• With: Wayne Rogers, John Layfield, Jonathan Hoenig, Tracy Byrnes, Julian Epstein, Tracy Byrnes

    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.

    POWERBALL FRENZY SPARKS CALLS FOR NATIONAL LOTTO TO PAY DOWN DEBT

    WAYNE ROGERS: Well, let me start with a question-why not? I mean if it works for all of the state governments and the states are doing it-why not the federal government? Make it a big one-a huge one. And any little niche that knocks down the deficit is good.

    JOHN LAYFIELD: This is really bad for states. Look, Wayne has something in common with the lottery-he has as much chance of winning the lottery as he does most weeks of getting through a comment without Jonathan interrupting. The problem you have with this is this could be billion dollar jackpots. It's going to be huge. But it's going to kill state lotto's. And a lot of these state lotto's, especially in the southern states, were sold as a way of funding education. Politicians lied. That didn't happen. It went into the general fund. But they're dependent on that general fund. So what you're going to do is these cash trapped states, who depend on this lotto, you're going to absolutely kill or at least cripple the funding for these states. This is a bad idea because it robs Peter to pay Paul.

    JONATHAN HOENIG: Wayne has got to check is calculator. I mean, he says, "why not?" The $580 million jackpot would pay off about 0.003 percent of the national debt. So let's just forget that idea. We don't need a new plan to pay off the debt. We need a new philosophy not to get into the debt and not to keep exacerbating the debt. I do think however that in a fully free society a lottery is a great way to fund the government because it's voluntary. All taxes should be voluntary. And I tell you, people would gladly pay it if they knew the money was going to Washington to actually protect individual rights and not just get pissed down the drain.

    TRACY BYRNES: I hate the notion that we consistently come down on anybody's idea because it doesn't cover the whole bill. Every little bit counts at the end of the day. Let's start somewhere. And look, I love you John, but I disagree. If anybody was sucker enough to buy a Powerball ticket at the state level-they're going to spend the $2 at the national level too because the pot will be that much bigger. I think people who are inclined to play, will play regardless of state, national, global, you name it. You can create lotto's around the world and people will play.

    JULIAN EPSTEIN: Well I hate to agree with John. I mean, just on principle I hate to agree with john. But he's absolutely right. This is a rounding error when it comes to the national debt. We're talking about a $16 trillion debt. There is one way to reduce the national debt right now which is a combination of spending cuts and revenue increases. Obama has put on the table $2 trillion in spending cuts. We're going to need to find about another trillion in revenue increases. And virtually every economist now is unanimous-that the most economically effective way of increasing revenue is going after that top 2 percent.

    STUDENT LOAN DELINQUENCIES NOW TOP CREDIT CARD DELINQUENCIES

    TRACY BYRNES: This bothers me on so many levels. And not because I have three kids going into college someday. Look, we have an economic issue, in that, these college kids are coming out of college and they're not even going to have jobs to pay off these loans. So their disposable income is going to be that much lower. That means they're going to be living at home for a really long time because they can't get their own mortgage. Also, they're not going to go out and buy that first car, TV, or anything because they're going to have to pay these loans back. And the only reason they have these big loans is because colleges consistently hike tuition because they know they can get free government money to pay for it.

    JONATHAN HOENIG: Well of course this hurts the economy. Every time the government intervenes in the economy, whether it's housing, ethanol, or agriculture, or in this case education, it always leads to destruction. I mean, since 1999 federal student loan has gone up by about 500 percent. That's actually more than housing related debt. 85 percent of that is held by the government. So of course, its 10 percent delinquency now when it goes to 15 or 20-it's the taxpayer and wealth production that's left on the bottom floor.

    JULIAN EPSTEIN: I think almost everyone, maybe other than Hoenig on this show, has agreed that education is critical to this countries competitive and it's critical to the individual. If you have a college education you're far less likely to be unemployed and you're far more likely to earn a lot more income. What we need to do is reform the system. What we did in the last congress was we took the banks out as middle men. That saved about $60 billion. The republicans opposed that. But we need to cut the waste out. The law that was just singed will give students more flexibility to pad back under the condition that they do in fact pay back the loans. That is an important reform as well. Tracy is right. The principle issue is whether kids coming out of college have a opportunity to get a job. That's the problem we really need to fix.

