Skip to main content
U.S. Edition
Search
 
 
 
 
 
 
 
 
 
 
 


 

Return to Transcripts main page

CNN IN THE MONEY

Chinese Takeover of Unocal; Summer Movie Slump; Bank of America to Acquire MBNA; Iraq War Toll on Bradford, Arkansas; Interview with Robert Dilenschneider; Internet Purchase Tax; Wal-Mart Heir John Walton Dies in Plane Crash;

Aired July 3, 2005 - 15:00   ET

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


(BEGIN VIDEOTAPE)
ANNOUNCER: From New York City, America's financial capital, this is IN THE MONEY.

(END VIDEOTAPE)

SUSAN LISOVICZ, CNN CORRESPONDENT: Welcome to IN THE MONEY, I'm Susan Lisovicz sitting in today for Jack Cafferty. Coming up today's program:

Beijing pulls up to the pump: A Chinese company's bid for U.S. oil producer, Unocal, touches off a debate about U.S. security. See if China owns too much for America a for America's own good.

Plus, why the stars don't shine in the dark: Movie attendance is deep in a slump this summer. See if we're losing our love for the big screen or if something else is at work.

How the war in Iraq touches one small town: Less than a thousand people live in Bradford, Arkansas. We'll find out what happens when some of them went to fight in Iraq.

Join me today is a couple of IN THE MONEY veterans, "Fortune" magazine editor-at-large, Andy Serwer and "Lou Dobbs Tonight" correspondent, Christine Romans.

And as we celebrate the 4th of July, this weekend, Independence Day has a special meaning for a certain Richard Scrushy in Birmingham, Alabama. Prosecutors were on such a win streak, you know, with Bernie Ebbers, Dennis Kozlowski, Sam Waxal, and then Richard Scrushy walks.

CHRISTINE ROMANS, "LOU DOBBS TONIGHT": Indicted and then acquitted on all his -- on all of the charges and he does walk. What's interesting about him, as well, is this was the first person to be charged under Sarbanes-Oxley, so prosecutors get a goose egg on their first Sarbanes-Oxley prosecution.

ANDY SERWER, "FORTUNE": I think it was really an aberration though, Chris. I mea, this is not indicative of the government going after fraud. You know, right. This is truly southern gothic. I mean, he played the race card, he played the religion card. His attorney cited a number of Americans who died in combat, defending our freedom and the jury was like this, oh! (CROSSTALK)

SERWER: They bought it, hook, line, and sinker.

ROMANS: He somehow managed to equate his prosecution with a lynching and the civil right -- the unfair civil rights prosecution back in the 1960s.

LISOVICZ: But, he switched churches right before he went to trial and his name is all over the town, quite literally because of the philanthropy when Healthsouth was doing well.

ROMANS: Right.

SERWER: And now he says he wants to come back. He wants to come back too, right?

ROMANS: Yeah, he wants to come back to the company and the people who are in the company are like, no way! I mean the stock sank, you know, over -- under his tutelage, and then after he left and was indicted, the stock -- what is this like one the pink sheets now for $5 a share or something, so...

LISOVICZ: Memo to prosecutors: Come to New York, if you want to get time, because Bernie Ebbers is going to be stripped of his assets.

ROMANS: That was a fascinating trial to watch. I'm almost sorry it's over if only because it was so entertaining, day in and day out.

SERWER: It was great. Yep.

LISOVICZ: Hate to tell you, Christine, but there are more to come.

SERWER: Right.

LISOVICZ: OK, and let's stay with business. A proposed business deal is raising concern this week about national security. But what's at stake isn't missile technology or some new high-tech weapon, its oil. A Chinese company, last week, made a bid for Unocal.

The bidder is known as CNOOC and it's 70 percent owned by the Beijing government. That's raising questions in Washington about whether Chinese control of the U.S. oil company and its valuable supplies adds up to a national security problem.

For more about that, we're joined from Washington by Richard D'Amato, the chairman of the U.S.-China Economic and Security Review Commission. That group monitors deals involving U.S. and China with an eye toward national security.

Welcome, thanks for joining us.

RICHARD D'AMATO, U.S.-CHINA SEC. REVIEW COMM.: Thank you.

LISOVICZ: This deal, of course, coming as oil prices reaches all-time highs, so national security and energy policy really intertwined in something that is China's biggest foreign acquisition ever, if approved.

D'AMATO: That's right. And it is the Chinese government that is attempting here to take control of the United States oil companies. It's not one of the biggest oil companies, but substantial oil company with worldwide facilities. It drills oil and gas here, in Southeast Asia, in Africa, in Azerbaijan and other places.

So the Chinese government is trying to acquire this company, but the problem is that when they acquire companies like this, the Chinese government treats the oil as its own and controls it, it doesn't put it on the world market.

Therefore, it would be taken out of the oil market and the United States, of course, imports 12 million barrels a day so any kind of disruptions that would occur in the international market would deeply affect our economy, would cause prices for gasoline and crude oil to skyrocket and would be a national security matter because it would affect the health of our economy.

