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
This past week, Cheryl Casone was in for Brenda Buttner. Cheryl was joined by: Gary B. Smith, Exemplar Capital; Tobin Smith, ChangeWave Research; Eric Bolling, FOX Business Network; Pat Dorsey, Morningstar.com, and Nancy Skinner, radio talk show host.
Time for Government to Let Private Sector Fix Job Market?
Gary B. Smith, Exemplar Capital: The private sector is in the business to make money; to do that they need to optimize resources. That means hiring people and going after opportunity. The government is basically dictating where money will go for large patches of the economy, and that's inefficient.
Nancy Skinner, radio talk show host: This is like blaming a surgeon that gives you a successful bypass or the person who throws you a life preserver when you're drowning. The economy's free-fall was stopped because of the government. Consumer spending wasn't happening and government spending replaced it. Without it, the economy would have been completely upside down.
Tobin Smith, ChangeWave Research: If you actually believe the job report released Friday, which is difficult to do, the only real jobs created were those by the start of new businesses. Absolutely let the free market work, because without it, we would have had 220,000 fewer jobs created. There is a difference between short term government action and creating an entirely new entitlement system. At this point, it looks like the government is doing the later.
Pat Dorsey, Morningstar.com: It's not that the stimulus has created everything and the rest of the economy is in free-fall, but the important thing is twofold. There have been estimates by a panel of Wall Street Journal economists that say about a million jobs have been saved by the stimulus. On the psychological side, this large injection of money into the economy gave a lot of businesses newfound confidence to ramp up their investment and spending plans.
Eric Bolling, FOX Business Network: There's probably going to be a massive revision to this initial 345,000 jobs lost number. Barack Obama may say he created a million jobs. But how do you create a million jobs with the unemployment rate going to 9.4 percent? It's the highest rate in 26 years. Wages also ticked down despite all the transfer payments supposedly from the government to the people. Don't buy into this, let the private sector work.
Rushing Stimulus Brings Waste; So Why Rush National Health Care?
Eric Bolling: If TARP and the stimulus were any indication, rushing national health care would be a huge mistake. When you get it out there, how are we going to pay for it? We can tax more, implement things like cap and trade, but then the consumer will get hit with much higher prices on products across the board. We've got to take our time.
Gary B. Smith: It's not just the fact that the government rushed TARP and the stimulus. Even when the government does something right, it still looses huge amounts of money. Look at the defense industry, Amtrak, the postal service. I can't understand how anyone would expect healthcare reform to be executed well.
Nancy Skinner: The idea that we're rushing something that we've been working on for 25 years is ridiculous. Millions have lost their health insurance. The healthcare sector is one-fifth of the total U.S. economy. The long-term deficit problem people constantly bemoan can't be fixed unless we get health care reformed due to its soaring costs. Healthcare reform will fix the long-term deficit problem.
Tobin Smith: Medicare right now costs us about $600 billion a year, but in reality costs us closer to about $1.5 trillion. There are just a large number of things we don't account for in its cost. If you suddenly add coverage to 40 million people, the pure math of it will absolutely bankrupt us. It's the opposite of what the Democrats are arguing.
Pat Dorsey: The issue of covering the uninsured is that if they're covered, they wind up going to the ER and costing far more to get care when they need it. The larger issue is that we spend more per capita than any other country on the planet and we have worse outcomes in just about every single statistic imaginable. The system is broke and needs to be fixed.
D.C. Gas Tax Plan: Is $4/Gallon Coming Soon?
Eric Bolling: If the government wants to fund a $450 billion transportation bill, the fairest thing to do is implement a gasoline tax. This way, people who use the system pay for it. The government has to find a way to pay for it, and the easiest, most fair way is to increase the gas tax.
Nancy Skinner: In the midst of a recession, we can't put the pinch on millions of Americans with more taxes. Why don't we tax the oil companies who profit from the roads? They're the ones making billions of dollars.
Tobin Smith: Don't forget the fact that oil companies pay more in taxes than any other industry. But if the government did a higher gas tax right, with a phase-in policy, that could work. The key is to have a fixed price to the tax so we can then make decisions as businesses and consumers. If we were to take new revenues from the tax and use it to build infrastructure, that would be a great allocation of the money.
Gary B. Smith: We should just privatize large sections of the national transportation system. It's done now. People are starting up their own highways and byways. All the government wants is to just get its hands on more money.
Pat Dorsey: User taxes make a lot of sense. The folks who use a resource should pay for it. A gas tax means drivers pay for it.
