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Bulls & Bears
On Saturday June 13, 2009 on Bulls & Bears, Brenda Buttner was joined by Gary B. Smith, Pat Dorsey, Eric Bolling, Tobin Smith and Regina Calcaterra.
$600 Billion Tax Hike to Pay for Health Plan: Recovery Killer?
Tobin Smith, ChangeWave Research: This is the super bowl of stupid ideas. This hurts the economy and the stock market. We have this idea that we can just transfer all this money to help pay for health care reform, when in reality we don't have it--we'll have to borrow it. This simply won't work.
Regina Calcaterra, Democratic strategist: I don't see higher taxes in the future. We could take the federal budget and slice it up and find a way to pay for health care reform. The cost of health care with private insurance companies will go down because we'll finally have the public sector competing with it.
Eric Bolling, FOX Business Network: On the heels of a budget that's expanding, the market cannot handle another program that will eventually cost up to a trillion dollars. We have to find places in the budget to start cutting. But this just hasn't happened. I haven't seen a government that manages to get bigger without massive spending increases to go along with it.
Gary B. Smith, www.thechartman.com: This will absolutely crater the market. We're adding another immense cost burden to the economy. We cannot just cut and slice. Congress and the administration are not going to cut back on any programs. The problem with this program is that government health insurance won't compete with private insurance--it'll drive private insurance out. All you have to do is look at how Medicare, Medicaid, VA Hospitals, Amtrak, etc. are run, and that'll give you an idea of what to expect from a government health insurance program.
Pat Dorsey, Morningstar.com: I don't this will have that big an effect on the economy. Odds are that the health care reform that gets passed will be far less radical than what's being floated now. These things always get watered down. The bigger issue right now is the excess capacity on the labor and manufacturing side of the economy. That excess capacity will have far bigger implications on any economic recovery.
America's Money Fix: Wipe Out Welfare?
Eric Bolling: The move by Gov. Schwarzenegger in California to cut back welfare benefits is a good one. The federal government can print money and keep expanding, spending and printing. States don't have that option, so they have to cut back on things like welfare expenditures. Obama should take a lesson from this. It'd be a better way than continuing to print money.
Tobin Smith: Unfortunately, welfare expenditures are a small part of the budget all things considered. Cutting back on federal welfare benefits would only have a small effect on the budget. Often times, government efforts try to make people better off, but ultimately do them worse.
Regina Calcaterra: We should never get rid of welfare programs. No municipality, state or federal government should ever think about balancing the budget on the back of welfare recipients. There are people who desperately need it. The majority of people on welfare are children. There are millions of impoverished children who are relying on food stamps, Medicaid coverage, home heating assistance programs, etc. This is not something we should cut out.
Gary B. Smith: Since 1965, the federal government has spent almost $10 trillion on welfare yet poverty levels remain almost the same. You have to question why we're spending all this money. We can't just maintain the status quo and something clearly isn't working. For that kind of money, we should see some cause and effect.
Pat Dorsey: There are bigger fish to fry. We have to look toward the big elephants in the room--Medicare and social security. If we did something as simple as pushing the age you get social security back a few years and raise the payroll cap on social security by about 15 percent, you shave enormous amounts of money from the budget. But that hurts everyone. It makes us admit as a nation that we've made promises we can't keep.
Cold Cash for Good Grades: Dumb Idea for Kids and America?
Gary B. Smith: This is the stupidest thing I've ever heard. What are we going to do next? Pay kids for eating their vegetables or exercising every day? There is something called personal responsibility. That comes from the parents to the child. If the kid doesn't get good grades, a parent sits them down, and tries to set them straight by using the stick rather than the carrot.
Regina Calcaterra: When you look at the program that was implemented, I think it's a good idea. They're targeting impoverished children. If you have a middle income child or a child of a wealthy family, parents provide them with some type of incentive for getting good grades. Parents of poor children can't do that. These are programs to incentivize children to get their grades up and go to college.
Tobin Smith: Incentives work. If you look at these numbers, they are unambiguously great. Clearly this program worked in these trial schools. I would rather give $500 to a kid who works hard and gets good grades than another tenured teacher. Think about the value of future earnings of that kid--society as a whole benefits.
Eric Bolling: This is just another entitlement program. My son gets A's in the school and he doesn't get money from the state of New Jersey. He gets a nice pat on the back from mom and dad.
Pat Dorsey: This program has nothing to do with the nanny state. It's being funded by a non-profit organization. Kids should theoretically all value learning for its own sake. But if a child is in a family where the parents aren't there, don't care, are alcoholics, drug addicts, etc. and providing no incentives or encouragement, this cash reward gives them that incentive to become a successful individual. Their success prevents them from becoming a part of the nanny state. This sounds like a good idea.
