tv Wall Street Journal Rpt. NBC November 19, 2012 12:30am-1:00am PST
fiscal cliff, compromise and the odds of the deal happening. america's energy independence and the environmentalist that says fracking is here to say. how do we make it safe? we will drill down to get answers. and many call him the next steve jobs. you are probably already using something this quiet genius already invented. the "wall street journal report" begins right now. >> this is america's number 1:00 one financial news program, "wall street journal report." now maria bartiromo. here's a look at what is making news as we head to a new week on wall street. corporate america had a strong message for president obama this week. ceos of a dozen of america's largest companies met with the president and warned that washington must reach a deal to avoid the fiscal cliff. the president also sat down with congressional leaders and officially began negotiations. if congress doesn't act taxes on income, dividends and estates
will go up and spending cuts will kick in january 1st. this week, i spoke to allen simpson ander skis bowl subpoeimpson anders skin bowls. >> you can't spend or grow your way out of. this grab hold it will be a rocky road. >> you say closing the loopholes alone brings a trillion. >> if you are willing to wipe out all of them and that may not be feasible but you can broaden the base, simplifying the code. >> you are worried we are not going to get a deal. that is how i felt. >> i think there is one-third probability we will get a probability in lame duck and one third we will go over the cliff and reach a deal right afterwards but there is a one-third chance that we won't and we will end up in chaos. >> for weeks and months we felt no one could be dumb enough to
see it would let it happen and now they see it could happen and now they finally shore it up. they were playing it all to be done. no one thinking it could happen, merry christmas. >> stocks are down 5% since president obama was re-elected. retail sales down 3/1 on the month. autos hit hard and likely superstorm sandy slowed business at the end of the month. he's a rare breed, a wall street insider who has the president's ear. what is president obama thinking these days? what can we expect of the fiscal cliff negotiations, robert wolf is an outside adviser to president obama. former president of investment banking at ubs and ceo of the firm 32 advisers. great to see you. >> great to be here, marie a ya. >> thank you for joining us. you are a rare breed. a top wall street executive but off close relationship with the
president. talk to us about this drama over the fiscal cliff. are we still in the posturing stage? how does this play out? >> i hope it plays out with a deal the. i would have probably put it around 80% a deal, but i would have sliced it this way. i would say 50% of that 80 is they come up with like $60 billion, which is six months of the ten years of the 1.2 trillion sequester. >> okay. >> okay. so something like -- >> a drop in the bucket. >> a drop in the bucket. you could do that and if you were doing that you would have to say okay and we are going to pass the debt ceiling. that gets you to march enor april and it forms a good basis. >> what do you think of the reports out on friday that the white house is in advance talks to replace the sweeping cuts set to begin in january with a smaller package. are they in advanced talks especially delaying the harder
decisions until in to 2013? it feels like the president's digging in. he doesn't want to give on this not extending the tax cuts to the highest earners and wants to take away the loopholes, as well as raising taxes. >> that all-in approach i think is going to get tough to get the votes, the all-in approach. i understand the president feels you have to tax the 2% because if you really look at the detail, if you don't extend it for the top 2%, that gets you about $750 billion over ten years. and if you do some of the itemized deductions that can get you to the trillion. >> he wants 1.6 trillion. >> right. i'm not sure, you know, that he has a chance of getting 1.6. that could be difficult. >> maybe it is a negotiating tactic. >> it could be. i think they all play a little poker. >> exactly. i'd rather be in the boat where they go with the clinton era
taxes from 39 to 5.6 than have the idea of tax deductions cannot be itemized greater than 50,000. because the truth on that is greatest hit on that is charity. it's half of it. >> people will give away less. >> i they is not where this country is. the second part is mortgage deductions and i don't think that is necessarily good for the country and it hits state and local. those are the three items itemized deductions hit i'm not a fan of that. >> do you think the president feels he has a mandate. basically he said, look the majority of people agree with me or do you think he will say, i have to give just to show that i'm going to give the way the republicans will try to give, by revenue? >> it is a couple different questions. i absolutely think he has a mandate. he did win. i don't think it's one of the scenarios where you do it my way or the highway. i think just the opposite. i think we had a lesson learned in 2011 on the debt ceiling that
you need both sides of the table. i think the president realizes entitlement reform has to be on the table, especially with medicare. and so there's no question from where i sit that yes, i think he has to stick to his guns on some of the things he believes in and what he's campaigned on but i think he understands for us to get to 4 trillion taxes are probably not more than 25% of that. >> right. how are these meetings going? the president has been meeting with corporate leaders this week. he met with labor leaders the day before talking about the fiscal cliff. what's coming out of these meetings in your view and what do your business colleagues say in terms of how he's conducting the meetings. a lot of people would say the president is not listening. we don't have a voice at the table. do they have a voice at the table? >> what's good about this is the private sector wants a voice at the table. one mistake we made during the
debt ceiling is we were relatively quiet. this is a time we can't be quiet. so one, i do think the private sector will have a larger voice. i think that the house and the senate and the president wants to hear from the private sector. two, there may be different ways to skin a cat. there's not just one answer. we know the number is 4 trillion but there are other answers. as far as the meetings going good, i'm going down there to the see valerie jarrett with a group of other people and i hear the meetings are going well. there is good give and take. i have not heard about theny meetings with congress let but the business leaders that i heard from said it was a good two way and people know entitlement needs to be on and business leaders say they understand revenues need to be on and most of them say i'm happy to pay ging to the clinton era 39.6 as long as we know where the money is going.
