Transcripts For CNBC Squawk Box 20121211

Strategies and former White House Press secretary and Gerald Bernstein former economic adviser to Vice President joe biden. Gentlemen, thank you for being here with us and getting this special day of coverage kicked off for us. Rising early and rising above. Exactly. Lets talk about this. Jared, it seems like things have gotten quieter. Do you think thats the case . Is that a good sign . I think its probably a pretty good sign. If you look at this mornings papers, you see a number of articles suggesting that theres a bit more compromise in the air. My concern is that tomorrows papers may say the opposite. So interestingly, theres been some pretty leak free discussions going on, which i actually think is a good thing. Theyre obviously big, outstanding questions. You mentioned the tax rate issue. One question i keep coming up against is the president and john boehner are now supposedly having good, substantive discussions. Can boehner bring the troops along . If he agrees with the president , can he get enough Tea Party Republicans behind him to sale the deal . Because that wasnt the case back in 2011. And, tony, i have to say, both sides seem to have really with all the rhetoric weve had leading up to today, it seems to me that both sides have rallied up their bases and i have questions about whether either of them can deliver. Yeah. I think it makes it really difficult. Jared is right, you know, you talk about each element of what an agreement might be. Some of them are really big water fall kinds of issues, right . And the rate issue is a water fall kind of issue. You dont meet in the middle. You have to go over and everybody go off the water fall together. Wait a second. Is there a proposal that could be met which would say were going to raise income tax rates, but were not going to go back to 39. 6 . Maybe 37 . It is possible, but still it is movement on marginal tax rates, which fundamentally republicans disagree with. They dont believe they should move on marginal tax rates. That makes it very, very difficult. That makes it a water fall issue, a philosophical movement for republicans. Now, is there a price that can be put together that to convince republicans that that is a price worth paying . Its possible. You know, they gave a price on revenues, but not on the question of rates. We havent seen any specifics on what that would be. They would want to see movement on longterm entitlement programs. No one has seen a plan on long ter. And thats the thing that boehners office is discussing. Exactly. And theres two points there off of tonys observations. First of all, it is possible that you go over the cliff, rates reset, 396. Then they come back a point or two and everybody declares victory. Now, i get that that is sillily because whats the point of going over the cliff if you can work it out a few days later . Why not not go over the cliff . But the tax rates reset. But then they come down and everybody declares victory. This is how washington operates and this is such a crazy thing that Grover Norquist can say i look, i actually think this is all crazy, right . Its all crazy to do tax policy this way. Tax policy is really big. My preference would be that we actually go back into the clinton tax rate. Its a much better place to do tax reform. You mean for everybody. Right. We have frightened everybody that its, you know, a scary place to be in the clinton tax rates now. Its not the tax policy i would prefer for the country, but it is a much better base for going and doing retax reform and doing it in regular order, right . And its a tax structure that did the economy very well as well as the fiscal budget which, of course, is in temperature plus. I read this morning in the paper something about negotiators are finally getting serious or Something Like that. Its the central 11. Why not get serious last september . I think it was david reubenstein maybe who said something about i think were going to have a deal sooner rather than later and its not going to be too close to the new year. Its later. It is later. How does this play out now . Also, ive talked to some senators who said, yeah, they are expected to be here. Maybe they go home for Christmas Eve and christmas but then theyre back home and its back in session. So this will be cutting down to the wire, maybe down to the very end . I was surprised that david reebenstein said that. Negotiations always come down to the wire. Especially if a side has to give in on a principled position, it has to be the last thing thats given. Are both sides going to have to give on a principled position or does the president have the upper hand because of the elections . I think both sides are going to have to give in. Is there an issue where you agree with one and you kick the can down the road . If they agree to anything on tax revenue or rates, thats immediate, day one revenue collecting, right . But all we have on spending cuts and especially the entitlement programs are promises to achieve something on the spending side sometime down the road. Right. I had something something that senator warner had throne out the idea that Social Security should be delinked from all this. And senator warner is a fine man and i think a lot of people trust him, but i think theres a sense that, wait a second, we dont want to decouple this. We dont want to split the two. I think he has a point in the following sense. These social insurance programs, the entitlement programs, medicare and Social Security, these are very big, very important programs to people. And the idea that youre jam negotiations on these programs doesnt make a lot of sense. Yeah, but we knew this was coming. So i agree with that. So i think that the changes we should be making over the past actually, it may may changes, would be a better top line. Were going to agree to make this amount of savings. For example, democrats dont like this and i dont think its a good idea, but the change cpi or the increased in eligibility age, it means testing. These are framework issues. I dont like any of that. But the agreement on the commitment to include something on those types of reforms. Yeah. I think that that kind of thing would move the negotiations forward. On a policy basis, neither the changed cpi nor the increased eligibility age make much sense to me. But you are willing to say even though this doesnt make sense to me, im not going to get everything i want . Marginal cash rates dont make sense. But you guys are willing to say yes, we will do that at this point . I am. I know tony is. If youre going to compromise, put yourself on the table. Gentlemen, we want to thank you very much for kicking off this special day of coverage with us. Its great talking to both of you. As we mentioned, our special Critical Mission is all day long. Coming up next hour, we will be sitting down with jeff henserling of texas. Right now, lets bring in our coworkers, joe kernen and Andrew Ross Sorkin. Thank you. Good to see you. Good to see you, too. It wag something to see when we well, im not going to go into it. But we hugged it out. A big bro man. The only thing is, you werent here, which made it bittersweet. Well have her back tomorrow. We will. Well see you tomorrow. We hope you had a good trip down on the amtrak. I did. Hopefully you had the bison chili. No. There was no bison chili this time. It was steak or a shrimp pasta or really . Yeah. Ive had the shrimp pasta. I had the salad. I wont eat bison anywhere but on the amtrak. Sound policy. Well have more from becky and jim cramer will join her in d. C. For now, lets get up on the mornings top stories. The fed is hold ago twoday meeting in washington and a News Conference by bernanke is set for tomorrow afternoon. Operation twist expires at the end of this month. The central bank is expected to maintain its purchase of bonds with longer maturities. And well talk more about expectations for what were going to hear tomorrow, in the next hour, when Steve Liesman will join us with results of our fed survey. An oh beck minister, important events. Opec ministers are in vienna. Why vienna, by the way . I dont know why they originally set it there, but it seems like as good a place as any. Have you been . I have not been. I dont think ive ever been to vienna. I always wondered about that. I mean, its better than meeting in, i dont know, skokie, right . Theyre expected to retain its 28 million barrel a day output target. But the real drama is likely to be about leadership, the worlds leading Oil Exporters are expected to argue about who should be opecs next secretary general and we have candidates from iran, iraq and saudi ara a arabia. Theyre all competing to replace the current leader, as you can see there. Abdallah salem el badri, hes 72 years old and hes been there for years. I dont know where ive been for five years, but did you know i apologize in advance. I didnt. You could have said you did and weve been best friends, in fact. Hes completely changed the entire operation. Anyway, did a great job. In Global Market news this morning, stocks in asia, closed mixed today. Investors waiting to see what comes out of the fiscal cliff negotiations and in europe, a choppy start to the trading day. Investors are waiting for the results of greeces Bond Buyback Program occurs. Joe has some of the big Corporate News and this one is actually a Global Corporate story. Hsbc. Were talking about paying 1. 9 billion in the money lawnering lapses. A brirchb lender admitting to a breakdown of controls, in a statement announcing a deferred payment. Yesterday Standard Chartered agreed to pay 27 million agreeing that it violates sanctions against iran and two other international companies. If youre an International Bank and you prael without getting into this kind of trouble . No. Can you actually operate without Money Laundering . Im just saying, if youre going to be in business in all these types of markets, isnt this going to happen . Arent there sxwier countries that would be probably that it would stead if you dont want any business tale. Was there a fascination in this country about whether you want to indict the whole institution or what happens systemically. Is this your sequel . I was on the phone last night. One of the two publishers that are left. We have other news on wall street this morning, Morgan Stanley said to be considering asking the fed to hold permission to hold a share buyback. The wall street journal reporting that the official request could come in early january when the bank is due to hand over iback tests as part of its buybacks. The company has no purchase requested to give to you. For four years after that, 182 billion buyback. The government offering more than 230 million in shares. The price represents a 2. 6 discount. Aig closed yesterday. It will raise 7. 6 billion. In a statement, treasurys former chief reinstruct during officers jim millstien says no tax player should be pleased with the government had to rescue this company, but all taxpayers should be pleased with todays anounlsment ending the largest of the industry bailouts. But the way, that profit now looking to be about 15. 2 billion and people did not expect that we would ever make money on in deal. I dont know if that makes the deal any better. I dont know if all of the anger and frustration that people have had, that people say, okay, we had a profit and were okay with it. Are you okay with it . Im okay with it, yeah. I feel better. I know you havent seen this movie, but mr. Smith on goes to washington. He said for so long where were you looking at on the screen . I was just reading it. I dont know. You guys of lost me on that last one. Aig said et wasnt that interested . Aig, yeah, what are you going to do . Its good to be back. See you. Lets check on the markets. The one story i thought was interesting today and not only sort of a commentary of what with do for a living, but how hard it is to be a stockbroker right now. You go over the things that people are concerned with when they talk to their Financial Adviser and the list is endless. And one client, this is right at the beginning of the article, he just drew a picture. He said, this is what i feel like being in the stock market right now. And that is, you know, after two really big spot selloffs and then a financial crisis. People are still not over this. Theyre not desensitized from the worry of there could be a significant break at any time. Do you want them to be is he sensitized . Yeah. And then it climbs another wall of worry. Desensitized means not being so worried that they dont go into the market at all. People, the individual investor because of whatever. Not trusting markets, High Frequency trading, the financial crisis, very, very difficult. Very weary. And were seeing it in the action in the markets. Were seeing it in the interest in the stock markets and everything else. Anyway, markets ended up 14 points yesterday. Theyre indicated up about, what did it say, about 20 points . Were up 20, but fair value is down 20. So were actually looking for an opening up of about 49 points. Coming up, why netflix could end up doomed with its success with children. But next, the unmanned bshuttle this afternoon. The unmanned mini shuttle will spend months in eithers orbit before returning to land on the Kennedy Space centers runway. But forecasters are now predicting a 70 chance of not launching today due to expected lightning, thick clouds and bad weather. We might be having this conversation again tomorrow. Announcer tomorrow, squawk box exclusive coverage of the New York Times conference. Investing, the economy and the looming fiscal cliff. Jpmorgan chairman ceo jamie dimon. Carlyle group cofounder David Rubenstein and a lot more. And it all starts tomorrow at 6 00 a. M. Eastern on squawk box. [ male announcer ] how can power consumption in china, impact wool exports from new zealand, textile production in spain, and the use of medical technology in the u. S. . At t. Rowe price, we understand the connections of a complex, global economy. Its just one reason over 75 of our mutual funds beat their 10year lipper average. T. Rowe price. Invest with confidence. Request a prospectus or summary prospectus with investment information, risks, fees and expenses to read and consider carefully before investing. Welcome back to squawk. Happy monday. Today in the wall street journal suggesting netflix could end up doomed with its success with children. Netflix just for kids get more popular. Companies like viacom get accurate. Companies provide netflix with most of its content in a kids focused section. The journal says at some point the suppliers will probably want to charge netflix more or they might even stop selling to netflix. Thats been a huge problem for them when it comes to contend more broadly. Time for the Global Markets report. Kelly evans standing by in london. You rise above over there, kelly. Is it vienna, bernanke . What is most what do you think is most important to you . It has to be what its whats happening in washington, isnt it . No. I say its up there, top thee, but also on the top three is whats happening with italian politics. Of course, mario monti saying he was going to resign as italys prime minister. That paves the way for flesh elections to be called in the beginning of next year. Yesterday, we saw the negative reaction. Sylvia berlusconi wants to make his return on the political scene. Today, we saw a bounce back. If you can see see bind me, the bank stocks in italy rerebound, but its only in the range of. 5 to 1 of these names which were down in some cases nearly 10 yesterday. If you take a quick look at european bourses, if thats possible, down near the ftse mib, this is the one selling off somewhere in the range of 3. 5 yesterday. Today its adding about. 8 . In spain, showing a nice rebound. Same attitude listing peripheral debt. We can take a look there. Italy and spain seeing prices rise, yields falling to 4. 75 and 5. 