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IN FOCUS: DOES CUTTING GOV'T JOBS HELP CREATE PRIVATE JOBS?
Rich Karlgaard: Yeah there's an absolute correlation and I'll tell you why because people who run companies from large to small are really uncertain about the future. They are uncertain about the future because there are a lot of political uncertainties, regulatory uncertainties, tax uncertainties, so when the government cuts jobs, it sends a very important signal to private America that maybe the government isn't going to try and eat the whole economy.
Rick Ungar: You know I wish it were that easy, but the truth is there is really nothing that reveals a correlation. Look, let's remember what these government jobs are all too often. You're talking about teachers, you're talking about firefighters, and you're talking about policemen. This does nothing unfortunately to boost private employment. However I think what you're really seeing happen here is the beginning of a narrative where people who don't want to give this administration credit for a booming economy coming they are going to use things like this to say "see we told you, if you just cut jobs it's all going to be good." It's not the job cuts in government; it's the administration policies that are putting us on the right track.
Steve Forbes: Yes and there is a lot of bloat on the local level and unfortunately the federal government hasn't really gone on a diet which is one reason why this economy isn't doing better. As for a booming economy, that's like saying a baseball team is on a real roll when it's batting 250, as we are going into the baseball season. No this economy is still sub-par. We should have created the 2 million jobs we created this year that should have been done 3 years ago. Government absorbs resources, Rich is right, government absorbs means less resources for the private sector.
Bill Baldwin: I've got some sad news for Rich and for Steve, when you fire thousands of firefighters and highway workers you do not get a burst of economic activity on the contrary those people stop buying things. If we want to shrink government, and I agree with Steve on that, let's do it gradually 2 percent a year for 20 years, not all tomorrow.
Elizabeth MacDonald: Ouch, yeah and also I love Rick Ungar and I love his analogy or discussion rather that you know the president can take credit for this economy. It reminds me of that famous quote "the rooster taking credit for the sun coming up" but here's the issue, the federal government --we are watchdogs for all presidents either side of the aisle. But the issue is as David points out 140,000 workers have been added to the federal government and the issue is when you free up that money you can spend it on tax breaks for the private sector to create jobs, not the government.
Dennis Kneale: Well there is simply no direct correlation between the two jobs because they come from two different buckets of money. But we should celebrate when private sector jobs are growing and when government sector jobs are going down for three reasons. Number one it shows you that maybe government won't have to increase taxes so much, leave more money in the economy. Number two it shows you that government workers won't be interfering with, there aren't as many of them to interfere with business. Number three maybe unions won't get so much more powerful so that they can get more dues and pay them right back into the campaigns of the democrats to reelect the people that keep employing more government workers.
IS FOOD STAMP PROGRAM OUT OF CONTROL?
Dennis Kneale: Well I think she deserves a special prize for inadvertently shining a spotlight on just how much the food stamp program in this country is utterly out of control. We are spending oh 40, 20 billion dollars in 2001 bush era it doubled in 8 years. Guess what in 3 years it more than doubled in just three years. The first year that Obama took office it rose 49 percent. Anytime you have a big windfall of government dollars going into anywhere- fraud, waste and abuse go up. Food stamps right now, it's way too easy to get on them and you stay on them way too long.
Victoria Barret: Well no, I disagree, I also think Amanda doesn't deserve a prize she is doing just fine, and she did just win the lottery Dennis. Now Dennis I know you have a heart and when it comes to food stamps here are the facts, half of the food stamp recipients are children half those are in single parent households. We can do things to improve this program. You know google knows what I had for breakfast it seems in this digital world of transactions we could get rid of fraud. But meanwhile you don't get rid of the entire program. That is not the answer.
Mike Ozanian: Right and you look at a state like Maryland David where 6 dollars of every 100 dollars of food stamps that they spend are actually fraud. In the last two years Maryland has cut by 48 percent the amount of investigations into fraud. I think Dennis is absolutely right here, the pie is getting bigger and the states looking into it their investigations are shrinking.
