The Web    CNN.com     
Powered by
 
 
 
 
 
 
 
 
 
 
 
 
 
ON TV
 
 
 
 
 
 
 
TRANSCRIPTS
Return to Transcripts main page

CNN IN THE MONEY

Tax Cuts Become Law; Washington Takes Tough Line Against Iran; Should Catholic Church's Finances Be More Transparent?

Aired June 1, 2003 - 15:00   ET

THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.

ANNOUNCER: From New York City where the 411 is 24/7, this is IN THE MONEY.
JACK CAFFERTY, HOST: Welcome to the Sunday edition of IN THE MONEY -- it's facts from my keyboards. I'm Jack Cafferty. Coming up on today's program, the check is in the mail, the president promised a big tax cut that would light a fire under the economy. Now that it's signed into law, we'll have a little debate on whether it's the right move at the right time.

And with Iraq smoldering, Washington is taking a tough line against Iran, but a number of companies appear to be doing big business with Tehran. We'll have a report on where that's going.

And now you see it, now you don't. The Roman Catholic Church takes offerings, but it doesn't offer much guidance on where the money goes after it hits the collection plate. With the church under pressure to be more transparent, vis-a-vis its finances. We'll talk to someone who's pushing to get a closer look at the books.

Here to help us as we plow through the 60 minutes of television, my two buddies, CNN correspondent, Suzanne Lisovicz and "Fortune" magazine editor at large, Andy Serwer.

So, the president signed a big tax cut plan, the stock market seems to like the fact their going to cut the dividend tax and capital gains tax, but the critics are saying -- one, it won't create any jobs or doing anything to spur the economy, and two, terrible for the deficits that are bigger by the moment or not.

ANDY SERWER, "FORTUNE" MAGAZINE: Well, you know, there's the Monday morning quarterbacking, always with this thing and this time in particular because there was 11th hour action, right before they passed this bill, they were talking up to the final moment and there's a couple things, like the child tax credit -- a lot of people are up in arms about.

SUZANNE LISOVICZ, CNN CORRESPONDENT: Well, I mean, there's a large school of thought -- thought that says no one is worse off for this bill, on the other hand, we know who will be best off, and that is the richest 1% of the tax bracket...

SERWER: But they pay the most in taxes...

CAFFERTY: Who pays the taxes? The people that have the most money pay most of the bills in this country.

SERWER: Right, but see you can on and on with this stuff, right, you can go on and on.

LISOVICZ: Twenty-nine percent of the after tax -- tax benefits -- that's pretty -- pretty generous.

CAFFERTY: They pay...

SERWER: The more you make, the more you pay, right?

CAFFERTY: The wealthy -- the wealthiest 5 percent pay 90 percent of the taxes in this country

SERWER: I think that child credit tax, though should go to lower income people. I know they're not paying taxes in some cases, and, again you go back and forth. One thing I'm ticked off about though, is they didn't end some of these tax loopholes overseas. That stuff they really should have done, I think.

CAFFERTY: "New York Times" editorial on Friday suggesting that President Bush must do something about correcting this child tax credit that wasn't included the bill for people that make between $10,000 and $26,000. In case the "New York Times" wasn't paying real close attention, that happened in a conference committee between the House and Senate. The president wanted a $726 billion tax cut which would have provided child care -- child credits for everybody. But, you know, all of a sudden, according to the "Times" it's up to the president to fix this. It was changed in the Senate and in the conference committee. On to other things.

It's smaller than its supporters hope, actually it's the same subject, but bigger than it's opponents fear. We're talking about the tax cut law. Mr. Bush signed the $350 billion tax break earlier in the week, the third biggest tax cut on record. He promises there may be more to come. The president says it will put some zing back into our sluggish economy. The democrats who fought the move say it's more money for the rich, now, and more debt for all Americans later. The president also signed a bill, Tuesday, that raises the debt ceiling to almost $7.4 trillion. So, will the tax cut be an economic shot in the arm or is it a recipe for disaster?

Joining us to debate the issue, Kevin Hassett, who is director of economic policy studies at the American Enterprise Institute. He's in favor of the tax cuts. And on the other side of the argument, we have Robert Shapiro a columnist at "Slate.com" and former undersecretary of commerce for economic affairs in the Clinton administration.

Gentlemen, welcome to you both, nice to have you with us.

Mr. Shapiro, let me start with you. Somebody said the other day that -- hey, this is our money. What about not giving it back to us?

ROBERT SHAPIRO, COLUMNIST, SLATE.COM: Well, because the primary responsibility of the national government is to manage the budget in a way that meets the needs of the people and promoting economic growth. This is a very strange tax bill. Alan Greenspan said, he'd like some of the provisions, but if you had to do it by expanding the deficit, he didn't support it and wouldn't stimulate the economy. The president's own council of economic advisers said it would produce a relative handful of jobs. As a result, the president council of economic advisers was moved out of the White House. Economists don't believe this is going to be very much...

