taxes and deficits when she should be focused on how to create the best environment for job creation, job creation is the single most important matter facing america right now. not taxes, not deficits, not debt, and not health care. in july the unemployment rate ticked up to 8.3%. don't worry too much about. that look at the right side of your screen. 163,000 jobs were added to the economy. but 12.8 million americans are still without a job and looking for work and close to a third of those who are employed hold lower paying jobs with little hope of wage increases any time soon. now in a real storm the worst thing that can happen is you lose your home. in an economic storm, the worst thing that can happen is you lose your job. lose your job and you lose the tool that helps you prosper. if others lose their job, that keeps your wages low. without real job creation, america cannot prosper. here's why jobs are more important than debt and deficit and tax reform. when you have a job, you spend money. when you spend money, you create dema. when demand increases, more jobs are created to meet that demand. more workers means more people paying taxes that pay for the services that we all use. in short, if you boost job creation economic growth will follow. it always works that way. it doesn't always work that way when you lower taxes or cut debt. joining me now are stephen moore, editorial writer at the bau "wall street journal" who thinks cutting taxes cures all ills, mohammed arian. steve, three jobs reports to go. president obama needs to add an average of 105,000 jobs per month in order to say that he won back all the jobs lost during his presidency despite inheriting the worst recession since the great depression. that is very doable. i'm reading a lot of reaction to friday's 163,000 jobs added from republicans that is negative and flat out wrong. more jobs are needed. this is a positive report any way you slice it. you agree with me, right? >> i agree partially. this is the tale of two surveys. i don't want to get too much into the weeds. the survey that showed the increase in unemployment rate that, is a survey of households. that found that employment fell. so all i'm saying is that we're not out of the weeds yet at all. the only thing i agree with almost everything that you said. look, i'm a growth guy. i agree with you that growth solves almost all problems. it brings the deficit down. it puts people back to work. hopefully leads to higher wages. but when you went through that -- how the chain of how jobs help the economy, you left out an important part, ali. it starts with the employer. and my problem is that what we've done under obama over the last 3 1/2 years is really punished employers with taxes, regulations, and if you don't have an employer, you don't have the job that gets the chain started in the first place. >> all right. i want to bring in christine romans. tell us what we're talking b break down friday's jobs numbers for us starting with private sector hiring, the thing we count on, the thing that stephen is talking about, we need employers to hire people. >> if you didn't have the government holding you back, you would have done better in that jobs report on friday. 9,000 public sector jobs lost. but 172,000 private sector jobs created. you've had private sector job growth now for more than two years. something the white house keeps pointing out and millions of jobs created in the private sector the last couple years. this is the trend that people are fighting about. how we've come out of this horrible period of job loss and how robust or how not robust this recovery has been. here is the last month. you showed that earlier in the program. it's a lot better than what we've seen in the past three months. one of the things that was interesting also in this report, manufacturing. manufacturing jobs up 25,000. caught some people by surprise because of the headwinds from europe and there's been a lot of talk about manufacturing recovery in this country, at least in the last month. manufacturing jobs held in there. >> that's interesting. if you look back in the last 75 or 80 years, there are a number of things that have driven this economy, manufacturing, cheap credit, housing, technology. let's bring mohammed in. i think we all agree and everybody across the political spectrum agreed we need growth and job creation would create growth in america. what is the things that going to do that? let me put this in context. mitt romney claims that under his presidency, he can gain 250,000 jobs a month for four years straight. you need a driver to do that. that's not just general growth. >> correct. ali, the important thing to realize there is no killer act. there is no single thing that will create these jobs. what we need is simultaneous movement on a number of fronts, the functioning of the labor market, the functioning of the housing market, the credit market, infrastructure, fiscal reform. so it's a long list and there are two realities. the realities are as true for president obama as they would be for anybody else in the oval house -- in the oval office. first and foremost, a political system is not allowing us to converge to a common analysis let alone a solution. and secondly, the international environment is tough. europe is having a major crisis. so unfortunately, it's going to be rough going to create the source of jobs that mr. romney is indicating. >> let me ask you this, stephen. this is part that us from straits us from straifrustrates me. from 1996 to 1999, it is largely an impossibility -- you hear people saying we need 200,000 jobs a month to get back to where we were. that is not somethi that typically happens in our economy. it's not something that most economists are predicting will happen in our economy. it strikes me this takes this discussion to a strangely political and misleading place. >> yeah. i