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ECONOMY FAILS TO ADD A SINGLE JOB IN AUGUST; FEARS MOUNT OF HIGHER UNEMPLOYMENT RATE: HOW CAN HIGHER UNEMPLOYMENT RATE BE AVOIDED?
GARY B. SMITH: If you're looking for tax cuts, I am in total agreement. I'll make a differentiation. Jonas said 'tax cuts.' What he's talking about is the payroll tax cuts. What most people think about when they think of tax cuts are cuts in the marginal tax rates, not just a couple hundred dollars in your pocket, like these payroll tax cuts. I like the plan that Jon Huntsman has come out with. Simplify. Simplify. Simplify. Bring down the marginal rates across the board for people and corporations and then close up the loopholes. Make it revenue neutral if you want, but simplify it out there. Cut out things like Obamacare. The whole reason we aren't growing and we're stagnant is because there is so much uncertainty and overhang out there. The President could go a long way by saying we're going to simplify things. I guarantee if he came out with that same kind of lower and flatter tax rates, the economy would take off
TODD SCHOENBERGER: We need tax cuts and there's no doubt about it. You're going to hear a lot from the President in the next week. He is going to be talking about all the stimulus and all the money that he wants to spend, but bottom line is, you need tax cuts. You have to throw that confidence back to the small business owners and get them hiring again.
JEHMU GREENE: I don't think the president's proposals are going to fix the jobs crisis overnight. Yes, it is not a good position to be in, especially going into Labor Day this weekend. I expect to hear some really good ideas from the President next week. We will hear tax cuts. I do think that we have to keep in mind that the stimulus package, almost about 50 percent of it, was tax cuts. So, a lot of the finger pointing and cheerleading for failure for this President, I think has to come to a halt. And there will be great things in there whether it's school renovation, looking a job training programs. Yes, it's renewing the payroll tax cuts, tax credits. All of those things.
JONAS MAX FERRIS: First of all, I don't think we'll see a 12 percent unemployment rate unless you see real estate prices dive again and I just think that's not in the cards. Staying above 9 percent for a year or two is surely in the cards. I also don't think we're going to hear a lot of big stimulus project talk out of the White House. I just don't think they have the political capital to do anymore. You're going to see extensions of tax cuts, which have helped, but they haven't lowered the unemployment rate to five or six percent where we'd like it to be. It would actually take another boom in the economy to lower the unemployment rate. The government could orchestrate that if they had their act together. China built a high speed train across the whole country practically and put a lot of people to work. We're not going to get anything like that out of Obama so I don't expect him to have any plans to really drive down the unemployment rate.
MATT MCCALL: Stimulus obviously didn't work. Stimulus created some temporary, short-term jobs. We saw jobs created last year. But, since then, we've seen the trend continually go down, so obviously, once that stimulus stopped pumping up these fake, short-term jobs that are created by the government, suddenly there's no jobs left. The only you can do, I guess, you just keep throwing money. But eventually, taxpayers have to pay for that. I think what we need to do is a combination of tax cuts, especially for small businesses, but also instill confidence. There's no confidence in the Americans right now. How do you do that? You lower regulations; you take away the unknowns of the tax code going forward. If people then have confidence, what happens? Demand increases. When demand increases, we must hire more people. And that's the answer to getting out of this unemployment mess we've been in.
ALAN KRUEGER PICKED TO LEAD PRESIDENT'S ECON TEAM; SAYS HIKING MINIMUM WAGE WILL HELP CREATE JOBS
GARY B. SMITH: Minimum wage is nothing more than a form of price control. Even if you believe whole heartedly in the goodness of minimum wage, all you have to is look at the statistics. The last time we bumped minimum wage in 2009, youth unemployment was 21 percent. It went to 30 percent. Black teen unemployment is now over 40 percent. So, it's not just wrong to say minimum wage is good. I think it's irresponsible, particularly in this economy.
TODD SCHOENBERGER: You've got to eliminate this minimum wage. There's no doubt about it. It doesn't hurt the economy. It kills the job growth in this economy. You have to get rid of it because it increases unit labor costs. We're talking inflation now. You're looking at products being more expensive, services being more expensive. It doesn't cause people to go out, if they make more money, to spend it. We see that now in this economy. So right now, you have to eliminate this minimum wage or at least reduce it. You have to give the small business owner some type of incentive to go out and hire new people. If it costs $9 dollars to hire one person, if I'm paying only $4.50 an hour, why not hire two people? It's just simple math.
