we could go over the cliff do see the threat but pull ourselves back. could there be damage done that's irreversible? >> there-- when you think about it, the fiscal cliff is sort of kind of a theoretical thing. the treasury, as we saw last year when we dealt with the debt ceiling crisis. the treasury has been groomed to adjusting so maybe the checks they can't write or the cuts they make might be later in the next few months. it gives them a little bit more te. the bush tax cuts, well, that would happen, but things could be grandfathered back in. the concern i have is the uncertainty. i see the u.s. economy is really starting to show some signs that it's taking hold. the recovery is starting to get stronger, but this uncertainty by the fiscal cliff is in the sense an anchor holding this recovery down. and that's something that's-- >> tom: just a matter of weeks to go before we get to the cliff. beth ann bovino, senior economist at s & p. >> tom: treasury secretary timothy geithner will stay in his position through president obama's inauguration next yea

we may run over the cliff. i'd expect a deal very quick in the new year with the retroactive feature. it's messy. it's not pretty. we're not looking for good common sense and clean policy from washington. but it will be in place in a month, two months from now. >> when the fall happens, you're saying that's the opportunity. >> i think it's consumer discretionary. you just picked it up a moment ago with corning's commentary about flat panel. the housing market is what's so key about this. we got the very good news from kay-shiler today. housing starts are booming. they're going to continue to run up significantly in the next few years. this isn't just a few months. we're way behind the curve on home building. >> what if the mortgage deduction goes away? >> well, we'll see about that. that's not on the table right now. it could be, but i don't know. i'm really not expecting that any time soon. >> i think it is, yeah. larry, what are you going to buy here? >> look at the market since the election. in fact, global

by most estimates if we go over the cliff, the u.s. onomy will plunge into recession. >> susie: we look at the impact of the coming cliff and whether congress and the white house can strike a deal. >> tom: that and more tonight on n.b.r.! it was the chairman of the federal reserve ben bernanke who first called it a fiscal cliff. he described the coming automatic cuts in government spending and increases in taxes as, quote, "a massive fiscal cliff," end quote. here's what he was describing: on january 1, 2013, tax breaks worth $416 billion will expire. spending on things like defense, medicare payments to doctors will be slashed by $65 billion. add it all up and you are talking about cutting roughly half a trillion dollars from the federal budget. the congressional budget office and others warn going over the cliff will send the economy into a recession in the first half of next year. it was congress and the white house that set the deadline in hopes of forcing each other to cut the federal budget deficit and begin to address the growin

economy of the fiscal cliff. expectations remain mixed for fancier retailers, but some experts predict the debate in washington over taxes will simply delay holiday purchases made by wealthy americans. >> i would expect that holiday spend won't get impacted as much. some of the larger wealth items, tax planning, estate planning, that's where their focus will be. itmay fer some of it bause they've been preoccupied. >> reporter: tom jacobsen tracks consumer spending behavior and believes the fiscal cliff will impact shopping patterns. he says in an uncertain economy retailers will need to pay close attention to pricing. >> as the confidence erodes, you might need more discounting to sell a luxury good. but that extra discounting won't take away from that good-feeling luxurious. >> reporter: according to a study out today, half of u.s. consumers still plan to buy make a small luxury purchase in the next six months. of those, 53% want specialty food or drinks, 48% are in the mood for luxury clothing, and 48% are look

, going over the cliff, avoiding the cliff. but at the end of the day do you think the american public is really prepared for these deep spending cuts and the magnitude of changes that are going to be coming over the next decade? >> well, frankly, i don't think the spending cuts need to be all that deep. i have tolted my colleagues on many occasion if we had 6% more revenue than we currently are forecasting, 6% less spending than we're currently forecast that would save $6 trillion and billion the budget over the next ten years. so there do need to be spending cuts but they don't need to be all that draconian, truth be told, remember, you're talking about $340 billion out of medicare and medicaid over the next ten years. we're going to spend 11 trillion dollars over that period. so 340 billion is 3%. you know, we got to put this in perspective. >> well, a lot of economists who put it in perspective say it going to be a tough economy for the next decade is there anything this there fiscal cliff negotiations that there would be a

