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Bulls & Bears | Cavuto on Business | Forbes on FOX | Cashin' In
Bulls & Bears
This past week's Bulls & Bears: Gary B. Smith, Exemplar Capital managing partner; Pat Dorsey, Morningstar.com director of stock research; Tobin Smith, ChangeWave Research editor; Scott Bleier, HybridInvestors.com president; Tracy Byrnes, New York Post business writer, and Adam Lashinsky, Fortune Magazine senior writer.
Trading Pit: When Will The Bulls Return?
No two ways about it, a bad week for stocks. The Dow hit hard—call 'em the black and blue chips—dropping nearly 600 points. It's the worst weekly point loss in 5 years. So when will the bulls be back on Wall Street?
Tobin Smith: The market got hit with the "perfect storm." About every six months we get this sort of pull back. But look at what happens after these pull backs—it's been a buying opportunity. Investors are going to come back. The economy is still good and that means you want to buy stocks.
Gary B. Smith: We saw incredible volume all last week—particularly Thursday and Friday. It was one of the highest ever on the stock exchange. A lot of these weak holders of stocks are being washed out. We're having a lot of turnover here and I'm not sure if it's the exact bottom, but we're pretty close. The housing stocks are selling half of book value right now. That's pretty cheap and means there are probably a lot of bargains in the market.
Adam Lashinsky: Two weeks ago when the Dow was approaching all time highs, I said to be cautious there were still a lot of risks. These risks were real two weeks ago and they're real now. The most important one is not housing! The most important risk is that private equity firms have been buying every company they can get their hands on. This is causing other stocks to go up in anticipation of also being bought.
Tracy Byrnes: Companies are still making money. American companies are multi-national now. You have to look at the whole world. We're making money overseas. Money is still coming into our country and being invested here. We need to reassure people that investors are selling at the bottom and that's the typical mistake that investors make. The market will go up, but not in a straight line. It's a zigzag. You can't hit the "Sell" button during this time.
Scott Bleier: The bull market is over for now. Let's get realistic here. We've had a huge run over the last year. We've known that the financials, which has been the leadership for this market over the last four years, was going down. Credit is getting tighter. The bull market is over.
Pat Dorsey: The reason people get freaked out when credit markets tighten up is that companies can't borrow more money and invest and hire more people. Corporate America has its best balance sheet in twenty years. That means it doesn't need to borrow money to invest and keep the economy moving forward. This means earnings are still going to grow and valuations are still reasonable. We are still going up. The bull market is not dead.
Best Solution to Fix Health Care: Tax Breaks?
Fixing health care with a tax break, not a tax hike! The White House is pushing a plan to give families who buy their own health insurance a $15-thousand tax deduction. Is this the right cure?
Gary B. Smith: It's a step in the right direction. People who have to buy their own health care insurance are at a disadvantage. People that can get it through their employers have an incentive to use it more, since the costs are low. Any kind of tax break gets the government out of the health care business. It's this continued deregulation, which will ultimately positively benefit the whole health care industry.
Tracy Byrnes: This tax break makes no sense to me! Families don't have the money to pay for health care now. How are they going to be able to afford the premium in order to get this deduction? Not to mention the folks that are covered at work are covered for more than $15,000 and are going to owe tax on the difference. So if their employer can give $20,000 in health care, they're going to owe tax for $5,000. People are not getting off for free here. I think that at the end of the day, this is actually going to hurt the little guy. The little guy doesn't have enough money to buy this to begin with, and that's why he's uninsured.
Scott Bleier: Tax breaks are great! Businesses get breaks for paying out health insurance as a benefit. Why shouldn't people who buy their own health care be able to do it? That's only part of the cure. The other part of the cure is to deregulate the insurance business completely.
Adam Lashinsky: Giving a $15,000 tax break will only do so much. The only way to help the situation is to let people get their health insurance through the government. The government is already giving health care insurance.
Tobin Smith: You can't deduct your premium. And the premium should be income. Companies pay huge premiums which is not income to the employee. If it were income, then the employee would understand that they paid for it and that it had some value.
