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Bulls & Bears
Brenda Buttner was joined by Gary B. Smith, Pat Dorsey, Eric Bolling, Tobin Smith and Nancy Skinner.
Dems' Plan to Let Middle-Class Tax Cut Die; Tax Hikes Coming for All?
Gary B. Smith: It is simple mathematics in this case. You have a budget that is going to be in the trillions of dollars. You have major deficits. Even if the focus was on people making $250,000 — even if you tax them at 90%, President Obama would not be able to pay for all of these programs, so the whole point of there will be no new taxes on 95% — it is “BS” now and it will be more “BS” in the future.
Nancy Skinner: During his campaign, he said that he was going to have a tax cut. He did not say in perpetuity. We have a global economic meltdown and you guys are all worried about deficits. The Democrats have always supported pay-as-you-go. The next step is, start to pay down that deficit and recover.
Eric Bolling: That is what you get. You are going to pay more for your driver’s license. You’re going to pay more for postage. You were going to pay for everything more on the state level.
Tobin Smith: The bigger issue here is that the rich aren’t so rich anymore. American Express said that 30% of the people for small business people are not paying themselves a salary now. We got the statistics in that the withholding tax is down 9.5%. The capital gains are down 20%. That is why the math does not work.
Bailed-Out Banks Still Not Lending; Blocking Job Creation?
Eric Bolling: TARP has been a miserable failure: Of the $700 billion, $600 billion was pushed out quickly and they’re still not lending us money. That number is 23% less, fewer loans going out the door now than before TARP. I put this out on Twitter and I said “give me a story”. I have long list. One person was looking for $3,000 from Wells Fargo. He was denied. Another guy is looking for his credit card rates to go down. He says he has about 800 rating. Banks are taking the TARP money and they are loaning it out, but loaning it on a long-term basis: 10 years. That is not credit that is going down to you had died. It is going to big hedge funds. It is not going to the real people who need it the most.
Gary B. Smith: Just another great government program that has had the opposite effect of what it was supposed to. I think there are cases where people should and must get credit. I think for a large percentage of the population, kind of pulling back on the use of credit, kind of living of the Dave Ramsey way, within your means. For the institutions to strip their guidelines to lend, I do not think that is bad. I think a lot of lack-lending is what got us into the problem in the first place. I am not sure it is all that bad.
Tobin Smith: There is no question. As I said in that American Express study, 30% of small business people are not paying themselves. When small business runs out of oxygen, they throw their jobs over the lifeboat.
Pat Dorsey: I think this beating up on banks story is absurd. When the economy is weak, people are less likely to repay loans, thus you loan less money. The problem we got into a few years ago was loaning money to people who could not pay it back. That is why we’re in the mess we’re in. The Fed surveys show demand for credit is down substantially. You cannot land to people who do not want it. There are some business owners were not getting loans and possibly they should. Demand for credit is lower because people are not racking up the kind of debt.
Pres Plan to Clean Up Earth... Creating a Second Tax Day in U.S.?
Eric Bolling: Let’s call it pollution tax; let’s call it a manufacturing tax. You cannot win this one. Here’s what it is: if you produce a gallon of gasoline, a kilowatt hour of electricity, or a bag of Fritos, you are going to pollute a little bit in the process, you get tax, and you’re going to do one of two things. Number one, you are going to pass that on to the consumer; bad. They are going to move to China or Iindia where there is no cap and trade tax; more bad.
Nancy Skinner: This is free-market nirvana. It is taking all the powers of the market to find those technologies, to “incentivize” green technologies. It gives companies plenty of time to put profit in inventing those technologies. We did this back with the Clean Air Act and it worked brilliantly. It is not a government control and command kind of thing. It is the free market, its profit, its green jobs, it’s perfect.
Tobin Smith: Here is why it is bad. In Europe, it does not work. The idea was supposed to be that if they added this pollution tax onto a corporation, they would pay less in corporate tax so it would offset their corporate taxes. But no, we decided that we were going to add this new pollution tax on already out of the corporate world, so instead of deducting it, it’s going to be a whole new set of taxes. Unfortunately, it is dead on arrival.
Pat Dorsey: I think the larger issue is whether a cap-and-trade tax actually does what it is supposed to do, which is to change the behavior of companies to actually reduce carbon output. The price they are talking about per ton of carbon is about $20 per ton. That, according to our studies is not high enough to change behavior. Basically at that point, you have a big scheme that does not really do very much. You need be prices north of $30 to actually impact the emission of carbon.