(CROSSTALK)

CAFFERTY: That'll happen when you disagree with the boss.

SHAPIRO: ..short term stimulus and almost all economists, including Glenn Hubbard, the former chairman of the CEA, his projection showed that by 2007, the impact of this tax bill on long term interest rates, in the future when the economy recovers, would actually slow the economy...

CAFFERTY: We're talking about the tax bill -- talking about the tax bill as though it exists on an island. Isn't the other half of the equation government spending that continues to going up at a rate far in excess of the inflation rate in this country, and those that advocate budgetary responsibility, couldn't they also address government spending as a way to hold down the deficit or just the tax side that gets talked about?

SHAPIRO: Well, I wish -- I wish the congress would. You know, spending has been going up at twice the -- twice the annual rate under President Bush as it did under President Clinton. President Clinton balanced the budget. President Bush has thrown us into drastic imbalance while spending has increased. I think that's absolutely right. We had a $250 billion farm bill. Subsidies for large agri businesses that the administration supported and Congress supported. That's an example of certainly by any economic measure wasteful spending.

SERWER: Kevin Hassett, let me get you in here quickly, I'm sorry. I want to ask you to explain succinctly how the tax bill helps creates jobs, because I have a hard time going from "A" to "B" to "C" to "D" on this. The president says it's going to create jobs. Help us.

KEVIN HASSETT, AMERICAN ENTERPRISE INST.: Well, what, I'm an economist, how can I do anything succinctly?

SERWER: You're right. OK, I apologize.

HASSETT: You know, I'll give it a shot, though. You know, I think that you're exactly right in the sense that the link between this tax bill and jobs is a little bit uncertain. Doesn't mean you shouldn't support it. I think that the link between this tax bill and economic growth is fairly solid. The question about how many jobs you get out of economic growth is a really complicated question because if we don't grow as fast as productivity, then maybe you don't get more jobs, if firms invest in a lot more equipment because the cost of capital is lower because of this thing, you know, if they're buying machines then maybe not hiring people. And so, exactly how many jobs you get out of this, I have absolutely no idea. I saw an estimate from the White House of about a million new jobs. I think that might have been the 700 billion that gave us a million new jobs, but I don't. I really don't know how many jobs we get out of this. But, I can tell you it will get some.

LISOVICZ: And Kevin, you're in favor of this, right? Your...

HASSETT: Absolutely. Absolutely. I'm telling you that I think it's pretty solid that we'll get a half of a percent to a percent more economic growth over the next few years because of this bill, but how that maps into the employment situation it's just very uncertain. There's not really a literature that tells us what the right number is.

LISOVICZ: OK, question to Robert, then. You know, this is all about trying to reignite the economy, bringing the corporate tax rate much further -- much more favorable from foreign investment. It's something like the second highest in the world, now, it would go back up to the 11th. Isn't that a good thing to try to get investment in the U.S., the world's biggest superpower right now?

SHAPIRO: Well, look. Lower taxes are always better than higher taxes as an economic principle, and more investment is certainly better than less investment. We had the strongest business invest -- rate of business investment over a sustained period in American history in the 1990s with a -- with taxes that were relative to this, considerably higher. The fact is that the impact of the tax code on this kind of behavior is fairly marginal. The reason business is not investing, today, is not because of the cost of capital, interest rates are very low today, it's because there's a lot of excess capacity. What we need, right now, in the short term, is more demand in the economy and, even on that score, this bill really, really falls very, very far short.

SERWER: Robert, just quickly, you're against this tax bill, though, but it's got to be wrong to keep money in the U.S. Treasury when the economy's in a funk. So what would you do? I mean, what's your plan?

SHAPIRO: Well, the -- everyone thinks that the economy in the very short term, this year, needs some stimulus and, so, I think we could have focused a short term tax cut on average people, on the middle class and -- and working families who would take that -- who were much more likely to take that tax cut and actually spend it to stimulate the economy.

HASSETT: There's that in this one, though, Robert. They're mailing checks in a couple of weeks to mostly middle income people because it's the child credit refund.

SHAPIRO: No. In fact -- in fact the -- a -- the typical taxpayer, someone at the center of the income distribution would get about $200 out of this tax cut, that's about $4 a week. 50 percent of households in America, this year will receive either $100 or less in tax relief from this bill. CAFFERTY: A lot of other households will receive those $400 checks beginning in July, plus there'll be reduced withholding taken out of the paychecks starting in July -- right? -- as they roll back the tax rates.

