DISCLAIMER: THE FOLLOWING "Cost of Freedom Recap" CONTAINS STRONG OPINIONS WHICH ARE NOT A REFLECTION OF THE OPINIONS OF FOX NEWS AND SHOULD NOT BE RELIED UPON AS INVESTMENT ADVICE WHEN MAKING PERSONAL INVESTMENT DECISIONS. IT IS FOX NEWS' POLICY THAT CONTRIBUTORS DISCLOSE POSITIONS THEY HOLD IN STOCKS THEY DISCUSS, THOUGH POSITIONS MAY CHANGE. READERS OF "Cost of Freedom Recap" MUST TAKE RESPONSIBILITY FOR THEIR OWN INVESTMENT DECISIONS.
Bulls & Bears
Economy's Message to President Obama: No "Additional" Spending Needed?
Gary B. Smith, Exemplar Capital: This idea of additional government spending just gets dumber and dumber by the day. The dollars we've put up for the stimulus haven't even begun to trickle into the economy yet. At least let that money start to work. Eventually, we're going to wake up with a big hangover in the form of stimulus. Deficit spending didn't work for this country in the 1930s. It wasted our money and saddled our children with huge debts.
Mike Papantonio, radio talk show host: If it hadn't been for stimulus spending in the 1930s, we would have never pulled out of the depression. When FDR first tried to stop spending money, it increased unemployment, dried up consumer spending and extended the suffering of the Depression. If we stopped spending right now, our economy would go into a tailspin.
Tobin Smith, Changewave Research: Right now, the bigger issue is putting out rules and standards for what we're already doing. We shouldn't do more until we figure out what we're doing right now. This is like redoing your home, repainting the walls, and putting on a new roof all at the same time.
Eric Bolling, FOX Business Network: If the house is on fire, it's like we've been shooting a fire hose down every block. Stimulus doesn't work. People don't spend the money--they put it in their pockets. Enough is enough. Things will get better. Home prices have started to level out. Sales are up, data points are ticking upwards. There will be bumps in the road, but things are getting better.
Joe Battipaglia, Stifel Nicolaus: Rahm Emanuel said we can't let a good crisis go to waste. The Obama administration is a very progressive group. They want to change direction, so they're using the crisis as an opportunity to redirect traffic for the business community and it's dangerous. The administration is going to keep going, pushing their programs and initiatives forward, and keep spending even more money--putting us all in a bigger hole as a consequence.
Can We Afford Paying Government Workers 40 Percent More Than Private Workers?
Eric Bolling: The biggest growth driver in the economy right now is government. This is absolute insanity. For years I told my son to go to Wall Street, trade, and make a lot of money when he grows up. But after the last six months, he should forget Wall Street and go into politics. That's where the jobs are going to be.
Mike Papantonio: I love to hear this arrogant, pompous attack on government workers. What about firefighters, police officers, teachers, or social workers. Is it too much to pay these people good wages?
Joe Battipaglia: Unlike the private sector that pulls back during a recession, government employee pay and benefits stay to same, or get even better. It sucks air out of the economy, and government spending continues to become a bigger share of U.S. GDP. In some states the only place there is job growth is in government hiring, such as New Jersey.
Tobin Smith: This difference in pay between government and private sector jobs has gone on for decades. But there's no pulling back because these workers get raises on an inflation-adjusted basis. The interest payments we're going to have to make on all this money we're going to be borrowing will be bigger than our annual defense budget. The government should be pulling back on these wages and benefits, but we've got bigger problems out there.
Gary B. Smith: The reason so many state and local governments are in trouble is from these high wages and benefits government workers receive. The most unionized sector of the economy is the government. Governments are beholden to these unions and have to pay these high wages -- the unions have a monopoly on them.
Best Bang for Your Buck Right Now: Stocks or Homes?
Eric Bolling: This is the best time in decades to buy a house. Home affordability rates are at their all time high along with inventory levels. With a 4.5 percent mortgage rate and an $8,000 credit, you can do it.
Joe Battipaglia: I think house prizes are still too high and they could drop by another 20 percent. Stocks are a better opportunity because any rebound will show up there first as opposed to the housing market.
