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Extending All Bush Tax Cuts Gains Steam After Tea Party Victories
The party after the Tea Party. Hopes gaining that huge wins for Tea Party candidates this week will turn into a big win to extend everyone's tax cuts this year. We're already seeing more Democrats hop on the tax cutting band-wagon, so will the Tea Party victory be a victory for all taxpayers?
ERIC BOLLING: I hope so and I think so. We saw it with the big wins in New York and Delaware and then we saw a lot of House Democrats say, you know what, let's extend all the Bush tax cuts. I think that's really good news because the economy needs those cuts. If we don't get them, we could double-dip into a recession.
JULIAN EPSTEIN: A Gallup poll this week showed that the public overwhelmingly supports the Obama plan to extend the Bush tax cuts to 98 percent of Americans but not to the richest 2 percent. The economics of that are pretty decent as well. We have a recession now that is credit-drive and consumer spending-driven, not productivity-driven. If it was productivity-driven, I could see extending the tax cuts to the richest 2 percent. But this administration is trying to put the money into the hands of the people who are going to spend it. That makes good economic sense. The Tea Parties want to blow a $4 trillion hole into the deficit by extending the tax cut to the richest 2 percent.
TOBIN SMITH: There's a limit to how much government can improve our lives and there comes a point where it gets too big and starts to hurt our economy and prosperity. The Tea Party is going back to sound economic policy that includes a reduction in government spending and extending the tax cuts for everyone. That richest 2 percent pays 50 percent of all taxes.
GARY B. SMITH: Any incumbent, Republican or Democrat, who is not thinking about a smaller government and lower taxes is in trouble. Julian brings up polls, but remember, 40 percent of Americans don't pay any income tax! The better poll is, what does the country think of Obama's economic policy, and most agree it is unfavorable. I think there is a groundswell here and I think it's only going to grow as we get closer to November.
JONAS MAX FERRIS: There has never been a point in American history where somebody with so little experience can get so much of the vote simply by being for just two things: tax cuts and spending cuts. Cutting the size of the government is not the most popular idea—that's why it grows every year. The takeaway for both parties should be, we can get votes if we are for cutting spending, and they should introduce some initiatives to do that. I would be for spending cuts before tax cuts.
New Report Shows $111 Million in Stimulus Funds Created Only 55 Jobs
(BEGIN VIDEO CLIP)
NEIL CAVUTO: “So you think they should just put the spending shovel down? Because Joe Biden today is saying, keep the spending going, stimulus is working like a charm.”
BERNIE MARCUS: “I don't know what [Joe Biden] is smoking.”
(END VIDEO CLIP)
BRENDA BUTTNER: Home Depot's co-founder Bernie Marcus not pulling any punches with our own Neil Cavuto on the Fox Business Network. A new report shows 111 million stimulus dollars only created 55 jobs in Los Angeles.
TOBIN SMITH: We know that “stimulus” is just the government taking money out of the private sector and allocating it the way it thinks is best. This one may be the record. $2 million per job, and it's not an anomaly.
JULIAN EPSTEIN: We can't make economic policy on little economic reports like this. Consider the economic data. Before stimulus, we were at negative 6 economic growth. Now we are positive 3. Before stimulus, we were losing 700,000 jobs per month, we are now creating jobs. Before stimulus, we were at 6,000 in the stock market, now we are at 10,000. The big data all show that stimulus is working.
GARY B. SMITH: Julian talks about all of the GDP growth. Well all of that stimulus money, where the government robs Peter to pay Paul, goes right to the GDP. But the fact is, unemployment is up since Stimulus, household net worth is down, and we're at half the growth we were at in the recoveries of 1974/1975 and 1981/1982.
ERIC BOLLING: This week we learned that 14 percent of Americans are living in poverty—that's the highest since 1960. Also, August saw the biggest increase in foreclosures. The stimulus is not working!
JONAS MAX FERRIS: This is not good job-building stimulus. Paying people to clean roads actually creates more jobs than building roads. There wasn't a whole lot on that bill that creates massive amounts of jobs. It wasn't a jobs bill. That's why unemployment is still so high.
