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.
Is a Ticking Tax Time Bomb Looming Over Economy and Job Market?
MIKE OZANIAN: David, the potential for tax increases are killing the economy. We saw it in the manufacturer survey this week, where what happened was the index came in lower than both a year ago and two years ago. We are seeing it in stock prices, which based on forward earnings are cheaper than a year ago. That should not be what's happening in a recovery.
RICK UNGAR: I would say that worrying can be a very good thing. Look, we have a unique opportunity coming up in the lame duck session that's going to come around after the election. My sources tell me that the pressure of the Bush tax cuts, by the way, when I say sources I mean the trainer over at the gym. My congressional sources tell me that there is a real appetite to use this opportunity with people fearing the expiration of the tax cuts to use it to actually get something done in December, to start fixing some of these problems. Let's hope this pressure stays on, I think it could be a very good thing.
ELIZABETH MACDONALD: We have the lunatic complexity of the tax code hanging up business hiring in this country and when they expire, some analysts on Wall Street say that it will cut two percentage points out of GDP growth meaning we are already at two percent GDP growth meaning that the economy would flat line, possibly double dip. The problem with D.C., according to Fed official Richard Fisher out of Dallas, he saying, "Stop kicking the can over to the fed to you do your job Congress in job creation." The fed has already done enough it has already tripled its balance sheet, it's now the size of Germany. It's got 2 trillion in cash locked up in the S&P 500. You have got to get some incentive there to get that cash, unlocked to create jobs.
VICTORIA BARRET: That's certainly true, I do want to know what Rick's trainer at the gym thinks of all this. I would trust him over your sources Rick. In all seriousness David, you are absolutely right. Incentives DO matter, you're clever, you're looking at Washington, you realize that they are spending much more than they are taking in and that means they have to take out more and that's going to come right out of your pocket. That means you are going to be hesitant to hire. It's that simple. I don't understand why we are making the United States an inhospitable place to do business.
JOHN TAMNY: Absolutely, and taxes won't help. Taxes are a price. They are a price placed on work, and they are a price placed on investment. The price on both is set to go up in 2013. My honest guess is that the markets have priced in an extension of these tax cuts already. Certainly a President Romney is going to extend them if he is elected. I believe the economy will not improve under President Obama. President Obama is going to seek an extension of these too. I think taxes miss the greater point which is the dollar is what's holding back recovery.
Are We One Month Away From Finding Out if America Will Go Bankrupt?
VICTORIA BARRET: It sends a signal across the nation that if you take on unions, if reform becomes part of your platform, the unions are going to go after you and do a recall. That will send a clear signal all the way to California where in fact, the pension reform we had in mind is now being reduced because the legislature here is scared and focusing on our budget this year instead of tackling the tough issues. So it's happening already I think.
ELIZABETH MACDONALD: No, I think state budgets are coming under reform. A number of states are moving more to 401Ks for government workers and pension plans that are very lucrative. You know, Wisconsin is a success story. The unemployment rate is below seven percent, well below California's; Chief Executive Magazine now says Wisconsin is one of the top 20 places for companies to start businesses and create jobs. The governor has already saved $1 billion out of spending and property taxes are going down.
JOHN TAMNY: It has to for the reasons that Victoria brings up. If Walker goes down, other governors are going to be a little gun-shy about cutting spending. This is going to be a big problem, because let's face it, unless you're Paul Krugman you understand that government spending cannot drive economic growth, government spending in fact pulls down economic growth because you are pulling limited capitol from the private sector. Let's hope that Walker does well and that this spreads across the country.
RICK UNGAR: While I love Elizabeth's new glasses she's wearing, I find that the rosy picture of Wisconsin to be somewhat stunning. There is a great irony in this entire election. What began as a protest about anti collective bargaining has turned into something totally different. The polls show that this has become about job creation. Why? Because Wisconsin today is about dead last in the United States when it comes to job creation. It is true. Let me give you the numbers. The governor came into office promising 250,000 jobs by 2015. He has so far created roughly 5,000 jobs. Oh by the way, he lost 4,000 jobs last month.
MIKE OZANIAN: I think Walker is winning the battle. Even the Democrats that are lining up against him aren't bringing up the union negotiations as the main point. They are talking about, as Rick says, jobs. Why? Because they know the public steadfastly sees the evidence in that Walker has saved them a lot of money from taxes. By the way, that Armageddon that the union were talking about, in terms of lost of teacher's jobs, lost police jobs- that never happened. In fact, Walker has saved a lot of jobs. So the democrats have changed the focus of the debate.
Flipside: Homeownership Dropping to a 15-year Low 65.4 Percent Is Good News!
JOHN TAMNY: This is beautiful economic news and it has to be remembered that housing is not investment it's consumption of capital. When we buy houses we don't cure cancer, we don't create the new software that will make us more efficient, and we don't open up new foreign markets. Instead when we buy housing we become land-locked at a time when the capital creates jobs is very mobile. Housing keeps us in one place when we need to be able to choose case jobs where ever they are. Anytime government stimulates home ownership, what they are doing is a cruel act where we again become less mobile. So anytime we see this number go down it's a great economic sign.
ELIZABETH MACDONALD: You know, I am looking at the pain behind the numbers and I hear what John is saying and I agree. It is kind of absurd that we try to fix income and equality through housing that is so dangerous to do. What's happening is we've got a lot of people, young adults who are moving back in with their parents because they did make mistakes. I get that. It's turning into a "Wayne's World" nation living in the basement of the golden girl's. I don't think we want a nation that looks like that when they can't get jobs in this economy.
RICK UNGAR: It always makes me warm and tingly when I can agree with John. The part that I understood what he said I kind of agree with him. Look, we for too long have kind of turned our housing into being all about an investment forget the fact that is about your home. It's not such a terrible thing if kids can keep themselves a bit freer they can't travel to where the employment is they should be more mobile they should be available to try different things until they become a little older, find the community that is right for them, find the place where they want to put down roots and buy a home it's not such a terrible thing. I do hate the way we have gotten to this point though.
MIKE OZANIAN: That's absolutely right David. This is why you see people on fixed incomes especially retirees who have to sell their homes. I think this is a mixed lesson. If you are a first time home buyer this is great news because you can get a 30 year mortgage at 3.8 percent so take advantage of it if you're renting and you don't own a home. I think the underlying factor is really bad and saying bad things about the economy because real incomes right now are not increasing. When you have an economic recovery they should be. It shows how bad our economy is right now that the home ownership is so low.
VICTORIA BARRET: Look, I think it's mixed when we were in the middle of the housing crisis, if we would have debated should the home ownership rate be lower in four years we would all have agreed, yes it should be. This free money system is not working its inflating prices and distorting the market. So, this shouldn't be a surprise I think the real issue is applies to employment. So we do want to see housing starting to increase because that is a very important driver of employment, but the numbers haven't moved that much.
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