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Bulls & Bears
Dismal Jobs Report Renews Fears of Double-dip Recession
BRENDA BUTTNER: Taxes bearing down. Jobs way down. The unemployment rate stuck at 9.5 percent. 131,000 more jobs lost last month. Enough to renew fears that double-dip recession is ahead. Does it have to be?
ERIC BOLLING: The recovery is dead unless we cut our insanely high taxes. Corporate taxes here are as high as anywhere else in the world. The only rate higher than ours in the developed world is Japan and look at how great that's working out for them. Everywhere else in the world is below us. We need to cut taxes and make sure that jobs stay here, people spend here, and companies spend on equipment and hiring. Then maybe we'll have a recovery.
JONAS MAX FERRIS: President Obama cut taxes last year. They are already low and unemployment is still high. There comes a point where you're not going to be able to cut taxes to hire more people. The economy doesn't actually need these workers right now. Maybe naturally, without any intervention, in 3 or 4 years, the unemployment rate would drop. But if you want to artificially lower the unemployment rate to a level the economy doesn't need right now, you have to go out and hire people. The government can do it, but what they've been doing are not those kinds of programs. They're afraid to directly hire people.
GARY B. SMITH: When people talk about cutting taxes they're talking about the marginal tax rates, not about putting $200 in a person's check. That's not cutting taxes. There can only be a couple reasons why they won't cut taxes. The first is that the government would see less revenue, which by the way, wouldn't be a bad thing. But the fact is, when Reagan cut taxes, they saw more revenues. When Clinton got the Republicans to cut capital gains taxes, they saw more revenues. 13 studies have shown that when capital gains rates are cut, capital gains back to the government increases revenue. So the only other part is, can the government keep the money and then create jobs better than the private sector via tax cuts. We've seen with Obama that they haven't been able to budge the needle one iota. Unemployment has gone up and Friday's report was dismal. FDR tried the same thing by raising taxes and that didn't get us out of the depression. In fact it wasn't until FDR actually cut taxes that we saw unemployment start to dip. So, I can't see a logical reason other than the administration thinking they know better than the people what to do with the money, and so far, they haven't shown that they do.
TOBIN SMITH: In Ireland they cut corporate taxes to 15 percent. It worked really well for 25 years. How about we just eliminate the capital gains tax for the next two years for all entrepreneurs? We wouldn't know what to do with the growth, because as we all know, according to the Bureau of Labor Statistics, entrepreneurs created all of the new net jobs since 1985. All we would have is growth and people investing money in building new stuff, which puts people to work.
Could $26 Billion Bailout Hurt States More Than Help?
BRENDA BUTTNER: Speaker Pelosi and House Democrats speeding back to DC to pass a new $26 billion state bailout bill, just as states are finally starting to cut back. Toby, you say she's about to kill the one thing we need most.
TOBIN SMITH: Pelosi's plan is like a crack addict. Some states have started to kick the habit and now the government comes riding in on a white horse, taking money that they don't have and giving it to them. Come on. Get off the crack. These states can solve their problems. Their housing prices sky-rocketed and all these taxes when kaplooey. They are trying to live on reasonable terms. Don't keep feeding them the crack.
JONAS MAX FERRIS: The problem with these states is they don't run surpluses during good times so the minute things turn bad they have to act like a corporation immediately to make budget. The federal government doesn't want that to happen. They are trying to prevent it to some extent by subsidizing. They gave them $100 billion last year in the stimulus plan and $26 billion now to schools and Medicaid programs. In my opinion, they should also have to make cuts in the future when we are not in a recession to warrant this handout. But they're not doing that. However, I don't think we really want to see the cuts that would happen if they didn't get the money we're giving them.
ERIC BOLLING: Unions won't ever make cuts but Tobin hit the nail on the head. When you teach someone to use crack and then allow them to continue using it even when they are willing to cut off the addiction, to try austerity and to cut back, and you say, "Oh no no, take $26 billion more," they never get off of it. They'll never stop the spending.
GARY B. SMITH: There are states that are cutting back. Colorado is cutting back on its education expenses. Florida is raising its tuition across colleges and universities. In the LA public school system, the average cost per student is about $24,000. In private schools it's $8,500. So not only can they not stay within their budget, they're bloated across the board. There can be cuts made. There's plenty of fat. Even Washington D.C. is trying to cut the teachers out because they agree that if they want to get higher salaries, they have to cut. And as soon as the head of education started cutting, the unions said "no!"
New Report Reveals Stimulus Dollars Spent on Wasteful Projects
BRENDA BUTTNER: Stimulus money being spent on this: research monkeys high on cocaine; studying the process of freezing rat sperm; video games for the elderly; and yoga therapy for menopausal hot flashes. Gary B., does this sound credible to you?
GARY B. SMITH: I have a couple more examples. I put together a list of my Top 5. $16 billion to help Boeing clean up an environmental mess it created in 2007. $89,000 to replace a new sidewalk in Oklahoma that leads to a ditch. $1.9 million for international ant research. $308 million for a joint clean energy program with BP. $554,000 for the foreign service to replace windows in a closed visitor center in Mt. Saint Helens. How anyone in the government can defend that is totally beyond me.
JONAS MAX FERRIS: I will defend this and I'll tell you why. On a dollar for dollar bases, these are probably creating jobs better than other stimulus programs. They have tangible job benefits. Also, these sub-million programs are not big things. They are not wasteful areas of government that need cutting.
TOBIN SMITH: I totally agree with Jonas. The $150,000 to study the Russian dinosaur eggs was a fabulous use of taxpayer money. The $185,000 to help Siberians learn how to lobby the American government? Not only are they ludicrous, but it takes us away from the real work.
ERIC BOLLING: The sad thing is that it's such wasteful spending. It's absolutely absurd how much money is being given to towns for things that you can't even imagine. And by the way, sometimes the money creates zero jobs, sometimes a tenth of a job, according to recovery.gov. It doesn't matter if it's just a little bit of money. It's wasteful.