Pat Dorsey: This may cause a loophole. It really obscures the issue that we pay far too much for far too little health care in this country. We pay more per capita than anyone else and our health system is by and large worse. It is important to have a system that encourages preventative care because that will help more in the long run.
Our guys each named the most recent stocks they have bought.
If you want to see what everyone had to say about these stocks, click here.
Gary B. Smith: Comcast (CMCSA)
Scott Bleier: Quest Diagnostics (DGX)
Tracy Byrnes: Energy Select Sector SPDR (XLE)
Tobin Smith: Trident Microsystems (TRID)
Pat Dorsey: Fuel-Tech (FTEK)
Gary B. Smith's prediction: Housing soars in second half: Buy Pulte Homes (PHM) for 25 percent gain
Scott Bleier's prediction: Oil's peaked for the year! Going down $10 by Labor Day
Tracy Byrnes' prediction: Retail is consolidating; good time to buy Best Buy (BBY)
Pat Dorsey's prediction: Lights! Camera! Action! Buy Isilon (ISLN)
Tobin Smith's prediction: Make some "dough" with "The Simpsons"; Cott (COT) up 25 percent
Bulls & Bears | Cavuto on Business | Forbes on FOX | Cashin' In
Cavuto on Business
On Saturday, July 28th, Neil Cavuto was joined by Charles Payne, "Be Smart, Act Fact, Get Rich" author; Laura Schwartz, White House Strategies; Meredith Whitney, CIBC World Markets, Leigh Gallagher, Fortune Magazine; Joe Battipaglia, Ryan Beck & Co; and John "Bradshaw" Layfield, Northeast Securities.
Bottom Line: Government's Job to Bail Out Homeowners Who Can't Make Their Mortgage Payments?
Neil Cavuto: Worries about housing and mortgage loans hitting stocks hard this week. Now, some states are using taxpayer money to bail out homeowners who bought houses they can't afford. Should the government be doing that?
Meredith Whitney: Heck no! The problem we have is that people who have no skin in the game are the first to default. The biggest risk loans belong to the people who bought their home with no money down. You have to have creative destruction to have a capitalist society. You have to let people fail.
Neil Cavuto: Leigh, what I worry about is if you bail these people out, do you start bailing out people who are behind on their credit cards and student loans? Where do you draw the line?
Leigh Gallagher: Well, you know, it's a really complicated question.
Neil Cavuto: Actually, it isn't.
Leigh Gallagher: No, it is. The issue is we're looking at a far greater cost if we don't start bailing these people out because foreclosures are going to take a great toll. You have to remember that these are people who probably had no business buying a home in the first place. The lending policies were very predatory and these people were taken advantage of.
Neil Cavuto: We live in a free country, right?
Leigh Gallagher: Of course we do.
Neil Cavuto: So you're free not to look at the fine print and you're free not to know that "adjustable" also means adjust up.
Leigh Gallagher: That is absolutely true. There is a fine line between buyer beware and seller snookering.
Charles Payne: Leigh is always compassionate. And I appreciate that. But, the fact of the matter is that people knew what they were getting. Maybe 1 percent of 1 percent was snookered. People took a shot and it didn't work out. I don't think the government should offer a bailout because these people simply cannot afford their loans. Most of the people who default, default very early. Sometimes they default before the interest rate is adjusted up. You know, people lost money in the stock market this week. Should they be bailed out, too? You can't just go to the government to get repaid.
Neil Cavuto: John, we're not being callous here. There are other ways to deal with this like go back to the private lenders and urge them to re-negotiate the terms because it would not be in their best interest to let their customers simply go belly up. It costs the lenders more to deal with the foreclosed property and resell the property. I get very nervous when the government puts itself in the business of bailing out.
John Layfield: I think you're exactly right, Neil! What banks need to do is go back and look at loans they can re-negotiate and look at loans they have to write off. You can't legislate ignorance. People make bad decisions. Homeownership has jumped, but a lot of those people should not own homes. Meredith is right; economic Darwinism has to take place. The free market will straighten it out.
