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Democrats' New Rallying Cry for Government Care: Do It for the Deficit?
Gary B. Smith, TheChartman.com: This is almost laughable. We're going down the hole of bigger and bigger deficits and President Obama's solution is to create another massive government program that will supposedly help us out of the hole we're in. At the heart of this, the Obama administration wants a nationalized health care system for the 47 million uninsured.
Regina Calcaterra, ReginaCalcaterra.com: Every year, our federal budget uses $2.5 trillion worth of revenues. Why can't we take that and divide it up by applying it towards health care? We've had a century of uninsured Americans and there will always be an excuse not to take care of it. Finally we're being presented with an opportunity to solve this huge problem.
Joe Battipaglia, Stifel Nicolaus: The political class has made too many promises as-is. There's no way for them to simply shift money from one place to another. We're at the point where the government has to tax everyone to death or eliminate benefits. This just isn't going to work. The government has to stop pointing to Medicare/Medicaid as the example for what a public option would look like. The government has botched those programs!
Pat Dorsey, Morningstar.com: The fatal flaw of current health care reform proposals is that they focus too much on expanding coverage and not controlling costs. No one is talking about medical fees for results, rather than just performing services. These are the major issues that must be addressed if we're going to slow health care expenses and ease their overall burden on the economy and deficit.
Tobin Smith, ChangeWave Research: The idea that we can solve runaway health care costs by investing in prevention is like a diagnosis for a wrong disease. The real problem is we don't pay taxes for health care benefits in the U.S. We're the only country in the world that would do something that crazy. So, people over-consume health care. Also, tax revenues won't nearly cover the costs of a public option program. And that's not even thinking about the potential costs of fraud that affect programs like Medicare.
Now It's 'Cash for Appliances': Government Handouts Helping or Hurting?
Joe Battipaglia: Ultimately these handouts are going to badly hurt the economy. The spend-crazy Congress seems bent on doing this for everything now. These handouts show why the economy is still on its back and struggling to get on its right side. And it also picks winning and losing products in the economy, and that's just not what the government's role should be. I suspect many of the people who took on debt to buy things like cars in the Cash for Clunkers program are going to regret it.
Regina Calcaterra: The government just gave out tax breaks to a lot of people and they paid down their debts. These programs are designed to benefit the middle class. It's not targeted toward the rich, or low income individuals who can't get a loan. It was the middle class who went out and bought 700,000 cars with Cash for Clunkers. It's the middle class who's going to be the main reason for economic growth in the third quarter, and contributing to a much needed increase in sales tax revenues across the country.
Gary B. Smith: I think it's wrong to say only the middle class is taking part in these government handouts. A lot of very wealthy people are taking part too. Of course these programs increase sales--it's like Macy's having a 50 percent off sale. This is nothing more than a temporary increase in consumption. But pretty soon, GM, Ford, Chrysler, etc. will go back in the hole. Demand is always going to move up if you discount prices, but it will all go away once you take away those artificial prices.
Pat Dorsey: These programs do nothing for the economy besides providing a short-term boost in spending. The problem with this new Cash for Appliances program is that the money is going toward appliances made in Mexico or China. It does minimal good for our economy. It's insanity.
Tobin Smith: How about cash for vacations? It isn't like we have huge amounts of excess cash to hand out right now. The government is effectively borrowing this money. Stimulus programs in other countries were paid for with actual cash their governments had saved. When you run a $1.1 trillion deficit and the money is borrowed, you ruin the word "stimulate." It's like a vitamin booster shot--it only works once.
Reagan and Volcker vs. Obama and Bernanke
Gary B. Smith: President Obama and Ben Bernanke will do the inverse of Ronald Reagan and Paul Volcker. Reagan and Volcker cut taxes, cut the deficit, strengthened the dollar and cut inflation. Bernanke at some point is going to have to raise interest rates. Congress and the Obama administration are going to raise taxes, try to implement cap and trade, etc. This economy is headed the opposite direction it took during the Reagan years.
