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Special Emergency Edition: 2008 the Worst Year for Workers Since 1945; More Information on the Tax Cuts of Obama's Economic Stimulus Plan
Aired January 11, 2009 - 14:00 ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
CHRISTINE ROMANS, CNN HOST: Hello. This is a special emergency edition of YOUR MONEY. I'm Christine Romans.
Nothing more critical to your money than your job and American jobs are disappearing fast. 2.6 million jobs lost in 2008, the largest one year drop since 1945, unemployment now 7.2 percent, the highest in 15 years. The losses spiked at the end of 2008, 524,000 jobs lost in December alone, a staggering 584,000 in November, more than 420,000 in October. Some sectors hit the hardest in December, manufacturing down 150,000 jobs. Construction shed more than 100,000 and retail 67,000 people at the malls lost their jobs -- Ali.
ALI VELSHI, CNN HOST: Thanks, Christine. We now have 11.1 million unemployed people in the United States. Let's have a look at this map and show you how it breaks down across the country. If you look at the map, the states in green have an unemployment rate which is more than half a percentage point lower than the national average so things are a little better there as measured by the unemployment rate.
Those in red have an unemployment rate that's half a percentage point or more higher than the national average, so things are a little bit worse and those in orange are about the same as the national rate. So you can see the trend continuing, the coasts seem to be worse off in terms of an unemployment rate and those mountain states in the middle all the way down to Texas seem to be doing somewhat better.
We want to explore this more. What kind of jobs are out there and what's being lost and what will be done to keep this -- or to keep jobs from being shed. Joining us now is Lakshman Achuthan he is the managing director of the Economic Cycle Research Institute and Jim Ellis, the assistant managing editor of "Businessweek." Gentlemen thanks to both of you for being here.
Lak you look at that map and you have other maps. The unemployment rate itself may not even be the best indicator when you're losing jobs. What is the state of our job situation here in the United States as for as you can see it?
LAKSHMAN ACHUTHAN, MANAGING DIRECTOR, ECONOMIC CYCLE RESEARCH INSTITUTE: Well, I mean, very much what people are feeling. It's very bad, and it is about to get worse. I think that's the bottom line of all of this. You have pervasive job losses across the board. Practically in every industry, in education and health care, a little bit of stability, but nothing that will offset the tsunami of job losses in every other industry. And so that is the hallmark of a recession in any event and this is a particularly intense moment in this recession.
Most of this report that we've just recently got is backward looking. OK? There's a couple of things in the latest jobs data that we see that is forward looking and one is the average workweek which is a record low. That is a leading indicator.
ROMANS: Many companies are cutting back on hours.
ACHUTHAN: On hours. So even though you are employed you are working less.
ROMANS: They're so bad that you're saying you'll have to work less.
ACHUTHAN: Yes. And the other is the diffusion of hiring across the country and that is also falling and falling and falling and it's this diffusion that is again, the hallmark of a recession meaning there's no place to hide. Where I can go to be safe? There isn't any.
ROMANS: Jim every month we look at employment reports and we look for some historical context, and this time around we looked at the year of 2008 more jobs lost in 2008 than any other times since 1945 when Rosie the riveter was loosing her job and the soldiers were coming home and they were ramping down production. I know the population is a little different. But it gives us a guide post for just how tough this job market is.
JIM ELLIS, ASSISTED MANAGING EDITOR, "BUISNESSWEEK:" It is just how tough it is but also just how far we still have to fall. We think about it, the total labor force is up about 40 percent since the '81- '82 recession which means a lot of the numbers aren't quite comparable. If you look at the numbers that we are loosing on a monthly basis, you'd have to lose a lot more jobs to get the same downward pop to the economy. But what it also means is that we probably have a lot longer to go. We've got up to about 10.8 percent unemployment in that recession. We probably won't do that.
ROMANS: In the '80s.
ELLIS: In the 80s. We probably won't do that. But it's probably easy to see in 9 percent unemployment rate today. That's very painful and that puts a lot of pressure on the administration right now to actually do something because a lot of people didn't feel this until late, but now they want some action.
ROMANS: And Obama out there this week, the president-elect saying, look, we faced double digit unemployment potentially. He's out there saying this is how bad it is. He's not sugar coating it. A recession that could last years.
VELSHI: It is double digit unemployment. We've never seen recessions that last for years. Which he's sort of saying this, is how bad it could get and was there anything in there that suggested how he might fix this, how he might deal with the fact that they've had 2.6 million people lose their jobs in 2008. How bad can this get? How does he actually create jobs?