we go off the fiscal cliff or not. no it doesn't it's just a little more pain now or a whole bunch more later this fiscal cliff they're talking about it's like it just appeared there in front of us and the whole thing is that this trap was set back in between two thousand and one and two thousand and three when we had we we started the war on terror the war on afghanistan the war in iraq. and so we increased deficit spending then we bush we did the bush tax cuts which borrows prosperity out of the future you're going to cut taxes so there's less revenues and that increases deficit spending there's less revenues coming in you're still doing the same levels of spending then we increased the levels of spending when we passed medicare part d. all these things together added up to what is happening today these choices that they are left with and one of the big problems here it's the total size of government the choice they will make is the choice to try and do a short term remedy and make next year a little bit easier by an

you look at the fiscal cliff.is $7 trillion in ten years with no thought, no nuance, no kind of strategy about what's the best for america. >> it's a sledgehammer. >> it's a big, dull hatchet when we need a sexual pep a a bunch of surgeons. that's the problem here. they need -- going off the fiscal cliff, and it is popular now to say maybe we should go off for a while -- >> that is gaining popularity. stephen moore, you and david have really spent a lot of time on this. your approaches to this are a little more certain. a lot more surgical. isn't that problem though, stephen? as david said, went around the country and talked to people. i found the same thing when i was on the cnn express on that bus trip. people understand what this means. they understand that we have to cut back on our spending. they are concerned about the lack of sophistication with which washington is handling this. >> yeah, but when? look, i get so sick of it. everybody says we have to cut spending. even my good friend david walker who i have

that dials back the entirety of the fiscal cliff i think there will be a fiscal cliff let's if you call it that basically i think that we're going to see the payroll taxes they're going to go away the payroll tax reduction and in all probability we'll also see increased taxes that are associated with the health care reform bill that are. scheduled to go forward so those two which are you know somewhat smaller in terms of the fiscal cliff i think those will have been and so i think there will be some impact on the economy marking the last word of the program go ahead i guarantee you i guarantee you the last word is i guarantee you whatever happens it won't be pretty it'll go down to the last minute they'll be all kinds of severe allegations thrown back and forth this summer twenty second december twenty third you're trying to take away our christmas it'll happen all right. thank you very much gentlemen many thanks and i guess the new york and in washington thanks to our viewers for watching if you are to see you next time and remember crosstalk . if you. want. to see good leverage or you

cliff. we've sounded the warning. >> job destruction that would happen under the fiscal cliff. >> economic growth is at 2%. this only hurts it. >> on the edge of a fiscal cliff. >> could do some very bad things to the economy. >> but how should you prepare for this scary scenario or for any deals washington makes to avoid it? it's about getting back to basics. taxes, investments, savings, retirement, jobs, the things that made americans secure in the past are no longer guarante guarantees. now a prosperous future depends on knowledge and a solid plan. remember, smart is the new rich. while there's uncertainty in the broader economy, your personal economy can still thrive. washington, wall street, main street, all trying to figure out what the tax bill is going to look like. most republicans in congress have signed this pledge to never ever ever ever raise taxes, even on the very richest of the rich. democrats, including president obama, say raise those taxes on the rich but keep them low for

they say address the cliff. do so by extending middle class tax cuts but not those for upper income tax pairs becauyers -- >> i'm sure you were being cheeky there. listen, the issue, though, is that the spirit of our problem long term is too much spending. historically, you raise the taxes, then the spending cuts don't happen. and then what does that mean? that means future generations, like the ones today, are now facing higher taxes because of spending cuts that never came. what do you say to folks who say, if we raise taxes now, in the end you guys will never cut? >> because there will be some spending cuts in -- addressing the cliff. the budget control act, we did cut spending. we know it has to be done. first we have to address the cliff. we have to make sure the amt, alternative minimum tax, is not impacted. we also have to make sure unemployment insurance is extended. we have to make sure physician reimbursement is not drastically cut. we have to look at social security. we're going to have to look at ent

