Thats a scrooge christmas. And the republicans they say that the democratic offer is not a serious one. Check it out. Lets not kid ourselves. So where do we go from here . And the Business World itself is waiting to see if we drive off the cliff. Theyre taking action right away. Deals are being done to sell companies. Stocks, homes, dividends, almost anything to avoid a big tax wallop after the first of the year. You see, folks, as ive said for so long, taxes do matter. Later on were going to tell you exactly why. First up the president place santa claus. White House Press Secretary finds spending cuts deeply irresponsible. For all this and more joining us now is katie pavlich. What Speaker John Boehner has always said, a dollar tax increase, a dollar spending cuts. President obama who jay carney represents during his Daily Press Briefings at the white house wants an unlimited debt limit. He wants no debt ceiling on the amount of money that he can spend. So jay carney is taking shots at john boehner who has said look its not a serious discussion about how were going to solve the fiscal problem unless of course we match spending cuts to the number of dollars we increase in the debt limit. Do you think that could Pass Congress in all seriousness . No more debt limit . No more power of the Purse Strings . No. Thats insane. I think its in the constitution. Yes. And although president obama this because he got reelected has he had has a mandate to do whatever he waumpbts, he forgets that the House Republicans were also reelected to kind of hold the line on spending. So no, i dont believe that would make it through congress. What about this utterance by the president today . Instead of blasting congress, sort of saying hes keeping a list of congressmen . Is this like a nixon enemys list . Weve seen this before from president obama. We have. Weve seen multiple versions of the quote obamas enemies list. We saw the truth team, weve seen the white house work directly with the media matters to smear certain people that they dont like. And now were seeing president obama say he has a naughty and nice list in order to make the nice list you have to push through his 1. 6 trillion tax increase. So i think therell be a lot of democrats who are actually making the naughty list this year. If he had actually come out with a program that had some spending cuts and some entitlement cuts instead of all tax increases, katy, maybe hed be having better luck right now. Well, of course. Thats one thing they think hes forgetting is that his own Senate Democrats arent even interested in passing what hes offering now for the fiscal cliff. They didnt do it when he put it into his budget and theyre not going to do it now. So like john boehner said today were at a stalemate and not really moving forward as president obama would hope. All right. Many thanks, katy pavlich, appreciate the rundown. Both president obama and Speaker John Boehner took turns today finger pointing on the fiscal cliff talks. Take a listen to this. Its not acceptable to moo a me to you for members of congress to hold middle class tax cuts to hostage simply because they dont want tax rates on upper income folks to go up. The white house spent three weeks trying to develop a proposal, and they send one up here that calls for 1. 6 trillion in new taxes, calls for a little not even 400 billion in cuts. It was not a serious proposal. All right. So where are we right now . Even while the fate of our fragile economy hangs in the fiscal cliff balance, for that lets turn to our distinguished guests. Peter goodman. Hes the Huffington PostBusiness Editor on a former new york timesman. We welcome back republican congresswoman nan hayworth and haddy heath, senior policy analyst with the independent womens forum. Okay. So mcconnell laughed at the tim geithner proposal. And john boehner says were at a stalemate. And president obama himself is kind of getting ugly about this enemys list. Weve seen this before from him. My proposal is, republicans have to come with a counter offer. Right now. Theres no point in blasting obama. Just a counter offer. I want to read from todays newspaper. This is what Mitch Mcconnell said. Higher medicare premiums for the wealthy, an increase in the medicare eligibility age, and a slowing of costs of living increases for programs like Social Security. And then republicans would agree to include more tax revenue in the deal but not from higher tax rates. Now, lets just look at this for a second. Well go to you first, nan. He wants medicare eligibility, he wants medicaid reforms, he wants spending cuts. Then hell talk revenues. That seems reasonable to me. Is he going to do it . Will the republicans come back with their own counter offer . Well, certainly larry those are elements of a longterm approach to our enormous debt. Its a crushing debt. It hams our vulnerability across the world. I think we should look very seriously yet again and the speakers mentioned it at the 2010 health law, Affordable Care act. That