Recap of Saturday, May 29


Bulls & Bears

This week Brenda Buttner was joined by Gary B. Smith, Tobin Smith, Eric Bolling, Pat Dorsey and Tara Dowdell.

Democrats Pass $116 Billion in 'Stimulus'; More Spending Bills on Docket

Eric Bolling, Fox Business Network: They keep coming up with spending bill after spending bill. This bill is 28 pages. H.R. 4213 has things like $175 million for Indian reservations, $185 million for domestic film production, are you kidding me? How about Puerto Rico getting $185 million for its rum? How about the wool trust, the cotton trust, teachers get their benefits. Everyone gets their beak wet. The problem is, it's not creating any jobs, and it's just creating a lot of spending which will just turn into a lot of taxes.

Tara Dowdell, Democratic strategist: There are elements and measures of this bill that aren't going to directly create jobs, but there are some elements that absolutely will do so and have a track record of doing so. The Build America Bonds program was highly successful under the stimulus. The money is leveraged and it provides lower-cost financing to states. So the projects that it actually goes to fund are much larger and the economic impact is far greater. There's a project going on in San Francisco that was done through this program. Hundreds of construction workers hired, underwriting firms received $1 billion in fees. And this is going on around that country. Critical infrastructure projects that move people and goods through this economy have to happen. There is an economic and a public benefit associated with this program.

Tobin Smith, NBT Media: As this thing gained momentum this week the market got weak. Let's just look at the facts. Medicare: the same group that passed ObamaCare and said they wouldn't raise reimbursements to just put in $24 billion. Does that create one job? No. They did take Medicaid out but then they put unemployment back in. We know from Larry Summers that when you extend all these benefits, it keeps people from going out and looking for jobs. You might have a new bridge, but this money is an absolute waste just the way the other ones were.

Gary B. Smith, It's going to create jobs but what the Democrats always ignore is that these bills don't create any net jobs. All the government is doing is robbing Peter to pay Paul. Eric and Toby mention this insane spending in here but they forget the tax side. There are increased taxes on hedge fund managers, venture capitalists, multi-national firms, oil companies. But there's $1 billion spent on summer employment programs, all of which could have been avoided if we hadn't hiked up the minimum wage. We'll spend $100 billion and in the end employment will still be 10 percent.

Pat Dorsey, The only thing that creates jobs is time. Businesses gain more confidence, they have higher aggregate demand, they hire more people, and that's just a function of time. Nothing is going to bring back the jobs that we've structurally lost in construction, structured credit, mortgage brokering, because they're just gone for quite a long time, until the housing cycle repeats again in 20 years. I do reject that the slide in the market is tied to this bill going through Congress. That is utterly false. It's tied to what is going on in Europe. The spending to be worried about is the 75 percent of the budget that's going towards entitlements of which the current package under discussion is just at tiny drop in the bucket.

New Fears Offshore Drilling Crackdown Will Bring $5 Gas

Eric Bolling: At least $5 per gallon gas is already on its way! The moratorium in response to the oil spill on 33 oil rigs which equals about a million barrels of U.S. oil per day coming off the market. We were at $4.25 two summers ago without any oil disruptions.

Tara Dowdell: The announcement of offshore drilling expansion and freezing had the inverse reaction to oil prices. So no, I don't think this new freeze will cause a spike in gas prices.

Tobin Smith: All these new fees and taxes that are going to be imposed on oil companies are eventually going to be passed on to the American consumer which could have us all paying more at the pump.

Gary B. Smith: When we started to get up to above $4 we saw a dramatic drop in demand. In other words people just stopped driving. So, as prices go up, consumer demand shuts down and prices retreat

Pat Dorsey: Oil is a globally traded commodity. The oil we produce off the shores of the U.S. is not very large in the context of global supply. Frankly, this ban doesn't matter one way or another.

Rallies Break Out Today in Arizona Calling for Boycott and 'Buycott'

Tobin Smith: It's a recession! This is not the time or a place for Americans to be boycotting our own good and services while we're struggling to pull ourselves out of a recession. This will absolutely hurt the economy.

Tara Dowdell: People have a right to boycott and that's what makes America great. Unfortunately, Arizona didn't look at the unintended consequences of this law. And these unintended consequences are not good for Arizona's economy or the America's economy.