Voter Outrage Over Bank Rescues May Limit Future Bailouts
BRENDA BUTTNER: It sounds like D.C. is getting the message on bailouts. A new report is saying that taxpayer anger over all the financial rescues may pressure the government to hold off on future bailouts.
GARY B. SMITH: This may surprise some as I was never a fan of the quote-unquote Wall Street bailout. I think it was the worst thing that has happened and I think it has only perpetuated the moral hazard that started to begin with. You know these Wall Street firms, or the bulk of them, always felt that the government would come to the rescue and sure enough, what's happened is instead of firms going out of business like Leman and like GM should have. What happened is that these Wall Street firms took in the money at ultra low interest rates and you know, it was supposed to go and clean up those troubled assets? We never hear about those troubled assets anymore. You know why? Because they are still on the books. So Wall Street benefited and I agree with many people. You know, the American public got rooked on it. Those firms should have been allowed to go out of business and I'll tell you what, if we take away that safety net, things will get stronger.
TOBIN SMITH: I agree but I think there's another part here which is that the bailout, if we're going to have a next financial crisis it's going to be an asset bubble that blew up like these guys and a whole bunch of borrowed money with bad assets. Well, if we let the Darwinism work, and let the people who didn't use the money well go out of business, we will have a stronger situation. My fear though is that we worked up the Federal Reserve and the Fed did all the heavy lifting of this bailout and we think they are now angels.
JULIAN EPSTEIN: While we're on the subject of polls, just stepping away from the previous segments, we should know that the public is overwhelmingly against the Bush tax cuts for the rich, the public overwhelmingly believes that the recession that we're in is a botched recession, so if we want to look in the polls and the anxiety, and who people are placing the blame on, it's overwhelmingly on the Republicans and on Bush administration. On the question of bailouts, I think the data is there that it has clearly worked. Look at what happened in the financial industry, the financial services industry. These were respectively bridge loans into the financial service industry. Most of the financial service industry is reporting a profit and the TARP money has been repaid to the government with interest. Same thing with the auto industry, the auto industry has basically repaid these bridge loans; we've saved a major American industry from going out of business.
ERIC BOLLING: That's incorrect as well. There's about $80 billion that we bailed out of the auto industry with that we'll never see a dime of. Yes do they want to go public? GM, do they want to IPO, maybe pay three or four billion back? But there's 80 billion dollars out there. These bailouts don't work. Very interestingly in that 2300 page financial regulatory bill that went through Congress a little while ago, they pulled “too big to fail” out of that so therefore it leaves the door open for Democrats coming in to say “too big to fail,” we're going to bail them out.
JONAS MAX FERRIS: The public outrage against bailouts is going to keep the government or whoever is in charge from doing another bailout, which is kind of a good thing because it will prevent the lame bailout that we don't need. However, if we actually need a bailout, and maybe there will be an event. Something big, stock market falls 80 percent the government wants to put money in to support prices, and the public won't allow it. It won't be good that we don't do that bailout. Now we wouldn't really see that. That's a long shot event, and again the outrage is going to prevent a lame bailout that we don't need to see, but it could also prevent what we need.
GARY B. SMITH: France finally gets it! "EWQ" rallies 10 percent by Jan. 1
TOBIN SMITH: Ines sparks surge in tight jeans! "URBN" spikes 25 percent by Christmas
JONAS MAX FERRIS: Don't drink and fly! "FRX" lands a 15 percent profit by Jan
ERIC BOLLING: GOLD! "GLD" sparkles 30 percent in 1 year
Cavuto on Business
This week, Neil Cavuto was joined by Charles Payne, Adam Lashinsky, Gerri Willis and John Layfield.
New Plan Slashing Government Pension, Benefits to Cut Deficit
GERRI WILLIS, FOX BUSINESS NETWORK: The bloated pensions and benefit plans for government union workers are a nightmare all over the country. People say the unfunded liabilities for pensions is $1 trillion. It's more like three times that, $3 trillion or 22 percent of GDP. Why? Because states overestimate how much money they're going to get from the stock market. California thought they would get returns of 7.5 percent. They haven't made that in three years.