i don't hear the business leaders screaming about tacks. >> what i am hearing is yelling with and screaming over toward about uncertainty, lack of knowing where the tax rates will be in 2013. the market is down 5%. since the election the market is down 5%. is that a fair statement? people are worried about this uncertainty and lack of clarity of where their tax rates will be next year? >> i don't think that is that fair. i think the market is down 5% for a few reasons. one is europe showed it is going back in to a recession. two you had a change in china and leadership. we don't know necessarily what that means. three, yes, the fiscal cliff is part of it but there's a good chance that people think taxes will likely go up or deductions go down. and a lot of people are selling because they have gains. i mean, so -- >> year-end positioning. >> year end positioning. the other thing is i don't want to be naive. a lack of clarity is not good. >> we will leave it there. great to talk to you. >> thank you, marie.
next we will take you behind the big business of fracking. capping in to america's natural gas resources. what are the economic and environmental costs? and later the california entrepreneur behind twitter. how jeff dorsey changed the way to communicate. now he is looking at how you use money. as we take a break look at how the stock market ended the week. back in a moment p. p. . [ female announcer ] there's one thing dave's always wanted to do when he retires -- keep working, but for himself. so as his financial advisor, i took a look at everything he has. the 401(k). insurance policies. even money he's invested elsewhere. we're building a retirement plan to help him launch a second career. dave's flight school. go dave. [ male announcer ] when the conversation turns to finding a financial advisor who's fully invested in you, turn to us. wells fargo advisors. together we'll go far.
and you pick the price that works for you. great. whoa, whoa, jamie. watch where you point that thing. [ mocking ] "watch where you point that thing." you point yours, i point mine. okay, l-let's stay calm. [ all shouting ] put it down! be cool! everybody, just be cool! does it price better on the side? no, it just looks cooler. the name your price tool, only from progressive. call or click today. i got you covered. thank you. oh, you're so welcome.
tapping in to america's natural gas reserves, is it going to mean an energy independent future and is it safe? we are drilling down for answers with fred krupp the president of the american environmental defense fund. thank you for being here. they said the u.s. will be the largest global oil producer in
2020. this amazing. tell about the sea change in global energy floes today. >> it is great to have more american-made energy but not good enough. we need to modernize our energy grid. it's not good enough to be the best at producing energy the last century. we will spend a couple trillion dollars modernizing the grid. the question is how we do it. hopefully, we do it in a way that protects us from cybersecurity risks, that makes the grid more resilient from storms, that facilitates energy efficiency and renewable, cleaner energy in the future. >> it's interesting. i think we all want to be energy independent. we want -- and we know the country is rich in natural gas. for the most part people don't want it in my backyard. former ge ceo jack well. compared it to the internet boom in terms of job creation and productivity increases. how do you balance it?