ROMANS: Dick, a lot of folks point to a xenophobia, they say we're just afraid of a communist Chinese company buying an American company. But the communist government of China has said several times now, in the past week, that this is a normal business transaction. But when you look at the financing of the deal, it's financed with zero interest and very low-interest loans, essentially it's kind of subsidized part of this deal.

D'AMATO: Yeah.

ROMANS: And if it were a normal business transaction, I guess would the United States -- would United States company be able to buy CNOOC if it wanted to?

D'AMATO: That's a very good point. The Chinese are really engaged in a kind of double think, here. The Chinese foreign minister, I think, two days ago said the United States government ought to get out of the way of a commercial transaction.

This is not a commercial transaction, this is the Chinese government moving into our economy and surely the Chinese government would never allow the United States government to go into China and purchase any kind of energy company, particularly one of their big ones. So, the Chinese treat this as a national security matter.

In fact, they are really kind of panicked because they are importing three million barrels of oil a day. And so they're -- they feel vulnerable, they feel paranoid, they want to control the hydrocarbons that they get and not be vulnerable, and that's what their quest is about.

But when they do this, they tend to disrupt the world market because they try to control the oil and, in a sense, hoard it. That would, in the long run cause a train wreck in the international oil system... SERWER: Dick, Dick, let me jump in here quick.

D'AMATO: Yeah.

SERWER: I mean, first of all, with response to -- with regard to that, I mean, of course, we, the U.S. government does has a fair amount of trying to control our interest when it comes to oil, as well. But, I want to get back to the 70 percent owned issue here.

D'AMATO: Yeah.

SERWER: We deal with companies all the time that have interest by foreign governments. Look at Airbus. We allow airlines in the United States to buy airbus aircraft, they're subsidized by governments in Europe. Fannie Mae, here in the United States, has advantages because of its ties to the U.S. government.

So, why is that any different? Sure, it's China, sure -- you know, they're inscrutable people would say, and all this, I tend to think a lot of it's xenophobia. Obviously, they have unfair trade issues with us, but how's this different from Airbus, for instance?

D'AMATO: Well, I think certainly, oil is different than Airbus in that oil affects the whole economy. When we have a supply disruption you can bring the economy down. There was a simulation done last week done by some respected organizations that showed that just a three million barrel disruption in the world oil market of 83 million barrels would cause economic havoc in the United States.

Certainly we're also concerned about aerospace, we're concerned about the transfer of our major aircraft technology abroad he and so, and that's a national security matter, too. But, oil certainly is the lubrication of our economy and it's a national security matter.

Our ships and planes can't go anywhere without these hydrocarbons, so because we're so dependent on imported oil, 12 million barrels a day, and we've not gotten any alternatives on line, there is concern about any kind of movement by the Chinese in the direction of trying to control oil and not putting it on the international market which would cause problems for the entire system in the next 10 years.

LISOVICZ: OK, you've said there's a lot of testosterone on both sides.

D'AMATO: Yes, there is.

LISOVICZ: This is a deal that is going to face very serious scrutiny and obstacles if it ever comes to fruition.

D'AMATO: Right.

LISOVICZ: Despite the fact that Chevron and Unocal may very well get together on their own.

D'AMATO: Yes. LISOVICZ: Having said that, China, an emerging economy and growing at double digits, the second biggest energy consumer, as I understand it right now behind the U.S.

D'AMATO: Right.

ROMANS: Isn't it this all gets to, ultimately, is that the U.S. sees China as the next Soviet Union?

D'AMATO: Well, I don't think that's really true. I think that we don't see them in the kind of Cold War rhetoric, I mean, they're not ever talking about burying us. They're a substantial completion and it's of substantial concern because we're talking about a communist authoritarian government.

But I think that we're concerned here about the Chinese playing by the rules of the international game, we're trying to bring them into the international system. The United States is working very closely with China to try and get them to abide by the rules and agreements negotiated, that they've negotiated over the years. So, I don't think that we have that.

I do think that there is concern about Chinese behavior in the world oil system by trying to hoard oil. We're worried about that. Now, I will say that there is some xenophobia out -- certainly there is some testosterone in Washington. Last night there was a huge vote in the House of Representatives, their -- 333-92 basically saying we don't approve of this deal.

ROMANS: That's right. They're going to try to block it, they don't want to appropriate any money to Treasury to review this and recommend it to the government or to the White House.

D'AMATO: Yes.

ROMANS: Let me quickly as you -- Andy and I both have a quick last question. I want to ask you first, there's a lot of money, American dollars floating around in China. They got to do something with it. A lot of people think Unocal is just the first thing, I mean, they are a lot of other things, Unocal's kind of testing the water. Do you think there are a lot of other companies they might buy?

D'AMATO: Yes, they're very interested in purchasing American companies, apparently, obviously they're trying to purchase Maytag, one of the Chinese groups. They've go $700 billion of spare cash hanging around because of all the trade balances that they've picked up this money.

So there's a concern about Chinese purchases in the United States economy. And there will be some paranoia about that. We think that the most of those will be commercial deals and they have to be judged on their merits.

SERWER: Hey Dick.

D'AMATO: Yes.

