• With: Gary Kaltbaum, John Layfield, Jehmu Greene, Tracy Byrnes, Jonathan Hoenig

    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.

    COCA-COLA CEO CLAIMS CHINA IS MORE BUSINESS FRIENDLY THAN THE U.S.: PROOF THE U.S. SHOULD OVERHAUL ITS TAX SYSTEM?

    GARY KALTBAUM: Well if the CEO of a multi-national company says so; if people like Bernie Marcus and Mort Zuckerman said so; if 150 important organizations say so, and 75 countries that have lowered corporate taxes over the last four years have done so, I suggest we should be next. There is no doubt this is just one of those headwinds that Washington provides and hurts the economy. You get rid of this; you do something simpler, fairer, where people don't have to spend hundreds of millions of dollars trying to avoid taxes, and that will definitively help the economy going forward and take some of the uncertainty out of the hiring and the economy also.

    JOHN LAYFIELD: Yes, I don't think there's any doubt about that. We spent decades building this 72,000-plus pages of tax rules that companies and individuals have to go by. It has gotten ridiculous the level of bureaucracy. We keep putting band-aids on top of band-aids and it's just not working. It's why these big tech companies will take a company and license it to say Ireland at a 12 and a half percent rate; take that money and then park it somewhere in a tax haven like Bermuda, Costa Rica, the Caymans that are more business friendly. It's all legal, but what happens is these large corporations don't pay this huge corporate tax rate. It's left to the companies who can't afford to do that, and that's the middle and the small businesses in this country. They are the ones that are getting just absolutely hosed in this corporate tax deal. It is terrible; we need to throw the whole thing out and start over.

    JEHMU GREENE: Well I think that we have to peel back the onion a little bit. Yes, our tax code does need reform. Just last week, President Obama put forward his plan for how he wanted tax reform to happen from a place of fairness; some things that would cut taxes, things that would get rid of the tax breaks for large corporations and oil companies, but I think you have to look at where the motivation is for not just Coca-Cola, but all of these other businesses. Their motivation is profit for themselves; their executives and their shareholders. We've been here before when in 2004 all of the businesses said, if you allow us this tax holiday, to bring our profits back in to the United States; this was just a few years ago in 2004, this is going to spur jobs, this is going to grow the economy, and what happened? Ninety percent of that money that was brought back went to executives and shareholders and a large percentage of those companies that got that tax holiday ended up laying off workers, so I just think we have to be really factual about their agenda.

    TRACY BYRNES: Actually, a lot of that money went to share buy-backs, stock buy-backs and things like that. So, to Jehmu's point, they didn't necessarily go out and hire, but it's the company's choice to do whatever they want; it's their money. The problem with the tax code is that it is a political book of favors, and the reason it is so large is because that's what our Congressional leaders do. They come to D.C., they say you pat my back, I'll pat yours, and in goes some exception for their constituents at home, and that was not what the tax code was created to do. And right now, the only people that can fish through it are companies that have the money to hire; the brainiacs to find the loopholes. When 40 percent of our lower-income Americans don't even pay, so who's getting the favors now?

    JONATHAN HOENIG: That's not true. Jehmu, you talk about the need for reform; the President talks about the need for reform, but it really is more of the same, more of a progressive tax structure in which the rich, or corporate America, or whoever the evil-doers of the week are, are morally obligated to pay for whatever the whims are of everyone else. I mean the President honestly believes that the tax structure is there to redistribute your income, and by your income, he means your life; seventy-eight thousand pages of arbitrary rules of your life. If that's not immoral, I don't know what is.

    FEMA FINDS ENOUGH MONEY: CAN OTHER GOV'T AGENCIES FOLLOW THEIR LEAD?

    TRACY BYRNES: First of all, you know what? We are all doing it at home. We're all figuring out how to find extra money at home, so now extrapolated out and FEMA's a perfect example, and I'll tell you what, no one wants to, but you've got thank the GOP and the Tea Party for this because all along they've been pushing and saying, you want to spend more? Cut in other places, and low and behold when push comes to shove and desperation sets in, you find the money you're looking for. I think other agencies really can learn from this.

    GARY KALTBAUM: No. In 2008 our federal government spent 2.8 trillion. They're going to spend 3.8 trillion this year. That's a trillion dollars more that's floating around south there. These departments like to plead poverty because they know if they do, they're going to get more money from the Federales and they end up in this situation. We have got to go top down and say enough is enough. Every department should be cut 10, 15 percent and they'd still be in great shakes. This is just a scam on all these departments' parts.