is a massive cost weight on the American People. It is a deeply unpopular issue. Still it was relatively ignored during the election but its still an active issue. And we have to provide assurance. Americans have told us. They told us in the exit polling, theyve told us in a number of other forms that they do not want to see burdens increased on our small businesses. Mcconnell didnt mention that. I mean, thats a different thing. Hadley, let me go to you on this. Mcdonnell mentioned im going to read this from the wall street journal. Higher medicare premiums for the wealthy, an increase in the medicare eligibility age, retirement age and slowing of c colas. He said thats their position. Isnt it time for them to come out with that boehnermcconnell, here it is heres what we want right now . From a strategy standpoint i think the republicans should put some counter offer on the table. But i think they tend to lose sight of the forest for the trees when we start to talk about the aspects of this deal, that deal, the other. What we actually need weve heard so much talk about whats responsible fiscal policy. A sponge fiscal policy is a progrowth fiscal policy. And repealing the health law could be one part of that. I think we should also remember that when we have a progrowth fiscal policy the benefits are not just for the many unemployed americans who could come back to work but we have higher revenues as well. Peter goodman, lets get your take on this. I would like personally to repeal the obama care. Ive never favored it. I continue to oppose it. I want a flat tax. Im a flat tax guy and have been for about the last 200 years. But i dont think in the next 30 days any of thats going to happen. So what im suggesting is, the gop tactically should come out with Something Like what mcconnell said today in the unified. Because i think obama is bluffing. I just want to ask you before i get to the obama bluff, what are the odds that the gop will come out, what are the odds that Mitch Mcconnell is really leading here . I think theyre slim because the Republican Party has been hijacked by a bunch of ideological extremists who dont want to do a deal. They didnt want an economic recovery. They bet on bad economic policy, sabotaging any possibility of an obama recovery. And now that governor romney is no longer and the electoral politics are behind us theyre really in a box. On the one hand they now are tied to the idea that they have to invest in something thats progrowth. But this idea that you repeal obama care and we get growth why is it unreasonable for the gop to want to extend the eligibility age for medicare, to want to fix colas for Social Security . These things have been around for a long time. Because youre balancing the budget on the backs of vulnerable people. Democrats have supported these kinds of things. They essentially want to means test medicare. Im not sure i agree with this but they want a progressive shift in that. Why is that a bad thing . Going after seniors who are now eligible at 65 and bumping up the eligibility age when youre talking about people word in some cases long term unemployed, in jobs where they are making cant pay their bills. Lets remember where this deficit came from. It came from the iraq war run off budget. It came from a financial crisis that rewarded a lot of executives who are still paying low Capital Gains tax. Theres a fabulous article on the front page of investors business daily which i recommend to you. A fabulous article. Im going to talk about it on tomorrows radio show about the benefits of the bush tax cuts which by the way generated higher revenues. Lets not go there tonight. For who, though . For everybody. In fact, the middle class thats why median wages actually dropped this year . Just look at the numbers that obama uses. If you repeal the top tax rates youre supposed to make 800 billion. If you repeal the whole bill youre supposed to lose 4. 5 trillion. It all went to the middle class. I got to challenge your facts on that. That went to the middle class. But do you think right now that there is a chance, i mean responding to what peter said, do you think that obama is going to Cold Shoulder the gop . Heres why im saying this. Let me just go one more thing. I think hes bluffing. I think the last thing in the world obama wants is a stalemate that will lead to all the taxes going up. All of them. And will lead to a recession. Disaster. Then he would be herbert hoofer obama and his second term and legacy would be completely wrecked. Thats why i think obama is bluffing and the gop needs to counter. Theres a distinct philosophical differences obviously between the house majority, which peter was elected overwhelmingly in 2010 and resoundingly reelected in 2012. Across the country. They have a strong voice. They have a position. The American People have embraced. The president i think, larry, is over interpreting his mandate in his second reelection. I think he feels empowered in ways that he actually has not been by the