Tobin Smith: I'm not sure we're going to see the economic growth we witnessed under Reagan and Volcker, but Ben Bernanke is the right man for the job. Anyone who worked in the financial sector during Reagan's first term knows that they did things no one ever thought they would do—particularly raising interest rates. Bernanke is dealing with a very different financial world from the one that existed in the 1980s, but he gets that. The good news today is that we have two billion more consumers in the world than we did in the 1980s. They will help get our economy out of recession.
Joe Battipaglia: Things were very different during Reagan and Volcker's time than now. There was a 10 percent consumer savings rate that was ready to explode. The economy was underleveraged, and inflation had peaked. Today, we have a near-zero percent savings rate. We have $1.20 of debt for every dollar, and baby boomers don't have young kids to spend money on. This is a big issue.
Pat Dorsey: We are going to see a recovery, but it's going to be very different from the one in the 1980s. These are two very different recessions. The economic recovery in the 1980s came out of an inventory recession. The problem now is way too much debt across all parts of the economy. It's critical for these debts to be paid down—and it'll be painful and take time. We won't see a typical snap back from this recession.
Gary B. Smith: Bernanke identity theft lesson! "EFX" soars 20 percent by year end
Pat Dorsey: Boost your tax bracket! "HRB" gets a 30 percent return in 1 year
Joe Battipaglia: Tech is leading a comeback! "CSCO" surges 35 percent in 12 months
Tobin Smith: No you're not seeing double! "C" doubles by next spring!
Stimulus Cash Going to Convicts: Proof Government Can't Run Health Care?
Charles Payne, WStreet.com: This is just an example of what happens when the government gets its hands on any program. Right now, there’s about $30 billion a year in fraud and abuse. The White House had to up its deficit project to almost $2 trillion. How can you not be afraid that the creation of a public option won't be a disaster?
Dagen McDowell, FOX Business Network: At first glance, the amount of stimulus money that went out to convicts wasn't that much. But if you take little examples like this that are prevalent across all sorts of government programs, that will really add up. The fact is, substantial sums of money have been and are going out to people and groups who shouldn't be getting money.
Al Lewis, columnist, Dow Jones: Everything the government does is on a big scale, and it somehow manages to screw it up. On the grand scale of things, this is business as usual for our government. This can't surprise you. Looking toward health care, we clearly have huge problems facing us, for both the private and public sector. Government is obviously bad at controlling costs, but so is big business. There are many open, important questions, and no one is really addressing them.
Leigh Gallagher, Fortune magazine: Yes, this was a mistake. But the reason this happened is that these are people who were all eligible for the benefits at the time they were deemed to be given. What happened is that they were in prison three months after the checks were cut. When you're talking about eliminating waste, we need to look at major issues like the excesses of the health care system--such as providing coverage to the uninsured. People who are uninsured and have major health ailments don't manage them until the costs are explosive.
New Intimidation Tactics From Democrats Pushing for Health Care?
Charles Payne: This is nothing but pure intimidation. Congress will always deflect criticism from itself and Monday morning quarterback. They want people they haul up to Capitol Hill to feel intimidated. They want to create a Darth Vader. This is all part of the government's greater plan to control salaries, profits, etc.
Dagen McDowell: If Congress is going to drag these health insurance CEOs to Capitol Hill, at least have public hearings so we can see what's going on, rather than just forcing them to release documents to the public. Congress needs a Darth Vader in all this, and they chose health insurance companies for that role. They need a bad guy, and they don't want to point to consumers.
Al Lewis: There's nothing like a Congressional inquiry to get all your ducks in a row. As a journalist you can't complain too much about these hearings. The CEOs get on the stand and have to answer questions. That's a good thing for the public. They're big boys and they get paid millions of dollar a year. They can answer these questions. And if we find a Darth Vader in all this, it's because the facts aren't on their side.
