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CNN PRESENTS

The Poverty Trap

Aired September 2, 2006 - 20:00   ET

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


CAROL LIN, CNN ANCHOR: I'm Carol Lin and here's what's happening right now in the news. Israeli missiles destroy a house in Gaza but no one else is hurt. Sources say the people inside had advanced warning. Israel says the attack targeted a building used to make and store weapons.
LIN: A major NATO offensive in southern Afghanistan leaves more than 200 Taliban fighters dead. Operation Medusa is in its second day. NATO says four of its troops have also been killed.

And fugitive Ralph "Bucky" Phillips now an accused killer. Just in the last hour we got word that one of the New York State troopers he's accused of shooting died. The trooper earlier had his leg amputated. The manhunt goes on for Phillips.

I'm Carol Lin. Up next, CNN PRESENTS: "The Poverty Trap." A conversation with President Clinton. Trillions of dollars donated to end poverty, but it still exists. Dr. Sanjay Gupta discusses some of the possible solutions in a provocative chat with the former president.

(BEGIN VIDEOTAPE)

ANNOUNCER: In big cities.

UNIDENTIFIED FEMALE: We're poor people. We don't have anything right now.

ANNOUNCER: And small towns and villages.

UNIDENTIFIED MALE: In this area, there's no jobs, no factories.

ANNOUNCER: Poverty kills 30,000 children worldwide every day. Nearly 1 billion people live on less than $1 a day. Are the billions spent each year getting the job done?

BONO, SINGER: This can be a generation that can end extreme poverty.

BILL CLINTON, U.S. PRESIDENT: We don't go around and decide in advance what's best for people. We come out and ask them.

ANNOUNCER: Here's Dr. Sanjay Gupta in New York.

SANJAY GUPTA, CNN CORRESPONDENT: Hello from New York, one of the richest cities in the country and in the world as well. Yet poverty, in so many ways, is just outside the window. We're coming to you from Harlem and the offices of former President Bill Clinton. Thank you very much for joining us.

CLINTON: Glad to do it, Sanjay.

GUPTA: As president, as a former president as well, you decided to take on formidable adversary, poverty. You obviously care a great deal about this in your work through the Clinton Global Initiative. How do you get other people to care about poverty, not from a moral standpoint but from a pragmatic standpoint?

CLINTON: Well, in America, if people move from poverty to the middle class, from a pragmatic standpoint, the taxpayers are not paying to support them, instead they become taxpayers and help to support the country.

And, secondly, one of the ways we generate economic growth is by creating more jobs and you have to have people to fill them. So, there are good pragmatic reasons as well as the moral reasons for trying to pull the country together and pull people out of poverty, help them work themselves out.

GUPTA: I want to talk specifically about what it means to be in the poverty trap. I want to take a look at that. Looking at one of the most impoverished cities in America, Detroit. Fully one-third of the people living there actually do live in poverty. But as we found out, people are still proud and want to revitalize their once-proud neighborhoods.

(voice-over): Detroit's east side. Its people and neighborhoods have been hit hard by years of poverty and neglect. In 2005, the city had some 12,000 abandoned homes. Now, many are fighting back.

UNIDENTIFIED MALE: Let's go.

MIKE FISHER, DETROIT COMMUNITY INITIATIVE: Two new houses being built on the side of it. Two new houses across the street. This has to go. Address right there.

GUPTA: Mike Fisher runs DCI, the Detroit Community Initiative, a nonprofit organization that gives high school students a summer job. And a chance to improve their neighborhoods.

UNIDENTIFIED MALE: It just makes me feel sad to look at something like this.

GUPTA: They are using a global positioning tracking device to mark the exact locations of destroyed and abandoned homes.

UNIDENTIFIED FEMALE: This one burned up the side of the house.

FISHER: We try to work with the mayor's office, the Detroit City Council, the department heads, other community groups to try to make it clean and safe.

Picking up tires, cleaning up dumping, rehabbing homes, building new homes, so we're bringing something to the table.

GUPTA: The city receives the information and prioritizes homes for demolition.

They are replaced by low-income housing that's paid for by a federal tax credit program.

UNIDENTIFIED FEMALE: I feel like I'm actually achieving something, because when I go out and I help out, I'm making an impact on the city.

FISHER: One block at a time. One family at a time. We can turn things around.

