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WORRIES MOUNT SLEW OF EU DOWNGRADES WILL HURT U.S. JOBS
Gary B. Smith: Even if we lowered the corporate tax rate to 25 percent, look what would happen. In 1997 a joint task force in congress studied the whole issue. What did they find? They found no less a person than President Kennedy lowered tax rates across the board. What happened? Employment went up and revenues went up. The same thing happened under President Reagan's tax cuts. Unemployment dropped from ten to six percent and revenues went up. So, you'd have a hard time arguing the other side where lowering taxes, both individual and corporate, doesn't lead to higher employment and higher revenues. I don't see why we do it. It doesn't make sense.
Tobin Smith: Read my lips-cut corporate taxes. Everyone of the republican candidates agreed on one thing-cut corporate taxes. Let's go to the history books. In 1984, Ireland went to a flat rate of 15 percent versus 35 percent. They grew their economy four times faster. Their GDP kicked butt for 22 or 23 years. We've seen it in every country that does this. It's time to do this now. Let's get ahead of this thing because if we don't, we're going to have some real job issues here because Europe is going to be negative for the next six months.
Jonas Max Ferris: When you start up a business, you're not going to be paying a high corporate tax rate, probably for the first several years. So, I don't want to say it's punishing success, but it gives an edge to the start up. I'm for low corporate tax rates. Anyone who invests money is investing for profits and you want low taxes. However, our corporate tax rate is actually low when you adjust for all the deductions. The top 200 companies pay an average rate of 18 percent or 19 percent. They don't pay the 35 percent rate. We have more deductions than other countries. Does that mean we shouldn't get rid of deductions and have a lower rate? Of course we should. However, if you're talking about jobs and are comparing it to the payroll tax cut, that is a cost that all employers have to pay. If you're starting a business, every single person you hire, you have to pay this payroll tax rate. I know when I started a business I would have rather had a higher corporate tax rate and a lower payroll tax rate because I wasn't paying the corporate tax. I wasn't making any money. But, I had to pay for those employees because I was start up. So, if you want to lead to hiring, lower the cost of hiring, which is the payroll tax rate which is what the companies pay-not even the side that the workers pay. If you had to choose between the two.
Christian Dorsey: If all you're interested in is increasing corporate profits, then sure, cut the tax rate. If you're really interested in creating jobs, you'll need to do a lot more. The reason businesses are not hiring right now has less to do with their tax rate and more to do with the lack of demand in the economy. Even if you increase profits by cutting taxes, you're still not creating a market for those goods and services. That's the real key issue. What's going on in Europe right now has been priced in and factored into markets for the last six months. This is not a surprise. What we really need to do to increase employment at home is to improve the employment situation, getting people back to work and seeing their wages rise again.
Amilya Antonetti: If it was that easy that there is one solution and this problem would go away, we'd already be doing it. The reality is it's not just the corporate taxes. Small business owners have said over and over again have said these things, in congruent, is what we need in order to be able to hire people. So, yes, this is one issue we actually need because it's just too high. Deductions are for big companies. Small business owners don't get those deductions. We need the lower rate, but we also need the payroll tax. We also need access to funding. We also need the EPA and all these other people causing complete havoc on our trucking industry, the price of diesel going back and forth for our goods-so everything needs to be addressed.
GM MAY DECIDE TO PUT BRAKES ON VOLT PRODUCTION BY SUMMER
Gary B. Smith: Chevy is really struggling with this one. They could have put a second shift on to meet demand, and of course they didn't. I'm surprised, Christian, the man of middle America, the populist person, hasn't come out against the Chevy Volt. Basically, this is a car for the one-percenters out there. This is a car that costs a small fortune and that everyone around us is subsidizing to the tune of $7,500 per car. This is a rich person's car. It doesn't do one iota to reduce carbon emissions. We could reduce all the gas-guzzling cars off the road and it wouldn't make a 0.1 percent difference in our carbon footprint. So, this has got to go.
Tobin Smith: The point is they were going to cancel the car until we came in and bailed them out. So, all of a sudden, this became a chip. So let's call this what it is. It was a bargaining chip to get about $15 billion or $25 billion in cash and that was how we played. So, they're going to put on theater about how it's going to sell so well. It's a rotten car. It's overpriced. It's not going to sell.
