Washingtoninduced catastrophe, and frankly, it looks like a pretty good life. If all goes according to plan, 2013 could be a big turnaround year for the u. S. The start of a recovery that feels real. Most of it will have very little to do with washington policy, though your state and federal government will have to step in to make it happen. Let me explain. First, there is an energy boom under way in the United States right now. Fueled by the joint forces of hydraulic fracturing or fracking of natural gas out of shale and buy mo by more drilling for oil. Natural gas is increasingly cheap and abundant and not only used for gas in homes and businesses but for the manufacturing generation. Its not just about cars and homes, more domestically pro du duced energy will provide fuel in manufacturing goods. Combine them with rising costs in china and other countries and already high shipping costs, and you make made in america products more attractive to people abroad, and thats good. Home sales rising for the first time in years. Construction is start to go pick up. And historically low Interest Rates now averaging below 30 for a 30year fixed mortgage will only fuel a rebound next year. And remember, a house will still be the most important asset for most americans, so a rebound there helps americans feel better about their financial situation and ready to spend a bit of money. Stephen moore is a senior Economics Writer at the wall street journal as well as a member of its editor board. Michelle is a senior economist at rbs and daniel gross is a columnist and Business Editor at newsweek daily beast. Now were likely to avert the worst of a fiscal cliff, unleash some of those spirits. We have things going on that will lead quite possibly to an economic rise, start bg now. Am i wrong . I dont share your optimism about us not going over the fiscal cliff, but i also dont think it will matter. The coverage weve seen has been largely in spite of government, and energy, manufacturing, housing finally coming back. Housing starts up 40 in october year after year. Our exports are at our highest level ever. Our goods and products have a big audience overseas. And the American Consumer that was so down and out in 08 and 09 is back. Consumer confidence, highest level since prerecession. More people are working now at payroll jobs than at any time since january of 2009. Their in connection with acomes. Everybody is doing a better job at credit card debt, et cetera. Its a better shopping season. Stephen moore, you and i dont share views on everything, we share the view on wanting america to be prosperous. Weve been riding the same gloomy ride for a while. Do you join my opinion that the renaissance is appealing . Theres nothing more that i would like to see, and you are so right, there is so much right in america. You and i disagree pretty profoundly on a lot of policy issues, but when it comes to these industries you talk about, im right with you. I love the American Energy story. We can be the saudi arabia of oil and natural Gas Production, and dont forget coal. Weve got hundreds of years of that. We can and by the way, youre exactly right. Because we now have access to cheap and Abundant Energy in this country, that has real peripheral effects with respect to manufacturing. I love the manufacturing story because our electricity and energy costs are now lower than the rest of the world. I agree with you on housing. We havent built any housing in this country in five years. With these low Interest Rates, you could see a renaissance in housing continue. You and i agree on those things, but i do think policy matters, and its not just solving the fiscal cliff, in my opinion, its solving it in the right way. Who are you and what have you done with Stephen Moore . Stephen, hang on right now. Susan, let me ask you, any recovery depends on American Consumers. Heres the interesting thing. American consumers have been telling us for months that contrary to lots of other economic evidence and indicators, things are looking and feeling better for them, and guess what, michelle, they have never, ever been wrong. Every time the American Consumer says were going down, we go down. When they say things are getting better, they get better. They feel okay. And i think it gets back to just like you said, the housing turnaround. I think thats helped consumers feel much better about their own financial positions, and of course the fact that the equity markets through the summer, were seeing a rebound, certainly not within the last month but prior to that. These things coming together, i think, could certainly bolster consumer confidence. Although i will say in the end, so much of how the consumer will do is tied to jobs, and thats why you do get back to business, and thats why what stephen said is so important. How you resolve this fiscal cliff is incredibly important in terms of businesses not only having uncertainty removed but actually feeling like theyll be a better environment going forward. If that happens, then you can finally see more hiring and more investing, and ultimately thats what gets the economy going at a rate that we havent yet enjoyed so far in this recovery. Then, dan, are we feeling this way . You share the view that we are not were not done with the fiscal cliff. Were not going to suddenly solve our fiscal problems. We certainly havent been talking it up on the spending side. Weve agreed we havent agreed but there seems to be a Movement Toward the idea that some taxes will go up on the high end and the middle class wont see much of a tax increase. Are we justified . I think the typical consumer is not like you and me and the other guests there. The typical consumer makes about 60,000 a year for their family. Theyre not getting tax dividends so theyre not freaked up about those going up. Theyre concerned about their paychecks and paychecks have been more steady for the first time in several years, wages have