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IN FOCUS: AMERICAN AMBITION OR GOVERNMENT REGULATIONS HOLDING BACK JOB CREATION?
MIKE OZANIAN: Well, small business has it right David. If you look at the new Dodd- Frank bill, it is killing the banking industry; you can see all the layoffs there. There is no revenue growth in that industry. It is killing energy. The EPA is attacking companies. If you look at Luminant, which is a Texas company that feeds much of the energy grid in Texas, it is shutting two plants because of new EPA regulations. Over 500 employees it is going to have to lay off. We are way over regulated. The Heritage Foundation, David, estimates that regulations extract over a trillion dollars from our economy every year.
KYM MCNICHOLAS: No I mean if you think about it, corporate America raked in more than $900 billion since the recession. Certainly the larger companies do in fact have the money to hire. The problem is that there is too much economic uncertainty. They have learned to do more with less. I mean how can they convince their shareholders that they should hire more people when they have increased productivity, they increased profitability since the recession? And then finally, skilled workers are a problem. I mean if you are here in Silicon Valley, which by the way President Obama did visit over the past couple of months, surprises me why he would say there is a lack of ambition, but needless to say they do need more skilled workers in terms of engineers.
VICTORIA BARRET: I think it is safe to say small business people. The same surveys that show their concern about excessive regulation also show concern about consumer confidence and the ability to get investment capital. So these are all issues. I think the regulatory burdens are feeding people's fears about the future. You look at everything this administration does; it is aimed in a way at picking winners and losers. So we had a few months ago, this whole idea of were going to create this program called Startup USA, Startup America and we are going to hire these people and they are going to stoke innovation, but if you read the fine print, it was innovation in clean tech, it was innovation in "underserved markets." If you are an entrepreneur, that is just red tape, it is the government telling me which businesses I should go in, which businesses I shouldn't go in. That's not going to create job growth.
MARK TATGE: And that is what I don't understand David. I mean to put this in perspective, let's look at this. We have has 20 years of deregulation. We've deregulated the airlines, trucking, electric utilities, natural and oil and gas and still businesses are complaining about too much regulation. What has the result of this been? We have a situation where we have higher prices, service has declined and we have more concentration of business than ever before. So deregulation has really not brought us a whole lot and in terms of the Dodd- Frank bill, hey, Volcker proposed a ten page rule and what has happened is the lobbyists from industry have turned it into a 90 page rule. That is why small business are complaining about being overregulated.
ELIZABETH MaCDONALD: Yea, the issue is not rules. There is no shortage of rules. It is a shortage of enforcement. Even Ben Bernanke said himself of Dodd Frank; you know wait a minute we can't even figure this out. This is just way too complicated, the impact. The President's own job consult said rules are a problem. The president himself said that rules are a problem. And when you look at what the red tape, were talking about the red tape that small businesses had to contend with, just look at the 1099 rule they wanted to install to report goods and services for small businesses of 600 dollars or up. So what we are talking about is the city of Milwaukee, you have to get a license to go out of business in Milwaukee. If you run a daycare center in Massachusetts, your children have to brush their teeth after lunch. It is red tape like that that is strangling businesses in this country and hurting job growth.
MORGAN BRENNAN: Look I am not going to argue the fact that regulations have a much larger effect on small businesses than they do on larger corporations. And yes, regulations are part of this whole economic puzzle right now but I would argue that consumer demand is actually the bigger issue affecting all businesses in our country right now. We have weak GDP. A big portion of that is from consumer spending and you have companies like General Electric and Weight Watchers and these other companies who are hiring they are just doing so oversees. Regulation plays a small part in that but consumer demand in places like China where it is stronger plays a much bigger part.
California re-instating green energy tax credits
DENNIS KNEALE: I really do. It is just the flavor of the month right now. You know, what is it 30-years ago we began subsidizing ethanol. And today after spending, I think its $30 or $40 billion in subsidies; ethanol is 2.5 percent of the gasoline supply. Here is the problem with solar, with wind, I think the greatest test of when these technologies should come in to being is the profit motive and the private enterprise will see a real upside potential. I know a guy, Shai Agassi, he raised $200 million in private money in three months to work on a start up for electric car battery filling stations, see they saw a profit motive, never mind the government.