how do you balance the economic boom we could see of fracking with the environmental impact? >> look, the economic advantages are obvious. we've created hundreds of thousands of jobs because of cheap natural gas. electricity prices are alow because of cheap abundant natural gas but the environmental impacts, if you go to the communities where the gas is produced are also obvious. i visited south of pittsburgh a little town called washington where a woman who told me she had to abandon her family farm because of the fumes from a neighboring well made her kids sick. she was living out of her car. we need to put in place the strong rules to allow us to do the fracking but do it safely so that no one has to their health for cheap energy. >> this is a horrible story and i'm glad you brought it up. we have seen stories of people
lighting matches by the water running. small communities impacted by buyouts. what are the most damaging side effects to frak something. >> well, there are risks to water contamination. not so much through the fractures, but through spills on the surface or leaks through the drilling shaft. also, what happens to the waste? where do you get the water? if you get all of this water out of a big river, not much impact. if you take it out of a trout stream in an arid region, that's a big problem. then we have the question of global warming. because while everyone knows that natural gas, when it is burned is cleaner than burning coal, when it escapes from the wells or the wipes unburned, it is 70 times more dangerous than carbon dioxide the first 20 years wchl have to close the leaks in the system and use it
as a fuel. >> what can be done to bring the groups together? to ensure we are doing it safely in the most efficient way possible? >> we have to find common ground, how to do it safely. >> can you do it safely. >> i believe you can minimize the risks. the environmental defense fund has partnered with southwestern energy, and together we've developed a model rule for state governments to use to make sure that the wells are drilled safely so they don't leak in to the surrounding aquifeaquifer. that served as the basis for government casiiscasish. we are making progress with the energy companies who realize it is in their best interest if everyone is brought up to a level that this is done safely. >> fascinating. good to have you on the program. thank you very much. very insightful and we
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last week at a gathering of influential technology ceos i spoke to jack dorsey about his rapidly growing company square. he's trying to put your money where your mobile is. >> when i was 8 i had a business card that said jack dorsey consulta consultant. >> he hopes his mobile payment startup square will change the relationship you have with your wallet. >> money, as a concept, as been with us for 5,000 years and started with us trading seashells and touches every person on the planet. at one point in every person's life some person feels bad about it. it feels like a burden. how do we remove the burden and make it feel like something that gets them to an experience they want to have or a service or product they want to buy? >> talk to us about square and what it is enabling. >> less people are carrying cash. they are not carrying checks
anymore. they are carrying plastic cards everywhere. square was a device you plugged in to your device, iphone, android and it would accept cards and the money would go to the bank account the next day. >> it is a great idea. because of that you have other companies nipping at your heels. you have intuit and pay "discovery" pal wanting to do what square does. >> our focus has been not around just payments but the entire buying and seing experience. if you look at payments it is just the payer and the payer is just someone who do a mechanical thing. we want to remove the mechanics of payments. we started with individuals but we want to build a utility that scales from someone wants to sell something at a yard sale with a credit card to the largest organization in the world and starbucks validated that last week by bringing it to
every one of their stores in the united states. >> walk us us through how it works. i go to starbuck and i say it is maria and i want a latte? >> to start you download square wallet for your phone and find the starbucks in the directory and go up and say i'd like a double tall latte and show your phone to the scanner. a quick beep and they hand you your coffee and you walk away. smpl simple. >> i paid the raj register. >> the cash register is moving more and more off the counter in to the buyer's hand. that's the most amazing thing. the buyer is in complete control of the transaction. the payment device is not leaving their hands at all. that's the most secure transaction you can have. >> so you also cofounded twitter which has sort of changed the world in a different way. is there a thread between twitter and square in terms of what is similar and what they are both tapping in to?
>> i think the common thread is simplicity. twitter made it simple to have a conversation with the world, just by updating what's around you and sharing what you are seeing or experiencing. the entire world, and participate in that and have a conversation with you. and square really simplified getting in to commerce. so both have simplicity and broad utility where an individual can come to each service and really make it their own but also the largest organizations in the world like starbucks or the u.s. government can broadcast their message and make it feel smaller and more personal. >> where are you looking to take square. it is valued at $3 million. what's the exit strategy in? how do you know when it is time to go public and open it up? >> you can think of an i po as an exit strategy, a goal or as a milestone. we think of it more as a
milestone. you don't stop there. you just keep going and going and building and building. both want to build something that is sustainable and lasts beyond one generation of the human life. and something that really makes a deep impact in the world. >> it says here it was full of innovations about communications and square about the exchange of payments. what's the next wave? >> i think the two major trends you have seen the past 40 years is learning from these super computer isolated examples to actually having the same technology in your hand. it allows us information faster. it allow us action faster and surfaces both in a much more compelling relevant way. so i believe that people can really focus on what is most meaningful. and the technology disappears and is added where we want it to be. >> people have called you the next steve jobs. is that hau how you see
yourself? >> not at all. steve has been a great inspiration for our industry, but the best thing he ever said is you have to follow your own path. you have to make your own path. you have to reinvent yourself ofand innovate. we're taking our own path. >> my thas to jack dorsey. up next on the "wall street journal report," we will look at the news this upcoming week that will have an impact on your money and hope you find us on facebook/maria bartiromo. they've been committed to putting clients first. helping generations through tough times. good times. never taking a bailout. there when you need them. helping millions of americans over the centuries. the strength of a global financial leader. the heart of a one-to-one relationship. together for your future. ♪ nt to improve our schools... ... what should we invest in?
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for more on our show and our guests, check out the website and i hope you will follow me on twitter and google+. look for@maria bartiromo. look for the stories that may move the market and impact your money this week. earnings reports from hewlett-packard, loews and best buy among others. monday the nation's realtors will release the number of existing homes sold last month. on tuesday the housing starts number. residential units that began construction last month federal reserve chairman will speak to the economic club of new york on tuesday. thursday is thanksgiving. happy turkey day, everybody. all markets are closed for the holiday. on friday, it's here. can you believe it? the kickoff to the holiday shopping season will begin the day after thanksgiving. in some cases on thanksgiving night. that will do it for us for today. thank you for being with me. next week, instead of leftover turkey, how about joining me for