• With: Jonathan Layfield, Wayne Rogers, Julian Epstein, Jonathan Hoenig, Carol Roth



    JONATHAN LAYFIELD: This is ridiculous. This is a horrible idea. It's the wrong time to implement it. Electric cars are decades away, or some alternative vehicle, to have a mileage tax is decades away from what we need to implement this in 300 million American cars, putting odometers on them, or logging down the mileage manually. This will cost consumer a fortune for this tax. We already have a gas tax. That is supposed to go towards roads and bridges-- that is what we should use. If there is a shortfall, increase the gas tax.

    WAYNE ROGERS: Yeah, I can understand it too (the mileage tax), but John is absolutely right, we already have a fuel tax, I mean putting some device on your odometer to measure the amount of miles you go-it's crazy. Not only that, it's an intrusion on our freedoms, once again. It's another way to trap people, it's another way to look, you know, for trouble. You've got a fuel tax, a fuel tax is a use tax. It's already a use tax. The fact of the matter is they're using the argument to say that we're getting better mileage now, therefore we have to raise taxes. Hey maybe you don't need to do so much; maybe the infrastructure's fine like this. Maybe you can use toll roads. We already have toll roads. Why not have more toll roads? There are an infinite number of better answers than a fuel tax that's based on mileage.

    JULIAN EPSTEIN: It's very Big-Brotherish, and John Layfield I think makes a very good argument against it. The reason we have a gas tax is to basically have a funding source for the upkeep of highways, so it's an important policy; its work has been bipartisan. Moving away to a mileage tax I think is probably a bad idea for a number of reasons. One, because we don't need any new taxes now, when the economy is in the state that's it's in, other than the debate that's going on the fiscal cliff, of course, which is another issue. Secondly, this mileage tax could disincent fuel efficient cars. Three, there's all kinds of questions about privacy, there's all kinds of questions about would you tax congestive times, would heavy trucks get taxes. I think it's probably an unworkable idea, which is why the Obama administration has distanced itself from the idea.

    JONATHAN HOENIG: It's not too long before it goes negative, actually Tracy, it's going to go negative in 2015. I mean the gas tax has been raised almost continually since it was first proposed and first enacted back in the 1950s. I mean in some states now people are paying 64 cents a gallon simply in taxes. So why is it that taxes are always the only proposal from government? Why not some semblance of freedom? There has been successful privatization efforts of private assets from roads to bridges on down the line in almost every country except here at home, and you know LaGuardia is the best example in new York: terrible airport owned by the government, in Mexico, in New Zealand, airports are owned privately, they're traded in the stock exchange, it helps the government, it helps the services, as well.

    CAROL ROTH: I don't necessarily think so (that it makes sense to charge those who drive more. I think that's a linear solution to a very complex problem. And as some of the other guests said, it depends if you have a fuel efficient car, it depends if you have an SUV. But I'm with Jonathan- why can't we be entrepreneurial about this? Why can't they add some sort of value instead of just taxing us? I'm in Illinois, we have a ton of vanity license plates, if you add a Chicago Bears, and a Hello Kitty- those kinds of license plates, people would be willing to pay up for that, so why can't they offer us something that we would be willing to buy, that would give them extra revenue and not just take from us? Maybe I'm spending too much time with the entrepreneurs, Tracy, but it seems like a very obvious solution to me.


    WAYNE ROGERS: Well it tells you how insane it is-by the way, the sound of those cows tells you what's going to happen. That alone will tell you enough. By the way, these are all based on marketing acts that the federal government passed over the years, and it addresses not only milk, but grain and meat and everything else in the world. As a consequence, we have a bureaucracy that is based on this, that the federal government in order the enforce this-y the way this goes back to an act that in 1942 the Supreme Court decided something called Wickard vs. Filburn in which a guy growing grain on his own farm to feed himself and his own cattle was, by the supreme court, told that he could not do this, because it was in violation of the marketing act of 1938. The same thing in this case, where we have a marketing act about milk in 1949 and the federal government is going to go and has to make a market, and says "if we're going to make a fair market, we will buy your milk at $8 a gallon," when by the way the current price is about $3.65.

    JONATHAN HOENIG: The Farm Bill is the problem. Government should have zero role in milk production, in agricultural production at all and Wayne hints to some of that. It's been so long-lasting, and of course that intervention is the problem. It creates the cliffs, the distortions, the mis-allocations that not only creates more uncertainty but in this case simply destroys wealth. And I'll tell you these farms bills are terrible; they're safety nets essentially, bailouts for producers that guarantee prices, they restrict foreign competition they all should be done away with, and I'll tell you, if the GOP wants to get behind something, why not get away with subsidies to all businesses, milk producers included.

