this comes from the cbo. next up, real gdp. this is cbo forecast. here is basically what they are saying. this is the fiscal cliff recession. it's not nearly as bad, not nearly as bad as, of course, what we had in 2009. but this whole story, running about 2%. it's going to drop down into a negative half a percent. that's not good for the country. that's not good for the workforce. that is not good for anybody. i don't care what your politics are. we do not need another recession. all right. let's discuss this. we have two smart guys. dean baker is codirector of the center for economic and policy research. welcome back dave malpass, former reagan deputy assistant treasury secretary. they call it the fiscal cliff. i see it as a tax hike. if they don't renew the bush tax hikes across the board that sinks the economy. what's your take? >> we should be focused on the tax increase. the private sector treats government spending as a tax. you're going to have to pay at some time. cutting government spending is not going to be as bad for the economy as incre

we have a link to the cbo outlook. what is the latest news? >> the big news today is about the dire warning the cbo has issued on the fiscal cliff. this refers to a series of automatic spending cuts and tax increases that are set to take effect in january. cbo is now estimated this will cause a significant recession in next year. they are predicting 0.5% negative growth. a lay they had warned of a negative growth in the first half of next year. now looking at 3% contraction of the economy if congress fails to act on the fiscal cliff. >> what action might lawmakers take to address the forecast when returning in the fall, and what can they get done before the election and in a post- election lame-duck? to go the cbo director said just a few minutes ago that congress should act in september when it comes back, and acting sooner is better than later, because already the economy is the anticipating a fiscal cliff and growth is being stunted. unfortunately, the press releases from either side of the aisle right after the report, there remains a stal

sandra: so how realistic is the cbo's outlook? with me here to break down the cbo report, dr. art laffer, former economic advisor to president reagan. thank you for joining us. >> thank you, sandra. a pleasure to be with you. sandra: do you agree with this? this was a pretty dire forecast from the cbo, this fresh fiscal cliff warning. do you agree? >> yikes! i think he is right. i don't think it is a fiscal cliff. i think it is really a tax cliff. you have a huge tax increases coming on january 1st, 2013 as glenn hubbard just said. i never heard, sandra, never heard of an economy tax understood prosperity. if you tax people who work and give that money to people who don't work you will get a lot of people not working and that date of january 13th, january 1st, 2013 is dead on. i don't know how they can stop people from trying to adjust their income into and out of 2013, to really make a big difference in the forecast. sandra: so what does the future look like then if these tax hikes do go into effect and spending cuts? do we enter a recession? >> well i think the spending cuts

the cbo report does not suggest that.o question whether some of the stimulus projects have made any sense. cheryl: really cook from an investment perspective you say that it is risk-on, our viewers should be taking more risk as we go into the final three months of trading for the year. >> most likely result would be to kick the can down the road, which means ultimately a slightly better economy, the fiscal cliff becomes a glide down and ultimately were going to have more inflation down the road, and people who, you know, put all their money into the low yielding treasurys because it's going this way could be burned. cheryl: that would make stocks a little more attractive. appreciated. well, coming up in about 25 minutes from now, erica payne from the left, peter schiff from the right facing off over the fiscal cliff coming up. dennis: looking for to that one, and traffic at a standstill. yet another barge ran aground overnight in the greenville mississippi era. jeff flock is down along the river with the latest. >> report

i like john boehner, except the cbo scenario that says that would probably tank the economy.tion is exactly what will force a very quick agreement on taxes and spending as soon as, but not one minute before we actually do go off the cliff. republicans can save us from going off the cliff right now by simply agreeing with the president, that all tax rates should be kept low, except the top tax rate, but democrats will not be taken seriously by republicans as negotiators if they don't find a way to scare republicans. if they don't find a way to make republicans feel like democrats. in other words, if the democrats don't make republicans feel that they are dealing with people, who are crazy enough to actually go off the cliff. crazy enough or brave enough to take the risk, even the brief and very temporary risk of going off the cliff. republicans have thought that only they get to use crazy scare tactics on only they get to threaten not to raise the debt ceiling. but now, john boehner sounds like he believes the democrats just might use the scare tactic of going off the cliff. j

it was based on cbo data. the cbo says the numbers are off. what does this mean?pend more than they might have thought necessary. to answer the question, how does the cbo make a mistake like this in the first place we'll ask an expert, douglas holtz-eakin, former cbo budget director and president of american action forum. thanks for joining us. explain. how do you make a mistake like that, $8 billion. >> it is a projection. we're not done with 2012 spending yet and won't close the books on it until 30th. they're making best guess how we end up the fiscal year. you would be surprised. an agency can shovel money out the door pretty quickly coming at end of the year. missing $8 billion would be hardly surprising. adam: i hope to make that mistake in future projections for my salary. >> we'll on that. >> the $8 billion is government saved and can do to use for something else or do they have to spend isn't. >> they don't have to spend it. it could sit in an account for years and years and take the money out not make it available for spending. the key to recognize what

