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Bulls & Bears
This week, Brenda Buttner was joined by Gary B. Smith of TheChartman.com, Tobin Smith of ChangeWave Research, Pat Dorsey of Morningstar.com, Todd Wilemon of NYSE Euronext, and Democratic strategist Sarah Flowers.
President Obama Says His $900 Billion Health Plan Won't Add to Deficit; Is That Possible?
Gary B. Smith, TheChartman.com: It’s not going to be a dime; it’s going to be a dollar. Health care will not cost $900 billion, but $9 trillion. For example, Medicare costs almost ten times as much as anticipated. Veteran’s Hospitals serve half the people it once did, but at twice the original budget. The Post Office - which has a monopoly - lost $9 billion this year. Anyone who thinks Health care will cost less than ten times the proposed amount is living in another world.
Sarah Flowers, Democratic strategist: Here are some facts about Health care: President Obama will not sign a bill that adds to the deficit. Reform will create more efficiency, by getting people out of the E.R.s and seeing primary care physicians instead. Also, there will be a new cash flow from the expiration of the Bush tax cuts. Right now, there is no incentive for insurance companies to cut costs.
Todd Wilemon, NYSE Euronext: Remember, the proposed plan would not go into effect until 2013. Why not start to squeeze out inefficiencies now to see if the President can truly cut waste in the Health care system? If he is successful, he will have gained credibility with the American people on his vision for reform.
Tobin Smith, ChangeWave Research: Studies have shown that we could take 7-8 percent out of Medicare and Medicaid by mandating proscriptive work on our paying system. If we taxed benefits, like compensation, we could drop utilization by 10 percent.
Pat Dorsey, Morningstar.com: This is being looked at the wrong way. Cost savings must come first, but not as the way to get to increased coverage. Until we can align the prices of health care with the actual costs of the services, coverage must come second. The cost curve is unsustainable the way it is currently.
New White House Manufacturing "Czar": Job Creator or Killer?
Tobin Smith, ChangeWave Research: No, Ron Bloom is not the guy to create jobs. Five different studies have shown that the job structure here costs 25-30 percent more than in other parts of the world, forcing jobs overseas.
Sarah Flowers, Democratic strategist: Ron Bloom has worked both for Fortune 500 companies and labor unions, and has a history of bringing both parties to the table to work together. We are a bit disparaging in the way we talk about labor unions. These are the groups fighting for better pay for workers, especially women who make $11,000 more on average than their non-union counterparts.
Gary B. Smith, TheChartman.com: Across the board, union companies have lower profitability and less efficient use of resources when compared to non-union companies. From 1973 to 2006, almost every manufacturing job lost came from a union company. Maybe this is the greatest union guy in the world, but unions cannot compete with their non-union rivals.
Todd Wilemon, NYSE Euronext: Unions are an anachronism. At the start of the 20th century, we needed them for collective bargaining. The problem now is the union work rules—making workers inflexible, unresponsive, and unproductive. With union pay contracts, workers have lost their incentive to work harder and perform better.
Pat Dorsey, Morningstar.com: It is difficult to say whether unions are bad or good. However, there has been a shift in the job base of our country from manufacturing jobs to service jobs and that will happen regardless of whether Ron Bloom or Mother Theresa is in the White House. We are still retaining high value manufacturing jobs in this country, it’s the low value manufacturing jobs that are going overseas; and quite frankly, they should.
Dow Soars 45 percent From Financial Meltdown Low: What's Next?
Tobin Smith, ChangeWave Research: We are going up, but we’re still not back to where we were on September 14th of last year. Part of the recovery is from the realization that we are no longer heading into the second Great Depression. The other reason is because money market accounts are only giving people .25 percent in interest, which is driving people to invest in the stock market in hopes of getting a better return.
Gary B. Smith, TheChartman.com: President Obama has said time and time again that he is a big proponent of capitalism, but his actions say that he is almost the enemy of capitalism - and thus, the enemy of Wall St. While he will say that we are all in this together, his true message will be that we are lucky the government bailed us out. The consumer is now starting to put money into the market.
Todd Wilemon, NYSE Euronext: We are going sideways. Maybe a pullback over the next five weeks and a small jump in late October or early November that will take us through the summer.