CHARLES PAYNE, WSTREET.COM: It's going to get real bad because there's a tremendous amount of resistance from the unions and their biggest ally in the White House. I mean, the government has gotten bigger, our government borrowed 44 percent more in the second quarter of this year. We're borrowing more money to prop up this government that's already on shaky ground. Gerri talked about other states, California, Illinois, and New Jersey. It's a domino, and tough decisions has to be made and that's why I think that New Jersey Governor Chris Christie's Plan to cut these costs is admirable.
JOHN LAYFIELD, NUTRITIONMARKET.COM CEO: I say the union heads are just doing their jobs. They're trying to get the best thing possible for their workers and they were promised this. Whether you can call it a default, a reform, or a means test, 25 states have a worse balance sheet than Greece. And the overly optimistic annualized return is crazy. Governor Christie lowered it from 8.25 percent to 7.5 percent. NJ thinks its state's pension system will be 90 percent funded with these austerity measures, but it's unrealistic if that 7.5 percent annualize return is not reached. And I don't think that 7.5 percent is going to be reached.
ADAM LASHINSKY, FOX BUSINESS CONTRIBUTOR: I believe, if there's any good news here, it's this is a state municipal government issue, not a corporate issue. Corporations have dealt with this over the past ten years and many said no more pension benefits. Now when they did that, they said those of you who have pension benefits are going to get what you were promised. This is now the big battle in the state and local governments. If you've made a promise, the unions are absolutely right to sue to get it.
GERRI WILLIS: It's definitely a national problem and the reality is that you can't solve this by just taking money away from future pensioners. You're actually going to have to start tapping funds from current retirees, not just future retirees. I've been speaking to experts on the topic all over the country and they say the money is just not there. You're going to have to make some tough choices here, and you're going to have to fight it out in the courts. That's exactly what's going on in Minnesota right now. There's a lawsuit the state is pursuing to get in the pockets of retirees right now. Not down the road.
CHARLES PAYNE: Gerri is right. Governor Christie has no choice. It's not like he wants to do it. It's not popular to do in corporations, they can go bankrupt and that nullifies all previous promises. If you want to go down the road where the state is somehow insolvent to make this more politically expedient, but these people actually live in the states, they don't want it see it fall completely apart.
Poll: 53 percent of Voters in Favor Of Repealing Health Care Law
CHARLES PAYNE: The government is reportedly planning to launch a campaign to resell the health care law before the elections in November. I wonder who the main pitchman is going to be. I hope it's not Vice-President Biden. Not one democrat is running on this because they read the poll numbers. Not one of them is proud enough to say, 'hey, I gave you this new health care reform'.
GERRI WILLIS: How are they going to sell this thing? What are they going to say: 'we're going to reduce co-pays for preventative care, that's already $10 to $15 and premiums going up, 30 percent and 40 percent'. People are going to be paying a ton of money out of pocket. They did that in Massachusetts, it didn't work. When they reformed health care in Massachusetts, they tried to get insurers on board and nobody wants to underwrite business out there. What you're going to do is you're going to alienate the insurers, they're already saying costs are going through the roof because of the promises we have to make to consumers.
JOHN LAYFIELD: The mid terms are around the corner and you don't want to say look, 'we spent $2 trillion and the unemployment rate keeps ticking up'. Four million more people went into poverty since we spent $2 trillion and four million more are uninsured. What the administration is saying is that it is going to give you health care and keep you in your homes. That's not what American people want, but that's all they have right now because the economy is not heading in the direction they want and they're out of time.
ADAM LASHINSKY: I'm sorry to try to crash into this fantasy bubble that my friends are sitting in right now, but first of all Charles, the pitchman in chief will be President Obama. Gerri, premiums have not gone up 30 percent to 40 percent for 50 million plus Americans who don't have health insurance. And John, as you know, none of these reforms have kicked in yet. So, it's no surprise that the things that you articulated, have gotten worse. I don't think it's a shocker that the administration is going to campaign to try to convince people that the legislation that they worked so hard to pass should be enacted.
CHARLES PAYNE: Adam, you're right about that. They made a huge mistake. They should have focused on the thing called jobs and the economy first and foremost. But they didn't and now they have to go with the agenda the created and they have to back it up. So now they have to say, "you're going to like the health care plan whether you like it or not."