HASSETT: And there are 50 or 60 million of the people. That's a lot of money.

CAFFERTY: Gentlemen ...

SHAPIRO: Well, the fact is we're cutting off at least half of the country from any stimulus.

CAFFERTY: All right, well, you know what? The next time the three of us get together, we'll get the other half of can country involved. I appreciate your time, both of you. Interesting stuff. We'll find out whether the predictions are right on one side of the issue or the other. Robert Shapiro, columnist for "Slate.com," former undersecretary of commerce in the Clinton administration for economic affairs and Kevin Hassett, the American Enterprise Institute director of economic policy studies. Fellows, thanks very much.

HASSETT: Thanks much.

SHAPIRO: My pleasure.

CAFFERTY: Coming up on IN THE MONEY as we continue, the in-your- face school of diplomacy. The United States camped out in Iran's front yard and pushing for change. We'll look at whether American businesses may be the ones who eventually dictate the pace.

Plus, dead man walking. Suicide bombers will die for their cause and if they can, they'll take you with them. We'll find out what turns a human being into a human bomb, a bit later.

And also ahead today, where faith and finance meet, many Catholics pushing their church to be more open about its money. With the church running everything from hospitals to universities, we'll tell you why they're being called to account. Stay with us we have miles to go before we sleep.

(COMMERCIAL BREAK)

CAFFERTY: The United States is pushing hard for change in Iran and Iran is pushing right back. Tehran, this week, denied U.S. allegations that it's hiding a nuclear program, and top members of al Qaeda. At the same time, top U.S. officials met to talk about forcing a change of government in Tehran. All of this comes as Washington struggles to bring the vision of stability and security to Iraq, no mean feat that, either. To some, the United States is moving too fast on Iran, to others it can't move fast enough. Whatever the Bush team does, the administration may have to consider what the corporate community wants, that's because despite decades of sanctions, dozens of major U.S. corporations still have legal subsidiaries doing business inside Iran. We're joined, now, by CNN financial news correspondent, Chris Huntington who's been following this angle of the story. Chris, nice to have you with us.

CHRIS HUNTINGTON, CNN FINANCIAL NEWS CORRESPONDENT: Jack, thanks for having me. Well, you know, we started pulling on Halliburton string, Halliburton getting a lot of heat for the work it was doing in Iraq and -- low and behold we discovered it had a pretty healthy operation in Iran. We looked a little further and discovered that it had lots company over there, as well. There are about 35 U.S. companies that have subsidiaries or related interests in Iran.

Now, we have to be careful with the legal terms, here, because all of these companies manage to do it through offshore companies or subsidiaries, sometimes two or three levels deep. The Halliburton office in Tehran, for instance is a company that is registered in the Cayman Islands, it's headquartered in Dubai they have no Americans on staff, so they've managed to navigate the letter of the sanction laws perfectly and that's common for all of these companies. You've got companies like General Electric, Caterpillar, all of the major oil field service companies, Halliburton, Baker Hughes, Smith International, Schlumberger, one of the biggest is also over there. Schlumberger actually has already figured this out long in advance of the Iran issue. They are registered in the Dutch Antilles -- the Nether Antilles, so they're not even officially a U.S. company, even though their oil field business is based in Houston.

This has all been going on for quite sometime and gets back to this, sort of conflict of policy in the Bush administration really, for decades. If Iran is the worst -- the mother of all terrorism, why are U.S. companies freely doing business over there, albeit, through offshore subsidiaries. We tried to get an answer out of Dick Cheney, and not surprisingly, got a no comment.

LISOVICZ: Chris, a very provocative news that you're disclosing here. I'm curious, what do these companies have to do to make sure they're not breaking the law?

HUNTINGTON: Well, the main litmus test, and it's written into the law, is that the U.S. parent company cannot directly manage or directly own the subsidiary. And the actual language is "facilitate, guarantee, approve, any transactions by that subsidiary," but, you know, an awful lot can be approved in a wink and a nod and over the phone and everything. And I'll just give you one example -- one weird example of how it's clear they were controlled. Every time I tried to called up the Tehran office of these companies or a Dubai office that was controlling the Tehran office, I would be directed back to the head office in Houston.

So, clearly, Houston had something to say over the way these companies were being managed and I say Houston, because that's where the oil field service companies are based, here in the U.S.

SERWER: Chris, you mentioned the Bush administration, obviously, these companies probably go back in their dealings with Iran -- back to the Clinton administration, probably even before that, as well.

HUNTINGTON: Back to the -- back to the Carter administration. SERWER: That's right. Now, my question is, you know, does the federal government know about this? Obviously, I think the answer to that is yes. But, do they know to the extent of this? How much are they keeping watch over this kind of activity? How aware are they?

