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Federalizing Teachers By: Charles Payne

|Includes: Pfizer Inc. (PFE)
The market is hanging tough when logic suggests it should be much lower, and I think we can thank tin-eared members of the Senate. Last night, the Senate passed another spending bill, this one for $26.0 billion, under the guise of helping out states with Medicaid payments. The bill will be paid for in part by limiting the amount of credit that multinationals could write-off for taxes being paid in local jurisdictions. In others words, these companies are taxed in the country they do business and face additional taxes when, or if, they send that money home. The move was promoted as an economic decision, but it's more of the same politics of envy and redistribution of funds. It's another attack on capitalism and free markets.

The notion that Pfizer (NYSE:PFE) could sell medicine in India and see its profits taken to pay for a teacher's salary in New York is preposterous, but that is exactly what's happening. It's promoted under the banner of "fairness" but it's not fair, it's suicidal. In the grand scheme of things, the message is that America has peaked and now is the time to split the spoils. Forget who worked for it and who didn't, let's just divvy it all up and move toward a status quo world. No more climbing the ladder of success, no more amazing creations of personal wealth. It's all about the greater good. Out of the bill passed, $16.0 billion will go toward helping states with Medicaid shortfalls. Yes, that was supposed to be addressed in the Stimulus Plan but there was a mix-up between the federal government's calendar and that of state governments.

At least that's what we are being told. The fact is that Medicaid is going to become a shipwreck once healthcare reform goes into effect and it's going to cost taxpayers so much more money than they ever imagined. According to the Center on Budget and Policy Priorities, states are $180.0 billion in the hole for FY10-11, and this $26.0 billion only covers 1/3 of the cash needed this year alone. So, that's one entitlement program run amok and just a short preview of coming attractions. The newer entitlement program will see the (unofficial) transition of state union workers to direct employees of the federal government. Those that voted and lobbied for the bill say 140,000 teacher jobs will be saved. That's more than $71,000 per much for shared sacrifice. The fact is that irresponsible state governments will have more time not to do the right thing.

By looting for-profit businesses and punishing those for seeking fortunes around the globe states aren't going to make the tough choices most Americans have had to make already. If the Obama Administration continues to punish American companies for being smart and rewarding states for being dumb, more companies will abandon America and the dumb states will only suffer more in the long-run. So, yes, those tin-eared senators moved the nation closer to bankruptcy but also closer to a major shift in power in November. Today's resolve is hoping it's not too late for the latter to avoid the former.
I liked the early action in the market but nerves are getting the better of traders. There are some big short-term profits and we are going to see some booked into the last couple hours of trading. That initial jobless claims number was so heartbreaking. It's really a shame anyone would boast about saving the economy. It's simply amazing that at this stage of the recession, and after all those trillions of dollars, 479,000 people had to file for first-time jobless benefits last week.
Look Closely, July is Sending a Subliminal Message
By Brian Sozzi, Research Analyst

Far be it from me to wax negatively in a discussion on retail. I thoroughly enjoy playing the role of consumer, whether it's for me (Banana Republic, J Crew) or family members. There is a certain thrill in finding that perfect fitting button down shirt for a night out on the town or that metallic Michael Kors bag for a special someone come the holiday season. Obviously, my joy for the chase of apparel and accessory euphoria is shared by many of those throughout the country that are excluded from the 9.4% unemployment rate. However, for those still struggling paycheck to paycheck (and this includes teens) or are unemployed, discretionary spending is far down the list of priorities. Even amongst those gainfully employed, such as myself, there continues to be this persistent fear in the air (I am eager to see the 2Q numbers and FY guidance from Tiffany & Co...). The fear resides in the long-term employment and overall financial prospects of individuals, and this fear has reared its ugly head in the latest consumer confidence measures. It's also on display within the recent personal income and spending data, which fleshed out a savings rate of 6.4%.

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