the cbo reports that while the deficit would be cut by nearly a half trillion dollars, it would be at the expense of more than 2 million jobs. meanwhile, the president choosing to focus on attacking his opponent instead of proposing any policy that would avoid the spending economic calamity. team obama putting governor romney's wealth and tax returns and his days at bain capital at the forefront of the reelection efforts instead. >> how many grants and loans for college students, governor romney has made his time as an investor the basis for his candidacy. governor romney is on the wrong side of these issues. lou: president obama reverting to a very familiar tone. the president applauding everything that he has done ing a line that hee. has used time and time again on the campaign trail. >> the fact is that everything i have done has been focused on how we rebuild that strong middle class and how we make sure everybody is getting a fair shot. everybody is doing their fair share. everybody is playing by the same set of rules. lou: a return tonight, unemployment tonight simply not an in

cbo's forecast is gloomier than what it predicted three months ago and then reported that 2012 would be the fourth straight year with a deficit of more than $1 trillion. yesterday, mitt romney called the cbo report unacceptable and used the opening to turn the conversation back on the economy. >> when you look at all of the debt of the country it's about the size of our entire economy. this puts us on a path to become like europe. what's happening over there is that people have spent more than they have taken in year after year after year, borrowed more and more money, made promises they couldn't fulfill, and finally something which had to end did end. and what happened there was that the government had to pull back with severe austerity programs and people in government and the private sector lost their jobs. 25% unemployment rate. 25% in spain. think of that. these are the kinds of circumstances that could arrive here if we stay on the path we're on. >> white house press secretary jay carney responded to the cbo report blaming congressional republicans saying in part they're willin

which cbo couldn't score because how do you figure out how much competition will save?t they did is he changed it, got widen on board and the cbo hasn't scored this one but it's clearly much simpler and much more attractive to democrats. >> bret: all right, jim. thank you. one factor in the presidential race is absolutely no one could have predicted is the uproar over comments about rape by the g.o.p. senate candidate in missouri. correspondent doug mckelway tells us despite urgings from party leaders that he withdraw, todd akin says he is in it to win it, probably. >> when asked in an interview whether he would end his candidacy by the last remaining legal deadline by september 25, embattled u.s. senate candidate todd akin left open a crack in an exit door. >> i'll never say everything that can possibly happen. i don't know the future. >> political analyst says the statement speaks volume. >> the fact he is unlikely to get significant financial support and his chances of winning don't look good, he will probably bow out. >> for now, defiant akin is staying in. project

here we have a cbo forecast. it is about as unwelcome as one could be, this president and his campaign, as well as the white house. we are looking at horrible numbers. 2 million jobs at risk, should the fiscal cliff not be avoided by the congress and the president -- 9% unemployment, what is your reaction? >> first, what is the cause, and second, what is the solution? he had four years to restore employment. we are not at the level of unemployment where he took office at. the second is the solution. we need a new president, just as neil ferguson on the front of newsweek advertised. lou: it is amazing in which the way i guess you call them a community -- the way that economists are reacting and harvard university itself going after ferguson as if he had absolutely committed an act of harassment with a document. >> the faculties are all part of that army of economists who are now employed to be part of the federal reserve system. as a result, anybody who indicts obama who is going to reappoint bernanke, that is wha

ibm which is now run by a woman and several previous ibm cbo's have also been members. >> i'm sure that they have a lot of great leaders there and the question would be how come some of their wives haven't broke through? why haven't other people broke through? why 70 years later we're still trying to break this glass ceiling for women or for people of color? >> condoleezza rice was not available for comment but she did issue a statement saying " i have visited the augusta national on several occasions and i look forward to playing golf, renewing friendships, and forming new ones through this very special opportunity ". ended is a special opportunity, the club has been around since 1932 and they first admitted black members in 1990 and it has taken until now to admit female members to read >> we're wondering about the cost, known as talked about that. >> the cost could be substantial, we're seeing a lot more female ceos and they sponsored the masters, and if

