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IN FOCUS: Is the Department of Energy throwing good taxpayer money after bad with its green loans?
STEVE FORBES: David, it makes you wonder what solar system these energy bureaucrats occupy. Obviously, it is a huge waste of money. The private sector puts in upwards of $16 billion a year, risk money of their own, what is the government doing here? Maybe good for tanning beds, maybe good for the Jersey Shore, but for the tax payer it's simply sun stroke.
KYM MCNICHOLAS: Well you know what, I don't actually agree with sending money to Solyndra, that's just a manufacturing facility. What I do agree with, it's not a waste of money, to actually invest in solar installations, where that energy is going directly into the grid. We have to become an energy independent nation, especially in California which has a goal of 33 percent renewable energy by the end of the year 2020 and it needs some support from the state and federal government to make that happen.
VICTORIA BARRET: The numbers don't add up, and you know Kym mentions California's goal, California has set up this sort of arbitrary system as governments do, as they say, "here is this wonderful pie in the sky goal, and gosh now we need to spend billions to get there." Guess who those billions come from? It's taxpayers, because the green, the so called sustainable energy is not very economically sustainable. It doesn't come close in terms of cost to natural gas and oil. It is just not realistic; meanwhile, the taxpayers are on the hook.
MARK TATGE: No, I don't think so. I think green energy is the future and if you're going to go back to the math, let's divide out how many people are in the armed forces versus what we spend on defense; a trillion dollars. So if you want to make that argument I think it's pretty hollow. If you look at what the center for American Progress says, there is a potential here for a lot of jobs. Two million jobs to start, and with a 50/50 split, $100 billion, we could have 8 million jobs. We need jobs and green energy is the future. We have got to stop pulling all of this energy out of the ground and look at what the next equation is going to be here.
ELIZABETH MACDONALD: That's right David, and a lot of that taxpayer money was spent on building a glitzy new factory not creating jobs, but I am too for green energy. I want it to work, but we have been talking about this since Jimmy Carter's Malaise speech in the 1970's when he wanted to launch a solar bank and it just has not been working. It's cash for flunkers is what's going on. Instead of funding outright companies, you should be funding research and development. The energy sector has notoriously been low in expenditures on its own RND versus a drug, automotive or computer industry. Instead of funding the companies, fund the research. Instead were funding the research by incubating really bad companies that are basically now crony capitalism. You've seen ties to all sorts of political donors to both side of the isle.
RICH KARLGAARD: Yea, that's a good one. You know the only solar that is going to make a difference is probably space based solar and that is a half century out. Meanwhile, we are floating on a sea of natural gas. That is where we should be putting our investment. As a conservative, I could support government loans toward converting our 18-wheel fleet, 140,000 trucks, to run on natural gas that would give you a critical mass that could really get this industry going. And my conservative friends who think all government support is wasted, you know I would just say that the interstate highways system and the government also spent the first $1 billion on the semi conductor industry. So it's not the fact that your spending on technologies of the future, it's the wrong technologies that somehow the Obama administration has completely fallen for, this solar nonsense.
Is America caught in an unemployment cycle?
VICTORIA BARRET: Oh yea, I think that this is a real vicious cycle. I mean, essentially what you have, in a few states, is a situation where we are giving money to unemployed people and making it easier to be unemployed, softening that blow, and meanwhile you're raising taxes on the very people who will create new jobs. So we can talk all about lets create jobs and let's do programs that train people, lets create green jobs, but then the very people who actually create jobs, small businesses are being levied higher and higher taxes and so they are not going to do any hiring.
MARK TATGE: Look this is something congress passed, congress approved the extension of these benefits the state didn't have the money to pay them and they borrowed from the federal government. What are you suggesting here? Are you suggesting that we not have any unemployment benefits at all, that we eliminate all benefits for people that are out of work? How is that going to improve the economy? These people will cut back on their spending. What are we going to have them all living under a bridge somewhere? Is that what you are suggesting Victoria?
RICH KARLGAARD: Well she is absolutely right and Victoria is even further right to focus on small businesses. You know large businesses in the United States have big cash balances, but the small businesses do not and they usually create 75-80 percent of the jobs coming out of a recession, and they are not. When you talk to them it's just this wall of uncertainty, this is just another brick in the wall of uncertainty. I sympathize with Mark's side, you really sympathize with the people who are chronically unemployed but you have got to get out there and talk to employers and ask them why they are not hiring and it is this regulatory and taxation uncertainty.