HUNTINGTON: They are very aware. The Treasury Department has an office there that's supposed to monitor the sanctions and they're all on top of this, but Andy, I mean these are very sophisticated global companies with bigger legal staffs then the Treasury Departments has, so they have figured out how to do this stuff to the Nth degree. They sometimes even traipse into treasury and get a little consulting to make sure that they're -- that they're doing it right, but the Treasury Department does stay on this. I mean, they told us just this week that they've got hundreds of cases open on Iran. The bigger issue is what's the penalty if they get caught? It's really minimal. The maximum fine per transaction by the Treasury Department is $11,000 per transaction.

CAFFERTY: You know, Chris, until two minutes, when you started this report, I had no idea the extent to which American corporations are involved inside Iran and my guess is that people watching this program are probably like me in that regard, so I wonder if, you know, if you're a shareholder in any of these corporations that is have these iffy kind of ties over there, should you be concerned about stock value and, you know, possible prosecution, et cetera, et cetera?

HUNTINGTON: Sure, because, Jack, that's probably the first place you may see some meaningful reaction to this issue. Couple of big institutional shareholders are already pushing the case. The state of Pennsylvania, just two weeks ago, passed legislation that requires their state pension funds to monitor their investment exposure to possible terrorist-sponsoring states. The New York City controller, here in the city, runs the pension funds for the firefighters and police force. He forced Halliburton and Koninklijke Phillips to have their boards of directors review their Iran business. He tried with General Electric, he got a shareholder vote on the proxy, the GE board recommended against it saying, "We are in full compliance with the law and have every right to our foreign subsidiary do business in Iran," and that's -- you know, GE's about as big as you get.

CAFFERTY: Yes, and about as smart, which is why they're about as big as they are. Chris, this is fascinating stuff. I appreciate you coming on the program and the next time you get something this good, drop on by with it -- will you?

HUNTINGTON: Thanks a lot. Will do.

CAFFERTY: OK, Chris Huntington. Still ahead on IN THE MONEY, as we continue, blown away. As suicide bombers give an ordinary face to an extraordinary threat. We'll look at what drives them and if there's a way to stop them.

And, Disney's been down in the dumps for awhile now. Find out what it might take to put the magic back in the Magic Kingdom. Get the mouse house up and rocking, again. And jailhouse rock, we'll tell you how one California high school made sweet music out of a Hollywood star's legal troubles. We're talking Winona Ryder, here, you don't want to miss this, it's a great story.

(COMMERCIAL BREAK)

LISOVICZ: President Bush sets off for the Middle East, next week where the political debate has not two but at least three sides. There's the Israeli government, the Palestinian government, and the suicide bombers. While the others talk, the bombers don't say a word and they don't have to. Of course, suicide attacks aren't confined to Israel a couple of recent examples from earlier this month -- strikes on Jewish and western targets in the north African city of Casablanca and in Riyadh, Saudi Arabia, bombers also hit residences for western workers. Al Qaeda is a prime suspect in both those cases outside of Israel. And FBI chief Robert Mueller has warned about it's just a matter of time before suicide bombings come to the United States.

Using terror as a political weapon, as perhaps most violently embodied by the suicide bomber, but with promises of everything from cash for the families to rewards in the afterlife, there's more than politics at work here. To help us understand the making of the suicide bomber, we're joined from Washington by Joyce Davis. She's the author of "Martyrs -- Innocents, Vengeance and Despair in the Middle East." She's also a deputy foreign editor for Knight Ridder newspapers. Welcome.

JOYCE DAVIS, AUTHOR, "MARTYRS": Thank you.

LISOVICZ: I guess, Joyce, part of the problem is very title of your book. There's a sizable population out there who do not see these people as mass murderers, but as martyrs.

DAVIS: Well, that's exactly right, but the reason I chose that title is because this is a title that is been used to describe these people, it is not solely what the book is about. The book is also about those innocent people who are caught in the middle of this, both Israelis, Palestinians, and Americans and it's an Americans who are caught in this and the book takes very -- pains to point out at the end that really, these people, these suicide bombers, are not martyrs, they are murderers.

CAFFERTY: Let me ask you, Joyce, about the ongoing debate about what to do about them. Many of the experts suggest that these are people born of great despair and hopelessness, the live in abject poverty and there is a financial, in some cases, remuneration offered to members of their family by those who finance these kind of terrorist attacks. In addition, many of them believe if they do this, they will immediately go to heaven and be in the company of 40 virgins, I think it is. Given the hopelessness of the lives on the one hand, the potential financial compensation, and perhaps reward in the here after on the other, is there a solution to this kind of thing?