75 respectively. Is investor attention returning to spain . Here is the thing. Italy is the third biggest Government Debt market in the world. Its the third biggest economy in the eurozone. Whatever happens with its political situation could put neighboring pressure on spain. The main thing to keep an eye on here is whether spain comes back into the markets cross hairs. We saw today an auction go up reasonably well. Were looking for the country still needing to raise significant amounts of money into the new year. And in a final reminder of the ten ewe yigz situation, greece had to extend the time frame of its own buyback of debt to the end of today. For the most part, despite these gyrations and despite berlusconi accusing monti of bad policy, markets are shruggedel it off after serious losses yesterday. The way its clear for attention to be focused, i will say, on the fiscal cliff in the u. S. Today. Yeah. Italy is important. Its a big economy. We dont you know, compared to whats going on over here i missed mario monti on vacation. You missed him on vacation . No, i missed oh, you missed the story. It was huge. When i was there a year ago, i asked what do those posters say . And it was a picture of him in a beach chair. It said send monti to the beach. It doesnt take long to get how long is the average government in italy . I dont know. Is kelly evans still with us . Shes gone. Thats about as long as a her report is about as long as the average government. But they have a figure. Lets head to eric fisher on todays weather forecast. Maybe he has the answer. Eric. Unfortunately not, guys. I know the weather changes quickly, and thats my business here. I dont deal with the Italian Government too much. But what were watching for today too much in items of changes, its colder outside. As soon as you walk out the door, you notice a big change in that cold front. This time yesterday in cincinnati, 17 degrees colder. 30 degrees colder in jackson. Still showers around boston and new york city. Theyll be out of the way fairly quickly. Our main story is florida. Miami, naples, picking up showers and thunderstorms. A half dozen tornados across the south yesterday. Well watch tampa, daytona be h beach, ft. Myers. This is the spot for strongest storms to develop. The cold air, finally returning to deal for many. 50s in atlanta after our average hey hoob around 71 degrees. Were looking at generally average temps tomorrow. The return to average is what makes it feel so cold outside. I can say, guys, that as we head towards the end of the week, wintered is going to return. Snow is going to start to return, as well. Good. That was better than rain. I sense your ens tus amp. Youre excited about this. I am. I know aspen got a foot yesterday. We dont want to waste it on rain. We had 20 inches over on the west coast. Move that over. Lets get some snow. Even back here, we had 39 degrees and raining doesnt help anyone back here, does it . No. Thats brutal stuff. For you guys. Youre watching sunday night into monday into the northeast. Thats your next shot. Could be a decent storm, could be. All right. Thats cozy. The fireplace going with the chestnuts roasting. Thank you. Coming up, why as many as 10,000 Union Workers are expected to march on the michigan capital today. If you get a chance, read the lead editorial on the wall street journal. This might bring us some things you havent thought about. Plus, which bank has the best customer a quick glance, and you can see if youre on track. When the conversation turns to knowing where you stand, turn to us. Wells fargo advisors. Where you stand, turn to us. So as you can see, geicos Customer Satisfaction is at 97 . Mmmm tasty. And cut very good. People are always asking me how we make these geico adverts. So were taking you behind the scenes. This coffee cup, for example, is computer animated. Its not real. Geicos Customer Satisfaction is quite real though. This computeranimated coffee tastes dreadful. Geico. 15 minutes could save you 15 or more on car insurance. Someone get me a latte will ya, please . Having you ship my gifts couldnt be easier. Well, having a ton of locations doesnt hurt. And a santa to boot [ chuckles ] right, baby. Oh, sir. That is a customer. Oh. Sorry about that. [ male announcer ] break from the holiday stress. Fedex office. Good morning and welcome back to squawk box here on cnbc. Im joe kernen along with Andrew Ross Sorkin and becky quick reporting live from capitol hill. Well have more from becky in our day long coverage of Mission Critical, rise above d. C. Well have more on that at the top of the hour. She will be joined by jim cramer and the incoming chairman of the House Financial Services committee, Jeb Hensarling. Widening an Insider Trading probe, the manhattan u. S. Attorneys office is said to have launched a broad criminal investigation into whether seven Corporate Executives cited in that november wall street journal article traded improperly in the shares of their own company stock. The article focused on highly beneficial sales by executives that it occurred right before bad news about the companys hit. It protected them from declines in the value of their holdings. It includes cardtronics, micro, cobalt international. And as many as 10,000 labor Union Workers from throughout michigan and the midwest are expected to march on the michigan Capital Building today. They plan to protest a likely passage of a right to work law. The republicancontrolled Mission House will consider two and perhaps as many as three bills today that would prohibit unions from sourcing private Sector Workers and Government Employees to pay union dues. Michigan would then become the 24th socalled right to work state. And jpmorgan is jumping to first place in a u. S. Customer satisfaction survey. Its three biggest rivals, posting a decline in their scores, including perennial lead her wells fargo. But the index finds Smaller Banks and Credit Unions continue to record higher numbers than all large banks. Lets go to the futures pits now and talk to kevin ferry at cronus futures management. Kevin. Good morning, andrew. Set up the week for us, if you could, sir. Okay. Well, interestingly, the political situation has kind of kept the fed on the back burner, because its probably going to be one of the most important and open meeting that theyve had weve had in some time. So the markets are preparing for that and the widespread consensus is that were going to get 40 or 45 billion more of purchases by the fed starting in the beginning of the new year. So weve got becky quick and basically half of cnbc down in d. C. Today on the fiscal cliff. Right. Is there anything youre hearing that is making it better . Well, here is ill give you the inside from the pit standpoint. Interestingly enough, even with the fed, the option market is skewed towards puts in the treasury and calls in the s p. So there has been, over the past few days, regardless of the news, which hasnt really improved on the fiscal cliff definitely that is a solid dollar betts in the direction that say that people think is going to resolve in a positive way. And positive is prejanuary 1st or positive at this point is january 15th . Good point. I would say its probably the 13th or 15th of january, not tend of the year, and thats where the focus comes back to the fed tomorrow. Unlike before, and probably for political reasons, the fed has been a little bit tight lipped about the details of what they would do. So what buckets they buy in, would they mess around, dudley had a big concept, they might want to mess around with mortgages again. That kind of information would be probably more leaked out to the marketplace by now if it wasnt for the fiscal situation. So theres quite a bit of uncertainty and the fed will definitely have it will make for a really exciting process tomorrow. Its exciting presser . Have they ever done an exciting presser . This is his chance to really prove it, i think. Yeah. And the surprising thing is, andrew, that its generally accepted that theyre going to come back in. These are large amounts of youre now talking about taking out over 90 of new treasury supply again. So on this is a big deal. Given what japan is doing, there are six countries with negative nominal rates already. Okay. Well see juicy first half of next year. But kevin ferry, thank you for that. And, joe, before i go, i need to just make one quick comment to you. I said to the audience i dont know if you heard this. Maybe you were wincing when i said it. I said happy monday. Did you hear that earlier in the program . No. Someone emailed me and i realized today is tuesday. You know how you can guard against that, though . By never saying for not wasting the sue pure if a loose anchor speak that you think happy monday is anchor speak . Yeah, i do. People dont need that. Or happy tuesday or anything. They know what day it is, most people, he hopefully. Except me. Yeah. You dont need to remind them. In our corporate headlines on this wednesday i said on this wednesday ftx is in exclusive talk toes buy rival ga ardner. Bids range from the low to mid 70s. The spx offer is assumed likely to be made of cash and stock at this point. Okay. And amrs ceo says they want a quick resolution on whether to merge with us airways or file for chamter 11 on its own. Now the labor contract has been ratified by all the American Airlines unions. At least thats what its saying now and a big discussion about whether it should have done these deal long ago during the turn use lens over the problems that theyve had in the past couple of months. A few stocks to watch here, Urban Outfitters getting a pop in after hours trading. The retailer said sales are doing well in the current quarter. Big move up. You see, this kills me that we cant figure this out. You can see that its not i guess we havent figured it out yet. Its not up at 37, its not up at 39. 5. Its a flaw. Shares of Limited Brands also rising late yesterday. And a specialty retailer announcing its board has approved a special dividend of 3 a share to be paid ahead of possible changes in tax rates. Well fix this, we will. And then theres i could ignore it, but i think its better people at home might they need to know that its above that. And then theres hertz. The shares fell after the company said its three biggest stockholders are selling 50 million shares. Carlisle and bank of america, Merrill Lynch recently held a 38 stake in hertz. After the offerings, the funds will hold a roughly 26 interest in the rental business. After the sales, hertz will not receive anything from the proceeds of the sale. Coming up, squawk on the farm. Were going to talk crops, crops, crops, tractors and other equipment. And what it all tells us about the global economy. Stay tuned. Announcer team, squawk box exclusive coverage of the New York Times deal book conference. Investing, the economy and the looming fiscal cliff. Jpmorgan chairman and ceo jamie dimon, carl likely group cofounder David Rubenstein and a lot more. It all starts tomorrow at 6 00 a. M. Eastern. Hi, im phil mickelson. Ive been fortunate to win on golfs biggest stages. But when joint pain and stiffness from Psoriatic Arthritis hit, even the smallest things became difficult. I finally understood what serious joint pain is like. I talked to my rheumatologist and he prescribed enbrel. Enbrel can help relieve pain, stiffness, and stop joint damage. Because enbrel, etanercept, suppresses your immune system, it may lower your ability to fight infections. Serious, sometimes fatal events including infections, tuberculosis, lymphoma, other cancers, and nervous system and Blood Disorders have occurred. Before starting enbrel, your doctor should test you for tuberculosis and discuss whether youve been to a region where certain fungal infections are common. Dont start enbrel if you have an infection like the flu. Tell your doctor if youre prone to infections, have cuts or sores, have had hepatitis b, have been treated for heart failure, or if, while on enbrel, you experience persistent fever, bruising, bleeding, or paleness. [ phil ] get back to the things that matter most. Ask your rheumatologist if enbrel is right for you. [ doctor ] enbrel, the number one biolog medicine prescribed by rheumatologists. Welco. Welcome back to squawk box this morning. The dow jones would up 51 points higher, s p 500 and the nasdaq would open higher, as well. Making headlines this morning, john mcafee may be allowed tory main in guatemala for the time being, that is. Mcafees lawyers have filed a request to allow him to stay in guatemala until his legal appeal against deportation to belize would have to be resolved. Officials in belize want to question him about the murder of his neighbor, also an american ex pat. Hes been evading authorities for nearly a month because he says they want to kill him. This has been one of the crazier stories out there in the world, swroe. And i have to tell you that on vacation, this is something i did follow. Wa is it about software and money . Software, money, drugs, guns. You remember that guy that had the yes, the underground. The s m dungeons. That was something. Prostitutes and free i dont know. Its something. He also had software money. Maybe its the coach. I dont know. Lets get to our guest. Al, how is the drought in the u. S. Affecting the agriculture business . Joining us to answer these questions and morning. Andrew, you come across that youre going to freeze. I nailed this. Martin rickenhagen. Excellent. Excellent. As the chairman and president and ceo of agco, so many great things to talk about. I think of a company like this in longterm global demographics are so positive. But then again, depending on global growth, there are cyclical highs and lows for your business, i guess. But thats in the business of trying to farm enough food for the world, i cant see how its not a great longterm business. Our business is known to be cyclical, but that didnt happen for the last 20 years. So that means the business is very stable on a very or rather high level. You explain to fundamentals its the going population, foods and changing balance in countries like india and china. So if you eat meat instead of chicken, you have to put in six to eight times the crops. And if youre eating chicken instead of rice, thats probably exactly. Yeah. So thats driving demand and, therefore, some income is very high, which is driving basically the demand for our products and, therefore, we have actually another record year, 2012, and the year at wall street to talk about this year and to talk about what we plan to do next year and we are planning to top 2012 again. So we are in a very good environment. And in north america, obviously, is important. Europe is obviously important. But youre focusing on emerging markets. Yes. Even putting manufacturing, which im not sure, why would you build youre building a 100 million plant in africa. Why not just export to avenue from from other places . Why build a plant in africa . We have going to affect the organization from here. This was a unique opportunity because it was a stateowned factory. We managed to take over and they needed technology. And why produce there is a huge market. There are 1 billion people right now, the population will double. On the continent . Yeah. On the continent of africa. They have a problem with feud security now. They have 60 of the Global Reserves of tillable land, which is great news, and only 20 of this land are used today, are farms today. Therefore, it is a very interesting market. Im very proud that we discovered it first and that we will be there also the first to manufacture from the western global players. So private corporation. Who needs to go into that, the oecd or the investment, some private firms need to come into those countries . Yeah. Theyre all ready, but some of those, this aid money didnt work out that well. So we have a slightly different approach. We opened a fully owned firm in zambia. We called ate demonstration farm where people can are invited. We show this is them how mechanized farming has done in the western world. We explained them what teedz to be done. We sell product to them. We finance product to them for eco finance banks such as the retail bank. And then we actually train them how to use a Massey Ferguson tractor under the local conditions. We think this is a great concept. And we are now looking into other farms. Another emerging market. 30 farmers are start ago farm, including one full time snake catcher to make farms safe for people over there. I guess there are Security Issues and infrastructure issues. I wish we had more time. Maybe you can come back and fill us in for business if its pretty good. Yes. We are looking to have a pretty good year for 2013. Excellent. Thank you. Thank you very much. Have a nice day. How would you say that last night . Im not going to try. Richenhagen. Coming up, fame, fortune and intrigue. You dont want to miss this. The inside story of the collapse of the family behind the mighty Anheuser Busch brewing dynasty. Its coming up next and it is one crazy story. I need to rethink the core of my portfolio. What i really need is sleep. 