Laura Schwartz: I think bailout suggests that the government is paying off your loan for you, but that's not at all what the Joint Economic Committee wants. They want to put $300 million to Housing & Urban Development (HUD)-certified groups that work with people to help them refinance, instead of foreclose. Fed Chairman Ben Bernanke as well as the Secretary of HUD have endorsed it.
Neil Cavuto: But, you're using taxpayer money to do this?
Laura Schwartz: Yes.
Neil Cavuto: But, where do you draw the line, Laura? I mean, you're a compassionate individual. Do you extend that to the person who's fallen behind on his car payments or credit card bills?
Laura Schwartz: No, this is for people who are in default or at the risk of foreclosure. It costs $78,000 to foreclose your home. The buyer, lender, city government and neighborhoods all pay for that. If the government helps, people wouldn't have to spend all that money on a foreclosure, they could pay anywhere from $1,000 to $3,300 to refinance.
Neil Cavuto: So it's cheaper in the long run to do this.
Meredith Whitney: To begin with, $300 million won't even make a dent on the housing market, so it's a silly act of Congress. But the scary part is that it sets a horrible precedent! So what? I'm going to get behind on my liposuction loan and have the government bail me out? Where does it end?
Neil Cavuto: How did you know that?
Meredith Whitney: My point is where does it end? It's a ridiculous premise and just shows that Congress doesn't know anything about the housing market.
Leigh Gallagher: One of the things to remember is that lack of regulation is really what got us into this. We could have seen more regulation from the Fed. You know, lenders were really giving mortgages away without verifying borrowers incomes. We could use more regulation.
Charles Payne: Lenders took a shot. Lenders made a business decision and they're going to pay for it. Laura, I think you want to add extra levels to government. We're trying to get away from big business, big government. Are we going to have poverty pimps out there trying to get a piece of the action? The problem is not fixable unless the government bails out all of these people.
Laura Schwartz: Unless we do something about it, we're going to see continued ripple effects like what's happening across the Pacific in Australia, where they're freezing some of their funds because of the U.S. subprime housing market. Deregulation would help.
John "Bradshaw" Layfield: People make bad decisions and you cannot bail them out. You can't go to people who've made good decisions and take money from them and give it to people who've made bad decisions. I'm for letting economic Darwinism take place and let the free market continue its reign.
Meredith Whitney: Greed is the base of this. I don't feel sorry for the teacher who's making $40,000 a year who squeezed herself into a $2 million dollar home and can't afford it.
Leigh Gallagher: But there's been greed on the parts of banks and money lenders as well.
Charles Payne: But now they're paying for it.
Head to Head: Why Are People Willing to Pay More for Coffee, But Not for Gas?
Neil Cavuto: Starting next week, Starbucks coffee is going to cost you and extra 9 cents a cup.
So why do people take this in stride, but call for investigations when gas prices rise? Joe, $5 for a cup of coffee, but congress is supposed to call for hearings for $3 GAS?
Joe Battipaglia: If I could brew my own gas for cheaper, I certainly would. It's all about substitution. If you don't like the prices at Starbucks, brew it yourself or go to some other place. There's no available substitution for gas. Consumers always rally against high prices because it's a posted price they see every day.
Charles Payne: Crude oil is 1,000,000 miles inside the earth and someone has to pay a lot of money to go get it. The availability of coffee is so incredible. Imagine if one gas station had $3/gallon gas and another had $30/gallon, and consumers still picked the $30/gallon. That's what people do. They pay more money for things they don't need, like bottled water. And they get angry at oil companies. Oil companies are being vilified.
Joe Battipaglia: Psychology is something completely different. At least with coffee, consumers feel they have a choice to pick something different.
Neil Cavuto: Laura, Democrats are heavily caffeinated. Wouldn't this get you outraged?
Laura Schwartz: No because it's an elective. It's a luxury item. When you pay 9 extra cents for a cup of coffee, that's 9 cents. But when you pay 9 extra cents for gas, that's 9 cents extra per gallon. And you have to get gas to go to work. You can brew a cup of coffee at home, but with gas, you're stuck with it.