SERWER: Let me jump in again, real quick. Real quick last question, CNOOC's deal's better than Chevron's. Higher price, all cash, and they're saying they won't do layoffs the way Chevron would. Why wouldn't you accept that if you're a Unocal shareholder? Who cares if it's subsidized?

D'AMATO: Well, I think that if I'm a Unocal shareholder and most of them are big mutual funds I'd be worried about the uncertainties of the Chinese system. Obviously, we're talking...

SERWER: Yeah, but you get paid money. So, why -- why would you care?

D'AMATO: Well, that's true, in the sale of it. But the argument that Chevron would make is that you're going to keep the hydrocarbons here and available on the international market, not take them off the market, that's something that the shareholders ought to be looking at, too.

LISOVICZ: Right and Chevron might be forced to up the ante and everything will go away then.

SERWER: That could happen.

LISOVICZ: Richard D'Amato...

D'AMATO: Thank you.

LISOVICZ: Thank you for joining us. Chairman of the U.S.-China Economic and Security Review Commission.

D'AMATO: Thank you very much.

LISOVICZ: An unfolding story. Thanks for joining us.

D'AMATO: Thank you.

LISOVICZ: When we come back, pay up and shut up: If you hate it when people talk in the movies maybe you're why theater attendance is tanking these days. We'll look at what's behind the slump.

Plus answering the call to battle: What if your mayor and police chief got called at the same time to Iraq? It happened in Bradford, Arkansas. Find out how the town coped.

And just think of it as a dog license for your mouse: Find out about one state's push for an internet sales tax how it could help small businesses.

(COMMERCIAL BREAK)

ROMANS: Summer movies used to be able to pack theaters with the promise of a hot story in a cool room. But more and more it's looking as though people are thinking of better ways to get their film fix. As of last Sunday U.S. sales of movie tickets were down for the 18th week in a row. And even Hollywood firepower like "Batman Begins" and "Bewitched" couldn't bust the biggest losing streak in 20 years.

For a look why the popcorn's getting stale at your local multiplex, we're joined by Dade Hayes, senior editor at "Entertainment Weekly" he's also the coauthor of "Open Wide: How Hollywood Box Office Became a National Obsession."

Dade, welcome to the program.

DADE HAYES, "ENTERTAINMENT WEEKLY": Happy to be here.

ROMANS: Great, listen, I have theory. I mean, I haven't seen a good movie in a really long time. Could it be that the problem with Hollywood and going to the movies is that there's nothing you'd really want to see? You'd rather pay $3.95 get it at on demand?

HAYES: Yeah, quality is a real issue, I mean, you think about the remakes and the sequels and the tired concepts that keep getting recycled. Now, I happen to enjoyed "Batman Begins," but it's still "Batman 5," in a sense. "War of the Worlds" might be spectacular, but made as a film before. It all feels very familiar and I think audiences are starting to get wise to that.

SERWER: All right Dade, I'm going to pile on a little bit, there. "Batman," "bewitched," "War of the Worlds," "Longest Yard," "Star Wars," "Charlie and the Chocolate Factory," "Herbie," "Dukes of Hazard," "Bad News Bears."

ROMANS: Wow!

SERWER: All remakes and all sequels and the last time the movie business was in this bad shape was 1985, that's the last time ticket sales were down 18 weeks in a row, but the movies back then were actually pretty decent. You had, "Back to the Future," "Color Purple," "Out of Africa," "Cocoon," "Jewel of the Nile," "Witness."

These are all movies that people still talk about that still watched on television. Isn't it true the NBA has taken over Hollywood? "Safety, safety, safety" is that really what's going on?

HAYES: That's definitely true, I think, on the studio side, but what's also interesting is that we have a system that's matured. You know, you have megaplex theaters up to 30 screens under one roof, you've go DVD which is now.

You know, six or seven into its life and that also is starting to mature to the point that people rush out the first weekend a DVD is on sale and then they don't buy it again. It's an amazing phenomenon. And when you can buy the DVD three months later, people are just saying why don't I wait?

ROMANS: You've got all this really great technology you can get for your living room, now, and I mean, people are having people come over and watch a movie. I mean, you can have a great video/audio experience in your living room now, you don't need to go to a theater and pay all that money. HAYES: Right, exactly. I think there's a real -- you know, just an array of options, I think, for the average consumer. By the way, not just home theaters, but video games and, you know, the internet has gotten to the point where people are, you know, they're busy with downloading music and so forth, so as the whole entertainment space grows, it may not be always good news for the movie business, which is a very traditional, you know, down the middle kind of business.

SERWER: All right, Dade, just to continue my rant about (INAUDIBLE), the only two original movies I can see this year are "Mr. And Mrs. Smith" if you can call that original, and "Madagascar" an animated picture. It's unbelievable.

HAYES: Yeah.

SERWER: I want you to pick up a little bit and talk about how the movie theaters may just be a loss leader business now. You put them out there the movies actually only really make movies in overseas and other forms of distribution, like cable and DVDs. Right?

HAYES: It's amazing, I mean, the head of one major studio told me that we're basically a delivery system for DVD. I mean, that whole system, you know, when you think about the red carpet premieres and the junkets and...