Tobin Smith: $1M mattress lesson! "BLK " up 50 percent by Nov.
Gary B. Smith: Get ready for stimulus 2! "TBT " up 20 percent by Dec.
Pat Dorsey: Health care reform boosts "HCN " 30 percent by next June
Eric Bolling: Keep terrorists locked up! "CXW " up 30 percent in 1 year
Cavuto on Business
How Can the President Prove a 'Saved' Job?
Charles Payne, WStreet.com: If you say something enough, people will start believing it. I think we're being sidetracked here and falling for this debate. The administration is trying to cover up the fact that hundreds of thousands of people are actually losing their omnibus every single week in this country. It's so disingenuous to even try and brag about creating jobs when we see hundreds of thousands of people losing their jobs every month.
Ben Stein, author, "How to Ruin the USA": I don't buy this at all, even if President Obama were the best statistician in the world. These numbers the administration is trying to use are complete phony baloney hypnosis. It's extremely disingenuous. If Joe Biden says something is true, what are we supposed to think?
Dagen McDowell, FOX Business Network: This is a politician's dream. You can't quantify it, you can't prove it. The President could come out and say 600,000 jobs have been created, and people could ask him to prove it. He can't. The question is, are we just moving jobs from one place to another while misusing resources the private sector would spend better? That's the central question.
Adam Lashinsky, editor-at-large, Fortune Magazine: There is some science to all this. During the depression, the government was funding jobs directly and could count them up. Today for example, there's nothing stopping the administration from saying it spent X-amount of money on GM, and now there is Y-number of jobs. The organization or municipality getting federal dollars can report back and say, we took this amount of money and hired this number of people. But I agree that today, we have no idea how many jobs have been created or saved.
Car Czar a No-Show at Hearing: Where's the Accountability?
Ben Stein: I don't understand what the deal is having Steve Rattner at the hearing in the first place. He's obviously an intelligent fellow, very successful stock and bond salesman, a very successful reporter for the New York Times business section. What does he know about cars? His main deputy is only 31, with no experience. Why are guys with zero automobile experience supervising one of the largest, most complex industries in the world? And more importantly, where's the law authorizing it?
Charles Payne: This auto task force has a whole different agenda, not to save the car industry. They're trying to push through whatever agenda it is they have in mind, but saving the American auto industry isn't apart of it.
Dagen McDowell: Every lawmaker at this hearing was there to show they didn't want any dealership in their district closed. They are going to fight tooth and nail to haul auto executives in front of Congress again and again to fuss and moan about dealers getting shut down. Even the new chairman of GM has said he doesn't know anything about cars.
Adam Lashinsky: Rattner didn't show up for this Congressional hearing. But he sent one of the top people on the auto task force to attend it. In terms of lacking experience from the people on the auto task force, the CEO of Ford comes from the aviation industry--and Ford has managed to make it through all this economic turmoil so far. Sometimes what you need is a fresh set of eyes.
Oil and Gas Rates Soaring: Will Summer of '09 Repeat '79?
Charles Payne: I think we're heading this way. Obama has the same sort of general philosophy as Jimmy Carter had. Both men have a good heart. I just think the way they want to fix the ills of the world is just plain wrong. They want to go after the rich and corporations. Who they vilify, demonize in these things always ends up backfiring in the long run.
Dagen McDowell: We're not going to have the summer of 1979, at least not for another five years. Spending is absolutely a worry. But back in '79, we had double-digit inflation, well north of 10 percent. The 1-year treasury yield was nearing double digits. Now, the 10-year treasury yield is less than 4 percent. We've got a long way to go till the summer of 1979.
Ben Stein: In 1979, we had a real genuine shortage of oil and other commodities due to the Iranian revolution. We don't really have a shortage now. In fact, we have enormous oversupply or energy commodities. This current rise in prices is a speculative bubble being run up by the commodities speculators who are seeing their chance to make money. This isn't real. Inflation is absolutely a possibility in the future, but not in the near-term.
Adam Lashinsky: For starters, we don't have an oil shortage. The countries that have oil are not going to stop selling it because they need the money so badly just to keep their countries safe and stable. Inflation is a huge risk, but certainly not in the next six months.