Neil's Exclusive Interview With N.J. Gov. Chris Christie
GOV. CHRISTIE: Listen, there's no problem in my view with saying no when what you're saying no to is wrong for America. And you know, continuing growing government, continuing to pile up more debt, continuing to increase taxes on everyday citizens is the wrong way to go. So, if the President continues to propose things like that - huge spending, huge debt, growth of government - I think it's the Republican party's obligation to say no because that's not what we believe in. We believe in less taxes, less spending, smaller government and common sense regulation.
NEIL CAVUTO: After Christine O'Donnell won in Delaware and beat a party favorite, at first the Republican Senatorial committee said they're not going to help her, not going to fund her. And now, they embrace her. What's going on?
GOV. CHRISTIE: I don't know what's going on. The Washington politics are kind of beyond me at times. I think it's a very simple answer. Christine O'Donnell or any other republican nominee should be supported by the Republican Party. That's why we have primaries. People get to decide who they want to be the nominees of our parties and then we should support you.
NEIL CAVUTO: Are there any others you think are rising stars in your party that particularly stand out? And do they have to scribe to the kind of things you're doing in New Jersey?
GOV. CHRISTIE: Well, listen, I think somebody like meg Whitman in California is running a smart, tough race and I think she's going to bring some real fiscal…
NEIL CAVUTO: By the way, she just broke the spending record for a candidate, on a state-wide race. The record was held by Michael Bloomberg running for NYC mayor, but she just broke it. What do you think of that?
GOV. CHRISTIE: I'm not surprised how much money the public sector unions are spending for her opponent Jerry Brown. Someone like Meg Whitman has to spend against the public sector union machine in California that basically drained the California treasury dry with the special interest benefits they've gotten. So Meg Whitman is doing what she needs to do to stay competitive. And look at Tom Corbin in Pennsylvania, the Attorney General, somebody I'm enthusiastically supporting. I think he's going to do a really, really good job. And John Kasich in Ohio. He's another guy I'll be working for and going out to visit. I'm excited about what John is doing. I think he will be a great Governor, too. I don't want to name a whole bunch more names, but there are a lot of other good candidates like Bill Brady in Illinois. Those are the kind of people I think we need to elect to really start a firestorm across this country at the state level and help bring change to America.
Retire in Style
CHARLES PAYNE: Express Scripts Inc. (ESRX)
JOHN LAYFIELD: Chevron Corp. (CVX)
ADAM LASHINSKY: Intel Corp. (INTC)
Forbes on Fox
On Saturday, September 18, 2010, David Asman was joined by Rich Karlgaard, Bill Baldwin, Mike Ozanian, Stephane Fitch, Quentin Hardy, Victoria Barret, and Fox Business Network's Elizabeth MacDonald.
In Focus: Cuba to Lay Off 500K Government Workers; Should U.S. Do the Same?
DAVID ASMAN: Half a million government workers losing their jobs to help save the economy in Cuba. That's right - Communist Cuba. If Cuba gets it, why don't we? Should we also we cutting down the size of our bloated government? Hi everybody! I'm David Asman. Welcome to Forbes on Fox! Let's go In Focus with publisher Rich Karlgaard, Lizzie MacDonald, Neil Weinberg, Quentin Hardy, Victoria Barret, and Stephane Fitch. Well Neil, I hate to copy Communist Cuba for anything, but they do seem to get lowering the government.
NEIL WEINBERG: The problem Cuba has is the same problem the U.S. has: the government is smothering the private sector. You've got to get the government out of the way. Some Americans will say, well our federal government isn't the problem; there's only 2 million federal government employees. But if you look at it, there are 153,000 new civilian employees over the last year at a time when, obviously, unemployment in the private sector is going up, we've got a $1.2 trillion deficit for the first 11 months of the year. Somewhere somehow we've got to start cutting government or we're going to strangle ourselves.
STEPHANE FITCH: Let's stop and think about this for a second. We've got only 2 million federal employees, and then if you subtract out the third that are sort of citizen- soldier defense types, you're left with about 1 in every 230 Americans who has a federal government job. If you look at health care workers, you're talking about 1 in 3,000; basically your chances of getting a federal health care job are quite a little bit lower than catching a pretty rare disease. If you're going to copy something from Cuba, go get their 7 hour fiery Presidential speeches and their good cigars, that's what we need to be borrowing from Cuba.