the latest numbers from the cbo. that will be the congressional budget office and the freshest estimates on economic growth and federal deficits for the next ten years, and facebook, relying on ads that pop up on your blackberries and iphones to bring in revenurevenue, will th work? they'll provide the technology to put that on the mobile phone. he'll be with us. what do you think of issues that we discuss? we want to know. varney@foxbusiness.com is how you reach us. all right, 9:40 eastern, 7 early movers this morning. dell, it disappoints and lowers the forecast and of course, that stock is down another 6%. better than expected profits over at williams and sonoma, an upscale kitchen gadget kind of place, up 3.50. and lazy boy took in more than expected and virtually no change. and fifth-third bank says the fed approved the request for 25% dividend increase, and that stock is up 3 1/2%. software maker, intuit, swung to a profit. gave a cautious outlook. and wet seal reported a decline in sales and it's down 8%. and

however, cbo says debt reduction ---- what ththey say essentially is deficit t reduction is not all th good in this space because if you letoth those things happen, the economomic recovery would be interrupted. >> but here is theig but -- i should preface this. you teasase me earlierer today about almost making paul rn cry. we were talking about his father and how proud he would bebe to see him where he is today. i thought the point whe he would really cry is when this dget hawk had to talk aut doing away with the sequestered. even if we do not h have the alternrnative for budget cuts, called off until we figure somemeing g else out. tea pay people have got to hit the idea. >> it is not just tea party people that hate the idea. when they put the idea together, the ideaea of was that sequester would be so bad, we would have to do someing. strarangely, they y do not have any better plan than they did when year ago for something thathe republicans and democrats can agree to. >> they also said was going to be so b bad because thiss is our punishment. have to do thisis. now they say, may no

i guess they are not pulling any punches at the cbo, are they? >> no, they are not, gerri. the deficit falling to $640 billion for more than a trillion dollars this year. that is mainly because the fiscal cliff will kick in. all the bush tax cuts will expire for everybody. on schedule at the end of the year. the top spending cuts from the debt ceiling last year will kick in at the same time. that will cut the deficit by about $500 billion for the year. but the cbo says it will cause a significant recession and asked her what the economy contracting by about a half percentage point. sending unemployment back to 9% and costing 2 million jobs. >> with this very sharp fiscal policy, we are looking to start at a production in gdp -- at an annual rate of about 3% in the first half of next year. that would represent a significant recession. >> of the $500 billion in deficit reduction, about 80% would come from higher tax revenues. about 20% from spending cuts. gerri: moving on to another story that i was curious about, the federal reserve and the committee this afternoon. what did

cbo agrees. that is why we're saying stop picking the winners and lewders in washington and let people keep the money in the first place and lower tax rate across the board for everybody. >> bret: why not be specific on the loopholes you will eliminate and deductions you eliminate to cut off the attack? >> what we don't want to do is whatted they did with healthcare reform, cut a back room deal that obama did in harry reid's office and give it to the country. read what is in it later on. we want to go through a transparent process in congress, where we have a dialogue with the public. what are important and broad based? get rid of the corporate welfare, crony capitalism in tax code. we have want congress to participate in transparent debate in front of the public eye to have a good debate about how best to broaden the tax base and lower tax rates. by the way, bret, a lot of bipartisan agreement to do it this way. simpson-bowls proposed this. a lot of democrats agree with us. get rid of loopholes.

the cbo projecting recession-like conditions for 2013 with year over year gdp growth of negative 0.3% and a jump in the unemployment rate that year from 8.2% to 8.8%. now, all of this is engendering political response. we have a statement of the white house saying today's congressional budget office report only reinforces the urgent need for house republicans to follow the senate's lead and pass a bill to give middle class families the confidence that they won't see the taxes go up at the beginning of the next year so the white house blaming congressional republicans. you can imagine, sue, that the republicans on capitol hill have the opposite take on this. back to you. >> indeed i can. thank you very much. >>> hyundai, the south korean car maker stepping on the gas in hopes of picking up u.s. market share. phil lebeau has that. hi, smil. >> reporter: hi, sue. this is the model news of them. this week rolling in to dealerships is 2013 santa fe. it's critical to the sales continuing to grow here in the u.s. the six passenger version comes out later this year, early next year. sales up

this cbo report, we can see what the republicans are going oo do with it.ey're going to walk right down memory lane saying that president obama spent a lot of money, president obama doesn't have an idea on how to run the economy. they're going to use this, no doubt, to get the narrative going on the economy for mitt romney, which they have had a hard time doing. but doesn't this put in some sense the democrats on the defensive and is this a tough report to read right now? how do you conclude what's in this report? >> well, having lived through all of this fiscal nightmare, i want to say a couple things. if the republicans had cooperated with president obama when he said, i have a way to do a big deal here, to really get us on that fiscal path to be fair, to make sure that we invest in our people at the same time reduce this deficit in a sensible way, we would have been in a different situation. but paul ryan, it's been reported, was one of the leaders who said, they didn't want to have anything to do with the president. here's why. they want tax breaks for

