tv Forbes on FOX FOX News May 5, 2012 11:00am-11:30am EDT
spooking job creators, less than 7 months, dozens of tax cuts set to expire, is that threatening a jobs recovery? hi, i'm david asman, welcome to forks forbes on fox, and michael, victoria, elizabeth and john, and rick runninger. michael. >> the potential for tax increases is killing the economy and we saw it in the manufacturer's survey and the index came in lower than a year ago and two years ago and seeing it in stock prices, based on forward earnings are cheaper than a year ago. that should not be what is happening in a recovery. >> and, rick, this is what is spooking the job creators, the private sector. why they are not hiring. >> see, i would say sometimes worrying can be a very good thing. look, we have a unique opportunity coming in the lame duck session, that will come around after the election. and my sources tell me the pressure of the bush tax cuts -- and when i say sources, the trainer over at the gym -- no,
actually... my congressional sources are telling me, there is a real appetite to use this opportunity, with people fearing the expiration of the tax cuts, to use it to actually get something done. in december. to start fixing some of these problems, so let's hope the pressure tastays on. it could be a good thing. >> you still cover taxes but you were like the expert at the "wall street journal" on taxes and everything and look at all of the tax cuts, that are set to expire it is silly to say they are set to expire. they have been in existence ten years. dozens of them. >> the lunatic complexity of the tax code, and business hiring in the country and when they expire, analysts say it would cut 2% out of gdp growth and meaning we are at 2% already, which means flat lining or double dip and according to fed officials, rich fisher out of dallas, he says stop kicking the can over to the fed to do your job, congress and job creation,
and the fed has done enough, tripled the balance sheets and now the size of germany and has $2 trillion, basically in cash, locked up in the s&p 500, and you have to get some incentive to get the cash up locked to create jobs. >> and, he used the magic word. incentives and they matter and businesses thinking about hiring, think, geez, if taxes are going up i better hold my cash? >> that is certainly true. i do want to know what rick's trainer at the gym thinks of all of this! i would trust him over your sources, rick. in all seriousness, yes, you are absolutely right. incentives do matter. and if you are a business owner, you are clever. you are looking at washington. you realize they are spending much more than they are taking in and that means they have to taken more and that is going to come right out of your pocket. and that means, you will be hesitant to hire, it is quite simple. i don't understand why we are making the united states an inhospitable place to do business. >> and john, the jobs figures on friday were unambiguous and it
was clear they were bad numbers. less than expected, yes, unemployment ticked down 0.01% and that is because a lot of people quit looking for jobs. >> absolutely. and, taxes won't help. taxes are a price. they are a price placed on work and on investment. the price on both, is set to go up in 2013. but, my honest guess is that markets have priced in an extension of the tax cuts, already. >> really? >> certainly, president romney is going to extend them, if he's elected. and, as i believe the economy will not improve under president obama, president obama is going to seek an extension of these, too. i think taxes miss the greater point which is the dollar is what is holding back recovery. >> rick, the president telegraphed if he's reelected there are some taxes he'll allow to rise including those on the top tier. >> i think what the president is really doing is setting up the lame duck i talked about earlier. look, we have an opportunity for' real negotiation and also,
let's keep something in mind, what we're looking at now is not just about taxes, interesting report out yesterday, that shows that executive compensation is going through the roof. while workers' wages remain stagnant. we are a consumer economy. a consumer economy. >> dave: the president had two years of a democratic congress, a chance to change it... and it hasn't happened. >> it goes back to 1978, and i don't think we can blame -- >> last two years the disparity is even wider. let me just ask one thing, mike, that rick unger said, he talked about negotiation and we'll have a chance -- we haven't seen a lot of negotiations and every time there is a chance for negotiations, it falls apart. i don't want to get into the blame game but relying on negotiation... >> i'm not as optimistic as my good buddy rick, the democrat controlled senate has not introduced a budget in three years, they only attack the republicans, in the house an under president obama the gap
between lower income people and the rich has widened. that is absolutely true. >> dave: go ahead. >> at least mexico has -- something to cheer about there. right? magical thinking to think the problem is ceo pay. i get it. we don't like medium income stagnated but the issue is how do you get back to prosperity. when you have a labor force less than half of the entire population with the boomers retiring, when the labor force participation rate is levels of 1969, 1979, 1981, that is really bad and gain more people working to fund entitlement programs the government wants. >> dave: i saw you a polite victoria raise her hand. go ahead. >> i agree with lynn and what is troubling is we are not seeing small business growth. we are not seeing small businesses being created and that is, i think, in part because we have this inhospitable environment we're talking about where they are paying incredibly high taxes, general electric doesn't pay the corporate tax rate and small businesses are paying a higher tax rate than ge.