Eric Bolling: This will actually help Arizona's economy! For every boycotter there's a "buycotter". People will flock to Arizona businesses and buy their products. Let Arizona handle their problems, don't boycott them "buycott" them.

Pat Dorsey: This won't hurt the economy at all. Whatever people don't spend in Arizona they'll spend it somewhere else. It's not like Arizona has the worlds only supply of some mineral that we all need.

Gary B. Smith: These boycott's won't have any effect on the economy whatsoever. Boycotts generally don't work because people lack knowledge of what exactly to boycott. In fact, if asked to "boycott Arizona" most people wouldn't know where to start other than not visiting there.


Tobin Smith's Prediction: America loves a good scandal! "ADM" pops 25 percent by Labor Day

Gary B's Prediction: Big hurricane season = repair bills! "TTC" storms up 30 percent in 1 year

Pat Dorsey's Prediction: Bad May for stocks = bargains! "ITW" works up 20 percent in 1 year

Eric Bolling's Prediction: Hey bus drivers, take a chill pill! "RHHBY" drives up 30 percent in 1 year

Cavuto on Business

This week Neil Cavuto was joined by Ben Stein, Charles Payne, Dagen McDowell and Adam Lashinksky.

Government Benefits Surge to Record High As Private Income Hits Its Low; Is This Trend Worrisome?

Charles Payne: Let's not forget some of the other wealth redistribution tactics like Cash for Clunkers, Cash for Appliances, Cash for Overpriced Homes. They're going to cap corporate profits and have a VAT but at the end, people who don't pay taxes will get a rebate. This is classic wealth redistribution. It's not working, it's backfiring.

Dagen McDowell: Less income coming from private employers, more coming from the government is to be understood during a recession because private businesses cut workers and cut pay and the government will pick up the slack. What's dangerous is that this is becoming a permanent shift. You see it in that spending bill where unemployment benefits keep getting extended and entitlements are being created by the federal government. Where is the tax revenue going to come from?

Adam Lashinsky: There is no evidence that proves that this is a permanent shift. I don't know when those measurements started but I doubt that number of income from the government is higher than it was in the 1830s. Like Dagen said, this is what you would expect to happen in a recession. We don't think of the government as part of the economy. The government provides certain functions, it's going to keep providing those functions, and when the economy recovers, that number will go down and everybody will be happy.

Ben Stein: First of all, the great majority of that money is paid out in Social Security payments, and that's not going to stop and that's not a bad thing. Secondly, the redistribution that's been going on is making the rich richer in the last 10 years. The real redistribution has been from the middle class to the rich, so it's not really a big problem. I'm not worried about it at all.

Does Oil Spill Prove We Need Clean Energy?

Ben Stein: The fact is, alternative energy—green, solar, wind are great ideas. I talked about it in a message I wrote for Mr. Nixon and sent up to Congress in 1973. It was a great idea then, but it's just not as efficient as burning coal, burning oil, burning natural gas. It just doesn't work very well. The giant wind mills out near our house in the desert are pathetic. We rarely see them turning. If you want to efficient energy use natural gas or oil. It's unfortunate. Alternative energy at this point is just a fantasy.

Charles Payne: The ancient civilizations used solar and wind for what they could—it's not like man just discovered this. The reality is, if it worked, we would have adopted it centuries ago. To the hypocrites who say, aren't you ashamed for saying "drill baby, drill!" I say, of course not! If you get in a car, you better say "drill baby, drill" unless you want to pay $6 a gallon. It doesn't work yet, we're nowhere near that level, and if we keep being stupid this, China and India and the rest of the world will get control.

Dagen McDowell: If it made economic sense, we'd be doing it. Period. Look at the land mass required to produce energy from solar and wind. One old, half-bagged natural gas well produces 20 times what the watts per square meter of a wind turbine produces.

Adam Lashinsky: We need fossil fuels. It accounts for most of the energy that we consume. We can't do without it. But we should pause to make sure that it's safe and doing so isn't anything but prudent. And by the way, the President has been out on a limb for the last six months, supporting a lot of this drilling. But the fact is, we do need to look at alternative sources of energy because they pollute less and we all agree that polluting more is a bad thing. It's highly problematic but I don't think it's hypocritical to say we want to encourage people to pollute less.

Is New $108 Million Tax on All Cars the Best Way to Ensure American Drivers Are Safe?