SERWER: Yeah.

HAYES: The whole run-up to the release, it's -- they've put the DVD release closer to the theatrical release specifically because of all that hype and that noise because they know that's going to really stick in people's mind, oh, I didn't see that in the theater, but I guess I'll bring it home for three bucks.

LISOVICZ: Dade, you are breaking my heart.

HAYES: It's a cold fact.

LISOVICZ: I was one of the few optimists, because a few years ago, I thought wow, the Independent Film Channel on cable, you know, the Sundance Film Festival, the East-West, the Havana Film Festival and I was thinking, you know, this is going to be a new renaissance not only for films, but for smaller films to find their audiences and it's just not happening.

HAYES: Well, it's an interesting summer in terms of the indies that are popping up. I mean, you think about movies like "Murder Ball" or "Rise" or, you know, these kinds of offbeat movies. Maybe in this atmosphere when people are spurning the big major studio stuff, maybe those -- maybe we might see a, you know, a "Before Sunset" type of movie that just kind of blossoms in the summertime, just like we did last summer.

SERWER: I hope that's true, Dade, because some of the others babes, you're going to have to pay me to go see, I think. I don't know if I'm holding my breath for the "Dukes of Hazard," but on the other hand, who knows. ROMANS: Andy loves "Back to the Future." You can go back to the '80s.

SERWER: All the old stuff. All right, we're going to have to leave it at that, Dade Hayes, thank you for coming on to the program. Senior editor at "Entertainment Weekly."

HAYES: My pleasure.

SERWER: Coming up after the break, extra credit: Bank of America says it's shelling out the green for a plastic giant. See if Wall Street likes the numbers.

Also ahead, answering the call: All over America, little towns are sending people to Iraq. We'll see how the war affected a place called Bradford, Arkansas.

And the undercover hero: To many, the man known as "Deep Throat" was as brave as he was anonymous. On this 4th of July weekend, we'll look at the state of the American's hero.

(COMMERCIAL BREAK)

LISOVICZ: Now let's take a look at the week's top stories in our Money Minute." Alan Greenspan and company raised interest rates another quarter point on Thursday to 3.25 percent. It's the ninth time in a year that the Federal Reserve has raise rates a quarter point, and you can expect more of the same. The Central Bank hinted at more measured increases. The next fed meeting is scheduled for August 9.

Former WorldCom boss, Bernie Ebbers is going for broke. Ebbers is going to fork over most of his assets valued at 25 to $40 million to investigators who lost billions when the company went bankrupt. Ebbers, who was convicted of fraud and conspiracy charges in March is awaiting sentencing.

And Big Mack is back: Morgan Stanley rehired former president, John Mack to be its new chairman and CEO. Mack is replacing Philip Purcell, who stepping down under pressure last month. Purcell forced Mack out of Morgan Stanley in 2001. Investment bankers and traders who never Purcell, upholding Mack's return a victory, and gave him a standing ovation on the trading floor.

SERWER: Also this week, Bank of America is looking to become the nation's biggest credit card company with a $35 billion offer for MBNA. Bank of America shares fell on the news as some shareholders seems to think it's paying too much for MBNA. But as you can see, shares of B of A have been in a slow, but steady rise over the past five years and there aren't too many big caps you can say that about. That makes Bank of America our "Stock of the Week."

And you know, if you actually look at that chart, the stock has doubled over the past five years, while the overall market is down 15 percent. This is a very acquisitive company. Ken Lewis and before him Hugh McCall, from NCNB, the Nation's Bank, putting it together with Bank of America, the fleet deal. And say what you, but they seem to have the magic touch when it comes to acquisitions.

LISOVICZ: To make a merger work.

SERWER: Yeah. It's hard.

ROMANS: I'm surprised no one smelled that this deal was coming, because, remember a couple of weeks ago when all of these executives from MBNA were in a helicopter that crash in, was it the East River?

LISOVICZ: And survived, to be sure.

ROMANS: And survived, amazingly, they all got out. I thought why you would you ever have all of your executives in one helicopter? And now we know! They were coming to meet with Bank of America and they have forged a deal.

LISOVICZ: And, I guess, what's it is about MBNA, it's about the credit card business. All about the credit card business, and MBNA has carved out a niche for doing niches when credit cards really made it popular, whether it's your alma mater or your favorite sports team .

SERWER: Affinity cards.

LISOVICZ: Affinity cards, right, and that's really what made it very attractive for B of A?

SERWER: Yeah, absolutely. They have basically -- Bank of America is going to be doubling up, going to 40 million accounts from 20 and they get all of those affinity cards. It's a big, big player. And you know, a lot...

LISOVICZ: Why is that? Because of interest rates, because of what they charge?

SERWER: Well no, it's because people like to have New York Yankee cards. I mean, people like to have barber shop quartet cards. We had -- there was 5,000 affinity cards that they have out there.

LISOVICZ: Who knew?

SERWER: It's amazing.

ROMANS: I know. Well, are they going to address the identity theft issue? You know, credit cards and 40 million potential credit card accounts breached a few weeks pack. Have they said anything about identity theft?

