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Bulls & Bears
On Saturday, January 23, Brenda Buttner was joined by Gary B. Smith, Tobin Smith, Pat Dorsey, Eric Bolling and Julia Piscitelli.
Some Democrats Now Pushing to Extend Bush Tax Cuts; Good for Jobs?
Gary B. Smith, TheChartman.com: I think we're finally beginning to see some sanity creep into the Democratic Party. Maybe the idea of keeping the tax cuts in place is creeping into the Obama administration. Tax cuts work! Throughout history, they have helped the country get out of recessions. You can look at the difference between states that raise their taxes versus those that lower them. The states that lower them are almost always in a better fiscal condition.
Julia Piscitelli, Democratic strategist: The Bush tax cuts are what helped get us into the problems we have now. We should not be focused on cutting taxes for the wealthiest people in the country. They can pay their fair share. The wealthiest Americans would be paying taxes at the rate they were under Clinton. There's no reason they can't pay those tax rates now so that money can be used by the government to create jobs. The money that can be raised by letting the Bush tax cuts expire should be used to fund President Obama's jobs bill.
Tobin Smith, NBT Media: Only about 40 percent of Americans pay federal income taxes, leaving about 60 percent of the country that pays little to no federal income tax. The top 5 percent of earners in this country pay about 95 percent of all federal income taxes. If the government literally took all the income of that top 5 percent, it would only raise another trillion dollars or so. Hitting rich people up just doesn't work long-term. If we really wanted to create jobs, the government would make a two-year moratorium on capital investment taxes.
Eric Bolling, Fox Business Network: So far, the stimulus money has spent $413,693 on average to create a job. Jobs are going to start going overseas. If individual and corporate tax rates start getting too high, then businesses have every reason to start looking abroad. There are plenty of countries that would love to have access to our workers.
Pat Dorsey, Morningstar.com: I don't think a government fiscal or tax policy does enough to help or hurt an economy. The U.S. economy is just too big. You have asset bubbles, like with the internet, credit, housing, etc. and suddenly there's a crisis in confidence that ends up hitting the economy as a whole. When businesses have the confidence to invest, and the capital to do so, they will invest. Unfortunately that takes time, and politicians don't have much patience. But the private sector will recover on its own from the recession.
Push to Steer Your 401(K) Money to the Government?
Tobin Smith: This is a sly, astute money grab. If you forced people to put say, 25 percent of their 401(K)s into government bonds that would effectively be there forever, people would be purchasing these bonds at one of the most expensive times they've been at in recent history. You'd be locked into extremely low yields. Meanwhile the government gets to acquire a huge load of money at a cheap borrowing rate.
Gary B. Smith: This is just a way for the government to dig further for more money from taxpayers. This is getting billed as a safe investment for people saving for retirement, where essentially consumers would be purchasing more U.S. debt. But it doesn't seem like the potential purchases of these Treasury bonds would keep up with inflation. You could be get a 2 percent or 3 percent return, but inflation could easily go higher than that and eat up any money you might be making.
Julia Piscitelli: This is just another option for people planning for retirement. There are a variety of ways retirement planners can invest their money. Allowing people to easily make Treasury bonds a part of their retirement plan isn't a bad thing. Having a safe investment as a part of your retirement portfolio isn't a bad idea, especially if you're not very market savvy.
Eric Bolling: The government is trying to sell the American taxpayer on the same deal they gave to the Chinese government. The U.S. government keeps putting hundreds of billions into companies like AIG, GM, Chrysler, Fannie, Freddie, etc. and our tax dollars just evaporate. This is just a scheme so the government can get more money from Americans to spend recklessly.
Pat Dorsey: What's unfortunate is that people keep looking back with hindsight realizing the rate of return with bonds outpaced the rate of return of stocks over the past decade. So people are thinking bonds could be a safer investment that gets them more money. But that opportunity is over now. Stocks are currently relatively cheap right, meanwhile bonds are expensive.
Giving More Aid to Haiti by Taxing Wall St. Bonuses?
Gary B. Smith: I'm totally in favor of the humanitarian aid the U.S. is giving to Haiti in the name of charity. But going after specific industries to pay for aid just smacks of the latest populism. Why not go after the guys at Google, or Apple, or the Unions who are also flush with money. Or maybe go after George Clooney who had a great year. When you begin to target specific industries, that's absolutely the wrong thing to do, no matter what the cause. Wall Street is just the easy target right now.
Eric Bolling: Wall Street is a very easy target. We still haven't spent hundreds of billions of stimulus dollars. Why not devote some of that money to Haiti? I think you could get some pretty popular support for a move like that. Targeting and going after industries you just don't like isn't the way to do this. We should spend money we already have sitting around and ready to go.
Julia Piscitelli: Taxing Wall Street bonuses is a good idea. I don't see why you couldn't devote some of that money to long-term relief efforts in Haiti. The U.S. government and corporations have been extremely generous, but it's going to take more money than what's gone in so far. I don't see why you couldn't devote some of the money from this new tax on banks being proposed by the Obama administration, and use it for reconstruction efforts in Haiti.