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-- pictures here of Tulsa Oklahoma and many of fat protesters have already gathered to protest against.
Excessive taxation I would suspect in excess of government spending would have you but the point is.
Over the next hour we're gonna talk about how your tax dollars are allocated -- -- William -- coming on.
Former secretary defense under President Clinton to talk about.
A defense spending a little bit how money is allocated to that but you know addition our -- Cody -- is up in Boston -- at a Tea Party.
Cody makes it through the whole -- on -- on Neil Cavuto is out in Sacramento and you'll join -- little later in the.
Simmons and I I have -- in -- know but I'm not.
Can -- -- I think Cody is ideal in boxing -- that in Sacramento California appreciate you know -- coast this on this.
A lot different thought that if we want to keep your stream and going as far as your stream of comments have a lot of new people -- so.
I -- -- make sure that we know that you're there we wanna talk about your comments and get our guests to comment as well that's the way additional works if you happen to me just before.
And -- the other way it works is that we are -- live it's.
With a couple of -- after 12 noon eastern time and also stepped up what's going on in the markets from which we do every day the Dow Industrials up by 42 points today.
So we're seeing a market that seems to wanna move higher that's you know they'll Boleyn that's -- look at it right because we've had some news that you think maybe -- sell off on with a B Intel.
-- last night and and other things but the markets still kind of hanging in there and moving.
To the upside so we will stay on top of that for the entire hour again if -- -- -- the show and you enjoy it and you can't watch is like every day you can catch a podcast now.
I'll download yeah every single day -- -- it over and over again mr.
An innocent I -- -- get credit to date so yeah -- headlines here from President Obama who is talking about are he's vowing to.
Three in the 22 real all right.
-- -- -- -- Right you and simplify monstrous US tax code that's his message right here he says.
And I quote here we will make it quicker easier and less expensive free to file a return.
-- April 15 is not a date that is approached with dread each year.
What do you think this is your chance to sound -- you think that's possible to do that we do that in the next four years.
-- takes simple by the tax -- because I don't know if there's any way to officiate a happy time.
-- April 15 but you know what I'm open to the possibility we're all and all possible.
And it is -- there's anything else going -- -- through this.
Let's -- -- -- giving tax -- to corporations that stash profits.
Or ship jobs overseas so that we can invest in job creation at home so that's another kind of message coming from President Obama.
And really -- he of course ask former fed reserve chairman Paul Volcker to leaving -- the -- -- new task force on tax reforms.
Self talk about both sides of this throughout the hour and really have a debate on the future of a tax policy to the extent that you know Jared Bernstein is vice president Biden's chief economic advisor was just -- in the Fox Business Network -- on Fox News Channel also but he's been.
They're making the rounds -- TV this morning and not responding directly to what's happening with the tea parties that we're covering.
But talking about the fact that hey listen what's all this uproar about taxes we've cut taxes or we -- -- for 95% of Americans.
The tax rates that are going up we're just going back to the rates are replaced in the search administration and they're still lower than they were during the Reagan administration that's this current administration's point of view right all the people have different views so anyway that it.
By the way -- currently -- -- -- recommendations for a new -- tax.
Supposedly we would get despite December 4 so markets on your calendar that I -- date deadline that.
All about deadlines here right yes we have a deadline productive which kept him coming up -- life that there's that president speaking on the box that.
-- can watch that on television right now if you would like aren't -- have you with us on foxbusiness.com live again -- come with us coming up later -- -- former Defense Secretary William -- but we begin today.
With a -- in the CE updated financial advisors is with us to talk.
You know -- great to have -- -- by the -- about you know about the markets and about how things are shaping up and also.
If we could talk a little bit about tax policy because we're gonna focus a lot about it on the show and obviously a lot of our viewers really want to talk about it.
What if you -- you made from your position advising you what to do with their money.
Of the direction we're headed tax policy -- right now.
Well you know there -- that kind of goes like your fingernails on the chalk -- sometimes when you suggest to somebody that they might ought to look at paying some taxes now.
That they might -- -- later because for sure tax rates are going up there there's no way that our tax structure can continue.
To have is -- low marginal tax bracket as it does on the federal basis just can't happen.
So we're actually looking at them in a lot of cases of IRAs and 41 case -- Roth conversions will actually converted over to a law.
Convert to a Roth you pay the taxes now.
Okay -- right before they go up well that's his host yeah that -- -- you know that the the challenge with that is getting people to get their arms around that level.
Why would I want to take a 100000 dollars out of an IRA account or -- 401K account.
-- 35% marginal tax on it now but I don't have to yes it's because if you wait take -- out later you might -- paying -- fifty or 60%.
And you put it into the -- Not only does -- accumulate tax deferred.
But when you start taking it out later there's no tax -- What's your reaction when he hears from these headlines I think the president about simplifying.
The tax -- I don't think it's possible to simplify.
He may be able to simplify the tax policy -- I don't think you can support by the tax structure.
It's gonna get more more complicated.
One way to raise taxes that people -- Is by pulling away deductions by making fewer and fewer people eligible.
For a certain tax deduction and we like that deduction will -- did any sexually raises your taxes without raising your percentage interest rate.
So yeah yeah it's a shell game.
And it doubles in the details.
I just gonna say is that we'll -- -- back into the market as well and at one of the things again if you had mentioned is kind of creative accounting we hear from major companies right now officials Goldman Sachs and -- out with a report earlier this week we expect a lot -- reports as well.
Creative accounting works on many different levels does can you explain.
Yet the challenge right now is when there -- a lot of people that that are very very bright and they make a lot of money for being creative.
With account and and they're good people.
The challenge here is that main street does not trust me the government.
And then -- does not trust the banks moved and so when all of a sudden out of nowhere seemingly.
Wells Fargo and Goldman Sachs declare they got these incredibly high profits for the first quarter when everything else is in the tank.
That's a -- -- outside.
-- how can -- -- I don't first of all it now this is main street looking at a big box of of the banks and say -- You guys are the ones that got us into this mess to begin with how -- you suddenly out of nowhere be making these big profits right something's not right it smells -- let me.
I had a little get -- -- -- We talked about mistrust of banks and and -- and my story and a little bit on this is running and you not pressing the banks are you not trusting not only the government by the banks of your your money.