UNIDENTIFIED FEMALE: Right here. Right here.

GUPTA: This is Saratoga Street. Where Nadira Wade lives. Nadira has 14 grandchildren. She's lived in this house for 19 years.

NADIRA WADE, DCI BOARD: Look there. You can see right up into the roof.

GUPTA: And it needs a lot of work.

WADE: There is a crack in the kitchen here, right above the stove. It leaks right here. We're poor people. We don't have anything right now.

GUPTA: But she still has hope for her neighborhood, and that's why she's working with Mike Fisher and DCI.

WADE: I'm on the board of directors, and we're trying to rebuild the neighborhood back up, from what it was to something better. Low- income housing for people like myself, which I own my house now. I can't afford to fix it, but it's mine. When it rains ...

GUPTA: DCI plans to help Nadira replace her roof.

WADE: It's just a struggle. It's just things is too high. Your gas bill, light bill, telephone bill.

GUPTA: Despite the difficulties, Nadira still believes her work with the Detroit Community Initiative will increase the value of her property and improve the value of the neighborhood.

WADE: When we get through building all these 49 brand new homes, I believe that people will start having more respect, and it will give them something to look forward to.

This is your neighborhood, respect your neighborhood! You live here. These people don't have any hope. They don't have any hope because it's like they've just given up. I'm not going to give up.

GUPTA (on camera): So Nadira represents one of the 37 million faces of poverty out there. You know, without sounding unsympathetic, whose responsibility is it really to take care of her? Is it the government's, the community's, her own?

CLINTON: I would say a little bit of all. The overwhelming majority of poor people are capable of doing some kind of work. One of the things that I think is important about the film segment you just showed is that the work of revitalizing housing or building new housing for lower income people has a government component, the low- income housing tax credit, has a local community component. They have to prioritize what's going to happen when.

But it's also good for the neighborhood. Not only in terms of raising property values in the neighborhood, but it can provide jobs for people. You saw those young people working in the summer, going around trying to organize the neighborhoods for reconstruction.

There can be construction jobs that are offered to people who live in the neighborhoods as well. I think that the only way to get this done is for there to be a strategy which -- in which the federal government provides some financial incentives, the communities organize what's going to happen and then people in the communities are given a chance to work toward improvement of their lives.

GUPTA: You know, this question of responsibility does come up a lot. And is it a political issue to some extent? I mean, are people divided on whether or not and how we should help impoverished people in this country?

CLINTON: I don't think so much anymore. Since we passed welfare reform 10 years ago, and people know that able-bodied people on welfare do have to work when they can or pursue an education to get the skills to go to work, most people know that this country does not finance idleness to any great extent.

I think the far bigger problem is the lack of organization, education and training and investment. And most people, for most people poverty is a little bit out of sight, out of mind. If they don't understand what could be done to reorganize these neighborhoods. A lot of this is the lack of systematic organization and investment. And if we had it, you would see these poor people doing quite well.

There's no lack of intelligence or willingness to work in most of these places, and they just need investment and an organized plan to make it work.

GUPTA: And we're going to continue dissecting down on that specific issue, specifically looking at are we really looking at a country of haves and have-nots. I'm going to ask the president about that. And what can possibly be done about that as well. Stay with us.

(COMMERCIAL BREAK)

(BEGIN VIDEOTAPE)

UNIDENTIFIED FEMALE: Sometimes it's almost like there's no happy medium. There's either wealthy people or there's poor people. UNIDENTIFIED FEMALE: I remember when I came over here, I wished to have a house. But how am I going to get a house if I have no money? I have not enough money. I don't have any career. I have nothing.

UNIDENTIFIED MALE: (unintelligible)

UNIDENTIFIED MALE: They got me on some food stamps and I draw my disability, Social Security to pay the rent and then have a little extra each month for food and stuff like that.

UNIDENTIFIED FEMALE: It's been a long, hard road but, you know, we'll make it.

GUPTA: Welcome back. We are talking about poverty, the poverty trap specifically with former President Bill Clinton.

You just watched that clip about Detroit, Mr. President. I am struck by those images of Detroit. Some of those ramshackle homes and stuff like that and we saw in New Orleans as well, what I felt, and I know you did as well, some of the rawest distinction between rich and poor. Do we live in two Americas, haves and have-nots?