Leigh Gallagher: One thing that's different about the insurance bill is that most people really don't know a lot about what these companies do. United Healthcare had a 155 percent profit in the second quarter. These Congressional inquiries might be perfectly fine, or they may turn into political theater and grandstanding. We know that bad things can happen in the private sector with low levels of regulation. There's no harm is asking questions and digging a little bit.
IRS Plan to Lower Amount You Can Save in 401(k): Dumb Idea?
Dagen McDowell: This is ridiculous. It's unbelievable that the government is going to discourage savings in an environment where we learned you can't live off credit. People need to save more for retirement. The last thing the government should be doing right now is lowering the limits of that benefit. I know they're doing this based on a pre-existing rule, but they need to break it.
Charles Payne: Americans are non-savers, but you give people enough of a tax break and they'll start saving. It's silly though for the government to be going into such high levels of debt while restricting people's incentive to save for their retirement.
Leigh Gallagher: I think people will probably find a way around all this. It will be a train wreck if the government tries to enforce this. In this climate, when the savings rate is still far too low, it would be a mistake for the government to constrict how much people can put into their retirement accounts tax-free.
Al Lewis: This is a small, hidden tax increase. Most people won't feel it--I mean how many Americans actually hit that $16,000 ceiling each year? This will primarily hit people who save a high percentage of their income, or have high income to begin with.
Charles Payne: NetApp (NTAP)
Leigh Gallagher: Becton, Dickinson (BDX)
Forbes on FOX
On Sunday August 30, 2009, Stuart Varney was joined by Neil Weinberg, Mike Ozanian, Quentin Hardy, Jack Gage, Mike Maiello, Evelyn Rusli, John Rutledge, and Elizabeth MacDonald.
In Focus: Does $9 Trillion National Deficit Mean Middle Class Tax Hikes Are Coming?
Stuart Varney: $9 trillion in the red! The White House now admitting that's what our national deficit will likely hit over the next decade. Does that mean a middle class tax hike is next?
Jack Gage: Yeah I think it is. Look, we're out of money. We can't keep spending at this pace and expect to keep up with tax receipts as the economy continues to shrink. Tax rates will inevitably go up to fund that. We look at the campaign promises of the current president and he said that he wouldn't raise taxes on those making less than $250,000 a year. That's just not the case. In fact if you confiscated all the income of the top 1 percent, you would only have about $1.3 trillion at the height of the bull market. That's not going to make up for a $7-$9 trillion shortfall.
Mike Ozanian: The Treasury can keep borrowing and the Fed can keep printing money. It's not inevitable. There is no limit to the size of the Fed's balance sheet. That's the law. The Fed can expand its balance sheet as big as it wants to.
John Rutledge: The Fed can expand its balance sheet as big as it wants. They can destroy the entire world economy at the same time too. Attention Middle Class: the government is going to tax everything you do. The things you do. The things you own. They are going to do excise taxes and income taxes. Not just the top incomes, but the bottom ones too and the middle class. $10 trillion dollars is more like it than $9 or $7 trillion. These guys are in a tremendous fiscal mess.
Quentin Hardy: I don't think we have to play class warfare here, Stuart. The Bush tax cuts for the rich, which didn't benefit anybody really in the end, are set to expire in 2010. Their taxes are going to go up. The silly, dumb war we got into in Iraq, which affected the poor disproportionately, has got us into a hole, as has the little casino we set up on Wall Street with our free market ideology. It's going to hit the poor. It's going to hit the middle class. It's going to hit the rich because we dug ourselves into a really big hole.
Elizabeth MacDonald: By the way, the Bush tax cuts weren't only for the rich. There were middle class tax cuts in there and the Congressional Budget Office already in their deficit projections are saying that the Bush tax cuts for everyone are going to go away. It's already happening now. The Democrats are talking about a health care payroll tax that will hit workers and small businesses. They're talking about taxes on cigarettes. They're talking about tax hikes for people making under $250,000, if you use a health care savings account, or you go to buy drugs in different accounts. It's happening right now. It's interesting at a time when Charlie Rangel is essentially underpaying his taxes, he's talking about raising taxes. And Tim Geithner is talking about raising taxes. He is "Turbotax" Tim Geithner who didn't pay his taxes. It's extraordinary what's going on with the Democrats and their moves to command and control the economy.