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What we want to know from elected officials is, how are you going to step up and solve the problems . As the deadline approaches, we report from the halls of congress. Well ask the tough questions. What are you going to do . Where the negotiations stand. And whats going on behind closed doors. Where is the compromise . Mission critical, rise above d. C. All day today. Congress, get a deal done. Welcome back to squawk box this morning. The collapse 6 the family behind the anheuserbusch brewing dynasty has remained a mystery until now. The kindle single the prince of beers goes behind doors with the final heir to tell the inside story of how everything unraveled. Joining us now on the set is author alex berenson. Hes also a New York Times reporter. I should say good friend. I didnt even know he was coming on the show, joe. Really . I knew just now. But i had nothing to do with having you here. But im thrilled to have you here. If those viewers, i talk about his books all the time, i have not read the faithful spy or anything as part of that group. They must go out and buy the book immediately. More importantly the fourth. What is going on . This is like prostitutes involved . There was a waitress. A waitress. Okay. So this is sort of the last couple years of ceos behaving badly. Youve got mcafee. Busch iv arguably had a worse fall. Your viewers may be vaguely awa aware, you know, anheuserbusch was sold in 2008. They may have owned bud stock back then. After what happened what isnt really known is how he spiraled out of control. And he really went into this almost suicidal depression. He was involuntarily hospitalized in 2010. This is less than two years after hes running anheuserbusch. Which raises the question of why he was ever allowed to run it. Was any of this happening when he was at anheuser . I dont know if you remember this, a hit and run. I remember someone died died in his house. There was a woman who died in his car. In 83 there was a hit and run. And he honestly has never acknowledged that he was driving. He said he cant remember. So i dont want to say he was driving. Because its never been proven he was driving. But if you think about it, why was a guy whos running a brewery involved if he was involved in a hit and run 20 years before, where alcohol i shouldnt say hit and run. It was a car accident, where alcohol was involved. And so, arguably, there was like an incredible Corporate Governance failure at anheuserbusch, where he, you know, his father the third who ran the company for 30 years, essentially overran the board, installed him as ceo in 2006. In 2008, for whatever reason, august iii decided august iv was not fit to be ceo. He engineered the sale. That was part of the whole story that you wrote. The prince of beers is what its called and you can get it on amazon. But the issue that i was trying to figure out is did they try to sell it to inbev simply to get it away from the son . Thats a really good question. And only the third really knows. Hes not talking. I spoke to the third very briefly for the prince of beers. I spoke to the fourth extensively. And the fourth is a sort of strange, sad guy. Hes like shooting guns in his house. Hes doing coke every day. In the end, his mother called Child Protective Services because this woman, this waitress in the house, who was living with him, who is also a drug addict, she was worried about the womans son, because there were guns and drugs in the house. And again, whats so crazy about this is august busch iii was the ceo less than two years before this happened. So yes, he was having panic attacks, believe it or not, during the takeover fight with inbev. He essentially was overwhelmed by events. Where was the board . Where was the board . Thats a great question. Did everyone know that he his problems were fairly well known in family business. Not the only time this has happened i guess. Money, money corrupts absolutely. And money and power. What i was shocked about was how how what i was shocked about was how was this guy promoted year after year. Really just arguing for big estate taxes. People should not inherit that much money. Carnegies famous line is, and i say this in the prince of beers, three generations in america on shirtsleeves to shirtsleeves. The bushes, five generations. So thats not too bad. It happens with lottery winners. Yes. All of a sudden it lands in your lap, and within a year youre like, you know people always say, you know, member of the lucky sperm club. August busch iv given how tough his dad was, and given how overwhelmed he was, he might actually have been a member of the unlucky sperm club. Hes holed up in his mansion in huntley, he claims hes trying to be sober, hes trying to turn his life around, but he still drinks. So how you can say, you know what, im not going to do Illegal Drugs if youre still drinking, i dont know how that works. How easy was it to get him to talk . Hes a very odd guy. He likes to talk to the media. In fact, i actually found myself liking him because he seems in some ways defenseless. He does not seem like a guy who ran a fortune 100 company. Right. Unbelievable. Alex berenson, money, drugs, software the software guy with the dungeon. You always say im cheap are you . You can get this book on amazon for free. Free. Download it for free. Its the coolest thing. Ask cliff robins where he is finding value right now. His names cliff and were doing all this program about the cliff. Plus, Mission Critical, rise above d. C. Jim cramer is going to join becky on capitol hill for a wideranging conversation with the incoming chairman of the House Financial Services committee. Saving the u. S. Economy from the fiscal cliff when squawk box returns. And we can save you 10 on ground shipping over the ups store. Look this isnt my first christmas. These deals all seem great at the time. But later. [ shirt ] merry christmas, everybody not so much. Ho ho ho this isnt that kind of deal. [ male announcer ] break from the holiday stress. Save on ground shipping at fedex office. [ male announcer ] breand you see the womantress. You fell in love with. Shes everything to you. But your erectile dysfunction that could be a question of blood flow. Cialis tadalafil for daily use helps you be Ready Anytime the moments right. You can be more confident in your ability to be ready. And the same cialis is the only daily ed tablet approved to treat ed and symptoms of bph, like needing to go frequently or urgently. 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Wells fargo advisors. Time is running out. None of its going to be impossible. The president insists on my way or the highway. Washington remains at odds. That is a bad strategy for america. Its a bad strategy for your businesses. And it is not a game that i will play. But the fiscal cliff still looms. Cnbc has called on lawmakers to rise above gridlock and reach a deal. Now, were beating down their doors. Live from our nations capital, this is a cnbc special report. Mission critical, rise above d. C. Welcome back to our special coverage, everyone. This is Mission Critical, rise above d. C. Im becky quick, and jim cramer is here with me for the next, oh, three hours or so. You bet. Great to see you. Great to see you, becky. Heres what we know right now. We have just 20 days left for the Obama Administration and House Speaker boehners office to reach a deal on the fiscal cliff. While talks continue privately between both, no public details of progression toward the compromise have been released. In the last hour, our guest, tony fratto who is the former press secretary and Jerry Bernstein agreed that we would likely get some sort of a deal, just perhaps not in a form that was widely expected. Joining us right now is the first of many lawmakers well be speaking with today, texas congressman Jeb Hensarling who is also the incoming chairman of the House Financial Services committee. And mr. Chairman, first of all, congratulations. Thank you. Good morning. Good morning. Thanks for being with us today. Happy to do it. We hear all of this talk, we hear all the talk thats been leading up to this point. We know its gone a little quieter at this point. Maybe thats a good thing. I also know youve been pretty firm about this. Youve said that elections do have consequences. The president is getting his revenues. Now hes drawing a line in the sand when it comes to tax rates. Do you agree to go along with Something Like that . Or is that a line in the sand for you, as well . Weve got to look at ways to increase tax rates. Its bad economics. We know that, you know, if you got an unemployed brotherinlaw, by raising taxes on your boss, is that boss going to be more likely or less likely to hire your unemployed brotherinlaw . We know about the study from the nfib saying that 700,000 americans can go from paychecks to unemployment checks. So we dont want to do that. But becky, the main problem here is, you cant solve this on the tax side. Frankly, its diversionary. You give the president every single jobharming tax increase that hes requested, you run the government for maybe nine or ten days. You cant get there from here. You know, about two years ago the president said the drivers of our debt are medicare, medicaid, health care. Nothing else comes close. I give him an a for honest by but an f for effort. What we see in many respects, the president doing a bait and switch from what he told the American People. He said he wanted a balanced approach. One dollar of revenue for 2. 5 of spending cuts. And now its kind of like, you know, lucy pulling away the football from charlie brown. He has the right to change his mind but we have the right to call him on it. But america is facing a debt crisis. It is spending driven, and this talk about taxes is, fwrangly, almost am i right to read between the lines. It sounds like you are saying, its a possibility, it could be bought if you see significant spending cuts, and dealings with the entitlement programs . Becky, what i said earlier is this is written into current law. We know whats going to happen at the stroke of midnight. I didnt vote for any tax increases. I dont want them there. But i recognize them. Its the difference between me bringing something to the table and recognizing its on the table. House republicans are going to work hard to minimize the increase in tax revenues. Were going to do everything we can to make sure that they are done in a way that doesnt harm the economy. An approach like simpsonbowles, which is to bring down rates, bring down marginal rates, and flatten and broaden the code. Start to clear out all the loopholes that unfortunately the president seems to want to protect. But, again, you cant solve it on the revenue side. Otherwise were going to be looking at tax rates that would make frances new socialist government blush. You cant get there from here. Ill tell you something, jeb, im a stock guy. Just like you, you dont want to talk about taxes. Lets forget about this whole tax side. I want three ways to cut spending by 500 billion right now. How about we take Social Security up to 68. How about we slash medicare benefits . And why dont we cut the the Defense Budget . Why do we need people in europe . Why do we need them in japan . What are we doing in decree california . I want some answers to this. Well, go to the web and look for the republican budget. That was written by the chairman of our Budget Committee paul ryan. You will see these savings 30year, 40year plan. I want to know what we can do well number one, defense has already been cut. We can debate how much it should be cut further but it has already been cut. I mean thats just a fact. But we added defense on the republican side. You have that global war turf. Good idea. Say again, please . Global war heres what you have to do. Ultimately youre going to take america off the road to fiscal insolvency. Youre going to have to reform current entitlement programs for future generations, which is exactly what we do in our budget. Medicare is going broke, Social Security is going broke. The four trust funds. Youve got one trust fund going broke in about six years im happy to put that on the table with every other reform. You know, we cant repeal we dont want to repeal the laws of demographics. We have more and more people who are getting older and older. Again, republicans have put forth a system. We believe that my 84yearold dad and my 80yearold mom who relied on this system ought to be able to rely on it. But it ought to be around for my 10yearold daughter and my 9yearold son and it wont be. You agreed to raise the deficit we have to put the plan in place today. Thats whats important is putting the plan in place today. Otherwise, listen, ive put forth plans and ill be happy to share them with you, you know, that it saved over a trillion dollars back when i was chairman of the republican study committee, the conservative caucus. I mean theres not too many, when you ask where should you cut, where shouldnt you cut . Id like to be on record saying im willing dont we bring im willing to cut anywhere in the budget to take the nation off the road to bankruptcy. Its christmastime. Were talking about dickens the Christmas Carol and the ghost of christmas yet to come. The ghost of christmas yet to come is greece, and now we know that greece is 50 youth unemployment, 25 unemployment throughout the nation. You know, from press stories you see where some of the youth are now having to go to subsistance agriculture because they cant find any sustenance within the major urban areas. Now i dont think americas going to become greece but i dont know. I dont want entitlements, even simpsonbowles lays out this proposal to raise the retirement age by a year. Another 30 or 40 years down the road, and thats something thats in washington. Its something that none of us would be dealing with. I just want to know how we cut it in the next two years. I want it cut now. Listen, i would be happy to roll lets just start out by rolling back the budget to where it was before barack obama took office. I mean weve had a 20 increase in federal spending, when now all of a sudden apparently gdp growth of 1. 