American People. Hes running a very risky game. This is not where the American People want to be. And i think its definitely up to those who talk about these things in the media and the American People to be aware of the consequences of what he is proposing. Heres the thing. Had licks theres no spending cuts in his proposal. The idea at one point with simpson bowls was 4 of spending cuts for 1 revenue increase. This one is backwards. This is 1 spending cut for 4 of revenue increases. Isnt the republicans best calling card to insist on strong spending cuts and entitlement reform . Isnt that their best counter punch . Absolutely. One of the reasons president obamas come into these negotiations from what he believes is a position of strength is because hes looking at polls that show that the majority of americans will blame a gopheld house of representatives if we do indeed go off a fiscal cliff. So hes coming into this with basically a list of demands without making any concessions. Hell be blamed historically. If he has a second recession on his watch, the history will be written that he presided over two recessions. Thats why i refer to him as Herbert Hoover. [ overlapping speakers ] he cant play that game. He can bluff but he cant play that game. Its not a bluff. This is not a bluff. You think he would take a second recession . Well, a second recession . If all the tax cuts are repealed. All of them. Were going into recession. Thats why the Congressional Budget Office said. You think he would risk a second recession that would destroy his second term . I think he understands the law of the land today is that everybody gets a tax increase. Hes trying to give 98 of the public a tax reduction and essentially the Republican Party states its position rather that Larry Ellisson get a tax cut. You want to raise the top tax rate. What im saying is will he actually allow all of tax youre saying the republicans can stand him off. A stand off means all the tax rates go up. If that happens were going to have a recession. Thats Herbert Hoover obama. [ overlapping speakers ] historically obama will get the blame for it. His legacy will get the blame for it. The progrowth policy is the only way were going to get out of this mess. We dont just want to avoid the fiscal cliff. Of course the parties want to avoid a fiscal cliff. But what conservatives want is to make 180degree turn in fiscal policy towards lower taxes, lower spending, and greater prosperity. Most importantly opportunity for all. I love that. I want you it talk that through with peter goodman. Peter goodman, appreciate it. Nan hey worth. One of our next guests believes the House Republicans should dive head first off the fiscal cliff. Oh, my god. Hes going to have to explain that one to me. Dont forget, folks, free market capitalism is the best bet to prosperity. Let me just underscore the prosperity part. We need a lot more of it. Im kudlow. Well be right back. Welcome back to the kudlow report. The new york mets agreed to a megamillion dollar contract extension for all star third baseman david wright today. Hes not alone in this yearend wheeling and dealing. Were going to explain why baseballs feeling a fiscal cliff tax frenzy. That coming up in about 30 minutes. Now switching gears, with just 33 days until the countrys economy plummets off the tax and fiscal cliff and theres still no deal in sight, we see today a daily caller op ed suggesting that republicans in congress should dive head long off the cliff. Really . Im not sure im on board with that one. But lets talk. Maybe i could figure it out. Here now is the coauthor of that op ed, neil patell of the daily caller and we welcome back texas republican senator Kay Bailey Hutchson. Neil, you got to walk me through this, buddy. I think if the republicans jump off the cliff and refuse to negotiate, their political standing is going to be substantially worse than it even is today. Larry, first we do not say that republicans should refuse to negotiate. That would be political suicide. Thats crazy. I think theyre likely to get a deal that has a really big tax increase and that also comes with a bunch of phony spending cuts. Theyll either be way out in the out years of count the savings from winding down the wars yet again. And a deal with big tax increases and phony spending cuts is worse than just jumping off the cliff. Youre not going to do a better deal unless youre willing to jump. Senator hutchson, neil may be right on that point. But dont the republicans have to negotiate . In fact in the last segment i argued str arged strenuously they have to come up with the counter offer to the very poor offer president obama just made much where the counter offer . Certainly its easier as you know, larry, as a kpn executive put out a plan. Before a counter offer would come we have to have a serious offer that we can take to our conferences and talk about what we would do and not do. But what the president put on the table is not a serious offer. Its not an offer at all. Its restatement of the president s plans that he has wanted to put in place. More spending, 50 billion stimulus at this point . When we have a 16 trillion debt ceiling that were hitting . 