Leigh Gallagher: People with long commutes are spending $160 bucks a week on gas. You're not going to spend that much on coffee. The other thing is, this is a great example of capitalism. This company has dressed up an item and people are thrilled.
Neil Cavuto: John, why is this allowed to happen?
John Layfield: It doesn't matter if it's 9 cents a cup or $9 dollars a cup. Starbucks is discretionary. It's a luxury. People pay more for it but it's a luxury most Americans can afford. When you go to the gas pump, it's not a luxury. It's really a necessity for the most part. It's something you have to have. People have gotten upset because oil companies are making money. Look at Starbucks and look at Pfizer, these companies are making a ton more in profit margins.
More for Your Money
Neil Cavuto: Ever wish you knew the stocks that were about to get taken over so you could buy them before the instant spike? Our guys are about to take their best guess to help you get "More for Your Money."
If you'd like to see what each had to say about the stocks, click here.
Joe Battipaglia: JoS A. Bank (JOSB)
*Joe owns shares of this stock
Charles Payne: salesforce.com (CRM)
*Charles owns shares of this stock
Meredith Whitney: Commerce Bancorp (CBH )
John Layfield: Kaydon (KDN )
Leigh Gallagher: Cameron International (CAM )
FOX on the Spot
Charles Payne: Don't be $cared; buy Amazon (AMZN )!
Joe Battipaglia: Cockroach theory true; markets get squashed
Meredith Whitney: Merger mania sizzles in September!
John Layfield: Mets and market win big in the fall!
Leigh Gallagher: Lindsay gets locked-up; career over
Neil Cavuto: Nothing to "fear" in economy but "fear" itself
Bulls & Bears | Cavuto on Business | Forbes on FOX | Cashin' In
Forbes on FOX
In Focus: Big Market Sell-Off: Huge Buying Opportunity?
Rich Karlgaard, Publisher: I think the buying opportunity has gotten better. The P/E (price to earnings ratio) of the market is only about 16 which means that the earnings yield is over 6. The yield on the 10-year treasury went down to 4.8 percent on Thursday's sell-off, which is a great piece of news for stock investors. So now the earnings yield/treasury yield difference is about a point and a half, that's a great buying opportunity.
Mike Ozanian, Senior Editor: The market is going to hit 12,000 before it maintains any upward momentum. Lending is being tightened, there is too much inflation baked into the market and the growth rate of corporate profits is slowing. The last time we had a credit crunch in 1989 the market recovered pretty quickly but the Fed was cutting rates then, it's not going to do that now.
Steve Forbes, Editor-in-Chief: This is the time to buy. With investing if you feel bad, do it. If you feel good, be cautious. Right now people are feeling bad and climbing walls of worry. Remember risk is a four-letter word, so is gain. The fundamentals are still good even though the Fed is messing up. I think the economy will get us through this hiccup.
Victoria Barret, Associate Editor: I think people should put their hands in their pockets for a while and stay put. The market is was worried about the crisis in subprime mortgages and this week we saw the market's worry that this could affect the overall lending market. This is an emotional reaction so far, we don't really know if there is going to be spill over. So I would stay put.
Dennis Kneale, Managing Editor: I think you do buy here. I think the market got a little dizzy being up so high. It needed a little break and/or correction but it's going to climb right back up. The fundamentals of earnings are good and interest rates are low. If anything the market is far cheaper now. Remember if you haven't sold, you haven't lost.
Elizabeth MacDonald, Senior Editor: The talk that the market is heading to a major breakdown is totally off. There is a flight to safety so that's great for the stock markets. Treasuries are at 4.8 percent. Worldwide GDP growth is in positive territory everywhere. That's terrific for the stock market here.
Flipside: Minimum Wage Hike Will "Hurt" American Workers!
Mike Ozanian: People who own businesses will want to pass the cost of higher minimum wages along in higher prices for consumers or they will hire less people. The last two times that we raised the federal minimum wage in this country the poverty level increased. Why? Because business owners hire less entry-level people. It's bad for low-income people and bad for the economy.