Because the statistics show that you might feel it was stressful but you have import your deposits and so we talk about these banks making money -- people are still happening a lot of my.
He sounded a positive news because FDIC.
A panel about the -- -- young guys are not yet they would not they.
No no no way -- -- it well because that's one of the major advantages of placing your money at -- right 1%.
In a bank CD.
Or a money market account.
Is the FDIC and Netanyahu in the field and girls and 1025.
-- very very few -- -- -- because so what does a -- and other percent of you don't either -- of what that gap is.
I would think there's a lot of accounts.
That have -- which -- a 350000.
And growing and there's a lot of people in that -- that are closer to retire whatever the case may -- of people looking for safe havens and so there's a lot more people moving from the hundreds of the 250 there's no question about it.
Another challenge that you have with -- with the banks have been in the deposits is is lending.
And so on one side of the equation you're hearing that banks aren't lending they're not freeing up capital they're not.
They're not going out and helping things move forward but yet they're making record profits right so those two things are just disengaged.
In the mind of main -- they just the -- how can this be OK another another question -- that put it on the board and get my started to weigh in on -- as we start this conversation right and you said well.
Taxes are gonna go up because central Texas got after an adjustment today that's on the did you know maybe move moments -- my money into Oval Office with their regular 41 -- -- is asking our viewers.
All right so.
Yes because popular worked up about the tax structure and you know we understand that.
So what do you give you should you be practical make those adjustments I'm -- -- your answers yes -- board said that as opposed to people say you know what.
This hasn't exactly happened yet we've got to fight this system and a lot of people sort of practicing golf we're gonna fight you know tell a different today we're gonna make our voices -- -- and make the adjustment.
It's what's the best thing you think people should do well the challenge with with the Roth conversion.
Is that one of the challenges is that if you make more than a modified adjusted gross income that's a special formula talked about it a complicate -- tax structure yeah it's a special type of formula.
-- if you if that number is more than a 100000 dollars you're not eligible to a Roth conversion number one but in 2010.
If they don't change that which they could at any time they don't change that that 100000 dollar limitation goes wet so for a lot of people they're not going to be eligible for the -- anyway.
But as far as taxes go.
When people think about taxes and I would imagine with -- the tea party's most of what they're talking about is the marginal federal income tax done but what about the state income tax and what about Social Security.
Lot of people don't realize if you and if you've never been an employer or you haven't worked in payroll.
That that's seven point 65%.
That was withheld -- just says spike up on your pace yup you're an employer's matching that.
So the problem with the tax structure is you only have a 100%.
Dollars -- infinite.
The federal government's proven that -- -- like crazy sure that's an infinite number but a percentage max's at a 100%.
So -- and by the way you do not get to take a tax deduction for your seven point 65%.
Social Security contribution.
So you're actually paying income taxes -- in your marginal tax bracket.
On the Social Security taxes that you can -- -- -- people don't realize that then now and -- what it is an eight point -- yeah.
Confession but it's huge and so you really have to sit out a look at this -- what about states I'm from Florida we don't have a state income tax.
That's hammering the states and municipalities in Florida because -- so dependent on real estate property taxes.
We'll -- and transaction fees that take place when real -- changes hands.
That's all flat.
I think it's like it's like for example California worried about car registration right -- -- -- kind of bullying sold and then the car registration -- and the like I want every couple of the comments -- we can pick -- -- -- and I -- in Georgia say you know they removed all deductions that would be OK with that and they can lower percentages and taking just as much that's the group says.
Annapolis says I live within my means no matter what the tax rates make it doesn't really matter that much.
I Richard Nixon.
I'm guessing that's not an unnamed -- If it's testing and banks in the same sentence is an oxymoron and finally an age from California taxes have to go up to pay.
For increased spending.
Bringing in fact the tea parties unless the government finds another way to make money besides taxation is there -- -- for the government to make money.
Oh absolutely there are really engaged in the process and they don't talk about what is it -- What do you mean when you goaded and fill up your gas your gas tank -- the fees that the federal government is charging at the retail level.
On that gasoline is is enormous which is which incidentally when they had when congress had these CEOs of the oil companies in several months back -- One of those CEOs mentioned that.
And they shut it right now because the mess profits and huge profits that the oil companies were making -- -- comparison.
After -- profits from fees.
That the federal government was making on taxation of gasoline.
On top of that one of the things that we talk about every connects -- -- which you don't it was designed by the way which you don't -- -- another thanks as sort of along those slides one of the things that we talked about and others because -- always been reporting what this is -- comes out when ExxonMobil reports earnings.
There's always a focus on that and this is not true of all companies -- -- especially with Exxon is always a political focus on the the big number in profit the -- they don't say per share what do they -- that the newspaper had was -- ExxonMobil made a record profit of XX billion.
Now we're always careful to report this -- you figure it out.
How much ExxonMobil paid -- -- they pay more taxes or any company does capsule and next thing that's not a good idea to -- so they pay the taxes to the government was making a ton of money off Exxon Mobil's.
They're not only making pricey I think you're absolutely dead -- not only are they making the taxes that we would all be familiar with which is -- corporate income taxes.
But if they were drilled down and looked at the -- right.
That they are actually collecting that they -- to the federal government the state governments the county government city government any government entity.
When that transaction.
Takes place -- it's off the charts it's an enormous how much money is being made by governments right now because we don't just have one government here.
Now what we tend to talk about is the federal government that's the big enchilada but we really have all these other government levels to.
That need to make money because they provide services right local and state absolutely now this one Fella I think his name was Kobe -- -- -- cork -- according.
I really think that's a great ideology that he's talking about but he's dreaming you know.
And that's what he was saying remove all of the actions and then -- have a lower percentage is taking it.
That's an ideological perspective however here's what happens they do that they do exactly what he suggest a great idea but should slowly but surely.
They start racing that -- structured.
-- Abyssinian back to the inevitable.
There's another point that's being -- what you don't have the deductions anymore.
Right yeah who has yet.
As it -- -- -- -- as a kind of threat.
81 at that point has been raising the -- and I think at this comes up with those comments about tax policy as well and so what we're talking about is that -- is president Obama's been in office with 100 -- -- I mean.