Jonas Max Ferris: This car can drive for hundreds of miles. It has a unique generator system that can power itself, unlike the Leaf by Nissan, which actually will run out and leave you stranded. The reason I'm bringing up the Leaf is that the Leaf didn't have the government behind it and they're still selling that car even though it's kind of a loser. It only sold about 10,000 units in America. The owners of Prius, when that came out by Toyota, was not a success immediately. It can take a little time. GM has made plenty of flops that were costly without the government. This is a unique car. It has the potential to help GM. I'm not saying that it's not going to be a loser and they'll have to kill it anyway. But, it's an interesting car and it may be ahead of its time. Maybe all prices have to go higher.
Christian Dorsey: The Volt may not be the answer to the electric vehicle wave of the future, but you need to have a necessary first step. Do you remember the Apple Newton? Probably not because it was a flop. But, without the Newton, we wouldn't have the iPhone today. You have to start somewhere. The fact that the Volt is going to be the first thing in this wave of electric vehicle future, I think it's important for us to really hope it succeeds or to recognize that even if it's not everything we want now, it's going to set the stage for future electric vehicles that are.
Amilya Antonetti: Please pull the plug. We told you before this even started that it wouldn't work. I don't know who is actually running the show over there, other than the government because they can't force people to do it. One, it's a bad investment and a bad ROI, but would it cost you to get into it versus how long the payoff is, is a bad investment. Second of all, have you looked at the size of us? We don't fit into it. I couldn't put my family in it. Third of all, if you look at what's happening we are moving farther away from the cities because we are streamlining our incomes. The thing doesn't go there and back. Maybe I can squish myself in it and then have to push it all the way home. This is a joke. I would have closed this down months ago.
OBAMA PROPOSES MERGING SIX AGENCIES TO "TRIM" GOVERNMENT
Gary B. Smith: This is Obama's three card Monty. He's just moving the shelves around. This is going to be like what happened with Homeland Security. We're going to have one big agency that's bigger than all the other agencies combined below it. We don't need almost any of these agencies over there. The small business administration is costing $6.2 billion and what it does is allow a little bit of money so some small companies can battle other small companies. The Department of Commerce, or the Import/Export Bank really just allows the government to pick winners and losers. We need to get out of that business and shut these down entirely, not make one big organization.
Tobin Smith: I would cut five out of the six. Look at the reward. Certain businesses are horribly run businesses. I live in Washington D.C. and it was amazing how homeland defense rented 350,000 square feet of new space just because they knew they were going to get bigger. Small business administration, if it was run correctly, would be a net positive, cash flow agency and it is absolute vital for franchised companies and retail companies that have no other place to go. But the other one, nice knowing you.
Jonas Max Ferris: Every government agency has a friend. If Boeing had a representative here they would tell you the Import Export Bank is very critical because we make loans to a foreign airline to only buy airplanes from Boeing, but not from Airbus. That's actually profitable to government even though it's an artificially low rate extended. I'll tell you that Delta doesn't like it because they don't have that deal and they have to borrow that money at a higher rate. They are disadvantaged to international carriers and international markets. So, I'm just saying that everyone has a fan in one of these agencies. You can't say that this one is good because it's personal. I don't work at Boeing, but I can guarantee you that they want the Import Export Bank to have more budget. Personally, I think some of these agencies are making trade bad.
Christian Dorsey: Consolidating is a good thing. I don't know how you can criticize not having services duplicated across many agencies. Certainly, if you're going to find any fault with the way government works, you have to include congress, which are the ones preventing President Obama from performing his executive functions of providing the leanest possible executive branch. The issue really in congress wanting to have oversight over various [inaudible] that have allowed government to get so sprawling and so big. This is actually a great step for the president.
Amilya Antonetti: I haven't seen them do one thing they say will actually help small business do anything but hurt us. So, they are the last people to decide what small business needs. Not all of them. The SBA has been fundamental for a lot of people as a first line. I got my first business from an SBA loan because the banks were hysterical. I needed them. They were the first place I went to get resources, to understand what I needed. So, are they perfect? No. Are they antiquated? Absolutely. Should you throw some of those business people into people who know nothing about business? Absolutely not.
Gary B. Smith: Bank of America 50 percent profit in two years
Tobin Smith: Oasis Petroleum Inc. 25 percent gain by June
Jonas Max Ferris: iShares S&P/Citigroup International Treasury Bond 10 percent gain in one year