Obama, Christie in war of words over entitlements



TRACY BYRNES: You know what? I'm sick of it Cheryl. People are sitting around waiting for their next check. Look, from fiscal year 2008 to 2011, we saw welfare recipients increase 17 percent. Over the same period, we've spent 75 percent more on unemployment checks that go out, so what does that tell you? It's telling you that more and more people are on the government dole. More and more people are sitting around waiting for their loan to be re-modified. Mortgage modifications are all the rage. Look, stop. All of us sitting at this table right here, and Jonathan and Julian I'm sure too, we didn't get handouts and we made it. What are we doing to our people?

WAYNE ROGERS: Well, the fact-of-the-matter is that it's grown enormously. I mean, from 2005 it's grown over 300 percent, since 2009; 43 percent. I'm talking about food stamps here, you asked about the food stamp program and the abuse of these programs grows absolutely with it just hand in glove. In other words, the Federal Government can't do anything right and everybody abuses the program, and then they say, we have to invent some other group for people who go out and try the people abusing the program, because the program is so shoddy to start with. Yes, there is a reason to have some sort of program like that, but when it's run rampant like this where there are more people getting money from the government than people paying into the government; you've got a state that's so corrupt I don't know how you stop it. I mean, we'll have to have a revolution one day in this country again I assume.

JULIAN EPSTEIN: Well, I agree with Tracy and Wayne that we certainly want to carve out the abuse and we certainly don't want people that don't need to be getting these benefits, getting them. On the other hand, a lot of people that get the benefits, for example, what happened in the last recession, which was no fault of their own. These are people that need the benefits; unemployment benefits for example. Four out of five people that are getting unemployment benefits are vigorously trying to find work right now, and you know you point to food stamps and unemployment benefits. The real cause of our financial problems are Medicaid and Medicare problems and our entitlement spending together with debt service is going to take up over 70 percent of spending. We're on a track to do that. What we really need to do is reform the health care entitlements; Medicaid and Medicare. President Obama, you know you talk about him defending it. He is the guy that came forward with a proposal last August that was very close to Simpson Bowles that said we've got to cut four trillion dollars spending. We'll do it through three trillion in cuts and a trillion in tax reform and the Republicans rejected it.

JONATHAN HOENIG: Well the basic issue here is individualism, which Governor Christie advocates, and collectivism, which the President is all about. I mean, in my opinion Cheryl, President Obama's vision of the American dream is depraved. I mean, what's always made this country unique is that the individual is put above the collective. We're not here to serve the furor, the king, the church. Your life belongs to you, so entitlements destroy that freedom. They say no, you can't pursue your life, your liberty, your happiness. You're here to serve the greater good. That's exactly what entitlements are about. That's exactly what the President's about.

JOHN LAYFIELD: I would argue that the President and the Governor, respectfully, are both wrong. The reason, what Wayne talks about a revolution, the reason we're giving out so many food stamps and this exactly tracks poverty, forget about the abuse, the problem here is poverty levels, but the reason that we're paying these people, the reason that we're extending long term unemployment benefits is so that there is not a revolution, that there are not people uprising in the streets. We're basically paying people, but the point is, not the fact that we have long term unemployment benefits, the problem is that people don't have jobs. I know you can take the example of people who sit on the couch somewhere in America and say, I don't want to work, but for the most part, Americans are not bums. They don't want a check from the government. They want a job and what the government has done, because Republicans and Democrats hate each other so badly, they're not passing budget reform. They're not passing what Julian said with Medicare and Medicaid reform. They're not doing any type of tax reform. They have no energy policy. That is the problem in America. What we're talking about here are symptoms and that is the payoff to these Americans.


WAYNE ROGERS: It's a waste of money. You know, you've got to recognize this and take the hit. This all started when Barney Frank tried to say, okay, everybody in the United States should own a house and so they made it so you don't have to put any money down and ultimately you create a crisis like we have, so to spend more and not recognize the crisis and take the hit. If this were a commercial and not a federal and a government organization, they would make everybody write it off and start all over. If they were under the SEC, that's exactly what would happen if they were a public organization. That's what they should do because they are wasting money trying to bail out something. It's another one of these, as Jonathan said earlier, you're going to be hello Greece, goodbye USA.