The first ball if it's fair -- -- -- these tea parties now second law.
-- -- for him to say he's going to you suggested that tax code and you know what 308 not this seems like another.
The goal is that if that's the right and he just -- your kind your reaction to what's going on Washington right now maybe can bring and how -- -- -- -- -- that.
That's it that's very sure of that time -- -- honestly but system blame that maybe should be there.
But he's a Smart guy I mean he's really a brilliant politician -- strategists I mean and a complimentary fashion.
He was not my guy by the way but he is used up my candidate but he has my president Kyle -- -- -- -- got around when -- -- actually that was around -- -- from -- -- -- Yes he was my guy.
But anyway he's not my president -- as my president and and I'm very very encouraged by a lot of things that I.
See Obama doing -- such devils had a list and I like the way he's doing it better here's an example there.
A lot of times he will he will stipulate that this is what I want to do.
And -- what he's doing is he's laying out the framework of what he would like to see.
And then he just turns to congress and says I need you to work this out sometime that's where the problems that's brilliant -- one has -- has now he is saying.
Right at the very beginning.
This is what I wanna see happened behind the president I don't have the power in the control by myself to do this but congress does he -- he just lays it right to them.
So now he's placed the ball in their court and neither do something with it -- they don't I wonder whether.
Makes it feel more like he's on our side -- No I understand that's -- -- point of you know I understand that point I I I I sometimes wonder.
General about in this in this particular case just generally whether or not a president is better served by having.
And you know with the gridlock is good part no party the opposing party in congress taking that in and kind of working with it.
Putting their own view in it whereas now you have a Republican Party is largely marginalized -- people are talking -- and there's been some right you know opposing -- have been brought up and what have you but the Democratic Party has the power to basically pushed through whatever they want.
If they're unified.
They're right you know did moderate wing of the party might speak out we've seen that from right in the senate and house -- the idea here's what's gives it to that.
That party in that his own party in power and you have the likes the speaker of the house of the majority in the senate now do what they do.
That's the problem sometimes way it is it is the ultimate problem but the fact that he's the president.
Didn't create the problem the problem was already there he's just working within the system.
I think he's -- -- an excellent job of prioritizing the things that he's attacking him what he's going after as he goes after.
Example eight years ago on the exact same thing was happening with George Bush knew he'd been in office less than a hundred days yet on -- no one remembers what he was working on no one remembers what he ran on certain -- because it's been a long time ago but because everything changed on September 11.
Bank -- -- all changed.
So what Obama's doing now -- he's positioning himself with what he knows he's taking on the things he's taken brilliant.
Very very exciting.
To nail those pirates with a -- what and with the navy seal snipers what a great move that -- I mean that was something that needed to be done has nothing to do with the economy has nothing to do with what's going on here in the country but what a great move.
I mean so many Americans -- to what Adam white -- -- -- -- that's because the real issue is Americans have been have felt messed with.
-- you don't mess with the Americans Americans are strong and proud and so on but but we've been messed with it and right now the senses we've been messed with from within.
Because this banking crisis and all the things have been going on and now now we've got the political battles going -- so and that this the tax issues.
Something's gotta give you know there's only a 100% of something then.
And the other the other challenge that we have right now is our whole economic system is based on a spending ripple effect.
And the challenges when people are unemployed right.
There're there are almost seven million people that have filed -- and getting unemployment 650000.
New ones every.
So let's get back to the spring expected to great conversation let's bring back -- senate that the -- -- today as well give this year.
If government spending stays as it is right now right right -- wrong.
Right what is your forecast moving -- into the markets what are we looking at here guys -- just like picture.
It is like that picture where we're at where is it exactly where that.
Where we're gonna find the location for you guys they just want to bring it to you right away it's a lot of pressure they never computers not -- the -- cores yet.
I guess you're some some live pictures remember a lot of critics say no with good shots these Tea Party still wandering Atlantic you're -- accurate picture.
As well again let's let's go on that a little bit as we show maybe a montage of some different places around the country where people are gathering.
Great exercise and have the freedom is the Asian and then to organize.
Well all of that.
If government spending stays the way it is right now tell us about how this next year looks in the year after that as far as the recession goes.
As far as consumer pressure what are your projections.
With the idea that government only has a couple of ways that they can raise money.
One of the -- taxation -- -- that subcategory of taxation.
The other way they could cut spending they could cut cost and so on which I think some of that is going on but the other way -- to print money.
And again there's an infinite number of dollars you can Trenton and in the short term that may you may look advisable to do but at some point.
That's got to be paid for.
And that's gonna get paid for in it in the sense in an inflationary -- so right now there's a whole bunch of people out there that could be buying a house.
They have come down in value now that are available right but they don't have a job or they can't get alone.
What they can't get a loan.
Less then -- maybe 5060% loan to value.
So we've got a lot of opportunities here.
But people don't have the where -- Paula take advantage of the opportunities the first thing we've got to do -- we've got to free up the credit.
And that will free up and point and we haven't done yet we have what we can't I mean it's gonna take time this that it took us two years essentially.
For us to get from win this thing started to unravel to where we are now -- eighteen months to do this we're not tough accident in a couple months and -- fixing them.
I am used term fix -- I'm glad to that brings up an interesting point of the conversation and it plays back into the -- tea parties by the -- -- will -- -- with -- Our buddy -- well enough Boston here a few minutes but the the point it today and -- and this is.
Government to a Tim Geithner is on where Korea's lives in an interview.
His whole philosophy is based on the fact that government has to do more rather than less in it in an economic or financial crisis.
In other words the mistake is going to be made he said this is paraphrasing what he said the mistake it's -- be -- not doing enough as opposed to doing too much.
The point of view on the other side that's being expressed -- -- -- again iced tea parties today that government is essentially the problem.
We -- if we all agree it's been a financial crisis that started whenever it started but Wright -- was as worse it was in the worst point was last fall right.
How do you deal with that they -- do it which end of that spectrum is the right and do you think what well when things are innate.
In a box and the -- the bat right situations are bad.
Anybody that does anything about it is open for criticism and the more they do the more potential criticism there's 'cause everybody's looking for somebody to blame.
Doesn't matter what the circumstances are that's how that the dynamic works.