Tobin Smith: Homes are selling for 50 percent beneath their replacement cost with low mortgages to carry. I'd go to homes right now. It's a special situation right now. If you're in the right location and get a good deal, take advantage of it.
Gary B. Smith: Home ownership right now is still a crapshoot. I don't think we learned anything from the last few years. We're back to low mortgage rates and Obama wants everybody to refinance. This will be subprime all over again and another housing crisis to go with it. Home prices could still drop instead of go up. Stocks are still a much better and safer way to go.
Tobin Smith: Fight off pirates & get a stock "treasure" with "AVAV "!
Joe Battipaglia: Tech is where it's at! "PALM " triples in 2 years
Gary B Smith: Gov't runs GM into the ground! "F " jumps 50 percent by 2010 auto show
Eric Bolling: Greenspan is "full of it"! "HBI " up 50 percent in 1 year
Cavuto on Business
"Tea Party" Protesters: Are They Right About Cutting Taxes, Spending?
Charles Payne, WStreet.com: I love this. It's amazing. It's a grass roots movement. It takes us back to the foundation of America. Unfair taxes and a revolt against the king. This isn't a bunch of millionaires, these are every day Americans. This isn't going to go away. People know that very soon they're going to be paying through the nose.
Ben Stein, author, "How to Ruin the USA": I think this movement is great, but don't see it being anything like the problems the colonies faced in the 18th Century. Right now, people are protesting being taxed at a wildly high rate and government spending that's out of control. They're protesting a government that has gotten out of control.
Dagen McDowell, FOX Business Network: Over the past decade, our taxes have been too low based on our spending. We don't have enough money coming in the door. If people want to protest, I want people to show up with these rallies with lists of all the things they're willing to cut in terms of spending. For example, you'll shave X-amount off Medicare prescription benefits, or take this much less money in social security benefits. If you want taxes low, then make a list of what you want to cut to reduce spending.
Adam Lashinsky, Fortune Magazine: We should applaud all protesters for going out and exercising their democratic rights. We'll know how big this movement really is on April 15th. There's a conflict here in that public opinion polls nationwide show that the solid majority of American support President Obama and his measures. If these people can achieve change, such as the way California is governed for example, that would be a huge step forward.
Exclusive: Rush Limbaugh on His Tax Revolt
Rush Limbaugh, radio talk show host: The Obama administration has no idea what sort of shortfall they're creating for tax revenues. People like me will help promote a city like New York, and pay towards its welfare state, yet we're held out as the villains. It's the wealthy who need to be thanked and encouraged to keep working. If they earn more money, cities like New York can cipher from them. What we're going to see is a continued exodus of people from high tax states moving to low tax states. Budgets never go down, and they have to soak the rich to pay for it.
After Billions in Bailout Cash, Now Bankruptcy's OK?!
Charles Payne: No matter what, I think we're going to have to put more money into the auto companies. This is going to continue to be a very hard situation.
Dagen McDowell: What the government has been trying to do is prevent an utter collapse of GM. Originally, this was thought of being a government funded bankruptcy to help make sure hundreds of thousands of jobs didn't suddenly disappear. The government was trying to push of a GM bankruptcy down the road to a point where the economy had stabilized.
Ben Stein: President Obama didn't have any constitutional right to fire Rick Wagoner, or any federal regulation allowing him to make corporate decisions for GM. This is pure government dictatorship. It's very scary to think the President believes if the government gives money to a company, it has the right fire its executives.
Adam Lashinsky: This is an extraordinary situation. This is not a typical business or economic climate. The government did decide to give extraordinary amounts of money to GM to keep it in business, and it gives them extraordinary rights. The U.S. government is the big lender here, and it's in control of the situation. Bankruptcy in the case of GM means wiping out their debts so they can begin to function as a company again.
Best Funds to Buy With Your Tax Refund
Adam Lashinsky: PIMCO Commodity (PCRDX )
Charles Payne: iShares Silver (SLV )
Ben Stein: Emerging Mkts Index (EEM )
Forbes on FOX
On Saturday, April 11, 2009, David Asman was joined by Steve Forbes, Quentin Hardy, Victoria Barret, Jack Gage, Mike Maiello, Evelyn Rusli, and Elizabeth MacDonald.