CLINTON: We do. For a period of time after World War II, when we were industrializing, we were growing together, from roughly 1945 to 1973. And in 1973 average hourly wages peaked.

So if family income grew between '73 and the time I became president, it grew because there were more two-income families and because families had more wealth in their homes if they owned homes. But average hourly wages didn't go up.

Part of that was the globalization, the economy. But part of it also was a result of government policies, which favored tax benefits to wealthy people over the middle-class and over helping poor people move into the middle-class.

And then when I became president, in my second term, for the first time since 1973, average hourly wages started to go up again. And families started to grow together again. And the bottom fell through the economy of our society actually grew more rapidly than the top fifth in percentage terms.

But it was a real struggle and it was a result of creating more jobs, targeting tax cuts to the middle-class for child rearing, childcare, college education, and a big increase in the earned income tax credit for more modest-income working families so that we could lift them up.

And there were lots of other things that we did, too, but you have to do in it a deliberate fashion, but it works. In my first eight years, we had 50 percent more jobs than in the previous 12 years, but 100 times of people moving to the poverty to the middle- class, and that's the direct result of a policy choice that we made to try to grow together and to try to go forward together. I think it's very important. To get rid of the deficit, in fact, we actually raised taxes from the top one percent of the income group and big corporations. But they made a lot of money in the eight years that I was president, because we had very, very high growth and modest interest rates but we grew together.

That's a deliberate decision, and we -- I think we made a mistake to get away from it, because now in the last five or six years, you've got poverty going up again. Middle class wages stagnant again.

GUPTA: You know, we're here in Harlem and you and I have talked about this before. The Clinton Global Initiative does a lot of work in many places around the world. Should CGI and other programs be doing more right here at home?

CLINTON: Well, I hope we'll have more domestic policies. Here in Harlem we do two things that are really important to me. We help more and more families to qualify for the earned income tax credit, because in New York City alone over 100,000 who are eligible don't get it every year.

And we try to help businesses start and keep going in tough economic times in Harlem. We started a lot of businesses here with my Urban Enterprise Initiative and we helped a lot of others become more profitable.

And I think there's a lot of things we need to do in America on Native American reservation, in rural areas where there's a lot of poverty or in urban areas like the section of Detroit you just showed or you mentioned New Orleans. There's a huge amount of work to be done in New Orleans and if those neighborhoods are rebuilt properly, they will create thousands and thousands and thousands of jobs for lower income people in New Orleans.

It's just a question whether you make a deliberate decision that we have to grow together.

GUPTA: We are going to talk a lot more about that. We are talking with former President Clinton about poverty.

You think poverty is bad in Detroit? Stay with us. Some of the people that the president met this summer don't even have the most basic things that we take for granted.

(END VIDEOTAPE)

(COMMERCIAL BREAK)

(BEGIN VIDEOTAPE)

GUPTA: One of the many projects the former president has taken on since leaving office is the Clinton Global Initiative. It's called CGI for short. You've all heard of it. It's sort of a matchmaker that brings together world leaders, nonprofit organizations and experts whose ideas can help defeat some of the world's most pressing problems.

This past summer, a CGI project brought you to Africa, sir. And you've traveled a lot, and I've traveled with you on some of these trips. What's the biggest thing that you learned when you were actually were hands-on on the ground in some of these places?

CLINTON: That intelligence and dreams and willingness to work are evenly distributed throughout the world. What's not evenly distributed is opportunity, investment, and systems, systems that work.

Tell Sanjay Gupta, if you go to school and you work hard, you'll get a degree, after which you can do what you wish to do with your life.

There has to be a connection between effort and result. And in many poor and unstructured areas of the world, that connection doesn't exist, so really clever people have to operate in a sort of a guerrilla-like fashion just trying to keep body and soul together. I've seen it everywhere.

GUPTA: That is well said, Mr. President. As you know, CNN's Jonathan Mann actually traveled with you on that trip to Rwanda, yet there were difficulties both on the ground and the sky, as you found out.

JONATHAN MANN, CNN CORRESPONDENT (voice-over): The animals in the highlands of eastern Rwanda know where the water is. The people know where the water is. And some water's even piped in, for a few hours at a time, a few days a week.

But there isn't enough water where Rwanda needs it most. In the driest part of the country, in the driest part of the year, drought is always a threat, and dust is everywhere.