5 to 2 seems to be the new norm. Again, that math doesnt work. It doesnt work. We can get rid of we can get rid of ballout funds. Not for the 2 . But were going to get a trillion each year. Why would you vote for that. But the deficit is the symptom. It is spending that is the disease. You cant have again, the deficit you could have stopped it then. The deficit is the deficit is not the true problem. The true problem is spending. Thats where the true problem is. And already the president is taking us from our historic norm of about 20 of gdp up to 24 and on the way to 40 over the course of the next generation. And thats why Social Security up right now. Two years from now. Wouldnt it be the answer . We dont have to do it that way, jim. In practice, as you well know, you dont have to cut one penny of federal spending. What you have to do is bend the growth rate. Youve got to live within your means. Youve got to quit spending money you dont have. Again, we think it is fair that current seniors stay with the program that they have. Future seniors be given guaranteed coverage options, including traditional medicare. The math works. Its been certified by the congressional budget office. I would commend you to read it yet again, because it doesnt take 40 years to get the balance. And, and if you would enact our progrowth tax measures, you know, any time that we have flattened the tax code, any time that we have cut Capital Gains tax, weve actually had more revenue because more Economic Growth. Witness the 03 tax relief, witness the tax relief in the reagan era, you can go back to Calvin Coolidge and find it works. We can get progrowth revenue. But, again, the main point is, unless you deal with entitlement spending, which at one time the president was willing to admit, we just want to do it for those who are 55 and under. Get we dont believe, nor do you have to dpoel with current seniors to get it done. Can i ask you this . Theres a story on the front page of the wall street journal today suggesting that House Speaker boehner has done a lot to try and bring his party a little more in the line. Some of the problems, they lay out this idea of the unruly freshmen elected in 2010. Hes done things both from the carrot and stick perspective. Hes removed Tea Party Members from key plum assignments. Does how Speaker Boehner have your full support in whatever he negotiates . Whatever deal he negotiates with the president . Well, you can only have one person negotiate an agreement. And so we back the speaker. I would hope 99 to 100 of the members of our conference would back the speaker. But in my hip pocket, since my voting card, with my picture on it, like every other member, i reserve the right to see what the final agreement is. But i have confidence of what the speaker wants to do, and that is to ensure, again, that were able to create more jobs through progrowth tax reform, and that ultimately, we looking at your button, rise above. Rise above the stale politics in dealing with your entitlement spending that is ultimately going to drive america bankrupt. So does that mean you would agree to Something Like maybe a slightly higher marginal tax rate on the upper 2 if you feel like you are getting entitlements and spending cuts down the road that you think are worth that tradeoff . Well, i dont know what i can do to stop it. Im going to try to stop it. Again, this was written into current law over a decade ago. That the tax relief is going to expire. So i dont know what i can do to stop that. And again, elections do have consequences. But, you know what . The American People, not only did they reelect a president , but they reelected a republican house. So we have our own mandate, as well. But, you know, i was chairman of the less than super super committee, i was willing to put revenue on the table and one of the items i was willing to put it on the table for, jim, to your point, is to have a gradual increase in the retirement age to help bend the cost curve, again to save these programs for my 10yearold daughter and my 9yearold son. And sustain them for my parents who are in their 80s. Ive been willing to do that. But again, were not going to have any kind of bait and switch. What good does it do historically, any time republicans agree to some increase in tax revenue, you know, its the revenue today, its somehow the spending reductions never quite manifest themselves. You know, i guess im dating myself. Also a little bit like the old cartoon popeye where wimpy says if youll buy me a hamburger today ill gladly repay you next tuesday. The immediate cuts that go with the Immediate Tax seems right. Go take a look at our budget. Next two years. Chairman hensarling we want to thank you very much for your time today. Thanks for having me. Okay. Our Mission Critical rise above d. C. Coverage continues all day long. Come back in 30 minutes were going to sit down with wisconsin senator ron johnson and talk for the next hour, Grover Norquist, old buddy from college joins us. Will his tax pledge hinder a deal on the fiscal cliff . He rises above . Where is that rising above . Thats true. There are some people who say you got to stick with your convictions, others stick around. Lets bring joe and andrew back into this. Guys youve been listening to the conversations this morning. Your take away . Are we closer, further away . You hearing things you like . Further away. Further away. Ive decided, becky and jim, that probably the best way to do it, im in howard deans camp, why wouldnt the president go over the cliff and then introduce legislation lowering the rates on 98 . And if the republicans dont vote for that he gets the tax cutting mantel and i dont see how they would vote against that . So cynical. But so true. Why is that cynical . You know, because because i think its crazy that thats the way things get done in washington, and we will explain that to the public. That, yes the president , wed be back to thered be no ifs, ands or buts. He would get exactly what he wanted. Then you could talk about what kind of legislation to pass with Capital Gains, dividends, the lower 98 . All the things you need to do. And but for everybody to to do that, to say we have to go over this fiscal cliff we dont have to in order so that everybody you could have legislation ready to introduce that week. Congressman hensarling, before you go, Something Like that, would i mean i hear this from both sides, that if we just go over the president would introduce this legislation to lower rates, republicans who have signed Grover Norquists pledge would be able to go along with that and say this is what we did. I didnt vote to raise taxes, i voted to lower taxes. Is that the most likely scenario . Makes sense . Im not a las vegas bookie so im not going to say what is most likely scenario. I dont know and my crystal ball is a little fuzzy. Again all this talk of taxes is marginally irrelevant. You give the president all of the tax increases that he has requested its roughly about 23 of his tenyear spending budget. Even 1. 6 trillion. At most is maybe, 22 , 23 . The additional but going over that cliff, thats real money. And by the way, thats not that revenue thing. Thats the actual spend side that republicans like so much. Youve got to a reasonable proposal. Again, until we Start Talking about dealing with the longterm insolvency of our entitlement programs, you know, all this talk about taxes is just a point of diversion. At some point the taxes. At some point the American People need to understand exactly how much their government is costing. They have to understand that programs that theyre relying on today are not going to be around tomorrow. And so every single minute we spent talking about 3 of the problem is where were spending time ignoring 97 of the problem. And every single day i just saw where the president , where the president says, well now the modest medicaid reforms, theyre off the table, weve already had others tell us that Social Security for future generations is off the table. Yeah, its off the table. My children are going to see an automatic 22 benefit cut, you know. My friends on the democratic side of the aisle, i could talk about fairness, whats fair about cutting my childrens Social Security 22 , which is their plan . Again to deal with the 97 of the problem youve got to deal with entitlement spending, grandfather the grandparents but bend the cost curve today. We can get good Retirement Security and health care at cost that doesnt bankrupt our children. But if we act today. Otherwise, that goes to christmas yet to come is greece. Chairman hensarling, thank you very much. Jim, a reasonable proposal for the fiscal cliff . Modest proposal. Ive read things like that before. Im talking about the look, did i mention once the tax increase . No. Im going for quick spending cuts. Because we just we agreed to give the rich people that deal two years ago, we added a trillion and then another trillion. I dont know why a republican ever agreed to that. Im trying to figure out it wasnt who the heck wasnt because of the 2 . Because it kept it kept the deal from happening. By given the added 2 trillion to the deficit. I hated that. Try to find out how to cut that deficit now. Not the future. Weve got a lot more 20 come this morning. Thanks, guys. Crazy conversation. Well see where it goes. Comments, questions about anything you see on squawk, tweet us squawkcnbc. Coming up, holiday central. The ceo of phillips vvan heuse. Who . Phillipsvan heusen joining us on the set. Hes dressed head to toe in calvin klein and hes here with one of his companys largest shareholders cliff robins. I dont know if hes dressed in calvin klein. Well find out. Wow. That happens a lot, doesnt it . Were in the middle of something and then the show gets anyway. Some in Corporate America might be sitting on cash in fear and uncertainty. Not our next guest. Chief executive officer of hedge fund group. Chairman and ceo of the pbh group. Used to be phillipsvan heusen. But no longer. They changed it for me and others. Blue harbor is leading shareholder. First of all its just nice to see you guys. Youre friends. Youre not arguing about anything. You like whats happening. I love it. Manny is a huge business builder, and thrilled to always be investing with him. Right now were lead stockholder. Thats a real home run, manny. Congratulations and thank you. Of course he says thank you. Huge premium. Its a huge premium. It is a huge premium. But its a great deal. And manny, im amazed what youve done, how youve built this company. When we started out investing with you, five, six years ago, it was basically a u. S. Business. Just bought calvin, then you bought tommy. Now you bought warnerco. Now youre part of a Big Powerhouse with almost half your business outside the u. S. Tell us about the warnerco deal, why you did it and whats happened . The key reason for the warnerco transaction was to bring the calvin klein brand back, reunite the brand. We now have control with the underwear business worldwide which represents about 75 . So that was the driving force. It really gives us platforms in asia, and south america, which we really dont have now. Really makes us a global powerhouse. You know, is the underwear business and the jeans business a bigger business than the suit business for example . Yes. The underwear business worldwide is over a billion dollars in sales and jeans business is close to 2 billion. So those are the two largest categories followed by fragrance which is about a billion and a half dollars. When you did the tommy deal you knocked the cover off the ball. You put some numbers out. You delevered the company quickly. Now youre back doing the warnerco deal. Is this going to be as transformational . I think in some ways its going to be more transformational. It really opens up two key markets for us to operate directly. Today we are operating on joint ventures and licensing arrangements. So in asia, china specifically, ind india, and in latin america with brazil, you know, really opening up the developing economies, where warnaco, in those two areas approaching 20 . Phillipsvan heusen, to be able to transform it from what we think of when we think of phillipsvan heusen to what it is now, thats what needed so many other brands could take a lessen from the way youve maneuvered in that. Heritage businesses, izod, are still north american businesses, think about it. But think about where we from a geography point of view just ten years ago 99 of revenues were being done in north america. And today, over 50 of the profit of the revenues are outside north america and over 60 of the profits. Okay. Thank you. Thank you. This was great. Coming up the engine of Economic Growth, the closely watched survey of Small Business sentiment, and investing plants. [ engine revs ] [ male announcer ] oh what fun it is to ride. 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Block the acid with prilosec otc and dont get heartburn in the first place [ male announcer ] one pill each morn 24 hours. Zero heartburn. Coming up we got breaking news on the state of american Small Business. Plus, a cnbc exexclusive, what Top Economists and Market Players expect to hear from the fed tomorrow. [ male announcer ] its that time of year again. Time for citi price rewind. Because your daughter really wants that pink castle thing. And you really dont want to pay more than you have to. Only citi price rewind automatically searches for the lowest price. And if it finds one, you get refunded the difference. Just use your citi card and register your purchase online. Have a super sparkly day ok. [ male announcer ] now all you need is a magic carriage. Citi price rewind. Start saving at citi. Com pricerewind. We may have seen a slight uptick in job creation for the month of november but the nfib tells us that Small Business hiring is still being stunted by the Election Results, and the effects of superstorm sandy. Joining us with the latest on that, bill dunkleberg, chief economist at the National Federation of independent business. Bill, in reading your findings, am i wrong to say you found that it really wasnt sandy, that it was the Election Results, and if thats true, how do we give can we give the president the benefit of the doubt in that maybe it just, the Election Results means that the cliff is front and center . The cliff would not have been front and center with romney because he would have probably just extended all the bush tax cuts, i think. So is it the election result thats causing this . And is it the president himself . Or the gridlock that its causing with republicans . I think you basically have it right. We spent billions of dollars and then woke up the day after the election and nothing had changed and i think thats the issue. Because the Management Team couldnt Reach Agreement on how to deal with the problem that was coming up, so we were stuck with the same kind of Management Team so people thought oh, my gosh, how are we going to solve this problem . You know, with the same people here who couldnt solve it before. So, youre right, its the fiscal cliff, and you know, if one side had really been more dominant in the election, one way or the other, then bee would have had a clearer sense that some kind of an answer would be reached. And wait a minute wait a minute. Hold on. Wait a minute. Lets say that the democrats took over the house and widened their lead in the senate and elected president obama. Wed have certainty. Would Small Businesses then exactly. They would have been happy that maybe wed have more entitlements, larger government, higher taxes, as long as they knew what was happening . That would have been a positive for Small Businesses . Wore that would have also been a negative . I think that probably would have been a negative, too. Good point. Somebody was going to be disappointed in this election. Thats what i is it the actual merits of whats going on . Or is it the certainty of gridlock . Well, i think its the gridlock that we cant get any answers. So if im trying to calculate the aftertax return on a new hire or a new investment in equipment, you know, what tax rates am i going to use, whats theyre going to be higher. Yeah, theres no chance, of course, that obama care will be undone now. For that you do have some certainty on that. But you still dont know exactly what the rates are going to look like. So i think the concern is that nothing will get done, and well go into a recession, so if you look at the reason the i mean this is the tenth worst reading on the index weve had in 37 years. I think the reason it went down is because people look out into the next six months and go, you know, were in trouble here. Are any of the Small Businesses that youre talking about saying what republicans say theyre saying, and that is theyre in the 2 . They pay those taxes like that . Pore what the democrats say, that none of the real Small Businesses, its only 2 . Are any of them worried about the higher taxes that are going to happen on the top end . Well, im sure they are. We did a special study with offering 75 different problems for the owners to identify as their top problems. Of course liezing Health Care Costs is number one. Uncertainty about government policy was number two and number four. Energy was three. Six, seven and eight was all about taxes, and the loss of capital, the growth of business, and tax code complexity. I mean, those are those are important issues for the Small Businesses out there. No question about it. Like to know something about whats going on. Okay. So we go lets say that this is resolved, that what we have facing us, some way or another, do you expect that it will come off of these lows that youre seeing . Well, i think that well have to see how the economy evolves. Since 80 of the declines in the index was about expectations for business conditions, and poor expectations for real growth, and your sales, that means that the Small Businesses are going to sit tight. They dont expect more customers so theyre not going to hire, and that, of course, showed up. All the other components of the index stayed at recession levels. Here we are at this very, very low level of optimism, Consumer Optimism tanked along with the owner optimism. And a lot of them