    JEHMU GREENE: Look, I think that the Obama administration has been very clear and strong on directing agencies to not just look for additional funds, to look at red tape and the regulations that are out there. He signed an executive order months ago for these types of reviews in the agencies. We can't take the FEMA example and then just assume that's going to apply across the board, and the reality is, if you find 25 cents in your sofa cushion, but you need a dollar to do the laundry, that's not going to cut it. So, we have to be realistic. Looking at it again, FEMA's budget is 35 million dollars a day, so finding that $40 million doesn't stop every single reason for why we needed the continuing resolution and we have to fund these agencies, but we don't want bridges falling down on us so I want the Department of Transportation to get their money.

    JONATHAN HOENIG: Boy, Jehmu's here, maybe I don't need to say a thing. She's got my lines down exactly; maybe not so much Jehmu. Truth is that we don't need FEMA. You talk like it's an integral part of the constitution; it's not. It was started in the late 70s under guess who? Jimmy Carter, and like so many other parts of the government, that's the whole point. If you believe that goal is to help people in need, we're always going to have another bureaucracy. Their role is to protect individual rights, and FEMA, the Smithsonian; all these other bureaucracies with their hands out have no role in that at all.

    JOHN LAYFIELD: Absolutely they have a fair point. Look, President Obama ran against President Bush for having two wars that were not funded; that was true. Obama now has two wars that are not funded just like President Bush did, but he adds another one in Libya, plus he has a lot more things that are unfunded on top of all that. There is not a backbone in Washington, D.C. You can do all these things, but you've got to cut somewhere else. Imagine if Clinton and Gringrich had passed a balanced budget amendment in the 90s, what we'd be dealing with now the world would be a lot better. That's what we need right now. You can spend money one place, but don't just add it on. That's a lack of backbone and guts by these politicians. They don't tell anybody no and that's the problem.

    MORTGAGE AND HOUSING RATES DROPPING, YET NO ONE IS BUYING HOMES

    JONATHAN HOENIG: Yeah, Cheryl we need to punish those responsible; the evil greedy bankers, the unscrupulous financiers who caused this. Wait, wait, wait, sorry, those are Jehmu's talking points. No, no, no, actually it is the government's fault Cheryl. Government created this bubble; Freddie, Fannie, the CRA. We talked about it for years and they've prolonged it through Help for Homeowners, too ultra low rates by the Fed. The more they've done to fix homeownership in this country, the worse, the more stagnant it's become. We need to get government out of the business of housing in this country once and for all.

    JEHMU GREENE: Hey, you know Jonathan does such a great job speaking for me. You know, clearly we know what created the bubble. We know what created this crisis; Wall Street greed and no oversight regulation of what was happening. Now, clearly some of the corrective policies that this administration has tried have not been as effective as President Obama had hoped. So, I think we have to look at the fact that some of these corrective policies need to be revisited, but the lenders have to start lending money. Interesting though, the Huffington Post just did a story that the luxury market is soaring.

    TRACY BYRNES: It's all about uncertainty, I don't really care who you blame for the problem right now, now you've got to fix it and let's move on, and I'll tell you it's uncertainty in the job market, uncertainty in the tax code, it's uncertainty in home prices in general. They're going to keep falling, why should I dive in?

    JOHN LAYFIELD: The rich are going to continue to get richer with low interest rates because they can refinance, they can buy homes, luxury is going to take off. The poor can't get credit anyway; I don't care if interest rates are zero. You can blame Bush, you can blame the sun being in your eyes, the fact is there is no demand and this interest rate policy is helping the rich and hurting the poor.

    GARY KALTBAUM: Time will cure it. Bear markets in housing take about 10 years. Unfortunately we've gone to the other extreme where you can't get any money for mortgages where they were giving it out hand over fist and it's just going to take some more time, some more price; probably another four or five years.

    WHAT DO I NEED TO KNOW

    GARY KALTBAUM: I think it's classic bear market, unfortunately I think this week they started getting all the pretty ladies, all the growth stocks that were holding up really well. So I think we have another leg down. I think Dow 10 thousand is probably where we're heading, so a good seven, nine, 10 percent, and I think it's going to start happening in the next couple weeks unfortunately.

    TRACY BYRNES: Alright, so recent economic data shows that we are spending more than we are taking in and we're saving less. It's déjà vu all over again. I think this is exactly what got us in to this mess in the first place; does not bode well, sort of plays into Gary's idea I suppose.

    JOHN LAYFIELD: Amazon's new tablet Fire has changed the technology paradigm again after Apple did it a few years ago. Hardware is now a commodity. If you're a content provider, that's okay, if you're a consumer that's good, if you make hardware that's bad. I think Amazon catches fire all the way up to Christmas.

    JONATHAN HOENIG: I'm betting on inflation Cheryl with DTUS; it's an exchange traded note that rises with short-term interest rates. If short-term rates in Greece can go to 60 percent, they can probably go to six percent here in what I expect to be probably a pretty severe inflation in the U.S. So check out DTUS and I do own it for my fund.