ACHUTHAN: The worst we've seen is a 16-month recession and it looks like we are going to get that this time around and probably break that record in the post-war period. And we've lost 2.6 million jobs and the plans that are being proposed can save or add another 3 million jobs, so maybe you're treading water and the other --
ROMANS: If you're lucky. We're hoping to stop the bleeding basically with jobs creation or job savings plans from this president.
ACHUTHAN: So very much, you're trying to contain the recession. This is not about oh; the sky's going to clear and everything's going to be great once the stimulus plan is passed. The business cycle has to run its course. There's a vicious cycle that's running and it has to burn out, unfortunately, because that's basically what we have in front of us and the other difficult fact here is that the U.S. economy tends to give you jobless recoveries. We saw that in the last two recoveries.
VELSHI: Business starts going, but you don't actually hire them.
ACHUTHAN: We keep losing jobs even though the recovery starts and so that way you might even get to double digits even after the recession ends.
VELSHI: Last quick word, Jim, what are your hearing, are people thinking that this administration might succeed?
ELLIS: People think the administration might succeed and the wild card however, is whether there is going to be an appetite for all the debt that they're going to have to issue to do this.
Let's face it, China and Japan are the people who basically bankrolled the U.S. government and China actually has its eye -- getting its own economic economy.
ROMANS: Spending money at home.
ELLIS: And if they're going to do that they're not going to want to increase the trillion dollars in U.S. assets that they already own.
VELSHI: All right. Guys thanks very much for that.
ROMANS: Lakshman Achuthan, Jim Ellis thanks guys.
VELSHI: Well times are tough, what president-elect Obama says he's going to do to turn this economy around and how much it's going to cost you, the taxpayer.
VELSHI: President-elect Obama says the economy is getting worse and a historic stimulus with huge tax cuts is needed to rescue the economy.
ROMANS: It's an emergency stimulus that will, without a doubt, explode the budget deficit and add to our staggering national debt, but ask just about anyone and they'll tell you there is no other choice.
ROMANS (voice over): The president-elect and Congress must act quickly and spend big to rescue the economy.
BARACK OBAMA, (D) PRESIDENT ELECT: The situation is getting worse. We've got to act boldly and we've got to act swiftly. We cannot delay.
ROMANS: Tax cuts about 40 percent of this evolving emergency stimulus, $300 billion worth.
BILL GALE, BROOKINGS INSTITUTION: The tax cuts in the first two years would be larger than the tax cuts in either the first two years of the major Bush tax cuts.
ROMANS: A $500 individual tax credit, a $1,000 for couples, not rebates like the checks taxpayers got last year, but maybe money in your pocket immediately.
DANIEL CLIFTON, STRATEGIES RESEARCH PARTNERS: The Obama team is looking very hard at putting it into people's paychecks right away. By our estimate it suggests that about $25 per paycheck for each worker and the reason for that is it gets into the economy much faster.
ROMANS: Businesses would also see huge tax relief. Small businesses would have more generous provisions to write off their losses. Also, new tax credits for hiring new workers or for not laying them off. The idea, instant money to credit-starved companies so they can grow and hopefully create jobs. Business breaks may help bring Republicans onboard, but economists caution there must be an exit strategy from this spree of tax cutting and big spending.
GALE: Right now we need to cut taxes to stimulate the economy, but as soon as the economy turns around we're going to be facing a massive long-term budget shortfall that will have to be addressed at that point.
ROMANS: At that point, a very big bill comes due.
UNIDENTIFIED MALE: It is very clear; doing a package of this size in the range of roughly $1 trillion, with an already-growing budget deficit and the retiring of the baby boomers is going to lead to tax increases in the next two years.
ROMANS: Bottom line, we have big problems. For now the experts say it's simply more important to get the economy back on track. To counter this crises, the president-elect is expanding on the tax cut promises from the campaign but essentially how do we pay for it and we are going to have to pay for it and that all comes later. And those are another set of problems. VELSHI: Chrystia Freeland is the managing editor of "The Financial Times" and our good friend Jeanne Sahadi is senior writer at CNN.com to talk to us here about that. The tax cut part of the stimulus program could be 40 percent of it and it could be $300 billion. Jeanne, it's divided up between a business sort of incentive tax cut and these amounts that will go directly to people, $500 for a person and $1,000 for a family. What do we think of that?