Tirafim Mukabasamana (ph) is a widow who told us she hasn't had a good year. She planted corn, beans and sorghum and a lot of it dried up.

"I don't have enough food," she says, "and sometimes we have to migrate to find more." Tirafim farms to feed herself and five children. And she doesn't even have a watering can. She showed us how she waters her plot with a kitchen bowl and basin.

There's been no rain since April, no water for the corn, and much of it withered in the heat.

(on camera): Here's an example of the way things are here. When we first arrived in this village, the local kids could see what was in our car and they quickly formed a noisy little crowd asking us for some of it. It wasn't money. And it wasn't candy. What they wanted was our bottled water.

(voice-over): Water, and how to get it, are so important to people in this part of the world, they were the first thing Bill Clinton heard about when he visited in July.

CLINTON: You know, when I was a boy, I lived on a farm.

MANN: Tirafim was one of a handful of farmers who had a chance to meet him.

"We grow crops and they don't mature," she told President Clinton. "If we could get irrigation, then the area would develop."

Rwanda is known as the land of 1,000 hills. And in this part of the country, subsistence farmers grow corn on the hillsides. Most have no irrigation, no fertilizer, and no training in anything but the most traditional farming.

In the valley below, where water gathers in the marshes and lakes, fields are green and productive, a sign of what the most primitive irrigation can do.

Farming expert Jean-Pierre Gusamana (ph) says with a little more skill and investment, farmers could triple their harvest.

UNIDENTIFIED MALE: I'd say triple.

MANN: The Clinton Foundation says farmers could do even better than that. With affordable fertilizer, better land management and an irrigation system, the crop could be ten times as big. And that would mean less hunger and food to sell. But Rwanda doesn't have enough money. Most will have to come from the outside. The challenge is always to spend it where it's needed the most.

CLINTON: Bye. Thank you. Thank you. Thank you very, very much.

MANN: Tirafim doesn't know what to expect. So for now, she works the land, and hopes for water.

GUPTA: Mr. President, we hear a lot about water. You traveled to Rwanda. I was with you on one of those trips as well. It seems like this far into the game now, trying to conquer poverty we should be talking about opening free markets and industrializing nations. We're still talking about water. Is that a sign that we aren't making the sort of progress that we should be?

CLINTON: It's a sign that sometimes we don't know the basic elements of people working their way out of poverty are.

It would be a good thing if the Africans could sell more of their farm products beyond their borders, but mostly it would be within Africa.

But we have to recognize that there's a big difference in poverty in poor countries in Africa, East Asia, Latin America, the Asia Pacific region and the poverty we talk about in America where it is confined to a minority of our people, even though half the people may be having a tough time paying their bills. The really poor are a small percentage among us.

In these countries, the really poor are more than half the people. In Rwanda the per-capita income is less than $1 per day. In those places you have 1 billion people, one in six, who have no access to water, 2.6 billion people who have no access to basic sanitation facilities. So what we're trying to do in Rwanda with my friend, Tom Hunter from Scotland, we've got this development initiative, we want to try to double agricultural income by bringing them water, better seeds, and affordable, sustainable fertilizer.

And we're working on doing all that. But without water, you can't do much.

GUPTA: And, you know, you talk about the most basic needs here. You know, something that sort of struck me was you talk about, between 1950 and 1999, for example, it was about $1 trillion given in aid to several countries.

Zambia, for example, is one of the countries that benefited a lot from that. Since 1964, when they took their independence, they've never been poorer. Still despite all this money coming in. We've seen money work, right? We've seen Thailand, we've seen Chile, we've seen Botswana, we've seen Korea actually benefit from aid in the past. Why is it not working in some of these sub-Saharan countries? Is it corrupt governments?

CLINTON: Sometimes. Sometimes it's corrupt governments, sometimes it's the lack of capacity in the government. Sometimes we haven't spent the money in the right way. A lot of the aid we spent in the Cold War, we spent for political reasons to try to build allies.

But the good news is we know a lot more than we ever have about what does work. We know a lot more than we ever have about how to work with local people, how to tailor projects to local needs and possibilities. And we know that we have to empower people and we know we can't tolerate government that's not honest.

Does the United States have a greater obligation than other countries? Jeffrey Saks (ph), who you know well, said we can buy our way out of poverty, it cost about $124 billion a year is the number he came up which is about 0.7 percent of GDP of many industrialized countries. The United States gives more than any other country but it's a smaller percentage, about 0.1 percent. As a richer country do we have greater and grander obligations?