1. 6 trillion in tax increases, which we knew the president wanted to do. But he wants to have a permanent ability to raise the debt ceiling with virtually no congressional input . Its stunning i mean its really breathtaking. Neil pattell, you know, i believe that treasury man tim geithner knows, i believe that president obama knows that aint going to happen. The debt ceiling votes not going to go away. The new stimulus is not going to go away. The 4 to 1 revenues over spending cuts. There really are no real spending cuts. None of that stuffs going to work. They know that, neil. I mean, what about the art of negotiating and finding Common Ground . Isnt there still some of that left alive in congress . Larry, were running a 1 trillion deficit a year. So any deal that doesnt start to make serious impact into that is not a deal worth doing. So yes, they should definitely negotiate. They should ask for real fundamental reforms to the entitlement system. We all know thats what we need. And if they got a deal that had some real reform in it, sure. They should be willing to give and take on such a deal. Theres nothing like that thats likely to be on the table. And jumping is a lot better than a phony deal. Why are you so pessimistic . Before i come back to senator hutchson, obama started out pretty conciliatory. Youre very pessimistic, neil. Obama came to the table with 1. 6 trillion in tax increases and no spending cuts. He seems very confident he can bum rush them into a bad deal. I think thats because theres a sense out there, probably from the last two times these guys tangled, that the republicans are unwilling to in this case to allow themselves to go over the cliff. If youre in a negotiation where your opponent knows that youre unwilling to have that kind of aout come then theyve got you right where they want you. I feel like obama thinks hes got the republicans right where he wants them. Senator hutchson, the republicans were on the short end of the election to be sure. The point im making, your leader, senator mcconnell, came out with a pretty good reform planned to regarding medicare for example. I thought that was a very sensible entitlement reform. Then he said we can talk revenues. Why cant the gop go down that road, get House Speaker boehner on there and see how white house reacts to this . I think mitch is doing that. As you know, i have a Social Security reform proposal that doesnt raise taxes on people who are working today and doesnt cut benefits that are the core benefits. That is the thing that we ought to do as mitch said we can do medicare reform. And the reason mitch is focusing on the entitlement reforms is because those are real reforms. And they would cut spending. And as you know, 54 of the spending that we do is mandatory. Its the entitlement spending. And if we dont address that, well never get this deficit down. So mitch is saying we want real cuts. And the real cuts would come from a reform. It will be very easy. It would be a threemonth a year increase in the age of retirement. Thats something that people can understand. A lot of democrats have supported that, too. Look. My basic point is its too early for the gop to drop out of this process. Thats all. Were not dropping out. I think that would be a huge mistake. Mitch was so stunned, larry, he was so stunned at this socalled proposal which was not a proposal at all. I understand. That he has now come back and hes said, look, entitlement reform would be real reform. It would make a difference in the deficits. And then well talk revenue. Larry were not suggesting dropping out, either. Neil pattell thank you very much. Senator Kay Bailey Hutchson appreciate it. Next up lipitor and the fallout. The people who take the popular drug need to know. 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In a story you followed, larry, a Louisiana Court has ruled Bobby JindalsVoucher Program is unconstitutional because it diverts money to private schools. No word on whether that will be repealed. It just breaks my heart. Because those young kids that have a choice to go to a Better School and get a better education, but i guess thats the Court Decision for now. Kayla, thank you very much for helping out this evening. Up next on kudlow could the dollar bill be on its way out . Congress considering replacing the green back with the 1 coin. Why stop there . Why not the return of gold coins that are legal tender . Were going to discuss it all next up. Welcome back to the kudlow report. In this half however, well, call it a fiscal cliff economic indicator. Year end contract wheeling and dealing has Major League Baseball in a crash cliff frenzy. And just like baseball, taxes really matter for everything. To avoid next years expected tax hike, companies are changing the timing of dividends and deals and Capital Gains and private equity partnerships and a whole lot more all to beat the tax man. Congress is tossing around the idea of dropping out of the paper dollar bill for hard coins. The government report finds the move could save taxpayers nearly 4. 