David Asman: Forget about D.C.'s tax grab. An even bigger grab is coming closer to home. All across the country, more and more cash-strapped states are hiking taxes to raise money to make ends meet. But, is that the worst thing the states could do in this economy?
Steve Forbes: It's bad. In a recession, the worst thing you can do is raise taxes. Don't say the states are performing essential services they can't cut back on. We're not talking about police. We're not talking about essential services. We are talking about bloated spending, bloated pensions, and the like. Lots of room to cut, but they treat the taxpayers like an ATM machine. The government has to do what every business, every household is doing… and that is cut back.
David Asman: Mike Maiello, I live in New York City. I see a lot of layabouts and all these government projects. There is a lot of waste that could be cut, no?
Mike Maiello: Hey, I live in New York, too. And they just cut our subway service back because they don't have the money for it. They actually raised the prices and cut the service. I think that is an essential service. States are not allowed to run deficits. Either you support tax increases in a smart way or you support a federal bailout of the states, at least as big as what they gave to Wall Street.
David Asman: Jack, there are so many ways states governments could cut. They are so bloated. Let me count the ways. Instead, they go for the tax hike. Will it hurt the economy?
Jack Gage: Absolutely it's going to hurt the economy to raise taxes. Look. To the point that states are bloated and the state government rolls are bloated, the majority of the states asking for this bailout from the government or from the taxpayers, whichever it ends of being, have grown their pay rolls, their state employee pay rolls by 12-13 percent over the last five years. It's hugely above the national average. That's why the bill is coming due.
David Asman: And Quentin, nobody's done it more than your Republican governor Schwarzenegger. It's time to beat up on a Republican. Go ahead. Beat up on him! We'll agree with you.
Quentin Hardy: I'm going to take a pass. The reason it's growing faster is that Washington pushed more and more responsibility on the states. I complained about it when it happened. Liz did, too. The fact is it happened. They have put more and more responsibilities on the states and if a state goes bankrupt, you are going to see the highway patrol get cut. You are going to see…
David Asman: I try to disagree, but he brings up a good point. All these unfunded mandates coming from Washington to the states…
Elizabeth MacDonald: The last thing you want to do is have a reckless bureaucrat who can't handle it. There is bloat. By the way, who are you going to tax? Everyone's portfolios are so bombed out, who is rich right now? We've lost the equivalent of the United States GDP in terms of net worth. What kills me is that millionaire's tax. What's a million now? $300,000 is the new million.
David Asman: $200,000 in New York.
Elizabeth MacDonald: And in New Jersey it's $500,000. Ridiculous when that kicks in.
David Asman: Evelyn, the question is, if you do raise taxes on a state level, won't people run away and go to places like Texas?
Evelyn Rusli: Sure, that's a risk you take. Even though these bloated budgets are pretty big, if you start cutting, you start chipping away, and eventually you'll start chipping away at essential services. Oregon lawmakers are talking about releasing prisoners and shutting down courts.
David Asman: But, you know there is real, genuine ways they could cut back but they can't because of pushbacks from local unions.
Evelyn Rusli: Sure, but I think they should try to cut back as much as they can. Raises taxes should be a last resort.
David Asman: Steve, Governor Perry from Texas is saying “Come home to Texas! We got plenty of room.”
Steve Forbes: Texas is the second largest states in the union. If they can live within a budget and have no state income tax, why can't the rest of the states? In New Jersey, the state spends the equivalent of $23,000 per pupil and what are they doing?
David Asman: Not much.
Steve Forbes: So you reduce spending, get better performance, but you won't get it as long as they think they can pick your pockets.
David Asman: Health care coverage? You're on your own. 401(k) contribution matches? Don't count on it. Pension plans? Fuhgedaboutit. Companies cutting workers' benefits left and right to save money… and Vickie says that's great news for workers!