JOHN LAYFIELD: There's two separate points here; keeping the homes in decent shape is completely separate from what they tried to do with the modifications and the housing bailout, which were an absolute abysmal failure. To what Wayne's talking about with Barney Frank, he said let's roll the dice and give people 100 percent credit to buy a home; people with no skin in the game. That helped to exacerbate this crisis. The thing of fixing up homes is completely different. This is what any realtor does. It's a matter of keeping the yard mowed; it's a matter of keeping the shutters fixed so you can actually sell these properties. The problem is there are no buyers out there. I don't care if interest rates are zero right now, but as far as mowing the grass and doing general upkeep, yes that's something you have to do.

JULIAN EPSTEIN: That's the first I've heard of that figure (spending 40 million dollars on lawn care alone last year). I have to quibble a little bit with Wayne and John here and defend my old friend Barney Frank. In 2005 and 2006, he was the guy that was proposing reforms to Freddie and Fannie and he was shut down by a Republican-led Congress, but look, I think we all agree, and everyone agrees today that Fannie and Freddie need to be massively scaled back, but the idea, the government has 200 thousand homes and they're stock because of foreclosure, the idea that we would not paint the walls and mow the grass and do the basic things we need to do to increase their value, is silly. That would only hurt taxpayers and destroy the market, and to the point about the housing market, the housing market is starting to come back.

JONATHAN HOENIG: You heard it. That's that collectivist, greater good notion. Why do we even have Freddie and Fannie? Well, the greater good. Why does the government own property? I mean, it's ridiculous. Why do we own tens of thousands of houses? Well, the greater good. We can't have them out there or otherwise the price would fall, but you know what? The price already did fall and meanwhile we're spending half a billion dollars a year painting houses. It's an incredibly insult Cheryl, to those individuals who oh, I don't know, actually pay their mortgages, take care of their own properties, and to the panels point, it actually prolongs the downturn. Commercial real estate, which didn't get all these bailouts, is doing great right now. Residential real estate is in the toilet.

TRACY BYRNES: But again, they're trying to prop things up. Stop it already and Cheryl look, you see it in rents. You see rent prices going through the roof. Why? People can't get mortgages. John's right. There are no buyers out there. People can't get mortgages or better yet, they don't want to commit anymore. Barney Frank and his dream for all of us to own a home is no longer in existence. People don't want to be a part of that dream anymore. So stop it. Stop pushing this down everyone's throats. They want to rent, then let them rent. Eventually the market will figure itself out and we are starting to see investors stand at the court room steps and buy up foreclosed homes. Why don't you let capitalism take care of this?


JOHN LAYFIELD: China has a 50 year plan for several different things; for energy, for economics, for so many different things. We don't have a five day plan here in the United States. So yes, it is easier to do business over there because they don't have the bureaucracy. That being said; look at these companies where inventory wasn't even there; where P&L balance sheets didn't really conform to any accounting standards whatsoever. I would be hesitant to do business in that economy despite the fact that it's just a growth machine.

WAYNE ROGERS: I don't think it has to do anything with the Chinese government or our government. If you've got enough money you can bribe any politician to do anything. It happens in our government all the time. Look, here's Jeffrey Immelt, Chairman of the Board of General Electric, preaches about local jobs, local jobs. Two weeks later he closes the x-ray department of GE and moves it to China. One hundred and twenty three jobs gone, boom, just like that. You've got major corporations, big government, big labor and big corporations all in cahoots. We're creating a fascist kind of economy.

JULIAN EPSTEIN: Yeah, but Disney going into China isn't, per say, a bad thing. I mean, there's a huge market in China and what they're doing is going after the Chinese market as well. So U.S. companies going into China isn't necessarily a bad thing. Secondly, the problem I think with China is that we observe fair trade rules. They don't. They manipulate their currency, they illegally subsidize products, they have all kinds of instances in which they don't observe the rules of free trade. As for U.S. businesses being able to compete, look you can work for 14 days at 60 hours a week and make 200 dollars a month in China. No U.S. business is going to be able to compete against that, but there are some trends right now where U.S. businesses are starting to take their work back here to the United States.

TRACY BYRNES: It's also buyer beware Cheryl. I mean you're talking two extremes. The bureaucracy is killing us here in the United States and the lack there of is actually, potentially hurtful in China. Somewhere there has to be a happy medium.

JONATHAN HOENIG: No, there's no upside in Totalitarianism Cheryl. I'm from the "give me liberty or give me death" school. It's why I don't buy Chinese stocks and I think a company should be very cautious doing business in Communist and Totalitarian states.


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