CLINTON: Sure. In the Cold War we gave less foreign aid because we spent more on umbrella defense on the rest of the world. So we provide the defense and other countries provided the assistance.

But now, that the world is much more complicated, we need to do our part. And we ought to hit that 0.7 percent aid target, knowing that we know how to do it now and we won't just be wasting the money.

I believe that, you know, most Americans would support that. Most Americans believe we spend far more of our federal budget and far more of our national income on foreign assistance than we do. If Americans knew how much we spent and knew that we could get good value for dollar, I think they would strongly support this.

GUPTA: It's about $10 billion a year roughly right now according to the calculations. CLINTON: It's about $10 billion exclusive of what we give to Egypt and Israel under the Camp David accords and it's probably a little more if you count -- if you count what we give for AIDS.

But, we should be giving about $60 billion a year. And in a budget that's what over $2 trillion, it's no money, really. And it's much cheaper than going to war. We've already spent over $300 billion in Iraq alone. So spending this money to build a world with more partners and fewer terrorists and more possibility for growth and possibility for prosperity for Americans is a very inexpensive thing to do if you do it well.

GUPTA: We spent 30 times as much on war, as you just pointed out, than we do on foreign aid. It's incredible numbers. I hope it's not too overwhelming.

We're going to take you next from rural Africa to rural America. A program that's actually in the president's home state designed to help out farmers get growing again.

UNIDENTIFIED MALE: It's a pleasure for me to raise them and it's a pleasure to pass them on to you.

(END VIDEOTAPE)

(COMMERCIAL BREAK)

(BEGIN VIDEOTAPE)

UNIDENTIFIED MALE: (inaudible)

UNIDENTIFIED FEMALE: It's not that easy finding a job. Um, I don't know. You luck out sometimes, and sometimes it's just hard.

UNIDENTIFIED FEMALE: (inaudible)

UNIDENTIFIED MALE: I just can't make it. I just can't make it. The cost of living is just outrageous now.

UNIDENTIFIED MALE: Like you don't have to give them a hand out, but hold a hand up and help them out with it.

GUPTA: You know, Mr. President, we're going to travel to your home state next. Home state of Arkansas. You've said to me and to other people, you grew up without a lot of money when you were growing up in Arkansas. What does it mean not to grow up without a lot of money?

CLINTON: Well, we weren't poor, both my parents worked. But my mother was a nurse anesthetist before Medicare and Medicaid, and she just served everybody that needed it and sometimes not having a lot of money meant we got paid in kind. I remember once a fruit picker paid his bill to her in bushels of peaches. I thought we were millionaires and I loved that.

And we lived on a farm for a couple years when I was a little boy and it had no indoor plumbing so we had an outhouse at a time when you had a lot of that. We hadn't run water and sewer lines throughout rural Arkansas.

We didn't take out of state vacations, I took one in all my years growing up. We took one ironically to the Gulf Coast, to a lot of the places destroyed by Katrina. But we never -- we weren't poor. We had food. We had clothes, we had access to healthcare, we had a decent roof over our heads. So -- but I knew a lot of poor people.

GUPTA: Right.

CLINTON: And it wasn't unusual to be in a town where you'd have nice little modest middle-class houses and be a few blocks away from people that were literally living out of their cars. And so I was always aware of poverty and aware that it was a part of life and that dignified, good people were poor.

GUPTA: Right. And poverty is less common in our cities than it is in rural America. And I think a lot of people -- a lot of people are surprised by that. Rusty Dornin actually found a program that is fighting poverty by reviving a lot of farms.

RUSTY DORNIN, CNN CORRESPONDENT (voice-over): James Fingers once farmed 800 acres in Arkansas, but competition from corporate farms forced him out. Unable to support his family, he had to sell.

JAMES FINGERS, FRANCIS COUNTY, ARKANSAS: In the conventional farming market, well, it was just getting really impossible to make a living.

DORNIN: But making a living doing anything else proved tough for Fingers. Jobs in the rural South are few and far between. The only things left in many towns like this one, Cotton Plant, are just sad reminders of times gone by.

FINGERS: Come on. Come on!

DORNIN: But James Fingers had a lifelong dream.