Stocks to Protect Your Financial Future
Charles Payne: iShares Silver (SLV )
Adam Lashinsky: DB Commodity Index (DBC )
Ben Stein: Vanguard Total Stock (VTSMX )
Forbes on FOX
On Saturday, June 13, 2009, David Asman was joined by Steve Forbes, Victoria Barret, Mike Ozanian, Neil Weinberg, Elizabeth MacDonald, Quentin Hardy, Evelyn Rusli, John Rutledge, and Jack Gage.
Flipside: Pay Czar’s Pay Cap Is Great for America!
David Asman: The pay czar's so-called pay cap is great for America! You heard me... someone here says reining in people's pay makes sense. Now that's a Forbes Flipside.
Neil Weinberg: Pay caps are good so we can let the senior executives who drove the economy over the cliff pay for their mistakes. Right now tax payers are paying for their mistakes. So if we are going to underwrite their problems why shouldn’t we cap their salaries?
Steve Forbes: Get rid of some of these czars. This is America not Cuba. If the talent’s not performing, get rid of the talent. But if you want real talent you are going to have to pay up for the talent. These companies need top notch talent, not bureaucrats or people who are wanting to punch their resume and get a job as a lobbyist after this.
Elizabeth MacDonald: We’re talking about seven companies that got massive taxpayer bail outs. They’re a horrific disservice to their shareholders. They were paid as if they were enormously successful. They’re not tax payers. They are now footing the bill for their really bad service to their companies. But don’t expand the pay caps to all the companies. The companies are subject to a tremendous amount of political pressure. That is so bad, do not extend it to all companies.
Mike Ozanian: What they’ll do is have all 535 members of Congress deciding what the pay caps should be, so you’ll have pay caps based on political decisions rather than economic ones. The best thing to do if you want to set pay relative to performance is to get rid of the 1968 Williams Act which made hostile takeovers extremely difficult.
Quentin Hardy: We’ve said for years: We have to let the market sort it out and let the free market do what it will. We will be idiots if we can't admit to ourselves over several years that house prices and risk insurance prices and equity prices were wrong. The market was an idiot in this case, you need some balancing regulation. People are being paid on very short-sided measures that aren’t in the overall interest of the company.
Victoria Barrett: I think it’s an awful idea. For one, if you have been listening to what Feinberg has been saying lately, and I think he’s a very talented guy, but he’s kind of assuming that he’ll be able to predict the next trouble. He’s says part of my job is to make sure compensation isn’t excessive, and make sure these companies are taking excessive risks. How can you make sure someone isn’t taking excessive risks? You just can’t do it, especially if you’re a bureaucrat in Washington. So my fear is that this stifles innovation.
In Focus: Hello National Health Care Plan, Goodbye Cigs and Fast Food?
David Asman: Hello national health care. Goodbye fast food and cigarettes. Democrats making a big push for a government-run health plan. Jack Gage says that will soon mean the government will be deciding what you can eat, drink, and smoke.
Jack Gage: Just look at some of the "accomplishments" by some of health care appointees by the President. We’ve got no trans fats in foods. You’re not allowed to smoke in a restaurant or bar in New York. They’re posting calories on your Whoppers and Big Macs and fast food chains. There’s going to be a tidal wave of preventative measures that will limit our ability to eat what we want and do what we like to do.
Quentin Hardy: The government already controls what you do and they do it in other ways. Your subsidy to sugar, $2 billion a year, to corn, $5 billion a year, to tobacco we’re paying them $10 billion to get out of a business that kills 400,000 American a year. A 9/11 every three days. That price is paid to keep prices lower and unhealthy behavior going on. I’d rather see it going the other direction.
Steve Forbes: The bottom line is they’re less interested in calories and more interested in picking our pockets in more ways. That is what they want, money. The pursuit of happiness means you can eat Fritos now and then.
Evelyn Rusli: The government doesn’t want to drive the industry into the ground. I can’t imagine America without a Coca-Cola, without McDonald’s. These industries are too important to America. I don’t see a problem in subsidizing our huge health care bill, which is on track to hit $4.4 trillion in 2018. We have to pay for it some how.
John Rutledge: I think it’s not just money. I think it’s control. These guys want to control everything you do. In the future you’re going to have to file for form 1040i when you want to inhale and 1040x when you want to exhale. I don’t want these people in Washington making decisions for individuals over anything. I don’t like subsidies either.
Elizabeth McDonald: They’re looking for money to pay for their healthcare reform. The president was saying “I’m against taxing healthcare benefits for the healthcare provided benefits for middle class workers.” Now he’s for them and they’re going to carve out deal for unions. The unions are going to get their health care benefits protected.
‘Cash for Clunkers’ Hurts U.S. Automakers?