SERWER: They haven't said anything about that, and of course, a lot of card holders are concerned, you know, whether their account going to change over and they probably will. There shouldn't be too much disruption.

A lot of people are accusing Bank of America of trying to become a financial sm market, here. I don't really think that's true. They're just expanding a business that they already have. There are not too many banking acquisitions they can't do any more, they're so big...

LISOVICZ: So big.

SERWER: It's them and Citigroup are the two big consumer branches. You got Wachovia is out there, too. And that's pretty much it. I think that this is a company that is going to continue to grow, but in the strict banking businesses. So it looks like a pretty good deal and it's not that expensive. It's not as expensive as some people on Wall Street think it is, I believe.

All right, also this week, John Walton Wal-Mart heir, John Walton, died when a plane he was piloting crashed in Wyoming. The 58- year-old Walton was not involved in the day-to-day workings of the company, but he was a board member and leader when it came to Wal- Mart's many philanthropic efforts. I had the privilege, I can say, of getting to know John Walton a little bit last year when I was doing a story about the family. And he was a rock solid figure. He was a Vietnam veteran...

LISOVICZ: Silver Star recipient.

SERWER: A renaissance man, exactly, and I think the company will really miss him. And, you know, it's obviously, a big loss for them.

ROMANS: So will Philanthropy as wall, he was somebody who really did a lot of good work in the education field, you know, constantly giving away money and trying to improve his, sort of, his pet projects.

LISOVICZ: I think when you see heir to Wal-Mart fortune as a headline in the obituary, it really does a disservice to this man who was a renaissance man, who was a medic in the Vietnam War, volunteered for duty. Silver Star for his bravery.

And as you mentioned, Andy, you were one of the very few people who got to know him in terms of the media, really was able to bring out some of these great attributes. He will be a loss for the Walton's, for sure, and for education, which was a particular passion for him. A very private family, isn't it?

SERWER: Oh, absolutely. They're private, they're secretive, but in a away, John was the most public of them because from time to time he would give addresses where he talked about education, school reform, charter schools, whether or not you agree with that because that's a controversial set of programs.

He was sincere and he really cared. And I think I want to pick up on something you were saying, that he led the company's, and especially the family's philanthropic efforts. It remains to be seen whether the family can follow in his footsteps and continue to step up to the plate. That's a hundred billion dollar fortune, a huge amount of money and they have to figure out how to do that, how to dispose of dispensable funds...

LISOVICZ: Wisely.

SERWER: And what's a fund. And it's a huge, huge challenge for them.

ROMANS: Indeed.

SERWER: So, it's a story we'll be following in the future, I'm sure. IN THE MONEY will be right back.



FREDRICKA WHITFIELD, CNN ANCHOR: Hello. I'm Fredricka Whitfield at the CNN Center in Atlanta. IN THE MONEY continues in a moment. But first, here are the headlines.

Kidnapped in Baghdad. No word yet on who snatched Egypt top envoy to Iraq or why. Witnesses say eight gunmen grabbed Ihab al Sherif after he stopped to buy a newspaper, pistol-whipped him and then tossed him into the trunk of a car.

Once again, a pilot flies where he's not supposed to. This time it was this Cessna over Camp David where President Bush is spending the weekend. Two f-16's escorted the plane to a local nearby airport. The pilot questioned and released.

Remembering a former statesman and conservationist. Gaylord Nelson died today at the age of 89. He served two terms as Wisconsin governor and then as a U.S. senator before organizing Earth Day 35 years ago.

I'm Fredricka Whitfield. A complete wrap-up of today's news coming up at the top of the hour on CNN LIVE SUNDAY. IN THE MONEY continues right now.

ROMANS: The war in Iraq has taken its toll on towns across the U.S. Some more than others. Take, for example, Bradford, Arkansas. Population 818. In October 2003, Bradford's mayor, along with the police chief, and eight other residents, all Arkansas national guardsmen were called up to serve in Iraq. Then the high school librarian was called to active duty by the Air Force Reserve.

In their absence, the town suffered emotionally and financially. A year and a half later, the Mayor Paul Bunn's tour of duty was up. And he was back in Bradford with his work cut out for him. Mayor Paul Bunn joins us now with his story.

Welcome to the program. First off I'd like to say a lot of Americans go through life without serving their city, let alone their country. You've done both. That's something you should be congratulated for.

PAUL BUNN, MAYOR OF BRADFORD, AR: Thank you very much.

ROMANS: Tell us what it was like, so many people in your town, a small town in Arkansas, leaving for Iraq and then coming back to try to sort of pick up the pieces?

BUNN: I tell you, it was difficult for us to be able to leave and leave our families and our jobs and everything behind and then coming back and trying to fit back in after 18 months of being gone. It was really hard.

LISOVICZ: Mayor, first of all, we all congratulate you on your service and so happy to see you back in one piece. Having said that, your experience in Iraq was very different than what you saw. I was very touched by some of your recollections. You said when you would go into a town in Iraq, you thought that it would be like our town. You would get to know the people as you rebuilt or secured the town. It wasn't like that at all?