RICH KARLGAARD: We can certainly freeze jobs right away just to start. Then we have look department by department to see where we can cut. For example, most people don't realize the Federal Reserve has 18,000 employees. If you had a gold standard, if you used the Taylor rule for interest rates, you know, maybe you would be 2,000 or 5,000 Federal Reserve employees.
QUENTIN HARDY: We may need to pare down the size of government, but we're talking about federal government. By the way, what Neil is doing with new workers versus absolute workers isn't a very good comparison; there's no information there. The problem is not the federal government; the problem is state and local. The federal government is about 15 percent of total government. You're not talking about firing abstract bureaucrats; you're talking about laying off neighbors, state representatives, local people – that's where the bloat is.
ELIZABETH MacDONALD: We do have a bloated government, and to Quentin's point on the local level, Buffalo just paid health insurance for 2 million dead city workers and they're not even alive and they're getting health insurance. And that's what happens when you have bloated government. We've been on a “supersize me” government track. I agree with Rich Karlgaard, 30,000 workers work for Congress. Why do we need 30,000? Why do we need 18,000 workers working at the EPA? Why do we have 4 workers at the Japanese-U.S. friendship agency? Why don't they Facebook each other?
VICTORIA BARRET: I agree with Liz on that last point, but you're talking about laying off 500,000; that's a quarter of the total work force there. These people won't get jobs elsewhere, they end up back on the government dole.
DAVID ASMAN: Let me interrupt, why do you think that they're not able to get jobs elsewhere? I mean, if they have talents, if the economy does improve, why couldn't they work elsewhere?
VICTORIA BARRET: You're assuming the economy improves. It's very hard to get a job right now, and we're not going to do what Cuba apparently is doing and say you lose this job, we'll give you another one. Look, I think there is plenty of bloat in government. I spent some time this week looking at certain types of jobs in the government sector versus the private sector and the government sector has twice as many managers compared to the private sector. These people, a lot of them, are probably just pushing paper around and technology can get rid of those jobs and we can smartly look at how to streamline government. But doing a blanket cut like this in a time like this doesn't make sense.
Flipside: Government Student Loan Takeover Leading to Taxpayer-Funded Education
DAVID ASMAN: A new report out this week showing more and more Americans are walking away from their college loans. It's alarming news especially now that taxpayers fund all college loans! But Bill, you say the White House is encouraging defaults with its new loans plan? Explain your Flipside.
BILL BALDWIN: Listen, we've got America: The Deadbeat. There's no question that federal policy favors debtors and defaulters over frugal people and conservative people. We bail out homeowners, we bail out GM, and now we're looking at $9 billion a year in defaults on federally-guaranteed student loans. There's a simple solution. Why don't you let the colleges lend their money instead of my money if they're so sure that their degrees are worth something in the marketplace?
ELIZABETH MacDONALD: I'm sick and tired of fat-cat academics, but I don't think the White House is doing an orchestrated push to take over student loan programs in this country. The terrible situation now, David as you pointed out in the break, is that student loan debt is surpassing credit card debt in this country. And many parents are saying it's not even worth it anymore to saddle our children this way. Send our children off to a 2 year community college and then for the final 2 years send them to an Ivy League school to try and get that so-called more important college degree. It ain't worth it anymore though.
VICTORIA BARRET: It is growing and it will continue to grow. What Obama did this spring was say, if you have a student loan your balance will be forgiven in 20 years versus what it used to be – 25. And if you go work for the government, it will be forgiven in 10 years. That isn't a loan, that's a grant. We shouldn't call these “loans” because they simply aren't. They're operating in a very different way and you're encouraging the problem, you're encouraging people to take out these loans, you're encouraging colleges to increase their tuitions. It's a vicious cycle and taxpayers are going to be on the hook eventually.
QUENTIN HARDY: These kids don't think in terms of 20-year horizons. And they're defaulting on their loans because there's a bad recession; people are defaulting on their mortgages, businesses are defaulting on their loans. There are defaults in all loans, why are students different?
