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CITIES CALL FOR NEW STIMULUS AMID NEW RECESSION FEARS
Gary B. Smith: We just don’t seem to be learning any lessons here. Let’s go back and review what the Obama administration has said. They said that the unemployment rate would never go above 8.5% and it went to 10%. By the end of 2010 it was supposed to be below 7.5% and it’s not anywhere near there. President Obama says we created all these jobs and yet the real unemployment factor, including people who have withdrawn from the work force, is at 15%. The jobs we created in the green sector, which should have been ripe for jobs with all the stimulus, the wind sector alone has lost 10,000 jobs since 2009. If we keep doing this it will be more of the same and we’ll keep spiraling downward, not upward.
Tobin Smith: One of the biggest issues with Europe is that they lost confidence because they had a financial crash because they completely overspent and set up a system they couldn’t afford. We’re right on that same trajectory. One trillion dollars a year in negative spending is making people come to two conclusions. One, we’re going to have terrible inflation down the road. Two, someone is going to have to pay for this and it’s going to have to be through higher taxes. So, the job creators are the ones that are holding back and that’s what is holding us back. It’s because they see we’re completely out of whack here.
Jonas Max Ferris: We don’t need more of it. We did have more stimulus than other countries. We didn’t go into austerity mode and we’re not in the recession that most of Europe is in right now, which is great. However, you don’t need to start a new stimulus program when you’re not in a recession. We’re not in a recession. We’re already running huge deficits. Deficits are a stimulus program. Spending more than you take in is a stimulus program. We could argue about how the money was spent. It wasn’t very clever. The president didn’t do many of the big projects that could have been more job creating. But, it’s too late. That should have started years ago. It’s over. Let us go. We’re doing better than most of the world—not as well as China, but they had a much bigger stimulus program than we did as percent of GDP.
Todd Schoenberger: Here’s the bottom line: we are headed into a recession and we need more stimulus. This is an economy that is desperately in need of organic growth and it’s not there right now. So, what else is it going to be? Do you want to have soup lines out there or do you want the government to get involved?
Stephanie Fitch: We have a lot of austere thinkers and they’ve driven those economies into a recession. The fact is the stimulus that Presidents Bush and Obama put in place a few years ago prevented a terrible depression. I’m not happy with the job growth and I do think more stimulus would be helpful. However, I’d rather be in our position than that of Europe where they tried austerity and it’s been absolutely disastrous. Cutting way back on spending would only make things worse.
NEW CALLS TO PUMP MORE OIL IN U.S. TO LOWER GAS PRICES
Gary B. Smith: It’s not so much this pipeline that will drive down prices. However, it starts to send the signal that we’re willing to do what it takes. We have almost 200 years of energy supply buried in our grounds. If we start to show the world that we’ll do a pipeline first, maybe drill in ANWR second and maybe the oil sands in the mid west third, people will start to price gasoline and oil in anticipation. That’s when you’re going to start to see the prices go down. I think this is a great first step. We need more first steps like this.
Tobin Smith: There is a factor of pricing right now with Iraq and Iran. The next big issue is going to be taking on the environmental terrorists, who are holding us hostage, and telling them that energy is more important than this terrorism they rack upon our country. If we tell that to the world you’ll start to see prices drop quickly because instead of having environmental terrorists controlling our energy we’ll have normal-thinking human beings in charge. That will make a big difference.
Jonas Max Ferris: The pipeline is a nice idea, if you can clear the environmental problems with it. However, it’s not going to make a big difference. Here’s why: we don’t have a free market in oil. Let’s pretend the pipeline somehow brings one million barrels of oil—brand new oil that would never have gotten into the market, which it’s not going to do—to the country. All that’s going to happen is OPEC is going to cut production by one million barrels to maintain the price it is now. There’s an organization that controls supply that counters our supply to the point where the price stays high. We can’t do anything about it.
Todd Schoenberger: There would be portions of the country that would see gas under $3 a gallon if this occurs. Everyone should be calling their congressional leaders on this. You want this thing done. It can easily be done because we already have one half of it—the southern part of the pipe—completed. It’s the northern part that’s in question right now. The plan is there. It’s on the deck and we are seeing oil prices go down.
Stephanie Fitch: I think the pipeline will help. Oil prices are a volatile matter and unfortunately, I think this will cause a blip and then something else will knock it up. The important thing is this is domestic energy. Canada is just a 51st state, right? This is safe energy. I would rather have energy coming out of North American ground than ground in the middle east that is too hotly contested and has led to some very ugly politics. Energy is dirty. The industry is dirty. I’m probably someone who the other guests would call an environmental terrorist. I will also admit that sometimes you just have to suck it up and smell some bad smells.
COMPANIES SAVE MONEY UNDER HEALTH CARE LAW BY DROPPING COVERAGE
Gary B. Smith: The average company spends about $11,000 per employee on health care costs. The Obama plan will cost $2,000. They’ll be saving $9,000 per employee. That’s going to go right to the bottom line. The problem is, the $9,000 doesn’t go anywhere. The Obama administration will somehow hope to clamp down on these costs. So, what you’re going to have is a clamp down on the costs and supply will dry up. So, this is going to hurt the employee, the taxpayer and everyone all around. That’s why it’s probably going to be repealed.
Tobin Smith: When you have a large company, you have a self-funded plan. You put money away and you pay for it. If you do the math and can get people out of that self-funded plan, then you, as a CEO, have a fiduciary responsibility to your shareholders to save that cost. That’s exactly what they’re going to do.
Jonas Max Ferris: The House Ways and Means report makes absolutely no sense. Their logic is because you can pay a $2,000 fine and that costs less than health insurance you can just kick the employees out and stop paying for health care. That kind of makes sense except why don’t they do it now when there’s no fine? They’re paying the $12,000 health insurance premium now where there’s no penalty. Why do they offer it? It’s because they get a huge tax break that President Obama is not taking away to provide health insurance. That’s why companies provide health insurance. It’s a loophole in the tax code. They’re never going to take it away. You don’t have a choice. Your company chooses your health care plan. That’s the way it works in America.
Todd Schoenberger: You have publicly traded companies that are already being squeezed with lower earnings. Therefore, they do have to look out for their bottom line. They do have a fiduciary responsibility to their shareholders. Bottom line is if you can save 80% on health care coverage and just pay the penalty you’re going to do that.
Stephanie Fitch: The Fortune 100 companies that were surveyed for this report would have to really want to hurt their employees to do this. It’s actually more expensive to kick the employees out of the plan because you have to pay payroll taxes on the higher salaries you have to pay them plus the penalty. Notice the one thing they didn’t ask these companies was if they were planning to kick their employees into the health care systems that the states are offering. None of them will. None of them are thinking about it. None of them will do this, period.
Gary B. Smith: Comcast Corporation (CMCSA) up 25% by 2013.
Tobin Smith: TransCanada Corp (TRP) up 25% in one year.
Jonas Max Ferris: Merck (MRK) up 15% in one year.
Todd Schoenberger: EZCorp (EZPW) up 50% in one year.
Stephanie Fitch: Intel (INTC) up 50% in 18 months.