Rich Karlgaard: Yeah that's axiomatic; you know I just think this is the wrong time to really shine a light on food stamps. We did just go through the hardest economic crisis arguably since the great depression. Sure you will find fraud, but you will also find it in corn ethanol subsidies, Solyndras, countless other areas of government. Politically I think this is just the wrong time to focus on the least among us.
Steve Forbes: David, even though Rich makes a nice point about there being a lot of junk in the budget, yes get rid of that too, but food stamps has spun out of control. It's gone way beyond those who need a helping hand because of temporary tough times. Unfortunately the federal government for political reasons is cracking down and discouraging states from having fraud investigations and reducing food stamp roles because the more people who get on them the more power they have. This is government bloat.
Rick Ungar: You know, everyone is for efficiency, everyone likes efficiency, you know what- Using this woman as the poster child for what's wrong with food stamps is the same as using Bernie Madoff as a reason to shut down Wall Street and I don't think anyone here is for that. In fact somebody better bring some oxygen for Steve, having just heard me say that. This is unreasonable. Look we can do better with food stamps we can be more careful particularly on the state level but complaining about it existing. Using this woman as an opportunity to stop taking care of military families who are dependent on food stamps-cross talk-well yes they are.
WHERE'S THE FAIR SHARE IN HOUSING FIX? SHOULD "ALL" HOMEOWNERS GET HELP WITH MORTGAGE TO HELP THE HOUSING MARKET?
Elizabeth MacDonald: yeah I know it sounds ridiculous because we are going to blow out a lot of money already, and when the bailout sheet for the government has already been blown to smithereens, certainly Fannie and Freddie, and you know what maybe I'm having my own network Howard Bill moment but I'm tired of the bailouts, I really am. I've talked to Bank of America, Citigroup all the time and the government continues to move the goal post on these housing bailouts. I say if you're going to share with one you have got to share with all. We all deserve a break why not. I know rates are low I get all that, I get all the money out the front door of the government but you know what I'm tired of it. It's unfair to the people who are prudent and did the right thing.
Victoria Barret: Well I wish that were so but you are just making one wrong and two wrongs and hoping it's a right, and it just isn't. We are already heavily incenting banks to refinance to consumers who should be obviously incented rates so darn low I refinanced twice in the past 6 months so I don't understand why the government has to push this even father and these incentives just create bad outcome. We are getting numbers now showing that banks engaged in even riskier loans after the bailouts because regulators came in and said "Hey you need to float some money around this market to clean it up." We don't need more of this we need less.
Bill Baldwin: I think we should help 10 or 20 million homeowners, offer them all the same deal here's how it works, the mortgage to be written down to 90 percent of your home's value but you owe the bank that plus half of any gain. So if you have a $250,000 mortgage on a $200,000 house the mortgage would come down to 180 you could either move out the next morning for a very small profit or you could stick around for 10 years if you got the where with all and split it.
Mike Ozanian: I think Emac is right, if you're going to help a small group and that doesn't work you have to help everybody. But I'm for helping nobody David. The Federal Reserve came out in 2005 and said home prices were overvalued by 20 percent. Things have only gotten worse, look the problem is you can boost up prices but that doesn't mean that's what the house is worth. You need rising incomes to boost home values.
Steve Forbes: Yes David, and this doesn't have to be a subsidy. If you own a house that is underwater but you have a job, making payments, have been making payments, have real equity in the house say 20, 25 percent yes you should be able to refinance. Fannie and Freddie should have been doing that 3 years ago because you are good and eventually prices will go up especially the fact that if you are making payments you should be able to get a deal to be able to refinance instead of being stuck with 6 percent mortgages.
Which Forbes billionaire should you bet on?
ELIZABETH MACDONALD: Bill Gates/MSFT
BILL BALDWIN: Charles Schwab/SCHW
DENNIS KNEALE: Charles Ergen/ECHO