    JULIAN EPSTEIN: So your viewers understand- this is an old policy that has been bipartisan, Republicans and Democrats have supported it. It is when the price of milk goes so low and basically drops by 50 or more percent the government will buy some milk to keep the prices in the marketplace relatively steady, if the congress does not change the law right now, we will go back to a 1949 formula, that will require the government to buy milk at twice the price it is right now in the market. That would then result in the price of milk and dairy probably doubling in the marketplace. So it is this mechanism that congress simply needs to update, the senate has passed a law, the house agriculture committee has passed legislation, it's now for the house leadership to actually bring this up. This is a relatively simple and uncomplicated and noncontroversial provision to update the law. Now you may have a philosophical disputer to say "we don't think that there should be any dairy support whatsoever." That's fine, that's a perfectly respectable intellectual position. But the result of that, if you were to implement that no support whatsoever for dairy, no government assistance, you will have many, many dairy farmers going out of business.

    JONATHAN LAYFIELD: This is a terrible policy. Julian explained it very well. I grew up working on a dairy in Sweetwater, Texas, I never milked a cow either, but this is based on the cost of production of milking a cow by hand in 1948- you extrapolate that to the year 2012, now the year 2013 coming up, and that's how you get to $8 a gallon for milk, and that's what the government has to buy it at, and according to this provision the government can't even give this away to charity, because they think that will dilute the market according to provisions in this bill. They don't have the ability to store all this. I think this is an easy fix and I think we probably don't end up having this happen, but this is what happens when our congress, repeatedly over decades, just puts band aids on top of everything and doesn't fix it. Same with the AMT Tax that's coming up, many things.

    CAROL ROTH: You know what, sometimes you have to have a little pain, Tracy, in order for these things to work themselves out, otherwise they become problems, that compound over and over again, and the reality is that supply and demand will end up evening out the price over time. So if we can get the government out of the equation, consumers will pay the appropriate price for milk, depending on how much it costs to produce it now, not in 1949, but now, and the supply and demand. But I think that there's a bigger issue here, Tracy. I am worried not just about this dairy cliff, but what about inflation on top of this? I think that food prices-not just from thus, but from all the money printing that we've been doing, could have a huge impact and I am very worried, not only about the food industry, but about grocery and the restaurant industry,


    JONATHAN HOENIG: The inventor of the wind up radio? Wait, Tracy, I'm hearing from the inventor of the slinky, too- he thinks the internet has killed kids, made them brain-dead as well. I mean, come on, Google had created wealth that has been unmatched in human history. There's nothing inherently better about having to look something up in a card catalogue versus on the web, I mean the problem today is that kids don't know how to think, they don't think long term- for that you can blame the public schools, not Google.

    WAYNE ROGERS: Not only that, it's a question of use versus abuse. Kids can abuse it. It can be the telephone; they use it for social media instead of using it for what it's intended - which is to get your information a lot quicker. It's a great thing when it's used properly.

    CAROL ROTH: I know that I am after using the internet and I probably use it more than everyone here. My spelling has suffered, my grammar has suffered and I have a hard time multi-tasking. I think it has the ability to stifle creativity and that's the big issue here. We need kids to be innovative and to think for themselves.

    JULIAN EPSTEIN: Excessive TV use is not good for the brain either. The internet is incredibly important professionally and personally in terms of news or professional mobility. It has all kinds of reasons as to why it's the most important communication revolution since the Gutenberg printing press. On the other hand, if it reduces us to sitting around the dinner table and doing nothing but texting each other, and we spend hours and hours on Facebook - then there is a tendency to become a zombie. There is a tendency to get into isolation idiocy so it depends how it's used.

    JONATHAN LAYFIELD: I run a kids program here in Bermuda, and you can take away their cell phones and computers - talk to them for just a second a see a butterfly pass by and watch their attention go somewhere else. Kids daydream. It's what they do. If it's not the internet, it's something else. The internet with Google and Wikipedia has helped kids tremendously in learning.


    WAYNE ROGERS: Well, I love drug companies. Drug companies take a long time to get to the market place, this one is called LXRX. I own it, I've talked about it in the past. I think this year will be a good year. Its selling under $2 a share, it has a chance to triple.

    CAROL ROTH: I've got Herbalife. Herbalife has gotten beaten up by these hedge fund managers that don't understand their business model, its 60 percent off its high, its trading at four point four times cash flow. If this has some great quarters it'll go up or it'll get bought out.

    JONATHAN LAYFIELD: Facebook was the disaster of 2012, held up with selling pressure in December. Buy this thing in the low 20s and you could see a 50 percent upside this year in Facebook.

    JONATHAN HOENIG: The end is falling and far-East financials are rising we've already talked about MFG. I think SMFG is a deep value play that could do very well in 2013 and I own it in my fund as well.