Victoria Barret: Yes. Here's the thing. We have become too tethered to our employees for health care, for retirement. So if something goes wrong with your employer, or if you get laid off, or you want to switches jobs, it's really complicated. It's really messy. The current system isn't ideal. Now, getting to a new system is also going to be messy. Right now, as companies cut back, they're also not raising salaries. The cost of health care is still high. So, there's an awkward transition we need to make. But, long term, it's better to not be tethered to your employer and allow you a lot more flexibility to jump jobs.
David Asman: Well, one word: Freedom. Gives you more freedom.
Elizabeth: No it doesn't. What are we talking about here?! I just feel like I need to take a Dramamine listening to this. I love Vickie and I understand the logic of the argument…
Victoria Barret: Thank you… but.
David Asman: She's about to slash you from left to right, Vickie, so prepare yourself.
Elizabeth MacDonald: What happens if you get sick on your job where you don't get health insurance, you're going to get laid off. What kills me is we shouldn't be cutting back on health care insurance when there's so little of it in this country. We need to keep some of it. I get it. The system is really bad. I don't like the fact that some faceless bureaucrat can deny you coverage…
David Asman: Hold on. Hold on! Help is on the way, Victoria – we got back up. Jack, go ahead.
Jack Gage: Well look. I think this boils down to the basic fact that workers without jobs don't have to worry about losing their benefits. That's the most important thing - making sure there's an environment where you can get work and you can't do that without helping companies. We're seeing this play out in Detroit where the UAW are so resistant to the idea of conceding benefits, conceding some of what their employers are supporting, that they are shooting themselves in the foot.
David Asman: Really, the legacy cost that remains from years past when they were giving everything under the moon…
Evelyn Rusli: The real debate is whether they will bring back the benefits… and they need to because when you cut, there's less incentive to save. And when you look at the health care front, I think people are just going to go uninsured or if they have high deductibles, they're going to avoid preventative care and that is troubling.
David Asman: Steve?
Steve Forbes: The key thing is to get to that system Vickie is talking about…. Where you own the policies. The employer can fund those policies, like the old TIAA-CREF. Teachers go to various schools and institutions, but they own the policies. The employers put the money in, but it's your property. You're not tethered, you have it wherever you go. You don't have to worry about COBRA and other stuff.
David Asman: Who has more incentive to save the money than the person who owns the policy, right?
Quentin Hardy: Hey America – Victoria Barret is a communist.
Victoria Barret: No!
Quentin Hardy: There will be an awkward transition while everyone is broke and poor and sick, but after that, the revolution will come. You leave them up to their own will, they encounter how horrifying the actual health care system is as they seek individual health care coverage, which there isn't… and it's totally overpriced…
Victoria Barret: No…
Quentin Hardy: And they just collapse. The whole system will give up and it'll be great. Victoria, you have no idea how tough it is out there.
David Asman: Jack, Elizabeth, Quentin… be quiet. Victoria has the floor.
Victoria Barret: I'm not going to be called a communist. Are you kidding me?! I'm not talking about turning over health care and retirement to faceless bureaucrats. I'm talking about empowering individuals; cost will come down if individuals make decisions. Also, your salaries should rise. Now, that's because it's a tough time, but over time, your cost to your employer should go down and your salary should go up.
Forbes on FOX Debate
David Asman: Talk about taking matters into your own hands! Well, more like making money for your own hands… Dozens of communities are now printing and using their own cash to keep cash flowing while boosting local businesses. It was something tried during the Great Depression and Steve Forbes says it's a terrible idea for our recession. But Steve, I think it's kinda fun.
Steve Forbes: Oh, it is fun as long as it stays what it is now… which is a discount coupon. So you pay $95 for $100 worth of coupons and you get 5 percent off. That's all nice and well and good and makes you feel great. But, if you try to pay people with this funny money, then you're going to have a problem because why substitute an even weaker money for an already weak dollar. Coupons fine. Beyond that? No good.
David Asman: There's something in my Libertarian roots that love this idea – that local communities can say “They heck with Washington! We're going to print our own money.”
Quentin Hardy: There's something in your Libertarian roots that likes 50 caliber sniper rifles too…
David Asman: No, no, no.