are going to be affected. I mean, the president said only 3 of Small Businesses are affected. But, we all kind of agree theyre about a million Small Business owners that would be in the 250,000 and up group. But in his denominator hes got the number of people who file a schedulec, which is 30 million. In my denominator i have 6 million employer firms, thats the key. So thats like 15 or 16 , 17 of the Small Business owners who will be impacted by higher tax rates. So theyll have to incorporate that in their calculations about hiring and investing. Plans to invest in the equipment and so on fell three points in this survey to another recession type number. So its not good. Okay. Bill dunkleberg, yeah, its not good. Not good. I dont know sandy didnt do it. I dont know how to make it any better. All right, time heals all wounds. Hopefully next time well hear some better news from you. I hope so, too. Thanks, joe, thanks andrew. Maybe well get some better news right now. Steve liesman joins us with the results there cnbcs latest fed survey. Steve . Can you make it any better . I dont know about that. What we have, andrew, is overwhelming support from our or expectation from our respondents, 48 respondents, economists, wall street strategists, and analysts, that the fed will replace twist with outright asset purchases. Disagreement on how theyll do it and increasing concern about all these purchases and the effect on the market. Lets start off with the disagreement about how theyre going to do it. We asked people, will the fed purchase only treasuries when it replaces operation twist . Or will it purchase treasuries and mortgages . You can see that theyre about split on this. Unclear what chairman bernanke is going to announce tomorrow. Now, how about how much qe . Theyre pretty united on that. This is what we call distributions. The percentage of respondents answering which number. You can see pretty much the biggest priority, 35 at 85 billion. So thats 40 billion that theyre doing already and then replacing twist would be 45 billion. Some disagreement along the way. The plurality there is 85 billion. What does that mean for next year . A whole lot of asset purchases. Heres the distribution chart again on the total purchases for next year, and theyre looking for a trillion or more. In fact, if you put together the trillion or greater, its 35 of the group looking for a trillion dollars of asset purchases. Remember, the fed owns the fed Balance Sheet is 2. 8 trillion. Thats a big jump in the total. What about whether or not additional quantitative easing will disrupt the market. Market pricing. Is the fed taking too much out . Big change here. Back in september when we asked this, only 43 said yes. 59 , 60 are concerned now, that the fed is buying so much stuff that its going to disrupt pricing in the industry. 52 say no. And 13 dont know. So a lot of uncertainty, and concern. One other thing, now we asked this for the first time, were going to be monitoring this over the next several months. A lot of questions about whether the fed uses economic targets. We asked people what the economic targets should be. When will the what Unemployment Rate and what inflation rate will prompt the Federal Reserve to stop or halt its quantitative easing purchases . This is the average. 6. 5 unemployment. And a pretty high number, 3. 4 , on inflation. So if the fed were going to pick economic targets, those are the ones where they average out for our market responses. Back at 8 15, guys, with their views on the fiscal cliff and the likelihood of a recession. You can see the full story, the full results on cnbc. Com. Andrew, the fiscal cliff results are not going to be very happy either. Sounds not so happy. I was going to ask, as an investor what do you make of that . Do you agree with those results . I think the difficult time to analyze those results, the Biggest Issue facing the market today is whats happening with the fiscal cliff and when that will be resolved. Thats what everyones waiting on. Would you do anything differently as a result . Im not. Because were longterm investors. Were looking at things from the bottom up. Looking at our companies and how we can create values. From blue harbors standpoint were not changing our motive of business. But the general public is certainly waiting to watch. Steve the unemployment number, 0. 5 . Its lower than i would have thought. Because remember it was sort of a 73 thing from Charlie Evans from the chicago fed. He said 7 and 3 . This is the average. Some people think the fed should do it a little lower. Some people a little higher. What im interested in is how this will change over time. How peoples perceptions of what the right Unemployment Rate is for the fed. Meaning as a policy it will keep getting lower . It could go either way. Its unclear how that average is going to work. But thats something i think that the fed chairman is going to be particularly interested in, what the margeate perception is. But im interested in whether or not you think 85 billion is the right number. Is it too much. Especially your concern about the market disruption. The fed is very concerned about this. It keeps studying this effect. It keeps saying no it wont. But now its going to do another trillion dollars. And theres concern in the market about this. There is. I mean i think that i still feel like the number one issue, well talk about this later today, facing the market is, and what everyones focussed on now, is the fiscal cliff. The uncertainty that were all living with. This is the big issue. Okay, cliff, steve, thank you for this. Were going to see you again. 8 15. Absolutely. Coming up, republican senator ron johnson on the progress of the fiscal cliff negotiations and the compromise. 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[ santa ] ho, ho, ho, ho [ male announcer ] lease a 2013 glk350 for 399 a month at your local mercedesbenz dealer. Im raul in princeton new jersey. My brother and i have been in business 30 years. We employ 200 people between the three restaurants and the bakery that are immediately impacted by how business suffers. Not to mention, their gratuities. Its all percentage of sales. We are concerned about the fiscal cliff, because of taxes. We are saving, absolutely. Were holding on any types of expansion. In an economy thats like desperate for jobs, that shouldnt be the case. Theres really no politics when you have to balance the budget like we do in business every day. Its the same here. I would like lawmakers in congress to compromise and make a settlement, avoid the fiscal cliff, and move on. Welcome back to our sal Mission Critical rise above d. C. Coverage. Im jim cramer. Becky quick. Were coming to you from capitol hill. And were here encouraging lawmakers to rise above partisan politics and negotiate a deal to avoid the fiscal cliff. Joining us now senator ron johnson, republican from wisconsin. Thanks so much for coming. Good morning. Im getting worried here. Because clock is ticking. Should we allow a vacation without legislation . No, im happy to stay here until we get this thing fixed. Understand how absurd this process is. Weve done this with the debt ceiling. With the super committee. Now were back here again where weve got two people, and theyre unelected staffs negotiating the financial future of america. I mean this is absolutely absurd. And why is that . Its because the democrats havent shown us their plan. We have nothing to compromise with. Listen, im happy to work with anybody, whos willing to first acknowledge the problem. And then work with me in good faith to fix it. But i dont see that from the other side. I mean the house has passed two budgets, including proposals to save medicare. The democrats in the senate have not passed a budget in three years. They havent voted for any plan whatsoever because they dont want their fingerprints on a plan to save this country. President obamas last two budgets have been voted on three times in congress, final vote tally 0 to 610. Until i see a plan on the table the republicans get their way, you get through this fiscal cliff, lets say there is some sort of a deal, youre going to be right back in the same situation in six weeks talking about the deficit, the debt ceiling again. If republicans had their way, we would be spending 7 trillion less over the next ten years, thats the difference between the house budget and the president s budget. 7 trillion. Were always talking about minimum of 4 trillion. Well the house budget has already done that. Theyve laid that put that template out there, because thats what a budget is, showing this is the most you can spend. Now take that information committees and start crafting the legislation under that fiscal constraint. Thats the way the process ought to work. Then you actually have elected officials debating back and forth in committees and committee markup, in the view of the American People, as opposed to behind closed doors, literally with unelected Staff Members trying to hammer all this stuff out in two or three weeks. Its an absurd process. Okay, so we go over the cliff then. We get a recession. It was meant to create a recession. Why did we get to the point where the republicans agreed must be so probusiness to lead to a situation where we know were going to have a recession. Why did you fight that hard . First of all, i wasnt here. Temporary tax cuts temporary tax cuts are not wise. It sets up that level of uncertainty. The Thing Holding back this economy. I was in manufacturing for 31 years. Business people want some level of certainty from the government. You have enough uncertainty in business. Business is hard, by the way. President obama thinks well these guys can pay it, they can afford it. Listen, it is not easy to conceive of a product, and then produce that product at a cost that is lower than what you can get somebody to buy it for. That is hard. Thats why most businesses fail. And now washington is going to increase the tax burden on small to medium sized businesses . Now washington is continuing to increase the regulatory burden. Thats the problem is the size of government. All of governments intrusion in our lives. All the rules and regulations. If you want to get this economy going, and i think you could get it going, reduce the government the federal governments influence on business peoples lives, and on americans lives and we could get this economy moving forward. We cut the Capital Gains rate pretty low. Ive started five businesses. Some successful, some not successful. When they were not successful, government had nothing to do with it. A great idea where you work hard and this country works, why do we talk about the governments intervention . Why dont we just talk about how Good Business can be, with or without the government . What has happened the last 30 years is weve gotten this regulatory environment, for example, president obamas own Small Business administration, the study they commissioned, costs 1. 75 trillion per year to comply with. Now, thats a number that is larger than all but eight economies in the world. Thats the kind of burden were putting on Small Business people. Listen, i lived through business over those 30 years. Ive talked to business people. Talk to me, started their businesses back in the 70s and 80s and tell me, ron, theres no way i could start this business and grow it the way i did in the current regulatory environment. Now what are we talking about . What is president obamas demand . Lets increase taxes, tax rates, on the top 2 . Which is, you know, theres a million Small Businesses, medium sized businesses, included in that figure. Those are the successful ones. That, by the way, small to medium sized businesses are the engine not only of Economic Growth, job creation, but innovation. Just take a look at whats happening. You have to look at the unintended consequences of these tax increases. Whats happening right now with obama care and the 2. 3 medical vice tax. I sold into that industry. You have medical Device Manufacturers moving overseas, Democratic Senators going boy that wasnt such a good idea, lets not enact that 2. 3 medical device tax and not only those primary manufacturers, cost jobs but all their suppliers. Their, you know, number one and twotear suppliers, theyre not going to be able to supply those companies anymore. Not in europe i know you are a man of principle. I know that you firmly believe this is the right path. If there is a deal that is carved out between boehner and the president , if they are able to reach some sort of an agreement, it may have things in it, or i know for a fact it will have things in it that you dont like. Would you go along with something if it matches up with spending cuts you would like to see . In the republican primary debate when they asked that question, would you take a deal where theres one dollar of revenue for ten dollars of spending cuts. You know, if i knew those were structurally locked in, that we actually fix the problem. Id take that deal. Youre not going to get one for ten. I know. Its a hypothetical. I have no idea. Lets talk about growth real quick. A couple numbers. Even with the miserable growth weve experienced from 2009 to 2012, you know how much revenue has increased to the federal government per year . 344 billion. If we just return to a normal economy, where we have revenue generation, which is average, at 18. 5 , that would add another 434 billion per year. Add those up thats more than 750 billion and president obamas punish success scheme would raise somewhere between 74 and 35 its 10 heres the problem bring the soldiers back from korea. What are they doing there . How about japan . How do we cut the Defense Budget now . Jim, im not disagreeing with you. Whats the first audit of the defense firms we dont even know where the money is being spent. Im not disagreeing with you on defense. You want to really attack whats going to be an explosion in costs, its brom ma care. Obama care is so vastly or grocery underestimated in terms of costs. I mean currently, the current budget window is 1. 7 billion. When true spending kicks in 2. 5 and that assumes only 1 million employees lose employee sponsored care, get dumped in highly subsidized some people have their head in the sand on that one. That will add trillions of dollars to our deficit and nobody wants to talk about it. Nobodys talking about medicare anymore. Because the democrats have taken that off the table. Im asking the democrats, show us your plan. Then i know what im going to compromise with. But in theory there is a plan that would exist that you would say, okay, im not going to go along with the pledge that i signed, this is a plan that i think is better for the nation and ill do it . I need to see structural reform in spending. So i know we have got things locked in but becky i havent cliff we got negotiate with myself . Youre against the recession. Ive done a lot of negotiating in my life. I know when somebody is sitting across that table negotiating in good faith and when somebody is just moving the poles. Where has this president done . Im a professional football plan i dont see him going. Id just like to know how to avoid the recession. You should extend all the current tax rates and start working toward progrowth tax reform like simpsonbowles is talking about. Lower the top marginal tax rate because that is the incentivizing nature of the tax code. Im happy to get rid of special deals. I didnt have Government Affairs office lobbying me in congress. Id be happy to get rid of all deductions, lower the tax rate. And heres something im really concerned about. If we increase taxes on the top 2 , youre going to be increasing taxes on sub chapter sllcs up to 40 with the medicare tax. The next shoe that will drop is corporations, the large ccorps are going to be going come on youve got to give us, going from 35 to 20 now youve got small medium businesses the innovators competing at a 40 tax rate feel like going to another country im at 48 , sir. I think a lot of people are like me. So what we need to do, the minimum if were going to increase taxes on the top 2 , i sure hope we decouple business income from that. Id like to couple sub chapter s and lc business tax with ccorps so we dont have that disparity. Well have to have back. This sounds like a much longer conversation. Senator, thank you very much. Guys well send it back to you in the studio. Okay, thanks. Up next, weve got more from our guest host cliff robinson. Still ahead, more from becky and jim in d. C. Theyre going to talk taxes with Grover Norquist at the top of the hour. Above the past month, the u. S. National debt has grown at an average rate of 9. 