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
Democrats Using America's Debt to Block Tax Cut Extension
Eric Bolling, Fox Business Network: Congress has to extend the Bush tax cuts. Look at what happened when two Democratic senators said we should extend the cuts. The markets took off 200 points on Thursday and 100 points on Friday. If you extend the cuts, businesses will have reason to start hiring and making new investment. It'll help turn around the economy and increase tax revenues, which will pay down of the massive levels of debt we're racking up.
Richard Goodstein, Democratic consultant: This is more like a religious argument. Supporters argue if the economy is doing well, give out tax cuts because we don't need new tax revenues. When the economy is doing poorly, don't raise taxes because it'll hurt the economy. The fact is that during President Bush's term, we had tax cuts. What did we get with it? Soaring deficits, flat wages, and minimal levels of job growth in the private sector. All we're talking about here is raising tax rates back to where they were under President Clinton. And I think most people would say things were pretty good during his time in office. The experiment with tax cuts for the wealthy didn't work.
Tobin Smith, NBT Media: This is an argument about how humans behave. I don't think it's even fair to compare tax rates and the economy with where they were 20 years ago. Today, about 20 percent of Americans pay almost 85 percent of all personal income taxes. If you want to take in more revenues from those taxpayers, you have to give them reason and incentive to make more money. If they make more money, then they pay higher gross taxes. Growth, over the long term, brings in more revenues than just hiking taxes.
Jonas Max Ferris, www.MaxFunds.com: We have to stop with this bending backward mindset with tax rates. By the logic tax cut supporters are using, if you had a 1 percent tax rate on the wealthy, we would have more tax revenues. That's absurd. There's a point where lowering tax rates on the wealthy stops working. It did work lowering them from 50 percent to 40 percent and maybe even from 40 percent to 35 percent to some degree. But we're at the lowest percentage of national income collected as taxes since 1950. Yet spending as a percentage of GDP is almost as high as it has ever been. You can't close this gap by hoping the extension of tax cuts will juice the economy.
Gary B. Smith, TheChartman.com: Given current economic conditions, it would not be a good idea to hike taxes on anybody. I'm not saying we need to drop tax rates even further than where they are right now. I'm saying the best thing is the keep current tax rates in-place. But I don't think we should be looking at cutting taxes as a bad thing. There are three examples in recent history of an administration dramatically cutting taxes—with Kennedy, Regan, and Bush. And each time they were enacted, the economy took off. Whenever the government lowers rates through income or capital gains, we see tax revenues increase.
President Obama: 'There Will Be No More Tax-Funded Bailouts, Period'
Tobin Smith: We still have the disasters known as Fannie Mae and Freddie Mac that weren't touched by the financial reform bill. There are estimates that total losses on those companies for taxpayers could go up to one trillion dollars. This story is far from over. The Federal Housing Authority is probably going to be in trouble soon enough. We just extended the unemployment fund by another 60 weeks that's run out of cash. States are borrowing the money to meet these obligations, and are supposed to pay the federal government back. You think that's going to happen? The idea that bailouts won't happen again is ridiculous.
Richard Goodstein: The bill says that there will be orderly liquidation for financial firms on the verge of collapse. Any costs associated with liquidating a collapsing firm are paid for by a fund that all financial firms pay in to. There would be no taxpayer money involved. On Friday, Sheila Bair was on Fox News, and she was asked what caused the crisis. She didn't mention Fannie or Freddie, and she's a woman with no ax to grind. What the President and Congress have done is create new provisions that would have prevented the chaotic collapse of Lehman Brothers and its ripple effects in 2008.
Gary B. Smith: I appreciate the President's rhetoric, and he can certainly turn a phrase. But I think this statement will be put in the same category as his "not raising taxes one single dime" line. The fact is that the Treasury Department can come in and bail-out any company it deems unstable. Where's that money coming from? Taxpayers. And honestly, I think our biggest risks are states going belly up, such as California and Illinois, or even a large metropolis. Do we really think President Obama is going to force them to cut teachers or government employees? Rather than force states and cities to make the tough choices to get their fiscal houses in order, they'll get bailed out.
Jonas Max Ferris: President Obama is specifically talking about Wall Street bailouts. The bill does not deal with Fannie and Freddie. But again, that's not related to Wall Street, those are government-owned companies now. This regulatory reform bill expands the government's ability to orderly liquidate non-commercial bank financial institutions. I do not think another investment bank will ever get bailed out while President Obama is in office. Lehman Brothers was the one company that didn't get bailed out in the financial crisis. That's what we want to happen with any investment bank that may get in trouble down the line—for a bank to be held accountable for its actions and not get bailout money.
Eric Bolling: The bottom line is that Democrats are bail-outers. Look at GM, Chrysler, or AIG. And it was all done with our taxpayer dollars. Democrats were all about putting billions into GM and Chrysler because of those supposed figures that said four million jobs would be lost if they went under. The idea that this bill completely prevents any future bailouts is ridiculous.
Poll: 76 Percent of Young Adults Don't Expect to Get Social Security
Gary B. Smith: This is great news for America. The whole Social Security system won't be responsible for paying younger people and accumulating that debt. Young workers aren't expecting to get this money—fine. Let it go to pay everyone else, and allow Social Security to become more solvent. It'd certainly be a solution to helping solve the Social Security problem.
Richard Goodstein: I think Social Security will still be around. But if politicians realize their voters, especially the younger ones, believe that Social Security payments aren't guaranteed, it may not be the third rail it has been for older voters. We all know that President Obama believes that some fixing to Social Security is needed, either through raising the retirement age, means testing, etc. I think Social Security is fixable; it's just a matter of getting enough voters behind the reforms necessary to keep it solvent.
Eric Bolling: I agree this could be a good sign. Young workers will realize they can't just suck at the teat of the nanny state and rely on a system that's going to fold probably before the time they actually collect a check. If this forces younger workers to save on their own, then that should be looked at as a good thing.
Jonas Max Ferris: This is a good thing in the sense that young people know and understand the Social Security system is going broke. It'll force them to plan for and save for retirement on their own. But it's not good that the government won't just adjust the payment formula and maybe pay a bit less to older Americans now to make sure Social Security stays solvent over the long term. Maybe people will get reduced benefits, but at least they'll get them.
Tobin Smith: This is going to be good because the younger generation is going to understand we need to get more highly skilled immigrants into the country to help grow our economy and create more opportunities for young workers. That way, they at least have a chance to succeed and save on their own for retirement.