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.
CONGRESS FIGHTING OVER EXTENDING UNEMPLOYMENT INSURANCE AGAIN; SHOULD WE GET THE GOVERNMENT OUT OF IT ENTIRELY AND HAVE PEOPLE BUY THEIR OWN PRIVATE UNEMPLOYTMENT INSURANCE?
TRACY BYRNES: Well look, it would save $1.5 trillion and that's what we've paid since 1962, Cheryl. They spend over $3 billion alone just in administrative costs each year and think about it, you put the consumer in charge of their insurance they make really smart choices. They don't take advantage of it and stay on these so-called government dolls for 99 weeks that some states allow them to do right now. So maybe if you paid for it, it comes out of your own pocket, you'll think twice about sitting home and watching TV all day.
JONATHAN HOENIG: Cheryl, a private unemployment market happened right here in this country before 1935 with the creation of unemployment insurance and social security. I mean, you keep calling it unemployment insurance. It's not insurance. Insurance is a voluntary choice if, to Tracy's point, an individual or corporation or whatever decides to buy insurance. This is a tax; yet another tax for another bankrupt government bureaucracy and entitlement state needs to be done away with. We need to go back to pre-1935 when companies like Proctor and Gamble, General Electric and others offered private insurance to their employees.
SALLY KOHN: Well look, I'm open to any solution that helps us get working people who have been kicked out of their jobs back on their feet and working again. I think that's what we all want to see. The concern here I think that everyone would have is before we had things like say Medicare and social security and we left those on people's individual shoulders, we had widespread poverty among seniors and also there is a study that was done, an independent study done last year that says that when the government outsources benefits like this, it actually ends up paying more because you're factoring in private profit. It ends up costing people more and we're not saving money then if we're saying we're going to lower your taxes and you have to pay it out of your own pocket. Not to mention the fact that they're still going to lose their job. So if people have the option and they don't buy the insurance and then, sort of like when you don't buy your own health insurance, you end up offsetting those costs because you demand free care at the hospitals the stay ends up paying anyway.
WAYNE ROGERS: Well, that's the biggest problem we have today is protecting ourselves from our own government. You know, you mentioned earlier the Chilean solution and that's a very good solution where it's a mixture of both private and government insurance. That seems to work in Chile despite what you may think, it's a working system. Secondly, the other thing that's the biggest problem we have is the fraud that's involved in the federal system right now; $17 billion in fraud? That's outrageous. And the administrative part of it; they spent in 2010 according to the Labor Department, $5.9 billion just to administer this thing. That's insane. That means with the cost of this you're telling me that the private sector can't do a better job? There's not one federal program that the private sector cannot improve on.
JOHN LAYFIELD: Yes, I think in theory it is correct. I agree with my friend Jonathan that before 1935 this was done privately. The problem is, before 1935 we had a very much, more simple world. They have run test balloons on this to see if an insurance company was willing to do this and nobody was a taker on this. We're in a very litigious society. This would be a nightmare for private insurance. I am for reforming this thing. The problem we have Jonathan, is structurally high, long-term unemployment. This country is not built for that. We're built for 26 weeks to pay this. This is not welfare. This is actually what people have paid in. The problem is that we have extended it past that and that's what we're dealing with now.
GM REPORTS RECORD PROFITS: SHOULD TAXPAYERS BE THE ONES GETTING PAID?
JONATHAN HOENIG: Yeah, I mean the taxpayer has been screwed Cheryl. While the President and GM are touting this wonderful product and the success they've had, the taxpayer is down literally billions and billions of dollars on its so called investment in GM. The stock has to rise 100 percent plus for us even to break even. I don't think the problem however is with the bonuses per say, but the very fact that we are and continue to be unwilling investors in this company. The government should sell the stock, get the heck out of private enterprise and promise no more bailouts for anyone.
WAYNE ROGERS: This past year it's done well. The fat lady hasn't sung as it were. GM is not out of the woods. You've got to understand something. General Motors went through bankruptcy. It didn't go through the bankruptcy because the fed came in and bailed them out because that guy who's in the white house wants to get some votes. That's how that happened. Ford Motor Company did not take any money, did not go into bankruptcy and they are very successful; even more successful than General Motors. So, we are still paying for General Motors. We not only own the stock, but they are giving the money to the workers instead of paying back the bill to the taxpayers. We might as well have just written the check ourselves to the workers.