BUNN: No, it wasn't anything like that.

LISOVICZ: Can you describe what you experienced?

BUNN: Well, it was so much different than an American town. Say, here in America, whenever the national guard is called up because there is a tornado or something like that that happens we go in there and we help the people put their lights back on, get their services back together and that is kind of what we were expecting it would be like going into Iraq.

But there, you were dealing with a lot of fear, because the people, you know, were being ruled by the insurgencies. We were always in battle. It was nothing like what I expected.

SERWER: Paul, let me ask you a question and that has to do with your feelings about the war. Did you support the war then? And do you support the war now? What are you feelings about the conflict?

BUNN: Before I went to war in Iraq -- you could tell by the interviews that I gave before -- I was 100 percent for going into Iraq and helping them rebuild their country by showing them support. Now, my feelings are completely different after going over there and serving for a year and gone away from my family for 18 to 20 months. The reason why that my feelings have changed since then are because of the amount of money that we're wasting over there in Iraq.

ROMANS: When you look at your own town, you come back. You had started a water project and other projects. You left. You came back. Basically, the town standing still. Do you feel a little bit of contempt that you saw that money being spent in a country halfway around the world where you say people didn't really appreciate it. You build something there, they blow it up. You'd like to see maybe some money spent in your own town?

BUNN: Exactly. For instance, when I got to come home for my two weeks leave that every soldier gets during their one year of duty, I came home and because of the way the budgets were running and the shortage of money that was coming from the government, I had to lay off a police officer.

So, you know, that put a bad taste in my mouth because back over in Iraq, we were helping hire their police officers using American money and not only that but we were rebuilding their schools, we were rebuilding all of their infrastructure, their water, their sewer, everything to do with putting their lives back together, while back here in America, our infrastructure was falling apart. You know, I just didn't understand the math there.

LISOVICZ: Mayor, this past week, the president spoke to the nation about the war in Iraq, setting no timetable. Several times during that speech he referenced 9/11. The different world that we live in. And tying both Iraq and 9/11 together. Having been there, do you think that is a fair comparison?

BUNN: No, I don't. I really don't think it's a fair comparison at all. 9/11, to me, you know, is not the same as what we're doing over in Iraq. In Iraq, it's a breeding ground for terrorism. The reason why it is a breeding ground for terrorism is because Americans are there. If you'll look at Iraq prior to us going in there, I'm sure that there was weapons of mass destruction, but the amount of terrorism was not there. The only reason why the terrorists are there now is because we are there.

SERWER: Paul, I'm curious to know your feelings about the draft. You volunteered for service since you're a guardsperson. You chose to go into the guard I guess is the best way to put it, as did a lot of other people in your town. What would you feel if there was a draft in this country for this war right now?

BUNN: If they would do a draft so that we could end this war, then I would be for that. But they would have to run this war completely different than what they're running it now.

ROMANS: How do you think they should run it?

BUNN: I think what we should do is we should take the country of Iraq and we should cordon it off. All of the borders around it should be protected. You could take all of the American troops and use all of our air power and we could stop anybody from coming across the borders. Then you could let the Iraqi government and the Iraqi police and all of their armed forces, you know, take care of the inner parts of Iraq.

And while we're in there, we could disarm all of the people that are in Iraq. You have to understand, this is something that a lot of people don't understand, everyone in Iraq is allowed to have a weapon in their house for each adult over the age of 18. And that's -- In America, that may be okay, but in Iraq, when you're fighting an insurgency like we are, that isn't okay.

LISOVICZ: Mayor, before we go, can you tell us how Bradford is doing now? It really took a big toll on the town with you, the police chief, the librarian all over in Iraq. How is it doing now?

BUNN: It's doing okay. It's slow getting back on our feet. We're still searching for ways to make money. We need help. We need grants, you know? I didn't think it was fair that when we left, all of our grants got, you know, cut away from us. So we're back in trying to get our grants put back in place so we can have our fire department and police department and everything back up to the speed it was prior to us leaving.

LISOVICZ: Mayor Paul Bunn, we're happy to have you back safely. We hope you enjoy this holiday. Thanks for joining us.

BUNN: Thank you so much.

LISOVICZ: Mayor Paul Bunn, the mayor of Bradford, Arkansas, who is still on active duty, it should be said. There's much more to come here on IN THE MONEY. Up next how to spot a hero on this Fourth of July weekend. We will look at where celebrity starts and real heroism starts.

And the virtual taxman. Find out how a tax for online sales might actually help some small businesses get bigger.

(COMMERCIAL BREAK)

SERWER: If you're looking for inspiration from a real American hero this Fourth of July weekend, our next guest has put down that newspaper or celebrity magazine. He says in today's society, you're going to have to dig a little deeper.

Robert Dilenschneider is author of "A Time for Heroes" and he is going to help us distinguish between heroes and icons. He's founder and CEO of his own public relations firm, the Dilenschneider group. Bob, welcome to the program.

ROBERT DILENSCHNEIDER, AUTHOR, "A TIME FOR HEROES": Andy, great to be with you. Thanks very much.