So right now for the federal government any thing that Geithner or Obama do they go they're gonna find criticism they've got to not worry about that they've got -- just forge forwarded.
Here's what they really need to do and so far so good with with partners most recent announcement I was most recent but a week -- to a going -- and this is how this plan is gonna work.
We have over.
Four trillion dollars of private funds sitting in money market mutual funds that doesn't include CDs or money market accounts in the bank.
Just money market mutual funds we've got to get an incentive to get that money back into the marketplace and movie -- And once that starts to happen.
The government can step back.
A little bit downplayed the challenge that'll be the channel -- -- -- you just exactly that to happen OK Dan thanks a lot you spent a lot of time and we got talked through a lot of the issues threatening to enjoy time.
And joins us want to -- -- actual -- format good stuff we love it took back I would again thank what we're what we're coming up with a program to conclude it's going to be album the letter from Sacramento the former secretary defense -- in the Clinton administration William Cohen is also good to join us to talk about.
How defense spending to the -- shows -- focused on spending tax dollars where they go he'll be with us.
He's been asking that question where's my money on -- column I think -- -- out to actually Willard who of those people behind you and what is going on in Austin.
They got one message for all those viewers on the Internet right now.
Is on me -- live free or die that's what the messages out here.
These guys who this guy is actually bought back and -- being honored in the revolutionary.
And guys -- all -- -- the people here are out here.
Thank you for serving our country hey man I've been seriously thank you -- serving our country guy.
-- -- the people we've got out here everyday Americans who are sick to death of the targeted tax tricks and all the corporate cronyism.
And it's better that's gone I got to speak brother both sets up the powerful and that's what the guys that -- -- remind and it's.
The big one of the big things -- anybody I knew I'd one of the big things Toney about that you know this a coming into these two parties have reason -- wonder how.
Will people -- off one of the crowd's going to be like it's tough for us to tell me as to why -- a little bit but what's it like up there Boston so far.
I'm just saying we're probably -- than 500 people at this point I think they were expected that best case 15100 to 2000 -- I -- a little light on the attendance.
The problem has been.
People can't tell is are we protest and republicanism -- I just got into the debate with this guy here.
Proud Republican and I'm explaining it wouldn't say it has a moment -- public so -- I'm not full spectrum of Republicans are proud he's a -- -- -- to -- a Republican and everybody here.
Anybody in the Republican Democrat fascist regime that's in -- it's -- It is an accomplice but it's.
Apple's is to accomplish access to accomplish my government it used it right if you guys Republicans -- see what they did.
I ended up with giving Wall Street 800 billion dollars in what about a 160 billion dollars in stimulus package of if that's small government someone wake me up what big government is -- -- the Republican Party just what you got take down a Democrat party.
-- -- -- -- -- -- -- -- Still seven Cody really -- through what he's saying.
I -- talking about this a lot over the last couple weeks and what would you say is six sacks and Tea Party success and what is the goal of the if anything it's -- here.
You know I think that they admitted to be really frank I think that the organizers.
Like going to be disappointed the actual numbers that doesn't mean it's not a success -- The issue is can this carry some momentum forward can people take something.
Away from this and actually end up feeling like we get some change.
Down the road it's not about today it's about the next four years the next eight years we've got to take out all the incumbents we want change.
And that's actually I think sort of the buzz that starting here in what the Republican.
Goody goody which you have would you consider running for congress.
You know it's funny and I actually.
It's it's just -- -- incidentally when you're running and I can tell you no way I'm fighting in the -- on wanna be the powerhouse.
-- -- that didn't favor -- -- and get on your Blackberry use Twitter a lot today would you please because we have your true your tweets are coming in live -- -- live chat all day long enough to -- -- -- -- I will go -- right now.
I don't users to come to smoke dot com or use the hash tag team free or spoke up and get active military the -- -- today.
Thanks study patio and I -- -- are that I had a lot of comment today about practices that -- icons that -- scare you have global issues particularly let's look at what we don't -- they'll provide hair and makeup woman feel it and fortunately there is you know it's recession we have cuts.
-- for president was -- guy wrote that I'd Simon and Catherine I it goes back Connell the president and during a beer cart listening -- from pro tennis out there.
-- one person office on Washington yeah.
You guys are -- -- that was but it's great.
We have a lot by the way the markets are higher I what it's worth I.
I think it and that I -- Cody finally met his match and people that are willing to talk as loud as quick and ends up for it and he.
He's not happy hour at the end and he makes it it is your -- I think we've just got back -- -- easier to make -- talent he has gonna make it becomes.
-- -- -- -- We'll -- did Mitchell's our next guest from the Cato Institute live from Washington DC couple deaths come up in a row from DC including the former secretary defense league college just a moment.
Dan thanks a lot for coming -- we have a very engaged audience today.
Because of all these tea parties people have been on our our board -- throughout the day and talking about tax policy so let me.
You know what.
But you started off in terms of how you think.
The administration has done so far in their allocation of spending where the mistakes it made and what -- think of how things are going so far.
I think the -- -- administration has made a big mistake big as they've continued the bush policy.
The so called stimulus 800 billion dollars.
Down the drain that's on top of bush who increased government spending from -- -- two trillion when he took office the three and a half trillion.
When he left office.
I'm just very concerned were on an express train heading to becoming a European -- -- state.
Yet seems like it but -- you know when people get nervous it's like.
Hit you know if you're steering on a rollercoaster sometimes you grip -- the sides tighter than you would.
Otherwise because -- so nervous I think that then.
That national reaction to -- -- to grip back and beat had this like stronghold -- what's going on.
What is the alternative especially during a time it feels like the economy is on a roller coaster.
What would you say is the alternative to what we're getting right now.
-- -- the key thing to understand is that we got into the match four and because of government in the first place house had government subsidizing housing you debt.
We had bush increasing spending by record amounts and what does Obama -- and go he increases spending on top of that he does more bailouts more subsidies.
But we have to stop and think about this what kind of country do we want in the future we want the government to take care of our housing our health care our housing our food.
There's a place that that happens it's called prison.
I'm not gonna well first data is -- the giant prison where the government controlled your life tells you what to do what to do it.
I don't want that future.