Quentin Hardy: But in this case, it is a good idea because it helps people focus on their local community. Money spent locally does circulate more than money sent to large chains like Walmart. Walmart might be cheaper, but Walmart also has the deep pockets to endure these downturns. Setting up a discount system that turns local businesses a little bit more attention, makes people spend help them get through tough times, I'm all for that.
David Asman: Victoria?
Victoria Barret: Quentin, Steve told me yesterday that he's going to start paying us in Forbes Bucks. We can make our money on a Forbes magazine and a Forbes necktie. How do you feel about that?
Quentin Hardy: That magazine makes an excellent casserole.
Victoria Barret: It's a gimmick and I think it's an unfortunate one, because the dollar is weak and we're in a time where we could be at risk for severe inflation down the road. So, I think it's not the right time for a gimmick like this.
David Asman: Well, they have the Ithaca HOURS, the Plenty in North Carolina, the BerkShares in Massachusetts, the Detroit Cheers…
Evelyn Rusli: I think it's great. The town is not shunning the dollar. If you want to keep all your money in dollars, that's fine. It's more of a social movement. It's really a big coupon where you can take it to local businesses.
David Asman: Mike, it's like a coupon.
Mike Maiello: That's fine. But the movement is not as innocent as what's being described here. It has been used by crack pot gold bugs for a long time to separate people from their real dollars. It is a tough time. There have been a lot of people being scammed about this. People have to be careful.
David Asman: What about counterfeiting? It's probably a lot easier to counterfeit these currencies than the federal dollars, right?
Quentin Hardy: Vicious counterfeiters who will flood Ithaca, New York? And wipe out the organic food store? I don't think so.
Steve Forbes: The bottom line is if these towns want to get prosperous in the future, focus on real things, a more business-friendly environment. That's the way to get real bucks.
David Asman: Steve, do you dream about taxes?
Steve Forbes: This time of year? Yes.
David Asman: Stocks that make money no matter what the market does. Sounds like a dream, right? Well, the Informers are here to make your dreams come true with their dividend-paying stocks!
Victoria Barret: Oracle (ORCL )
Jack Gage: Aflac (AFL )
Evelyn Rusli: Otter Tail (OTTR )
Terry Kennan was joined by Wayne Rogers, Jonathan Hoenig, Tracy Byrnes, Jonas Max Ferris and Brian Moore.
Public Support of Capitalism Dives; Signal for White House to Tax and Spend More
Jonathan Hoenig: Yeah, I mean Terry, the president already pushes this notion that capitalism has failed, right? That profit and self interest are bad, and that what we really need is this selfless government to allocate assets the right way. So hell yeah, you're going to see higher taxes, higher spending and most frightening is bigger government ownership and control of almost every element of American life. I think it's a major, major problem for this country.
Brian Moore: Well, no, this is not a green light for Washington. But it is a confirmation and a recognition that the free market system just doesn't work. And a recognition that the wealthy benefit. And the tax cut by Bush back in 2001 provided about four trillion dollars to the wealthy elite at the expense of the average taxpayer.
Terry Keenan: The average taxpayer had a lot more jobs back then, a lot more jobs created during that period than we're seeing now, that's for sure.
Brian Moore: Well, you combine that with the bailout, and the six trillion dollars that the Federal Reserve has given to the financial industry, and we're looking at system of capitalism that only benefits the wealthy at the expense of the little guy.
Tracy Byrnes: But I'll tell you what, look at the poll. The poll's a little misleading. No surprise that people under 30 voted for socialism. Now, Obama's had this big push to get the young crowd out there. They voted in this poll, and they skewed the numbers a bit. Anybody over 30, hard working with a job, voted very strongly for capitalism. So it is still working. We had some bumps along the way, but it is still working. Younger people, and with all due respect to them, their daddies are still paying the bills for them, going through college, essentially living the socialism life right now, that's why the numbers were skewed in this poll.
Terry Keenan: Capitalism has helped millions of people, not just in this people, but the worldwide. To have a much, much better life.