JEANNE SAHADI, SENIOR WRITER, CNN.COM: Well, Democrats were giving a little bit of criticism yesterday, not criticism so much as just we want to go over this package ourselves and maybe amend it a bit. Some people don't think that the $500 or $1,000 credit will do very much good especially if it's given in a lump sum so it really depends on how they structure it. Permanent tax cuts are more stimulated than temporary ones.
VELSHI: Where everyone will get a percentage tax cut.
SAHADI: That is right. You know it is coming every pay check, so you feel like maybe you can spend half of it. So what they might do is structure it over a quarter or two. That might be more effective as a simulative measure. There has been some criticism of a business tax break that Obama has proposed which is to encourage companies to create jobs by creating a $3,000 tax credit. If I have to pay someone $50,000 I can't afford that so $3,000 will not help. So there is that talk back and forth. They will be negotiating it, and it's a fluid situation.
ROMANS: Negotiating in Washington? We are all together and we make the decision and it happens.
You've seen so far the stimulus proposal and again it's got to be negotiated. Do you like what you're seeing so far and the tax cuts and do you like what you're seeing on the spending side?
What is your take on this?
CHRYSTIA FREELAND, MANAGING EDITOR, "FINANCIAL TIMES": What I think what we're seeing is the balance between the economics of the program and the politics of the program. So the politics of the program are all about doing three things. Trying to get the Republicans onboard and Obama -- I think very interesting, given his mandate he's actually made a real effort to create a program and to say I want the Republicans to support this, too.
He also, as we saw from the pushback earlier this week has to keep the Democrats onboard, too because the Democrats are saying hang on a minute. We want this election. We want this to have a Democratic flavor and then I think there's a real need for him and we do see him going out and doing this to sell this to the public, because I think the financial bailout has really made this U.S. program much more politically fraught than it would have been otherwise. I think people are concerned and they feel we've spent a great deal of money and what has it given us.
ROMANS: Treasury secretary Paulson and Ben Bernanke went up in from of Congress and the American people and said do the $700 billion Wall Street bailout and now you have the president-elect standing up with Biden and others saying we have to do this or else and it's really a tough, tough sell.
VELSHI: We have to buy it.
Let's take a look at how this thing breaks down. We mentioned that the tax part of it would be 60 percent of it, 40 percent of it, I'm sorry, which would come out to about 300. This is the other side of it that might be $450 billion. The spending part of it and some of what's talked about is renewable energy, alternative energy and conservation and making buildings more energy efficient and building and repairing infrastructure, roads and bridges and that stuff.
Computerizing health care system and a lot of people don't realize how big a deal computerizing health care records would be. It's a big one and upgrading educational facilities, labs, classrooms and things like that and expanding unemployment and cobra benefits because so many people are out of work. That's the spending side. How do we feel about the spending side? That's what we thought. That's what a lot of people think the stimulus program is supposed to be.
SAHADI: Well, there's a lot of dispute about how long term that spending should be especially Republicans who are saying, temporarily targeted, period.
President-elect Obama has come out this week and saying I will deal with this deficit and I've appointed budget scrubbers here they are, watch them scrub and we'll come up with a lot of breaks.
ROMANS: It takes a lot of scrubbing. That's a lot of scrubbing. A trillion dollar deficit for the foreseeable future.
SAHADI: What I hear is that if they don't touch healthcare they can only scrub on the margin.
ROMANS: They're a really, really big one.
FREELAND: But I think one of the difficulties in thinking about the timing of the stimulus is no one knows how long the recession is going to be and it's one thing to be saying right now, we're definitely going to have to cut back and there will definitely be tax increases in 2010. What if the recession is still going on?
You're not going to see the government doing that and so that's why I think there is going to be -- and there needs to be flexibility built into the program as if there was an adrenaline shot right away and also some measure that could be simulative a little bit further down the line, and I think that's what some of the infrastructure sending is.
VELSHI: We never had a recession that would last as long or take us into 2010. The longest recession that this country has ever suffered prior to the depression has been 16 months and that's when the whole world is in recession. So we, again, everything's been unusual this time around. ROMANS: Kind of re-writing it as we go along here.
All right. Thank you, ladies.
You think the other guy has it better? Where does your job rank on the list on the list of the best and worst jobs in America?