I want a country where people are afraid to achieve where people don't decide that their life is better -- -- -- not the government.
That's that'll translate into economic weakness.
Art fair enough now this a couple different conversation -- are all part of one larger one.
By Dan but the earlier question I had for for our guest -- -- -- -- was on overtime in the financial markets is -- and I think we can all agree.
A rough time for the economy financial crisis you could call and the case -- been made by this administration.
Articulated by the secretary of the treasury and others is that what you're gonna financial crisis governments must do more not less is that true in and of itself in a crisis forty think.
Less government action actually gets you further when times -- when nobody else -- spending essentially.
But we got into the financial crisis because of government we had the easy money policy from the Federal Reserve.
And we had that whole corrupt and -- fifth in the subsidies.
Through Fannie Mae and Freddie Mac writes I don't get out -- that pumped up the housing Bob Hope.
The housing bubble burst and now what are the politicians wanna do they're saying well the best way to cure a hangover that by going out getting drunk again.
What is the best way to cure it if that I've heard that argument a lot I understand it.
Make sense but what if that's not the best way what is the best way.
While the -- news is that we just have to let the bubble burst we have to let the -- that's worked their way out of the system.
It's sort like it literally if the analogy you have a hangover you party too much the night before you have a headache you're not feeling well there's no magic pill you could take.
And there's no magic thing that the politicians in Washington and bill.
Unfortunately the politicians want it get us.
Back on the same path that got us into the mess in the first place.
Let's bring back to business and again also a little bit of a cross section here at the tea parties are hearing that in Madison Tea Party -- has -- -- -- people has even started yet.
You know one of the things that's been proven in -- time of recession is that companies should invest and research and development that the -- went to recession breaks.
Is big for those companies and those companies that are reeling to take that risk actually benefit down the line how is government different than that.
But the key thing at this government invest or just government now and fast.
But people in the private sector are deciding they're gonna set aside some money into new investment new research new technology is because they're.
Focusing on bottom line incentives to make the economy were better off and -- -- When politicians decide they want more spending what's motivating them a desire to get real -- -- And that's why we -- so much corrupt and sleazy pork in that so called stimulus package -- -- which was all about stimulating.
-- -- constituencies that helped Obama get elected.
It has nothing to do with making the economy stronger if more government spending -- good for the economy.
Why is France always a very weak economy and Hong Kong which is very laissez Faire there always are very strong economy.
Right in the one final question -- have for -- -- that doesn't that change.
In -- time -- financial crisis which is bid they're going back to the original question is an -- in in in normal times -- will say yes true.
In other times people say well -- that it's different because of the the dire straits economies and now.
Why would it make sense to have the politicians spend a bunch of money and think that that's going to help the economy where did they get the money.
They have to borrow it out of our right pocket before they put it into -- left pocket.
This is why the so called keynesian theory of economics -- never worked.
It didn't work for Hoover and Roosevelt -- the 1930s.
It didn't work for Japan in the 1990s.
It didn't work for bush last year if not working for Obama this year.
Bigger as a recipe for -- Helping politicians raise campaign cash but it's not a recipe for a stronger economy I think this -- So many people out there are these tea parties they're upset.
Because you still have a lot of people in America who are the ones actually working and producing and they're looking at the politicians in Washington bush and Obama.
Making government bigger making more people dependent on government and turning turning us into a European -- -- state and that.
Would be a terrible tragedy America -- -- -- a special place because we had this notion of individual right of self reliance.
And -- now we have politicians in Washington turning us into a real world version of atlas shrugged.
How understood Dan thank you for your point of -- Dan Mitchell from the Cato Institute out of Washington today thank you Dan we appreciate it -- a couple things here as we continue about 45 minutes left.
On -- this is dot com live Neil Cavuto is out of Sacramento California he's coming up in just a moment.
Former secretary of defense William Cohen will also join us -- is right behind -- she's doing a report through the Fox News Channel so if you're watching is on the Internet you can flip on Fox News Giuliani just a minute.
Updating -- business stories there were court covering these Tea Party -- you're looking at live pictures from one of the parties that of one of the protest that's under -- already today.
Protesting the excessive.
Taxation anti tax Tea Party says they've been -- we talked to -- will it up in Boston earlier.
Where people -- gathered with whom we're listening to some of the speakers on hand there talking about too much spending and taxes that they perceive to be too high now.
Let's move out of Charles can't -- is with us also from DC today had worked in the Clinton administration and that was assistant director -- Charles -- this idea Dan Mitchell was bringing up right before you were it that you came on that you know I was I was -- on this the road where.
All right we're we're in a financial crisis.
And the idea at least as it's been articulated by the administration has been we must spend more government must do more.
Whether -- be on the budget side -- the monetary side as opposed to less because of the crisis.
Are we going on the right road or or or are we spending way too much.
I think we're going on the right road I mean nobody likes to.
Government spending to the degree that we've had -- but -- there's really have a broad consensus among.
I can -- from the right in the left in the center.
When you're in deep recession -- really has to step -- and he and stimulate.
Consumption because people are actually cutting back on their consumption.
And that slows down the economy -- The best way to I don't know it who what's the best way to do it Charles in terms of you know -- Some people argue while on the monetary side yeah I understand -- with the Federal Reserve is doing that is stimulating things and and we need to do that need to boost it.
Bailing out the banks via TARP and other ways I can understand that but that some look at the department you work did on the budget side -- -- -- -- say.
But all the spending on things that they say -- stimulant but might not be that's where we run into some trouble even moderate Democrats said that.
Well -- you know I think I think people are at at the tea parties -- expressing.
A lot of frustration.
Because -- that they don't really know what to be frustrated about.
They they hear about excessive corporate bonuses they hear about earmarks.
But those are really red herrings -- these the these bonuses.
Aspects of the economy and and and I am actually consume less than 1% of the budget.
So I think people need to look more at at the big picture of the big picture is that.
US taxes are lower than almost all of the other western industrialized countries.
And what as far as our own economy is concerned the tax rate is lower than it has been traditionally.
So so there has not been a a spike in taxes.
That seems to be an impression that that's been created so you're saying these people don't have anything to protest -- that is at the bottom line -- now.
Well I think I think they're expressing great frustration.
