CNBC's Santelli Brandishes Hammer to Illustrate Obamanomics
As the old cliché goes, you don't use a sledgehammer to crack a nut, but according to Rick Santelli, that's exactly what it appears the Obama administration is doing terms of financial regulation and fiscal discipline.
On CNBC's Feb. 2 broadcast of "Fast Money," host Melissa Lee proposed that taxing the wealthy is not the path to "economic prosperity and fiscal stability." Santelli, the network's CME Group floor reporter, agreed.
"Well, you're right," Santelli said. "But I also think you're going to see when the Bush tax cuts expire, a lot of middle class write-offs and exemptions and various tax benefits will also fall by the wayside. Not the least of which to mention, I have so many friends that work for the financial industry. And they've learned from the government, even if you only make $25,000 to $125,000 a year, one firm says if you leave to go into another job or whatever, anything outside retirement, they're going to keep 10-to-20 percent of the stock they took from you following the government's directives."
The outspoken CNBC correspondent said the approach, now referred to as "The Volcker Rule," after Paul Volcker, the former Federal Reserve Board chairman who's now a key economic advisor to the White House, is the wrong way to go.
"I don't know," Santelli continued, holding up an oversized gavel. "You know what? I don't think that this ought to be the tool that our government is using, whether it's health care reform or whether it's reform on regulations or in general to try to find money from those that work. This is not the tool. It should be a scalpel."
"Fast Money" panelist Karen Finerman asked Santelli what should be done - if not higher taxes and stricter rules. Santelli explained there was too much emphasis on action and not results in the young Obama presidency.
"I don't think that they can quit spending," Santelli said. "If you look at the big debate that was in one of the hearings today, I think it was [Sen. Judd] Gregg, he was yelling because basically, the current proposal is, ‘Hey, we didn't, you know, spend $30 billion here, let's use it for another jobs program.' How many times do we keep doing the same thing over and over, just because we're spending money. I'm from Chicago, we spend a boatload on education. Spending money isn't what you celebrate. It's results. We're not getting very good results."
The key according to Santelli would be to simplify the tax structure. As "Fast Money" panelist Guy Adami explained, corporation, like Intel (NASDAQ:INTC) have learned to game the system. And with a complicated tax code, the smarter firms will always figure out to find the loopholes.
"It is outrageous," Santelli replied. "Basically the tax code, I guess if you stack it up page to page, I'll be touching some of the lunar blemishes up there, but in the end, we need things more simple. I think that should be the lesson after the whole health care process that whether it's taxes and loopholes, these regulations Wall Street will run circles around it. But I told you, none of this is going to pass. Just the discussion about hedges with Mr. Volcker shows how complicated it is. Talk to anybody who trades commodities about the over-the-counter oil or grain trades that get scrubbed through because of hedging exemptions. Make things simple I guess is the answer."