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Senators Secret Talks on Budget Fueling Tax Hike Fears
Steve Forbes: Absolutely, it's a preposterous proposition. The idea of putting on more taxes with an economy like this. David, this is how you drive the economy down. Look at Europe, they haven't done much in terms of reducing spending but they are piling on those taxes. Expecting congress to reduce spending is like expecting Dracula to cease biting-it just doesn't happen in the real world.
Rick Ungar: I think that putting the words "no" and "compromise" together are the two worst words in the English language. We have got to figure out how to compromise. Look, let's be careful when we talk about who there would be a tax increase on. It is not gonna be across the board, its going to be on the highest levels of income. By the way, I know this is not going to solve our problems but you have got to give a little to get a little. If you are looking for cuts across the board, and that's not inappropriate, you have got to be willing to give a little.
Elizabeth MacDonald: They haven't worked. The last time we saw a really great compromise was the bi-partisan move in 1990 to both basically cut spending and do tax hikes. Guess what? No cuts in spending. There were tax hikes. They forced 8 republicans and George H.W. Bush out of office. You also saw in 1982 under Reagan the same kind of compromise deal and, guess what? There was basically the biggest tax hike at that time in peacetime history. Spending went spiraling out of control. By the way, entrepreneurial capitalism did not create this crisis. Why are we hitting the great guys in the economy with higher taxes. It just doesn't seem fair!
Morgan Brennan: Yes, history shows that is the case, but I don't see how we can say no deal is better than a deal given the fact that we have had every American economist in the last couple weeks come out talking about the fact that this so called "fiscal cliff" that we are expected to hit at the end of this year without a deal will send us possibly into a recession next year. I think we have businesses that aren't hiring right now, they are holding back because of all the uncertainty that they have about not having a deal is creating. I agree with Rick Unger here, I think it is ok If we saw a little bit of a tax increase for the top tax bracket right now. I would also like to see some of those cuts put in place. I think that looking at the model that was in place under Bill Clinton is what we should be doing right now.
Mike Ozanian: Right, they also cut the rate of spending you have got to remember at that point that Newt Gingrich and the republicans in the contract they had, they had very strong support from the public for that. Clinton kind of took that deal in because he knew that the public was behind it. I would like to offer Morgan and Rick the same type of compromise the politicians are offering-give me a lot of money today and I promise sometime down the road I will pay it back maybe. Paul Ryan offered a very sensitive compromise which didn't even cut spending, it cut the rate of growth. Democrats put the kibosh on it. If they were remotely serious about raining in spending at all they wouldn't have tried to kill that proposal.
Bill Baldwin: Well, there is a little problem here which is that the US is the brokest nation in history. It is high time we kept expecting our trading partners, such as the Chinese, to fund our welfare state. So, I am going to start with a small tax on carbon which are getting bigger and bigger. By the way Steve, whatever number of cabinet-level departments you want to defund, I will raise you one. But separately, to have a less bankrupt treasury
PRICES PLUNGING ON EVERYTHING FROM GAS TO COTTON; IS IT ENOUGH TO GET ECONOMY MOVING AGAIN?
MIKE OZANIAN: if a supermarket can sell coffee at a cheaper price it's not going to go out and hire a bunch more people and build a bunch of more supermarkets. Look, during the Great Depression prices plummeted yet unemployment was at double digits for years. If you want companies to invest in plant and equipment and hire more people, you need a smart regulatory policy, smart tax policy, and we don't have that right now. That's what's preventing an expansion.
BILL BALDWIN: I think it's less money for sheiks, Russian gangsters for despots, for multimillionaire corn farmers and for people who inherit royalty checks. It's more money for the rest of us to build the economy. Another good thing-U.S. government is the biggest consumer of oil out of anybody so don't go bankrupt slowly.