economy from falling off the fiscal cliff. while washington struggles on a fiscal cliff deal, what should you do about your portfolio? jeff applegate has some answers. he's chief investment officer at morgan stanley smith barney. and home depot hammers home strong gains and lays the foundation for a strong quarter ahead. that and more tonight on "n.b.r." it was another day of cliff- watching here on wall street today. investors and traders are waiting to hear what happens at an important white house meeting on friday between president obama and congressional leaders. they will be talking about ways to solve the so-called "fiscal cliff" dilemma. investors appear cautious about making any big moves until they know whether the cliff will trigger increases in capital gains and dividend taxes. the dow fell almost 59 points, the nasdaq lost 20, and the s&p was down five. meanwhile, in washington, congress returned to work for the first time since september. lawmakers face a long "to-do list," and getting a deal on that fiscal cliff

in markets tomorrow, it's the cliff, the cliff, the cliff. it has created some volatility, which has given us opportunities to look for good growth stocks like church and dwight and motorola solutions to buck purchase recently. i hope to find more tomorrow. thank you. >> all right. we'll be watching that. thanks very much, gentlemen. it sounds like with all this fiscal cliff stuff, you guys are a little bit on the sidelines. is that a fair statement? real quick, yes or no. >> you pick your spots. >> i think a lot of big money is on the sidelines, but i think that it's a good opportunity to be in. >> thanks, you guys. see you soon. we appreciate it. with the fiscal cliff getting closer and closer every day, my thoughts on the lack of leadership in america. that's up next. stick around. what starts with adding a friend... ♪ ♪ ...could end with adding a close friend. ♪ the lexus december to remember sales event is on, offering some of our best values of the year. this is the pursuit of perfection. [ male announcer ] the way it moves. the way it

, if we go over the cliff. so this is very, very dangerous. and i think we have just all have to keep repeating that policymakers cannot, should not -- it would be irresponsible to hold the u.s. economy hostage, particularly if it's one around a very narrow issue, which is the top tax rates for a relatively small percentage of people. >> let me ask you about the second-most pressing issue, of course, and that's jobs. employment. what should the second obama administration do to encourage job creation? marty. >> well, i think getting the uncertainty of higher taxes off the table would help. i think corporate tax reform would also help. president obama has said that he would bring the top rate down, the corporate rate down from 35% to 28%. well, that would get us in line with the major european economies. so that would be a good thing. and if we took the next step and went to the kind of international tax rules that every other industrial country has, the so-called territorial system, that would encourage america

what is your fiscal cliff strategy? what if we go over the cliff? what does that mean in terms of your behavior, how you allocate capital? >> well, i think in the short term if we go over the cliff, that means that probably bonds will do better. we will likely have an economic slowdown. and with further fed subsidies on interest rate, i would expect bond prices to sort of stay where they are, maybe even increase a little bit more with yields going down. in the longer term, though, i think investors need to focus on the fact that this is going to get resolved one way or the other. whether it's through negotiation or at worse you go over the cliff and you have higher taxes and less government spending. with the revised gdp number today, revised upwards, you know, the economy is more likely to absorb a decline in economic activity with a higher gdp number. so i think investors need to look at their own situation. if you're going to sell, now is is a good time to sell. rates are low. if not, don't adjust your entire investment philosophy just because of

the cliff doesn't sound like something good to happen. no you know there are three or four things that can have been terms of tax cuts and spending cuts tax increases and spending cuts and the total amount if we were to do absolutely nothing would be about six hundred billion dollars in a fifteen trillion dollar economy quite severe it would definitely go into recession would be a severe recession it would be a very bad thing for the economy ok mark how do you come into this i mean hasn't the market price this into some degree i don't leave a price to us going over the cliff i think they think i think most americans think a deal will be made eventually it may happen a day before christmas but i think we will come to a deal myself but we may not and there's a real possibility we may not particularly if the republicans don't budge from the policy they've taken for the last two years ok anthony where do you jim been known this well i don't think that the problems are as severe as we're talking about or is largely talked about at least in ter

