Economy slows as Washington stalls on extending tax cuts


Economy Slowing As Tax Hikes Near and DC Partisanship Mounts

GARY B. SMITH: That's what it feels like, Brenda. It's not a personal opinion you look at the number of companies who have come out this past week and warned that earnings are likely to be down or flat because of uncertainty. In fact Brenda, it'd be better to list the companies that haven't warned. I mean we have McDonald's, we have Ford, we have Cisco, we have Apple we have Starbucks. It's like a who's who of the Fortune 500 now and those companies obviously across the board, different sectors, different industries, tech you know consumer goods all across everyone's saying the same thing. Congress clear things up make at least the very minimum the tax situation clear.

CHRIS KOFINAS: Yeah, there's enormous cost. This is what I think is part of the problem. I think everyone would agree, best case scenario you'd want to extend all the tax cuts, but you've got multiple pressure points. The number one pressure point is the fiscal situation. You're talking about a massive deficit and debt that keeps on growing and so if you extend the tax cuts, all of them in particular you have to come up with that additional revenue. The other problem, and I think that this is really key to keep in mind is not only do you have to talk about the payroll tax extension, not only do you have to talk about unemployment insurance extension, not only do you have to talk about sequestration but then you have to do all of this and the tax cuts in the context of raising the debt ceiling. It is going to be a lame duck from hell come after the presidential election. That's just the reality.

TOBIN SMITH: I don't know how to respond to a lame duck from hell, but I can say this. It's pretty simple here; ten percent of the consumers, consumers are seventy percent of our economy are the ones who are responsible for forty percent of the discretionary spending. So, if you take a dollar away from that group that's the top ten percent of earners it's like taking four dollars out of the economy and that math is not being considered here. We sort of think that this all happens in a laboratory, but the fact of the matter is, if you take four dollars out of the big spenders we're on the rate for a recession right now. Everybody that I follow and we use says we're on that track. You do this, we're in a recession.

JONAS MAX FERRIS: First of all, we have these tax cuts and the economy is crawling along with them so I don't even know how much they're even working at this point. You know, we can't afford to extend these to any group. The whole tax break is a mish-mash of various extensions and the payroll on top of the bush on top of this. We can't afford them we're running a huge deficit. Even if they all go away and this cliff happens next year and there's these four spending cuts which aren't even enough either, we'll still be running a deficit even with the high tax rates and the spending which means we're actually still in a stimulus program, so the worst case is the stimulus program. There's no plan to actually close the deficit, the trillion substantially with either tax increases or spending cuts anyway so I don't think it's as bad as it is or that any group deserves a major break in this cliff that we're about to hit because we're all in it together at this point. We could use a small tax break that we pay for with cuts but we never going to organize to do that.

DAVE NELSON: I agree. We're approaching the fiscal cliff and I think the administration misses the point here. We should be talking about tax reform, not raising tax rates. You know read, "The Moment of Truth" read the Simpson Bowles plan, they get it. We need to flatten the tax, we need to broaden the base and I'll go a step further we need to reduce corporate taxes to make us more competitive around the world.

Chinese Company Buying Canadian Oil After US Blocks Keystone Pipeline

Tobin Smith: I admire Mr. Schumer on blocking but in fact what they are blocking is our ability to take this massive resource and bringing it in to the United States and lowering our prices. Guess what, call it the China Move! The Chinese look at us and laugh and throw their hands up and say "These idiots are going to block this?" Great, we are not only going to buy Nexon for $15 billion, this is just the beginning. They have stuff all over the world. They have stuff in our Gulf. This money is going to be doubled or tripled with the money they have. It is going to go from the pipeline in Alberta to British Columbia to China. Call that the China pipeline.

Gary B. Smith: Oh, absolutely Brenda. It just boils down to supply and demand. The thing that is baffling to me is that I think every administration back to the Truman administration has said "We have to be oil independent!" "We have to at least get off our dependency on the Middle East." In Canada, one of our closest allies for who knows how long has the second biggest oil reserves behind only Saudi Arabia and Venezuela. We could build a partnership there and be at least in partnership with them. Instead we are squandering money on these green projects that have gone nowhere. It is baffling to me why we are doing this.

Jonas Max Ferris: I don't. I mean there are going to be a lot of deals we are going to lose the Chinese. I mean that government runs a totally different rule set than Americans do. They have been doing deals with the Cubans. We are not going to do deals like that. It is the way it is. You know the oil is going to hit the market somewhere maybe China will lower the global price. I don't think running this oil through our refineries is going to necessarily lower our gas price. It is going to use Vallero's capacity. Let's go to the bigger issue, we don't allow this because TransCanada is a Canadian corporation and they are coming into America and seizing ranchers land through eminent domain. That doesn't seem very American. If you want to buy that land...

Chris Kofinas: I think that from a national interest perspective I think the smart thing would have been to have adopted the keystone pipeline from a jobs perspective and from an economic perspective. That doesn't diminish the valid environmental concerns that many people in my party had but I think we could have figured out a way to work around them and not necessarily gone the road that we have. I think it is going to be built. That is one question. The other question in terms of the impact on oil prices, I think we are conflating it. We can build it but I think we are living in fantasy land if build it once the oil starts flowing gas prices are going to drop immediately. This is a global commodity, there are a lot of external factors that go into the calculation of oil prices.

Dave Nelson: It will pump up prices and the administration pundit on this two years ago. This pipeline should have happened two years ago but the president fought hard to block and delay this pipeline and China gets it and I am not sure why the administration doesn't.

McDonald's Unveils Healthier Menu at London Olympics

DAVE NELSON: If McDonald's is doing this to maintain visibility at the Olympics, then investors Monday morning should be dumping this stock. I hope that's not the reason this is being done. The company has been struggling under the new CEO Don Thompson and it hasn't gone well so far this year. So, we'll have to see how this works out. If it's a secular trend and they're changing, maybe I'll endorse it, but I don't know if investors will.

GARY B. SMITH: On the one hand, yes for Dave's point if they are caving and structuring their menu to be politically correct, that's bad. But, in this case, I give companies like McDonald's, Starbucks, Wal-Mart credit for being, quite frankly, a lot smarter than the government. They're doing this to make more money, I think, give them higher visibility. Look, when I walk into a McDonald's, if the McRib has vanished and the quarter-pounder has vanished, then I'm going to start worrying. Not until then.

TOBIN SMITH: If a business strategy changes because of the liberal agenda, call it what it is, then they're making poor decisions. The profit making decision, that's a reactionary deal, and I would be worried as a McDonald's shareholder as well.

CHRIS KOFINAS: I don't think they need to be worried about the food police. Listen, I think McDonald's offering healthy food is a good thing. The only thing that upsets me is where were they when I was in high school or college? Because if I had been eating healthy McDonald's I would have had more dates. So, this is what upsets me the most.

JONAS MAX FERRIS: They are wasting shareholder money on this sponsorship. They started in the 70s and it made sense then, but Virgina Slams used to sponsor tennis and then Americans started not associating cigarette smoking and playing tennis. That's the way the world is going with fast food. It's not an Olympic food, let's be honest with ourselves. Stop wasting the money. Don't change the menu so much, just get out of the sports sponsorship-it doesn't make sense and I'm sure they'll do it in five years.


GARY B. SMITH: Economy slowing but H'Care isn't! (JNJ) dispenses a 50 percent gain in 2 years

DAVE NELSON: Boeing is about to take off! (BA) lands a 20 percent profit by March

JONAS MAX FERRIS: Help keep the lights on! (ED) powers up 20 percent in 1 year

TOBIN SMITH: Look for more stock buybacks; (T) rings up 20 percent profit by year-end