DISCLAIMER: THE FOLLOWING "Cost of Freedom Recap" CONTAINS STRONG OPINIONS WHICH ARE NOT A REFLECTION OF THE OPINIONS OF FOX NEWS AND SHOULD NOT BE RELIED UPON AS INVESTMENT ADVICE WHEN MAKING PERSONAL INVESTMENT DECISIONS. IT IS FOX NEWS' POLICY THAT CONTRIBUTORS DISCLOSE POSITIONS THEY HOLD IN STOCKS THEY DISCUSS, THOUGH POSITIONS MAY CHANGE. READERS OF "Cost of Freedom Recap" MUST TAKE RESPONSIBILITY FOR THEIR OWN INVESTMENT DECISIONS.
New Survey: Fewer Americans Think College is Worth It
Tracy Byrnes: I'm not advocating skipping college, but five of the ten hardest jobs to fill these days do not require a college degree, all you need is a high school diploma. We need drivers, we need mechanics, we need people that actually have a trade. Not to mention going forward in the future, 40 percent of the jobs available over the next ten years will only require a high school degree. Now look, I want people to go to college. I want America to be smart, but I think we need both sides of the coin and I think we do a really bad job of making people feel really bad about themselves if they don't go to college. It's just not for everyone, not to mention the debt-people can't afford it.
John Layfield: It depends on what you do in college. Tracy is exactly right, this is not an either/or equation. If you're going to college to get a liberal arts degree, odds are you're wasting your parent's money. But, you look long-term you make 50 percent of your money from your career with a college degree. Unemployment for college graduates, not just those under 24, are about half of the national unemployment rate. And we're looking at a science and tech degree, which a lot of people don't want to get, and for them, you're exactly right: skip college and get you a job right now. There's nothing wrong with that. We're going to have 15 million job openings, according to Bill Gates, by 2020. America is going to have to outsource those jobs because we don't have them.
Julian Epstein: It does surprise me a little bit, but I think Tracy's comments were right, I think John's comments were right. College is clearly not for everybody and I think the bigger issue is having a job market out there that would make more jobs for college graduates. John hits it on the money here. If you're a college graduate, your income is going to be 50 percent greater, benefits are going to be greater, your economic mobility is going to be significantly greater, and your unemployment is going to be half. While I agree that not everyone needs to necessarily go to college; we need to be a country that's going to be smart, we need to be a country that's going to be able to compete with Europeans, with Asians, all of whom are making great advances in their education system.
Wayne Rogers: I think everyone hit it right. There's a presumption that says "college is a must," and somehow that's going to lead to a job and you're going to make more money-that's not true at all. College is not necessarily directed at giving you some sort-of background that's going to lead to a job, you just get a general education. After all, you go to graduate school for law, for medicine, for specialized things, so that vocational training is where somebody is trained specifically for a vocation. That's a good way to get to a quick job, if that's your ambition.
Jonathan Hoeing: You say that not everyone needs to go to college, but in fact, that's what our government's policy has been for years. We have a president now who calls college a right. Of course, like any government monopoly, it has pushed up the cost and pushed down the quality. I think the panel has made some good points. According to the government's own statistics, roughly 65 percent of the government's jobs now standing, don't require that much coveted college education, and of course, whether it's Irving Berlin, Trace Adkins, or Thomas Edison or Debbie Fields, or Jonathan Hoeing, there are many examples of successful people who have not gone to college. Government involvement has raised the cost, lowered the quality, and that's what needs to change.
New Numbers on Public Pension Costs Fueling Bailout Fears
John Layfield: This is going to be the next big bailout. You've got the fourth city right now in California about to declare bankruptcy. Detroit is bankrupt, Providence, Rhode Island, they're trying to stave off bankruptcy proceedings. The reason, we know, is because of public pensions. We know what is not working, and that is public pensions. So, privatize these pensions and go from a defined benefit to a defined contribution plan because politicians promised things they knew they couldn't deliver, and you've got to take it out of politician's hands. It's not the union workers faults; it's the politicians, so take it out of their hands.
Wayne Rogers: John's right, a defined benefit plan is a disaster. You have got to have defined contribution plans going forward in this. There's another underlying financial point here and that's the bond holders. At some point in time the bond holders who are holding bonds issued by municipalities like this are going to rise up and say, "wait a minute! You're putting things in front of us that are no good." The other thing that has to be done is that they need to extend the lifecycle of people retiring. You can't retire at 50; you've got to extend that more to what our expectancy is now. There are ways to correct this that can be done.