Dagen McDowell: They want to study what happened at Toyota and prevent what happened in the future. But you know what prevents it in the future—public embarrassment of Toyota. Not attacks on automobiles. If you were regulating with the power that the government has today and doing your job to being on top of Toyota, you wouldn't need a new tax. But again, you take money from the hands of the American people, you put it in the hands of bureaucrats, and where does it go? It goes poof.

Charles Payne: We also have this oil spill trust fund that they're going to charge oil companies $0.32 per barrel for, just in case there's another spill. Of course that will be passed on to consumers. Anything you can think of, we'll raise $100 million to study it. It's crazy. When you say you're not going to raise taxes on a certain percentage of the population, of course you are. When it's all said and done, we're all going to be paying through our nose for a Coke, gasoline, and a Toyota.

Ben Stein: We already have a lot of government agencies to study the safety of cars, and they have class-action lawyers who sue about the safety of cars. It's a Pavlovian response to put a tax on anything that goes wrong. It just doesn't make sense. There are some good sound reasons to spend more money, but just to do it the way a dog salivates when there's a bone near it is just crazy. That really is just leaning us to ruin.

Adam Lashinksy: I'm still not worried. This is such a small amount of money that it's not worth Ben's expensive time. For better or worse, $108 million is nothing. We have a precedent in this country of taking people for the things they use. We built out highway system on a gas tax and it still makes sure we have beautiful roads in this country. This seems screwy to me, but if it's going to help make us a little bit safer, I'm for it. And that's what the money is for.

Best Funds to Buy Right Now

Charles Payne's Stock: iShares Brazil (EWZ)

Adam Lashinsky's Stock: S&P 500 Short-Term Futures (VXX)

Ben Stein's Stock: iShares Japan (EWJ)

Forbes on Fox

On Saturday, May 29, 2010, David Asman was joined by Rich Karlgaard, Bill Baldwin, Mike Ozanian, Quentin Hardy, Victoria Barret, Elizabeth MacDonald, and Mark Tatge.

Flipside: Blame President Ronald Reagan for the BP Oil Spill!

DAVID ASMAN: Well don't blame the BP gusher on government officials gaping at porn instead of oil rigs… or on President Obama. Blame it on the Gipper. That's right, Ronald Reagan. Get ready for a fiery debate on this one. Hi everybody, I'm David Asman. Welcome to Forbes on Fox. Let's get this Flipside from Rich Karlgaard, Victoria Barret, Bill Baldwin, Mike Ozanian, Quentin Hardy, and Mark Tatge. So Quentin, how is Ronald Reagan at fault?

QUENTIN HARDY: This is good rhetoric gone bad. Reagan's anti-government, government-is-always-wrong thing ignores the reality that Reagan grew government and left a $2 trillion deficit we had to take care of. But his inheritors take his message and say, government is always stupid and bad, and that's created a terrible culture of cynicism. Chris Cox of the SEC ignores what's going on on Wall Street. FEMA with "Brownie." Now we see the MMS being so tight with the oil companies. People are drawn to government even as they are cynical about government, and we should insist on better. Government can do better and has done better. I think Reagan might have had a good message, but it's been abused and it's come to a bad end.

RICH KARLGAARD: Quentin, we might as well indict all the pro-enterprise presidents, like Calvin Coolidge, James Madison. Look, if there's a political problem here, it's the vetted culture in Louisiana. Granted the MMS is a federal bureau, but Louisiana is a cesspool of corruption and it seeps in. In the past few years, you've had a governor, Edwin Edwards, who's gone to prison. You've had the worst mayor in the United States, Ray Nagin. You've had a congressman from Louisiana who was caught with $100,000 in the freezer. By the way, they were all Democrats.

BILL BALDWIN: I wonder if by Reagan we really mean deregulation. I'm actually on Quentin's side on this one. I think that we can look to laissez-faire business solutions for small crises and problems, but we have to have a strong government for big problems: war, terrorism, and the second [sic] biggest oil spill of all time.

MIKE OZANIAN: Reagan's point was, don't rely on government to solve your problems. If you look at the energy industry, or the car industry, or financial services, they are the most heavily government-regulated industries. And not by coincidence, they are also the industries with the most problems.

