Saturday Morning Talking Heads

I typically watch Fox News every Saturday for their block of "Cost of Freedom" programs and I clearly see why it is the most watched two hours in business talk. Although I don't always agree with all the participants, they are very entertaining and many provide the best thought in business and the economy in the media.

A few observations from this week's programs:

* Social Security tax increases are still tax increases on job creation. We continually hear that Social Security is in a crisis and the answer to such always seems to be to raise taxes. If increases of taxes on income hurt the economy, so will Social Security taxes. In both cases it makes it difficult for the business owner to hire employees. Let's fix Social Security, but let's do it without hurting the economy.

* Let Wal Mart go into banking. The retail giant is interested in creating retail banking options at very low costs to consumers, and critics are concerned about their ability to do such. One commentator actually said "they don't know how to do it, so they won't do it well." Give me a break, as if Wal Mart won't hire the best people they can find to protect their assets and their customers. Wal Mart won't compete against the vast majority of banks, but make it possible to attract customers who have never had accounts, pumping huge amounts of money into the economy to be leveraged in a way it could never be done in a cookie jar, like many of these potential customers are doing now. If it is legal and Wal Mart wants to do it, I bet they will figure out how to do it well.

* Taxes on wealth creation must remain minimal in order to compete in a global economy. This may have been the smartest thing I have heard all day. How has Ireland, India, China, and other historically weak economies turned things around in recent years (two of these becoming economic powerhouses)? It isn't merely cheap labor, which India and China has had for years, but a tax system that puts the burden increasingly on consumption and a way from wealth creation (the source of jobs). If the US wants to compete on the international scene, they need to reduce or eliminate as many taxes on wealth creation as possible. Now more than ever they should consider eliminating income tax and replacing it with a consumption tax.

* How Tax Cuts Increases Revenue. Ben Stein is known by many as a TV and even movie personality (remember the history teacher in Ferris Bueller's Day Off?), but he is also quite brilliant when it comes to understanding the economy. One area he has come up short on, in my opinion, is understanding the power of the tax cuts in eliminating the deficit. On the news today he said that the increase in revenue the government has seen has been due to "business cycles" improving, which naturally generate higher revenues and not due to cutting taxes. Yet, I have also heard him state that the economy responded favorably to tax cuts and created a positive economic cycle. In other words, Stein has created a sequence of events in his mind but fails to see the bridge between the positive business cycle and higher revenues. That bridge was the tax cuts.

Some of these issues deserve, and will receive, more attention later, but I wanted to get them down as soon as possible. There is some excellent intellectual capital when it comes to business information available, one simply needs to know where to find it.