SERWER: You're welcome. I want to ask you about the state of the American hero. Who are our heroes today?

DILENSCHNEIDER: It's tough to find American heroes. I don't think we find them in business. I don't think we find them in politics. There's a young man the other day, a couple of years ago, who was a 13,000 dollar a year government clerk.

And when a plane hit a bridge in Washington and the passengers went into the water and dying and close to death, he jumped off the bridge and saved one of them. That's what he did. Then he went back to his job and became a $14,000 a year government clerk. That's the kind of hero that's out there in America today.

When I was in an airport the other day, 15 men walked through the airport. They happened to be just coming back from Iraq. The shiver that went up the spine of everybody in the airport when they cheered is bigger than what Michael Jackson or somebody on the cover of "People." those are the heroes today.

SERWER: There was a great story recently about an American Airlines flight, some guys were coming back from Iraq and all of the people in first class gave up their seats for the guys to sit in first class. And I think the guys in Iraq are heroes and also the people who gave up their seats are heroes. Little everyday things you can do. Tell me the difference between heroes and icons. Plenty of icons, plenty of celebrities, but those aren't heroes.

DILENSCHNEIDER: Celebrities, icons, the people who are "People" magazine I guess those are icon to see some people. Heroes to me are like Jerry Fairington (ph) in Dallas, Texas who doesn't need the money. Any time he sees an older person on the other side of the street and walks across the street and helps that person come across the street.

That is a terribly heroic action. It's something that is right. Jeff Immelt of General Electric has come out for green becoming a green company. That's a heroic act in the face of a lot of people that just simply don't believe and won't accept it.

LISOVICZ: Bob, Susan Lisovicz here. Good to see you. We celebrate our independence this holiday weekend. Of course, we talk about and think about our founding fathers who do seem so heroic by today's standards. Thomas Jefferson, Renaissance man. George Washington, a hero. Alexander Hamilton who put together our banking system. Why does it seem Washington is letting us down so constantly?

DILENSCHNEIDER: Susan, it's right there. Washington is polarized. Nobody talks to one another today. We take positions and force the positions through. There are so many big things that need to get done in this country and need to get done by Washington politicians and they're really not getting addressed. It's very simple. A Washington person takes a position and their marginalized. George Voinovich came out against Bolton. He's marginalized. He is going to have a very tough time in the Republican Party going forward.

There are heroes in Washington. People like Arlen Specter who is going to select the next judge after Sandra Day O'Connor and other judges probably thereafter, is fighting against chemo -- against cancer. Virtually every day. There are heroes like that. But very few. We need people that are willing to step up and really tackle the big ideas and go after big things this country needs.

SERWER: Bob, I'm disappointed. I guess Tom Cruise is not one of your choices at this particular point? But leaving him aside, you know, it seems that some heroes do come from Washington, DC. And they manage to bridge the partisan gap. And I think we're talking about, say, FDR on one hand and Ronald Reagan on the other hand. A lot of people still have bad things to say about Ronald Reagan, as well as FDR but you seem to think both of those men were heroic?

DILENSCHNEIDER: Absolutely. I agree with by the way on Tom Cruise, Andy. But FDR broke the back of the Depression. That's what he did. He restored this country and put in place all of the systems that create what we enjoy today. Whether you liked FDR or not, it was extraordinary. Lyndon Johnson broke the back of the civil rights movement. Jack Kennedy started Lyndon Johnson, Texan fulfilled it.

Ronald Reagan broke the back of communism. Extraordinary things by men who were really, frankly, ordinary men but they stepped up to the plate and did something really important. We need people like that in American life today. We're bereft of it in Washington.

ROMANS: What is going to change that, Bob? Christine here. I am wondering, what is going to change that? I know that there is a pretty low approval rating of Congress. Maybe voters are going to have to get out there and kick some of these people out and try to find heroes themselves?

DILENSCHNEIDER: I think right now we are at a vortex, Christine, in the American life. George Bush has said he's going to stay the course in Iraq. He's got a significant number of people saying they're for that. So I think we're going to really have a decision coming down that's going to set the course of politics for the next 25 years that is are we going to be in Iraq and fight the game in the Middle East or are we going to be out of Iraq and become somewhat parochial and protectionists.

That is going to be a major decision for the American public. American politicians are going to come down on either side of that issue in the next two years. And that, I think that will spell who is a hero and who is not a hero.

ROMANS: All right. Robert Dilenschneider, "A Time for Heroes," is the book. Thank you so much for joining us.

DILENSCHNEIDER: Thanks so much for being with the three of you.

ROMANS: Plenty still to come on IN THE MONEY. Ahead find out what is behind the fireworks. We'll show you a Website that will test your knowledge about the events behind the Fourth of July

And if you can tear yourself away from the barbecue this weekend, drop us a line. E-mail your rants and raves and barbecue recipes, I guess, to inthemoney@cnn.com.

(COMMERCIAL BREAK)

LISOVICZ: The taxman is taking another shot at Internet purchases and we all know why consumers don't like but our Allen Wastler isn't so sure Internet businesses should fight so hard. That our subject this week of "Inside/Out." You taking the contrarian view again.