TRACY BYRNES: Wayne is right and let's be clear about these numbers. We gave them $49.5 billion in 2009. If you can't make money with that then you've got problems and the stock is at 27. It's got to go to 53, to Jonathan's point, before we see the last half of our investment come back to us and Wayne is right. They're losing sales overseas; sales here in the U.S. are slowing down. So this is not going to continue like this. They basically shut the lights off everywhere and cut costs everywhere they could to get that bottom line up, but top line we are not seeing that kind of growth.
SALLY KOHN: Look, in exchange for this whole rescue package at GM, the blue collar workers took huge cuts in terms of their benefits and their pay and also the seven thousand dollar checks obviously it's not an either or. They wouldn't make up for the money that the government's invested. Beyond that look, I've got to say on this one two points. First of all, no one complained when the banks, well I complained but I'm sure none of you complained when the banks that the American taxpayers bailed out went and paid their big bonuses; millions and millions and millions of dollars in bonuses. AIG for instance paid its bonuses before it paid back the taxpayer number one, but second point is, look I'm not going to blame the President for wanting to invest in American jobs and bring back American manufacturing. It's working, the company is profitable and I don't think a single American is going to begrudge those hardworking folks that are helping bring that company back for getting a small bonus in a bad economy where they already took a hit.
JOHN LAYFIELD: No we can't (get out of the auto game) Jonathan and Tracy are right. It's going to be a 50 something dollar stock before the government gets their money back. We still have about $30 billion left in this company. What Sally brings up as far as the bank bailouts is completely non sequitur, but it's a great talking point politically. We have two separate issues here. We have the bailout and we have General Motors. This amount that they're giving these employees is about $300 million. They were paid over $7 billion last year. If every company was run as a meritocracy, and I agree with Wayne it's unfair to Ford, it's unfair to UPS and FedEx that the government bails out USPS also, but if this company is being run as a meritocracy I am 100 percent for giving these guys bonuses instead of increase in salary; a good business decision.
AIRLINES REPORTING 'GOOD NEWS' THAT LOST BAGS ARE FALLING, BUT IS THIS REALLY BAD NEWS FOR TRAVELERS?
JOHN LAYFIELD: Look there's been over $110 billion in bankruptcy in airlines. There's been over 15 airlines over the past decade. This sector has not made money since Orville and Wilbur first flew at Kitty Hawk over 100 years ago. It is a poorly, poorly run sector. The problem is that they have to price this correctly. This is not mass transit where you've got to give everyone a seat. You've got to make money and to Wayne's point, competition is what will fuel this and make this better. Competition before has created Southwest Airlines and JetBlue; that's what we need now. Airfares are going to rise.
WAYNE ROGERS: Well you know it's a free market. If the airlines can't make money and you think you're going to pay more for the airfare then get in a car or go on a train. You know there are all other kinds of transportation. It isn't mandated that you have to fly and that you have to pay a higher price or a lower price. It's competition like John says and competition will bring the price down. That's what works in a free economy. That's what should be done.
JONATHAN HOENIG: Air travel still is cheap. I mean we all like to complain about it. The fact of the matter is that in 1979 the average cost of a flight was about $560. Since that partial deregulation it's actually come down to about $320. So, air travel historically speaking cheap and Wayne, to your point, you keep saying it's a free market, it's a free market. That's the problem. It's not a free market. Every element of the air travel industry from the FAA to the TSA to even consolidation among airlines. Years ago U.S. Air and United Airlines tried to merge. They were blocked by federal anti-trust regulators. That's what we need to do. Get the government out and let that free market reign.
TRACY BYRNES: Fares have to go up. Fuel's going up. The taxes and the fees that are all associated with flying these days are going up by the second. So your actual ticket price is not nearly as bad. The other half of it unfortunately goes back to the government. That's part of your problem.
SALLY KOHN: You're going to have to start paying for the oxygen on the plane. It's going to get cheaper, you have to pay to check your bags and I think next time it would be cheaper for me to fly by just checking myself through to my final destination.
WHAT DO I NEED TO KNOW?
TRACY BYRNES: Free-market fix to housing mess; billboard homes.
JOHN LAYFIELD: Profit from spiking oil and gas prices with (COP).
WAYNE ROGERS: Valueclick (VCLK) is a great value; buy it now.
JONATHAN HOENIG: Protect yourself from rising interest rates with (DTUS).
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