Tobin: Merck "MRK " protects our lives and economy from swine flu
Gary B: Susan Boyle fever hits up "GOOG ": Hits $500 in one year
Pat: Energize with Energy Transfer; "ETE " up 30% in one year
Eric: I'm so happy with sohu.com! "SOHU " up 50% in 12 months
Cavuto on Business
This past week, Charles Payne was in for Neil Cavuto. Charles was joined by:
Ben Stein, Author “How To Ruin The United States of America”; Dagan McDowell, Fox Business News; Adam Lashinsky, Editor-at-Large, Fortune Magazine; Gary Kaltbaum, GaryK.com
Should Taxpayers Foot the Bill for Chrysler Benefits?
Gary Kaltbaum, GaryK.com: No we shouldn’t. I feel for people who lose jobs, but either this country is about capitalism or we are about socialism where government starts taking care of everyone, everything and every time. Is government now going into the business of protecting all pensions and health benefits? Who is going to pay for all these backstops? Oh yeah...us!
Ben Stein, Author, "How to Ruin the United States of America": It is interesting that we can take care of speculators with taxpayer money, but we can’t take care of a retiring autoworker with taxpayer money. The situation is unfortunate. I don’t think we should be paying these benefits. But the government has gone way overboard with their spending and just doesn’t know where to stop.
Dagan McDowell, FOX Business Network: You can’t use the mistakes from the other parts of the bailout to make up for mistakes made by the automakers. Bottom line is that these companies and their workers will need to take their “haircuts” and change they way they do business.
Adam Lashinsky, Editor-at-Large, Fortune Magazine: Look, this is not an ideological debate... It is all about a negotiation. So it really shouldn’t be a question about “should we” or “shouldn’t” we. It should be about what happens going forward and what concessions are made. The workers have already started to make concessions (like with their pay structure), so this is all part of the process. I was on the record wanting the automakers to declare bankruptcy from the start, but now that we are here, at this moment, the negotiations must keep going.
Big Brother and Your Taxes... Will Higher Taxes for You Mean Big Brother Will Be Watching All of America?
Ben Stein: Information gathering by tax authorities — like the California State Franchise Tax Board, have gone way beyond what is appropriate. But this isn’t just a state problem, it is a national problem. Tax agencies are so pressed for money. How long will it be before the IRS really starts doing this kind of information gathering?
Gary Kaltbaum: I don’t know if higher taxes will equal less privacy by itself, but it is definitely a contributor because that is what makes government bigger. I just think we are going that way no matter what. Government is getting bigger by the day which means they will be in our face more trying to dictate what car to buy, how much water to use, whether we should smoke or not...and I believe government is going to accumulate all that knowledge for the wrong purposes.
Adam Lashinsky: Taxing authorities conduct audits on people they suspect might be cheating on their taxes. Once the government decides to do an audit, they can get a tremendous amount of information, and why not? They're trying to ensure tax fairness. The tax man has a responsibility to ensure that taxpayers pay up.
Stocks to Own for the Next 100 Days
Gary Kaltbaum: SPDR Gold Shares "GLD"
Adam Lashinsky: American Electric Power "AEP "
Ben Stein: Boeing "BA "
Forbes on FOX
On Saturday, April 25, 2009, Stuart Varney guest hosted for David Asman. Stuart was joined by Bill Baldwin, Neil Weinberg, Mike Ozanian, Quentin Hardy, Victoria Barret, Jack Gage, Mike Maiello, Evelyn Rusli, Lacey Rose, Kai Falkenberg, John Rutledge, and Elizabeth MacDonald.
Stuart Varney: The number of Americans seeking jobless benefits hitting a record this week. Republicans say it proves the president’s shovel-ready plan isn’t exactly shovel-ready. Time to demand our $800 billion dollars in stimulus money back?
Mike Ozanian: It’s time to get that money back! Here’s the problem: Even if the stimulus creates the 3 million jobs Obama says it will, our unemployment rate is still going to be at 6.5%, which is too high. It’s time to return that money to the private sector, where it can be put to good use.
Neil Weinberg: Mike, I hate to do this and bring logic to a political discussion, but the Congressional Budget Office, which is actually nonpartisan, says that this is going to create economic stimulus. It will expand the economy between 1% and 4%. Over the long term, it’s going to be bad. It’s going to crowd out some of the spending from the private sector.
Stuart Varney: Time to bring that money back?