5 billion dollars per day. You wont take my life. You wont take our future. Aids affects us all. Even babies. Chevron is working to stop mothertochild transmission. Our employees and their families are part of the fight. And were winning. At chevron nigeria, we havent had a reported case in 12 years. Aids is strong. Aids is strong. But we are stronger. And aids. Aids is going to lose. Aids is going to lose. Finish each others sentences. I know. One stock to watch, aig. Andrew, tell me what happened with aig . You were telling me earlier. Aig the governments getting their entire stake is selling the last piece of the stake make money. They are going to make in fact there was an estimate earlier of 15 billion, but in an email that just went out from the ceo of that company saying its going to be 22 billion. And you see the liberal press. They hate him. Hero. Hero or goat . Hes a hero. I give him credit. I give him a lot of credit. I give him whole hearted credit. Coming up, big lineup at 8 00, Grover Norquist will join us to talk taxes and the fiscal cliff. [ male announcer ] at scottrade, we believe the more you know, the better you trade. So we have ongoing webinars and interactive learning, plus, inbranch seminars at over 500 locations, where our dedicated support teams help you know more so your money can do more. [ rodger ] at scottrade, seven dollar trades are just the start. Our teams have the information you want when you need it. Its another reason more investors are saying. [ all ] im with scottrade. I heard you guys can ship ground for less than the ups store. Thats right. Ive learned the only way to get a holiday deal is to camp out. You know weve been open all night. Is this a trick to get my spot . [ male announcer ] break from the holiday stress. Save on ground shipping at fedex office. [ male announcer ] break from the holiday stress. I have obligations. Cute tobligations, but obligations. G. I need to rethink the core of my portfolio. What i really need is sleep. Introducing the ishares core, Building Blocks for the heart of your portfolio. Find out why 9 out of 10 large professional investors choose ishares for their etfs. Ishares by blackrock. Call 1800ishares for a prospectus which includes investment objectives, risks, charges and expenses. Read and consider it carefully before investing. Risk includes possible loss of principal. Today we report from the halls of congress. Well ask the tough questions. What are you going to do . Where is the compromise . Mission critical, rise above d. C. All day today. Congress, get a deal done. America, were on the edge of the fiscal cliff. Billions are at stake. And your money hangs in the balance. While washington quarrels with itself, time is slipping away. The only solution for our government to put differences aside, and put real compromise on the table. Rise beyond disparity. Rise past adversity. Rise above. This is a cnbc special report, Mission Critical, rise above d. C. Welcome back, everyone. Our special Mission Critical rise above d. C. Coverage continues. Im becky quick along with jim cramer. We are live from capitol hill today, encouraging lawmakers to try and rise above gridlock and reach a deal on the fiscal cliff. Heres what we know at this point. There are private, but quiet, talks going on between the Obama Administration and House Speaker boehners office. Those talks are continuing. But again we have just 20 days left. We were just joined by senator ron johnson from wisconsin who said that we have to focus on business tax reform. And in the last hour we had texas congressman Jeb Hensarling who added no republican wants to raise taxes, but hensarling says he doesnt know how we can have some sort of a hike, how we can avoid that situation. Taxes, of course, are one of the key sticking points to a deal. And joining us right now is Grover Norquist. He is president of americans for tax reform. And grover, thank you very much for being here. Absolutely. Good to be with you. Jim. We know we are at this countdown. Its a pretty tight time line before we see if were going to go over the fiscal cliff or not. And ive spoken to a lot of republicans, elected officials who have signed your pledge, who say maybe they signed it a decade, maybe even longer ago. Some of them think the situation has changed. Is it wrong for them to vote with their conscience if they think that this is the best thing for the united states, to vote for a compromise that would avoid the fiscal cliff . Well, two things. The fiscal cliff, of course, is a complete madeup deadline. It can be moved two weeks or three weeks. Nobody should sign a bad deal, not obama, not boehner, because of an imaginary deadline. It can be moved weeks out. Months out. Two years ago. Obama personally moved it out two years. Because he didnt want to raise taxes and damage the economy. Because he said the economy was weak. The economy is not strong now. So the argument to raise taxes now is not any better than it was two years ago. I think theres a real danger that were going to end up with some damaging tax increases and nothing to show for it. The economy may or may not be stronger but we are also staring down a situation where we have seen a 5 trillion deficit thats built up over the last four years. There are some republicans who think, yes, we are going to have to do something, spending cuts is the biggest part of that, but they also think that youre going to have to raise revenue. Again, do you think its a bad thing if they vote with their conscience, even if its something that goes against your pledge . Its not my pledge. Its the pledge that congressmen and senators take to their voters when they got elected. Sometimes thats changed though. Okay but raising taxes is always bad for the economy. That doesnt change. Raising taxes is what politicians do instead of reforming government. I mean the reason we havent reformed the entitlements, the reason we havent reined in spending, is the politicians go oh, well just raise taxes and backfill. Those states which dont raise taxes and do reform government are doing better than california and illinois, which raised taxes in order to not reform their pension system, and their Public Employee compensation. Not only do they not reform them, they increase them whenever they get a tax increase. So, tax increases are not part of reform. Theyre what politicians do instead of reform. And you can look at it through national history. But its easier to see in the 50 states. Which are the states that dont raise taxes . Theyre the ones who do reform government. We have to be careful because the most recent data show 300,000 new jobs created in california. I agree the tax scheme is crazy out there. I have no idea how they created all those jobs. But they did. Heres what im concerned about. Which is worse . The number of jobs that will be lost, because the president lets say he doesnt compromise on this revenue. The number of jobs being lost by the president s intransigence versus the number of jobs that could be created if we actually did not raise taxes. Look, nfib and the Small Business groups say that the tax increases the president wants specifically would cost 700,000 jobs in the Small Business community. But if he doesnt compromise, if he doesnt rise above and say cut the taxes or give then he would have even bigger tax increases im just saying that the problem is, that if we dont rise above, grover, we are going to lose a million jobs in defense. Were definitely going to lose 2 million. All the data show that. So what do we do if the president doesnt budge and the republicans dont budge . What happens . Well, i like this rise above strategy. And i think the best way to rise above washington is to let the American People in. Im very concerned that theyre now having secret meetings. Okay. Were in the u. S. Senate. The senate hasnt passed a budget in three, four years. Harry reid isnt even at the table and theyre having these discussions. But he has a veto for anything that happens. A secret veto. But hes not in the room. The senate got elected, got itself reelected by not having any votes over the last couple of years. I think if we had cspan, and cnbc cameras in the negotiations, then people could see what the republicans are doing, and the democrats are doing. Lets remember what the president s budget is. I bet many of your viewers are unaware, because the establishment press hasnt covered what hes done. He saves a trillion dollars by not occupying iraq and afghanistan for the next ten years. Okay. I could save a lot of money by not continuing the war of 1812. But a trillion dollars of the spending cuts are completely phony, because theyre from something we already stopped doing. Theres another trillion dollars that was agreed to and is in law from the budget control act. He wants to sell you that horse again. He wants to add another savings like that is this trillion. Although the republicans Jeb Hensarling even said when jim pushed him on the idea of what would you cut, would you cut denens . He said weve already cut defense. Theres double cutting on both sides. Why dont we cut foreign aid . Why dont we cut we always talk about medicare and Social Security. We give a lot of money to farmers. We have big foreign aid. A lot of countries were probably thinking you dont want to give it to. I think we should eliminate foreign aid with one exception, and that is we should share with people that understanding of how we did it. Fernando desoto whos been out in various countries getting Property Rights established so that people who live on land most of the people in egypt live on land they dont own. Live in homes that they dont technically own. They cant sell them. They cant go away for a long period of time. Maybe a quarter of it is on land thats unconstitutional to live on. So cut that. But dont give them cash. But do explain to them, that the Property Rights are kind of important if you want to build a free society. How about negotiating with these Drug Companies . You know, the republicans gave in on this medicare partd. They made it so the government does not negotiate with merck and pfizer. Shouldnt that be scrapped immediately . The government really come after those guys to get breaks we all know that our hmos youre talking about when they created the Department Im just saying negotiate with the pharmacies. Wouldnt that be a good way to save some money . That was one of the few entitlements im not sure im crazy about creating another entitlement that came in under budget because it does allow competition by citizens. It really crushed those Drug Companies. Why wouldnt you want that . When the governments the only purchaser, thats not competition. Thats waging price controls and that hasnt worked well in canada or europe when youre trying to develop new drugs. So i do worry a little bit if the governments the only purchas purchaser, id rather have 300 million americans making these decisions, they just you know trying to find some ways to save money. I ask a lot of these guys, please tell me, maybe take the troops out of korea. Maybe cut the j35, trying to pin some people down. What can we do in the next couple years, other than the cliff, just to really do some cutting in that. All that spending. Theres a list of 700 billion in savings, a number of groups have put together in d. C. , and first of all, you should sell off all the military owns that theyre sitting on. Thats tens of billions of dollars. Cut but that goes out into the free market and people will do interesting things from that and the benefits from that you dont even know right now. We have something in this town called the deep caucus which is congressmen and senators determined not to privatize weapons depots. Half are privatized they cost less. Half are run by government bureaucrats, they cost significantly more. Theres a lobby the depot caucus to not save that money. We should do what other base closures those are security concerns though, right . Half of them not government security. Half of them are already done privately and they dont have any bigger problems than the government does. Really who do you think would keep a better eye, the contract or the guys who go, oops, we missed. How about the farmers . Farmers is pretty Good Business. Farmers, two things. Youre paying you stop doing price controls. You stop paying them to tell them how to grow. You want to be a farmer, heres what you do. There are a lot of things you could do for the farmers, the death tax is devastating to keeping a farm together generation after generation. Reducing the death tax would be helpful. Giving the money is not helpful. And so those are savings to be made. Theres an awful lot of stuff this government does that it doesnt do well. And we need to if you can raise taxes, you never have those conversations about spending. The only time either in the states, or in a city, detroit, you cant have more money. Oh, we may have to reform. They may actually reform detroit. Finally. But as long as youre bailing things out, they dont get reform. And the same thing is true in the corporate world. Youre throwing money at them, cash, other peoples cash, theyre not going to reform. Theres an article on the front page of the wall street journal today that lays out the difficult time that House Speaker boehner has had in trying to control his party. They call them the unruly freshmen class of 2010. Many of them are Tea Party Members. Many of them are close to you. Boehner has moved forward with trying to reward some members, to curry favor and other situations over the last couple of weeks he has removed three Tea Party Members from key committees, because they were not voting in line. Hes flexing his muscle when it comes to the leadership. Some of these people are very close to you. How do you see his leadership right now . Well, im a strong supporter of boehner. I think hes been quite a good leader. He helped keep all the republicans together and they voted against the wasteful Stimulus Program in 2009. There were 40 republicans we worried about. Those werent the unruly freshmen . 