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.
MASSIVE TAX HIKES LOOMING; SLOWDOWN FEARS GROWING
Gary B. Smith: I think in 2013 we're all going to have to move to the Cayman Islands. It's going to be a lot better there than it is here. The Heritage Foundation called 2013 "taxmageddon." Here's why: the average household in the United States is going to see tax increases of $3,800. That comes from the expiration of the Bush One and Two tax cuts, the expiration of the payroll tax cuts, Obamacare increases and the Buffett tax that Obama is talking about. The worst part is the primary focus of these taxes is going to be the middle and low income households because that's where the bulk of the Bush tax cuts went to. 2013 is not going to be a very good year for anyone or the economy.
Tobin Smith: Let's look at the stock market. You have capital gains, or the tax you pay on your profit, going up 45 percent. If you choose to sell or own a stock in the next year you're going to pay a 40 percent higher tax on your profit if you wait until next year. So, with human nature, we're going to have a lot of selling. We're at a point in the market where we're at the support level and I can see the market down 15 percent next year and that has a trickle effect.
Jonas Max Ferris: We have been running a stimulus economy for so long that people forget what taxes they used to pay. It's two presidents now that have increased the stimulus as if we are in a depression. We forgot that we're going back to rates that a healthy economy can handle. Neither president has cut anything to pay for these tax cuts, so we as a nation have to return to these tax rates. We have to lump it and it's going to make you miserable because you don't remember paying that rate.
Amilya Antonetti: When I poll small business owners, including myself, feel like indentured servants as administrators for the government. There's so much administration that we don't even know where to begin and the fact that you would take our attention down into that level of massive amounts of paperwork and then ignore what we keep saying when it comes to taxes. I would love to see what the numbers are on how many people are filing extensions this weekend waiting to see what's really going to happen. How in the world are we really going to be able to file?
Stephane Fitch: This is bologna. There is no chance that we are going back to the big, bad Clinton-Gingrich tax code. I'm not afraid of that. There is no chance that even a democratic congress would pass a return to the old days. The problem with the economy and why all those companies are hoarding money and small businesses aren't doing as well as they should is 12.7 million unemployed people. We're not doing enough to put those people back to work. We're not doing enough to juice the economy. That's what's got people nervous. There's no chance we're going to go to the Heritage Foundation tax bomb. It's more like a tax burp.
GOVERNMENT IMPLIES INFLATION IS TAME AS STICKER SHOCK HITS MAIN STREET
Gary B. Smith: People substitute. If a hamburger is expensive, then we switch to ham or chicken. The point isn't substitution. The point is how they measure it. The basket of goods that the Bureau of Labor Statistics measured to come up with the CPI says 2.7 percent. If we spent all our money on ham and eggs then inflation would be higher. If we spent all our money on gasoline then inflation would be higher. But, it's not. People forget that natural gas prices are down. Eating out is at 0.1 percent. So, all these things balance out. If people took a look at their budget, yes gasoline has gone up. But, other things have gone down. So, overall inflation is about 2.7 percent. And, it's leveling off.
Tobin Smith: They say that inflation, measured by the Consumer Index, is nothing. However, I'm looking at prices here that human beings can't substitute-they have to buy. Child care is up 3 percent. Checking accounts are up 9 percent cost-wise. College is up 5 percent. Bacon and cheese are up 8 percent. We have real cost increases at the same time that wages haven't grown nearly as much. College tuitions are up and 25 percent of people's homes are under water. That is going to affect behavior. To say that we don't have inflation is just denial.
Jonas Max Ferris: Tuition is going up and child care is going up. That's not inflation. That's states cutting back so they can balance their budgets. That's not inflation. Let's not mix the two. There is only two to three percent inflation. That's what the Federal Reserve targets. They want that. The only bad part is that homes and wages haven't been going up. Wages have been declining relative to inflation for a few months now. That is a concern. It makes you feel poor. If we have 4 percent increase in pay and 3 percent increase in prices people like that. We want that to happen. We would like higher prices with higher wages. We're not getting that yet because we have a lot of unemployed workers.
Amilya Antonetti: Not only is child care up, but all the things that used to be included in school are no longer covered. They're having to supply paper and wet ones and cleaning products for their kids. Transportation is no longer included. Transportation now means gas and that becomes another issue. We have summer coming up and I have a line of employees coming up to me saying I don't know what I'm going to do with my kids this summer because I can't afford summer school. Do I try to take the vacation time? Well for vacation time you no longer have two to three weeks, we have one week. So, they're right when they sit in front of me and say I can't afford my daily life anymore. As a business owner, I can't help them. That is the hardest place for any CEO to be knowing that they are right and I can't help them.
Stephane Fitch: The government number is good. The realities of life right now are that the economy isn't strong enough. The problem isn't inflation it's that incomes aren't rising the way they could or should in a healthy economy. I would actually welcome a little higher inflation. I think we're eager to fight a very old battle. The inflation hawks think it's 1979. Disco is dead. Inflation is not a serious concern. We should be focusing on other things, like getting people back to work and strengthening the economy.
U.S. OIL IMPORTS FROM BRAZIL DOUBLED IN PAST YEAR
Gary B. Smith: if you look at all the oil resources that we have we have over 200 years worth of supply-the continental shelf, ANWR, the green river in Wyoming. Oil shale here in the continental United States on top of that makes it an abundant amount. We're just not doing it because the current administration is defending the green policies.
Tobin Smith: Let's remember that we have about 400 billion barrels offshore and if we drill those wells the way that Brazil is drilling them, two wells at the same time, then we would have the safety that have and our oil. It would add probably a half percent to our GDP. You can't tell me that us not taking care of ourselves with new technology isn't the way to go.
Jonas Max Ferris: This is one of the problems with the President's policies. He somehow thinks these old businesses are wonderful to encourage in America. At the end of the day we're selling ten times as many eye products to that country than we did two years ago so that's the trade. They're pulling stuff out of the ground-we used to do that 150 years ago. We're done with that. We've gone through all our oil, largely. Now, we're the leader in technology, entertainment and a lot of other industries. That's what we should focus on. Let's go through their oil. That's wonderful. Brazil is going to become a big energy company. They've done ethanol right. They've done wind right. They've done oil right. They've got a lot left. We don't. We're doing other stuff that's more advanced.
Amilya Antonetti: One of the basics of business is you start at home before you go out. I don't understand why he's not putting the energies here. We have plenty in our backyard. We have businesses ready to go and desperate to start doing oil here. Look where President Obama is. In sales, start from your ground inventory and then go out. I don't know what they're doing.
Stephane Fitch: We are not harmed at all if we buy oil from Brazil. We are producing much more oil domestically than we were five or six years ago. Thanks to Obama continuing the Bush policies we are now getting 55 percent of our liquid fuel from domestic sources. This is something we're doing well at and we're going to other democratic allies. That's a good place to buy your oil from. That's healthy in this world.
PREDICTIONS
Gary B. Smith: Royal Caribbean Cruises (RCL) up 20 percent by December
Tobin Smith: Wells Fargo (WFC) up 25 percent by January
Jonas Max Ferris: iShares Dow Jones US Aerospace & Defense (ITA) up 15 percent in one year
Stephane Fitch: Owens and Minor Inc (OMI) up 20 percent in one year
Get all the stories you need-to-know from the most powerful name in news delivered first thing every morning to your inbox