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AMERICA'S BIGGEST JOB CREATORS SAYING UNCERTAINTY IS KEEPING 'EM DOWN AND HOLDING THEM BACK FROM HIRING. DID OUR ONLY HOPES OF JOBS RECOVERY JUST GO OFF THE RADAR?
JOHN TABACCO: This is a big deal, Brenda. Really what the president doesn't tell you is that the small percentage of companies are generating most of the production consumption from their employees so it's very uncertain for the smaller businesses to not know what their health care costs are going into next year. Also, possibly be facing a looming tax which will increase your expenses, and when businesses don't have certainty they're paralyzed. I'm a small business owner I know how it feels. Granted right now companies are looking for stability and they don't see any stability when they're uncertain about what their future fixed costs are.
STEVE MURPHY: My business is not really affected by the world economy. I'm a political media consultant, but I'll tell you this. There's never a recession in politics that's right. There's pessimism out there, there's no question about that. We see that in all our polling. Businesses wonder what's going on in the world economy. They wonder whether we're going to go into a double dip. We're obviously in a slow down. A worldwide slowdown, the bricks have slowed down. Brazil, India, Russia, China and we're slowing down, but this idea of raising taxes on individuals who make more than $250,000, $500,000 for a family is going to affect hiring is completely false.
GARY B SMITH: Well, Brenda it is not good. Let's get back right to where the Obama tax has hit, it hits that three percent of the small businesses that are doing the bulk of the hiring. They're the ones that make the bulk of the revenue therefore they pay the bulk of the taxes. It hits them squarely as John alludes to. They have the taxes going up on the quote on quote rich. You have the Obama health care taxes you have by the way capital gains taxes are going to go way up. So you know when John is talking about his businesses saying, hey wait a second is it worth for me to hire people, buy equipment do all that stuff assuming John bought any equipment, I'm sure he's buying big turbines and stuff like that, are the small businesses doing that. Well, let's just look at what the survey says. Despite what Steve says, and he has a great business that probably is recession proof most small businesses surveyed said hey wait a second we're going to cut back on hiring, we're going to cut back on buying equipment so we either now have two choices. Either it's true that the economy is going to collapse cause of these taxes or these people in the survey are outright lying. I chose to believe the former.
JONAS MAX FERRIS: It's the number one reason for the lack of hiring is the lack of demand for your products. That is the number one answer in the survey if it was family feud, the number two answer, yeah it would probably be forecast for the future people run businesses are depressed about. They don't think about the looming tax increase. I will say though that Obama by saying that 97 percent of the people won't pay it is why it won't raise enough of money to pay off the massive deficits he's running right now so it actually doesn't hit enough of people, but I also think ultimately it comes out of aggregate demand. This notion that we always have, it always seems like we have expiring tax cuts the next year for like the last five or six years. It's actually not a great way to run a tax program because you're always thinking that the tax cuts are going to go away and there won't be a demand so I better not hire somebody now. It'd have been better if we always had a smaller tax cut that we could've paid for with actual spending cuts than one that we can't afford that we pretend it goes away so we could show the balance budget over twenty years or whatever nonsense they do.
TOBIN SMITH: First off, the number is $250,000 for a family not $500,000 so that's a big issue. The second issue is that, 91 percent of all the taxable income for small business comes from 1.2 billion businesses. So, it's not like this is a consequential number; 91 percent. If you're going to the, I'm sorry folks life's not fair, 1.2 million of these 30 million small businesses account for 91 percent. When you raise those taxes four or five percent at the federal level they go up two percent at the state level and now all of a sudden you've taken hundreds of billions of dollars out of the system and that hurts the economy and it hurts jobs.
THE WORST DROUGHT IN NEARLY 25 YEARS DRYING UP CORN CROPS ACROSS AMERICA THAT'S THREATENING TO DRIVE FOOD COSTS HIGHER; HOW MUCH HIGHER COULD WE SEE PRICES GO?
JOHN TABACCO: I would consider the consumer popped right now because the consumer is already bobbing and weaving. Joe main street is facing foreclosures, he's facing unemployment, he's facing potentially higher taxes that we talked about earlier and now this drought is going to send your basic staples, corn crop this is going to send your basic food staples sky rocketing. I don't think the American consumer could take another body blow right now to be honest with you. This could be hurtful and I think it could trickle into other kind of price inflation.