Quentin Hardy, Silicon Valley Bureau Chief: If you take out the minimum wage it's just going to give more benefits for big business.
Steve Forbes: This 70 cent increase to $5.85 an hour isn't going to do too much harm, but when it goes to $7.25 in a year and a half that's when it's going to start to bite. The government can't mandate prosperity. They can create conditions where entrepreneurs can create prosperity. It's not big business that pays minimum wage, it's small struggling businesses in the poorer parts of the country. When you raise that to above $7 it's going to start to hurt. Remember, only about 200,000 people working full-time make minimum wage and they don't stay in those positions for very long. They try and move up.
Dennis Kneale: Some "bad" companies don't pay enough for their people to earn a living. And maybe at some level, at a bare minimum, the federal government should step in.
Lea Goldman, Associate Editor: When this minimum wage goes up to $7.25 it's simple math. You're looking at a 40 percent increase in under 2 years. That's going to hit business where it hurts. They're going to let go the least skilled, most disadvantaged workers, just the people that the minimum wage was intended to help. If the government really wants to help the poor they could roll back their payroll taxes or give them transportation incentives. Minimum wage is not the way to do it.
Michele Steele, Forbes.com Reporter: Why shouldn't there be an incentive for people to work? One of the ways to offer incentives for people to work is to increase the minimum wage.
Wanna Bet Legalizing Sports Gambling Would Help Economy?
Elizabeth MacDonald: I don't think referees should be allowed to bet on sports. But in general, yes! Legalize it! Run it through the state lottery system and then tax it. There is $380 billion a year in illegal sports gambling and taxing it would go a long way in funding education initiatives and any state revenue shortfalls. I think it's a great idea that could offset some of the hideous state taxes that we suffer through.
Steve Forbes: Politicians are always looking for golden ways to pick our pockets, and gambling would hit lower-income people disproportionately just as lotteries do, and states are not starved for money. They are obese in terms of spending—we ought to put them on a diet instead of feeding them even more.
Mike Ozanian: If you find it morally wrong, don't do it! They have had legalized sports gambling in Europe for years and they don't have more problems there. I know some very nice people who go to the racetrack here and they don't seem to be "morally bad." It reminds me of Prohibition—it didn't stop people from drinking, it became illegal and the mob ran it. Make it legal and get the mob out of it.
Quentin Hardy: With legalized gambling, we are losing all standards. Must everything be part of the money economy? Couldn't there be some sportsmanship for its own sake in this world?
Lea Goldman: I'm not for legalized sports betting, but not for moral reasons or financial reasons. I think once you lower the bar to entry, and everyone comes in with legitimate bets, suddenly you have cast a pall over every controversial play, over every bad referee call. Someone claims it's rigged, or someone claims it's fixed—and suddenly, it's not about sports anymore. It's about grubby betters, and their needs come first. This is a national pastime, let it be fun!
Informer: Jackpot Stocks!
If you want to hear what each Forbes panelist had to say about their stock pick, click here.
Michele Steele: Macy's (M)
Rich Karlgaard: Palm (PALM)
Victoria Barret: Omniture (OMTR)
Elizabeth MacDonald: DryShips (DRYS)
Bulls & Bears | Cavuto on Business | Forbes on FOX | Cashin' In
Our Cashin' In crew this week: Wayne Rogers, Wayne Rogers & Co; Jonathan Hoenig, CapitalistPig Asset Management; Jonas Max Ferris, MaxFunds.com; Stuart Varney, FOX Business News; and Alexis Glick, director of business news for FOX News Channel.
Stock Smarts: What Happens To Our Economy If Stocks "And" Housing Tank?
Alexis: I look at this with the "glass is half full" perspective. Yes, I do think we have a situation in which we have to deal with the credit markets. The more tightening of credit that we see will definitely impact corporations and the consumer. In terms of the corporations, the biggest risk is that the companies will not be able to spend and innovate. They will not be able to go out and do the kinds of deals they want. The biggest risk in that environment is jobs. In regards to the housing market, it has been weak for several years. Housing stocks hit a high two years ago. We're continuing to see quarterly losses, but I don't think the damage is as bad as everyone says it is.