David Asman: Cash for clunkers or just a clunker of an idea? The House passing a bill that will give up to $4,500 to folks who trade in their old gas guzzlers for these new fuel-efficient cars. Lawmakers say it will jump-start struggling U.S. car companies.
Victoria Barrett: Well, its not going to do anything for U.S. auto sales, here’s why: Those fuel efficient cars aren’t coming out of Detroit. They’re coming out of Honda and Toyota. So we’re essentially trading wealth from U.S. taxpayers to foreign auto companies. I think this is a disaster of a policy.
John Rutledge: This is a straight up subsidy for automakers and for auto dealers. It’s a $4 billion deal. It’s terrible for taxpayers. Destroying wealth, destroying the stock of cars is never a good idea.
Steve Forbes: Cash for trash isn’t such a bad idea in terms of it is going to help auto makers… that’s fine. But let people choose what kind of cars they want to buy. All fuel efficiency does is encourage you to drive more. It’s not going to cut down our oil bills.
Neil Weinberg: Cash for Clunkers: if you’re going to help U.S. automakers this will help them. Congress in its infinite stupidity has made this so loose you can get these subsidies for only increasing your mileage by two to five miles per gallon. A Hummer H3 will qualify under his particular plan.
Mike Ozanian: All it’s going to do is cause the price of cars to go up, David. Less people will be able to afford them. Like government subsidies for education just causes education costs to go up.
Informer: Baby $hower Gifts
David Asman: A "Forbes on FOX" baby shower for our own Victoria Barret. Many congratulations, Vickie. What else could capitalists give to a mother-to-be than stocks?
Quentin Hardy: Google (GOOG)
Mike Ozanian: Barrick Gold (ABX)
Jack Gage: GameStop (GME)
Evelyn Rusli: T. Rowe New Era (PRNEX)
Should Pay Czar Cap Union Bosses' Pay?
Wayne Rogers, Wayne Rogers & Co: The guys who have the banks and everything, reign in everybody's pay. The government should reign in the Congress' pay, everybody who is in the government's pay. They should put a cap on minimum wage. Just take the whole country. Let's say we're going to regulate everybody. Then we can employ a lot of people to enforce the regulation and cap their pay, too.
Jonas Max Ferris, MaxFunds.com: If you take money from the government because your business failed, I think you kind of lose your rights to a free market salary at that point. That should be one of the punishments to discourage taking money you don't need. The union guys, they didn't explicitly take the money but they would be out of work if they didn't have the money. If George Bush had let the auto industry fail last year instead of living them a loan, half of these guys would have been out of work. They would have had a liquidation event without government money. Jobs were saved with government money.
Rebecca Diamond, FOX Business Network: We are only talking about bailed out companies. If your company is directly bailed out by us taxpayers, then you better believe it, we have to say and you're not going to get a multimillion-dollar bonus based on failure. The unions have not received a penny of bailout money. They are shareholders in these companies now. You are going to rein in the pay and cap the pay of every shareholder of a bailed out company? That doesn't make sense.
Tracy Byrnes, FOX Business Network: I kind of think, though, we have crossed the line on this. We are in it. It has to affect everyone. Many will argue the unions are part of the problem in the first place. They have been fighting this thing tooth and nail. They came up with ridiculous rules and regulations.
Jonathan Hoenig, CapitalistPig Asset Management: Honestly the whole auto bailout is a union bailout. Don't kid a kidder. I don't think the point is that we need better bureaucrats, though, to determine the right level of pay. Wayne, I don't know honestly what mushrooms you're on this morning, but you need to stop eating them. We don't need bigger government intervention. That's what got this ball rolling in the first place.
Picking Safe Government Jobs Over Corporate Jobs: Is Capitalism at Risk?
Jonathan Hoenig: That certainly is what is glorified these days. Business and money, for-profit enterprises are demonized by this administration almost at every turn. The President idolizes selflessness. Going to work on Wall Street despite the fact that Mozillo and Milken created a lot more wealth than Congressmen ever will, and I think it's killing the for-profit capitalist element of our economy.
Rebecca Diamond: I think it's great. The public sector will always be there. It changes about how big it grows and then contracts, depending on the economy and what sector is vilified. But it's great that we have now the best and the brightest right out of college wanting to work for the public sector. How many times we can all say about going to the DMV, the post office, and this bureaucratic office or that one and saying how terrible and incompetent these people are. Finally we have some new, fresh blood in there.