Tobin Smith: Tim, if you can't sell it, store it! "PSA" up 40 percent by next spring
Gary B. Smith: Bum stunt boosts "Bruno" brand! "AMZN" up 25 percent by December
Pat Dorsey: Pipes are smokin' hot! "MGG" up 50 percent in 2 years
Eric Bolling: D-Day reminder: defense! "BA" up 30 percent by November
Cavuto on Business
This past week, Neil Cavuto was joined by: Charles Payne, WStreet.com; Dagen McDowell, FOX Business News; Adam Lashinsky, editor-at-large, Fortune Magazine; Gary Kaltbaum, Kaltbaum & Associates.
President Obama Plans to Name a "Pay Czar"
Charles Payne, WStreet.com: The administration has made no bones about moves like this, so we can't act surprised. The president wants to squeeze the wage gap, and he'll move from the top down. So far, the administration has been very effective doing this. What I worry about is all these czars getting things done through threats and intimidation.
Gary Kaltbaum, GaryK.com: Since the first week of this administration, I've been asking: where is this going to end? It's obviously not going to end. This is all about putting too much power in the hands of too few people. These czars will get to make decisions that interfere with market forces. In the case of pay, this is pretty simple. If I'm in a company that's being wage capped, I'm going to head over to a company that isn't. Over the long term, this interference will only hurt the free market.
Dagen McDowell, FOX Business Network: One reason we need the pay czar is because Congress came in and layered on more pay regulations. This is on top of what the administration wanted to do for the bailed out institutions. The institutions that have taken government money don't know how much they can pay certain individuals. This pay czar can clear up these problems. But obviously we don't want czars to inhibit business practices and investments.
Adam Lashinsky, Fortune Magazine: These czars will be setting policy for what has become a large segment of the economy. Sometimes when the government directly influences something it has control over, it can in fact influence the rest of the country. But, at the end of the day, nobody in the administration is going to oversee my pay, or almost anybody else's pay. As far as I know, this new pay czar doesn't answer to the White House.
535 New Bosses for GM: Recipe for Failure?
Gary Kaltbaum: Amtrak, the Post Office, Social Security, all these government run institutions are getting close to bankruptcy. The government hasn't done anything right and they don't know how to run an auto company. Yet here they are getting involved. It's an unadulterated recipe for failure. I only wish the bankruptcy had gone through regular courts and let somebody in the industry deal with it.
Dagen McDowell: We've pumped $50 billion into the auto companies, and it'll probably be closer to $100 billion before it's all done. These companies have to cut back to become viable. These 535 new bosses in D.C. will get in the way. Let them cut dealers--they're in bankruptcy. It has to happen. What do you think is going to happen behind the scenes? People like Barney Frank will be calling up Fritz Henderson wondering why this warehouse or production facility in Massachusetts is being closed. It's the behind the scenes actions we have to worry about.
Adam Lashinsky: I'm not going to get too worked up about Congress. Any hearing you ever attend you'll hear boys and girls asking very stupid questions. But they also have some good questions. They wanted to know how much GM will save from each dealership closure. They're exercising oversight, and I think won't be all that inclined to run the company.
Charles Payne: They say too many chefs spoil the soup. But these Congressional members have no idea how to run the show. They don't ask pertinent questions. President Obama, at the end of the day, runs the show. Obama keeps saying that he knows what the American people want--that we want small fuel efficient cars. That's despite the fact that hybrids, or other fuel efficient cars, aren't even close to the most demanded cars in the U.S.
16 Percent of Personal Income From Government: Welfare State Already Here?
Gary Kaltbaum: The $17,000 per average home in government handouts given this year is amazing. To be fair, recessions bring the number up. But when we get out of this recession, that number will stay up. We will not see any government pull back once we're out of the recession. This administration likes centralized government.
Charles Payne: It's hard to believe, and yet this government is continuing to get bigger. The pool at the top income brackets is shrinking. What's worrisome is the state of mind that comes with a welfare state. It crushes private enterprise and free markets. If everyone is just waiting for their handout, it takes away initiative and incentives, and we turn into the ultimate welfare state.
Dagen McDowell: The President talks about sacrifice, but the real sacrifice will be with people who are on Medicare and social security. They just aren't going to be able to get as much. The rude truth is the government has to cut back what it's paying out to people. When we talk about sacrifice, it will mean getting off the government dime, not taking more.
Adam Lashinsky: At the end of the day, the capitalist spirit is going to stay alive. There will always be people out there trying to come up with new ideas, inventions, businesses, etc. to make money. We're going to be okay. The U.S. will not turn into a welfare state.
