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CBO: IF CONGRESS DOESN'T FIX "FINANCIAL CLIFF" NOW, OUR ECONOMY WILL GO OFF A CLIFF COME JANUARY 1
ED BUTOWSKY: Absolutely without a question, not only are they right, they are a little late to it. I don't think there is anything they can do right now to keep us from going into a recession. I think we are already in one right now.
STEVE MURPHY: I think it is more dangerous than the threat of going back into a recession. I think the long term threat posed by the deficit and the debt, it's bordering on a national crisis. I'm not fearful of this so-called train-wreck happening. I think we need big spending cuts, I think we are going to have to have tax increases, I don't think congress is going to come to any kind of agreement, in the absence of an agreement that has big cuts and tax increases in it, I'm fine with this going into effect now.
TOBIN SMITH: first off this is a CBOE making an estimate, so if they say it's going to be 7 months, we probably started 3 months ago based on their track record. The issue is that we are at the marginal return point where because of slowing and because of lack of oomph, when you do this whammy taxmageddon and all of a sudden have $800 billion sucked out of a $15 trillion economy, we don't have the game power, we don't have the bandwidth. We will be in a recession, no question.
JONAS MAX FERRIS: I have no fear of any temporary tax cut going away when we are not already in a recession, which we are not in now, and I doubt we will be in by next year. There are some problems with the gridlock. The AMT would be something that we would have to fix, that has been being ‘fixed' for 20 or so years. Ideally, we would have all these taxes totally get hosed all at once on everybody. The spending cuts are very minimal, we need more if anything. So I'm not fearful of that, I'm more fearful of everyone being scared of this day happening and it all coming to an end, I think America can handle it. I think it's the first step towards a balanced budget. I'd like it to be spread out over a couple of years- the tax increases. Not just all of a sudden like boom there are all these taxes. I think we will make it through, I don't think we will have a recession. I think the CBO is wrong.
GARY SMITH: I understand one half of the CBO's argument, look the taxmageddon would result into a $3,800 increase for every taxpaying person in the U.S. What I don't understand is this decrease in the spending, its $100 billion, spread out over a number of years. Why the CBO thinks that is going to have a dramatic effect on the economy is baffling to me. We just spend 7x that with the stimulus and it didn't budge the needle in a positive direction. I would like to see the tax cuts stay and the spending go away. That would be great, we would have smaller government. Why should the government spend the $100 billion when we can keep it in our own pockets. I think that would be a win-win.
PROTESTERS DEMAND STUDENT LOAN FORGIVENESS AT SALLIE MAE HQ
GARY SMITH: We have become an entitlement nation, if it's not occupy Wall Street it's this debacle here. I took out a student loan when I was in college, I didn't want to pay it back it was onerous, it was hard, I wasn't making that much money when I was done with school, but that was the deal. Hopefully these students went through some kind of cost benefit analysis. Well if I go to Podonk University is it going to be worth $40,000 to pay off? They said yes, they signed on the dotted line they got a low interest loans, they have to pay it back. Why there protesting, it's just the age we are living in unfortunately.
JONAS MAX FERRIS: When you compare how students are treated by the federal government compared to homeowners, they are getting a raw deal. I'm not saying they don't get stuff like grants and loans, but on almost every layer, a homebuyer gets treated with better gloves than the education buyer. For example, you can't deduct the interest when you graduate unlike a homeowner. You can borrow ¾ of a million dollars tax backed at a low rate to buy a McMansion. There are very low caps on federally guaranteed low interest student loans, you have to go to the private market. You can't walk away from the debt very easily. You owe the federal government money for a student loan, you have 25 years to pay it off or you are going to jail or they are going to garnish your wages. Homeowners, if the home goes down, you can say ‘I'm walking". In my opinion, students have a decent beef that the homeowner is getting a better deal than they are and education is more important to our economy than buying McMansions.
ED BUTOWSKY: I don't understand any of this at all. The mentality of these young people is ‘somebody owes me something' somehow they were done wrong. They signed the contract, they know exactly what the interest rate was, and they made a commitment. What am I going to do go home and march out front of Neiman Marcus, or march in front of Macys? This is absolutely ludicrous to what they are doing it makes no sense. They aren't protesting the interest rate; they are protesting the entire loan. If that's the case, give back your college education.
TOBIN SMITH: It's now a trillion dollars; this is basically the new subprime deal. If you look at this entitlement perspective they don't want them wiped out, they want them absolved. We don't have a trillion dollars we could give away here. This idea that we are going to somehow absolve and reject these loans becomes another one of those downward spirals for those people who actually made the loans and we can't afford it.
STEVE MURPHY: Let's not tar all young people, everybody with student loans saying that they feel entitled. This is a small percentage of people who are out there demonstrating. There are a lot more students going to college on the GI bill who have served in Iraq and Afghanistan than these demonstrators, but we do have a problem with too much student loan debt. It's a big drag on the economy. We need to reform our college system so that students don't have to borrow as much and come out so laden with debt.
1 IN 6 AMERICANS STILL OUT OF WORK; GOVERNMENT SPONSORING FOREIGN STUDENTS FOR SUMMER WORK
TOBIN SMITH: What are we back in the 90s here? This is the Reagan thing, the only way to immortality in the world is to be a government program. This may have made sense in '95 when we had such a low employment rate with kids but that ain't today. Why would we continue this like boneheads that we are is because we gave benefits to the employers to do so? Why don't we give those benefits to our kids?
STEVE MURPHY: One of the stupidest economic policies that we have in this is country is bringing students to come over here to come to our colleges, they graduate from college, then we send them back to their own country. I didn't see any folks working as lifeguards I see folks working at computers. I would rather them be computer programmers here, than computer programmers in India and send the jobs overseas.
GARY SMITH: In this case I think Steve is wrong, what happens is that the employers that participate in this program, this is a whole tax break political agenda kind of thing. They don't have to pay social security, they get a tax break, and they pay the kids $7.25 an hour. Try and find a computer programmer for $7.25 an hour, you can't. If I was an employer, than I would be looking to hire the foreign kids, its cheap labor. They wouldn't want to hire the local kids because it costs too much.
JONAS MAX FERRIS: Don't we have young people who go abroad and work? I'm sure we have a balance of trade and labor where we have students that go abroad and get jobs abroad. I think labor flowing is a good thing.
ED BUTOWSKY: These are kids, and part of what we are doing right now is that these are not big labor forces, these are not skilled laborers. What we are doing right now is given the situation we are in with our employment at this moment; trying to help these kids out, learn a skill, this is exactly what we need to be doing to help the kids in this country. We could always bring in kids from foreign countries at any time, but we have a real tragedy going on right now with these kids. They can't find jobs, we need to help them develop their skills and if we are going to be paying money right now to anybody right now it should be our own kids.
Predictions
TOBIN SMITH: Don't friend Facebook
JONAS MAX FERRIS: Fon't friend Facebook
GARY SMITH: NIKE
ED BUTOWSKY: Fusion I O
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