gone up a little bit, and the biggest asset people own is a house. Its not just a volume of sales rising and construction but home values. And so with every passing week, a certain number of people who are under water on their mortgages are now in positive territory. And that contributes to what we call the wealth effect, people feeling more confident, theyre more likely to spend. Its procyclical. When things are going in the right direction, it forces to propel them further in the right direction. Stephen, you feel very strongly tax rates should go down and not up. These procyclical things, the idea that the price of your house might go up. If youre stuck with your house and you might be able to sell it, credit it with it being a little easier. Obviously youre more interested in the paycheck than the houses you pay on the paycheck. Do we see a little tax increase . Im not asking you to give up your position. You will always be here arguing that taxes should be lower. But does it outweigh your ongoing concerns that taxes are going to krip pel us . Yes, i think we can get through this and also if theres growth the tax rates wont be so high. I think michelle is right. It all starts with jobs. If people dont have jobs they cant pay mortgages, they cant buy anything. I want to stay on this optimistic theme, and maybe because its thanksgiving weekend, but i made this point before on your show. When it comes to america relative to the rest of the world, were the least rotten apple in the cards, right . That gives us a huge advantage in terms of investment, coming to the United States, building new business, and thats why im somewhat optimistic despite the fact i dont like the direction washington is heading. We were always the least rotten apple but it had a worm in it, and maybe this fiscal discussion will remove the worm. Michelle, what do they have to do to not return the worm to the apple, to get this feeling that we are doing better . Bottom line, i do believe we are talking about an economy, if we can do the right thing, to grow 2 and if we can get some longer term certainty in terms of a grand bargain and release the constraints in this economy that businesses face in terms of uncertainty, i think we could look at an economy that could grow better than trend in this economy. I look forward to it. I want to reach out and hug all of you. Its a useful time to at least point out the good things. We spend a lot of time pointing out the bad things. Well continue doing that as necessary, however. Dan gross, and Michelle Girard and Stephen Moore. Thanks to all of you. Coming up, we just touched on it, but global recession has chipped away at manufacturing jobs in the last decade. Those jobs are coming back. Dont forget to wear a tool belt to the manufacturing site, though. Well look at the manufacturing jobs of the future when we come back. You are watching your money. These smartphones come with a bonus 100 walmart gift card . Thats right. So its like i won. Sure. Oh my gosh i won i won [ male announcer ] get a 100 walmart gift card when you buy any android or windows 8 smartphone. Through december 1st. From americas gift headquarters. Walmart. Throughout our lives. One a day mens 50 is a complete multivitamin designed for mens Health Concerns as we age. It has more of 7 antioxidants to support cell health. One a day mens 50 . To support cell health. Take the steps to reach yours, everyowith usgoals. With real advice, for real goals. The Us Bank WealthManagement Advisor can help you. Every step of the way. From big steps, to little steps. Since 1863 weve helped guide our clients, so they can take the steps to help grow, preserve, and pass along their wealth. So their footsteps can help the next generation find their own path. All of us serving you. Us bank of green giant vegetables its easy to eat like a giant. And feel like a green giant. Ho ho ho green giant can i still ship a gift in time for christmas . Yeah, sure you can. Great. Wheres your gift . Uh. Whew. [ male announcer ] break from the holiday stress. Ship Fedex Express by december 22nd for christmas delivery. Made in america, its one of the keys to the american renaissance and its the backbone to the middle class. Or is it . The economy is adding jobs but the jobs the u. S. Is adding are not the same ones it has lost. Take a look at this, jobs in leisure and hospitality. One of the big growth areas in the last few years pay 13. 35 an hour. Retail pays more, 16. 43 an hour, but neither of these pay as well as manufacturing with an average hourly rate of about 24 an hour. Since january of 2010, the u. S. Economy has added 508,000 manufacturing jobs. Thats since the gij of tbeginn the recession. Thats a blip, by the way, compared to the last 25 years. Since 1997, take a look at this. The u. S. Has lost 5. 5 Million Manufacturing jobs. But at the same time americas manufacturing output has increased by 84 . Weve increased our output as weve employed substantially fewer people. Technology, automation. Scott paul is the director of American Alliance manufacturing. My friend will cain, cnn contribute toror contributor. Scott, we are producing more with less as an industry, but do manufacturing jobs look good . Well, and thats the real question, ali. I do think there is a good future for manufacturing jobs in this country. No, we wont have factories that are employing 10,000, 20,000 people like we did in the heydays of the 50s or the 60s, but there is a lot of reason to believe we could invest in manufacturing that we could actually add jobs on and that its a viable career path for young people today. We have an aging manufacturing work force. Secondly, production costs are coming way down in the United States. Youre seeing firms that are reshoring jobs, youre seeing lenovo open up a laptop manufacturing facility in north carolina. These are things you couldnt have imagined a decade ago. Let me bring will into this conversation. Will, listen