Charles Payne: Melco Crown (MPEL)
Adam Lashinsky: Coca-Cola (KO)
Gary Kaltbaum: Boston Properties (BXP)
Forbes on FOX
Flipside: Push to Unionize Wal-mart; Great for Walmart and America
David Asman: Talk about bad timing! The same week Walmart reveals it’s hiring 22,000 more Americans, a major labor group is making a major push to unionize workers at America’s number one private employer. So, why is someone here saying that’s just what Walmart and America needs?
Neil Weinberg: When Wal-Mart is bargaining with its suppliers, it is collectively bargaining. All of its stores bargain together so why shouldn't its workers be able to bargain and get the best deals they can get, so they can have benefits so they can support their families.
John Rutledge: If unions capture Wal-Mart, middle low- end people and small towns across America can bend over and kiss their living standards good-bye. Wal-Mart is about low prices for millions and millions of people. This year Wal-Mart has already announced 22,000 new hires. Last year they did 34,000 new hires. They keep prices low... don't screw that up.
Quentin Hardy: If Wal-Mart offered the same pay and benefits as it should, stuff wouldn't be so cheap. I can see why John likes China so much, but let's also face facts. After a very anti-union administration lasting this decade, the middle class is being crushed through health care costs, they're losing ground. The top 1 percent got richer, and in real terms the S&P is down 1.4 percent. The idea that unions are a bad thing is just not proven.
Victoria Barrett: I think if you unionized Wal-Mart, you'll get higher prices and lower quality of service just like what happened in the auto industry. Just look at the bailout we are facing with GM right now. The auto industry is heavily unionized. You can't ignore that. They made bad cars.
Bill Baldwin: I think the labor laws ought to be changed to make it easier for unions to organize at once rather than store by store, so we don't have UAW workers for GM and Detroit competing with workers in Mexico. We ought to apply anti-trust laws. That means the UAW for GM can't talk to the UAW for Ford, and that means the UAW for Wal-Mart can't talk to the UAW for Target. So they got to compete.
Mike Ozanian: Unions would be terrible for Wal-Mart. Just look at the most troubled companies and industries in this country. They are all heavily unionized...the auto industry, the rail industry, steel, airlines. These are the industries that have all bled money. There's a reason, and unions have been a big part of that. Municipalities of states are all losing money, they are heavily unionized. It's all because of the unions.
In Focus: Europe Praising Obama's Populism After Bashing Reagan's Capitalism
David Asman: President Obama in Europe as we speak. Where his populist, some would say apologetic speeches are being praised. Well, rewind to the 1980s when Europe was protesting President Reagan's pro-America and pro-free market comments. Some here say Europe has it wrong and that the world and our economy need Reagan’s message right now.
Mike Ozanian: Obama's heavy handed government policy is most like FDR's. Under FDR, the economy shrank for 10 years until WWII. After Reagan’s tax cuts, from 1983 through 1989, the economy expanded over 4 percent a year after adjusting for inflation.
Quentin Hardy: The protest against Reagan were against the Persian missile deployments. His allies in Europe were Margaret Thatcher and Helmut Kohl. They were democratically elected pro-free market people. Obama is a populist and that's really smart when it comes to battling things like Al Qaeda. George Bush had that "go at it alone" strategy, which didn't do us a lot of good on the War on Terror.
Jack Gage: Vladimir Putin was traveling around to obscure cities in Russia where factories were shutting down that were struggling in this economic climate, and he said start these factories again and employ these workers. He took the heavy hand of government to business in Russia and said this needs to happen now, which is a very socialist bet. What Reagan did under the tough circumstances he inherited (5 percent mortgage rate, 20 percent interest rates, 14 percent unemployment), he made the biggest tax cut in history and cut $36 billion or 5 percent out of the federal budget.
Neil Weinberg: I would say that Obama and Reagan in many ways are similar. We are talking about the message overseas. They are both great communicators, and they are both saying ‘look, we're on your side.’ We're fighting these bad guys. We're on the side of right, and I don't think when you are sitting in Cairo or Jordan that the message is all that different.
John Rutledge: I'll take the "Gipper" over the "Ripper" any day of the week. Obama wants to rip money out of people's pockets and give it to other people that he chooses. So it’s not about making the pie bigger it's about personally deciding who gets the pie. Those policies make the pie smaller for everybody. They're going to make the very children of the people who are supporting him poorer than they are today.
Flipside: Forbes Student Loan Payment Plan: More You Make, Less You Repay!
David Asman: The lack of jobs for college graduates pushing students loans up to a ten-year high. Now the Obama administration is offering to adjust loans payment to how much you make: make less, pay less; make more, pay more. But the Forbes editor says the more you make the less you should pay.