    WAYNE ROGERS: Well there's got to be some happy medium. I kind of agree with Julian in the sense that obviously you've got to educate the public. The system has to work. We have to have a better way to run it. It's just a terrible way. I don't believe the federal government can run it better than anybody else. There are so many ways for a kid today if he wants to go to college that he can apply for all kinds of scholarships and other things. I've worked in college so I helped to pay my loan. I had to work to pay off that loan while I was in college. You can do that. There are ways to correct this system to make it work.

    JOHN LAYFIELD: I agree with Julian and Wayne. I work with kid's everyday and I preach to them how much more they make and how much easier it is to get a job when they get a college education. And Julian, you don't have to take a shot at the republicans every single time you make a comment. We know you hate them. The issue is much bigger than that and both sides haven't done much for the guidance for these kids. These kids need to have some kind of guidance once they get to college. That's what we try to give them. To let them know when they get to college you can't just take out any type of student loan and end up with $80,000 in student loan debt with no way to pay it off. You have to figure out what you need to do as far as a job. And that's what the hard part.

    CHINA'S JOBS PLAN: REPLACE TAX ON Cos WITH NAT'L SALES TAX

    WAYNE ROGERS: This does work. And it's a sad day to think that we have to do something that the communists in China are doing. But yes it works. They tried this in a province there in Shanghai and it worked very well. And now they've expanded the program to other provinces in China and its working very, very well.

    JONATHAN HOENIG: This would work. It's fair, it treats everybody equally, it's easy to understand, and most importantly it taxes consumption not production. I'll tell you; the only thing I like about communist China is the general tso's chicken. But I do think that the corporate income tax must go. It's barley 100 years old in this country. And think about how much more wealth we would have and how many more jobs we would have if the SMP had 35 percent more of their profits every year.

    JULIAN EPSTEIN: The reason a national sales tax is good is because it encourages savings and it is far harder to cheat on. The reason that it is bad is because in an economy that's growing at a 2.4 percent, any sales tax is not going to stimulate the economy. The reason why I like letting the Bush tax cuts expire on the top 2 percent rather than a tax cut, is because all of the economic data, COB has looked at it, says that if you let the Bush tax cut expire on the top 2 percent it will have virtually no impact on job creation and virtually no impact on GDP formation.

    TRACY BYRNES: I love it. Except I know that I know that we would just tack it on to all the other taxes we have around here. If we could get rid of everything else and focus on just this-it could work brilliantly. But the problem is we are so deep in everything else that I would be really hard to wrap it up.

    JOHN LAYFIELD: China did get it right. And look, the $500 billion Julian, that's over ten years. That's $50 billion a year. We have a 1.3 to 1.5 trillion dollar deficit annually. That doesn't even pay the interest on that. Look this is a fair tax. We take away food a certain things so it's not regressive tax against the poor. Some type of national sales tax is the way to go.

    WHAT DO I NEED TO KNOW?

    TRACY BYRNES: Doctors are starting to do visits via Skype. I love this. It saves you time in the office and you can easily detect a sniffle over your computer.

    JOHN LAYFIELD: Julian is half right; he thinks the republicans are worthless. I think they're all worthless. Who knows what's going to happen with this Fiscal Cliff. Invest in good solid companies in good sectors. Chevron is one of them.

    WAYNE ROGERS: I'm like John. This is a good company. It's called AAON. They make air conditioning equipment. I've owned the stock for over 20 years. It's a great management. Small company but does very well.

    JONATHAN HOENIG: Sometimes you've got to spit in the Devil's eye just to know you're alive. NBG is National Bank of Greece. This is a lottery ticket. I remember, however, a lot of Latin American stocks in 2000 and 1999 coming back. If Greece comes back-NBG will as well.