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FEARS ARE MOUNTING THAT $447 BILLION JOBS PLAN WILL TAX COMPANIES AND HURT JOB CREATION
Gary B Smith: The whole proposal is kind of goofy. Most of the small businesses we're talking about here are the job creators. They pay taxes through the normal income tax and 90 percent of those will actually pay higher taxes. So, if you're a small business, what are you going to do with that higher cost? You're going to pass it off to your customers. As a result, demand for your product is going to go down. We've seen that. And if demand goes down, that company is not able to expand, hires less workers. The whole thing is just counterintuitive.
Tobin Smith: I'm a small business guy. If I know that my profits are going to be 10 percent less, I am going to cut my overhead by 10 percent. Since my overhead and most of everyone else's overhead is labor, tough toasties. What the Obama administration just doesn't get is that the small business person makes a decision based on the net profit and the net overhead. When you raise my overhead 10 percent, I am going to cut my net cost. That's a fact and we've seen that over the last 12 months. I don't care about taxes. I care about profit. And that's the issue.
Jonas Max Ferris: First of all, these tax increases, if they come, are offsetting tax cuts in the here and now, which would be extensions of the payroll tax. So, at worst, it would be offsetting to the point where it would be a zero sum. But, in fact, it's less than offsetting because everybody who makes two, three, or four hundred grand isn't an employer. There are just people who make a lot of money. They buy a lot of stuff and you might hurt their spending if you raise their taxes. But they don't all hire people. The payroll tax cut lowers the cost of hiring people, so all these businesses that might see higher income taxes are also going to see lower costs of employment, so it would be offsetting. One of the problems with it is it's kicking in too soon. If they could somehow push off the tax increases until we're really out of the recession or slow economy, that would work a little better.
Susan Ochs: The survey that just came out by the National Federation of Independent Businesses-they do a monthly survey of small businesses-shows that taxes is not the number one concern of small businesses. It's weak sales. We need to get demand moving forward and doing a broad base tax cut, like this one that will hit 130 million workers, that's the way to spur demand.
Amilya Antonetti: It's not whether I want to have a $10 million business and make 10 percent, or whether I want to have a $1 million business and make 60 percent. I care about the most amount of money that I can actually put back into my business. So, what we've already done to address [Susan Ochs'] point about demand, small businesses had to trim all fat all the way around. That means that we no longer have the marketing dollars. We can no longer afford the hot hunter on the street. That's why we don't have demand because we have taken it all the way down to survival mode. We don't have those resources and it has affected our demand. But, we made a decision to say ‘do I stay afloat or do I cut and shut my doors?' So, we stay afloat, but we don't have the resources we need in order to capture that audience. Furthermore, now you're asking me to not only invest in this ridiculous plan, but you want me to invest in expansion of the things I need in my business. There's only so many dollars I have. I can't put 20 percent here, 30 percent here or 50 percent here. Then I'm upside down. This is the same mistake they made with his green company. The numbers do not work. Not now or ever.
TAX CREDIT TO EMPLOYERS HIRING WORKERS WHO HAVE BEEN UNEMPLOYED FOR SIX MONTHS OR MORE
Gary B. Smith: If a company wants to hire if they have demand-and that is the main reason they are going to hire, probably the only reason-they are going to hire the person regardless of time frame. If they don't need the people and it happens to be just six months that a person has been unemployed, and then they need them, they are going to hire them anyway and we've just given out $4,000 which is not needed at all. So, really, this is kind of a cash for clunkers thing. It sounds good, but it's a plan developed by someone who has never worked a day in their life and has never had to hire and fire people before. So, basically whatever we're going to spend the $4,000 is money we're never going to see again and it's not going to help unemployment.
Tobin Smith: At the margin, that's a wonderful concept. So, at the margin, if you had two equally proficient people I would take the person that gave a slight edge because I get $4,000. Now, let me tell you how the real world works. Number one, if there's low-skilled people-there are ten million low-skilled people out there-I can hire them. They've been out for twelve months or eighteen months. The issue is skilled people. Skilled people, I will snap up in a second. The problem that businesses have, is the people that we need, the highly skilled people, we don't have enough of. This $4,000 credit means nothing there.
Jonas Max Ferris: They're not trying to incentivize you to buy those people. Essentially they want you to buy the guy who has been unemployed for a year or two years. The problem with this is I don't think it will defer hiring until someone's been stale that long because, again, there are a lot of people in the pool now who haven't been working. It's that it's actually going to reward Groupon to hire someone who they're going to hire anyway. You're giving money to companies who were going to do a lot of hiring for no reason. That's a little wasteful.
Susan Ochs: First of all, I would be shocked to hear a CEO say that they would wait six months to hire. If you see demand and you need to move, you're not going to wait for any tax credit. Competition waits for no tax credit. Your competitors are going to get a jump on you. There's a reason they offered this tax credit and it's because we're starting to be in danger of seeing a permanently unemployed class of people. If you look at the average duration of unemployment, it's been extending steadily throughout this crisis. We're now up to 40 weeks-that's 10 months. What this is trying to say, on the margins, if you have two relatively equally qualified candidates, to encourage you to bring someone who has been out of the work force for six months back in. That's what it's trying to do.
Amilya Anotnetti: What I'm going to do is I'm going to wait until the person I want gets up for hire and then I'm going to take my $4,000 dollars. I'm going to use whatever I can do to work my margins. And so will every other small business person. So, all you're doing is prolonging the hiring cycle. It takes me $40,000 to hire someone, which really means it's $49,000 by the time I bundle it and another matching of that for soft dollars. I'm in it for $100,000. If you're going to give me $4,000, I'll wait.
NEW FORD AD BASHES GOVERNMENT BAILOUTS TO BOOST SALES
Gary B. Smith: I like it. I think it taps into the feeling amongst many people about ‘hey wait a second, why wasn't my industry singled out to be saved? Maybe I worked in the garden industry, or maybe I food service and I got laid off. These guys get bailed out. I'm going to go buy a Ford.' I think it's got to help.
Tobin Smith: I'm buying it. Ford's smart. They ran it and they got a lot of response. Guess why. Because a lot of people are ticked off about this deal. They're tapping into it. I have no problem with it.
Jonas Max Ferris: First of all, Ford was for the bailouts to save their suppliers. Second of all, it's like ‘oh, we're slightly less crappy than the other two U.S. automakers.' That would be a great ad campaign if there weren't eight successful foreign auto companies you're competing with. But, it's only going to highlight that you're in the same pool of losers. I think it's a bad way to go.
Susan Ochs: Trashing bailouts is so 2009. The reality is, nobody likes bailouts, but this one worked. Even the Heritage Foundation is calling this one a success. It saved one million jobs.
Amilya Anotnetti: I thought it was very clever, so my hat is off. I am a Ford fan. What I don't like is it feels too much like all the political campaign stuff that's going on, so I would have liked a better execution.
Gary B. Smith: XLF up 30 percent in 1 year
Tobin Smith: VIA up 25 percent by December
Jonas Max Ferris: TROW-20 percent gains in 1 year