FINGERS: Come on!

DORNIN: Raising cattle. He scraped together enough to buy 20 acres of land that used to belong to his grandparents. Then he discovered the Passing on the Gift Program, sponsored by Heifer International, an organization dedicated to helping people like Fingers become sell reliant.

FINGERS: This one and this one.

DORNIN: Fingers received five cows but they weren't free.

(on camera): You had to go through some training to get this, right?

FINGERS: Yes.

DORNIN: And how much did you have to do before they would give them to you?

FINGERS: In the training we have to do at least approximately 30 hours of training.

DORNIN (voice-over): Fingers also had to fence off his land. He did it, post by post.

FINGERS: It's taken me a little while, but each time I get a check, and I buy me a roll of wire, I buy me a few posts.

DORNIN: Three years later ...

(on camera): You had five, and 13, and now you're ...

FINGERS: Next year, hopefully 20.

DORNIN: But now it's payback time, as part of the program, he must pass on the gift of five animals from his growing herd to the next farmer in line in the program, and that's Roscoe Albert, a 64- year-old farmer who can't make it on his pension alone.

ROSCOE ALBERT, PHILLIPS COUNTY, ARKANSAS: In this area, there's no jobs, no factories and then if we can get some -- something to produce on our own money, and then, you know, that's the access to the community.

DORNIN: Fingers wants this program to do for Albert what it's done for him.

(on camera): If they hadn't helped you and given you these cattle, what would you have done?

FINGERS: I probably would have -- I would have had to go back to Wal-Mart and stand at the door.

DORNIN (voice-over): In the 1930s, there were nearly 7 million farms in the U.S. Now, less than one percent of Americans are full- time farmers. And once bountiful communities are depressed and jobless.

Still, farmers try to help other farmers through tough times. They come out to show their full support when one of their own makes good.

FINGERS: It's been a pleasure for me to raise them, and it's a pleasure to pass them on to you.

ALBERT: I appreciate it.

FINGERS: All right.

ALBERT: And I'm going to do my best.

FINGERS: All right.

ALBERT: My dream is getting them, but, now, it's there. You know, I held them, and I'm going to do my best.

GUPTA: Mr. President, I was watching you watch that, and, you know, you're obviously affected by that. You've seen these programs work.

You know, there's a theme that's starting to emerge from our conversations, it's not just about the money. This is a self-help program. It's not a gift necessarily, it's about encouraging and inspiring and getting them to pass it on. Is that the answer? Is that the answer to trying to conquer poverty here?

CLINTON: I think it's a big part of the answer. You know, the Heifer International which is a 60-year-old nongovernmental organization, that by coincidence is headquartered in my home state and their global headquarters is now right next to my library.

They've been doing this for tens of millions of people now over the last 60 years on all continents. Llamas in the Andes, camels in the Middle East and cows in the rural South.

The segment you just showed, you know, I know that town. I know every part of it. I know the whole county. I know -- I spent a lot of my life trying to help those black farmers hold on to their land. This heifer program is stunning. It's exactly the kind of thing we need more of in other areas.

These empowerment strategies that helped people to help themselves and then get them to help other people. It's wonderful.

GUTPA: You seem very encouraged by it. Because it's interesting when you look at poverty over all, there's a sense that rural poverty is much harder to escape maybe even than urban poverty. Do you agree with that and why is that?

CLINTON: It's harder to escape, because you don't have concentrations of people to make money out of retail businesses, for example, because it's harder to get factories to go into areas if -- if the unemployment rates are very high and the skill levels are low.

You have to learn to build on the economic realities that you have. But on the resources that you have. And the resources are basically people, the land, the water, and where they are, you know, we've got a lot of good land and a lot of good water and a lot of people that know how to make a living in rural America.

So I think -- I do think, by the way, in the United States, if we redesign the farm program, which we're going to have to do sooner or later to reduce some of the big subsidies to the big corporate farms, we give no help at all in America to smaller fruit-and-vegetables farmers, for example.

That if we did that, we could become more self-sustaining, have more sustainable agriculture and use less water and use less energy and build up the fabric of rural life. They normally have an enormously strong work ethic in rural America, and they don't want to leave. It's their lives. It's -- their character is so tied to the land. And it's hard to give up.

GUPTA: There are some themes that are emerging. We talked about maybe it's not just the money and there are reasons to be optimistic as well.