DAVIS: One of the reasons I did the book was to try to really move us past the myths and the stereotypes and the misinformation to the truth of the situation. The fact is, many of these people do not live in abject poverty, they may live in environments of despair and hopelessness, but, for example, one of the suicide bombers that I profiled came from a relatively middle class background in a place called Jenin in the West Bank. It is a place in which militants run rampant, in which they live in a constant state of war, but this family was not in destitute poverty.

And the issue of money and payment is, I think, has been overblown from what I can see. This family, for example, said they received nothing but the issue of their belief in what -- their action might bring in an afterlife is very real and this is why we need to hear and are hearing more from mainstream Islamic scholars who say that this kind of action has no basis in the religion, and people should not look for a reward in heaven, but perhaps should look forward to another place.

CAFFERTY: Yes.

SERWER: Joyce, one thing I want to point out, of course, suicide bombers already have hit the United States, that's -- 9/11 they were suicide bombers, let's be clear there. You talked to people of military strategists and the like and they'll tell that once the other side resorts to a tactic like suicide bombers, that they are going to win because these people are so intent upon their end that it's impossible to fight against them. Do you believe that?

DAVIS: Well, I've talked to many strategists, counterterrorism people and including many in Israel who deal with this problem on a daily basis. It is virtually impossible to stop someone who will -- is willing to give up his life in order to kill you, at least to stop them physically. The problem -- the issue here is a complex one and it will require a complex solutions. A combination of trying to take the methods to protect ourselves physically, but also, to look at what is fueling this, what is behind it and what can we do about this atmosphere in which this kind of tactic seems to flourish.

LISOVICZ: You know, Joyce, you talked a little bit about the changing face of the suicide bomber, and there has been, yet, a new profile added to that, and that is, the role of women. We've seen a number of women who have entered this terrible, terrible act, including one woman recently who was studying for a doctorate in English; she's being used as a poster girl, if you will, for the Islamic Jihad. What does this represent to you? Is this yet a heightened escalation in this war?

DAVIS: Well, one of the things that we have to be concerned about is that as our preventive or our methods to try to stop this increase, their -- people are going to use different tactics. They are all -- they are smart people who are looking for different ways to attack, they see themselves engaged in the war with the United States.

So, while we might develop a profile of a Middle Eastern looking man with a beard or who's very common, well dressed, they'll come with something else -- a young woman who may look western. So, yes, women will be used and one of the things I found in my research is that there are many women who are prepared to take this role, but we should be careful because as I show in the book, one of the first female suicide bombers was not even Muslim, was an orthodox Christian who blew herself up as Israeli soldiers moved in to capture her in Lebanon.

CAFFERTY: We've only got about 30 seconds left, Joyce. But, I wanted your thoughts on one last thing. As the president heads to the Middle East for a summit on the road map to peace between Israel and the Palestinians, one of the very early sign posts in the road map calls on the Palestinians to control the violence. Given all that you know about what motivates the suicide bombers, is it even -- is it even possible for the Palestinian government under Mahmoud Abbas to control the activities of groups like Hamas, given the kinds of things we're talking about here?

DAVIS: I'm afraid this is something that is going to be very difficult for any Palestinian government to do unless there is a change in the atmosphere in the West Bank, unless people see some difference in their daily lives. Unfortunately, before this problem will be tackled, it's going to take basically a civil war within Palestinian society. Palestinians will have to be willing to kill Palestinians in order to stop this.

CAFFERTY: They won't voluntarily stop it if Israel shows real progress on, for example, withdrawing from the occupied territories, opening up the borders, reducing the check points, just in general, loosening their grip on society over there?

DAVIS: This will clearly change the support for the militants, you will find a lessening of their support, but you always have, from what I have seen, a hard core group who will try to do anything they can to derail progress.

CAFFERTY: Sure.

DAVIS: And so, you will expect to see these kinds of attacks. The question is whether the mainstream Israelis and Palestinians will allow this -- these people to derail all efforts at peace.

CAFFERTY: All right, we're going to have to leave it there. Joyce Davis, thank you very much. She wrote the book, "Martyrs -- Innocents, Vengeance and Despair in the Middle East." She's also deputy foreign editor at Knight Ridder. Nice to have you with us.

Still ahead on IN THE MONEY, as we continue, the mouse that snored. We'll look at Disney's woes and top management's new strategies.

And, if you have some ideas about that or anything else we're talking about today, or things you might like to see on shows in the future, let us hear from you, e-mail address is -- INTHEMONEY@CNN.com

(COMMERCIAL BREAK)

(NEWSBREAK) SERWER: Welcome back to IN THE MONEY. Misery loves company. Perhaps that's the reason why our stock of the week is Walt Disney. Yet another media giant that has taken a big hit in the market over the past few years. Disney has been struggling with animated movie flops and ABC TV network that's frequently last in the ratings and board room battles involving CEO Michael Eisner.