TOBIN SMITH: Thankfully, the corn we're using now was stored about six months ago so it takes about ninety to a hundred days to get into the system, number one. Number two, the corn that's being harvested right now is not even harvested until September. Is it going to hurt us this summer? No. Are prices going to be higher for food stuff, yes but guess what? Gasoline is down 30, 40 percent. If you want to offset food prices take it to gasoline at height.
JONAS MAX FERRIS: Corn dogs, I don't have to cut down from two to one. I will say that if this hottest year ever happened last year or the year before it would've been worse that this year because every other commodity essentially especially energy commodities are down and those are also inputs in their production price gas, fuel, transport, etc. So the consumer is not going to see this one yet but I will say this sort of damage to the supply chain is some ways is worse to the consumer than real inflation which is caused by monetary phenomenons by the Federal Reserve, because your wages aren't going up but your costs are going up, and that's actually if it happens to a lot of products if we had serious droughts across the globe, many years you'd see all kinds of food prices going up and people wouldn't be any richer, they wouldn't pay for it more and they'd be in a lot of trouble, hopefully this will be the end of it.
STEVE MURPHY: Yes, some people are clearly having a harder time making ends meet. Look, and this is apostasy for a democrat, hope I said that word right for a democrat, but we should not be using corn for ethanol. Corn prices have generally been too high in recent years. Ethanol is very inefficient when made with corn. It's much more efficient six seven times as much, they do this in Brazil when made with sugar cane. We need to think big to get this economy going again.
GARY B SMITH: We have been talking about inflation Armageddon for like the last six months and yet I always look back on the numbers and I always said it's just not showing up. Inflation year to year is 1.7 seven percent. Food inflation is 2.8 percent. I think it will have a little effect on food. I think it will have an effect on food inflation, but remember food is only 14 percent of the budget. As Toby points out other big areas have gone down. Gasoline year to year is down almost 15 percent. Right across the board, Brenda things tend to balance out and remember the other thing. We have so many more choices than we did in the past even five, 10 years ago for people to switch. If beef prices are going up, I know what you do Brenda in your family, you switch to pork.
CRITICS ARE CALLING IT THE END OF WELFARE AS WE KNOW IT. THE OBAMA ADMINISTRATION QUIETLY NOTIFYING STATES THEY CAN SEEK A WAIVER FROM THE PROGRAM'S STRICT WORK REQUIREMENTS
TOBIN SMITH: Where is Clinton? This is a program that works. This was an entitlement that we cut back, and it worked. We need one thing to point out that you can actually cut back on entitlements in this country and people aren't going to be dying of starvation in the streets, but lo and behold now I can do a smoking sensation class that's working, I can do bed rest and that's working. I could do homework for my kid and that counts as working. This is the entitlement mentality gone wild.
STEVE MURPHY: How do I get these words out of my mouth and agree with Toby. I agree with Toby. This is polarizing. We don't need this in this country, we need unity and to ask taxpayers who are having a hard time making ends meet to pay for welfare recipients not to work. Look, the way you break the cycle of culture isn't with policies like this, it's with work and with education. This was a great reform and it should not be changed.
JONAS MAX FERRIS: Yeah, let's back off of our opinions on giving people a check for doing nothing. If you pay people who are working, essentially not work, they don't have to work now let's say that's what happens, I'm not even saying that's going to happen. Then someone else is going to fill that job and the other person is going to go off the unemployment so we'll lower the unemployment rate that is what the White House wants to do.
GARY B SMITH: Well, God bless Jonas for somehow finding the silver lining in this. He burrows deep to find the good points, and thankfully he's on the show. The bigger issue here is should we be doing it. Historically, the government offers carrots for things they want you to do. They offer more deduction because they want you to own homes. They offer depreciation equipment because they want factories to build more and to invest more. So what you're really doing here is offering an incentive here for people not to work. Even if Jonas if right and the effect is zero on the unemployment rate, it strikes the American public as the wrong thing to do. As Toby points out, do we want people lying in bed making money? The answer is no, we shouldn't be doing it.
JOHN TABACCO: How far have we gone to being a European entitlement nation now? Recently, the World Bank told the Spanish government that if their employees are on vacation and they get sick they have to get granted more vacation days. The same type of policy when you have people out there pounding the pavement, begging for jobs and the canard in your earlier point was those people who are not in bed or taking smoking sensation courses, they might work a part time job that might turn into a fulltime job.
GARY B SMITH: Netflix (NFLX)
JOHN TABACCO: Nike (NKE)
JONAS MAX FERRIS: Vanguard Information Technology (VGT)
TOBIN SMITH: Cirrus Logic (CRUS)