Bill Baldwin: I think government subsidies for higher education should be closely coupled to productivity and economic value. That means we should be helping professions like doctors and welders. We shouldn't be subsidizing poetry. They don't pay it back. Doctors are already paying more with their income tax. So if you want to study poetry fine... do it one your own dime.
Victoria Barrett: I just in general don't like it when the government picks winners over losers. I think when you get a loan at a certain rate you should pay it back no matter what profession you choose to be in.
Quentin Hardy: It's valuing education for other things we might give an 18-year-old a loan for. I think it probably is a good idea. I have a difficult time correlating it to income, because journalists are not a very good outlet now, but they were a while ago. Lawyers are not a very good outlet now, but they were a while ago. Give variable interest rates to different professions. More if you want to be in liberal arts, zero or even negative if you want to be a scientist or engineer.
Evelyn Rusli: Why help people who can afford to make their loan payments? I think it penalizes people who want to go non-profit. Teachers can see that their payments are too high.
Lacey Rose: I don't think we need incentives for people to seek out high-paying jobs.
Stocks Ready to Jump at Least 50 Percent
Mike Ozanian: Hornbeck Offshore Services (HOS)
Jack Gage: Baxter International (BAX)
John Rutledge: BHP Billiton (BHP)
Evelyn Rusli: General Cable (BGC)
Government Health Benefits Tax: Job Market Killer?
John Bradshaw Layfield, www.custommuscle.com: Of course it is. Why don't we tax 401(k)'s so that we kill savings in America as well. Look, someone has to pay this. If you take a guy off the 1099, when you're not paying his health insurance, you give him health insurance. It's going to cost him about $2,000 out of his salary to get that, because a lot of them done have insurance. Someone has to pay that…it's going to go back to the employer, so it's a lose-lose everywhere because they cant figure out how to pay for this.
Julian Epstein, Democratic strategist: No, i think your data is wrong. The President said this is one of his last options: cutting tax benefits in health insurance and I only think then he's talking about the upper income folks, about 200k or 300k. the major part of the President's program is to contain costs. We waste 25 cents on every dollar in healthcare spending. We have an enormous amount of waste and what the President wants to do is allow real competition in the health care industry by letting the Medicaid program compete.
Jonas Max Ferris, www.MaxFunds.com: President Obama should be more for this idea but this was a good idea when John McCain proposed it because employers should not have to pay for insurance for people, it's ridiculous. In fact, it's a discouragement to hire people…"Oh, I have to hire this guy and spend 10,000 a year in health insurance for him." It's absurd. They should do this…it's a great idea. It was McCain's idea I believe. I wish Obama would like it more…not just for the wealthy. Across the board, corporate America should not be responsible for health care…that is ridiculous.
Jonathan Hoenig, CapitalistPig Asset Management: Take a step back. Essentially what the government is doing is taxing people who are not on the government dole. Taxing the people with private insurance who aren't costing the government anything. I think the President's goal here is to sabotage that little tiny struggling element of free market that's actually working out there, to eventually getting people into a single paid model which the government is controlling the shots for anything.
Tracy Byrnes, FOX Business Network: Why the upper income? Why is the upper income class always being penalized for being upper income? Why are they going to have to pay for these extra health care costs?
Wayne Rogers, Wayne Rogers & Co: I'm lost as to why if someone is getting benefits, why not tax it? The only reason not to tax it is because the government is so stupid they don't know how to spend it anyway. That's the reason not to tax it but why not lessen it and say "hey you don't have to give that benefit. We're going to some other kind of plan." Listen, you're working for it and getting paid for it, then you should get taxed for it.
Is Our $787 Billion Stimulus Now a Slush Fund for D.C.?
Jonathan Hoenig: Absolute slush fund. I mean, it doesn't even stop there. Billions of dollar for a housing project, 300 million for community centers in Alaska. The whole premise of the stimulus is idiotic. The whole notion of the private sector being destructive…what we really need is smart guys in Washington to spend money. You know what I'm finding out: that spending money and creating wealth are two totally separate things. The government is the worst type of investor. Totally irresponsible and making decisions for political purposes and not economic ones. I'd be surprised if a zillion dollars weren't wasted after all this is done.
Julian Epstein: I totally disagree. Look at the real scoreboard and if you look at what happened in the markets this week all the signs are that the Obama recovery program is working. New claims for unemployment are dropping, the markets are responding well. Look, there are three areas where this money goes: safety net programs, state and local governments, no one thinks we can cut that because it'll result in tax increases, and the third is for infrastructure, to which there is enormous bi-partisan support. Everyone on this show can say it's waste and we need to cut spending, the fact is that it's working and no one can point the specific things they want to cut.