Wayne Rogers: What I think is wonderful about it, we will all work for the government sooner or later. We do anyway because we pay taxes. They are the employer of last resort. They are going to employ everybody. They do right now. They keep it with the stimulus. The biggest tragedy of all of this, you take a buck that you earn, you send it up to Washington. 90 Cents of it gets drained off in regulation, administration, etc. Why doesn't the government just go oust business? Let us work for ourselves, let us run our own stuff. It happened long before we had all of this. If we do it on a local basis, we'll be fine. We don't need the federal government.
Tracy Byrnes: It bums me out. As a grad student, we sat there and all we dreamed about was the top corner office, being the CEO of the next big company that was going to take over the world. This whole notion of aspiring to go work for the government and be on pay caps for the rest of my life sound like we're killing the entrepreneurial spirit. They are not going to make the gazillion dollars you have the potential to make if they get out there in the private sector.
Jonas Max Ferris: The payrolls of government have been going up for years now. This is not a good thing. I'm all for government regulation and everything. The bottom line is this is taking workers out of the private sector, qualified workers in many cases. People were doing it for all different reasons. The bottom line they are doing it for security and safety. The private sector doesn't seem like a safe place to work now. It's better for our economy that people work in the private sector. This is a waste of resources in the economy to have so many people on the payroll of government and not in a function that makes money for the government.
New GM Chairman Admits He Knows Nothing About Cars: Is That Good?
Tracy Byrnes: New set of eyes, new set of everything, quite frankly. The guy comes in with enthusiasm. We have seen it happen before. Take someone like Meg Whitman. She came out from Hasbro to Ebay. She took it up 100 percent. We have seen it with Randall Tobias. He left AT&T, took the stock up 400 percent. We have seen this kind of thing happen, scandal not withstanding. Many CEOs have done it. It's fresh ideas.
Jonathan Hoenig: But who brought them in? Was it the board, the shareholders? No. It was the federal government, the car czar. This guy is an extension of the federal government. He is working for a dollar a year. He is funded by taxpayer money. So this is fascism. Private enterprise that's owned by shareholders but really run by the president and run by the administration. That's what we're seeing here.
Wayne Rogers: Well, first of all, Mitch and other guys going from one business to another. They weren't turnaround guys. They didn't have to turn something around. This guy has to go and turn around something. When he says he knows nothing about automobiles, yeah, but I stayed at a holiday inn last night. He doesn't really know what the hell he is doing. I can't imagine — there is one guy you could put in there that could run this. That's Roger Penske. He knows how to run an automobile business. If you remember he bought Detroit diesel from General Motors who couldn't make a nick with it. He turned it around and made a fortune.
Jonas Max Ferris: Look at GM's history. The most famous executive of GM history was Albert P. Sloan who turned it into a corporation too big to fail. His background was MIT electrical engineer, ball bearing company he ran. He knew what people wanted. He knew how to line up cars in a way that you would climb from Oldsmobile to Cadillac or whatever. That's what they need again. I don't care if he comes from the toy business. These people lost touch of what the American people want to buy and what they want later in life.
Rebecca Diamond: If Steve Jobs took over, we would have an iPod dock in all the cars as well. You hit the nail right on the head, is that the people who presumably had all the experience and knew everything there was to know about cars and came up through the ranks of these auto companies don't know what the heck they are doing. Don't know what the consumer wants. Tracy is right. We need fresh blood in there. I don't care, Jonas, if he was appointed by the government or not. He is still a turnaround guy. I have faith that he will turn around this car company.
What I Need to Know for Next Week
Tracy Byrnes: Miss California is out of the Miss USA. The Miss USA pageant is turning into a total joke. I have to say Donald Trump wins in the end. He is getting publicity for a pageant that nobody wants to watch. People are tuning in for this nonsense.
Jonathan Hoenig: My idea is Japan. The market hit 10,000 last week. Not ours but the Nikkei at an eight-month high. I liked a lot of the Japanese stocks in the past. SCJ is one that gives you exposure to small cap Japanese stocks. I own it in my fund. I think this is an interesting off the radar idea for people who want exposure now.
Wayne Rogers: Last week I talked about oil. Oil ran up. Now I like natural gas. I'm picking XTO Energy. I think gas is coming to a bottom. It's bottoming out. If you look at the charts on that and you look at the UNG chart, all of these charts point to me that six months from now gas will be higher.
Jonas Max Ferris: Just when you thought the credit crisis was going to reduce demand for credit reports along comes the story that employers are more frequently checking your credit report before giving you the job or not. Therefore I am picking the holders of the FICO brand name of credit reports — FIC — because people are going to need more and more and more credit checks to make sure they can get a job in this tough economy.