John Rutledge: It is going to cost a jillion dollars. The only shoveling is about BS. Tell “Doogie Howser” Geithner to back off. The one thing they’re worried about in China is this tsunami of spending in America. It devalues the dollar and pushes inflation up. We do no need people around the world worrying about the dollar.
Stuart Varney: Pay that $800 billion back? What do you say?
Quentin Hardy: The Republicans say this, the group that thought tax cuts for the rich would help; and after eight years, nothing happened for the average American. The group that gave you a deregulated house of cards, that sent the world into the greatest downturn since the Great Depression... they seem to be upset because we have not had a turnaround in 100 days. Somehow, I think it might take a little bit more than that.
Stuart Varney: Elizabeth – you were rolling your eyes.
Elizabeth MacDonald: I was?
Elizabeth MacDonald: Never mind that the Democrats allow Fannie Mae and Freddie Mac to get out of control. If either President Obama or John McCain had campaigned on spending $800 billion or $3.6 trillion dollars, both of them would have lost. I love how all these politicians are against the deficit. Watch this. Watch how the money is being spent. Obama campaigned about transparency. They are tracking the money that goes to the states. The money is going through an untold number of rat holes.
Evelyn Rusli: I think we need a timeout. It has only been about two months since the bill was passed. We cannot pronounce it “dead on arrival” just yet. We need some patience. Even though critics point out that unemployment has risen to about 8% since then, who knows where unemployment would be if the bill was not passed?
Forbes on FOX Debate
Stuart Varney: If you’re a man – watch out! Some at Forbes say this recession is out to get you. And they may be on to something. Take a look at this – nearly 80% of the jobs lost in this recession were held by men.
Victoria Barret: You can argue it’s sexist because it is targeting traditionally male-dominated jobs – construction, manufacturing. You have the unemployment rate for men at 9%. The unemployment rate for women is 7%. What is even more troubling is long-term out of work – people who have stopped looking for jobs this March for the first time ever – more men said that than women. That’s troubling. Societally, that’s not good. We need to do something about it.
Stuart Varney: Kai, isn’t this reverse sexism where the victims are men?
Kai Falkenberg: There is no sexism here. Male nurses are doing fine. Male teachers are doing fine. Women welders are not doing well. Women on Wall Street are not doing well. You gotta figure if you go into a job or industry that’s dependent on the economy, if the economy tanks, you’re going to lose your job. That what you have to factor in when you choose what career to go in to.
Stuart Varney: With the victims predominately of one sex, doesn’t that make this recession sexist?
Mike Maiello: This is revealing a legacy of sexism in our economy. You have men losing their jobs, meaning two income families are now relying on one income, and it’s the lesser of two incomes because women have on average been paid less for the same work as men. Women are also less likely to have health insurance. That’s the big problem here – two-income families living on the lesser of two incomes. Terrible.
Mike Ozanian: Speaking from personal experience, there is one way President Obama can straighten this all out. For all working men who were supporting two more women who are not working, they should get a $2500 tax credit to use for handbags and shoes. That would boost morale tremendously – at least in the Ozanian household.
Stuart Varney: You have arrested the attention of the audience.
Lacey Rose: I don’t think I could get behind Mike’s policy. I think it comes down to employment patterns. It is the men who are more apt to be in industries that are more likely to be crushed in recessions, like manufacturing and construction. Women tend to be in more stable industries. I think sexism is still very much at play though, in terms of wages. Men are earning more than 20% than women.
John Rutledge: It’s a load of crap. We should stop whining about sexism. Unemployment in a recession affects different people in different jobs in different ways. It depends on the work you do. Unemployed is a completely recent invention. Cavemen did not have unemployment. They just couldn’t find any animals. Farmers never had unemployment. It has only been invented since people started working for “the man” in business. The trick is – don’t let your kids grow up to work for “the man.” Start your own business. Take charge of your own life. I have not been unemployed since the 1970s. When business slows down, I just don’t make as much money.
Stuart Varney: This week, Congress saying health care reform is a top priority. And today, a Forbes Flipside like you’ve never heard. One of our biggest pro-capitalists saying a government-run health insurance company would be great for America!
Bill Baldwin: Politicians loves to denounce insurance companies for making a profit or paying their executives or discriminating. So I have a new “put up or shut up” plan. The government would be more than the insurance business. It would be in the auto insurance business, the hurricane insurance business, and of course, health insurance – a business it’s been in for more than four decades. But - there are three provisos in my plan that the big government people may not like. If there are going to be subsidies, they are the same for both Obama and united health care. Number two: The government plan would have to at least break even. And number three: Once this is in place, all government mandates and controls on health insurance companies would vanish.