Mike Maiello: No! It's time to stop scaring people about the deficit. A 10 year deficit projection is about as useful to anyone as next month's weather forecast. They don't know and let's say they're right. $9 trillion over 10 years; our economy right now in a depressed state has a $14 trillion output in 1 year. And we're not going to be at $14 trillion in 10 years; we will be $20 trillion. We're going to grow our way out of this because we have a smart president for once.
One Word to Fix Health Care: Competition
Stuart Varney: As promised, the one word fix for health care: competition. Right now, insurance companies can't compete across state lines. John Rutledge says change that and problem solved. How so John?
John Rutledge: Of course it will help Stuart. This one is a "no brainer." More competition always means lower prices. Low prices are what we need to help solve this problem. You can't even see state lines from an airplane. Why should we keep people from doing business across them? We should be able to sell everything anywhere we want and get the prices down.
Quentin Hardy: That's fine with me, but there's a little bit of difference in the grammar here. You said we'll fix it all. John said will help. Yeah it will help on the margin, but it doesn't fix anything about the fundamental problem with health care. Is it competition? Sure. Will that help? Sure. Does it fix the underlying trend of higher health costs? I doubt it. Doctors will still have incentives to have more expensive tests that don't do much good and the last 40 percent of the cost will be on the last month or two of life. That won't change.
Elizabeth MacDonald: Doctors costs are going up because there isn't tort reform. If you don't have tort reform and you're going to have a government-run plan, you put the cost right on the back to the U.S. taxpayer. Competition will absolutely help. John is absolutely right. I like the idea out from Democrat Russ Feingold along with Republican Lindsey Graham about having a test pilot in 5 states. Why don't you have one state do health savings accounts, another do a single payer system, another do a co-op program? There are other ways to do it. Arizona Rep John Shadegg has a good idea with competition and insurance pools crossing state lines.
Neil Weinberg: Competition obviously is good. But we're still going to have constipation in our system here. The reason we're going to have that is quite simple. We're not going to have much competition. We have an oligopoly which controls the health insurance market. The problem we have in this country is we got to separate ourselves from having our employers pay for it. This means that the consumer is not that interested in the price. So we've had the price of insuring a family of four go up by four times - four times as quickly as inflation. It now costs a company $13,000 to insure a family of four and we're not going to slow that down unless we get real competition and real competition means to break up these oligopolies and let people go out there and buy health insurance the same way they buy car insurance.
Mike Ozanian: The only way to get the best health care for the most number of people is to have a truly free market. If you look at eye care for example, Lasik surgery has gone down 38 percent in the last 10 years in price. More people are having it done because more people can afford it. There is no insurance for it. There's no Medicare for it. There's no Medicaid for it. The free market works. It would be the best thing we could do.
Mike Maiello: We already have all these giant national insurance companies competing with each other, so you're just handing more to Aetna, Cigna, United Health. That doesn't solve the real problems which are rescission of coverage and denial of coverage to people who have preexisting conditions. How does opening up competition across state lines address those two issues? Can competition solve rescission of coverage and denial of coverage to people with preexisting conditions? If the answer to that is yes, then this doesn't answer the question.
Flipside: CEOs Need to Shut Up When It Comes to Politics
Stuart Varney: A Dixie Chick said she was "ashamed" of President Bush. Soon after, the popular all-female group went from hot to hated. Many fans boycotted them and some sponsors even dropped them. It's a lesson the CEO of Whole Foods didn't learn. He's dealing with a boycott of his own after writing a critical op-ed about national health care. Some say good for him, but not Neil Weinberg.