google and apple. >> dave: they have the lawyers and lobbyists -- >> not only washington. >> dave: the heart of the economy. they are the ones who will be hit when the top tier tax increase goes down. right? >> exactly. >> they will be. a lot of small businesses pay at the individual income tax rate. but i think rick's numbers, that he cites, just about every week, need to be addressed. implicit there is to the same people at the top, every year and the same people at the -- are at the bottom. and be in truth, mark zucker berg is about to make $20 million in an ipo and ten years ago he was in high school, so to assume -- >> a great point. >> income in equality, that is beautiful and means enterprise is being rewarded and in the u.s. the people at the top are an ever changing team picture. >> dave: and rick unger that is a beauty of the american system, whether democrat or republican who is in charge, we do have the flexibility. people who are billionaires, one year and the next are not, and you have new billionaires? >> yes, that is... that is
swell, but talk about misleading numbers. look, you guys want to blame the president, because ceos are taking all of the up side and putting it into their pockets? >> dave: no, he has had a chance to turn the economy around and hasn't. >> instead of rewarding a workforce where the productivity is skyrocketing, i don't understand how you blame that on the president. >>... the worst recovery since 1948. >> we have an economy that is totally dependent on government borrowing and the fed printing money and as john point out, it has done nothing but destroy the dollar and we have no jobs. >> dave: on that happy note, gang, we have to go. one month from today, could decide whether america goes bankrupt or not. what is happening that day? we'll tell you, we report, you decide. quotes, any way you want. fully customize it for your trading process -- from thought to trade, on every screen. and all in real time. which makes it just like having your own trading floor,
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chinese dissident, lawmakers saying he and his family will not be safe until he's on u.s. soil and the activist escaped home arrest last month and sought protection at the u.s. embassy in beijing, as secretary of state hillary clinton visited for unrelate talks, the chinese government said that he may be allowed to travel to the u.s. and, breaking details from the arraignment of the suspected 9/11 terrorist, a military tribunal right now at guantanamo bay, cuba, with khalid sheikh mohammed and his four co-defendants in court before the judge, to be formally charged. one suspect reportedly stood up and began praying in the middle of proceedings, refusing to answer that judge. i'm jamie colby, see you back here at 1:00 p.m. eastern. back to "forbes on fox." >> wisconsin is going to be the center of the american political universe. america is going to find out the answer. to what is more powerful.
the people, or the money special interest from washington, d.c. >> david: new jersey governor chris christie explaining why we all have a stake in the wisconsin recall vote. it goes down, one month from today, public unions there trying to take down republican governor scott walker and his cost-cutting plan and victoria says, if walker goes down, state budgets everywhere will blow up. how so, victoria? >> well, look, it sends a signal across the nation, that if you take on unions, if you -- if reform becomes part of your platform, the unions are going to go after you and, gosh, a recall? i mean, that is -- will send a clear signal all the way to california, where, in fact, the pension reform we had in mind, is new being reduced because the legislature here is, you know, they are scared and are focusing on our budget this year, instead of tackling the tough issues and it is happening already, i think. >> david: if walker goes down state budgets will be more out of control than now. >> no, i think they are coming
under reform in a number of states, moving to 401(k)s, government workers and pension plans that are lucrative but wisconsin is a success story and the unemployment rate is below 7%, well below california and chief executive magazine says is one of the top 20 places for companies to start businesses and create jobs and they say the -- the governor saved a billion dollars out of spending and property taxes are going down. >> david: john, what do you think? if walker goes down will it have an effect on other states? >> it has to, for the reasons that victoria brings up. if walker goes down, other governors will be a bit more gun shy about cutting spending and this is going to be a big problem, let's face it, unless you are paul krugman you understand that government spending can't drive economic growth. government spending in fact pulls down economic growth as you pull limit capital from the private sector. let's hope walker does well, and his friends across the country. >> david: and krugman is not alone, rick unger is in his
camp. rick, go ahead. >> yeah, while i love elizabeth's new glasses, i have to say... i find the rosy picture she paints of wisconsin to be stunning. there is a great irony in this election. what began as a protest, about anti-collective bargaining now turned into something entirely different. the polls show this has become about job creation. why? because, wisconsin today is dead last in the united states when it comes to job creation. >> that's not true. that is flat wrong. >> it is -- absurd. >> it is true. >> it is wrong. >> nevada is worse. >> let me give you the numbers. i'm sorry. let me give you the numbers. the governor came into office, promising 250,000 new jobs, by 2015. he has so far create roughly 5,000, jobs and, oh, by the way... >> he's creating jobs and obama is not. he's -- >> let's not get caught in the
weeds and numbers, by the way, didn't another politician promise jobs? mike, what do you think? what happens in wisconsin, will it affect other states' chances to get their budgets under control? >> i do and i think walker is winning the battle, david, even the democrats that are lining up to run against him are not bringing up the union negotiations, as the same point, they talk about as rick says, jobs. why? they know the public steadfastly sees the evidence and that walker saved them a lot of money from taxes and, by the way, armageddon the unions talked about in terms of lost teachers' jobs and lost police jobs never happened and in fact he saved a lot of jobs and democrats should shift the focus of the debate. >> david: victoria to e-mac's point, look at indiana, for example, they put restrictions on public sector unions that some people say are more onerous than what was -- >> oh, yeah. >> david: and they are doing well, indiana took a lot of jobs away from illinois. >> oh, yeah. i agree with that entirely. what was hillary clinton's line about, you know, cease the
opportunity of crisis? that has happened here, in states, and my concern is that its will be rolled back, when we are just in the middle of tackling, a lot of states like california, real reform. not just year-to-year budget reform but long-term reform issues, that is my -- >> e-mac. >> i agree with victoria and illinois. you don't want the bond market doing your fiscal reform for you. >> david: which raise taxes, yes. >> that's right and the bond market is really slamming illinois's bonds and moody's for example, also is threatening to downgrade a number of states if they don't get their fiscal act together. >> david: no matter what happens, in wisconsin, aren't these states individually trying to take care of things, maybe with exceptions like illinois and california? >> yes. and let's hope they are. you can't draw the correlation between state spending and job creation, of course states can create jobs but at the expense of what, states know how to spend money and waste on jobs that are worthless.