5 billion over 40 years. On the flip side of that coin is now the time for a return of a goldbacked dollar as legal tender. Lets talk about this. We have the chairman of the american principles project. Shawn i can never understand why first of all gold coin, which really circulate throughout the economy, but sort of like contraband. Theyre not regarded as legal tender and i think they should be. Its certainly the constitutional solution, larry. The states have the right to use gold and silver coin as legal tender. And federal tax law currently prohibits them from doing it. Utah has pd th legislation. Were really waiting for the secretary of the treasury to allow them to implement it. If you went to a silver or ali aluminum dollar, its interesting the whole story what are going to put into the dollar. Steel, aluminum and zinc. If you had a dollar with steel, aluminum and zinc and a dollar that was gold which would do better in the marketplace in your opinion . Whatever people have been allowed to choose they choose gold rather than some other kind of money. The competition of the actual coinage is just a sign of the debasement of the money that weve endured over the last four decades. Arent there a lot of gold coins circulating now . I mean theyre not legal tender. I understand that. You cant give them to mcdonalds. Cant give them to a cash register. But arent there thousands and thousands of gold coins that are out there . People are collecting them but theyre not just antiques, theyre investments . Look people are not going to use gold coins as any kind of currency in the american society. Its going to be used electronically. I think the larger point about legalizing the use of gold as money is it provides competition to the Federal Reserve. The Federal Reserve is in desperate need of competition. If they had a little competition instead of only statutory constraint maybe they wouldnt be debasing the dollar as they have been. Isnt that the key point . They want to provide competition to what the Federal Reserve is producing. And of course, the Federal Reserve and the treasury and the comptroller of the currency and all the rest of those guys, they dont want that competition. Because the money that the fed is printing is lousy, soft, unreliable money. Thats exactly right. They have a couple of problem. The first problem is article 1 section 10 of the constitution gives the right. The second problem the American Public is catching on to what this monetary debasement is doing. Who is it helping . Obviously not the middle class. I suppose its helping the moneyed class. But that cant be our policy. It may be helping the federal Government Finance all these transfer payments. We need to have really a larger discussion about the underlying prince of our monetary system. The current says well we have isnt working. We had a lot of interviews with ron paul during his president ial run. We talked about gold. What do you make of getting rid of the dollar bill . Do you care about that . You mean for a coin . Yes. Too expensive to print. That doesnt really matter. Look, the bigger question we have a lot bigger fish to fry than whether we use a dollar bill or a coin for a 1 note. The bigger problem is the debasement that that represents. The dollars down over the last four decades. Since we went off gold in august of 71 were down 82 . And to what end, right . Is it helping us with respect to employment . Obviously not. Employment ratios are down. Is it helping our Financial System . No. The big three banks are in a world of trouble. They all three trade at less than book. So what exactly are we getting out of all this monetary debasement . The one thing were getting is a runaway spending in washington, d. C. Thats the effect of this unlimited print mag sheen that the Federal Reserve has. Lets put some gold into the equation. Gold as legal tender. Thanks very much to shawn fowler. Now speaking of gold, thieves impersonating policemen boarded a boat in curacao and stole 70 gold bars worth an estimated 75 million. Sounds like a thriller. Authorities say there were six thieves wearing jackets with patches saying police who assaulted the captain and took off the gold in three cars. Authorities say the shipment was legal but wont say who owned the gold or where it was headed. Now, lets turn and do some stock market work. Consumer spending fell in a new report out today. So did real disposable income. Could have something to do with superstorm sandy. Weak in yesterdays Third Quarter gdp report. Profits, and these are the broadest gdp profits, covering about 5 million large and Small Companies really came in pretty good in the Third Quarter. Up 9 from a year ago. So even though business looks weak, good profits could be the backbone of the stock market