Wayne: I disagree with Alexis in the sense that the housing market is not seeing its worst by a long shot. The housing market still has a long way to go down. There are three stages: absorption, price adjustment and foreclosure. We've already gone through the absorption stage. We are now in the price adjustment stage and the foreclosure stage is where we are heading. Banks do not want to foreclose. The banking stocks are heading south. It won't just happen in the credit markets for stocks, but for more hedge funds and people who are heavy borrowers.
Jonathan: This isn't just a problem with the sub-prime mortgages. Countrywide Financial (CFC) was down because of loans to prime borrowers. I see some elements of contagion here because those financials, which have always led on the way up, they are the weakest thing on my screen. For example, small savings and loans, regional banks, and even some of the bigger banks like Bank of America (BAC). People have gotten so comfortable owning financials, but right now they are death to own.
Stuart: We have not seen the worst yet in the housing market. We've still have yet to see these housing prices come down as much as I think they are going to come down. I think it's likely we will see a 10 percent decline across the board and 15 percent in the hottest markets.
Jonas: The stock market has been pretty strong. Housing is where the real trouble is. This is a recent phenomenon with stocks. If both stocks and housing fall at the same time, it's a huge problem for the economy. In the 2001-2002 crash, we saw massive hits to the stock market, but housing prices went up dollar for dollar. Household net worth really didn't change through the entire thing. It kept confidence up and kept the economy strong.
Alexis: We might have another correction, say 5-10 percent, but let's put this in context. We were at historically high levels. Housing had the greatest boom that we've ever seen in this economy. So, there's this great doom and gloom scenario out there. We did all get a little too aggressive in our borrowing, and maybe even levered ourselves too highly, but you have to put it in context compared to the past 4-5 years. If there's one thing I'm thinking about, it's oil prices. Gasoline prices, are they going to continue to rise and affect the consumer? Those two together will be a lethal problem.
Stuart: A homeowner who's facing a 20 percent drop in the price of their home which they are about to sell does not put it into context. He or she takes a hit and it's reflected in their economic outlook and activity.
Wayne: One of the things I've talked about in the past that no one has mentioned is the rise in interest rates, not only with insurance, but also with taxes. In Florida, for example, where taxes have gone up, you cannot get insurance in certain places on the coast. In those places that have been overbuilt, there's a massive supply of homes and people just can't sell them. There's going to be major bankruptcies down there and you are kidding yourself if you think this is going to be a soft landing.
Jonathan: Haven't rates been going down? There's a flight to quality in treasuries right now. People want out of stocks. Eventually when the stock market does turn around, is it going to be those multi-nationals in the global economy. Why do you think 3M (MMM), Boeing (BA), and McDonald's (MCD) have been doing so well? I'm going to be looking at those kinds of stocks. Hopefully they will be making the turnaround when the market in general turns around.
Jonas: The foreign stocks who are the trouble. We saw those markets get hit harder than our market. The US stock market is the strongest stock market right now, even though it doesn't look like it.
Jonathan: China is at an all time high right now.
Alexis: Let's not forget that we did see a signal when Bernanke spoke last week. He is suggesting that the banks will have to figure out a way to solve this problem. They do have to go back to their lenders. They have a fiduciary responsibility. There were all these adjustable rate mortgages out there.
Jonathan: That's where the trouble begins. As soon as the regulators get involved with the banks, then it really hits the fan.
Raising Social Security Taxes: Would It Crush Small Business Owners?
Right now the cap on income eligible to be taxed for social security is almost $98,000. Some lawmakers want to raise that cap or even eliminate it altogether. What would that do to the small business owner?
Jonathan: It would kill small business owners. It would also kill the economic growth that this country has enjoyed for the growth of small businesses. The lawmakers are going to find some way to pay for it. If it's not small businesses, it's going to be big businesses, rich people, young people, or old people. The problem with Social Security is Social Security! And I think it should be retired!