800 billion. You got them back in line. Theyre going to lose, right . You got people ready to run against them. Boehner kept 40 appropriators away from the table with 800 billion in cash. If republicans had passed votes for the stimulus package they could have walked away with some of the goodies. He kept discipline from guys who wanted to spend more money. He also needs to work on discipline, because a couple years ago, that unruly freshman class interfered with the strategy boehner had that was working. Which was, heres were going to give the president a year and a half ago in summer of 2011 when they were almost on the verge of reaching a deal . No, no. Boehner played that one actually fairly well too. But im thinking about immediately in early 2011, when they were saying to the president , heres your continuing resolution. Heres two weeks or a months worth of additional spending, that you have to cut 4 billion. And so youre getting three yards and a cloud of dust on spending and some of the tea partiers go this is boring. Lets have a big fight now. But, grover, if there wasnt such an uprising back in the summer of 2011, they were on the verge of signing this deal, they got the fiscal cliff out of it, if it wasnt such an uprising then, if boehner had had more confidence to cut that deal with the president he would have had a much better deal from your perspective than youre going to have this time around. Actually i read that differently. I think the president misread his power because he heard a republican of republican senators talking about raising trillions in taxes. From the gang of eight. Gang of six. Right. And they were talking about tax increases. Nobody else was. Not other senators, nobody in the house. Not boehner. And the president went back and tried to jam boehner, because he thought there was division in the ranks. So one of the challenges that boehner or Mitch Mcconnell has is you need to be one voice as the president s one voice but you have a lot of members. What about hedge funds . Dont raise the rates, just make them pay the rates. Make them pay ordinary income. Im always surprised, you convert ordinary income rates to Capital Gains, thats not what people do. Just pay ordinary, right . You agree to that. They dont have to raise the rates. Did you readed article that harvard is the hedge fund that has the university on the side . I dont know. 27 billion hedge fund. You agree with me they ought to switch the rate with ordinary income. Im not look, its a tax increase but you can offset it by tax cuts elsewhere. You could do tax reform in such a way that long as it doesnt net money to the government. If the government sees additional cash they go, oh, and they drop all the reform plans they had, they take the new money and they spent it. But there are going to be additional revenue. Republicans, including boehner himself, have said there will be new revenues that come, whether its higher tax rates or not. You could certainly get revenue from Economic Growth. Thats not the plan now. Actually it is the plan theyve laid out. May not be the plan for the president president s plan. But give you some sense of the numbers, you grow 4 a year, reagans numbers, versus 2 a year, obamas numbers, you net 5 trillion in additional revenue over a decade. Thats how powerful growth is in terms of revenue. But 800 billion in additional revenue is boehners plan. I mean thats additional revenue without raising tax rates. No but can you get that through Economic Growth. Thats what he offered the last time when the president misunderstood it which caused the car crash. But what you do get from the president , who wants to raise tax rates that will slow growth from what it is otherwise. So youre not going to raise as much money as they hope to. You never do when you raise rates. Grover, thank you very much for joining us. Thank you. Good to be with you. All right. Okay. Plenty more to come from capitol hill. Its kind of exciting. In 30 minutes, senator bob corker and kent conrad. And at 9 00 eastern, representative Scott Garrett and sander levin. Remember squawk on the street. Thats right. Squawk on the street we have a lot to come, as well. The two senators were talking with next, two members of the gang of eight now. Well talk to them. Guys well send it back to you right now. Great. Thanks, guys. Appreciate that. We are now, though, going to flip it over to phil lebeau who is in new york and hes got breaking news. As expected we knew that delta was in negotiations to buy 49 stake in Virgin Atlantic. The deal has been completed. The price is 360 million for that delta will increase its access to heathrow. Thats really the key here. 31 daily nonstop flights. Thats all part of what goes between the uk and north america for Virgin Atlantic. The brand remains, guys. Make that clear here. The Virgin Atlantic brand does not go away. What changes is that delta has a 49 stake in the company. Theres going to be a press conference later this morning here in new york. Were going to be talking with delta ceo Richard Anderson, and squawk on the street a little later on this morning. But this is a big deal in terms of whats happening with the airlines, and that international consolidation that weve all been expecting. Guys, back to you. Before you go, real quick. How much is this going to really impact delta, singapore air, which had this stake, was unhappy ultimately, because they didnt have the control that they really needed. Or thought that they needed. I think Richard Anderson believes he will have the control. Also Singapore Airlines, many believe that it did not utilize the access to heathrow as effectively as delta will be able to in terms of flights between north america, and heathrow. So well have to see whether or not Richard Anderson is able to do what Singapore Airlines could not do over the last several years. But Richard Anderson clearly believes they can make some serious money here increasing that access to the uk market. You followed it for a long time, phil, dont you, like when you see Richard Anderson, do you think ill bet you he makes it work . Isnt that sort of the opinion we have of him . Theres no doubt among all the airline ceos, hes probably the one that has done the most consistent and effective job in 2er78s of growing revenue, growing profits and this is a big step for delta to say, listen, we wanted to get access to this before other airlines, our competitors had a shot at that heathrow. Remember this is all about the slots at heathrow. Heathrow is the ground jewel in the Airline Industry in terms of profitability. If you can increase your slots and increase the number of flights going there, then youve got a greater shot at increasing your profits. All right. Richard Dean Anderson remember. He could rig up anything. Anything he needed to do, he could make it out of a couple of wires and i love virgin air. So its good. By the way, they accept American Express membership miles. Why are you on virgin air if youre a Mile High Club guy . Coming up, more from washington, were going to hear from democratic senator kent conrad and republican senator bob corker on the debt negotiations at 8 30 a. M. Eastern. First, Steve Liesmans going to be bringing us more of c innocences latest survey, fed survey when we return. Tdd 18003452550 when im trading, im so into it, tdd 18003452550 hours can go by before i realize tdd 18003452550 that i havent even looked away from my screen. Tdd 18003452550 tdd 18003452550 that kind of focus. Tdd 18003452550 thats what i have when i trade. Tdd 18003452550 tdd 18003452550 and the streetsmart edge Trading Platform from charles schwab. Tdd 18003452550. Helps me keep an eye on whats really important to me. Tdd 18003452550 its packed with tools that help me work my strategies, tdd 18003452550 spot patterns and find opportunities more easily. Tdd 18003452550 then, when im ready. Act decisively. Tdd 18003452550 i can even access it from the cloud and trade on any computer. Tdd 18003452550 with the exact same tools, the exact same way. Tdd 18003452550 and the reality is, with schwab mobile, tdd 18003452550 i can focus on trading anyplace, anytime. Tdd 18003452550 tdd 18003452550. Until i choose to focus on something else. Tdd 18003452550 all this with no trade minimums. And only 8. 95 a trade. Tdd 18003452550 open an account with a 50,000 deposit, and get 6 months commissionfree trades. Tdd 18003452550 call 18665160492 tdd 18003452550 and a trading specialist tdd 18003452550 will help you get started today. Welcome back to squawk this morning. U. S. Equity futures at this hour. Dow looks like its opening nicely. 53 points higher if we opened up right about now. Lets get you over to Steve Liesman with more on from exclusive you definitely read that . No, you can read it. When you guys are done figuring that out let me know. You guys are you guys quite done . Heres what turn your mike off, joe. Heres what were going to give you now results on the fiscal cliff. And what are 48 respondents from wall street, economists, strategists, analysts are saying about the fiscal cliff. First thing is, youll note, possibility of recession is now at a 13month high. Ticking up to 28. 5 . We were at the low in march 19. 1 and we havent been higher since 36. 1 in august of 2011. I guess that was the previous deficit debate. Now, heres what kevin gibbous is saying about the fiscal cliff. Its edged its way to the head of the class. If it could be avoided Economic Growth in terms of just being hard versus nearly impossible well have more on that in just a second. Does wall street think were going over the cliff . No. 41 saying well 41 saying yes well go over, 42 say no. Look at this 13 who dont know. You want to know about uncertainty in the economy. I would add the yes that 41 and the dont know 13 , i would get 54 think were going over the cliff or theyre not sure. We talk about uncertainty in the economy, thats showing it right there. The u. S. Economy can grow at 3 to 3. 5 in short order if the politicians could get the budget right. So theres the upside. The downside here, too, we asked about the fiscal cliff impact. The blue is 2013. The red is 2014. 44 say the impact would be negative two and negative four. Whats interesting about this when you look at the results, as it goes not just in 13 the impact is 1. 6 in 2013. It remains more than a half a point in 2014. So it lingers on. But does wall street think it will linger on . Last thing i want to show you here is how long a cliff dive and you can see just lasts for a few days or weeks. Only 28 for a few months and a very small percentage say most of 2013. Thats the good news, wall street thinks if it happens, it happens short. Back at 10 00 for results on what economists are expecting four qe and the market. Check out more of the survey at cnbc. Com. Joe and andrew, back to you. Your turn. No please. No, no, most. I insist. Straighten you guys out. Thanks, steve. Im going to read it. Coming up. Coming up. More from more from washington. Washington. And our special coverage of the fiscal cliff continues and our guest host Cliff Robbins is here. Weve got to talk to him. At 8 30 a. M. Eastern. Bob corker, remember his comments from yesterday, also democratic senator kent conrad who is not trying to get reelected, so he may be forthcoming today on the path to compromise. [ engine revs ] [ male announcer ] the mercedesbenz winter event is back, with the perfect vehicle thats just right for you, no matter which list youre on. [ santa ] ho, ho, ho, ho [ male announcer ] lease a 2013 c250 for 349 a month at your local mercedesbenz dealer. At your local wooohooo. Hahaahahaha oh. There you go. Wooohooo. Hahaahahaha im gonna stand up to her no youre not. I know. You know ronny folks who save hundreds of dollars switching to geico sure are happy. How happy are they jimmy . Happier than a witch in a broom factory. Get happy. Get geico. Fifteen minutes could save you fifteen percent or more. What i care about is reducing these deficits. Not only will we have explosive growth in the markets, well have explosive growth in this country. How high will this market go in the face of the fiscal cliff . Weve been taking advantage of volatility. On days weve panicked well have a buyer list ready. I think technology is kind of interesting. The second largest customer of china, the u. S. , avoiding the fiscal cliff will be very good for them. Defense cuts will be around 9. 4 . A lot of people trading on that. Lets rise above. Coming up our special coverage of the fiscal cliff negotiations continue were going to try to find some Common Ground with republican senator bob corker and democratic senator kent conrad. As we head to a break take a look at u. S. Equity futures which are setting up nicely for the day. [ male announcer ] tradings like a highspeed train. And you dont want to miss it with thinkorswim by td ameritrade. You get knockyoursocksoff tools, simple oneclick orders, realtime paper trading to hone your skills, plus anytime you need it support. Stocks, options, futures, and forex. Get your trading on track. Thinkorswim by td ameritrade. Trade Commission Free for 60 days, plus get up to 600 when you open an account. Look this isnt my first christmas. These deals all seem great at the time. But later. [ shirt ] merry christmas, everybody not so much. Ho ho ho this isnt that kind of deal. [ male announcer ] break from the holiday stress. Save on ground shipping at fedex office. Welcome back to a special edition of squawk box. Becky quick and jim cramer are live in washington, covering the fiscal cliff negotiations. Rise above Mission Critical. Welcome back to our Mission Critical rise above d. C. Coverage. Im jim cramer along with my colleague and friend becky quick. Were here in washington today pushing lawmakers to rise above partisanship, seek compromise to avoid the fiscal cliff. Joining us now, republican senator bob corker and democratic senator kent conrad. One after another, are we going to have a deal before year end . So, i think there will be a deal. And i might be surprised. I dont think it will be a deal that i could support. I think we spent, unfortunately, all of this time talking about revenues. Weve sort of been on the democratic side of the court. I dont understand why weve done that and why we havent moved over to the entitlement side. At the end of the day, im probably the only foolish person here in washington. Ive laid out the kind of entitlement reforms i think we need to have. But i realize the reason we sort of stayed down on the revenue side, even though house members are trying to figure out when theyre going to rescue the 98 , whether its before january 1st or after, the fact is that neither republicans or democrats really want to talk about entitlement reform. So its my sense that there will be a deal. I doubt its going to be a deal that bob corker can support. And i hope to be surprised. Hold on a second. You made a lot of news over the weekend. People have been using you as the poster child for how there is a compromise reach ed. And suggestion was you implied people took away you would be in favor of dealing with the revenue increases now and putting off the spending cuts until later. Is that an invalid yeah, yeah. Yall were showing a little clip yesterday which was just to me what im saying is that as long as we stay on revenues and dont talk about entitlements were never going to get to the right place. And, what i hope boehner does not do is give away the debt ceiling with any kind of deal, unless its the real deal. The deal that solves our countrys problems. Weve got about a 4. 5 trillion package that needs to be put in place. So what i was saying is, why dont we pivot to entitlement reform right now and give it six weeks . In the next six weeks . Its this period of time. To me this congress has spent more time on the fiscal cliff than any congress in the history of mankind. Certainly. We know what every decision is and how much it costs. Kent knows that, and if we kick the can down the road it is an absolute travesty for our country. So what im saying is lets do it all right now, before the debt ceiling date comes. Id like to do it before year end, but as everybody continues to focus on the revenue piece, were never getting to the part that counts, and thats fearful to me. Weve got two clocks, one to get the cliff avoided. Then youre about to leave. Youre a free agent. Are we going to be able to get done in time . I think so. This may surprise people but i in part agree with senator corker. I think it is imperative that we do the big deal. You know, we are on the cusp of having the possibility of doing the big deal because if we took the president s revenue, we took the republican spending cuts, and we put them together, wed have a package of more than 4 trillion. If you count whats already been done that needs to be enforced. You count the interest savings from doing a package that large, and wed be well over 4 trillion. Wed be in a 4. 3 trillion, 4. 4 trillion range, and wed do an incredible wed do an incredible gift give an incredible gift for christmas. Nobody thinks those numbers are real. People are saying those are just their opening bids. Thats just what they say out here in public so they can get to a better position. Well find the middle ground when you get to it. Youre saying dont get middle ground, take the heaviest of each side. Negotiate up. So typical around here, we negotiate down. In this in this circumstance, lets negotiate up. And we could have a package that would then secure the Economic Future of the country for decades to come. Wed not only stabilize the debt, wed begin to work it down in a fairly dramatic way over time. And none of these spending cuts are really so heavy. Look, 500 billion out of health care can you find that . Say you cant possibly do that. You know how much that is of a percentage of what were going to spend over the next decade . 