Tracy Byrnes: Only five percent of that money has actually been infused in the economy so this run that we're seeing in the market.
Wayne Rogers: There is no subject to the budget, there is no accountability for any of this. They're appointing czars to spend all of this money. There is more government intervention and we are paying the bill. You the tax payer is paying for all of this and it's totally unaccountable for and it's an outrageous thing. Even the VP has acknowledged that it can't be spent well!
Jonas Max Ferris: I'm not against government spending to get us out of a deep recession. So in structure, I like this. But what they're doing is half tax breaks and half slush fund. Its better than burning the money, but its only slightly better than throwing it out of helicopters. There are a lot of tax cuts in there and frankly the money to the states is a tax break because all those states should be raising taxes so that part you really cant complain about. The rest of it is a joke…any money to retirees with the social security benefits does not deal with the core issue which is housing. All they're done is the 8,000 dollar home credit. Everything else is just wasting money.
John Bradshaw Layfield: If you want to look at a scoreboard, look at this: a trillion dollars has been spent, a million more jobs lost, 9.4 percent unemployment, 32 percent home foreclosures have accelerated. Fundamentals are continuing to accelerate downwardly right now. This is a safety net, not a stimulus. If you want to do a safety net, call it that. You guys were elected, you have the right to do so but don't call it a stimulus -- it is not a stimulus.
GM Worker "No Show" Policy: Bad for Biz and Economy?
John Bradshaw Layfield: ZERO tolerance! If my guys are sick, or have problems at home. Its ok, stay home and take care of your problems. If you don't show up and have a truck load full of stuff that has to be delivered, you are fired on the spot. The only person who would do this is Congress. Congress doesn't have to show up. We had a Senator on this show who urged his guys to miss a couple votes so they don't have a perfect attendance score. That is how Congress runs business, that's how they're General Motors. This does not work in the real world.
Julian Epstein: if you have more than one unexcused absence, you lose a week of pay. If you have three absences, you lose up to a month of pay so it's not like they're giving you five unexcused absences. Workers are taking a huge hit on the GM deal. They're losing a third of their workforce, their healthcare benefits are being cut, their retirement benefits are being cut. So as is appropriate, labor should get some skin in the game here. They need to, as should the bondholders and everyone else.
Tracy Byrnes: When unions renegotiated their deals, I remember in the late '90s, it was like "If I work more than 6 hours, I'm going into overtime." These guys have been coddled for so many years, this notion of I'm going to dock your pay if you don't call… are you kidding? They still have their jobs and benefits, everything.
Jonathan Hoenig: Is he an expert in automotive design? Engineering design? It's not my forte, but it's not the President's either. Companies come up with very fair compensation policies…they have sick days, personal days, they come up with a good system which works not only for the company, but also for the employee. I think GM has lost their incentive to foster productivity because they're sucking on the teeth of the American taxpayer! That's what's wrong.
Wayne Rogers: I don't think it's anyone's business. The union sits down and they have a contract with the company and both sides agree to it, that's what it is. By the way, if I'm the company, I don't have to agree to this and I should just go and fire the guy. And if the guy doesn't want to come to work, fine! I'll find someone who does want to work and I'll pay him. I just don't think it's the government or anyone else's business to dictate what goes on between two people entering in to a free market contract.
Jonas Max Ferris: This has been going on since the 50s with unions when they were on the top of the world. German workers get a month off paid and they're doing well. Do you want more vacation and less income and be a little poorer like in Europe, which some people want, or do you want to work a longer work week and be able to buy more but have less vacation.
What Do I Need to Know?
Tracy Byrnes: Recession still here, desperate times, little coffeehouse in Southern California starting to take their clothes off. The girls are scantily clad, chief available is -- cleavage is showing and they are selling coffee. Unfortunately you are going to see more of this.
Jonas Max Ferris: Hot new phone to compete with the iPhone. The Palm Pre. I don't think it is going to be that successful. The network is going to get a lot of attention. Buy Sprint.
John Bradshaw Layfield: Disneyland versus Disney World – L.A. versus Orlando, I don't care if you have the Seven Dwarfs, Snow White and Shrek they cannot cover this man, he is king. Buy Disney.
Wayne Rogers: My pick is CHU, China Unicorn, I don't think what happened at Tiananmen square anniversary is going to affect the Chinese economy whatsoever. The Chinese are way ahead of news a lot of things and they are going to continue that way and their growth is much better.
Jonathan Hoenig: It is wedding season now. But Platinum (PGM)