Joining us now to tell us more about the mouse house, is "Newsweek" West Coast editor David Jefferson. David wrote a feature article on the attempt to turn around at Disney in this week's issue of "Newsweek," titled "Finding Disney."

David, welcome to the show. I wanted to ask you about Michael Eisner, specifically. You know, you hear a lot about the problems at Disney and then Eisner and other people there say, well, a lot of these problems are out of my control. The theme parks, there's 9/11, the movie business is down, et cetera, et cetera. Is it really out of his control, or is he doing a bad job running the company?

DAVID JEFFERSON, "NEWSWEEK": Well, look. I mean, at any company, the buck does stop at the CEO's office. So he has to take some responsibility. What's happened with Disney, they're not kidding when they say the economy has been lousy. I mean, when you are running theme parks and you're in the middle of orange alerts, who wants to go to a crowded place like that?

It's been very difficult for them. On the other hand, Eisner is a renowned micromanager, at least alleged to be. He's had a series of executives who have tried to be his number two since back in 1994, when his former number two passed away, unfortunately. And he hasn't been able to keep anybody, so he's really having to learn to be more humble, to kind of stick to his knitting, and it's something of a comeuppance.

LISOVICZ: But the humility comes after years of challenges, shall we say, including the acquisition of ABC. Would you say that has ever paid off? There's all this talk about linking, you know, the Disney brand is unquestionably valuable to the programming of ABC, but it continues to be a laggard. You know, and they're just going back to the old formula, this fall, I believe, they are going to try some sitcoms to try to lure some viewers back. It hasn't worked.

JEFFERSON: Right. I mean, it certainly hasn't worked up until now. When you look at ABC, it's really been a network in decline in prime-time, at least, since about the time they acquired it. I mean, you had a lot of really popular shows that were being fazed out. "Home Improvement" and "Roseanne." They really didn't have anything to replace it with.

Finally they came up with "Who Wants to be a Millionaire?" which was sort of a surprise hit for them and did bring them up to number one a couple of years ago. But again, they didn't have a lot of good shows in development at that point.

So, first of all, what they have had to do is come up with a good strategy for shows that people want to watch. I actually think going back to the comedy strategy is very smart. I mean, sitcoms pay off in the long run, as Susan Lyne, the president of ABC Entertainment, who came on about a year and a half ago says, you know, sitcoms are the one thing that has a back end. So it's very profitable for them.

As to whether Disney's been able to really achieve synergy through ABC, it's kind of a mixed bag. I mean, on the one hand, you don't want Mickey Mouse 24/seven on a television network. And I think they've done a good job of restraining themselves from turning it into the Disney Channel. They have a cable channel that does that.

But if you look in the terms of the way they've linked it up with some of their cable properties, with ESPN, with the Disney Channel, yes, there are some very smart synergies going on there. The best example would probably be between ESPN Sports and ABC Sports. They have really experienced some very impressive things there in terms of a new NBA contract that they were able to negotiate, where they really are finding the economies of scale.

CAFFERTY: David, Jack Cafferty, let me interrupt here for a minute. There are some rumblings in the boardroom that Michael Eisner's future may be limited as the top guy at Disney. Whether he continues to run the company or not, how do they fix it?

JEFFERSON: Good point. I think that the way they fix Disney is they go back to what they do best. I mean, first of all, they have to revive animation. It is very difficult for a company that built its history on being number one in animation to find itself not only behind its partner, Pixar Animation, but also behind DreamWorks. Jeffrey Katzenberg, former Disney alum, won the first ever Oscar for best animated film with "Shrek." So number one, they have to shore that up.

They're closing the Disney stores, some of the Disney stores and selling off some others. I think that they're moving more towards a licensing strategy. That's very smart, and, you know, they have got to shore up ABC in prime-time.

LISOVICZ: OK. David, let me jump in because you have succinctly outlined all of the troubles that Disney faces. You have also written about how a parade of managers have gone screaming from Disney because they can't work with Michael Eisner, but it seems now that Eisner has finally appointed a number two, and that is Robert Iger, who is the anti-Eisner. He seems very personable, he's even a good dresser.

(LAUGHTER)

LISOVICZ: Unlike Eisner, or at least that's what critics say. You know, what are you...

JEFFERSON: Eisner has his own style.

LISOVICZ: Right. That's exactly right, and sometimes he even wears the mouse ears, but what do you think of that? Isn't that something good for Disney?