cliff. reports today say obama wants 1.6 trillion in new taxes, two times what republicans were offered last year. is this whole negotiation going nowhere? >> cisco not only surprises the street with a beat but says the u.s. enterprise business is showing signs of improvement. >>> and abercrombie silences the shorts. >> the president is scheduled to meet with a dozen ceos this afternoon to hear their concerns about looming tax increases and spending cuts. 73% of participants in a "wall street journal" ceo council conference said the fiscal cliff is their primary concern. goldman chairman and ceo lloyd blankfein talking about the importance of avoiding the fiscal cliff. he writes there's more than a trillion dollars of cash that is sitting on the balance sheets of u.s. nonfinancial companies with certainty about tax rates, companies will increase their capital expenditures currently at anemic levels contributing to a virtuous cycle of jobs and growth." if there was a disagreement as to whethe

even as we approach the dreaded cliff. i know there are a lot of disappointments in the latest quarterly earning period. tons of them. but there are also some winners. and many of the stocks that reported good numbers are now rising above. but they're being obscured by worries about the fiscal cliff. and that's why we're throwing our surprise party tonight here on "mad money" where i highlight companies that delivered upside surprises. but have been neglected, severely neglected. they've been overlooked. and they've actually seen their stocks go lower. and don't forget, i expect home depot, cisco, maybe even petsmart in a couple days to go lower because of how horrible this market is. the good people at bespoke investment group went through all the companies that reported in this earnings period and they tallied up every one that ran a very tight gauntlet, not unlike the one that clint ran in arizona. the company had to beat wall street's earnings estimates, had to beat the revenue estimates and had to give the guidance th

cliff. >> there's been little progress with the republicans, which is a disappointment to me. they've talked some happy talk about doing revenues, but we only have a couple weeks to get something done. so we have to get away from the happy talk and start talking about specific things. >> as we head into the fiscal cliff negotiations, my advice to the president would be seems like our friends on the other side are having some difficulty turning off the campaign. we need to sit down and work this matter out. >> behind closed doors. even with the fiscal cliff looming over the markets, our own jeff cox with cnbc.com says there's a growing bit of optimism about the outlook for next year. take a look at some of the predictions from some of the street's biggest names regarding the s&p 500 for next year. it's quite a chapg for morgan stanley, by the way, whose 2012 forecast was for the s&p to close at 1167 on december 31 of this year. >> wow. they're expecting a mega rally next year. >> he hates hav

>> fiscal cliff. >> looming cliff.you've been watching this week in the fiscal cliff. >> it's a surprise. that's why we are throwing our surprise party tonight. have i overdone this yet? fiscal cliff. we're having a birthday cake, surprise cake. it's one of those that has ice cream. cvs barely budged the day it reported. almost like someone took a knife and stuck it into the outside surprise party. talk about a party pooper. what are these titanium balloons? inappropriate balloon moment there. but i'm still "stubbed" up. [ male announcer ] truth is, nyquil doesn't unstuff your nose. what? [ male announcer ] it doesn't have a decongestant. no way. [ male announcer ] sorry. alka-seltzer plus fights your worst cold symptoms plus has a fast acting decongestant to relieve your stuffy nose. [ sighs ] thanks! [ male announcer ] you're welcome. that's the cold truth! [ male announcer ] alka-seltzer plus. ♪ oh what a relief it is! ♪ [ male announcer ] to learn more about the cold truth and save $1 visit alka-seltzer on facebook