We're in the middle of a of a deep recession.
There's frustration and about wasteful spending -- through earmarks and frustration about the corporate bonuses but but those really -- the big issues the big issues are.
The -- shouldn't get out of the current recession and also looking at our long term fiscal crisis and then that's really where a lot of attention should be focused and where.
Where I work at the Concord Coalition that's -- one of our our major objectives is just to get people to think about the long term crisis.
Which is that by 2030.
Medicare Medicaid social security and interest will consume all federal revenues.
Because those programs are growing so rapidly.
So I think we need to and it kind of keep our eye on the ball.
And and focus on on what's really opposing the danger to our economy and that is the long term fiscal crisis because -- entitlement growth.
And it's sorry go ahead.
No I'm just gonna say no I was trying to cut jobs -- I did that the point is obvious is.
I was gonna say a moment ago that you know who were arrested whether or not these people have somebody to protest and not for the reasons I'm just curious and we've had administration officials on.
And -- Jared Bernstein earlier he was just on the on the network before we came on the air.
A while ago it doesn't seem like there's been much response from their point of -- to these tea parties.
Now our point of view you know from journalistically speaking has been hey listen.
We cover other protests right we cover a number one people gathered to protest something so why would we cover these now sure we have some.
Posts and -- isn't exactly was on earlier that have a point of view they -- whether it's there or whether there in the in the field but to as the reporters covering this.
You know we deemed -- newsworthy because a certain amount of people.
Are are are there and expressing their point of view and we feel hey let's bring it to people let them decide the administration has responded all I think that's a mistake.
Well just euphoric in my -- senate President Obama was making making -- statement of that.
-- stimulus that's irony gone into effect right need the stimulus bill that was passed.
-- in February included over 300 billion dollars of tax incentives.
There's a proposal currently to extend the middle class portion of the bush tax cuts.
There there were Texas senators.
Last year as well -- texas' for energy production.
That has really been a lot of tax relief under way I think it's important to.
I keep the facts driven outside of it to -- about that bright that's been that's -- the -- -- but I think it if activists connected this -- I I think it.
It would be my hope that the frustration.
-- shifted from.
The current tax levels are truly are not unusual to the long term fiscal crisis wherein we are.
-- on the backs a future generations.
Enormous public debt.
And and anyone who has kids.
Has got to be concerned about and and that I wish that the frustration.
Would be focused on that rather than on.
The these other issues like earmarks in corporate bonuses that are really.
Bright red -- if it's a good time but that is a bit but -- point.
Thanks very much Charles we appreciate Charles Thomas berg who again work that the Clinton OMB and is now the Concord Coalition from DC just back from the Fox News Channel everything went well everything -- I'm good -- back of the -- -- -- with interest and -- And highland house all day today as render six dollars a barrel -- hanging out there for a while also for the trial.
4912 was down a little bit and stocks are up a little bit 52 points on the Dallas to speak at 1241 you are -- -- -- on the former secretary defense coming up -- -- Neil -- as we talked about.
But would you market this is our next guest -- -- I guess in the preventive is great -- -- a wide ranging discussion -- spend the next few minutes talking about how your tax dollars are allocated Jim thanks very much for coming on the progressive progressive policy.
Thanks -- national security project we're gonna talk up about defense spending obviously but the secretary and with you as well because -- just got a lot of attention tax dollars coming in.
People say well you're spending too much on XY and Z and in the -- -- has been but wait a minute you're cutting defense you're not spending enough we're.
Maybe we need -- -- Well I I think it's interesting that you've been covering these tea parties all day because on the one hand there's this.
Sort of strain in society that's very anti tax on the other hand we actually do have to collect revenue in order to pay for things like national -- -- and as we've seen this year defense spending is up around 535 billion dollars or view it excludes the cost of Iraq and Afghanistan.
But I think the important thing is that what we've seen with Secretary Gates is his ability to sort of move the discussion I think that this is extraordinarily important.
In America today we have the largest military in the world we spend more money on our military defense than any country -- all the rest of the countries in the world combined.
Yet we're at this point where we have to suddenly readjust sort of our basic philosophy about how we spend money and concentrate more on getting the most bang for buck.
Mean banks are back had we -- that.
Well look we're fighting wars in Iraq and Afghanistan right there that right now that are focused more on counterinsurgency irregular warfare and gates is -- hadn't cut a lot of big ticket legacy weapon systems which has helped move this conversation and said.
We need manpower we don't necessarily -- need as much in the big ticket legacy weapon systems.
There there are important and certainly we're not making America weaker by -- re allocating money from planes that we don't necessarily use in these wars.
Putting more boots on the ground in in ways that we have to.
Somebody's -- about the allocation of budget goes -- defense photographs I have in front of me SS 21% national fast -- it -- essential security.
Income security 13% Medicare -- in those numbers are.
Are about are about right -- depending on what you work into the numbers and work on the we just put out the outlays by functional on our on our chat board right now.
-- -- from -- point of -- are we concern or should we be concerned about percentages.
Or how -- or what the money is allocated towards another was -- but the secretary going in different directions at the right direction.
No basically we should not be concerned necessarily what the percentage that we spend nor should we be concerned necessarily with.
Is this year's budget and increase vs last -- or what percentage of you know how much money do we spend vs the rest of the world on defense.
What we should be most concerned with is buying the appropriate amount appropriating.
Relative amount of money.
To fight the threats that we know about today and those we anticipate the future and that's what Secretary Gates has done with this most recent budget he's taken important first step.
To say that we have to really state take a step back and think about the way that we spend on this -- and also -- with or without necessarily -- any defense budget there have been a lot of accusations on the right but that's what he's doing and it's fundamentally not true it's it's starting a new discussion.
-- going to be a lot of push back.
Over the next few months about some of the more important cuts that he's -- and some of the tough choices he's taken.
But that's the discussion that we need to have these days about defenseman.
-- Jim let's take it was going on the -- phrases well Catherine from Virginia says.
I want my tax lowered that you have Tony weighing in saying our enemies are increasing their offense spending you know indicating why we should.
Raise our deep well and that those are the two sides so how do you -- -- make there's two sides play nice.
The well let let's take a look at some of the numbers.
We spent were scheduled spent in 2009 about 535.