the numbers john than, came from cbo that conservatives love to cite. >> 8 percent unemployment. come oman. you can't quote one and not the other. >> the numbers i gave you are wrong because they came from the congress. you are wrong. >> guys we have to leave it and we have to move on. coming up. record heat heats up electric bills. government is forcing generator plants to shut down. are americans about to pay up even more? >> iranian military has successfully test fired a new short range missile. iran's defense minister said this missile is equipped with a guidance system he the missile as a defensive weapon. >> two strong conservative voices are urging governor mitt romney to pick paul ryan. he is the intellectual leader. governor mike huckabee joins us at noon and will weigh in on. >> and general services administration is probed for sphen conferences and award ceremony. the chairman of the house committee joins us on america's news head quarters. we'll see you soon. thos hot temps are causing a hole in america's wallets. it could get worse. 140 coal power generators are expe

sununu says they are all on the same page -- >> cbo says that as ll. >> i would never interrupt you charles. he is not taking money out of medicare -- obama is not. the money is in the medicare trust fund. the money that would be going to providers of medicare -- why do they take the money away? the assumption is that under the affordable health care plan, more and more people get insurance and they will not have to rely -- the uninsured patients in hospitals -- that is a perfectly reasonable calculus. you can say that, it is in nice charge to make, but it does not hold u up. that is so much of what is going on on the republican side. they have these nice little arguments, limbaugh and all the rest of them make over and over again, but they do not hold up. >> ryan says that if you are above the 55, you are ok. what about if you or r 54? >> the democrats believe in insurance exchanges for people under 65, and repepublicans believe in insurance exchanges for people over 65. republicans don't want the insurance exchanges available to anybody under 65, but all said and, at the age of 65, people

yesterday, prices went down after the cbo report.s like not even the fed's easy money is helping stocks. is it the recession? >> i don't want to blame any one day on the fiscal cliff. generally, as btig's chief strategist my job is to meet with clients fairly frequently and articulate our view on investments in the economy. i can say confidently that there is virtually no concern about the fiscal cliff. just about everybody thinks it will be kicked into the future anywhere from three to six months or so. no. i don't think it is impacting investor sentiment now. >> why is everybody buying gold? >> gold has more to do with the federal reserve. we get into something you and i can fight about. the last couple of days or weeks you have seen people come to the realization that another program at this point is more likely than not. probably not assured but more likely than not. you are seeing it in the gold price. >> we don't have time to argue tonight. i think oit will do more harm than good. why do you think oil prices got clobbered today

this is on the same day of course we know the cbo came out with the fact that for the fourth straight year deficits dating back to the end of george w. bush's term and covering alg of president obama's three and a half years in office, we'll talk more about this cbo report and the recession but here is the first big interview, larry kudlow coming out of the interview saying i'm a guy who would perhaps be open or receptive to these ideas but there are no specifics here. >> well, i thought congressman ryan was going to be more -- be able to be more specific. he is a man who likes specifics and he is a numbers person. so governor romney has been unspecific throughout the campaign. i thought in picking ryan he would get more specific. as romney refused to detail deductions that he would eliminate in the tax code to find new revenue this week, congressman ryan doesn't feel as his vp pick he can get specific with numbers. i think what's interesting is in light of the cbo report, both parties by the way are responsible for the looming fiscal cliff we're facing in november and december with t

the cbo says the economy will grow by 1.7% next year. that's a normal circumstances that would be considered dismal. it's still growth. in addition, the cbo projects two million jobs will be created while the unemployment rate will stay steady at 7%. that's if -- if congress gets its act together. chief politicalstrategist for potomac research strategies in washington. greg, we all know that congress won't act before the election. they should. would these guys really, really risk taking us into a recession because they're fighting politically? >> you know, christine, just when you think you can't be any more disgusted by the gridlock and dysfunction in congress, a story like this comes along. i got to tell you, i think the markets, the stock market in particular have been on happy pills for most of the summer. reality often sets in in the fall. i think the reality is that none of us will know what the tax rates will be in january until late december at the earliest. >> does this idea that people think there must be back room negotiations

