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Bulls & Bears
This week, Brenda Buttner was joined by Gary B. Smith, Tobin Smith, Eric Bolling, Jonas Max Ferris and Kate Obenshain.
Companies Hoarding Record Amounts of Cash as Government Regulations Pile Up
Eric Bolling, host of FBN's "Money Rocks": Companies are sitting on the money and not hiring because the future looks shaky for them. Number one: There are obscene regulations on the books—2,300 pages of financial regulations are coming at them! Number two: confidence. They're not sure if the consumers are going to come back and buy the products they make. And number three: that whole cloud of cap-and-trade, health care and taxes. Those are all reasons why they'd rather sit on the cash than hire new employees.
Jonas Max Ferris, Maxfunds.com: Companies are sitting on cash because they can't sell stuff. Factories are running at very low levels, at about 70 percent. There is no demand for what they currently produce, at least not enough to warrant increasing production. Recently released numbers show that consumers are hoarding cash more than companies. CEOs have come out and badmouthed the Obama administration. The Verizon CEO is a classic example of that—he said it's a hostile environment. But he's talking about regulation, not government spending. Corporate America likes government spending because it means revenues. That money is being spent. People are buying stuff. When you give people tax cuts or extend unemployment, people go out and buy stuff. That's profit. It hurts the economy long run, but they don't care about what happens in 20 years with the deficit. A corporation would like it if you borrowed money from China and gave everyone $1,000 to spend.
Kate Obenshain, Young America's Foundation: Corporations are terrified by the spending. The government can't increase the deficit by four times in this amount of time and expect businesses to be comfortable about their economic future. Businesses are unsure if any economic recovery can be sustained because of all of the government spending. They realize that they are going to be the ones stuck holding the bag when the government gets over its spending frenzy. They want to see some commitment from the government to creating jobs in the private sector—to getting these ridiculous regulations and the threat of tax cuts out of the way—so that they can be unleashed to start hiring people. They're not going to start hiring people until they know that the government's regulations are controlled and rolled back and they know that the government is going to stop spending these obscene amounts of money.
Tobin Smith, NBT Media: It's about confidence, and confidence comes from the ability to look 6, 12, 18 months down the road. With all due respect to our president, everything they have done has looked like community organization. As a small business person, if I was president (of course that couldn't happen), I would look with my bias. When I invest money, I look at what the rate of return will be on that money. Right now, I can't measure the rate of return, so I'm not going to spend. Also, 52 percent of Americans in the latest poll said the economy is not improving, it's getting worse. Clearly, there's a disconnect with the president.
Gary B. Smith, thechartman.com: It's starting to feel like we're going to rival Japan for our own "Lost Decade". Companies don't need the administration to be so pro-business. They just need a clear, understandable environment. Not only is the Obama administration bashing business at every chance they get, they're also picking out industries one over the other. I don't think Ford, for example, liked that the administration bailed out General Motors. They're probably thinking, wouldn't it have been great if GM had gone away or at least declared bankruptcy.
Union Pension Bailout Bill Gaining Steam in Congress
Gary B. Smith: I am absolutely not behind this bill. I would have sympathy for union members if they were on the same playing ground as private workers. But do you know that they get paid 1/3 more for similar jobs? Health care benefits are double what a private worker gets. If public union employees were paid the same as private workers, it would wipe out every state deficit across the country.
Jonas Max Ferris: First of all, hourly wages are higher for union workers than private sector workers because there are a lot of low level jobs in the private sector, like at Walmart and MacDonald's, and there aren't unions for those workers. Government jobs are higher-paying jobs. Wages would come down a little without unions, no question about that, but not enough to fix the problems in all of these states. Pensions in general are backed. There's a government program, PBHG, that is under-funded by about $25 billion. It probably will need a federal bailout, and that is a bailout of private sector pensions. If we're going to bailout private workers, unions should get the same.
Tobin Smith: If you look at the real numbers of the actual pensions that are under-funded, they're looking at 200 or 300 billion dollars, but that's not the scary one. The state, city and local unionized funds are $3.2 trillion dollars under-funded. When we start the bailout game we know how it works. One guy gets it, the other guy gets it, it's not fair. This is the original sin here, of trying to pick and choose who's screwed up pension fund should get the money and you know what, everybody's got a representative and everybody's got a senator and that means everybody would get a bailout.
Kate Obenshain: This is a classic example of the democrats trying to pay off the unions yet again. The union pension plans are notoriously ill managed. Basically, instead of paying into pension plans, the unions go for higher wages and better benefits. So they can get reelected to their leadership positions, this is an effort by the democrats in congress and some very liberal democrats pushing this bill that are trying to push through this so that taxpayers will get stuck holding the bag yet again. I guarantee you, if the democrats get it through, it will be disastrous.
Eric Bolling: They can't they've priced themselves out of the job market. Richard Trumka from the AFL-CIO says, give us more money and we'll ask for help, of course they'll ask for more money, guess who is a big donor to almost every democratic liberal cause on the planet, AFL-CIO. Did you hear Mr. Obama at the Chrysler plant almost giving a standing ovation to the union bosses in the front row, like they were rock stars. There's a lot of cronyism going back and forth.
Lawmakers Demanding Governments Cut Off Funds for Sanctuary Cities
Tobin Smith: If you look at the numbers, they're astounding; we're getting into the $150 billion over a five year period. For every illegal we're taking out of the cities, we're creating jobs for American citizens and it's insane; the federal government is an enabler to this conspiracy.
Gary B. Smith: I can understand there's a lot of emotions here and there's a lot of rhetoric, back and forth, but we're a nation of laws, whether we agree with the laws or not. This whole thing, we're going to withdraw the funding, is that in the law? Is that how the government operates? I don't think so. It's fine for the government as they're doing, to sue Arizona. Arizona has their right to do what they want under the law, but to withhold federal funding, I think that's wrong.
Eric Bolling: They're breaking the law, they should withhold all federal funding, the problem is they're going to open up more and enable more sanctuary cities, because you know why, at the end of the day, these are voters. When they provide amnesty, immigration reform, they're all going to be voters and guess who they're going to vote for? The Democrats or they're going to go ahead and look the other way.
Kate Obenshain: You're going to look at the politics of it, 73 percent Of Americans according to Rasmussen think we should cut off funding to sanctuary cities, although some immigrants are going to vote for the democrats because of this, I think it's a loser issue, both from the hypocrisy side to pursue Arizona because they have the temerity to try to enforce federal law and yet, to turn a blind eye to the cities that are flagrantly flouting the law. I think there's going to be a serious backlash against the Democrats.