JEFFERSON: Absolutely. I mean, Bob Iger is very impressive, he's very personable. He got a bit of a bad rap when he first came to Disney. I mean, they called him the suit or the green eyeshade guy, because he was a little business-y. He wasn't the flashy mogul. Part of the dressing well, I mean, you can see him walk around the lot today wearing untucked suede shirts. He is looking very much the mogul.

When you sit down with Bob Iger, which I have done on several occasions, he talks a lot about sharing power. He really has kind of come up to speed on the parts of the company that he didn't know since he was a, you know, he's a 29-year veteran of ABC, so he knows network and he knows cable and what he has to come up with speed on is animation and movies and what have you.

He's very enthusiastic, and so, you know, it's interesting that Eisner is, in fact, finally sharing power, and I think what's happened is he's found a counter balance much in the way that he had that same sort of balance when he and Frank Wells first came into the company in 1984.

CAFFERTY: David, it's an interesting story about a company that in one way or another has, I guess, touched all of our lives, the Disney franchise and brand. Appreciate you joining us on IN THE MONEY. Nice piece of work in the "Newsweek." David Jefferson is the West Coast editor of that fine publication. Thank you.

JEFFERSON: Thank you.

CAFFERTY: See you soon. Coming up on IN THE MONEY, taking it on faith. The Catholic Church keeping a lot of financial information under wraps for years and years. We'll look at how pressure from the flock may be forcing a change.

And if you have something to tell us, let your fingers do the walking. INTHEMONEY@cnn.com.

(COMMERCIAL BREAK)

CAFFERTY: Welcome back. For America's 62 million Catholics, these remain challenging times, to say the least. First and foremost, they're faced with the ongoing scandals involving allegations of sexual abuse within the church.

Our next guest says money and the way it's managed by Catholic clergy and laypeople also playing a big role in the problem. Dr. Frank Butler is President of FADICA, that's an organization dedicated to getting Catholics more information about church finances and charities. Mr. Butler can claim one recent victory, as the Archdiocese of Boston announced this month that it will post details of its budget online to better inform parishioners about where their money is going.

Dr. Butler joins us now from Washington, D.C. The sex abuse scandals in the church aside and the payoffs that allegedly have been made in some of those cases, why should the average person care about what the church is doing with its money? FRANK BUTLER, FADICA: Well, it's a huge institution, and the impact of the church's schools, its social service agencies and so forth are enormous. They run 17 percent of all the general hospital beds in the country, are under church auspices. They have the largest private school system in the country. These impact the lives of millions of Americans, and so donors to those institutions are rightly concerned about the use of their money.

LISOVICZ: Frank, can you put it in perspective for us? Just how big is the Catholic Church in terms of real estate? If it was a private company, would it be in the Fortune 500? What kind of assets does it have in terms of financial figure?

BUTLER: Well, its operational budget each year, if you include hospitals, which is a large segment of it, would be in the range of $80 to $90 billion. That's in terms of income to operate its institutions. The net worth of it is, I think, gigantic, if you will. These are multi-billion dollar systems. And I don't think anyone has ever put a figure on the entire enterprise.

SERWER: Francis, do you really think you understand or have a full comprehension of the extent of the finances of the Catholic Church, particularly as it relates to the Vatican? Isn't it very hard to separate what's owned here and what's owned by the Vatican? My understanding is it's very secretive organization and very, very difficult to get disclosure.

BUTLER: Well, it is permeated by a culture of secrecy, and in the administrative area, that's particularly evident.

There are about 180 Catholic dioceses in the country, and they are separate corporations, if you will. So they are self contained and their policies vary. There's no uniform reporting. Some dioceses are very good and very open about their numbers. Others are not so.

I think that there generally speaking, there's a culture of privacy, of secrecy. These are like privately held corporations. They're all autonomous from one another. The Vatican certainly is autonomous from the dioceses. So there's no uniform administration, as well.

CAFFERTY: We mentioned in the lead-in, Francis, that at least in some areas the church appears to be starting to become a little more transparent when it comes to its finances. What's driving this change in attitude? Are they being forced, or are they doing it voluntarily? Where's the motivation coming from?

BUTLER: Well, you know, strangely enough, the church has had fairly good legislation, let's say, on its -- in its canon law that requires a certain degree of transparency. There has been very spotty conformity to that law. Their policies at the national level are quite good, actually, but again, compliance is very mixed.

So, what we're seeing now is the greatest crisis that has impacted the church in the United States in its history. And we're seeing a movement on the part of parishioners and Catholics generally to ask more questions about finances and the financial operations, and probably for the first time in their history are they asking these questions.

CAFFERTY: All right, Francis, appreciate you visiting with us here this afternoon on IN THE MONEY. Francis Butler, president of FADICA, Foundations and Donors Interested in Catholic Activities. Thanks for joining us.

BUTLER: Thank you.

