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IN FOCUS: While the government was failing on ways to cut spending, earmarks made a comeback
VICTORIA BARRET: You've got to get rid of them entirely. I mean, the problem here is a lot of money, it was less this year than last year, we've tried to ban them, but banning them is sort of saying that didn't actually work. We're talking about nine billion dollars and everyone is guilty here. When you look through these projects, and even, you know the good Congress people are stuffing in their little special prizes so you have to get rid of them. They become the currency of the election, they're dirtying... it's just dirty politics and it's a lot of money.
MIKE OZANIAN: I am David, because they don't solve the problem which is too much spending. Spending levels are set before a single ear mark is appropriated. It's not going to do anything to help the economy. Look, the stimulus plan didn't have a single earmark from Congress yet money was sent for turtles, tunnels and tennis courts.
ELIZABETH MACDONALD: It's real money and also, Tom Colburn Senator is right, uh he is saying there is a gateway drug to spending addiction and that we see more spending in bigger appropriations bills. We had ninety thousand earmarks in the last decade and the government has doubled during that time according to Coburn. Look, at this country existed for two hundred years without earmarks, they're not in the enumerative powers of the Constitution, and even Thomas Jefferson said no to earmarks, no to this country.
DENNIS KNEALE: That's exactly what it is. The question is whether banning them, let's ban ear marks is going to work at all. Let's remember something; bringing home the bacon has always been one of the points of politics. You know you're against earmarks or the Congressmen bring something home for you. So eliminating earmarks isn't going to change the habit. There are other ways to fix this still. And how much spending is really going on here? It's $32 out of $3,500. We're on a $3.5 trillion budget and it's like thirty billion. This won't fix the problem it's just optics to make us feel better.
RICH KARLGAARD: Yeah, I think it's a start, Dennis is exactly right it's not big but the optics are good. What demoralizes the American people is this feeling that the government is becoming increasingly sneaky and doing things in a less transparent way after all of these bi-partisan promises of transparency. But the real issue, Oz is right - it's spending and its growth. We've got to get economic growth up if we had economic growth up we could afford a three point five trillion dollar federal budget, but our growth doesn't support it now.
RICK UNGAR: Bottom line is no matter what any of us have to say it's never going to happen. Look, Congress could theoretically legislate a ban on earmarks, but you know what's going to happen then? They're going to go walking right on over to the executive branch where they're going to hit up the agencies to take from their budget to give the politicians what they need to take home the pork. It's not going away.
FLIPSIDE: 8 states to raise the minimum wage in 2012
KYM MCNICHOLAS: No disrespect to Teddy Roosevelt who started this whole minimum wage thing so many years ago, but I do believe that eliminating the minimum wage will help increase wages in the long run. Think about it this way, I was talking to the Former Chairman of AOL, Steve Case, who is now the CEO of a company called revolution which helps startups, and he was saying that new starts across the country are down 23 percent because it is just too expensive to start a business, even operate a business right here in the United States. So let's say you allow companies to actually hire people for what they can afford, that will help them to remain profitable it will allow them to grow. When they grow, they are going to hire more and they are going to pay more.
RICK UNGAR: You know we are getting to a point where small children are going to stop brushing their teeth and cleaning their rooms because it is going to be bad for job growth and wages. We cannot use this as an excuse for everything. I will tell you what; the unskilled workers in this country will not suffer a wage decrease by giving them a larger minimum wage. But you know what they will do? They will have more money in their pocket to spend, they will become customers and customers create jobs.
RICH KARLGAARD: It depends of the background of economic growth. In my home state of North Dakota there is an oil boom, it is called the Buchan Reserve, and in the town of Williston, a McDonald's franchise is paying $20 an hour for counter help. That is three times the minimum wage, because there is economic growth. So you have to concentrate on economic growth, the wage situation will take care of itself. We do not need a minimum wage, we need economic policies.