MIKE OZANIAN: All you have to do is look at what happened to housing, David. As we made people less responsible for their mortgages, we created the housing bubble. The same thing is happening with education. As President Obama has increased the amount of housing debt that Fannie Mae and Freddie Mac, and therefore taxpayers, have to pay. Guess what? Default rates have gone up. Default rates and mortgages right now are at an all-time high. Default rates of student loans, of guaranteed government loans, is at 6.9 percent - that's the highest in 10 years.
STEPHANE FITCH: I think what we could start with is going after the government loans that are made for education at for-profit schools. The for-profit schools present a real problem because the administrators are torn between their urge to chase profits and their urge to educate kids. I don't think that's a healthy conflict. I don't have a problem with for-profit education. I have a problem with government subsidies for it.
AFL-CIO Cio President Says Companies Are Committing 'Economic Treason'; Is He Right?
DAVID ASMAN: Fighting words from a union boss. AFL-CIO President Richard Trumka this week claiming America's jobs creators have given up on America and are committing “economic treason” for sitting on more than a trillion dollars. Rich – any issues with what Mr. Trumka said?
RICH KARLGAARD: Well yeah, this is just widely irresponsible. Treason is a crime that is punishable by the death penalty; it's equal to murder. So to toss a word like treason around to describe why companies are rationally saving money and banks are constrained in their loan making is just outrageous. It echoes back to the bad days of the 60s and 70s, the Hoffa years, when unions were thugs. I thought we got beyond that, but apparently not.
QUENTIN HARDY: I have a slightly more benign view of freedom of speech than Rich does. It's a throwaway line in a speech. It's not a call to arms to go to the barricades. I think you can blow that kind of thing out of proportion. And I do see his point too. You know, Bush told people to go out and spend after 9/11 and he was kind of right. It adds acceleration to the economy and banks aren't lending to small business, they're trading on a really great interest rate. They're making money in a way a dog could make money. It would be nice if they lent to small business as well. They're not doing it because they have other alternatives. Is that treasonous? Probably not, but I'm not running a union.
MIKE OZANIAN: If this guy wasn't such a hypocrite, he'd actually point to his boss, President Obama, who is really the de facto CEO of GM. GM has $29 billion of cash. Why didn't he go after President Obama and say, “President you're committing treason. Spend some of GM's cash"?
BILL BALDWIN: It's a little bit over-rhetorical, but let's get to the straight economics of it. I'm going to sympathize with the union people for one moment and say corporations have overdone all of their downsizing and their shrinking, and it's time for them to reinvest some of that trillion dollars in human capital. There's a way to inspire them. Why don't you say we have a 2 year holiday on payroll taxes and labor laws for net jobs added. So if you have 4,000 employees now and you up to 4,100 you get 100 free passes. No payroll taxes, no unemployment laws, no minimum wage laws, none of that.
NEIL WEINBERG: Mr. Trumka is right about one thing as well: businesses in this country are run by a bunch of greedy self-interested S-O-Bs. The truth I believe is if they see a chance to make a profit, they will go after that chance. The problem we have now is that businesses are scared; they see no opportunity, they see their taxes going up, they see more regulation, obviously with health care they don't know what is going on. Mr. Trumka is completely wrong about this being treason; what it is, is self-interested and that's how capitalism works.
Informer: Tea Party Stock Winners
DAVID ASMAN: Tea Party candidates scoring big this primary season. And our Informers say buy these stocks now and you'll win big before they're elected in November:
NEIL WEINBERG: DeVry (DV)
BILL BALDWIN: Pfizer (PFE)
STEPHANE FITCH: GrafTech International (GTI)
MIKE OZANIAN: WorldCommodity Fund (WCOMX)
President Is Still Insisting Top Earners Don't Deserve Tax Cuts; Will Extending All Tax Cuts Cost Government Money?
(BEGIN VIDEO CLIP)
PRESIDENT OBAMA: It would mean borrowing $700 billion in order to fund these tax cuts for the very wealthiest Americans. $700 billion to give a tax cut worth an average of $100,000 to millionaires and billionaires.
(END VIDEO CLIP)
CHERYL CASONE: The president is sticking to his guns when it comes to sticking it to the top earners. But more lawmakers are firing back, saying extending all the Bush tax cuts won't cost the government a dime because it's the people's money, not Washington's. We just need to spend less. So who's right here?