MORGAN BRENNAN: You know yes, this is a vicious cycle with unemployment but I have to say the cost of unemployment aid and taxes are not a big piece of that. Yes you have states like New York and Connecticut that are pushing those costs onto employers, but you actually, going back to Victoria's point, you actually have a lot of states that aren't pushing those costs onto employers like Ohio, California, Idaho. Yes, this is an issue but it is not a larger issue. If we really want to look at taxes and how those are effecting jobs take a look at slashing the tax on cash that comes in from American corporations overseas. I mean you have Indra Nooyi, the CEO of Pepsico saying she would create more jobs here if that company wasn't getting taxed so harshly on the money they make overseas.
DENNIS KNEALE: We mean well but like many government actions in this downturn, we mean well but we are doing bad things. I think that extending the unemployment benefits I keeping more people out of work. Remember this is a billion dollars in interest. Now I just saw you ran a graphic that said 27 states own close to $40 billion to the federal government for layoff benefits. Do we think they are ever going to pay that money back? Here's the problem, we wouldn't have to extend it for two years if we did our own savings. Like med savings accounts, we ought to have a layoff savings account, tax free, that you then go to after 32 weeks when unemployment benefits run out.
STEVE FORBES: Well in it of itself the tax is not going to destroy jobs David, but what it is an example of is what you might call unemployment from a thousand tax hikes. Little things here, little things there and suddenly you found out it is very costly to hire somebody. So there are better ways to do it. Unemployment accounts like Dennis suggested, Newt Gingrich and others have proposed such proposals. That's the way to go. Don't punish the job creators, don't hit the taxpayer they are the ones who are going to get this economy back, if we let them.
Should America withhold every penny from the IMF?
STEVE FORBES: Absolutely David, IMF stands for Infinitely More Funding. It is a government example of failure. It rewards failure; it puts in austerity so these countries can't grow. They put on higher taxes if they can get away with it, devalue their currencies. So it is simply tightening the belt until the country drops dead. Not the way to go. It is the opposite of Ronald Reagan's approach.
MORGAN BRENNAN: Look, on paper I think it's a great idea not to give the IMF any more money, however like it or not we are connected to their economy. We've seen this in the last couple of weeks, the last couple of months our stock markets have ping ponged back and forth as this news of Greece and the EU crisis has come out and we have a lot of banks here that are exposed to this situation in the EU and they are not lending, they are hanging onto their cash. They are nervous about what is going to happen. And you know yes, the dollar may grow in strength if we pull back and this whole situation keeps unfolding there, but this could really affect our exports too. It's a big part of our economy.
ELIZABETH MACDONALD: Yea and it is unclear according to the Bank of International Sentiments just how much the US banks are exposed to Europe. Banks here in the United States are already cutting their exposures rapidly to Europe. But I think Steve is right. The IMF should not stand for I Am For bailing out bad countries in Europe and that's what is stands for. And by the way, the president has given the IMF access to $108 billion dollars as of 2009, to US funds and here is the issue; Instead of the IMF lending money, it should basically act as a guarantor of loans. Let other people finance the loans. Not the United States and not the IMF.
MARK TATGE: Well there is something to be said for that, but the IMF for better or for worse provide liquidity to the system and going back to Steve's point, so is he suggesting we should just let Mexico fail and Chile fail and Argentine fail and all these countries around the world fail? This is a problem and we are flirting with another Great Depression here, I think if we are going to allow this to ladder this way.
DENNIS KNEALE: Well you know HSBC just came out on Friday and said oh my gosh, if Europe defaults, if the Eurozone breaks up we are looking at another world wide Great Depression. I just want to point out that I don't think Europe even matters anymore. Yes, we should withdraw money from the IMF. I am sick of funding our enemies. I want to know what we are getting for it. At a time when we should be tightening our belts we ought to withdraw funding from the UN and we ought to start charging Europe for our US defense forces to defend Europe.
Stocks that will bail YOU out!
DENNIS KNEALE: Bank of New York Mellon (BK)
MORGAN BRENNAN: Altria (MO)
KYM MCNICHOLAS: Enerplus (ERF)