Neil Weinberg: With the Dixie Chicks, maybe it's too much to expect pop singers to keep their mouth shut, but when I invest in a company like Whole Foods which is public, I want that chief executive to be focused on one thing – maximizing shareholder value. If he wants to go into politics, let him quit and run for mayor like Mayor Bloomberg or let him get a TV show like Michael Eisner, the former head of Disney but he needs to keep his mouth shut when he's running the company.
Mike Ozanian: I love these outspoken CEOs. Whole Foods stock has beaten the market over the past week. It's beaten the market over the past year, and by the way easy on the Dixie Chicks they earned $18 million last year. Come on.
Evelyn Rusli: As a citizen, he has a right to free speech, but as a CEO his number one responsibility is to the shareholders. Look Whole Foods even said that we have no position on health care, but people are still associating the product with the CEO and that's why they're boycotting. Bottom line, it's bad for business.
Quentin Hardy: I think this guy is evolving rather nicely. He got in trouble before for complaining on anonymous bloggers anonymously. Now, he's at least saying who he is and what he thinks and if people want to boycott against that, that's fine. It's a free marketplace of ideas. I wouldn't deny anyone their democratic right to speak their mind.
Jack Gage: It reminds me of Ayn Rand's famous protagonist John Galt. I think there is a reason he didn't mix with politicians. It's because he was too busy printing money. If you're the CEO of a company, you have to be concerned with competing and with out going your competition. Not with out lobbying them or trying to outsmart them in a policy debate. Stick to your guns. Stick to your business. Take care of the shareholders. That's a CEO's job.
Informer: Stocks to Bank on When You Can't Rely on Social Security!
Stuart Varney: Worried Social Security won't be enough to retire on? You should be. Uncle Sam is not expected to hike Social Security payments next year for the first time since the 1970s. Now our Informers say don't tie your retirement to the government. Tie it to their stocks:
Neil Weinberg: Toyota Motor Corporation (TM)
John Rutledge: StatoilHydro (STO)
Jack Gage: Millipore (MIL)
Evelyn Rusli: Gilead Sciences (GILD)
$10 Billion in Health Care Bill to Help Unions; Should You Pay?
Jonathan Hoenig, CapitalistPig Asset Management: Absolutely not. This is another subsidy for unions. Like cash for clunkers, like the auto bailouts. Everyone is hurt and principle is equal treatment under the law. Union workers deserve no more rights, no more privileges than freelancers and small businesses and sole proprietorships.
Mark Brenner, director of Labor Notes: Absolutely. But how did we get here, they all squawk about CEO pay. These workers worked 30 years on the assembly line. They hung telephone wires. They have contracts, too. Now you want to kick them when they're down and take away their health benefits. Come on, big problems here are the fact that we're not reining in the cost of purchasing drugs, $350 billion. Some people are getting too much health care. Whole idea behind health care, Congress saying health care, carbon groups to get more health groups. What about elderly people, union workers that is when the costs are out of control. The only way they are going to make it affordable 'that gets too much is for them to get less.
Tracy Byrnes, FOX Business Network: I think the problem is this is in the government's bill so the government gig more money to this and they have given a load of money to auto industries to keep them going. Cash for clunks sears small piece of what we've done for these companies thus far. So to redeem the money is to keep the health benefits going. To add more to it, it's awful news for the rest of us that are working very hard.
Wayne Rogers, Wayne Rogers & Co: Jonathan seeing a monster behind every pole. You know, there is a gorilla hiding in his closet for god's sake. The union best plans has been some of the best in the United States. It hasn't cost the taxpayers a nickel. They are very efficient and much better than the government is at it. If the government gave the unions some money and unions are the people who are going to administer it, better than the federal government. Buried in this plan, by the way, are some awful things that are much worse than this. You have to tax the whole bill.
Bonuses for Congressional Staffers: Fair or Foul?
Tracy Byrnes: Yeah, in the midst of them giving out these bonuses they are bashing Wall Street for doing the same. It's spotted for another day but what they are doing and faces they are showing to the American people is garbage, they are saying, do as I say, not as I do. We all have to cut back and take our own lickings and cut down our budgets but they can move forward. I think it's wrong. It's bad PR.
