >> so you are not worried about the recession happening in 2013, most of the economists say it

would occur if nothing is done in washington. you say it is okay if it is short term. >> maria, it will occur, i think the recession is terrible, tough on people who won't have jobs. but this is clearly terrible, we can't go on with the deficit. nothing seems to want to -- nobody seems to want to take the political heat. this is the way they're designed to take the politica heat. all of these cuts are necessary, some of them painful. we'll all have to give up something to get out of the federal deficit situation. and the fiscal cliff seems to be the only solution. >> it is amazing there is no discussion about coming to an agreement here. i feel like it is a repeat over and over again, like last summer when we were waiting on the debt ceiling debate. i mean congress goes away for five weeks vacation. i mean, give me a break, that is about e election time. what about the extension on the tax cuts relief? >> that won't do any good, all

they do is what they have been doing for years. kick the problem down the road. this congress is notñi capable doing anything. all they want to do is slow the president so he doesn't get elected. so look, no matter what happens, if you take away as much stimulus as the deficit is happening, there will be a recession, the question is, how much stimulus do you want? >> i personally believe the economy is better than it has been in years, it is not in great shape. somebody has to do something about the deficit, i think the time is now, stop kicking the can down the road. the only decision congress has been able to come up with is a fiscal cliff. i don't think it is great, but it is a lot better than doing nothing. but extending the tax cuts, that wouldn't help. we have to bite the bullet, take the recession -- if the chairman is right, and the ceo agrees with him. it will be short and shallow, that is a tough price to pay but it has to be done in order to deal with the deficit. somebody has to do it sometime.

>> i'm going to tell you, howard, congress i agree with you. but you haven't seen leadership from the president, either. let's face it. there is no conversation at all. coming out of the white house, one year since s&p down graded the rating, that it had for several years. we have actually seen rates come down. what does that tell you? >> well, to be quite honest with you, they did have a deal with the white house, and john boehner backed away from it, because he was from of his right wing. they had a deal, regarding tax increases and the right wing wouldn't do it. this is a congress bent on doing nothing. as you know, the republican leader in congress said my job here is to get rid of president obama, period. well if that what you think your job is as the leader of the senate, you're not serving your country very well. and i think that is what is happening. >> what about simpson bowls, would you think that is something to get us out of this?

>> there are a few things about bowls that i wouldn't do, raising the allege on medicare's raising the age is dodoable, as long as you make exceptions for people who have to work with their hands and don't get the longevity. and certainly looking at benefits, raising the range, we're trying to help more people, not fewer. >> all right, howard, great to have you on the program, we appreciate you, howard dean. >>p next on the "the wall street journal report," how the inventor of computing lostts way. and how about the favors of italy? the celebrity chef, lydia bastianich, on the benefits of eating well. as we take a look at the stock market, back in a moment. [ female announcer ] want to spend less and retire with more?

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welcome back, microsoft opened the technology to the computer that most of us use every day. but has it been a victim of its own success? joining me now is kirk eichenwald, who was involved in the august issue. thank you for joining us, kirk. thank you. >> great piece, microsoft was once so dominant in professional anconsumer technology, but less than cutting edge. the name doesn't resonate with the younger generation, and the stock has not done much of anything in the last ten years, it is flat. what happene >> well, the biggest problem is that microsoft forget what it means to be in the technology business. you know, they came up against ibm at the beginning, ibm started to get cocky and

over-confident. and microsoft zipped in. and let's say they reenacted the developments of their nemesis, and have not been focused on bringing out new product. in fact, their philosophy as expressed by their ceo about ten years ago was, we wouldn't be first to cool, but we' be first to profit. meaning, they won't come in with a new cool technology. they will wait for somebody else to do that. and then they will buy their way into that market place. well, the problem is, is that if somebody else is coming in with the product first, like an ipod or an iphone, they lock up the market. they start making all the money, and when you come in with the zoon, that is not the cool product. so people don't buy it. >> right, and the other thing they missed the whole iphone

trend, they are passing them in revenue and technology, continuing to change our l live with the mobility. so how did microsoft miss the boat on the product? are they in too many places? you know they have the connect, they have the video games, maybe they have their hands in too many things? >> well, absolutely, somebody said as i did things for this interview, microsoft doesn't know what it wants to be when it grows up. you think about the divisions they're competing with, one division is sony, another one is apple, another is google. you know, you just go down the line, and this company has more competitors than almost any other company out there. it is because they can't figure out what they want to be. that is why in the piece, i say, one of t real options, one of the only things i think that could make microsoft a power house again is to break up the

company. to make it so that it is, you know -- x box and connect are great products. but inside the microsoft behemoth, they're just little drops of water. >> the revenue, largely, is coming from thee office and sor of a professional internet part of the business. office management. so has the leadership of the company, the co-founder, bill gates, and his successor, steve balmer, contributed to the lost way? >> absolutely, one of the things i thought was a more telling story in what i came across was people may not know that microsoft came up with the first ereader, you know the thing like the kindle, and the things very, very popular for digital downloads of books. they came up with it in the late '90s. and it was the very tablet where you look at it. it looks like a book, you can turn the pages. and this was brought up to bill gates who gives the thumbs down

because the screen doesn't look like windows. now think about that for a minute, who cares if it looks like windows, microsoft, do the customers? no, and so that was they missed that element. in fact, the kindle is built off the technology that microsoft developed. they missed that because they were all wrapped up in themselves. so yeah, bill gates had that problem, steve balmer, you know, made that even worse with the mindset of we'll be everything to everybody. and we'll buy our way into businesses, when we see what works. >> now you cited a remark of steve jobs, and the book by walter isaacs, that said there was not enough "liberal arts" at microsoft. tell me how they have determined their fate. >> microsoft has always been a -- a technology engineering