Billion dollars on our baseline defense budget that's that's a budget that I alluded to earlier.
Is more than the rest of the world combined that they spend on defense.
Yet the 9/11 attacks cost al-Qaeda about 500000 dollars comic I was a little bit of a paradox wow you can say we're spending so many -- spending 500 and -- and 535 billion dollars on defense.
Yet we had the greatest disaster in American soil for what amounts to a Wall Street executives now capped salary and -- incredible.
And visited the numbers are just when you hear -- right.
And to stunt yet -- it's it is amazing when you -- put that way as -- up by as we take a look at more of these.
Tea Party pictures on the screen here we'll get to kneel in Sacramento and a moment.
Jim thanks a lot by the lakers were to continue this discussion -- -- -- progressive policy institute's national security project at a DC we're gonna continue this discussion.
About how -- opening the show today about how your tax dollars.
Are allocated -- former secretary of defense now bill bill called William Cohen joins us also from Washington because.
You know what we're talking there about you know.
How -- how they're -- capers defense and secretary Colin thanks very much for coming -- by the way.
Perfect guest today in general because as you know obviously -- now.
You made some proposals for how you thought things should be done differently now he has what do you make of what the secretary the current secretary -- proposed.
Well I think he's trying to -- to shape the the budget in a way that meets our immediate and foreseeable needs.
As you've been discussing it raises questions in terms of how far over the horizon do we have to look.
And he has something coming up called the -- QDR the quadrennial defense review.
And that's an opportunity for the entire department to look into the future try to -- into an opaque future.
Secretary Gates is saying we need to reshape the budget.
In our spending in a way to deal with the most immediate needs namely Afghanistan and Iraq and what we've seen is insurgency or a symmetric warfare.
Mean the notion that we -- -- to from 500000.
To take down the towers that's true.
It could take your computer stroke to take out there are -- much of our.
Our infrastructure from a cyber terrorism point of -- so the real issue is.
What are the likely threats that we're going to face in the now and near term future and what's over the horizon.
And that's the balance that needs to be struck Secretary Gates is saying I think it's.
More counter insurgency we have to be prepared to -- engage in.
And then you've got others will say what wedeman you've got a resurgent Russia.
You go to China that continues to expand his capabilities.
And at some point in time it's going to be a dominant.
Player on the global scene in terms of militarily so.
What's the hedge against that and so it's always a question of trying to strike the right balance congress can in fact lift the cap they haven't say look and it's not enough will pay more.
Or they're going to have to live within the limits what Secretary Gates is living -- this thing given the amount that we have this is how I suggest.
We spend it so now the debate is the first part of the debate the debate debate now shifts up to Capitol Hill.
secretary and another question on that Heidi kind of reconcile all these different sides we just heard.
And that we have about had a budget allotment for defense at 535.
Billion dollars that does not include Iraq does not include Afghanistan.
But we also know that we have more than a trillion dollars in bailouts going -- Wall Street.
In your mind how do you rectified this tech spending from the government.
The first obligation of the United States government is to protect the American people.
Above all is the of the requirement.
Now within that contact you say well is an economic recovery also part of -- national security the answer is yes.
The real issue is.
Defining our national security interest that means that.
We still play a role and we need to play a role in helping to make a disorderly world more stable.
We had hoped following the end of the Cold War that we would see a new world order.
Well we've got a new world of disorder.
And that disorder emerges every day whether it's pirates off the coast of Somalia -- its North Korea firing off a a missile or -- satellite launch.
Whether it's the insurgency taking place on the borders of Pakistan and Afghanistan the continued fighting taking place in Iraq.
So we have global interest and it requires us to maintain a force structure.
-- able to deal with them as successfully as we can.
Given the fact that no country including United States is all powerful no country can act completely alone we need allies in this effort.
And that raises all kinds of other issues namely what's -- support we're getting in Afghanistan to other countries -- concerned about it and if not.
We going to be able to sustain American support for so big issues involved book where we're global and we need to say globe.
And they are big issues no doubt about it the the the question becomes this eight.
For example you're right that it -- if you do agree largely with the direction at least -- -- Secretary Gates is it is taking here.
And that we can essentially do more with less or at least do things differently and not spend.
As much money on a net basis as we have been on defense does the mere fact that somebody sees the fact that the US is spending less than they had been in the past on defense does that in and of itself possibly make us less safe.
-- with the headline traveling around the world that our priorities may -- -- shifted it's that it all worrisome in that world that you just described.
No the of the numbers shouldn't be the dispositive.
Factor of the capabilities.
The effects that we can bring to bear.
That was -- always has to be the tests numbers.
There -- important.
And certainly you can reach a point where you can -- say we've really cut -- capability but what we really have to look at one of the requirements what are the capabilities.
And how -- we match that up with what it costs to build them Secretary Gates is saying.
We need to have more.
Types of systems that are less expensive that are delivered on as soon -- faster time scale.
Because we're getting fewer and fewer systems more more complex and it delivered later and later.
So you know quantity has a quality of its own as the saying goes and so he wants to get perhaps less complicated system to get more of them.
We're also gonna spend more on manpower.
When you talk about our budget remember more than 50% almost 60% goes for manpower and we're talking about the need to increase that manpower.
Anywhere from 75 to a 100000 -- -- 93000 more.
That's a big ticket items so we're talking about putting more manpower getting less sophisticated system but more of them.
Now that's a that's where the debate should be joined in terms of looking into the future.
What a little likely threats -- of the unknown threats that we have to kind of hedge against and what can we afford to pay for.
On that you see more manpower in your estimation -- the US armed forces properly.
-- right now in the battlefield.
The answers no we need to have better equipment for -- we've seen this whom we went over to.
Iraq and we found that the insurgents had a way of getting a symmetrical you're blowing up borrow humvees not having -- -- armored.
Not having the kind of capability forces are needed we're better now -- so we need to get better across the across the board for all services and so.
Training and equipping the equipping is very important.
And making sure we have sufficient man I was would not constantly recycling these are kids.
They're young kids it was sending over there -- third and fourth tours and that's does not good for that was -- great for the country so we have to have more.
In the sense of greater capability more manpower and certainly equipping our forces to go into the kind of battles of -- likely to have to face.