you look at the fiscal cliff.ten years with no thought, no nuance, no kind of strategy about what's the best for america -- >> it's a sledgehammer. >> instead of a big dull hatchet, we need a scalpel with a bunch of surgeons. and congress is sitting there with saying they're going to get there. and that's bad. >> your solution is a lot more surgical. as david said, he went around the country and talked to people, and i found the same thing when i was on the cnn express on that bus trip, people understand what this means. they understand that we have to cut back on our spending but they are concerned about the lack of sophistication with which washington is handling this. >> yeah, but when? i get so sick of this. everybody says we have to cut spending. even my good friend david walker who i have so much respect for. david, when are we going to cut the spending? the answer always seems to be we'll do it next year or the year after that. it's not such a bad thing if we start now. i'm not so opposed to 10% spending cu

>> fiscal cliff. >> looming cliff.ooming cliff, one of my favorites. >> you've been watching this week in the fiscal cliff. >> it's a surprise. that's why we are throwing our surprise party tonight. have i overdone this yet? fiscal cliff. we're having a birthday cake, surprise cake. it's one of those that has ice cream. cvs barely budged the day it reported. almost like someone took a knife and stuck it into the outside surprise party. talk about a party pooper. what are these titanium balloons? inappropriate balloon moment there. scuba diving the great barrier reef with sharks, or jumping into the market, he goes with people he trusts, which is why he trades with a company that doesn't nickel and dime him with hidden fees. so he can worry about other things, like what the market is doing and being ready, no matter what happens, which isn't rocket science. it's just common sense, from td ameritrade. if we want to improve science. our schools... ... what should we invest in? maybe new buildings? what about updated equip

because going over the cliff creates more joblessness. avoid that, we still don't grow the economy in 2013, so we need to show the business community, and quite frankly, all americans, that we have a plan to deal with this deficit so that we can grow e the economy next year, put more people back to work. >> right. all right, we'll leave tlileave. mark bertolini, thank you for weighing in on the topic. we thank you for joining us on this special edition of the closing bell. i'll see you back in new york tomorrow. stay with cnbc. "fast money" picks up right now after this short break. i'll see you tomorrow. have a good night, everybody. [ male announcer ] this is joe woods' first day of work. and his new boss told him two things -- cook what you love, and save your money. joe doesn't know it yet, but he'll work his way up from busser to waiter to chef before opening a restaurant specializing in fish and game from the great northwest. he'll start investing early, he'll find some good people to help guide him, and he'll set money aside from h

after the fiscal cliff everything is fine. i think there's a reason for cautious optimism, but i don't think there's a reason to think it's going to go gang busters. >> we saw harry reid speak yesterday. the market moves when we see different comments out of washington. we saw it again today on this perception that was actually positive commentary. our bar has gotten pretty low. we see stocks move around a lot. what about interest rates? are they responding as much? >> well, perfect question. look at the chart. here's a chart of today's treasury action against the equity market. indeed, other than around 1:00 eastern after the auction, they've been correlating. stocks go up, rates go up. stocks go down, rates go down. we're trading on pr. if the premise of this exchange is should we trade on headlines, if you're a day trader who understands once you make a trade and the air is gone out of the person you trade it with, that's the only realism that is there. pr doesn't move markets more than the short term. most of the people i

, where the economy goes off the broad fiscal cliff, the largest fiscal cliff, which, according the c.b.o. and our analysis, would send the u.s. economy into recession, i don't think the fed has the tools to offset that. >> susie: members of the audience agreed. >> he was very frank in saying, you know, "we can try," he essentially said, "we will try, but we don't have anything in our arsenal that comes close." >> susie: bernanke is already using the weapons in his arsenal to fix the job market, which he said today is still "unhealthy". he also repeated the fed's plan to keep interest rates super low at least into 2015. >> we will want to be sure that the recovery is established before we begin to normalize policy. we hope that such assurances will reduce uncertainty and increase confidence among households and businesses. >> susie: but bernanke gave no hints on when americans can expect to see higher rates. >> the further we go down the road, the question is going to turn to how is the fed going to reverse policy, and what the chairman said today is that decision is a long way off. >> su