company. and one of the things that steve jobs said that is not quoted in that articlele is, you know, th easy part is the engineering. the hard part is determining what customers want and need. and to a large extent, microsoft does it the other way around. ththey focus on the engineering you know, making -- i mean look at windows advi-- vista, which disaster o on the engineering a desire stage. it was so complicated, and so many of microsoft's products are so complicated. and it is because they're overloaded. they have over loaded their engineering centric. they're about getting people to put in things that they think will look good on an engineering basis. >> do you think microsoft will be able to get the mojo back? >> only if they break up the company. >> only if they break up the company? >> there is no way for a company that is competing against

everybody, where every division is weighed down by you know, massive beurocracy, you know, thomas edison didn't invent the light bulb like that. >> it has gotten so big. thank you so much, kirk eichenwald joining us. coming up next, lydia bastianich and me will sit down and have a meal at the table. and have a meal at the table. >> everybody to the table, with scottrader streaming quotes, any way you want. fully customize it for your trading process -- from thought to trade, on every screen. and all in real time. which makes it just like ving your own trading floor, right at your fingertips. [ rodger ] at scottrade, seven dollar trades are just the start.. try our easy-to-use scottrader streaming quotes.

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. wsh welcome back. lydia bastianich, the italian mama to cooks, cooking since the '90s, making her have a new career as a celebrity chef. when we f first talked to her, e celebrity chef, , she offered ma tasting tour of her ultimate passionate. >> 60 thousand square feet. >> reporter:elevision chef and restaurant owner lydia bastianich put her money where her mouth is. >> 50% is retail, you can buy great chocolate or honeys, all from small italian producers. and the restaurants, you saw the

cafe -- >> it is the first retail venture for lidia and her partners, son and renowned chef, mao. the three partnered with founder of original italy in turin. they hoped thata slice of italy in new york would generate some 60 million in annual sales. >> it was kind of an element of pulling together people, some with financial strength, some with prepared food strength, some withetail strength. the vision is close to the original vision, but it was molded to this space and to the energy of new york. >> you must make a lot of food here every day, every week. >> you need to listen, on a slow day, anywhere from 5,000 during the week, to 8,000 on a weekend. up to 12,000 people walk t throh this place. >> so you're making hohow much pasta a week. >> we make here, produce up to

2,000 pounds of pasta, a thousand pounds of the favorite. >> these roots were planted in italy, following world war ii. >> and the area i was in, i was a little girl caught behind an iron curtain, with an italian culture and heritage, into communist, and now slavic nations. we couldn't speak our language or go to church. >> reporter: after fleeing to the border, lidia and her family spent time at a refugee camp where they were brought to the united states by a catholic charity. >> coming to the united states, most of my life is spent on education here in america. so i feel very american, and i feel very italian. and i am blessed with two of the greatest cultures on the earth. that is part of the success. >> talk to us about the

business, you have eight restauaurants, sevenen cookbos, your latestust out, 12 years on public television. how did you do it, lidia? >> my driving force was not so much accumulating wealth. it was proving mymy parents rig. telling them thatt the sacrifics ththey made was worth it. my mother is 90, she lives with me. and i tell her t to this day,m, you are the rson f forit. you're part of all of it. [ speaking italian ] >> when i saw everybody to the table and eat, i mean it. because that is the glue, the center that holds a family together, giving them security. and good food brings everybody to the table. >> reporter: lydia bastianich has been bringing everybody to the table for decades, in 1981, with her husband, felix, she opened the restaurantnt on

manhattan's east side. how wowould you characterize ththings in terms of business? is the consumer back? >> the restaurant is the great barometer, we feel it right away. because the tabable is such an ideal place to do. why, you're going to ask me, and i'm m going to tell you. because you know, as human beings, we need to nourish ourselves, you have to do it. it keeps you alive. the defenses are down, that is why it is such a good place to talk, to your family, everybody else. they're defenseless, they're taking in this food, what better place to discuss the proposals, than at the table? lidia's food and entertainment is what she oversees with her two children. in addition to the restaurant, she has the foods, pastas, sauces, brings this italian grandmother right into the italian kitchen. what did your family teach you about running the business?

>> respect for food, don't throw anything away. this feeling of the cycles of nature, and the remaining, the cooking, eating, the cycles, respecting it. look, how beautiful. have one, when i was small, i used to harvest it with my grandmother. just like that. >> reporter: food really gives of itself, she says. my thanks to lydia bastianich. and up next on "the wall street journal report." the look at the impact on your money, and in great britain, a lottery ticket is morean just a wish for a fortune. it may lead to gold, silver and bronze. stay with us. staying active can actually ease arthritis symptoms. but if you have arthritis, staying active can be difficult. prescriptionon celebrex can help relieve arthritis pain so your body can stay in motion. because just one 200mg celebrex a day can provide 24 hourelief for many with arthritis pain and inflammation. us, in clinical studies, celebrex is prproven to improe daily phical function

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for more on our show and our guests, check out the website at wsjr, at cnbc.com. and a look at stories coming up ahead, earnis r reports will be out from cisco, home depot and walmart, among others, tuesday we get information on the sales. and the price index, monitoring the sales. and the consumer price index ll be out. also, pebble beach, kicking off in thursday. also, new units that began constructionon, go windodow int housing. finally today, what brings t gold home or in britain's case, keeps it there. this is the proceeds of the national lottery, adding up the

money for its athletes. they invested up to 260 million pounds, or four hundred million, yielding the best medal count for britain in a century. root, root, for the medal coun and team usa. join me next week for look at start-up nation, a look at the technologyompany that uses the wisdom of the crowd to solve the consumer problems. each week, keep it