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Ryan Plan: Federal workers to contribute more to pensions
TODD SCHOENBERGER: Well, it is Brenda but it is also the responsible plan. Look, you're looking at twenty one thousand federal retirees they're receiving a pension, a lifetime pension n the six digit range. Many are actually receiving as much as two hundred thousand hours. What's that mean for taxpayers? Well, we're looking at a two trillion shortfall. We have to fill the gap and that's what Ryan is coming out with that's all he's doing. He's doing the responsible fiscal thing, but he's getting a lot of backlash for it.
SARAH FLOWERS: Well here's how it's not fair. We're talking about a five point four percent effective pay cut for average workers. For people, for some of us that may not sound like a lot, but to somebody who is making the average federal salary which is less than $70,000 we're talking about thousands of dollars that aren't going back into our economy. That's school supplies not being bought that's new computer not being bought, that's money not going into the economy which is bad for us all.
GARY B. SMITH: Well, Sarah is absolutely right if we're just talking about salaries unfortunately we're not we're talking about pensions, and pensions for the public sector like for like job compared to the private sector are almost fifty percent more. We now have a few trillion dollars, I forget the exact amount $2 trillion of unfunded pension liability at the federal government level. So clearly the math says that asking federal employees to kick in what amounts to another five percent I don't think is unfair considering their pensions are fifty percent larger than what you get in the private sector.
TOBIN SMITH: Sarah, that's a very nice thought and maybe that would've been applied ten years ago, but if you actually look at the numbers over the last thirty six months, other than lawyers and judges, I mean judges could make more money than pre-practicing lawyers almost every side is in a higher rate and Gary's point is and you have to include salaries and pension because the pension plan is so gilded. Now, look it this idea of actually trying to match somewhat of our income with our outgo and our liabilities is something that we've not had to do because we could just borrow trillions and trillions and trillions of dollars to plus the hole. Well that time is coming to an end and this is the ultimate responsibility which makes me fall over this guy to actually bring this point up.
JONAS MAX FERRIS: It sounds like a lot to say that twenty thousand federal workers have six figure pensions but that's actually a few small fraction of the giant federal workforce. A lot of them are doctors that work for the federal government. Yeah they make money that get high pensions it's not that outlandish hat they do that. In general there's a lot of pension underfunding in America in the federal level and the state level and on the corporate level, and tax payers are on the hook from all of it one way or the other. So all of these pensions across the board, including federal need more money going into them they're not earning enough money especially the private ones to make good and the taxpayers are there, so everyone's got to kick in a little more take a pick at whatever to sure up these pensions including federal workers.
President pushes new spending plan as jobless rates rise in 44 states
GARY B. SMITH: Well Brenda, it hasn't worked in the past let's put it that way so if the definition of insanity is you know blah, blah blah doing the same thing over and expecting different results that's what we have here. Look, the associated press which I don't think is any friend in reality of the right has studied the first ten months of Obama's spending on infrastructure, roads highways and found zero gain in local employment. It was verified by independent economists, but in addition to that the CBO has studied it, the general accounting office has studied it the department of transportation has studied it, the congressional research has studied it and all found the same conclusion Brenda, that infrastructure spending has no effect on unemployment in fact that might even have a negative effect on employment, so to think that, "Oh now it's going to work" is absolutely silly and it's a waste of money.
SARAH FLOWERS: Sure, what we have seen is twenty eight straight months of private sector growth. One factor in the equation isn't enough to get the whole job done here, and while transportation jobs such as building roads and road construction have their limitations they're short term jobs, they're not jobs that last forever. If you're a guy looking for a job right now that's a good job.
TOBIN SMITH: Well Sarah's got a rough thing to have to support here. I would go with Mr. Obama who in a sort of casual statement a couple weeks ago when they asked about shovel ready jobs, he looked into the camera and said, "Well I got to tell you shovel ready what sort of, I sort of messed up there." We know for a fact that we have a $50 trillion economy. We know that $473 million although it sounds a lot is about a teardrop in the ocean of the spending of one day in this government and economy. So unfortunately he's not being cynical here, Gary has the facts right it can't and it won't cause it really gets absorbed and dissolved into already existing projects.
TODD SCHOENBERGER: Yeah, you got that right, but here's the thing. I like this idea. I mean, look the private sector isn't going to be hiring and we already know about the macro issues, the economic issues you have an uncertainty issue with the fiscal cliff. I think it's a great idea because this money was already earmarked between 2003 to 2006, now they can actually implement this cash. It's a short term temporary job, but I got to tell you guys , they got to be doing something because they're private sector is not doing anything.
JONAS MAX FERRIS: It's borrowed money we've already spent. If you build a road and you borrow the money to do it you're going to create some jobs someone's going to be building that road while...it's good to make jobs but if you've driven by a road project there's not thousands of people on that road putting couple miles of road together. It's a few hundred people at best it's not just that job intensive and it's not that large enough, and roads are a few million dollars every few hundred yards.
Direction of U.S. economy in question amid mixed reports
TODD SCHOENBERGER: It's the last three that you just mentioned, Brenda. Look, the economy stinks right now you look at the earnings growth they're quarter over a quarter it was only three percent guys a year ago at least it was over twelve percent. Companies are just not making enough money and the forward guidance is poor at best.
SARAH FLOWERS: Well, I think we're not out of the woods yet, but things are getting better. As you look at those companies you got to think about who is spending dollars in their store. We see people in the upper part of the middle class feeling a little freer to go back to maybe renovate a home in their house, or sorry a room in their house and for people in the lower part of the economy they're just not feeling the security yet.
GARY B. SMITH: Yeah, I think it's sideways and I think it's exactly what you're seeing here, Brenda. Some companies are reporting good some companies are reporting bad as you note, and I think it reflects the uneasiness, not pervasive negativism or optimism, but people just don't know. Look, we can all just sit here and speculate but we really don't know what's going to happen with taxes. We don't know what's going to happen with healthcare, we certainly don't know what's going to happen with the elections so there's a lot of uncertainty and I think people are trying to feel their way through while we still have relatively high unemployment, housing prices haven't budged but they haven't gone down. I guess as Sarah would say, so there's a lot of kind of muck that we have to wade through maybe it'll be cleared up in November.
TOBIN SMITH: Well, I'll tell you what is clear that you sort of have the tale of three cities here. Somebody like Staples who's getting their lunch eaten by Amazon, that's why there numbers are down. You have an innovator like Target, you have an innovator like Home Depot that's doing very well also because they are North American facing. Most of their customers are in North America. Then you have a company like McDonald's, like Deere that sells into Europe that just is having problems because Europe's having problems. So, unfortunately kids we cannot make a global macro statement based on these four companies.
JONAS MAX FERRIS: America is doing better than these other countries and other companies that were being carried along by emerging market growth in China. They're not going to be there anymore unfortunately it's just the U.S. at this point leading the world back to our old positions so to say. I will say corporate America's earnings have never been higher. I mean most companies earn more than they ever have before, that part of the economy is looking spectacular. The real economy is not corporate earnings, it's somewhere between the bad unemployment figures and the very good corporate figures. So, it's kind of in the middle. I don't think the growth is going to be there as well, but you can't knock the positions that these U.S. corporations are in right now. They're doing fabulously, it's actually mostly profit picture and it's not so much revenue so the sales growth is not really there, but they've been able to squeeze out profits needing to hire people, not needing to pay more it's worked out very well for them.
GARY B. SMITH: (FB)
JONAS MAX FERRIS: (FDN)
TODD SCHOENBERGER: (MO)
TOBIN SMITH: (GME)