WAYNE ROGERS: I'm not so fired up as I am startled by the logic. It's like sticking up a guy, robbing a guy, and saying, ‘I'm going to take your money before you can lend it to me'. I mean it's crazy. The government is spending money they don't have. They don't have it yet. How can the president say, ‘Oh this is going to cost money?' It's my money and they're going to take it! It's crazy. And let me tell you something else. You realize that the top 1 percent of the people in the United States paid 19 percent of the taxes prior to the Bush tax cuts. After the Bush tax cuts those same 1 percent paid 36 percent of the taxes. The top 10 percent paid 49 percent before the Bush tax cuts they paid 68 percent of the taxes afterwards. Right now you've got 3 percent of the people in the United States carrying the tax load for the other 98 percent. There is something wrong.
CHRISTIAN DORSEY: It is going to cost the government money to fund the society that we all want. And let's get some of facts straight here. The President's plan is to see that everyone, every household on their income up to $250,000, has permanent tax cuts. He's only talking on increasing taxes on family incomes above $250,000. As Wayne says, that's about 2 percent of the population. When we talk about what this is going to cost all of us in the form of decreased services, decreased opportunities, to pay down the debt, it amounts to a huge giveaway for people who don't need it.
TRACY BYRNES: But the costs are larger when you tell these small business owners that they can't go out and hire people. They can't go out and expand their businesses because their tax bills are going up. And look, you raise taxes, you know what the wealthy do? They figure out ways to not pay them. You keep tax rates low, I'll pay my bill and walk away. Tax revenues increase when the rates are lower, and that is certainty a fact.
CHARLIE GASPARINO: That's the problem with these static analyses that Christian uses, that the President uses. It doesn't take into account the de-stimulative activity that occurs when you tax people that spend and entrepreneurs that produce. It's just a fact that during the 1980s, believe it or not, tax revenues went up. Why did they go up? Because we took tax rates down. Here's the real interesting issue about this. If you talk to economists on the left and on the right, they will tell you that we need to stimulate the economy. The only person here that says we need to de-stimulate the economy is the President of the United States. It's economically insane.
JONATHAN HOENIG: Even the top 2 percent has no less right than the struggling homeowner. I don't even care if it's a small businessman. I mean the playboy sipping his champagne and partying all day long, he earns that money. It's not made on the backs of the poor. It's not made through stimulus or redistribution, or all of the president's other favorite tools here. The president seems to assume that the rich, the 2 percent, are guilty, and that it's his job as commander in chief to pass out the cards in a more appropriate way.
Will Health Care 'Blacklist' Will Lead to Government Run Care?
CHERYL CASONE: Blame us for rate hikes, and we'll tell you to take a hike. This week Health and Human Services Secretary Kathleen Sebelius is warning companies not to say the health care law is forcing them to charge customers more. She's keeping a list, and threatening to exclude names on the list from exchanges set up by the government. Tracy, you say this blacklist is pre-meditated, and the real goal is to drive them out of business and usher in basically universal health care?
TRACY BYRNES: Heck yeah. I mean look what she's doing. She's saying Obamacare is costing you more, but you can't pass that onto the consumers. It means that it cuts into the bottom line. These companies will eventually not be able to survive unless they can increase their premiums. And she's saying that you can't do that? That's because she's pushing them out, and we're looking at socialized medicine down the road.
CHRISTIAN DORSEY: Most of the healthcare bill is yet to be implemented and will be phased in over the next eight years. And if prices respond to the market, then the market hasn't fully evolved. I understand why Secretary Sebelius was a little upset. Because she's looking at the facts that say in 2009, the top five health insurers had a record profit year over year of 56 percent and they're on pace in 2010 to exceed that. She's also looking at facts that say that over the last 20 years they've gone from spending 95 cents for every premium dollar on medical care to only 81 cents. And in last year alone, the top executives at the top five insurance companies made a 167 percent income increase. So why are they struggling?
JONATHAN HOENIG: To be honest, Christian just gave the whole left's talking points there—the whole notion that free markets are destructive, profit motive is evil. We need governments to provide a smart solution, but this wasn't a free market to begin to, and of course health care reform makes it even more government controlled. When government gets to decide what's an appropriate rate increase— that's not a free market. The President ran on socialized health care. This is what he wants. And this is ultimately what we're going to get.