VELSHI: Welcome back to YOUR MONEY. We promised you we'd give you the best and the worst jobs from a survey that was done from Careercast.com, it is partially owned by the "Wall Street Journal." Best and worst jobs and here is what they took into account, they ranked them one to 200. They ranked work environment, income, and employment outlook, chances for advancement, stress level and physical demands. We picked out the best, the top five and the bottom five for you. Take a look at the top five.
ROMANS: Let me guess, bald TV anchor is not one of them.
VELSHI: I was looking for it. Mathematician, actuary, statistician, biologist and software engineer, I mean, come on! I'm not going to walk into one of those jobs.
ROMANS: Well that tells us you have to be smart and you have to have training and you have to -- yeah.
VELSHI: Take a look at the worst jobs on that ranking and some don't sound so bad. EMT, Seaman, 197th on the list, taxi driver, dairy farmer. That one sounds tough for me and lumberjack. I think if you are a lumberjack.
ROMANS: If you're a dairy farmer, you get to own your own business.
VELSHI: I forgot, my friend is from Iowa and we don't make jokes about farming.
ROMANS: We like farming.
VELSHI: And you do have to wake up early and it's stressful.
ROMANS: It's an interesting snap shot when people trying to figure out how to make the next move and what job to get and the statistics that temporary jobs too are drawing up in the latest economic downturn, according to the Bureau of Labor Statistics employment of temporary help agencies in November fell more than 15 percent from a year earlier.
VELSHI: Now there could still be hope for displaced workers who are looking for temporary work. Tig Gilliam joins us now and he's the CEO of Adecco, one of the biggest names in the job placement industry. Tate good to talk to you. Thank you for being with us.
ROMANS: What I love about this company is they do a little bit of everything. TIG GILLIAM, CEO, ADECCO: They do a little bit of everything. They do job placement and you do a little bit of everything here. ? Absolutely. We have temporary and permanent recruitment as core competencies, but we also help people with workplace transitions, engages with people who have been laid off to help them go through the process of finding a new career and a new opportunity.
VELSHI: Typically, is that the company that is doing the laying off that engages?
GILLIAM: The company says we have to make a change, a structural change, but we like to help our employees find their numbers opportunity so they come to Lehi Garrison and they go to a structured process for that opportunity.
ROMANS: What are you telling people who are laid off? What are you doing to get those people moved some place else.
GILLIAM: First of all, it's a process and it is a project. You can't go into saying hey, you know, maybe I'll try to find a job and it's also very important that you think about what are all of the ways you can take your skills and experience and apply them maybe in industries and companies you hadn't even thought about before. You have to be flexible in this environment.
VELSHI: Where temporary work, if available to you could be helpful. We've done a number of shows recently on the types of industries and jobs that you can have depending on how much time you can put into retraining. It could be a matter of weeks, and it could be one.
ROMANS: A couple of weeks to become a mathematician.
VELSHI: That's a stretch. It might be a step on the way to changing careers.
GILLIAM: Absolutely. Many people choose the temporary employment lifestyle because it gives them access to so much diversity in the job market. Different companies and different project types and they're able to continue to build their skills and experience and make themselves more valuable to employers going forward.
ROMANS: So where are you still able to find people, or place people either in temporary work or beyond?
VELSHI: Or any kind of work?
GILLIAM: Your best job's list or your worst job's list is correct regardless of how you're being employed. The jobs are in specialized skills and that's why education is so important for us, not only formal education, but informal education. Finance and accounting, I.T., engineering, health care and medical jobs are still in strong demand and experiencing say 3 percent unemployment rates not 7.2 percent.
ROMANS: Say you an accountant for a big Wall Street bank and you lost your job, it doesn't mean that you have to only work for Wall Street banks and you moved to health care. You figure out how to apply those skills to health care which is an area that's growing.
GILLIAM: Those financial and analyst skills and those financial and analyst skills are needed in every industry.
And ironically, you know, this all goes in cycles, right? 18 months ago we talked about the layoffs that were taking place in the mortgage sales and processing area. Guess what the hottest jobs is this week.
GILLIAM: Mortgage sales and processing. Rates are down, refinancing are up.
VELSHI: They are interesting because a lot of the phone calls and e-mails we've been getting have started to come in the last 30 days about people saying, hey, we have these homes available at lower interest rates. Do you think it's a good time to buy? So people are starting to change their mindset.
GILLIAM: And they're looking to take advantage of the interest rate environment and their current employment and take advantage of that now and get financings in place. We have 1400 finance and accounting jobs available today. So we talked about the bad news but there is good news if you can find it in the right places.
ROMANS: That's what I needed to hear.