MARK TATGE: I think we've gotten government out of the backyard of business over the last 25 years. We may have a lot of regulations on the books, but we don't have a lot of regulations that are being enforced. So we have problems with car accelerators and with tainted drugs being sold to children, and we have problems with BP and oil spills. The regulations are not being enforced. This is the legacy of Reagan, Bush 1, Bush 2, and even Clinton. Clinton was really more of a Republican than a Democrat in many ways. He was for deregulation, too. Now we have all of these problems and we're saying, do we need to re-regulate?

VICTORIA BARRET: The timing that Quentin points out is interesting. If you look at union membership in the government, it really starts to climb in the late 1970s and throughout the 80s and 90s. And it goes from 25 percent of government workers to about 40 percent. I think that's a big factor and a problem in our government right now because it not only affects wages—we have inflated salaries in the government sector—but the whole culture. It's a way of doing things: showing up to work late, not taking pride in your job. I think that's part of the problem here. I give Obama some credit because he's trying to redo the government hiring process, which we should be doing. We should be looking for smart people to fill these positions.

In Focus: New Jersey's Message to D.C.: Fix America's Debt With Spending Freezes, Not Tax Hikes; Is It the Right Message?

DAVID ASMAN: "Deep-sixing" tax hikes by putting a deep freeze on government budgets. New Jersey Governor Chris Christie announcing this week that's exactly how he got his state's budget in line. Meanwhile, America's debt is topping $13 trillion this week. Rich, is it time to put D.C. on ice?

RICH KARLGAARD: I think Governor Christie is just brilliant. The great thing about a freeze is it let's everyone know what the rules are and it's not disruptive. Everyone can plan for a freeze. Right now, the economy is fragile and people are nervous. Some people want to slash budgets; some people want to grow government budgets. A freeze is exactly the right solution; it let's everyone know what's coming up.

MARK TATGE: Comparing New Jersey to the federal government is like comparing Rhode Island to Texas. It's just not the same thing. This is a time not to be cutting spending and not to be raising taxes because we are coming out of a horrible recession that we inherited from the previous administration. We inherited the economic problems we have and we inherited a trillion-dollar-plus war. Americans tend to have a short memory about what was created in the previous administration.

VICTORIA BARRET: We can't keep spending to infinitum. These are taxpayer dollars. Someone goes to work and a portion of their paycheck is taken from them and the government spends it. This money doesn't grow on trees.

BILL BALDWIN: Would it be okay for me to be in favor of both budget cuts and tax hikes? Is Steve Forbes within earshot? I want to see a $1 per gallon tax on gas. Freezes are for wimps. I'm talking about slashing. I want to eliminate electric car subsidies, handouts to farmers, and the entire Department of Education.

MIKE OZANIAN: I'm a wimp, I'm for a freeze. I think Rich is spot-on. Two-thirds of the budget is mandatory spending and you can't change it. A third is discretionary and you can. Let's start with that and freeze it. That will at least help slow the rate of government growth, which is what we need.

ELIZABETH MacDONALD: I say, take that BP "top kill" approach to Congress and put it right on the congressional budget gusher and stop it. I say don't just freeze it—cut it as well. We can't plug a hole in the DC spending and we can't plug a hole in the gusher coming out of the Gulf of Mexico, but we can put a man on the moon. The American people are saying, what is going on here? And now we're talking about a VAT? The VAT didn't fix Europe, and we're talking about one to pay for more government workers and spending. It's really out of control.

Will Unions' Plan to Spend $100 Million to Help Reelect Incumbents Hurt the Job Market in America?

DAVID ASMAN: Tea Partiers and the U.S. Chamber of Commerce out this week warning about a union plan to save lawmakers' jobs. Big labor groups gearing up to spend more than $100 million to keep incumbents from getting voted out. But Mike, you say that saving lawmakers' jobs will hurt American jobs?

MIKE OZANIAN: This will help union jobs and union members, particularly those who work for the government, who get paid 30 percent more than non-union members. That's bad for the economy because it's bad for output and productivity.

QUENTIN HARDY: This is just democracy in action. There are a few million people on the Tea Party movement and vastly more in unions. They want to back their candidates. You say incumbents; they tend to be Democrats who favor union jobs. This is people protecting their own, which is what happens in Congress maybe too much. People love the pork their guy brings home. They hate the pork the other guy brings home. The Tea Party people are no different. They like their guy.

