DISCLAIMER: THE FOLLOWING "Cost of Freedom Recap" CONTAINS STRONG OPINIONS WHICH ARE NOT A REFLECTION OF THE OPINIONS OF FOX NEWS AND SHOULD NOT BE RELIED UPON AS INVESTMENT ADVICE WHEN MAKING PERSONAL INVESTMENT DECISIONS. IT IS FOX NEWS' POLICY THAT CONTRIBUTORS DISCLOSE POSITIONS THEY HOLD IN STOCKS THEY DISCUSS, THOUGH POSITIONS MAY CHANGE. READERS OF "Cost of Freedom Recap" MUST TAKE RESPONSIBILITY FOR THEIR OWN INVESTMENT DECISIONS.
Bulls & Bears | Cavuto on Business | Forbes on Fox | Cashin' In
Bulls & Bears
On Saturday, March 13, Brenda Buttner was joined by Gary B. Smith, Tobin Smith, Pat Dorsey, Joe Battipaglia and Steve Murphy.
Who's Right on Health Care Tax Hikes: Democrats or 78 Percent of Americans?
Joe Battipaglia, Stifel Nicolaus: The American people are absolutely right. Unlike Congress, they've actually looked at the language of this legislation. The Medicare tax rate is going up along with additional taxes. They're going to get more revenue by taxing dividends and capital gains, which play a big part of income for middle class families. The middle class will absolutely be stuck with the bill on this thing.
Steve Murphy, Democratic strategist: The middle class is not going to pay most of the cost of health care reform. Yes, they will pay a little bit, through new Medicare taxes. But we have to fix Medicare anyway. There is trillions of dollars of unfunded liabilities in Medicare that will affect everyone in the country. Primarily though, health care reform will be paid for by the wealthy through various surtaxes. And that's the way it should be.
Tobin Smith, NBT Media: There are a lot of bad assumptions in all this. The worst one is that there are enough rich people to go around and pay for this thing. The fact of the matter is that tax revenues from the rich peaked in 2007. Since then, they're down about 25 percent or so. And they won't come back to 2007 levels for some time. The major sin of this whole crazy idea is that we can have just a small amount of people pay to overhaul health care, and it just can't work.
Gary B. Smith TheChartman.com: The CBO sees that 25 percent of people making under $200,000 are going to see tax increases. This rests on the assumption that health care reform will actually come in at budget. But like every other major government program, from Social Security to Medicaid, to the Big Dig, all these things run way over budget. The government just can't efficiently run anything this massive. We can't expect current cost projections for reform to hold firm over the long-term.
Pat Dorsey, Morningstar.com: If you make the mistake of expanding coverage without fundamentally reforming the health care system, it will cost tremendous amounts of money which has to come from somewhere. Our current system is utterly broken. We have to scrap fee for service, and start paying and incentivizing outcomes. That would be true health care reform. And unfortunately we've wasted a tremendous opportunity to fix a system that's fundamentally broken.
Government Dependency Explodes As Number of Taxpayers Shrinks
Gary B. Smith: Something has got to crack soon. I think we're already faced with the same financial problems Greece has been dealing with. We have a $1.6 trillion deficit. Our debt is almost equal to our GDP, nearly $14 trillion. The Tax Foundation released a report saying we'd have to raise taxes on the rich by 242 percent this year just to pay off this year's deficit! And we'd have to keep those rates in place in perpetuity to pay off the debt. In terms of Greece, the sad part is that most of the people you see rioting are government workers. In our country, the sector with the lowest unemployment rate is the government.
Steve Murphy: Right now, we're paying for the dramatic expansion in government under George Bush. If we're like Greece, we're like Greece under Alexander the Great. What we've ended up with is too many military obligations. The biggest problem we have right now with the budget is the Iraq war and properly paying for it. Not to mention, cutting taxes at a time we were fighting two wars. Do you actually believe we didn't need the stimulus to prevent the economy from going into a depression?
Tobin Smith: The average person getting government assistance gets $26,000 a year. Today, there are only about 20 to 30 million people in the country who pay any significant level of taxes. In Greece, only about 5 percent of people pay the vast majority of the taxes. The U.S. is all too much like Greece when it comes to people getting government benefits or paying little to no taxes.
Joe Battipaglia: Unfortunately, states in the U.S. have about a $170 billion hole they have to cover, and even worse, they're grabbing for a tax fix. Their biggest problem is that they can't find a good source of revenues. Why? Because tax rates are already too high, and they're pushing out the wealthy who are moving somewhere else. We're dumbing down our tax base. We keep driving up our deficit, and the administration is going to borrow $3 trillion over the next three years. We keep digging a bigger deficit hole. This sort of stuff just pushes us more and more in the direction of the Greeks.
Pat Dorsey: The U.S. and Greece aren't remotely comparable. Right now 20 percent of income in Greece goes unreported. It's about 7 percent in the U.S. When we talk about the number of people in the U.S. who don't pay taxes, it's largely because of benefits and credits, not due to underreporting or misreporting income. In Greece, people literally brag about avoiding taxes. Our culture doesn't work that way. But in Greece, the ability of the government to collect taxes from those who owe them is much weaker compared to here. Greece has a major shadow economy that just doesn't exist in the U.S., and it poses a major fiscal problem for the country.
Don't Tax Americans to Lose Weight, Just Pay Us?
Tobin Smith: Give people cash! Why? It's a behavioral incentive. And one incentive we know that works is cash. We've seen a number of private sector companies try this with success. We know obese people already pay significantly more for health care. If we pay people to get healthy and take care of themselves, many of those added costs can be earned back. It works. Paying someone $1,500 to lose weight now, rather than paying $75,000 later when they begin suffering from major health problems will help.
Gary B. Smith: This isn't Uncle Sam, it's Nanny Sam. I can't believe we're talking about this. Although I do agree that when private companies have done programs like this, it has worked. But should the government be doing it? Absolutely not! The money is going to come from people who are healthy and go to people who are obese and can't lose weight. People who are healthy are already paid because they pay far less for health care, work more days on the job, etc.
Pat Dorsey: What's really interesting is the little known fact that farm subsidies have paid people to make the fattiest foods available. It's the "Nanny State" that caused high fructose corn syrup to become so prevalent. It's cheaper to get calories via junk food over fruits and vegetables. Honestly the best way to fight obesity is to get rid of farm subsidies. If you want to subsidize something, have it be fresh fruits and vegetables. Or help make eat cheaper to buy an apple over junk food.