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WISCONSIN TEACHER PROTESTS GOING NATIONAL; COULD UNION FIGHT FOR 'AMERICAN DREAM' TURN INTO 'NIGHTMARE' FOR ECONOMY?
BOB FROEHLICH: It could be an economic nightmare. This is so catastrophic if this spreads because it's so unlike, for example, what's going on in the National Football League where they have billions and billions of dollars and are fighting about how to divide it up. In this case, the states have no money. There are budget deficits. Parties have to come to the table and take these cuts. Corporations did it, big and small companies; state and local governments are not immune to this. People have to come to the table, there has to be compromise. We're talking about major budget deficits. This is not time for protest, this is not time for running away from responsibilities, and for state legislators to hide in other states. Everyone has to come to the table - this is a budget crisis, it's time for everyone to step up and pay the price.
STEVE MURPHY: Cuts are absolutely going to have to happen, but that is not what these protests are all about - and not what the Republican governors are trying to do. They are trying to abolish the right to collective bargaining. They're not talking about sitting down and negotiating concessions, negotiating pension reform, not at all. They're saying we are going to take away your right to sit down with us, we're going to decide for you. That's un-American and when you reduce the strength of unions, you reduce the middle class in this country. That is what's happened over the past 25 years and the economy depends on the middle class.
GARY B. SMITH: They do need to sit at the table and the reason is that they do is that unions have this collective bargaining item on their agenda. The problem with that is they have a monopoly union. If you have a union at UPS and they come to head with the management and they somehow shut down UPS, well you can go use FedEx or the postal service. Here, you can shut down a whole government. People don't have any alternative, they can't go to another policeman or firefighter or another school that's open. That's the problem, that's why this whole union/collective bargaining needs to be abolished.
CHRIS COTTER: We've got 17 states right now and counting, where we're seeing a protest happening, where governors are going to have to come to the table and make cuts or ask for serious cuts. But you've got states like Michigan for example with Governor Rick Snyder who says we're going to make cuts, we're going to do it through collective bargaining. Wouldn't it be fascinating if these leaders with these unions said we're going to stop acting selfishly, we're going to start truly looking after our constituents, we're going to come to the table, and we're going to give in to these cuts through collective bargaining where collective bargaining works and the states get to make the cuts so they can remain fiscally viable.
JONAS MAX FERRIS: This isn't as bad as everyone thinks (for the economy) because these unions don't have as much power as you think they do. The government overpays for everything and they're going to overpay for labor with or without a union and I'll give you a perfect example: The Army. The Army has some of the most lucrative pensions in the world and there's no union fighting for these pensions. The government will always give the unions more money because it's a way of buying votes and buying constituents and that's going to go on with or without unions. It's the private sector that shouldn't have unions, private companies can't merge and become a monopoly and negotiate against them, they're not allowed.
FEARS GROW OF NEW RECESSION IN U.S. AS MIDEAST UNREST SPREADS
JONAS MAX FERRIS: We should be worried because this is a weak economy. It's not a recession anymore, but it's not the kind of economy that can handle a lot of burdens. Anything that starts to go on, you're going to have problems. There are good oil prices that are high and bad oil prices that are high. These are bad high prices. What we saw in 2007 was high oil prices because the global economy was consuming a lot of resources; that's not so bad, it won't hurt the economy. When you've got disruptions or possible disruptions or panics, prices going up 20-30 percent, that's a supply shock like you had with OPEC in the 1970s. That could actually cause another recession in the economy.
STEVE MURPHY: So far the supply has not been reduced by this. Look, oil rules the Middle East just like our addiction to oil rules our economy here. The oil economy is going to overwhelm these "kleptocrats" over there and there's not going to be a serious disruption in the flow of oil. As a matter of fact the biggest threat in that regard is actually Iran and their attempts to develop nuclear weapons and whether that leads to military conflicts in the region.
BOB FROEHLICH: I don't think Saudi Arabia will become involved in this because I think we almost have this artificial threshold that unless oil gets above $140/barrel, which approaches an all-time high, I think the economy can withstand this. Look here are the facts: the consumer is in much better shape today than they were two years ago, and here's the one thing that no one is talking about...corporations have more money today than any time in the past 60 years. They're going to put that money to work, they are increasing dividends, they are buying back shares, they're buying other companies for goodness sake. I think we can withstand the higher price of oil, it's going to be with us for a while.
CHRIS COTTER: I think in the short term it would be a big problem with our economy. Might there actually be a silver lining here in that we finally get the administration to put together a bipartisan comprehensive energy plan that seriously looks at alternative energy choices and drilling? We've reduced our deep sea drilling platforms from 30-something to 8 after what in the gulf last year. We need to have a real plan moving forward, we don't have one right now and this is the cause of it.
GARY B. SMITH: The market had kind of a struggle this past week, but I think it was more reaction kind of like what we saw in Egypt. I think we can withstand this for a couple of reasons. One: the consumer has been through the $4 threshold before, they know to telecommute to cut back and all of that. Two: gasoline prices always get the headline because you drive by the big sign, but gasoline is only 5 percent of most people's budget. The bigger things like housing which is almost 40 percent is actually flat. In fact, a lot of people are seeing property taxes go down so actually housing costs are going down. So a lot of things that people don't see or don't think of is flat. So even if oil goes up, I think we have enough of a buffer in our whole inflation picture to handle it.
NEW PLAN TO PAY DOWN GOVERNMENT DEBT: HOLD GOVERNMENT 'YARD SALE'
GARY B. SMITH: I think it's a terrific idea and the list is easy to start with. First of all, let's start with either the things the government can't run or break even. You've got the Postal Service, you've got Amtrak, those are easy ones. Then you have the things that are falling apart like highways. Why can't they be privatized? We have the technology to take tolls and then it's a pay as you go deal. And then finally, all of the assets that we're not using, that private individual corporations would love to have. We have $760 billion I think in land that we own. Let's get rid of the land that we don't need for security, for parks and stuff like that and hand it over. Easy.
JONAS MAX FERRIS: I don't think Amtrak is worth anything. The government does own a lot of resources that are just dead assets and I'll tell you what is at the top of my list it's been there for a while, we've got more gold than anybody - 81,000 tons worth almost half a trillion dollars sitting in vaults, we have to pay to have guys with guns stand around it for no reason. Why do we own that asset? Sell it, pay off the debt. We've got a lot of resources.
BOB FROEHLICH: I think there are a lot of facilities, a lot of buildings that are not being utilized at all or are being underutilized. To me if we sell that than you can split the money with the states and then you don't have to put the maintenance into it that they're not keeping up. And also that can be tax viable to state and local governments. I really love Gary's idea too, I think we should we privatizing the road system and interstate highway systems, maybe privatize the post office if we can. There's a lot of things we can do and then there's some land out there. Maybe we should sell the parks to Disney, privatize them, it would make them way more fun.
STEVE MURPHY: Privatizing the roads? That's a great idea for the American economy. You have to pay a toll to go to the grocery store, you have to pay a toll to go see your grandmother, you pay tolls across the country. That's nuts. These are all tiny savings. Get rid of the hundred billion dollars of corporate welfare we have in this country from the very beginning.
CHRIS COTTER: Here's the thing though when you talk about parks, obviously Disney is going to bid for it, but you're going to have the dangers of somebody from another country bidding for it and Yosemite is going to be owned by Sweden. Our great treasures are being sold off to everybody overseas.
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