SERWER: Just ahead, "Shoplifting" the musical. Find out why Winona Ryder's past troubles are inspiring a bunch of California high school actors. It's my favorite story of the week.

And if you have something to tell us, put it in an e-to at INTHEMONEY@cnn.com. And if you don't, then don't. Back after this.

(COMMERCIAL BREAK)

CAFFERTY: Who says there are no good role models for kids these days? A group of high school students in San Diego have created a musical based on last fall's shoplifting trial of actress Winona Ryder. Production is called "Sticky Fingers: The Tale of Saks, Lies and videotape." The students weren't afraid of her reaction either, they invited Ms. Ryder to come to the show. Opened on Thursday night. I understand there are rave reviews. Standing room only. Winona didn't bother to show up, though. No sense of humor, that one.

SERWER: Great stuff.

LISOVICZ: She has a sense of humor, though, because she hosted "Saturday Night Live" and she had that free Winona t-shirt. And she posed for "Women's Wear Daily."

SERWER: I think she's kind of batty.

CAFFERTY: I think Andy thinks she's kind of batty.

SERWER: She's kind of batty. You know, I think it's really great that kids did that, though...

CAFFERTY: That's wonderful.

SERWER: Because, you know, these shows, they always do the same 20 or 30 musicals, the whole thing...

(CROSSTALK)

SERWER: Over and over and over. If you're a parent, you got to see this one again. So they're doing -- that's really great, they created this whole thing by themselves.

LISOVICZ: An important footnote, it's directed by a teacher who plays piano for the show. It also doubles as CNN interviewer Larry King in the show.

SERWER: She plays Larry King?

LISOVICZ: No. The teacher...

SERWER: Yes. That's what I mean.

LISOVICZ: No, the teacher, the teacher who directed plays Larry King.

CAFFERTY: Oh, it's a guy?

LISOVICZ: Yes. Larry Ziegler (ph) I believe is the name.

CAFFERTY: Time now to check the mail bag, while they are still letting us do this. Many of you wrote in about the reported $90 million deal between -- that LeBron James signed with Nike. Charles is an attorney in Washington, D.C., wrote to us and said: "What lousy negotiators. As a high school student, James probably would have taken a million. It is up to Nike and its competitors to keep the bidding down." By the way, if Nike wants to break the contract, I will represent Nike on a contingency.

Alex in Florida wrote: "I'm 9 years old and I predict LeBron will rule the NBA." There you go.

SERWER: There you go.

CAFFERTY: "Once the Cleveland Cavaliers take LeBron, everybody will know about the team. LeBron is worth $90 million, I'm sure." The one thing to remember is, the team is in Cleveland. And on the subject of Carrot Top and why such a cheesy comedian is doing commercials for AT&T -- who wrote cheesy comedian? That's not my opinion. I think Carrot Top's terrific.

SERWER: We said worse.

CAFFERTY: Yes. We said worse. Janice in Florida wrote: "How in the world did someone as annoying and totally unfunny as Carrot Top get the AT&T gig? The answer is: his agent."

SERWER: What's his phone number?

CAFFERTY: I don't know. "That's the one you should be doing the story about, and maybe he could help you too, Jack."

Remember, you can weigh in on the topics we discussed on the program or our career choices by e-mailing us at INTHEMONEY@cnn.com. That'll do it. It's been some fun, don't you think?

SERWER: Oh, yes.

CAFFERTY: Absolutely.

LISOVICZ: I had fun.

CAFFERTY: So much fun we'll do it again next weekend. That is IN THE MONEY. My thanks to Susan Lisovicz of CNN Financial News, Andy Serwer, my friend from "Fortune" magazine. Join us next Saturday at 1:00, next Sunday at 3:00, and Monday through Friday from 7:00 to 10:00 Eastern time for that very fine morning television program called "AMERICAN MORNING." I'm here seven days a week, 24/seven, working myself to death.

SERWER: For you!

CAFFERTY: Thank you. See you tomorrow.

TO ORDER A VIDEO OF THIS TRANSCRIPT, PLEASE CALL 800-CNN-NEWS OR USE OUR SECURE ONLINE ORDER FORM LOCATED AT www.fdch.com



Iran; Should Catholic Church's Finances Be More Transparent?>


CNN US
On CNN TV E-mail Services CNN Mobile CNN AvantGo CNNtext Ad info Preferences
SEARCH
   The Web    CNN.com     
Powered by
© 2005 Cable News Network LP, LLLP.
A Time Warner Company. All Rights Reserved.
Terms under which this service is provided to you.
Read our privacy guidelines. Contact us.
external link
All external sites will open in a new browser.
CNN.com does not endorse external sites.
 Premium content icon Denotes premium content.