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.
Georgia Voters Rejecting State-Wide Sales Tax Increase
Charlie Gasparino: Well, I think it has...If you think about it President Obama has not raised taxes yet on the income-he has backed off that going back to the Clinton tax rates. I will say this…And when you look at what people want, people obviously hate tax increases. I think the message-and I have not seen a definitive poll on this by the way, when you look at some of the polling and it is more nuance. I think a lot of people would not mind paying higher taxes if at least they made an effort to reduce the size of government. Then people would say no problem-but they never do.
Dagen McDowell: Unfortunately, the votes are not happening down in Washington where there's so much uncertainty about the future of tax rates, and you are talking about how corporations behave. Do you know how abysmal that is? The alternative minimum tax-which potentially could hit millions and millions of more people-the patch for this year expired at the end of last year. Technically, Congress has to get on board with just that. On top of that the Bush tax cuts start expiring-people do not want taxes to go up but the bigger question is then how will the next leader of this country fix our fiscal situation?
Adam Lashinsky: One of the issues of Main Street are these very soft-large issues that you raise. People don't like, they think there is too much government; they think there is too much spending. They don't want to pay taxes, so on the other side of that yes, inequality is a problem, the rich don't pay their fair share. I think what you saw in Georgia for example if you ask people if they want their taxes raised they're going to say no! That's a good example of why direct democracy is a terrible idea-we want our representatives to make these decisions and I will just quickly say something good about the tea party. These people are essentially running on what is an irresponsible platform-they don't want to raise taxes-but guess what? Now they are going to have the opportunity to govern and face these problems head on. I do commend them, this is what they're running on and they're going to have a really hard time governing.
Ben Stein: Well, we have an incredibly irresponsible fiscal policy in this country. Mr. Laffer, a very nice incredibly pleasant guy started us down this road to disaster with his idea that you can cut taxes and still raise more revenues. That turned out to be nonsense. It didn't work for Reagan and it didn't work for anyone else. It is not going to work now. What we are going to have to do is either raise taxes or drastically cut spending. There is phenomenal, unbelievable waste in government spending even if they cut out all the waste.
Another U.S. City Goes Broke As Public Pensions Soar
Dagen McDowell: You gotta do what it takes! If you want to get rid of these liabilities and you want to cut these payouts in retirement to workers and if you want to right yourself and you have got to go bankrupt so be it! It is a warning sign to municipalities across the country of the damage it can do to the people in these towns. Maybe it will keep people in these towns from getting drunk of debt. By the way nobody is scared about California, one of the best performing municipal bond categories in the entire country this year.
Charlie Gasparino: No, and I will say this. Municipal bonds are doing well in California for also technical reasons like the high taxes. Now, here is the problem. I think that this is a huge cop-out. First off, I think there is untold damage to that city for years to come. They will be paying much higher interest and it is a cop-out. I really don't believe that these guys use bankruptcy as a way to cram down. It is better terms with the unions. If you look at the big bankruptcies before this, Orange County. They went bankrupt because of a swap deal gone bad, but did they use that as an opportunity to reform government? No!
Ben Stein: Well, it would be a great opportunity but they are not going to fix it. The pension situation is just out of control and will remain out of control. The public sector unions are unbelievably strong in California and they will do some papering over here and there. As Charlie Gasparino said, interest rates will soar for that municipality but at the end of the day they are still going to have those very high pensions. That has got to give nationally, at the state level and at the municipal level. It is a shame-we love our firefighters, we love our police, we love our prosecutors, we love the judges, we love everybody, but something has got to give.
Adam Lashinsky: First of all, a good piece in the USA Today last week, an opinion piece by a union official pointed out-there have been 5 bankruptcies out of about 50,000 municipalities and high expenses in the pension fund paying municipal workers is not the only cause of the problems. High jobless rates, falling real estate prices…In Mammoth Lakes it was a judgment in a lawsuit that caused them to go bankrupt. I am only trying to point out that you make it seem like there is only one reason why they went bankrupt for these problems.
Gas Prices Surge 5.1% in July; Biggest July gain since 2000
Ben Stein: What do I make of the keystone pipeline deal? That was nonsense, that was pandering to the most extreme wing of the Democratic Party. That being said, they will eventually build the keystone pipeline. I think Mr. Obama will change his mind and have a slightly different rooting, but whether or not that will be enough oil to change the price of oil to me seems very dubious, I don't know that they have worked out the algorithm for that, but I would be very very surprised if that would change the world price of oil.
Adam Lashinksy: Well, what we don't want to do is make a change in policy based on the gas prices between June and July. Right now gas is cheaper than it was in 2008 and 2011 and from what it was a few months ago so you do not want to get too hysterical about these monthly fluctuations.
Dagen McDowell: Here is what you should get hysterical about. This year we are going to pay, on average, the highest price ever in the history of this country for gasoline. Right now the average is roughly $3.61 a gallon, that is higher, on average, then we have ever paid before. So if that alone is not a wake-up call then you are taking Oxy-Contin and you are out of your mind.
Charlie Gasparino: Do you know that the only regressive tax that liberals like is higher gas prices? They love this one. They don't mind that the poor and the working class in this country gets hosed because we have marginally higher rates.