CHARLIE GASPARINO: What's really sort of shocking here is how they don't hide the fact that they really do want to socialize this industry, that it's not what the president said. You got to give him points for the honesty here. It's really funny that they start talking about profits. ‘Oh God forbid they're making money,' and it is a rigged system to begin with. And the problem is with health care reform, it's even more rigged, and I think that's the real scary part.
WAYNE ROGERS: The whole system is anti-capitalism, if you will, and it's a messed up system. You can't have a third party deciding who's going to get what money between two different individuals. In other words, the patient is not dealing with the doctor; he's dealing with the insurance company. The insurance company is dealing with the federal government; the doctor is dealing with the insurance company. It is a flawed system to start with. It has to be demolished and start all over. You have a health care bill that consists of 24,000 pages. Has anybody read it? No. Nobody has read it in the government. They don't understand it and they passed it. It's idiocy, it's the government gone berserk again. We've got to get rid of all of them.
Barney Frank Wants Fannie Mac and Freddie Mae to Keep Giving Bigger Loans; Should Congress Extend Increased Loan Limits for Fannie and Freddie?
CHERYL CASONE: Fears are growing that Barney Frank is looking to take another gamble on housing. Back in 2003, the Massachusetts Democrat said he wanted to roll the dice on housing, and we all know how well that went. Fast forward to today and now he's calling for Congress to extend the increased loan limits for Fannie Mae and Freddie Mac, something that was supposed to be temporary. But Jonathan says this mentality is exactly what caused the housing collapse back in the first place.
JONATHAN HOENIG: Government intervention creates a bubble—you know, Freddie, Fannie, and Barney Frank. The bubble collapses because reality exists and their solution is to create another bubble with all these bailouts— hope for homeowners, help for homeowners. And re-regulate everything but Barney Frank, Freddie Mac and Fannie Mae. So history repeats itself and Barney Frank once again is driving that train.
CHRISTIAN DORSEY: It's a good policy to make sure that you stabilize high cost areas so that buyers can buy and sellers can sell. And remember, self prime loans and negatively amortized loans, two privatized market inventions are principal drivers for the housing crash. And if you don't believe that the government should be involved in housing policy, are you then saying that we should get rid of mortgage interest tax deductions as well? Come on folks.
CHARLIE GASPARINO: Here's the irony of this whole thing; by sort of propping up the market, by making it easier for people to get these loans that really can't afford it, you are driving housing prices up beyond what working class and middle class Americans can really afford. Unless, you turn to Fannie and Freddie, unless you take out one of those crazy loans, and that's the problem with these sort of expansionist housing policies; they make housing less affordable for working class people.
WAYNE ROGERS: The whole idea of having a market that was created by Freddie Mac and Fannie Mae originally, to have a place where banks can sell their loans so that you had a market, is a good idea. It's when the federal government intervenes into this stuff that it works. Maxine Waters, Barney Frank, and all of them said, ‘You've got to start making loans available to everybody so everybody can have a home'. Forget about having credit policies. Franklin Raines was a crook. He filed papers for 6 years that were bad. The chief financial officer was a crook. It was the federal government interfering in something that was otherwise good that turned it upside down.
TRACY BYRNES: Christian, Albert Einstein said that the definition of insanity is doing the same thing over and over again and expecting a different outcome and that's what we're doing.
What Do I Need to Know?
TRACY BYRNES: Poverty rate is the highest it's been since 1994 — 14.3 percent. Blame government intervention. Now we're going to see raising taxes? What? And we're also hearing that the new bank regulation is causing bank fees to go up. It's crazy.
CHARLIE GASPARINO: Barney Frank's days as head of the Financial Services Committee is coming to an end. Look for Spencer Bachus to run that Committee after the midterms.
WAYNE ROGERS: Well, you've heard me talk about Ford Motor in the past. I like it still. It had a breakout on Thursday on double its normal volume. I think it's still a good buy. Hold it.
JONATHAN HOENIG: I think Ford's a great story, but honestly, I'm all about the clean green economy. I think Honda is a better stock. HMC, another breakout, it's closer to it's all time high and I own it in my fund.