despite the hysteria of the fiscal cliff. Lets talk to don for all th hysteria, profits are rising, the economy has got pluses and minuses. Im not sure people need to pay all that attention to the fiscal cliff. Well, if you look at what the Global Stock Markets are doing, they suggest that our market would be doing significantly better were it not for the fiscal cliff. Now profits have been good. I think people are getting used to the idea they trust corporate ceos more than they trust those that print government bonds that arent really worth as much by the time they mature. Theyre also seeing a yield compression around the world. If you look at corporate beyond yields, theyre about half of where they were just a year ago. So i think youre seeing a global asset shift thats more friendly to stocks. You havent seen a lot of fear in the market. And i think whats holding the market back right now is the fiscal cliff negotiations. No question. But there just hasnt been a catastrophe yet. And i think thats good. And i think profits are still the mothers milk of stocks. But there are opportunities out there. Ive seen some Great Research reports saying first of all japan looks cheap. Theyre reinflating. Theyre probably going to succeed. Some people are saying that china is also reinflating and they had a soft landing. Then what about europe . Ive seen some people touting europe. If you look at the financial fear indicators in europe, that crisis is basically over. Well, yes, it is. I dont know if you can capture in the frame on the camera. What im doing here, im patting myself on the back. Who is it whos been telling your viewers for two years every time theres one of these trumpedup crises in europe to buy it. Now theres been a solution. Europe has been stabilized. Its actually the brightest place for investors on the planet. Im sorry you missed the bottom but its not too late. You look at after hearing that segment on the u. S. Government making the decision to debase paper coins by turning them into paper money by turning them into junk disposable paper coins . Well what would you rather own . The tenyear american bond, treasury bond yielding what, 1. 6 . Or would you rather have a spanish bond denominated in the strongest currency in the world, the euro, paying 5. 5 . Ill take spain over the United States at this point any day. All right. So dont agree at all. Do not agree at all. Look, retail sales in spain are down 9. 7 yearoveryear. Theyre seeing the biggest bank run in spain the globe has seen since the great depression. Youth unemployment in spain is 55 . There is not a good reason to own spanish bonds here. [ overlapping speakers ] last time we were on together you were saying the world was going to end because greece was going to default and leave the euro. Its all over. Europes fine. Just give it a break. That was last years story. [ overlapping speakers ] europe is not fine. Spain is in significantly worse position. Theyve taken on more debt into deteriorating economy. You tell me how that translates to this has all been fixed and this is all solved. Its not solved at all. [ overlapping speakers ] spain has about the same debt to gdp ratio as germany. That good enough for you . [ overlapping speakers ] hang on, fellows. Lets not get hung up on spain. What i want to come back to is the usa. Because our market has not collapsed, its really different than it looks like it was back in 2011. I just want to ask, is it better to own those lowrate bonds right now . Or jim la camp, i want you both to weigh in quickly. Is it better to own Corporate Bonds or Treasury Bonds during this tiff over the fiscal cliff, or is it better to own stocks . Real quick. Well, short term were going to have a lot of gyrations. But those yields are under the inflation rate. Youre getting negative real returns on these. Thats one of the reasons the stock market has been more buoyant. And don luskin, is it better to own bonds during this fiscal cliff tiff . Yes, december is the time to be risk off folks. The markets in complete denial. Total complacency. The fiscal cliff will create a crisis like the debt ceiling negotiation did that led to the bottom 16 months ago. Going to be another buying opportunity. But stocks will be significantly lower. By the way thats what creates buying opportunities. But face it its going to happen. Jim la camp, will the stock market vigilantes be necessary to get an agreement in washington . I think were going to see more volatility. Don and jim, thanks very much. Up next why the biggest headache right now for a baseball general manager might just be taxes and the fiscal cliff. Dont tell me taxes dont matter. It even affects baseball all next on kudlow. Dominos have a problem with obama care. They claim it forces them to post signs with nutritional information on every product. Dominos says its done the math. There are 34 million possible combinations costing thousands of dollars at each location which of course will be passed on to customers. This is nuts