MORGAN BRENNAN: I am just going to have to remind everyone here that minimum wage was put into place to squelch sweat shop labor. So yes, I do think we need to have a minimum wage in place. I think in some areas maybe, yes we should even increase the minimum wage. Here is the reason; so much of the academic data on minimum wages is inconclusive. There are so many different reports today, so many different things. What we do know is that the poverty rate is up to 15 percent and the household income is down 7 percent over the past decade and what we do know is that the cost of living has risen. We just talked about this on the show last week. So yes, I do think we need to raise the minimum wage. As Rick mentioned it puts more money in the hands of potential consumers who can spend and boost GDP.
VICTORIA BARRET: San Francisco, which you mentioned, is a unique place and I know several small business owners in this city and the city right now is actually booming. Startups are popping up on a daily basis downtown. Rents are high; it is hard to get a reservation at a restaurant on a Tuesday night. But you talk to restaurant owners, you talk to salon owners and they are feeling the pinch. Business is good, but it is hard for them to make a profit and so as a result they are not growing. I have a friend who is not going to expand her salon downtown because she is facing such high costs from not only the high minimum wage in San Francisco, we also have all of these health care regulations that just add onto her cost and that means jobs that are not going to be created. So yes, workers are getting higher wages her but we are also facing 9 percent unemployment. That does not make any sense given that the city is booming. A higher unemployment rate than the nation.
DENNIS KNEALE: It is all but guaranteed guys, that among certain weakened businesses that are on that brink between solvency and insolvency that when you instantly raise their base cost for labor and they weren't ready for it, and they didn't need to otherwise, some of them will end up laying off some people even though we meant to help workers. The problem with the minimum wage is it hurts the people we mean to help most and that is the youngest people entering the workforce. There are fewer jobs for them to enter. Morgan just said we lost 7 percent of wages over the past decade; our wages keep going down in real terms over decades guys. Our minimum wage keeps going up. It is helping? No! It is not helping at all.
FLIPSIDE: Fannie Mae, Freddie Mac spend $640,000 on a conference is good news for taxpayers
MORGAN BRENNAN: I actually do think it is a good thing. If we were talking about executive bonuses, something else that has been going on this year, I would be mad. But as far as a conference is concerned, whether you like Fannie and Freddie or not, you have to remember that between them and the other government backed lenders in the mortgage industry, they make up almost 96 percent of the entire industry. And between foreclosures and loan modifications and new loans, they need to be meeting with what is left of the private industry. They need to.
MIKE OZANIAN: Well my big fear with Fannie, David, is that this conference will be successful and drum up more business for them. Look, over the past four years they have tripled in size and their pre-tax loses have also tripled. Their stock price now trades in drill bit sizes. This is terrible for taxpayers.
ELIZABETH MACDONALD: I think they should be broken up. Freddie is saying they conducted 200 meetings over two days. I hope that is some kind of taxpayer bang for the buck. I hope those 200 meetings were to talk to bankers about how to break themselves up. If they are trying to cut expenses, have at it. I am not seeing it just yet.
VICTORIA BARRET: Well look, they are in a business, they have to conduct business, they have to go to conferences. Great! Send all of your guys to a conference, but do they have to sponsor the conference? I mean is their visibility not high enough? I mean that is absurd. They should not be spending money sponsoring conferences. Go, but do not sponsor them. It is not necessary. We all know who you are.
RICH KARLGAARD: I would like to point out the rich hypocrisy here that two years ago President Obama was bashing private banks for holding conferences and that nearly killed the city of Las Vegas and the tourism industry. Look Fannie Mae and Freddie Mac should be broken up into regional entities and they can have their own little conferences and various Holiday Inns around the country.
Shoppers snatching up bargains in the stores; where to find bargains in the stock market
MORGAN BREANNAN: HARTFORD FINANCIAL (HIG)
DENNIS KNEALE: CHEVRON (CVX)
ELIZABETH MACDONALD: JOHNSON CONTROLS (JCI)
KYM MCNICHOLAS: HEWLETT PACKARD (HPQ)