Next, we are going to see how small groups of Mexican women are fighting poverty, just a few pesos at a time.

UNIDENTIFIED FEMALE (through translator): before we didn't have income, and maybe now we don't have a lot, but we have something at least.

(END VIDEOTAPE)

(COMMERCIAL BREAK)

(BEGIN VIDEOTAPE)

GUPTA: One, of the most promising ways of fighting poverty comes from thinking small. The strategy that's dubbed microfinance or microcredit and as Karl Penhaul shows us, even in the poverty of southern Mexico, it can lead to bigger and better things.

KARL PENHAUL, CNN CORRESPONDENT (voice-over): It's not a typical bankers' board meeting. But women's savings groups like these are springing up all over southern Mexico. They save as little as a dollar a week and can in return take out small loans for anything from medicine to starting up a small business. For many, this spells a newfound financial freedom.

UNIDENTIFIED FEMALE (through translator): Before if you had rope to the throat (ph then you had to sell something even at a bad price. But now things are different.

PENHAUL: Bartola Mendez he and nine of her neighbors have set up one of these savings groups. And now, with the help of state aid, they're farming fish for sale to the public.

BARTOLA MENDEZ, TABASCO STATE, MEXICO (through translator): Before we didn't have income. And maybe now we don't have a lot, but we have something at least.

PENHAUL: Mexico's Tabasco State government dug the fish pond and stocked it with tiny tilapia fish. Now she and her partners tend the pool and sell the fish once they're fat enough. They've learned the discipline reinvest some of the profits in order to expand their business. Mendez believes this is a woman's work.

MENDEZ (through translator): Women are more responsible than men or we know how to manage money better.

PENHAUL: At $150 a pound, she figures she'll make $190 clear profit once earnings are split with fellow savers. A short drive away, Maria del Carmen Sanchez (ph) heads a similar savings group. The women have been saving from 20 cents to a few dollars a week from selling pigs. Three years and $1800 later, the group bought these sewing machines so they can stitch bed sheets and children's school uniforms.

UNIDENTIFIED FEMALE (through translator): When we started, it was quite a big sacrifice. It is not easy to organize this.

PENHAUL: Sanchez knows a thing or two about sacrifice. Her husband is a street merchant and earns less than $8 a day. That's less than 80 cents a day to feed and clothe each of her 10 children. In an effort to boost their future income, Sanchez and 25 members of her club have each received a $600 loan underwritten by the government.

Sanchez walks me through the workshop they're building with their pooled resources and shows where she plans to put her sewing machines. She tells me even though clothing sales are sluggish, she and her neighbors vow not to give in to poverty.

UNIDENTIFIED FEMALE (through translator): I cannot accept defeat because I know we can achieve this.

PENAHUL: Back at the board meeting, that kind of optimism is contagious. Of course the money matters, but poverty is teaching these women that working together and pooling what little they have matters more.

GUPTA: I should point out, it's the Clinton Global Initiative that sponsors several of those sort of savings clubs like the one we just saw. Carry it through for us, Mr. President. You have the small, microloans, these microloans. What happens next? How do they get access to financial institutions, to selling their wares? What happens?

CLINTON: Well, it varies in different places. And I want to -- let me back up and say, one of the participants in our global initiative is taking responsibility for funding millions of dollars of these kind of loans in Mexico. And I'm very proud of that.

It operates in different ways in different places. The microcredit concept really was fathered, if you will, by a Bangladeshi named Mohammed Younis (ph) who started the Grameen (ph) Bank over 20 years ago. Hillary and I have known him for more than 20 years.

They Grameen Bank has given millions and millions of these microenterprise loans out to groups of people and one will pay back, and the other gets the loan. And one will pay back, and the other gets the loan. And has inspired similar movements all over the world, the microcredit business is exploding in India now.

When I was governor, Hillary went on the board of the first microcredit it financial institution in the rural South that had ever been set up, the South Shore Bank in Chicago was set up to have microcredits along the lines of Grameen Bank. So this is exploding all over the world.

And the savers concept in Mexico is one way to start it. So what you do is you find -- you start with the skills people have. And you finance them to do what they can do well, and where you know there will be a market and if there's not, then you have to work on making sure the market works.

