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Bulls & Bears | Cavuto on Business | Forbes on FOX | Cashin' In
Bulls & Bears
This past week's Bulls & Bears: Gary B. Smith, Exemplar Capital managing partner; Tobin Smith, ChangeWave Research editor; Pat Dorsey, Morningstar.com director of stock research; Scott Bleier, HybridInvestors.com president; Charles Payne, Wall Street Strategies CEO, and Laura Schwartz, White House Strategies principal.
Trading Pit: Will a Pelosi-led Congress Attack Corporate America?
Corporate America is at odds with much of what Nancy Pelosi is pledging to do if she becomes Speaker of the House: repealing tax breaks, hiking the minimum wage, and taking on drug companies for prescription prices. Will a Pelosi-led congress be anti-business or pro-business?
Charles: A Pelosi-led congress would be anti-business. Nancy Pelosi would be such a disaster. She's very dangerous. It wouldn't just be drug companies that suffer, but also defense and energy companies. America, if you vote her or the Democrats in, you're going to have higher gas prices, fewer cures for illnesses, and less money in your paycheck. I hope people realize that.
Laura: Americans already have less money in their paycheck. We've got to turn this around. Nancy Pelosi is not going to hike taxes immediately. She does have an aggressive plan, like the rest of the Democrats, for implementing the 9/11 recommendations, hiking the minimum wage, and negotiating lower priced drugs with Medicare-related policies. But, you know what? There are other places to look in our economy and in our government before increasing taxes. Take a look at the IRS, for example. There is $300 billion out there that is uncollected. When you look at some of the policies, like investing in alternative energy, perhaps she would roll back some of the tax credits for big oil. As a last resort, evaluate if what has to be done will take away from the economy and then go from there.
Gary B: I fully agree with Charles. If an American corporation rolled the dice and built up capital and infrastructure and spent millions of dollars on drug research, then finally hits the jackpot, Nancy Pelosi would want to take all that away. She would come in and say, "You've made too much money. Let the government take it because we know better. Forget about all the risk you took. We'll give it out where it is needed." This woman would stop big companies from outsourcing jobs, therefore forcing them to pay higher union wages, which would make companies less competitive. Nancy Pelosi would be a disaster for big business.
Pat: I don't think Pelosi is the danger that everyone is painting her as, nor do I think Republicans are as much of a friend of big business as the Democrats want to paint them. The truth lies somewhere in the middle
Tobin: First off, "pay as you go," is code for "let's raise more taxes and pay for bigger things." She presents herself as a Clinton-ian Democrat, but if you look at her votes and the way she acts, she's not. This woman can raise money, but she is a wolf in sheep's clothing. Her goal is to take money from the people who earned it and give it to people who haven't earned it. That's her strategy, and it has never worked.
Scott: Nancy Pelosi is going to try to be against business. She's going to try and turn back the clocks, but she won't be able to. She doesn't have a firm mandate. If Pelosi does become Speaker of the House, she will have a very small majority. Her job is not going to be to bash business, although she will try. Her job will be to get her candidate into the White House in 2008.
Wall Street's Prediction: Gop Will Win Elections!
It's just a week and a half until Election Day, with Democrats leading in the polls. Does the poll on Wall Street tell a different story?
Charles: The poll on Wall Street is the best poll out there. In the presidential election of 2004, everyone was predicting John Kerry to win, but Wall Street predicted President Bush. The market is so strong right now, there's no way it could be suggesting that Nancy Pelosi will be able to take over the House with her crazy ideas. I think the GOP will pull a big upset.
Pat: I have never seen a shred of data that consistently shows the market predicts elections better than a poll does.
Gary B: Wall Street is saying that it will be fine if Republicans maintain control of Congress. It is also saying that if there were a split House and Senate, that would be fine too. In fact, that might be better for the market, because it could put a halt on all this legislation and spending. That would be fantastic for the economy. The market would not like it if Democrats win both sides of Congress.
Laura: There's a real difference between Wall Street and Main Street. Middle America is saying that they want change and they want Democrats elected. This does show that middle America is hurting right now. When the Republicans are out there campaigning, they keep saying taxes will be raised, while Democrats prefer targeted taxes. Isn't it amazing how the Dow kept going up as the Democrats were leading in the polls? The top 1 percent of this country has seen a 12 1/2 percent rise in their income, while 90 percent of the bottom half of this country has seen a decline in their income, when adjusted for inflation. The middle class is not doing so well.
Tobin: This whole class warfare thing gets on my nerves. If you look at the actual cash flow in the average home in America, that cash flow is up because taxes are down and interest rates are lower. I agree that everyone is paying a little more for health care and other items, but the cash flow is up. If you take the cash away, that's when the market goes away.
Scott: The market right now doesn't care who wins in the midterm elections. The mandate is going to be split government. Whoever wins is going to only win by a little bit either way. The market will love a split government.