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Bulls & Bears
This week Brenda Buttner was joined by Gary B. Smith, Pat Dorsey, Eric Bolling, Todd Wilemon and Julian Epstein.
Unions Pump Cash Into Campaign Ads as States Seek Cutbacks
Eric Bolling, Fox Business Network: The unions just don't get it. They've priced their members out of the job market. They kept pressing for higher wages, more benefits, increased job security, and now look what's happened. Case in point, the city of Milwaukee is broke. The city went to the teachers union, asked to renegotiate its contract, and the union said no. The result? The city laid-off 480 teachers. But they all could have kept their jobs if they had renegotiated the contracts. And now, these unions are looking to the federal government to get bailed out.
Julian Epstein, Democratic strategist: I think it's reasonable to expect unions to be lobbying to protect the jobs of the teachers, cops, firefighters, etc. who are their members. If you factor in the amount of money corporations are spending on issue ads, corporations are spending far more on ads than unions. This comes down to whether federal aid to local and state governments is a good thing during an economic recession. If you don't provide the aid, states and municipalities can do two things—cut jobs and/or raise taxes. This is a short-term problem due to falling tax revenues. In the meantime federal aid should be provided to avoid jobs cuts and tax hikes.
Gary B. Smith, TheChartman.com: I agree that we can't be surprised that unions are fighting for the jobs of their members. The problem though is that it comes on the backs of everyone else. From 1990 to 2000, private sector jobs increased about 21 percent. From 2000 to 2010, it actually shrunk 3 percent. But public sector employment over that same period has grown 11 percent. The worst part is that all these great public sector jobs are paid for by the private sector. And many public sector jobs create no wealth. They just bring the country down a road of economic malaise. We can't have the public sector grow at the expense of the private sector.
Todd Wilemon, NYSE Euronext: Look at New Jersey. Governor Chris Christie told the teachers union that if it didn't enact a pay increase next year, then the state wouldn't be forced to lay off one teacher. But instead, the union said it'd rather have teachers laid off than not get the pay increase. For once, it's time for unions to start sacrificing with the rest of us. We have to start realizing that increasing government spending will not do anything to get us out of a recession. What got us out of the last recession? The 2003 Bush tax cut; and it got unemployment down to 4.5 percent. It's time for the government to start implementing policies that actually work.
Pat Dorsey, Morningstar.com: The larger issue here is the long-term cuts that are going to have to be implemented to keep states and municipalities solvent. This is not some short-term problem. The huge costs associated with pension and retirement plans for public workers is a big issue that is only going to get worse. We had mayors, governors, etc. who agreed to lavish benefits for public workers operated on the assumption that things would be great economically forever, the stock market would have 10 percent annual returns, etc. These promises were just so removed from ever being economically viable over the long-term. Unless there is fundamental structural change to these benefit programs, nothing changes.
Fed Suit Against Arizona Law Triggers Job Loss Fears
Todd Wilemon: At the end of 2009, there were about 6.8 illegal aliens working in the U.S. The latest job report shows about 14.6 million Americans are out of work. If you put the two numbers together, you're see that some illegal aliens are taking away jobs from Americans and driving down wages. We are a nation of laws, and there's a method and process to becoming a legal alien or citizen. Those are the people we need to be protecting and looking out for right now.
Gary B. Smith: It might sound right that illegal aliens take away jobs from Americans. But study after study shows that this just isn't really the case. The White House Council of Economic Advisors under George Bush said that, on average, U.S. citizens benefit from immigration because immigrants compliment U.S. workers, not substitute for their jobs. About 90 percent of foreign workers in the U.S. experience an increase in wages due to immigration. The fact is though, immigration, be it legal or illegal, is not hurting the job market.
Eric Bolling: There are 12 or 13 million illegal aliens in the country, and they're holding jobs that 14 million unemployed Americans could use. Plus, the illegal workers depress wages since they're often willing to do the same job for less than an American citizen. This federal lawsuit is sending a signal to every illegal immigrant thinking about crossing the border to see how it all plays out. If the courts rule in the federal government's favor, then you could see a huge influx of new illegal immigrants coming over the border, and only worsen the job market for Americans.
Julian Epstein: As many studies have shown, immigration, legal or illegal, is good for the economy on balance. I think everyone would agree that there's a major need for immigration reform. And we need to stem illegal immigration for a whole host of reasons, national security included. The problem with Arizona's law is that it's targeted at Hispanics, and it forces immigration enforcement on local law officials who aren't properly trained for that. And unfortunately I think it'll drive away immigration to the state as a whole, which will be detrimental to its economy.
Pat Dorsey: I don't there's been some mass exodus of unemployed GM workers moving from Flint, Michigan to California to pick strawberries. I just don't buy the argument that, for the most part, illegal immigrants are taking jobs Americans are falling over themselves for to try and get. But great human capital, in terms of highly intelligent, skilled people, is scarce. And we should not be fostering an environment in this country that implies to highly skilled immigrants that they might not be welcome here.
Fannie Mae, Freddie Mac Warn 'Green' Home Loans Are Too Risky
Gary B. Smith: Evidently, these are too risky for everybody. The government just needs to get out of pushing people into the home ownership business. We can't repeat the process of giving out loans that are too risky. These home energy assistance programs are perfectly structured to allow rampant fraud. The government already gets taken for countless billions a year in various types of fraud. We don't need another program to add-on to that.
Julian Epstein: I agree that the government gets defrauded in far too many programs, and that needs reform. But I don't think we can necessarily complain about green energy subsidies when the oil, natural gas, and coal industry get tens of billions worth of subsidies every year. It's not the worst idea to have government-backed mortgages that promote green energy usage.
Eric Bolling: If Fannie and Freddie are saying these loans are too risky, then we shouldn't have anything to do with them. They have trillions worth of questionable loans still on their books, and when they say "hold up" on certain types of loans, we better listen. This is like Lindsay Lohan saying "whoa, this cocktail is too strong for me."
Todd Wilemon: The problem with most forms of green energy, be it on a small or large scale, is that they're just not efficient enough, or cost effective. Adding these loans on top of a shaky mortgage market just isn't a good idea, and thankfully Freddie and Fannie are showing they're clued into the reality of it.