VICTORIA BARRET: I think there is a macro issue here, and that is, we need flexible thinkers in government jobs. We're seeing evidence of that everywhere and the union approach to jobs is the opposite of that. So if the question is, is this good for American jobs, then no—it isn't good to have incumbents in office who favor union priorities. We'll still have this very rigid approach to jobs, which we don't need.

MARK TATGE: What's the matter with the working man in this country? Didn't they build America? For the last 10 or 20 years we've been favoring business in the special interest lobby, and all of the sudden we have unions who are trying to keep the incumbents. I don't think there's anything wrong with that. That's what's called democracy. There's a thing called the Constitution and they are representing it and expressing their rights, and I think that's a good thing because businesses have sat on the working man. They haven't given them raises in the last 10 or 15 years. Why do you think the economy is doing what it's doing?

RICH KARLGAARD: Unions have the right to exercise their political muscle, but the funny thing is, Democrats now want to limit the employers' right to exercise their political muscle. Where's the fairness in that?

Informer: Upswing Stocks!

DAVID ASMAN: Stocks lost money on a big downswing in May. Which stocks will make money on an upswing in June?

MIKE OZANIAN: British Petroleum (BP)


BILL BALDWIN: Briggs & Stratton (BGG)

Cashin' In

Forget Raising the Retirement Age to Save Money; Should We Get Rid of Social Security All Together?

Jonathan Hoenig, : Social Security by definition is a Ponzi scheme. It is Bernie Madoff on the largest scale. They lock you up for things like this. There is no savings, there is no investments, no ownership, no account with your name on it. There's just looting you today with the promise that they'll loot future generations on your behalf. We should find a way to transition out of it back towards, not collectivism, but a society and situation based on individual rights and personal responsibility.

Wayne Rogers, Wayne Rogers & Co: Jonathan is smokin' something. That's about political reality as flying off to Mars. Jonathan, there's no chance that's going to happen, you know its not going to happen. People who have paid into this system are not going to give the money up. That's just a crazy idea. The best solution for this is the one that they're proposing namely to stretch this out. Longevity has increased in the U.S. enormously, the time since retirement has doubled since 1965, people can afford to live longer, they can afford therefore to push this retirement age out 2 or 3 years at least, maybe longer. Maybe it should even be indexed to longevity so everyone can take it longer so you can't argue with that.

Tracy Byrnes, Fox Business Network: Anyone in our generation Cheryl is not even planning on receiving a social security check. If I get it, its going to be my candy money when I'm 70 and I have no teeth. I'm on the same drug Jonathan is on because I think the whole thing should go. Transition people out. Cut off the date, 45 and younger no social security checks to start planning. And you know what, if I put money away and a little money gets taken out of my paycheck every month, I want to know that I have that money. To Jonathan's point, I don't want it to be part of a Ponzi scheme, I don't want it given out to use to put new toilets in Congress.

Mark Levine, When Democrats were involved, social security had no problems at all. Does anyone remember Al Gore's lockbox?! Saturday Night Live made fun of it, the Republicans made fun of it, but the idea was pretty simple: take all the money people pay in social security taxes and save it for social security! It's a crazy idea! and of course George Bush broke into the lockbox and spent it all on his buddies, oil and pharmaceuticals, and two wars and tax cuts for the rich…if you would just give the money back, Republicans, we'd have plenty of money!! Give us the money back!

John Layfield, CEO/Owner: I'm down here in Florida now where George Bush probably had something to do with the oil spill as Mark has suggested. President Eisenhower and his Congress were the first ones to get rid of this lockbox idea because they thought this money would never be used because there was so much of it. Now it has become a Ponzi scheme. This has eradicated poverty among elderly people but this is a good thing, Tracy and Jonathan are right, there is no way this thing is going to be paid for. We're going to default this.

Jonas Max Ferris, It's not really a Ponzi scheme, it's a chain letter. It does require more people to be in with to transfer money to other people. The problem is completely manageable with raising taxes by pushing the age off. I don't see why this is such a big deal…you keep moving the age up until its funded by itself so you don't have to raise the payroll tax. It is going to force people to save.

Would It Be Cheaper to Let Arizona Enforce Their Illegal Immigration Law?