VELSHI: Thank you for that. Thank you for a silver lining there.
Tig Gilliam is the CEO of Adecco.
Well there are two schools of thought, the one says that Obama's recovery plan will work and the other says quite frankly, it won't. You'll want to hear this and decide for yourself.
ROMANS: President-elect Obama has offered details about how he plans to fix the next economy in crises. One of our guests says things are getting better while the other says Obama is going to, quote, help destroy the country.
VELSHI: You can probably decide which one said that, only one of them can be right, however, so we're going to let you decide. Peter Schiff is the president of Euro Pacific Capital and the author of "Crash Proof, How to Profit from the Coming Economic Collapse?"
Stephen Leeb is the president of Leeb Capital Management.
ROMANS: Stephen, a couple of weeks ago you said look; things will get better in mortgage refinancing it wasn't just a one-month blip. I think people are going to be able to refinance. Was there activity there? And that mortgage rate is going to get low and that would be a trigger for the economy and you were right. We've seen that lately.
STEPHEN LEEB, PRESIDENT, LEEB CAPITAL MANAGEMENT: Mortgage financings and mortgage applications are now well above 10-year averages and almost close to all-time highs. In fact, the only time they've ever been higher is when the bubble started in the early 2000s, if you go back to 1990 they're near record levels.
We've seen a lot of economic data that suggests we're pulling away from the extremes. I mean, I know the employment data today was horrible, but if you look at unemployment insurance claims for the past two weeks, big, big surprises.
Energy demand is up 11 or 12 percent or 15 percent from its low. Commodities are up 15 percent from their lows and even the stock market after the last couple of days is up 15, 16 percent from its lows, and I'm just talking facts, Peter. I know you're upset when people talk facts. Well, no.
PETER SCHIFF: It goes straight down.
LEEB: But as Christine said, no, when you're at all-time highs, Peter, you really don't have to say it's a trend. I know you don't like trends, and I know you don't like numbers, and I know you don't like facts, but when you see mortgage applications very close to all- time highs, all-time highs are all-time highs.
If they are refis, don't they mean money into the economy? Excuse me.
VELSHI: The government is giving away cheap money.
LEEB: We're not arguing about that.
VELSHI: Stephen's got a perspective that indicates that we might have bottomed out or in some parts of the economy and maybe there's some hope at the end of the tunnel. You think that light at the end of tunnel is still a train.
SCHIFF: Exactly. It's probably a big train.
VELSHI: Tell me why you think we are.
SCHIFF: We have a serious problem and unfortunately the government is making it worse. The reason we're in trouble is we simply borrowed and spent too much money from the federal government to state governments, Wall Street, individual households, we need to retrench and we need to reduce our spending and increase our savings and of course, what Barack Obama is trying to do is the opposite. He's trying to force-feed more borrowing in the economy.
No. I like tax cuts if the government cuts spending. We need less government and if we want lower taxes we need smaller government. That's the state government, too. In his plan he says he wants to give money to the state so they don't have to make cuts. They need to make cuts.
LEEB: Let me ask Peter just one question, Peter, has there ever been a case where any country, anywhere in modern times has gotten out of a severe recession and depression without massive government simulation? In other words, the answer is no.
LEEB: The answer is no.
SCHIFF: You're wrong.
LEEB: Give me the example. Give me the example.
LEEB: Give me the example.
SCHIFF: Let me talk! All of the past stimulus that we have used quote, unquote, get us out of recessions and that's why we're in this mess. You know, the government interferes in the economy and exacerbates the problems. The recessions are the cures for the artificial booms that governments create, and when we --
VELSHI: Let's follow this thought for a second. What would the consequences be, Peter, if there wasn't government intervention? Because honestly the proportion of people who now say that the government shouldn't be involved was larger three or four months ago who were discussing the stimulus, it has become much smaller.
SCHIFF: I know, but it's wrong. The government can't do anything. The government doesn't have any wealth. All they can do is redistribute the wealth that we have in the private sector. They make us less efficient.
LEEB: Can I just say one thing? I asked Peter this question before. One example.
SCHIFF: I told you. Stephen, there has never been an economic downturn.
LEEB: I'm not asking that, Peter. That's not what I'm asking. You have a remarkable ability not to listen and the question I'm asking, Peter is there any example from the United States in the 1930s, et cetera, of a country coming out of a depression without massive government stimulation --
SCHIFF: When has there been a depression?
LEEB: In the 30s it took the war.