Wayne Rogers: Well, there's no doubt about that. I mean, ever since the enlightenment with Adam Smith first evolved the philosophy of this, capitalism for 200 years in this country has done wonders. You have one hiccup here and you want to abandon this and go to socialism? Look at what happened in Russia. Central planning never works. It will never work, and we can see that in our lifetime. It didn't work in Italy, it didn't work in Russia. It's not going to work anywhere. Capitalism is the best way to do this in a free market system. You're going to have hiccups; they have to be smeared out. By the way, when you talk about the bush tax cuts that produce more revenue for the federal government and did have a lot of benefits to the societies as a whole --
Jonas Max Ferris: You know what the most interesting part is that Jonathan has the same opinion on the bailout as the socialist guest. Capitalism, there's no question about it, is still better as a semi broke system. But just raising taxes and spending, that's not socialism. You can have it with a 10 percent tax rate and no government spending because the companies are owned by the government and use profits, like the communists ran the oil companies, made a lot of money. That was the revenue. The taxes and spending, actually have a 90 percent tax rate. We had it in our period.
Life Insurers on the Brink; Bail 'Em Out Or Let 'Em Die?
Tracy Byrnes: This is a joke because from here we'll go to the mutual funds. These life insurers made some bad bets on credit defaults, all that other bad stuff out there. Not to the excess of AIG by any stretch. They don't have nearly the exposure and they have secretly been buying up thrift savings and S & L. The whole thing is sneaky and unnecessary. The life insurance companies do not need this, not to mention these things are state regulated. The states are set certain reserves for this company. Not our problem that New York happened to lower the reserve on New York insurers and therefore they're not holding enough cash.
Wayne Rogers: I don't think so. I think Tracy just said it, you know, I can't approve of what she said. There's no reason to bail these people out. Absolutely no reason to bail them out. If they're going to fail, let them fail. If they bought into some of this risk, they're going to mark down their assets side, but they're still good earners. In other words they have the earnings to do this. No reason to bail them out.
Jonas Max Ferris: Yeah, they don't deserve a bailout. Nobody deserves one, but they should get one. The mutual funds already got a bailout, in fact a lot of companies would have failed the government didn't step in. The reason why they should is because we had to stop runs and panics on these companies. A lot of middle class Americans have annuities, fixed ones, various contracts with these insurance companies; they bought them because they're sort of conservative. If they panic and think they can't get their money out, it will start a cascade. The state funds would have been wiped out by AIG.
President Hires Actor as "Arts Liaison:" Waste of Taxpayers Money?
Jonathan Hoenig: I mean the government should have no involvement in the arts. Not in funding, promoting, not presenting, or these other art grants that we give away. Art is how free people express ideas. The government is not in the business of expressing ideas. The business of protecting our rights to do that. So, I think this is just another way to reach out to rich liberal Hollywood, which of course helped Obama get elected. This is like a liaison to that community.
Wayne Rogers: Jonathan wants to beat up on the actors for God's sake. I'm sure he supported Ronald Reagan, a wonderful actor and president. Why are you making a big deal out of this poor guy? He's taking a hit in earnings, going in there for less money he's making now. Nancy Pelosi spends five million a year on an airplane and taking this poor guy to do what, I don't know.
Tracy Byrnes: But Jonathan, this is all about dollars and cents, right? Obama collected $8.6 million from these people out there. He has to pay attention to them. The next highest person was Hillary Clinton and she only got $3.4 million. He blew them away, he's got big names supporting them, you know what, and unfortunately they could sway votes, so maybe it's not such a bad thing.
Jonas Max Ferris: I don't even know why it's necessary -- look, it's an element of propaganda, all white houses have a propaganda budget, they don't call it, the Bush White House, there were agencies that were paying reporters to write stuff about programs. I'm sure Bush had a similar person. It's not really that expensive. I don't like the role, but a good use of money. As far as the art criticism, if you go into a real art museum, look at the great works, a lot of them were commissioned by governments, kings; it's not all a free market.
Tax Refund Stocks
Jonas' pick: CISCO SYTEMS (CSCO)
Thursdays close: $17.82
Jonathan's pick: ADVANTEST CORP. (ATE)
Thursday's close: $16.45
Wayne's pick: OPEN TEXT CORP. (OTEX)
Thursday's close: $34.99