JEHMU GREENE: Pay more; they are going to buy more. That's what it comes down to. I think it's going back to the way Henry Ford looked at things. If you take care of your workers, they are going to contribute to the economy in a much more significant way. And, Gary, I have to disagree with you on the facts. There's a reason why most economists have backed away from arguing that the minimum wage actually decreases jobs. Research shows in states that actually enacted the minimum wage prior to the federal law minimum wage being increased, that they did better than their neighboring states that did not. There are so many business leaders that have come out, especially looking at the CEO of Costco, who has said that the minimum wage adds to the economy. I think that's a false argument that some folks on the business side have used to not pay fair wages.
JONAS MAX FERRIS: Raising the minimum wage does very little because of the current level it's at. If they dropped minimum wage completely in 2009, I guarantee you unemployment would have sky-rocketed almost as much as it did because that was 2009. We were in a huge recession. At this point, it's too low. The average wage in America for an hourly worker is like triple the minimum wage. So, it's at too low a level to make a huge difference either way-up or down. There are some benefits to higher wages. Raising costs means lower hiring. If it was higher, it would start to lead to higher unemployment. I just don't think at the level it's at it makes much of a difference either way and the statistics seem to prove that whenever they study it. If it was $15 dollars an hour, yes, it would lead to very high unemployment.
MATT MCCALL: [To Jehmu's point] On paper this sounds great. Her theory is you pay more they're going to spend more. The problem is, when company XYZ only has a certain amount to spend on their overhead or payroll, suddenly instead of employment 2,000 at an X amount they are now employing 1,500 hundred people because they have to pay each person more. So, what does that do? That increases the unemployment rate. It really, in theory, does not increase demand it actually increases unemployment at the same time.
HALF OF OIL PRODUCTION IN THE GULF AREA IS SHUT DOWN BECAUSE OF TROPICAL STORM LEE: WILL WE PAY MORE AT THE PUMP?
GARY B. SMITH: As we've seen in all the recent spikes in prices in gasoline is as gasoline goes up, people start to pull back. They start to telecommute. They drive less, etc. The refiners have to drop the prices because no one's buying. I think, in this case, Matt might be right maybe for a day or two, but generally these things tend to be overblown. We just source oil from other places other than the gulf-overseas; Canada, Mexico. I can't see this being a big deal. I hope it's not.
TODD SCHOENBERGER: The long-term outlook for gas is obviously it's going to go up because oil prices are going to go up. When you just look at simple supply-and-demand economics, we as humans consumed 87 million barrels of oil a day, yet we're only pumping out 88 million out of the ground each day. Eventually those numbers crisscross. So, even though you have global slow down as far as the economy goes, you still have some former emerging markets that are now big economic power houses; i.e. China. When you look at countries like that, they consume more oil and oil based products. As a result, it's going to inflate the price of oil.
JONAS MAX FERRIS: I don't like all this hurricane talk with palm trees behind me. Katrina hit in a real estate boom. We were at a strong economy globally. Construction was everywhere. We can handle hurricanes now because the economy has 9 percent unemployment. We didn't have unemployment like that in '05. So, if you had to have hurricanes hit at a certain time, you would want to have it during a slow economy because it won't launch gas or oil prices 20 percent or 30 percent, like would happen with a serious Katrina-sized hurricane. I'm not really worried about it at this point.
MATT MCCALL: Just think about what happened with Katrina. I'm not comparing Lee to Katrina by any means, but the fact is, they did shut down half of the refineries off shore in the Gulf. What that means is that's half the amount of oil that's coming out of those refineries, going to the refiners, and then eventually going into our gas tanks. So, it's pretty simple math. When you have less supply coming on, demand, even if it stays even, prices are going to shoot up. Keep in mind also, we're pretty early in hurricane season. We could still have a few more coming in. You have Cathy coming off the other side. So, with all these storms coming and if we get any type of demand increase and this economy turns around at all, suddenly you'll see prices of $3 or $4 dollars back to $4.50. We're already up a buck in the last 12 months.
GARY B. SMITH: Honda (HMC) drives up by 20 percent by January
TODD SCHOENBERGER: Linkedin (LNKD) 50 percent gain by April
JONAS MAX FERRIS: Vanguard Financial ETF (VFH) 25 percent gain in one year
MATT MCCALL: United States Gasoline ETF (UGA) up 20 percent in 6 months