ALLEN WASTLER, MONEY.COM: First of all, New Jersey a week ago through the tax committee they have there, all of a sudden, they got a shortfall there like every other state. They said, hey! Let's tax downloads, okay? They went after everything. They went after gym memberships and pizza delivery but they also went after Internet downloads. That got me thinking, okay, six percent sales tax so my iTunes from 99 cents a song to $1.05 a song.

Now I listen to a lot of songs. I'm saying, now wait a minute, should I take the hit? But then I look at it and start saying, now wait a minute, this is part of a wave that's coming on right now. Wisconsin tried to do much the same thing. And there's a big program for all of the states to get together and rationalize their state sales taxes to become the big Supreme Court objection to states putting their sales tax on out of state purchases which is complicated, all right? So they're looking at ..

SERWER: Good.

WASTLER: I found a study that says over 10-year period, states tend to lose $440 billion on e-commerce sales tax revenue.

ROMANS: Wow. They want a piece of the action.

WASTLER: This is pretty significant now. Let's think about the Internet. There's a lot of problems on the Internet right now. We've got a growing problem with fraud. A lot of small businesses that try to get on and they can't handle it because of the fraud issues that develop. You got Visa and MasterCard saying you got to take the hit on this, not us.

What would fix that? People tend to pay attention to things that make money. Our government tends to focus on what is the tax base here? What is the tax base there? If the Internet stops its lunatic fringe thing, no, no taxes here! But actually starts contributing a little bit.

SERWER: So you're for taxes on the Internet? I can't believe it!

WASTLER: Tax my iTunes but I think of the fraud stuff that develops. This that and the other. Let's get money. Let's get some attention ...

LISOVICZ: You're getting credibility, in other words.

SERWER: Would you tax Black Sabbath more?

WASTLER: I'd tax some things -- Barry Manilow, he would get hammered with me!

LISOVICZ: Let's go to the fun site, please.

WASTLER: Fourth of July weekend. See what your Revolutionary War knowledge is like.

LISOVICZ: History 101!

ROMANS: This is what it's all about.

WASTLER: Here is question number one.

In which battle did the British surrender near Freeman's Farm? Concord, Saratoga or York ...

ROMANS: I know.

WASTLER: You do?

ROMANS: It's Saratoga.

LISOVICZ: I was going to say B too.

It's B.

WASTLER: Very good! I I'm proud of you guys.

SERWER: Very good.

WASTLER: Next question is tricky.

When was the first Independence Day celebrated?

ROMANS: It wasn't -- '78.

WASTLER: You think? Andy?

SERWER: It's a trick question! They did something on July 4th, 1776.

WASTLER: They declared it and went out and got a beer but that wasn't official. 1777. There you go.

ROMANS: Trick question!

WASTLER: Final question. With which event was Paul Revere associated? Concord, Boston, or Baltimore.

SERWER: A. A.

LISOVICZ: It's a.

WASTLER: Are you sure?

LISOVICZ: I go with the crowd.

WASTLER: Very good!

SERWER: I knew that.

WASTLER: Longfellow will guide you through that. It's Concord. Lots more questions on the site.

SERWER: I like that.

ROMANS: But it's Concord - Concord.

SERWER: Concord?

ROMANS: Battle of Concord.

LISOVICZ: Coming up next on IN THE MONEY, it's Concord. Time to hear from you as we read some of your emails from the past week. And you can send us an email right now. We're at inthemoney@cnn.com.

(COMMERCIAL BREAK)

LISOVICZ: Now it's time to read your answers to our question about what you'll cut back on to pay for more expensive gas.

Rick from Ontario wrote, "Here in Canada gas is already about $4 a gallon so I've cut back on groceries. I'm sure if gas was so expensive in the U.S. there would be a revolt." Probably true but we're not at $4 yet. Rich wrote, "To help me afford higher gas prices I've decided to spend less of my tax money to subsidize corporate CEOs as they shove their money into overseas tax shelters. Oh wait, I can't do that without electing an entirely new government.

And Paul wrote, looks like I'm going to put an end to my daily $3 latte habit. So if you own any Starbucks stock, this may be the time to sell."

Good point.

Now for next weeks email question of the week, "Is the war in Iraq having any effect on your community?"

Send your answers to inthemoney@cnn.com and you should also visit our show page at money.com/inthemoney, that's where you'll find the address of our fun site of the week where you'll be quizzed on your knowledge about revolutionary history.

Thanks for joining us for this edition of IN THE MONEY. Thanks to "Fortune Magazine" editor at large Andy Serwer, LOU DOBBS TONIGHT correspondent Christine Romans and money.com managing editor, Allen Wastler. That's it for this edition of IN THE MONEY. Enjoy the rest of your holiday weekend.

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

CNN U.S.
CNN TV E-mail Services CNN Mobile CNNAvantGo Ad Info About Us Preferences
Search
© 2007 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. Site Map.
Offsite Icon External sites open in new window; not endorsed by CNN.com
Pipeline Icon Pay service with live and archived video. Learn more
Radio News Icon Download audio news  |  RSS Feed Add RSS headlines