-- one more question secretary come before we let you go because that I met you come again you are kind of this unique position of being very similar to the current secretary defense just.
Generally speaking what was it like.
Being a Republican from congress serving a democratic administration same thing that secretary right now is going through is there -- any.
Complications that come up because of that.
It was never a problem it was perhaps the finest experience.
I ever had in public service on 31 years.
And it was actually no difficulty whatsoever for me to to do that because President Clinton.
Made it clear that he would never engage me or asked me to be engaged in anything political.
That I was to run the the panic on that.
We shouldn't have made national security or defense policy that is Republican war one as democratic it should be an American defense and security policy.
And that's what Secretary Gates is doing with the President Obama now I think it's a terrific thing -- stand.
All right William Collins former secretary defense under President Clinton thanks very much -- would appreciate you coming -- Real -- more amazing interesting to -- that have a -- less spending.
It's hurting that went in term for spending and I knew that that we we talked Cody had to talk to.
The big box that's where I attended the real that I don't -- that Kelly's -- now we're not saying that what we're.
Maybe making me can't but Cavuto can actually can compete a little bit on on here.
On the feedback at all times the location when -- look better already and not to take anything away from Cody but I think that's.
That's mine that's mine.
-- He has a lot of moves -- I don't know.
This is me raw but on the guys thank you very much -- at Sacramento California.
Probably one of the more prominent on the national rallies they're better than 300 across the country as you can see.
They're using this really has an opportunity said this is America this is what has happened.
That is young man here he did not close I was doing the exact same basket we apparently.
Clearly what -- class -- no need to worry now.
But -- there you you keep you know hearing guys it's like a big Tea Party but what's going out of California is probably.
More urgent and more.
Endemic and what's happening at some of these other places because.
Californians are getting hit very very hard not only are all their taxes going up according -- surcharge on everybody's taxes here but the sales tax.
At eight and a quarter percent and in a lot of reasons -- bring it up to 10%.
-- -- Is the highest now in the country so this is sort of as one -- number you told me sort of a by.
Partisan rant a lot of these folks were very very upset even back in the Bush Administration when we first started these.
Financial and bank rescues so this is as much -- protest against big government.
Then anyone is initiating that big government again as much against -- big government and anything else.
And and as much -- sounds like about local and state government is about federal we get so hung up on what the federal tax structure -- but it sounds like a lot of people they're talking about.
The local and state taxes they're paying also.
We you know it's agency when you go to the tax that that's some of these other sites on what you realize -- -- tax burden that includes.
You know -- state and federal taxes sales taxes.
That burden has gone and grown to about 40% for the average American that it's where the average American.
Little more than thirty years ago it was a little north -- 10%.
So this is an inexorable trend that has gone on.
In Republican and democratic administrations and a lot of these folks keep pulling me not only because as you know -- big celebrity news.
But they keep -- in fits and notes that it remind me Neil.
This is a -- against our politicians of all stripes who'll have forgotten what this country is about.
The organizer of this particular San Diego that as mark.
-- Bakalar and mark Zuckerman and I'm -- I.
I'm thinking -- -- airport experience which was a nightmare but we won't go there but one of the things that you were trying to do leaders say.
This is not a political cause this is a grassroots -- what do you mean by that.
Well the truth is -- that we believe the politicians have used party politics partisanship and social issues to divide us or at least a decade.
We realize they've been doing that so that they can play hide the ball they can do whatever they want -- our money.
They can engage in irresponsible fiscal policies were so busy disliking each other and -- with each other we're not paying attention and we've had it with that we're done with partisan politics.
We're not talking about party were tired of all politicians who are not paying attention to -- our money.
All right -- if he gets it in my -- critical look behind me here is the State Capitol just a broad.
A Governor Schwarzenegger told his and then the legislators are in there and he knows I'm out here.
And it might they CNN I entire thing I don't.
I'll tell us.
Any anyway it is the history of marketing them back and he wanted to -- and got -- -- -- -- You're saying this has nothing to do with a Republican governor or whether legislators -- Danica -- -- you're saying.
Government is simply getting too big -- the local -- national level and that's what -- of these people approaches and I.
Yeah the average American is just burden too heavily I think you said it well you talked about the average tax burden on the average Americans over 40%.
Here in California they're punishing working families they just took -- the dependent child tax credit.
It's 200 dollars per child who does -- punish the worst it punishes the working poor and I'm listening to politicians as watching the news this morning and they're talking about how this is all about rich people.
And how the rich people need to be taxed more and there is no burden on the poor people well the reality is the tax burden.
It's falling worst on the working -- and we're tired of it and it's Republicans it's Democrats it's anybody.
Who is in the legislature that's not standing with the people we -- tired of them standing against.
You heard others in other news organizations say this is terrorist.
Populist fringe groups.
I would say look around -- I -- I'm looking around one look at it the due to the George Washington.
Here and he just let it.
That the realities if you -- it up Pocahontas and mark I don't know where they came from but it.
They make -- interesting here you know if you look.
Rallies here you're neighbors and friends and and people they use you know and that you would hang out -- and there aren't complaining about what the gov.
It's OK guys I'm sorry -- -- really quick you really have about ten seconds -- but how how do you think you would define success or how -- -- define success for what they're doing today.
Well it's not just the numbers that they gathered done a lot of them are saying about the pats -- degenerating and and we're still a couple hours away from this thing ticking off and there's already a good sized crowd here.
I'd love to say it's because I'm here yeah but the fact of the matter -- I think it's going on in that building behind me and these people are set.
And again these are Republicans these are Democrats these are young these are all.
These are people came dressed up to make a point and those who just came with their kids.
To make a statement and I think what they're trying to say is we love our country.
We don't like to refer to ourselves as fringe groups we are regular Americans who are concerned about the direction of this country.
And a lot of them are saying we don't like that directs.
And get enough -- -- Neil Cavuto -- mere presence scared of the G-7 governor Arnold.
-- have a good bubble military Gloria fox this is -- boxes throughout the day.
Hey listen guys thanks for joining especially new viewers and we're just -- on the board we are here every day at noon eastern time foxbusiness.com live and available -- podcast -- around.
-- have a good day everyone -- in live at foxbusiness.com.
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