Alexis: I completely agree with you! I really think it will have a crippling effect on small businesses. If you look at small businesses, they account for 70 percent of job growth in this country over the past five years. There are almost 26 million businesses in this country that really qualify as small businesses. If you do this to them, you're crippling their ability to hire and constantly innovate and create.
Stuart: I'll make a prediction: the Democrats raise the taxable amount to $130,000. That will mean that as of next year a small business owner will pay an extra $3,400 a year in Social Security tax at 12.4 percent. In what way can this possibly be good for small businesses?
Jonas: Let's assume that in order to fix Social Security, you have to cut benefits and raise taxes and that's the only way to do it. You can raise the 12.4 percent rate or you can raise the cap. In my last small business of 30 employees, no one made over $130,000. In fact, 98 percent of small businesses employees don't make enough money to pay if they raise the cap. So as a small business owner, would I rather see the rate raised or the cap raised? I'd rather see the cap raised, because that will hit big businesses, hedge funds, banks, and people that make a lot of money.
Wayne: I disagree with all of you. You're addressing the tax part, but not addressing the spending part, which is why it's going out the window. It's because of the profligacy of Congress, who has robbed the Social Security fund for years. Everybody in Congress should pay that tax, they should be volunteers, and they shouldn't get a salary. That will stop this from happening.
Alexis: Do we actually believe that even raising this is really going to help Social Security? The problem is just so big. Is this one thing going to help it?
Stuart: It's not about fixing the Social Security system. The Democrats want to tax you because you are successful and rich and wealthy. They're going to tax your income. They're going to tax your capital gains and payrolls. It's going to happen.
Jonas: Alexis is right. We're going to have to cut benefits as much as raise taxes. This is the best way of the worst ways to do it.
Stuart: Democrats are in a punitive stage. They want to punish success.
Alexis: This is a demographic problem and that's the problem. There aren't going to be enough people working to pay for those that are retired. This isn't going to solve that. There are two ways to look at this. We have to look at the benefits situation and you have to ask what the healthy solution is if it's not going away. I just don't think this is the solution. Maybe we just need to start fresh.
Is Wal-Mart Helping "The Poor" More than any Politician?
Wal-Mart announcing a mega-sale during which it will cut prices on 16,000 items for the back to school shopping season. Is Wal-Mart is doing more than any politician to help the poor?
Stuart: I am the only person at this table who, in fact, shops at Wal-Mart because I have six children and they're going back to school. Wal-Mart is doing more to alleviate poverty because they are enhancing the buying power of the low-end American consumer.
Alexis: My children think that going to Wal-Mart is like going to Disney World. Kids love it! I agree that they are doing wonderful things. I think this whole strategy that they are doing to offset gasoline prices speaks to all of us.
Wayne: Wal-Mart is not doing this for the benefit of the public. Wal-Mart is trying to make money. This is a glorified garage sale.
Jonathan: Wal-Mart's always been in it for the buck and that's what has made it so successful. At a time when prices for everything from pizza to gasoline are rising, the company is cutting prices. They are saving people money. Before this, Wal-Mart saved the average family $2,000 dollars a year.
Jonas: Wal-Mart is a great business. It helps people to lower prices and it helps the poor, but we can't compare this to what politicians have done for the poor. When you look at Edwards' plan to fight poverty by giving vouchers for health care, it's good for the economy and hurting the wealthy. However, it you are redistributing money from the wealthy to the poor, that benefits the poor more than a sale at Wal-Mart. .
Stuart: I'm sorry that I am disagreeing with the very aristocratic Wayne Rogers, but us plebeians who actually shop at Wal-Mart like these low prices. I don't know how you can say it doesn't benefit the average American in back to school shopping.
Best Bets: Favorite Mutual Funds
To watch this segment in its entirety, please click here.
Jonas: Buffalo Science & Technology (BUFTX) (Minimum Investment: $2,500)
Jonas: PRIMECAP Odyssey Growth (POGRX) (Minimum Investment: $2,000)
Jonas: UltraShort Real Estate ProShares (SRS) (Friday's Close: $110.25)