MARK TATGE: Well, that kind of denies history. I mean look at a lot of the greatest innovations that have happened. They have had government money involved in them because the private sector wasn't willing to take the risk. And the private sector right now is not willing to take the risk because of the economy. Private sector did not put a man on the moon, they didn't develop the internet, they didn't develop satellites it was government investment that started that. Even calculators, it was government investment. So there needs to be cooperation between both parties and I don't believe with the fact that the government should not be involved at all here.
ELIZABETH MACDONALD: China has a lot of subsidies, but I hear what you are saying David it's an important point. For example, we had TARP and TARP gave money to the banks but with provisions such as clawbacks and employee compensation and warrantees. I don't know if taxpayers want a warrantee in Solyndra. But if feels like this is free money, an open fire hydrant of spending aimed at very fragile, frail companies that are on the brink. Do we want that? What else is happening to, the VC guys, the venture capitalist crowd know it. They are doing things such as subsidy startups which will take advantage of these government subsidies to line their own pockets. And they are using lobbying money to lobby for tax increases in places like California and oil companies to benefit themselves.
MORGAN BRENNAN: Let's let Solyndra just die a not so sunny death. That is one company of more than 30 and in California we are talking about tax breaks that equal $104 million dollars. That is peanuts compared to the state and federal tax breaks that you see even for traditional oil and natural gas companies, although that might change with President Obama's new legislation. We're seeing tax breaks everywhere. If you really want to go after tax breaks leave that alone, let's go after Google and their 2.4 percent tax break.
MIKE OZANIAN: I think that non-profit entities can be good at inventing things but when it comes to innovation and commercialization I think that is where you need to rely on the private sector. These solar projects that are getting tax payer money, they are not inventing things. What is happening David, is the government taxpayer money they are getting is going out the window because the technology is changing so fast the companies can't keep up with them. So they are running huge loses. And some of these companies have gotten money, because let's face it, because people who work at these companies who run them are friends with the President and have donated money to the President.
KYM MCNICHOLAS: You know I think it's a great idea. If one kid throws a spit ball, you can't necessarily punish the entire class and keep them all in for recess. I get the fact that we do need to be more discriminating in terms of the money we invest in these companies that are making these green technologies. But these companies that are trying to make their work environment healthier and more environmentally friendly for their employees. I think it's a great idea to offer them energy tax credits. Here is the caveat, basically they need to be looking and there are cost and energy savings in the next five years.
GOP Presidential candidate Gov. Rick Perry suggesting privatizing social security in his economic plan
ELIZABETH MACDONALD: I say privatize it. The UK, Sweden, Chile have been doing that to great success. I say, even just a minimum 2 percentage points of your own payroll taxes that you pay, put it in your own account instead of having Congress get their mitts on your social security money to spend it on whatever you want because they invested all of your social security money into government notes and bonds. So you are more efficient than the U.S. government is at investing your money.
MARK TATGE: Well, I don't like it David. Here we are going to turn over social security to the same people on Wall Street who allowed my 401k to go down t by 40-60 percent and are the cause of the most recent financial meltdown. So I am supposed to trust Wall Street with this, I don't think this is a good idea at all.
VICTORIA BARRET: No trust Washington, haha. Look this is a noble idea and it is interesting we are bringing it up now because Democratic Governor, Jerry Brown, of California is suggesting something similar for state pension funds. He is giving young people the choice to opt in to private social security. But what makes the big cost savings in his proposal is not privatization but increasing the retirement age. That is what we need to debate in Washington because that is where we're actually going to see cost savings in social security.
MORGAN BRENNAN: I am really hesitant to do that. I have to echo Mark in the sense that just looking at 401ks and IRAs they have gone down by about a trillion dollars for Americans. And I think a lot of Americans don't necessarily understand what it is to assume risk in the market unfortunately. So I am very hesitant about this. I think we should also look at the fact that to transition over we are looking at a $5 trillion cost in the coming years to do that. That is a heck of a lot of money.
ELIZABETH MCDONALD: PROCTER & GAMBLE (PG)
MORGAN BRENNAN: DOLLAR GENERAL (DG)
KYM MCNICHOLAS: TARGET (TGT)