they believe, the cbo, over the 10, 15 years obamacare will save medicare, $1 trillion.ause it's going to lower costs for medical services. you may not agree with that. >> eric: what really lowers cost is competition. that's what the ryan plan is. not the obama plan. >> andrea: how are they going to lower the cost, though? this is something that the public hasn't heard a lot about. independent payment advis advisy board. bureaucrats appointed by obama. these are not healthcare professionals. they're professor professors ine intelligentsia and they will unilaterally decide what -- this is an exact quote -- "cost containment issues in medicare system." they will decide what procedures people can get or can't. they are designated to cost cut. >> dana: what i like about the plan, if i can get in here, what i like as an individual, because what they would do is say here is kimberly is your allotment. if you want to stay on the current medicare plan, government approved one, that is great. if you shop around and you can choose one to save money and you pocket the difference. i

now you have cbo painting very clearly how dire this will be. as you look at money rolling off printing presses, keep in mind if we go off the cliff we will reduce the federal budget deficit by 500 billion but we'll go into recession. that is according to the cbo. we'll see gdp fall by half a percent. it will grow negative by half a percent. unemployment will go from 8.3% we experienced up to 9.1%. these are some of the things cbo is bringing to everyone ace attention. on top of the fact, the current data, forget the fiscal cliff, we have a one trillion doll dollar deficit for the fourth year in a row. what cbo says, if the congress and president can creech reach a deal before january 1st, unemployment would stay 8%, but next year's deficit would be almost 1.1 trillion. back to you. >> unbelievable, adam. thank you very much. jon: now this fox news exclusive. the long-awaited independent report on the botched gun walking operation "fast and furious" is now in the hand of the justice department. the report looks into the failed policy that put u.

>> sununu says they are all on the same page and following their intellectual leader -- >> cbo says -- >> i would never interrupt you, charles. i would never do that. he is not taking money out of medicare, he is not taking -- obama is not. the money in the medicare trust fund is the money that would be going to providers of medicare did why do they take the money away? the assumption on to the affordable health care plans to get more and more people get insurance, they will not have to rely -- and injured patients -- uninsured patients in hospitals. that is a perfectly reasonable tactless. it is an ice charge to make and you can say over and over again, but it is not hold up. that is true of what is going on on the republican side. they have these nice little arguments, limbaugh and all the rest, but they don't hold up. >> ryan says that if you are over 55, you are ok. what if you or 54? >> it is interesting, the two parties beverage. democrats believe in insurance exchanges for people under 65, and republicans believe in exchanges, they want to privatize it for people over 65. repub

sununu says they, all on the same page and following their intellectual leader -- >> cbo says that as well. >> i would never interrupt you, charles. he is not taking money out of medicare. he is not taking money away from -- obama is not. the money that would be going to providers of medicare -- why did he take the money away? the assumption was under the affordable health care plans the, there's more and more people getting insurance and they are not going to have to rely on -- uninsured patients drawdown on hospitals. that is a perfectly reasonable calculus. you can say that, it is a nice charge to make, and you can say it over and over again, but it does not hold up. that is true of so much of what is going on on the republican side. they have these nice little arguments, limbaugh and all the rest, but they don't hold up. >> ryan says if you are 55 and up, you are ok. what if you are 54? >> the two parties diverge. the democrats believe in insurance exchanges for people under 65, and republicans believe in trends exchanges, they want to privatize it for people over 65. republicans

the cbo ship -- cbo studies showing enormous repercussions that will occur if the fiscal cliff is not afforded by this of ministration. he has not said a word about it. why would he not? >> i'm not surprised. i am very disappointed. it does carry a risk for him. he has made the centerpiece of his reelection energizing his base by promising to tax rich people among other things. that's not going to avoid the fiscal cliff. that will drive us over. senator pat murray said we should go over the fiscal cliff. the trouble with that, it's irresponsible economic management. the fiscal clef is 4 percent of gdp. the study is generous in its implications. it could be even worse. as i think the risk is, it's starting to affect the economy now. it will affect the economy more as we approach it, and for a president who needs better economic conditions to get reelected, that's a dangerous move. lou: certainly these markets is going to be responsive. they're going to be, it seems to me, and i want to get your thinking on it. it seems to me it will be making judgments in the weeks ahead but well befor

you have this cbo's and then somewhere else, the crn's. in my very short time of being supervisor i have observed that the burden sadly rests on the shoulders of the people affected. i can give a quick example. i know there was one time -- you know, you have women who are resident managers at housing authorities where the victim lived where the perpetrator lived. they're racing around making sure everything is ok. you bring in the healing circle to maybe do something and then you bring in the cren and then you find out that they do not have the ability to pay for the funeral and there is grieving and they're traumatized and all of this stuff. i found that sometimes -- what we have found is because there are so many turf and neighbor of lines -- neighborhood lines, a lot of people will not lead to access the services they need. we have instances where people are living in the housing authority sites that are impacted. to the extent that we can coordinated -- and we have in the past with the ymca and other organizations -- bring the services