4 . We cant save 4 . Thats whats missing in this discussion on the spending side, and on the revenue side. Nobody ever puts it in perspective. How much are you saving . Whats the total youre going to save were thrilled to have you. Youre clearly in a rise above spirit. Senator corker how far are we really apart . Well, i dont know. I mean, again, what we havent done is conditioned this whole debate because weve been focused on the revenue piece. And you know the numbers are out there and the wealthy are saying candidly we know weve got skin in the game whether you call it rates or tax deductions. We just want you to solve the problem. I think we havent spent enough time dealing with the solutions that have to come in place, have you guys seen any specifics as it relates to the entitlement reforms . I know that weve laid something out. But we really havent conditioned the American People for that. And thats whats been missing in the debate. And thats what Many Senate Republicans are saying right now. Hey, lets shift this debate over to entitlements, and lets do what kent just said. Lets negotiate up lets get both sides of the equation in play. Right now whats only being discussed is revenues. This is an incredibly, logical, sane conversation. Im thinking the same thing. Thats because were saying in a Senate Office building at this point. This is probably the one place you can have that conversation. The other two parts of this party, beau the administration, the white house, the house, are not going to have a conversation like this. re jump to either side of you. How do you get those two parties to come up with some sort of agreement that sounds exactly like what you two are talking about . I actually think that at the end of the day, we are very close to putting together the grand bargain. Because if you think about it, kicking this can down the road doesnt work. Why doesnt it work . Because early next year were going to have to have a debt limit extension. Can you imagine what that will be like absent the grand bargain being reached now . Well be right back to task. We will be right back to putting markets at risk. Right back to partisan divide. We will be right back to gridlock. So, we can avoid all that. Its right before us. And its not that hard. Thats what i think has been missing. Let me tell you, any deal were at a position right now in the united states. We can talk china. Europes been left behind. The only thing thats keeping us back is any deal. Just get any deal if we can get 4 growth . It has to be a real deal thats north of 4 trillion. Heres where kent and i might disagree. I agree that we can get to a grand bargain but it has to be one in my case where youve actually made the decisions. Im not going to do another process bill, im sorry. You know meaning i want lets implement the policies right now. I dont want to set up another committee, i dont want to give directions to committees to come back. You know theres an old adage here in the senate, theres nothing to be learned from the second kick in the shin from a mule. Okay . Weve already been down the path of a process. We had 12 really smart folks, six on each side, and im not willing to go down that route again. I want us to make the decisions now, i want the entitlement reforms put in place now, and i hope that Speaker Boehner will not negotiate a way the debt ceiling until those specific reforms are in place. Thats been missing in this debate and thats what ive been trying to say over the last several days. Im going to leave it on a positive note. Because this was the most positive thing, even if youre a little bit away, its really a victory for the American People. Thanks to senator corker and conrad. Level heads throughout this. Guys, back to you at hq. Okay, jim. I just decided that, you know, if we get through this mayan apocalypse on december 21st. If we get through that, we got the debt ceiling man we can fix the fiscal cliff. Were going to hype i cant wait for the debt ceiling now. Man is that going to be something, too. Thats going to be our next thing. Constant entertainment. Oh, talk about it. Youve got you think this is brinksmanship. When is the deadline . I cant wait. Its february, right . The beginning of february. Whats the slogan for that . Let me come up with that. Negotiate up. We dont want this to end with the fiscal cliff. We got and it wont. Anyway how about the s p 500 . Coming up the hunt for yield at times of uncertainty. Institutional investors looking for alternatives to the lower return on fixed income. Were going to talk to the North Carolina treasurer and the cofounder of Investment Firm cambridge associated. Over president Barack Obamas first term the federal debt to gdp ratio increased over 19 . It is projected to increase over 20 by the end of his second term. [ male announcer ] you are a business pro. Monarch of marketing analysis. With the ability to improve roi through seo all by cob. And you. Rent from national. Because only national lets you choose any car in the aisle. And go. You can even take a fullsize or above, and still pay the midsize price. Im going big. [ male announcer ] good choice business pro. Good choice. Go national. Go like a pro. [ male announcer ] good choice business pro. Good choice. Try running four. Ning a restaurant is hard, fortunately weve got ink. It gives us 5x the rewards on our internet, phone charges and cable, plus at Office Supply stores. Rewards we put right back into our business. This is the only thing weve ever wanted to do and ink helps us do it. Make your mark with ink from chase. Welcome back to squawk. The nations Pension Funds and endowments are feeling the pressure of low Interest Rates on their portfolios. Joining us now on the set is james bailey, cofounder of cambridge associates, leading adviser to more than 900 endowments, sovereign wealth funds and pensions globally. And from raleigh, North Carolina janet cowell, the treasurer of the state of North Carolina. She oversees more than 70 billion. And were pleased to have both of them here. Im going to start with you, what do you do with this awful environment in that respect . Is it an awful environment . Maybe it isnt. Actually it starts with endowment funds thinking about the long term. And when we look at the long term, i would say were more optimistic, particularly about the u. S. , than the current kind of thatter. A lot of secular things going on that make the u. S. Look like a better place to invest for employer issues such as the shale oil, shale gas. Right. Issues such as better competitiveness with china. And so were optimistic about the longterm. We have to get over this shortterm problem, and i think do you advise clients youve put money with cliff for example. He used to be a private equity guy. What is your split between how you see private equity and how you see the world hedge fund . We continue to be a big proponent of private equity. If you look among our clients we typically have Something Like 8 to 10 in private equity and another 5 or 6 in venture. Were big proponents of that. What we liked about what cliff has done is theyve taken a private equity approach to Public Markets and theyve done it in a cooperative kind of way. And thats been very effective at improving the performance of individual companies, and generally in good returns for the buyer. Janet, what are you thinking these days . How tough is it out there . Well, we have about 30 of our money in fixed income and were expecting about 2. 5 return on that over the next three to five years. So clearly weve got to move into some higher return options. Whats your threshold these days . What do you need to hit in terms of a rate of return to make your numbers . Our target rate of return is 7. 25 . So clearly with a third in fixed income, the math doesnt really work so well be moving out of some of that fixed income. The options were looking at are other credit related assets. Weve done a good amount of residential mortgagebacked securities. Commercial mortgagebacked securities and we were getting pretty high double digits on those. Were still expecting in the future to get high single digit and maybe some double. Weve done more sort of real asset kinds of things, so we have certainly i think jim just mentioned energy, we have done oil and gas, natural gas, solar, a whole range and weve done that a lot in the united states. But also global. Janet, were really dealing from a position of strength. I know youve got a aaa rating from all three agencies and almost a fully funded pension plan so youre really in a position to make some changes dealing from strength. Are you going to be migrating more of your assets out of fixed income or just looking within your nonfixed income pool and doing some more Different Things . Well, you know, in the very short term well probably it will serve us well with the fiscal cliff issues, since the equity markets will probably be very volatile. But, next year we would certainly be looking to move some of the money out of that fixed income pool, and into both, you know, some more private sector s assets like i just mentioned. Janet are you doing anything specific around the fiscal cliff . We are not changing our Asset Allocation for that. Because, again, i think with our fixed income portfolio, were seeing that flight to quality right now, we are well positioned for that. And then also i think, there will also be a flight probably into things were not heavy Gold Investors but we do have money in natural resources. I have a question for jim. You know, jim, youve got a Global Business on the ground, around the globe, and i know youre a key adviser to some of the largest sovereign wealth funds in the world, chinese, abu dhabi, middle east. Those funds, as theyre looking and wondering whats happening here in the u. S. And seeing this selfimposed fiscal cliff and all the uncertainty that weve created does it make those foreign key investors less willing to invest or lend to us . What are they how are they feeling about what theyre seeing here . What i would say is theyre very concerned. And certainly every time we go and speak to them, they express that concern. They ask questions about it. Having said that, they dont have a lot of other places to go. If youre sitting there, trying to we dont really have a lot of other places to put 2. 5 trillion dollars. And similarly in abu dhabi or saudi arabia or whatever. So the truth is, theyre rooting for us to figure out how to get through this crisis. But theyre investing still in dollars. Janet, ive got a quick question semiunrelated to this, has to do with facebook and i know youre one of the lead plaintiffs in the facebook ipo suit. Can you tell us where this stands . Well we were happy to be lead plaintiff on that. The reason we felt strongly about that is theres a whole trend among some of these hightech ipos, kind of stripping shareholders of their rights. Or certainly weakening shareholders rights. And its sort of ironic the logo for facebook is a big f, because thats their Corporate Governance score. Ooh. Ooh. That raises a question in my mind, janet about Corporate Governance. I know you and i both believe that good Corporate Governance leads to better returns and youve become a thought leader in the whole Corporate Governance space. What are you doing with respect to taking your views on Corporate Governance, and having that impact how youre managing the North Carolina funds . Well, i mean, certainly one of our Top Priorities is loss recovery. 23 we have suffered losses like in facebook or with other investments, as a fiduciary thats my top priority. But we are, you know, taking stands on just trying to increase shareholder rights, working with other pensions to make sure that our board votes count on things like executive pay, executive compensation, which is always, you know, a hot topic still with so Many Americans having job loss, and lower salaries. Guys, were going to have to leave it there. But we really appreciate your conversation. So i need to thank janet cowell and jim bailey. Thanks so much. Coming up more from our guest host Cliff Robbins. Plus the flight from france. Why a french icon is packing up and moving to belgium. [ male a] ive seen incredible things. Otherworldly things. But there are some things ive never seen before. This ge jet engine can understand 5,000 data samples per second. Which is good for business. Because planes use less fuel, spend less time on the ground and more time in the air. Suddenly, faraway places dont seem so. Far away. We create easytouse, powerful Trading Tools for all. 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The flight from france, a belgian mayor saying the famous french actor, Gerard Depardieu has set up residence in belgium. He has a tax on top earners of 75 of income above 1 million euros. Belgiums top rate, 50 . Coming up at the top of the hour hes got to stay away from that rich french food, i think. Do you remember what he looked like as a young man . You see pictures of him on youtube. For his health, im looking out for him. Hes a large man. Anyway, our special coverage from washington continues with congressman from each side of the aisle, representatives are going to join becky and jim to talk debt negotiations. But we have more from our guest host, Cliff Robbins. Were going to give him the last word when squawk returns. Tomorrow, squawk box exclusive coverage of the New York Times conference, investing, the economy and the looming fiscal cliff. Jpmorgan chairman and steve schwarzman, and David Ruben Stein and a lot more. It all starts tomorrow at 6 00 a. M. Eastern on squawk box. Americans are always ready to work hard for a better future. Since Ameriprise Financial was founded back in 1894, theyve been committed to putting clients first. Helping generations through tough times. Good times. Never taking a bailout. There when you need them. Helping millions of americans over the centuries. The strength of a Global Financial leader. The heart of a onetoone relationship. Together for your future. I heard you guys can ship ground for less than the ups store. Thats right. Ive learned the only way to get a holiday deal is to camp out. You know weve been open all night. Is this a trick to get my spot . [ male announcer ] break from the holiday stress. Save on grounipping at fedex office. Welcome back to squawk box. Lets get to our guest host, Cliff Robbins for the last word. It doesnt have to be the last word. I just want to understand, we keep calling him activist, but i think of carl ikahn youre absolutely right, it is different. Theyre into collaboration by forcing you to collaborate. Weve invested in 30 companies over eight years. Never sued a company. It really comes back to my experience in 20 years in the private equity business, i think were good at sizing up and collaborating. Were investing in companies that want us as lead stockholders and theres unlocked value. When i look at the Retail Investor who watches this program, do they have the same opportunity as you have . You only will buy a stock or into a company if youve met with management, talked to them and decide you like them. Yeah, thats exactly right. Thats why we like this sort of private equity approach to the private markets and the public strategies. The good thing for public sto stockholders they can invest as well. Its for all stockholders. Public stockholders can participate alongside us. Would you ever go hostile . We never have in eight years, and i dont think we ever would. And how in the nittygritty were talking about transparency and compensation in the last segment with janet. How important is that stuff to you relative to the actual business . I think its very important to invest with a team with a lot of integrity, a smart person. Were focusing on the quality of the conversation. Fe want a team thats probing, looking for new ideas, looking for value. Thats who we want to partner with. Its unlikely to be a good blue harbor investment. Accurate for private equity in the last election . Private equity, people have been buying and selling Companies Since the stone age. Is it positive for society . I think it is. There are companies that need to be private. One of the arguments is, youre making it in a way, why does it have to be done in private . Couldnt it be done in public . Were avoiding paying the premiums. Were not paying the premium, were buying at market. But there are companies that should be private. And private equity is a very good model. How levered are your investments . Not levered at all. Sometimes our ideas put leverage on a company, sometimes there are ideas to deleverage a company. Were a common stock in the market like all the stockholders. People can follow along, if they follow their filings. They can. This creative disruption, and unfortunately there are times when Companies Need to shrink, and its a tough weve had a lot of false choices in the