Elizabeth MacDonald: We tried this in the 1960s when Medicare was launched. What happened Blue Cross Blue Shield unloaded all its riskier patients to Medicare. They didn’t get the care they deserved and their care was restricted. We are all for getting proper insurance for everyone in this country. This is a really serious issue because people are dying because faceless bureaucrats, states away from them, are denying claims. If this happens, a federal insurer will overpay for claims because it won’t adjust for the risk-pool properly, like the private sector does. The taxpayers will end of bailing it out just like the life insurers.
Victoria Barret: I am shocked. With all your conditions, it sounds like those conditions will never come true. The private sector subsidizes those programs. We end up paying higher costs. It just will not work. When you have the government as a competitor, it is not a fair competition. In the end, the government will crowd out the private sector. We will have no competition.
Quentin Hardy: Half the country has no health insurance. Whatever the government comes up with is better than nothing.
Stuart Varney: It’s not half the country that doesn’t have health insurance. It’s more like 15%.
Quentin Hardy: That’s not true!
Stuart Varney: Ok, we can argue about the number, but it’s not half.
Quentin Hardy: I am in my third big, creaky, government bureaucracy… I am in my third year of dealing with a claim. It brings you to near-tears to deal with these people. It is not efficient. It is not well-run.
Jack Gage: Quentin, Bill plan to create a public health insurance company run by the government would really more subsidizing at the expense of the taxpayers. Private insurance is the best solution you’re going to get if you’re going to pick your doctor.
Stuart Varney: We’re back with the rock-bottom stocks ready to rocket up.
Jack Gage: Burger King "BKC"
Neil Weinberg: UnitedHealth Group "UNH "
Mike Ozanian: New York Times "NYT "
Bill Baldwin: Wells Fargo "WFC "
President Spends $1.5 Trillion in 100 Days: Enough or Not?
Jonathan Hoenig, CapitalistPig Asset Management: We have to stop this. The President is under the mistaken belief that spending equals growth. The more you spend, the more you grow. If that is the case, let's spend 100 zillion dollars and we can all be rich. I’m very concerned about the long term expansion of government spending. We have already poured $500 billion into Chrysler. Where did that get us? The government is not an efficient allocator of assets. That is why Amtrak has not made money in 30 years.
Damon Vickers, Nine Points Capital Partners: I agree it’s madness but he’s going to continue spending that money and in his mind, that’s the right thing to do. We witnessed what happened in Japan post ‘89. He would almost think that they are playing directly out of the playbook. The alternative, as foolhardy as it may be, is a higher suicide rate on TV. I think we're getting weak.
Tracy Byrnes, Fox Business Network: I think this is going to backfire because you have families at home that rely on you to spend less and need to save more, this is how we're going to get ourselves out of our own mess that we're in at home with credit cards and things like that. Very easy to extrapolate this to the government. We’re never going to be able to pay our bills back. This populist message is going to go away. People are going to realize they are in debt.
Jonas Max Ferris, MaxFunds.com: People are spending less and saving more. That needs to be countered by some other more irrational entity which is the government. When people are cutting back, that is the only time you can rationalize that. I'm not worried about the next 100 days spending. I can debate the specifics. The money needs to be spent. The problem is reigning in what the economy picks up. I am concerned that will not happen. We have a bad history of the government cutting back. That is the problem, not the current spending.
Wayne Rogers, Wayne Rogers & Co: The debt itself is already gigantic. It eats up an enormous portion of the budget. Not only can you not pay it back, you will not be able to do any of the other things that the government intends to do. It will not be possible. Printing of money is going to blow up in our face. We will have massive inflation. It happened in Germany after World War One period that led to the rise of Hitler. That will happen here.
John Bradshaw Layfield, www.layfieldenergy.com: This is closer to the Weimer Republic and it close to Japan. We have to print money 24/7. This administration has spent more money than Bush did on Iraq, Afghanistan, and Katrina combined. I am worried about the fact that we spend 1.5 Trillion dollars. I think it is unsustainable.
Lower Rates for "High-RIsk" Cardholder; Financial Crisis 2?
Tracy Byrnes: First of all, he wants these companies to lock in interest rates. Cheap money is not going to help these credit card companies that are now holding debt. Delinquencies are on the rise. It is going to hurt the consumer in the long run as well. Their credit line is going to be caught. They are not going to have access to this money at the end of the day.