Julian Epstein: You have to keep this in perspective. Pension programs in the state and local level only account for three percent of overall spending. Most of the money for these programs are provided by the employees and by the returns on investments. The reason that these programs are in trouble is that they have relied on what the historical returns have been, which is about eight percent, of these monies is invested into the market. Right now we're looking at one percent returns, which is where the problem lies. Two-thirds of the states have already enacted reforms, states are enacting reforms that are requiring employees to have to kick-in, for some reforms they are changing the nature of the programs. But look, as I say, this is only three percent of spending at state and local governments. So it's important now to overestimate or exaggerate the extent to which tax payers are on the hook here.
Tracy Byrnes: It's a huge loss because there are so many variables here that are being assumed. Julian is dead-on: how do you assume a 7.5 percent return on that Calipers Fund? In a day-in-age, where tenure for treasury is at 1.5 percent-Dear God. How do you assume that one person can pick the proper money managers? Again, in the Calipers case, the chief investment officer relied on money managers-where's the diligence?! Again, those are taxpayer dollars that no one is overseeing. We're letting one person manage all this money-that is ridiculous!
Jonathan Hoeing: The tax payers, unfortunately, are the ones who bail it out. When a private individual or a private company makes bad decisions with their investments, they're the ones who suffer. But, when government pensions, which major beneficiaries are, of course, unions when they make these bad decisions, often times these fraudulent decisions, in many cases, it is the tax payers. Whether it's unrealistic assumptions in terms of return or unrealistic promises to beneficiaries, the taxpayer always comes in. Calipers, which you mentioned Cheryl, has only 55 percent of its assets that it needs to cover its future retirees.
REPORT: CANADIANS NOW WEALTHIER THAN AMERICANS
Wayne Rogers: Well, Canada lowered their corporate tax rate to 15 percent, the U.S. still has a corporate tax rate of 35 percent. Lowering taxes is going to help the economy. We know in 1981 when the Reagan tax cuts came along we had after that a terrific economy. The same thing happened under President Clinton in '94-they lowered taxes and we had a booming economy. So, lowering taxes produces a good economy in the private sector.
Jonathan Hoeing: It's freedom. What produces wealth, Cheryl? It's either freedom or force-it's always freedom, and in many cases Canada's economy has been more free than ours. Specifically in housing, they didn't incentivize housing in much the same manner that the U.S. government did, so, of course, they didn't have the boom and they didn't have the bust either. They did, as Wayne pointed out, lower corporate tax rates for a more open approach towards fossil fuels, towards immigration, all of these add up to a healthy prosperous economy. We should follow down their path.
Julian Epstein: I thought Jonathan was going to talk about the health care system, which is also saving Canadians more money. So let me just push back on a couple things. First of all, if you look at the median Canadian assets, they actually became more wealthy than the United States in 2004, not today, so it's been going on for about seven or eight years. Secondly, to Wayne's point on taxes, taxes are lower under Obama than they've been under Reagan or Bush. Taxes right now of the percentages of GDP are 15 percent of GDP. That's the lowest they've been in 60 years. The corporate taxes, as the percentage of GDP, are two percent of GDP. That is lower than the next 25 of OACD countries. It is true that we have a 35 percent tax rate that sets a statutory rate, the actual more effective corporate tax rate is around 15 or 16 percent, which is well below the average.
Tracy Byrnes: Taxes are only part of the equation here. If you don't welcome business, if you wrap their necks in regulations; that is what makes people want to skirt taxes, want to jump ship and send their employees overseas because they're in a country that doesn't welcome them. That is the problem here. The tax rate is just a piece of the puzzle.
John Layfield: The reason that the corporate tax rate is 16 percent is because the small and medium sized businesses are the only ones that pay it. The big businesses have bought off politicians for decades and the reason Canada is doing so well right now is that they have a national energy policy. The rise of fossil fuels has been the rise of Canada. We don't have one-big difference.
What Do You Need to KNow for Next Week?
Tracy Byrnes: Pay With Plastic at the Checkout and Prepare to Pay Up
John Layfield: "Camp Out" and Get Great Returns with (CAB)
Wayne Rogers: Time to Bet on Gaming Stocks and (SHFL)
Jonathan Hoeing: (OILT) A Slick Play on Growing Global Demand for Oil