massive overregulation. And i think its another reason why we should say goodbye to obama care. Now lets go from pizza to baseball. Americas greatest pastime is also feeling the pain of the fiscal cliff tax hike. Professional Baseball Players and Major League Owners in a fever pitch to finalize contract negotiations before years end. Brian shatner steps up to the plate now with that story. Reporter the potential for marginal tax rates to go from 35 to 40 is a big deal for Major League Baseball. I want to put it all in perspective. The minimum salary in Major League Baseball is just under 500,000 a year. Right now we are smack dab in the middle of free agency. Its pretty clear players and agents are trying to get as much money as possible in 2012. Just like special dividends were actually seeing a lot of activity this week. Usually baseball only gives big bonuses to draft picks. But on thursday when outfielder b. J. Upton signed a 75 million deal with atlanta, what was included . A 3 million bonus. Payable, mind you, by december 31st. It absolutely jumps off the page. His former teammate in tampa, Evan Longoria signed a 100 million extension. Including in that 1 million in bonus money payable on december 15th. The reason that this stands out so much, its so against baseballs culture. Its actually more known for deferring salary instead of front loading. And larry, there is no doubt that the pattern relates to the fiscal cliff. Back to you. All right. Many thanks, brian schactman. Wall street rushing to make deals, dividend payouts, private equity, Venture Capital distributions. Dont tell me taxes dont matter. They are affecting Financial Behavior everywhere. Were going to show you why next up. What about updated equipment . They can help, but recent research shows. Nothing transforms schools like investing in advanced teacher education. Lets build a strong foundation. Lets invest in our teachers so they can inspire our students. Lets solve this. For over 60,000 california foster children, the holidays can be an especially difficult time. Everythings different now. Sometimes i feel all alone. Christmas used to be my favorite. I just dont expect anything. What if santa cant find me . To help, sleep train is holding a secret santa toy drive. Bring your gift to any sleep train, and help keep the spirit of the holidays alive. Not everyone can be a foster parent, but anyone can help a foster child. A front page wall street journal story today explains how companies are scrambling to offer deals and special dividends as the january 1st tax threat of the fiscal cliff nears. 173 companies have moved up their Dividend Payments to beat the tax man. Private equity shops, Venture Capital assets and even block traders on wall street are changing their behavior. So please, dont tell me that tax rate incentives dont matter. Were looking at it before our own eyes right now. Lets talk about this. Nbc contributor and former president ial candidate howard dean, steve moore of the wall street journal editorial board, author of return to prosperity. Steve, i begin with you. We have from the wall street journal editorial page costcos dividend ta dividend as tax epiphany. Taxes matter, steve. Even though there are a lot of people in this world who think not. They matter a whole hell of a lot. It was very predictable these companies would be starting to pay deluges of dividends now. If you pay them now your shareholders only pay 15 . If you wait six weeks they have to pay as high as 40, 42, 45 depending on where that rate ends up. So taxes do matter. Its affecting behavior. Let me sayhist my good friend howard dinos this, laimplarry. When he was a governor he cut taxes not raised them to make his state more productive. You should be advising this president not to raise those rates. Steve i was hoping to get some help from you. You know very well, one of the things we can both agree on the deficit is out of control. Thats for sure. You know as well as i do that the best deal for deficit hawks, leaving aside what goes on in terms of taxes or revenue cuts which we can disagree on, is going over the i was going to call it the fiscal cliff really a fiscal slope. If they come to a compromise the politicians in washington, both republicans and democrats are going to reduce the size of deficit reduction dramatically. My argument will be lets go right down that fiscal slope. Lets raise the revenue and make the cuts that have to be made which nobody in washington is willing to make. And lets take a big bite out of the deficit and restore confidence to our markets. Thats going to kill the economy. This is one of the things i agree with. It will not kill the economy. If you do those tax increases it will. I want to make sure. This is a little different point. I hear you on the fiscal cliff, howard. I appreciate respect of you as much as i may disagree. Whats really at stake here, one of the things at stake here, steve moore, is the idea that changing taxes, for example raising tax rates on capital