MORGAN BRENNAN: You feel better and maybe you have a little more money in pocket but I think this is terrible news. The reason we are seeing these commodity prices come down in large part is because we have a weak economy. I'd say the fact that they have come down is not going to revive the economy. If anything the silver lining here is that it will just keep the GDP number from getting any weaker. If people are going to go out and actually spend money they are saving at the pump I think it would have been evidenced in the most recent retail numbers. For May, even when you cut the gas spending out of those numbers you're still seeing flat retail sales despite the fact that Mother's day happened and Memorial Day happened.
ELIZABETH MACDONALD: I think it's a good thing. I know what Mike is saying, we don't want to see a plunge in prices like deflation which is really bad for companies. It is good for prices to come down for consumers because look, enjoy it while you can. We have about 2 to 3 billion new consumers coming into the middle class overseas. That's going to naturally drive prices across the board up for all sorts of commodities including oil and gas.
STEVE FORBES: It's good short term but shouldn't disguise the fact that the fundamentals are still bad. The weak dollar is still out there, the high taxes are still out there, the regulations are still out there so this is just the eye of the storm. The storm is still there. Enjoy it, but don't put any stock in it. I don't think most consumers are, they know its temporary, so they are still going to hold back.
VICTORIA BARRET: I think everyone is right. It's both. The cause is not a good one it's a fall and demand. It's not because of Middle East peace. It is a boost for consumers. Any time we get a 50 cent hike in gas prices that translates to 60 billion on gas and not on other things. The cause isn't great, but it's a nice boost.
SHOULD COLLEGES OFFER DISCOUNTED TUITION FOR ILLEGAL IMMIGRANTS?
STEVE FORBES: It just makes a mockery of the rule of law. Why obey the law if you're going to get subsidized by government? This underscores the need for genuine reform on immigration. If you need workers, whether its entry level jobs or high tech jobs, make it legal so we know who is in here. But encouraging illegality? What's America about if not the rule of law?
MORGAN BRENNAN: I think this is great. I just have to note that the way this I set up. It's not actually a subsidy to illegal immigrants, nor will it actually affect tax payer's pockets. This is actually modeled by the failed asset bill. I think this is great news. The president of this college expects enrollment to jump 150 percent by this fall. We are talking about added revenues of up to $2 million over the next 5 years. More revenues means better tuition prices for all the students involved.
VICTORIA BARRET: I don't see how this isn't a subsidy because when you are in state and you get that in state tuition break, it's because presumably your family is paying state taxes for the last 18 years of your life. They have been paying into the system versus someone who is out of state. If you are illegally here, chances are you have not been paying into this system. I'm all for giving illegal's opportunities in this country, that's what this country is about. I'm with Steve, its rule of law that we are going against, encouraging people to be tax cheats here; we are encouraging them to be illegal. It's a band aid approach versus solving the real issue, which is having illegal's in our country and giving them work permits.
RICK UNGAR: I think it's the weakest point. I don't know if you noticed, but Mayor Bloomberg had something to say about this, this week. He pointed out that 75 percent of the illegal's working in his city is paying taxes. This is not a place where you have a lot of out of states students clamoring to come. This actually got more money into the system. It is not a subsidy. Why do we want to continue blaming these young children for something they didn't do? Here you have kids trying to get an education, trying to become productive citizens in this country, we want to punish them? We are already punishing them by charging them $1,000 more than what naturalized kids are paying.
MIKE OZANIAN: Subsidies always raise the price of anything, regardless of what is subsidized, whether its ethanol, solar panels. It does the same thing with education. There are numerous studies that prove that because schools know they can charge more. Why do you want to raise the cost of education when you already have thousands upon thousands of students that are tremendously in debt? It makes no sense.
INFORMER: INVESTORS STILL TAKING MONEY OUT OF U.S. STOCK FUNDS
ELIZABETH MACDONALD: Schlumberger Limited (SLB)
52-WEEK HIGH: $95.53
52-WEEK LOW: $54.79
MORGAN BRENNAN: The Coca-Cola Company (NYSE:KO)
52-WEEK HIGH: $77.82
52-WEEK LOW: $63.34
BILL BALDWIN: Quest Diagnostics (DGX)
52-WEEK HIGH: $62.32
52-WEEK LOW: $45.13