Jonas Max Ferris: It's not deductible unlike mortgage payments but that is another story. Bottom line this is little low on hypocrisy. The government telling people paying bonuses on their own money. Its multimillion dollar bonuses and paying off student loans to high level staffers, they didn't get a bailout out to staffers, they didn't take that. Look, it's not the executives with the jet thing.
Mark Brenner: $51 Million on the table here. They spent more than $51 million of our taxpayer dollars given out to $18 billion, these are education forgiveness of student loans. It's not the kind what we were talking about taking $700 billion in taxpayer dollars and paying yourself $18 billion. It's a totally different league.
Wayne Rogers: The Congress is going to do whatever they want to do. They don't believe that anybody lives on the other side of the beltway. There is between the Hollywood freeway and the Potomac River, they are only interested into themselves and they are going to vote for it anyway. So it doesn't matter. They are not going to debate about it. They are going to give it out whenever they want to.
Jonathan Hoenig: At a time when n which the private sector is slashing jobs. Government is really a growth industry. Who are these bonuses going to, not firemen, not policemen, not judges, staffers. They are going to cost us more in the long run anyway.
Government to Fork Over Billions to Subprime Lenders: Housing Boost or Bust?
Wayne Rogers: It's one of dumbest ideas I've heard of. Here is the government rewarding the criminals that bumped the law in the first place. They are passing out money to big banks. All the people who were earning outrageous commissions, not even doing their homework or getting the right paperwork from the people… are now turning around and rewarding them. Dumb, bad. It's not a free economy if you're going to prop it up every time someone makes a stupid mistake.
Jonas Max Ferris: It's throwing good money after bad. They are pushing up the housing bubble but it's the only way to come off of it. It's crazy, but in a free market if you are underwater like so many homes are, you are not going to make payments and lender is going to foreclose on it… driving all home prices down. Let's not forget the government ensures trillions. They will lose more in a cascade of new foreclosures if they did nothing. I don't think people realize how far home prices could fall.
Tracy Byrnes: Let it happen. It's happening anyway now. It's a slow painful bleed. Let's get it over. Let it happen now. Let them go. Nobody is doing anything right now. Let whatever happens, happen. What's happening now is not helping and it's not working.
Jonathan Hoenig: When we have all these efforts to prevent foreclosure they are violation of the rights of the individuals who live within their means. The people who bought a home they can afford. Trying to prevent foreclosures, whether its help for homeowners and all these forced re-negations, guess what, they have all failed. People re-default on their mortgages and rates are dismal.
What I Need To Know For Next Week
Wayne Rogers: Another intrusion by the fascist state, they are going to make menus in restaurant, of caloric intake, what you eat. You won't have a choice. It's going to say hey you are going to be fat if you eat this stuff. I say buy Whole Foods (WFMI) which is a healthy food stock. I don't own it but I wish I did.
Tracy Byrnes: The government is talking about not giving social security recipients a cost of living increases. 50 million people use Social Security. I think it's awful because this generation was unaware social security was going to end up the biggest Ponzi scheme ever. It's going to be the next bailout, you wait and see. I say give them their cost of living increase and then figure it out. These older people came in unknowingly. These people need it right now and we need to fix the system or abolish it.
Jonas Max Ferris: the Chinese Government always does crazy stuff. Their government saying they are running out of organs in the prison population where they execute people. They execute more people than any other country. They are going to get a donation scheme but knowing the Chinese, it's probably going to get capitalistic, where you can buy and sell organs. This is good for Becton Dickinson (BDX), a global medical company, it's big in China: More surgeries mean more surgical instruments. I used to own it and I might own it again soon.
Jonathan Hoenig: I keep a close eye on the currency market. It's now cheaper to borrow in dollars than it is in Yen for the first time in 16 years. Last time it happened, Yen soared. Takes a look at FXY, and if you are looking to diversify out of dollar, this is a good play. I do own it.