better to leave it in the private sector where real businesses are create. long term, wisconsin will be better off, if they cut spending now, and job creation will result from that. >> david: i have to go back to rick unger. you are in california, as vickie is, and we are -- art laffer, the guy who is famous for the laffer curve, and, is for lowering tax rates and he says the governor will come back to decisions to lower tax rates to create more jobs, do you agree or disagree. >> i can't imagine i'd ever agree with anything art laffer had to say but we'll give it thoughts. he's wrong. what is going on the ballot to raise taxes, this november and this is the governor's proposition so i'm not quite sure what he's talking about. >> david: all right. we have to leave it there. it's not just wisconsin on everybody's radar. a tax attacked in a bunch of states, making sticker shock at the store soar. and first, bad news for the american dream. home ownership hitting a 15-year
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>> this is beautiful economic news. and you have to remember housing is not an investment, it is consumption of capital when we buy house, we don't cure cancer, we don't create the new software, that will make us work more efficient and open up foreign markets and instead when we buy housing we become landlocked at a time when the capital to create jobs is very mobile. housing keeps us where we are -- in one place, where we need to be ready to change jobs wherever they are, any time governments stimulate the home ownership, what they are doing is a cruel act whereby we want to become less mobile and any time we see the number go down, it is a great economic indicator. >> david: and, he says it is a beautiful thing, what do you say. >> i'm looking at the pain behind the numbers and i hear what he's saying and i agree. it is impenetrableably absurd, to bring about income equality with housing, a dangerous thing to do but young adults are moving back in with their parents because they made
mistake and it is a wayne's world nation, living in a nation of the golden girls and, they can't get jobs in the economy. >> david: rick, isn't private ownership a cornerstone, some kind of cornerstone of our free enterprise system? >> in a sense but out makes me warm and tingly when i work with john. it is cool. >> david: so cool! >> the part that i understood of what he said, i kind of agree with him. look, we, for too long have turned our housing into all about being an investment, forget the fact it is about your home, it's not such a terrible thing if kids keep themselves a bit freer so they can travel to where the employment is and should be more mobile and available to try different things. until they get older, find the community that is right for them and the place where they want to put down roots and buy a home. it's not such a terrible thing. i do hate the way that we have gotten to this point, though. >> david: and, mike, one thing, one reason is because of high
prop tax property taxes, the past ten years they've gone up double, two times, that is one reason they are having problems in california. >> that's right and why you see people on fixed income, retirees, having to sell their homes, it is a mixed blessing, a first time homebuyer it is great news, you can get a 30-year mortgage, 3.8%, take advantage of it, if you are renting and don't own a home but the underlying factor is bad and says bad things about the economy. real incomes now are not increasing and when you have an economic recovery they should be, but it says how bad our economy is, right now, that the home ownership is so low. >> david: victoria, good or bad sign or our economy that it is so low? home ownership. >> look, it is mixed. when we were in the middle of the housing crisis if we would have debate, should home ownership rate be lower in four years, we'd all have agreed, yes, it should be. the system is not working and it is distorting the market and
inflating prices and it shouldn't be a prize. the real issue is it is tied to employment and we want to see housing starts increase, continue to increase, there are signs they are increasing, but that is a very important driver of employment. >> david: john, quickly... don't you treat a rental car worse than you treat your own car? isn't there something about ownership that makes you treat the property better? and, isn't that a reason to be for it? >> that is certainly true. but, once again, we live in a world where capital moves at the speed of light. the last thing we want is for people to have the ball and chain hanging them down when they need to be mobile and pursue -- in pursuit of jobs, an undeniably good thing. get the government out of it and let people pay for their mistakes. >> david: a new report showing parents helping out their adult children are taking a time out from saving for their retirement and we are here to help with funds to pay for it all. ♪ to roll over my old 401(k) into a fidelity ira.
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