and dividend and private equity firms and individuals and small business, that that doesnt matter. And what im saying is, when you see how the financial world is reacting, we just reported on how the baseball world is reacting. In other words, these tax rate changes have a profound effect on economic behavior. Does washington understand that . No, they dont. And we have so many pieces of evidence. And thats one of my favorites is the fact that you look at these states, larry, that have low taxes like texas and tennessee and like florida. And theyre doing much much better economically because theyre getting jobs and getting businesses that are moving from hightax states like new york and new jersey and california. So we have mountains of evidence that proves this. And my concern is look, if we raise these tax rates, were putting the United States of america, this great great country of ours, at a more competitive disadvantage and it leads to outsourcing of jobs. We all want to see jobs brought back to the United States of america, not leaving our great country. Let me respectfully disagree with my good friends larry and steve here. The fact of the matter is, our tax is a high tax state even though i did cut taxes. Our Unemployment Rate never went much over 6. 5 . It has been consistently much below the nations Unemployment Rate the entire time. Secondly, what youre seeing in wall street today is shortterm behavior. Bill clintons tax rates, what were going back to if we go down the fiscal slope, had no negative effect in the economy. In fact the economy was a whole lot better when bill clinton was president than it was under george bush or barack obama. So i think your case is good in the short term, not so good in the long term. I think the best way to restore confidence in wall street in the long term would be to show were serious about the deficit. I dont think any deal they strike will be as serious about the deficit as this fiscal slope. I just think that era, youre right. The economy boomd especially in the mid 1990s and late 1990s. I dont think it did so well a couple years after bill clinton raised taxes. Thats one of the reasons 1994 republicans had the biggest election theyve had in 100 years. People wanted an end to the kind of liberalism. But the president better put some spending cuts on the table here. Because if he doesnt, i just think the whole thing blows up. Larry im afraid now we are going to see a potential going over this cliff. And even the president is saying thats 2500 per middle class family. I think the risk howard, i want to get rid of deficit, too. Question is ways and means. You look at whats happening with these financial players. They are anticipating higher marginal tax rates. And theyre acting accordingly. My point howard is that just as the financial world anticipates, work effort is affected by this. Risk taking to start a new business is affected by this. I think this is a part that many people dont understand. Changing tax rates changes behavior. Thats why the Major League Baseball players are trying to do what theyre doing with their contracts. Thats why Venture Capital. Larry thats short term stuff, though. It changes behavior. Any reasonable person would move income from one year to another if they knew it was going to be taxed at a lower rate. What we need is consistent tax rates. Clinton as i said before, the rates under clinton did not have a bad effect on the economy. I agree if youre going to raise things up to 70 or take 5,000 from a middle class family, yeah, thats too much. But the tax rates that bill clinton had were pretty good for america. We need to balance this budget. I am not opposed to more spending cuts. I am not. I am not opposed im against cutting medicare benefits but im in favor of payment reform, which we desperately need to do to control costs. So we can do this. But i dont see any particularly harm other than we are going to go into a recession if we go over the slope. If you dont think tax rates matter, why is it that over the last 30 years when Ronald Reagan became president tax rates all over the world have fallen . Theyve fallen in europe, asia, south america. I mean, its happening everywhere because countries want to [ overlapping speakers ] i have never said tax rates dont matter. [ overlapping speakers ] governor howard dean. I adegree, howard, we need stable tax rights. I agree with that. Id just like to have a flat tax. Steve moore, thank you very much. I appreciate it. Folks before we go i want to send my very best wishes to my longtime friend and producer donna mizlocky moving on to new opportunities for the next leg of her successful career. Donna, thank you and good luck. Thats it for this evenings show. [ abdulrashid ] ive been working since i was about 16. You know, one job or the other. The moment i could access the retirement plan, i just became firm about it im done. Im out of here. You know, its like it just hits you fast. You know, you start thinking about whats really important here