John Bradshaw Layfield: You’re flushing the consumer right down the toilet. If you do not allow these credit card companies to say that we're going to take care of user rates, you do not allow them to price in risk. If they cannot do that, they are going to withdraw up to 55% of these outstanding credit lines. When 90% of the consumers at one time during the year use a credit card, you kill the consumer.
Jonas Max Ferris: I do not think this is that hard, the rules that they are proposing. There is no overall cap on interest rates. You could have a 30% interest rate. I do not think in America you should be able to charge 30% any more than you should sell guns to toddlers. If you can’t make money at 20%, which is the limit I think they should have…
Jonathan Hoenig: With all due respect to the President, he has no banking experience. Rates are not arbitrary. I have made unsecured loans. The reason you have to charge 30% is these deadbeats do not pay you back. There is no right to credit at any rate. A credit card offers you a terrific value, when you think about it. It is convenient.
Damon Vickers: I have never owned a credit card. We were sold somewhere along the years that we need a credit to survive. When did that happen? That happened when assets were super-inflated. The only way you could afford things was to buy them with low money down. It started in the 1920's. The Obama administration is going to do everything they can to keep injecting money into the economy. I think the initiatives are nice in light of what we have seen. Until we get a real engine of growth, which is a wave of technological change in this economy that creates jobs and prosperity, we’re going to keep running up the bills.
Wayne Rogers: I have a cure for this. Only banks can issue credit cards to people with whom they have a history. Otherwise, banks could not issue credit cards. The people who want to issue credit cards to borrow worst were shaky, charge whatever they want. Get the government out of it. If the borrower fails and the credit card company goes under, so be it.
10 Top Bailed-Out Companies Using Taxpayer Bucks to Lobby Congress: Waste of Money?
JONATHAN HOENIG: It is terrible. Honestly, I do not care if the bailout money is going to build orphanages with silver panels on the road. The bailouts themselves are a bad idea. First it was the trip to Las Vegas. The only solution is to stop the bailouts. Let companies make their own decisions and either rise or fall on their own merits.
DAMON VICKERS: I love it. Look at the return on investment. They have gotten tens of billions of dollars from the government. They spent $10 million to get more? These are smart business people, Jonathan. You know what they're doing. If I knew every day of the week that I could spend $10 million and get $50 billion, I would do it every minute.
TRACY BYRNES: The government gave this money out and they had no control over the way it was bad. Lobbying is a cost of doing business. That is what these companies are doing.
WAYNE ROGERS: Think how much money we would save as citizens and taxpayers if there was no lobbying. You can't take money and lobbyists cannot give money. Come back to Fannie Mae, for example. They have lobbied congress for $64 million. That is taxpayer money going to pay a tax-exempt entity that is turning around to lobby the government. It is outrageous. JOHN
BRADSHAW LAYFIELD: There is no doubt about it. Damon is right about this. I will lobby as well. Do not blame the business. Blame the government. If they give the money to some of these crooked politicians and they are giving these guys favors, if they are willing to do that, it is the politicians fault.
JONAS MAX FERRIS: Lobbying is not all bad. These banks need to help the government. The government does not know how to regulate or operate banks. Lobbying does lead to regulation that makes sense to that industry. It happens to be a way to get legislation that makes sense. They need help from the banking industry. Unfortunately, that is it how it works in America.
U.K. to Raise Tax Rate to 50$ for Britons: Are Americans Next?
Wayne Rogers: I think 50% is going to be the beginning. I think you’re going to see rates higher than that when we're through. I do not see any way around that. They are going to tax the people. At some point in time, the people are going to revolt.
Damon Vickers: I will love to see people revolting, but it seems like Americans have an incredibly high threshold for pain and aggravation. I do not see it going that high. If they raise tax rates, they would absolutely implode the economy. Britain is a little bit different. The people that make money in Britain have their money offshore. We do not have that here because they do tax us on our offshore and comforted accounts.
Tracy Byrnes: You are pretty close to 50 percent now. Especially in places like New York and California. You are paying city tax and estate tax. If you keep raising those taxes, all you were doing – you are incentivizing people to figure out ways around it. They keep raising rates and it backfires. Smart, wealthy people pay people to get their tax rates down.
Jonathan Hoenig: 50 percent… It is going up from there, especially for the rich. The rich are the ones bearing the major burden of income taxes. The president believes that the rich have a moral responsibility to give back. He is going to spread the wealth. Do you remember that?