When I was president, we funded a couple million of these loans a year. But really the world should fund, 50, 100 million a year, because you have to do quite a lot of them in a given area to change the character of a whole country.

You can change a village. I remember once I was in Senegal in a little village and the treasury of the local microcredit, finance operation that had been funded by the United States, came running out of this grass hut and to show me that he had kept good records of a all those loans and our tax money had been spent well.

So people will figure out, poor people will, what they need and how to sell it if you can finance it.

GUPTA: Do we -- I mean, do we just throw too much money away?

There's a theme emerging as we've been talking about here. That it doesn't takes a lot of money. It takes inspiring ambition. It takes know-how, it takes microloans perhaps, we spend billions, trillions really over 50 years. It doesn't seem like it's the answer.

CLINTON: Sometimes we spend the money on the really big-ticket items, like building a big electrical network for the whole country or building a big highway network. And maybe that's necessary.

But without the means at hand for ordinary people to start from where they are and work themselves into a sustainable living, you can waste a lot of money on the big things.

For example, if you look at -- well, let's take -- go back to Rwanda. Remember we -- Rwanda is the most densely populated country in Africa, because it's small. But even there about 35 percent of the people don't have electricity. So what's the most economical thing to do? Would it be more economical to run the power lines to the other 35 percent? Or should we build decentralized solar and wind and other options out there for those places? Decentralize the same way that cell phones are decentralized. And use the construction to create jobs for people in rural areas.

We just have to be innovative here to think about the financing, the work, and how it's all going to work when it's over. But you have to start with people, what they want, what they are capable of doing and what they are committed to doing. And they have to be part of the process, people at the grassroots level.

GUPTA: We are talking about the "The Poverty Trap" with former President Bill Clinton. We've seen poverty in rich countries and poor countries. It's both rural and urban as you learned. All of us have good intentions, I believe that.

Next, I'll ask the president, what can an average person do that's really going to make a difference?

(COMMERCIAL BREAK) GUPTA: President Clinton has told us there are times in his life when he didn't have much money and he's also been rich. He's also led the world's richest and most powerful country and he's also just back from the dusty village streets of Rwanda.

And fighting poverty isn't just about pulling out a check book. Mr. President, I believe that people are inherently good-willed. You say you care about poverty and I think people care about poverty, but what is the average person to do?

CLINTON: I think there are three things you can do. First of all, even if you don't have a lot of money, you can give some money if you know you get a high rate of return. If you give to it Heifer International, you know it will help somebody make a living in agriculture. If you give it to UNICEF, you know that it will help young people go to school or have food.

The second thing you can do is work alongside poor people in helping them to build their communities. Habitat for Humanity or any number of other things like the very first segment that we saw, they need people to help clear the lots and build.

And the third thing you can do is use specific areas of expertise. One of the most rewarding things for me in working in Harlem with businesses is we have all these small business people all over New York who come down here and help these Harlem businesses to succeed and they are ending poverty by creating jobs and opportunity in Harlem.

So I would say use your expertise, use your labor. Give your money. Even if it's a little bit of money, if you give it to somebody that you know won't waste it, it's well done.

GUPTA: Thank you very much, Mr. President. We appreciate the words ...

CLINTON: Thank you.

GUPTA: We appreciate the advice. Again, we began the hour by telling over 1 billion people around the world live on less than $1 a day. Now I know that numbers like this can be overwhelming, but we hope that this program has showed you that organizations like the Clinton Global Initiative are finding new and creative ways to use government and donated money to finally break the poverty trap. Thank you again, Mr. President.

CLINTON: Thank you, Sanjay.

(END VIDEOTAPE)

(COMMERCIAL BREAK)

CAROL LIN, CNN ANCHOR: I'm Carol Lin with a look at what's happening right now in the news. Now what's left of Ernesto is dumping plenty of rain on parts of the Northeast right now. It's knocked out power to hundreds of thousands of people and flooding is still a problem in Virginia and North Carolina where Ernesto is blamed for at least five deaths.

Al Qaeda's number two man calls on Americans to convert to Islam. That message from an online video today and also in that video, a California man wanted in the U.S. on terrorism charges.

Now the appearance of the American in this latest al Qaeda tape raises the question, are there more American terrorists walking among us. Tonight at 10:00 we're going to take a closer look at Adam Gadahn.

I'm Carol Lin in Atlanta. LARRY KING begins right now.

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