Tracy Byrnes: The President is asking fro a half billion dollars and 1200 troops to go down there and secure our borders. Why? Let Arizona do what they have to do and they're doing it for free. The illegals are leaving on their own because the threat of these new laws. Lead them. Let them be. Don't spend any more money. Allow the states to control.

Mark Levine: You're going to make me pull out me secret weapon, the Constitution of the United States! The Constitution says that Arizona can't go at it alone. If you don't like it, argue with the Federalists, argue with the Founders. But ever since 1787, the Constitution says there is one federal immigration law, if you don't like it, then tell Republicans to stop filibustering and comprehensive immigration reform.

John Layfield: The U.S. taxpayers is burdened to the hills but you have to understand that Arizona is completely broke right now. They are one of the sand states who had massive problems in real estate. They don't have the tax revenue to support this. And while Mark has this Fire Bad Water Good that all Democrats are good and Republicans are bad, that simplistic view doesn't work when you have a crisis like this. I agree that federals should take on border security. I'm for soldiers for Fort Hood or Fort Bragg going to Tombstone, Arizona on their time off from war overseas patrolling the borders themselves but I think it's a federal problem. It's a national security issue.

Wayne Rogers: The Constitution is not being enforced. The word illegal before the word alien, you're not enforcing the law. To enforce the law that the federal law has is much worse with the Arizona law when you talk about racial profiling. They stop anybody under any circumstances and ask for their papers. In Arizona, you can't do that! You have to ask the guy only if he's doing something else wrong before you can ask him that! So you're all wrong about this thing with the Constitution…you have to enforce the law!

Jonas Max Ferris: Forget the Constitution, neither can afford to pay for this. And why does solving this immigration problem have to cost taxpayers money? If you come here to work, why don't you just find employers who hire illegal workers to make this profitable to the treasury. Why do you solve it by spending more government money?

Jonathan Hoenig: The fence is a waste of money. Protecting the border, I know of no Islamic terrorist who has come through Mexico. Our enemies come through Tehran…they're not picking lettuce in Yuma, Arizona. And by spending all this money and preventing people from coming in here, we're preventing productivity. Many times immigrants come to work, to be part of this country, to add to it. The $500 million is nothing compared to the productivity that they bring to this country. So the more money we spend in keeping them out, the more money Arizona is bleeding from their own foot.

Minnesota Taxpayers to Pay for Marriage Counseling for Couples Considering Divorce: Should All States Do This?

John Layfield: This is insane now marriages are too big to fail. If you do this for economic reasons it makes no sense. Married guys are cheap. Single guys spend money on dates. What's good for the economy is for people to get divorced!

Tracy Byrnes: We're talking about a $5 dollar that's accessed on a marriage license. I can think of way worse things to spend $5 bucks on. It's very expensive to be divorced. Women in particular. Once they're divorced many of them end up on welfare. It's much harder financially to be apart than it is to be together.

Mark Levine: I don't believe the state should have any role in it. It's a private thing. Let everyone get married and if they need counseling let them pay for it.

Jonas Max Ferris: Divorce is good for the economy. Taxes—government gets more revenue. When you split—two houses instead of one. That's good for the bad housing market right now.

Wayne Rogers: Mark and Jonathan are right. This is not an economic issue for the public of the taxpayers and the government to get involved with. It's a moral issue between the people who entered into the contract of marriage and their the people who should decide that. By the way, the next move if you're going to pay for divorce counseling, why don't you ask me to pay for the wedding? We'll just tax everything and the taxpayers can pay for the wedding!

What Do I Need To Know For Next Week

Wayne Rogers: Competition makes the free market work. We don't have that — even in Big oil. They, just like the banks, are too big to fail. Like BP down there in the gulf. Things like these oil disasters are going to continue as long as this continues.

Tracy Byrnes: Housing sales up 14.8 percent in April. Don't believe the numbers. It was all because of the government and the home tax credit. Sales are going to come back down. Foreclosures are on the rise. The housing market is not recovering.

Jonathan Hoenig: Sometimes you need to buy when there is blood in the streets. Europe the housing crisis there is front page news. Look to Europe – (IFEU) a good play when the housing market turns around.

Jonas Max Ferris: The smoking baby footage got me thinking. Abroad, they encourage young people to smoke. (BDX) Becton Dickenson is a medical device company that will make bucks from all these future medical problems.