carefully to this. President obama, as you know, during the campaign promised, and people said all sorts of things during campaigns, that hes going to create a million new manufacturing jobs at the end of his second term. He also wants to tax the rate on lower the tax rate on manufacturers, provide incent e incentives for companies that reshore or bring jobs back to the United States, and you say just the opposite of what scott just said. You say its a policy that takes us back to the 50s. What you just put up on the screen, thats the fly in the ointment. Weve seen a small renaissance in the last decade, and bravo. Manufacturing needs special tax rates, incentives, tax subsidies, so forth. Why does it need special treatment . Scott . There is a good answer for that, and yes it does need special treatment. First of all, there is no sector in our economy that has a higher multiplier effect. When you create a job at a factory, you create spinoff jobs and logistics that the cash going to the economy creates jobs at the grocery store. The opposite is hardly ever true. Second, we now know that manufacturing production in innovation are linked together. When those two are separated by an ocean, it doesnt work very well and thats what firms are discovering. In fact, some of the leading researchers at mit and harvard have included the same thing, that if you want to have innovation in an economy thats going full freight, you need to have production. And finally, lets not forget exports as well. Well get to exports in a second. Let me hold up an example, though. Apple, you could make the argument, managed to innovate very effectively and manufacture everything an ocean away. They have a very risky manufacturing strategy thats depending on 250,000 workers in china that are working in deplorable conditions, as we know. There is a smarter way to do it, and yes, it would be highly automated, but they could be employing thousands of engineers in california making those products. It wouldnt raise the cost of an iphone more than a couple of bucks, but the returns for our economy would be fabulous. It would be great. Heres the deal, scott. Heres why i disagree with you, and thats if this those benefits all exist as you laid them out, the innovation to manufacturing need to be geographically linked in order to be fully op pi timized, wone country itself figure that out . Why do they need the government to step in and realize those goals . If its there, it will be selfevident and the company will choose that path. Manufacturing is in a tradeable sector. We have global competition. Other sectors of the economy dont necessarily have that. Manufacturers do, and every other country out there has incentives to attract manufacturing, whether its the low road like china or the high road like germany. If were not in that game, were going to be sitting on the sidelines. Were going to lose jobs and weve seen that. Our manufacturing goods trade deficit has gone up. That might be true that some play dirty, why dont we as well. The risk is we encourage malinvestment. All these things made unique and special in the last 100 years in the economy, and thats innovation, thats resilience. Had little to do with subsidies, but rather a unique playing field. Lets not corrupt whats made dirty to keep up with the dirty players. Im not suggesting we play dirty, and i disagree with your economic history a little bit. Every successful history thats been incubated in the United States has been in yonurtured. Someone makes cars in the United States. Id like to see them made here. China, germany, japan, they all have car manufacturing. I think it should be smart, i think it should be sophisticated, i think it should be based on incentives and what the private sector wants. You can control that manufacturing. Thats why ford is bringing manufacturing of the fusion back to the United States. Its why gm is bringing back some of its functions from india to michigan. Its why youve seen lenovo bring laptop manufacturing from china. American manufacturers have a great work force, as youve pointed out, will, we have great energy costs and we can successfully compete if were playing that game, but weve got to play that game. Hold on, will, because until i get the 90minute version of this show where we can discuss where anybody in the world can supply manufacturing, and i know what youre thinking, that nobody should be doing it. I think we should do this again. Will cain said something very uncharitable about my suit, by the way. When youre taking pictures of ali velshi, make sure you note this is not Colonel Sanders suit. Its tan, not white. Fracking is putting americans back to work even as Environmental Concerns grow. Im going to squeeze some energy out of this topic. Right after we pay the bills. Your money is back after this. Wow. Nice place. Yeah. [ chuckles ] the family thinks im out shipping these. Smooth move. You used Priority Mail flat rate boxes. If it fits, it ships for a low, flat rate. Paid for postage online and arranged a free pickup. And im gonna track them online, too. Nice. Between those boxes and this place, im totally staying sane this year. Do i smell snickerdoodles . Maybe. [ timer dings ] got to go. Priority mail flat rate boxes. Online pricing starts at 5. 15. Only from the postal service. At meineke i have options. Like oil changes starting at 19. 95. My money. My choice. My meineke. For the first time in a long time, im seeing past the dangers of a fiscal cliff. And things are looking up in this economy, particularly when you look at the Energy Sector in the United States. A new report from the International Energy agency predicts that the u. S. Will become the Worlds Largest oil producer by 2017, temporarily surpassing sawed a rab ya. The same report projects the u. S. Will be nearly Energy Efficient by 2030. These are the terms you heard in the campaign talking about lower energy independence. That includes canada and