disagree. look, i think we can accomplish 250,000, even 400,000 jbz a monjobs a month. we're something like 12 million unemployed and 4.5 million jobs short of where we were in 2007. this is the pickup period where we should be seeing this really robust increase in job creation. we saw the levels of job creation in the reagan years. one of the things that you said about me was that i think tax cuts solve all ills. i don't believe that. but i do think that we have a tax system, the way that we're taxing is very contrary to growth. we reward debt over equity. we reward consumption over investment. and those kinds of things -- i think the rates are too high. we depend too much on the top 2% or 3% to pay too big a percentage of the taxes. so what i'm saying is if we restructured our system that i think democrats and republicans could agree on, you get more growth in the economy and get the jobs you and i want to see. >> again, no disagreement there. the issue is we see how long it takes to get anything done restructure the economy so we get four years of growth at 250,000, i think it's impractical. coming up, here come the storm. congress is not doing enough. here's a congress which could help and it's becoming part of the problem. if they don't act, is there anyone else, anyone else who can save from you the storm? 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>> no, you're right. you're absolutely right. not only is congress not able to take the measures that we need, but as you just pointed out, it actually pulls back the economy. if this fiscal cliff that you're talking about, let's remember, it's not just on the expenditure side, it's on the tax side if, this physical cliff materializes, we'll go into recession. >> yes. and this is -- you said this before. increasingly people are saying. this stephen, let me ask you about this. i want to go back to this graph where i indicated one of the best ways to get economic growthen that is get people working. they pay taxes. they create demand. demand creates jobs. you know, all of that kind of stuff. why don't we skip to that stage? let's agree that we think that a better tax system will benefit employers and employees in this country. we believe that, you know, lowering our debt and deficit is important. why don't we put all our energies into solving the job crisis. they had ceremonial votes on things that are never going to happen which wastes american's time. >> there is a big difference on the big disagreement about how you create those jobs. look, you know this is the one year anniversary of the debt ceiling debacle. it is also another important anniversary, the 100th anniversary of milton freedman's death, one of the great economists and supply side free market hero of people like me. and what milton freeman is famous for saying there is no such thing as a free lunch. if government spends a dollar, it has to come out of the private sector. i think government spending cuts right now are positive for the economy because it takes resources out of the government and gives it to the private sector and that's what milton freedman was famous for. >> but what if they don't spend it in a way that generates growth? here's our problem. let's say you're right. and there is some chance you are right. if you're right -- >> a good chance. >> -- if you're wrong we then go into a recession. >> look, we've been in a lousy economy for four years. and i would say we've tried it your way for -- and president obama's way for four years with this day luspending and debt in government. so i guess what i'm saying and what mitt romney and the republicans are saying is let's try something different. let's not, you know, what i love about the show is consumer finance oriented, oriented to the individual in the household. a household that has a massive amount of debt doesn't say you know what we should do is go out and incur more debt and spend more money. that's what the federal government does. >> he makes a brilliant point. we look at the ways in which we can increase demand and consumption and growth. yet guys like you watch countries that do that and say that is kind of what got us into this pickle in the first place. >> yeah. i think that this discussion risks going into corner solutions. that people can push into extremes. i suspect the three of us sat together and if the issue was only about economic measures, there wouldn't be much difference. yes, we need to have a better spending and entitlement process. yes, we need tax reform. yes, we need to reform the labor market. yes, yes, yes. the problem is a set of social judgment that's come along with this. what's our obligation towards the most vulnerable segments of society? what is the right contribution the way we should make that to society? this is where we get stuck. then we end up suggesting that the economics is really different. i don't think it s i think it's a social judgment that are different. >> and actually that takes a full circle to where i started where i said if i were somebody looking to hire somebody and mitt romney and barack obama were applying for the job, i'd want them both in because i think they're smart, creative guys. it is the politics that's different. it's also the politics that's ruining things and could send us into a recession. what is the solution from your side? i think we need solutions from both sides to say let's get out of our corners and come to the middle and find the thing that can allow us to move forward and create jobs and create growth? >> i agree with you. i think right now that i have been in washington for 25 years. i've never seen the differences between the two parties. it's like a grand canyon right now and something that frustr e frustrates you and me that they can't get together and reach an agreement about these big problems that we've known about for years and years. now, look, i fall on the side of i think some of the top priorities are tax reform and getting these entitlements under control so we don't have this long-term debt. i do think, i've said this before on your show, i think the economy is really prepped for a big expansion. there is a lot of money on the sidelines. we have low interest rates. the u.s. is still the hub of the world economy. i just think that a recovery is possible. but politics is ruining things right now. >> yep. you're right on that. i think that's the irony of this economy that there's a chance we can be in recession in six months. and there's a chance we can be growing faster and a lot of it, some of it lies with europe but a lot of it lies with congress and politics. stay where you are. stephen, always good to talk you to. thanks very much. stephen moorehead with the "wall street journal." by the way, you heard from these two guys. you heard from me. i want to hear from you. i say economic growth comes down to creating jobs. so let's table the talks and talk tax cuts and debt reduction for the time being and handle it laterment you want to debate me? tweet me. as you know, be ready. i'm reading every last one of them and i'm ready to do battle with you. next, your congress refuses to act to protect you from the coming storm. but there are other options. the federal reserve is one of your best hopes to avert the storm. but they're not quite convinced that you need the help. i'll ask our guest what they're waiting for next on "your money." this is new york state. we built the first railway, the first trade route to the west, the greatest empires. then, some said, we lost our edge. well today, there's a new new york state. one that's working to attract businesses and create jobs. a place where innovation meets determination... and businesses lead the world. the new new york works for business. find out how it can work for yours at thenewny.com. in here, every powerful collaboration is backed by an equally powerful and secure cloud. that cloud is in the network, so it can deliver all the power of the network itself. bringing people together to develop the best ideas -- and providing the apps and computing power to make new ideas real. it's the cloud from at&t. with new ways to work together, business works better. ♪ ♪ [music plays] ♪ [music plays] . probably think i'm a broken record with this economic storm warning. economic storm coming to our shores. i think i'm right. i could be wrong. you know what? if i'm wrong, nobody gets hurt f i'm right, you get a chance to protect yourself it from. congress which has to help you isn't doing it. but they're about to take a summer vacation. don't hold your breath for help from congress in averting a possible recession. there are other entities that can shelter us from the storm. one of them is the u.s. federal reserve, the central bank of the united states. i'll explain how. federal reserve chairman ben bernanke and company can act independently of congress and the president but this week they said they might not be willing or ready to do anything more until they are more certain that the storm is upon us. however, this group is making big moves over the past years and that is helped the recovery. they lowered interest rates. that's been the fed's traditional method of boosting the economy. when you lower interest rates, it makes money cheaper. it attracts people to borrowing that money. they build factories, employee people or borrow it and spend it, that creates demand. that creates jobs. but after dropping interest rates to historic lows, near 0% in 2008, well then the fed doesn't have any more tools. it has to get more creative. they started an unconventional program known as quantitative easing. the point is to put cash into the economy without just printing more money. and to keep interest rates very low to encourage lending and eventually as i explained spending. so the fed bought hundreds of billions of dollars worth of risky mortgage bundles from banks and treasury bills. the economic recovery eventually lost some steam. that's when so-called quantitative easing 2, qe-2 began. it was another huge round of buying with the hopes of putting more money into the economy which consumers and businesses would then spend. well, invstoesinvestors like th. it didn't have the desired impact on the economy. so september last year the fed unveiled a new plan called operation twist. by the way, operation twist got the name in the 1960s when the fed did something different and the twist was a popular dance. same idea here but a different execution. the fed, stay with me here, would sell short term bonds and buy long term ones. the idea is that while short term interest rates were very low, this would make long term interest rates low. that operation twist is still going on. mohammed el 5 lchlel-e rian is . does the fed have anything left to help shelter us from this impending economic storm? >> the best the fed can do, ali, is postpone the storm a little. it doesn't have the tools to o promote growth. it is hesitant to move too early. you saw that in the last meeting. they have every reason to move. but they didn't. why are they hesitant? because they're worried about what is happening away from us. in europe in particular. third, every time the fed does what you said they have done, they create a problem somewhere else. that's why the fed is hesitant because the best kit do is delay the storm. but it can't completely avert the storm for us. >> talk to me about the collateral damage. other than the fact if you're a saver this is a horrible environment for you. what is the collateral damage that fed can impose by creating more liquidity and more liquidity, i mean somehow putting more money into circulation, giving that to banks so that they are able to lend it out more easily? >> the fed is trying to take safe assets as low as possible in order to push all of us i