SCHIFF: No, it didn't.
LEEB: Yes it did upon what got us out.
SCHIFF: What got us out of the depression was capitalism and we would have gotten out a lot quicker had the government not intervened.
VELSHI: We had larger job losses than we did in 2008 was 1945 when the war ended. When the war ended --
SCHIFF: The soldiers -- soldiers lost their jobs. There was a transition and there were workers -- we had an economic bomb. The market did it and there was a re-allocation. We had our labor involved in the military. There was a transition to civilian employment.
LEEB: If you look at government in 1940 when we came out of the war, it was much larger as a percentage of GDP than it is today. Much larger.
SCHIFF: Because they were fighting a war.
LEEB: Thank you for agreeing with me.
SCHIFF: The war wasn't a good thing. The war didn't help the economy.
LEEB: It depends how you felt about Hitler, Peter.
ROMANS: I promise this is a spirited and friendly discussion.
SCHIFF: Steve, we had to fight the war. It was a burden we had to bear to help the economy.
LEEB: Who should fight the wars in your opinion?
SCHIFF: What does it have to do?
LEEB: I'm just asking you another question. You have a remarkable ability not to answer a question.
ROMANS: For the sake of commercial breaks and the fact that we actually, you know, have to --
VELSHI: We have like an online version that people can keep watching this?
ROMANS: No listen, each of you, 30 seconds, wrap up, where you think we are going and what the dangers here and why you think the dangers might be behind us. You go first.
SCHIFF: What will happen now is instead of allowing the free market to function and to rebalance this economy, the government is going to force us deeper and deeper into debt and they'll print more and more money and the crisis that they're setting up right now will be a major run on the value of the U.S. dollar. The dollar will plunge and that will send interest rates and consumer prices literally through the roof in this country and this will be an inflationary depression that is the exact consequence of the government.
LEEB: I'll just borrow from Hayek, which I'm sure Peter is familiar with, maybe not. His two major examples are the Soviet Union and I think Germany. Both those economies moved toward totalitarianism on the back of severe depression. Severe depressions, and that's what I want to avoid. I'm willing to tolerate some government now to avoid a dictator like Hitler later on.
VELSHI: We're going to stop on that. Both of these guys do agree.
ROMANS: And they are very passionate about it.
SCHIFF: Gold is guying way off.
VELSHI: Our jobs could be in jeopardy because they're going to take the show.
Stephen Leeb and Peter Schiff.
ROMANS: All right. Your future could be in jeopardy. U.S. National Security could be in jeopardy, but you might be surprised to hear why.
ROMANS: You're going want to stay with CNN. At the top of the hour it's a CNN special event. "IOUSA America's Money Crises." "IOUSA" is a film that illuminates the emanate crises of mounting debt in America. In addition to showcasing this film we'll be joined by some of the top economic minds in the country including former commerce Secretary Pete Peterson the founder of the Peter G. Peterson Foundation which sponsored the film and David Walker is the president and CEO of the Peterson Foundation and the former comptroller general of the United States.
Gentlemen, tell us what's so important about this film and why David Walker, we will start with you, why it is so incredibly important right now when the president-elect is saying we face imminent trillion dollar budget deficits to get us out of this near- term very dangerous situation.
DAVID WALKER, PRESIDENT AND CEO, PETERSON FOUNDATION: Well this film is about America's own deteriorating financial crises with lenders. We are in a recession. We'll have to take some dramatic actions to turn the economy around, but we have to recognize that the federal government is over promised and under delivered. It's got to start getting its financial house in order, too.
ROMANS: Peter, we're basically saying here that the America government for far too long has been making promises that it can't keep. Someone has to pay for those promises and there are children and grandchildren's generations ahead.
PETER PETERSON, FOUNDER, PETER G. PETERSON FOUNDATION: Well, I think part of the problem we're facing is America is kind of a negated case of what I call short-term-itis. We live in the moment. We have myopenia. We deal with whatever is here now.
One of the things that makes this challenge particularly challenging, if I can repeat, is that to be sure, we have a very important short-term crisis situation, but this president and the Congress and we, the American people, have got to combine that with a major effort to begin approaching the long-term problem and that, at bottom, is a very moral issue because it's our kids' future that we're mortgaging.
ROMANS: David, for so long there were economists who have said this is a big, dynamic economy, don't worry about the deficits. It's a reflection of just what an incredible economy this is. Now we're in a challenging economic environment and suddenly everyone guys now that the deficits really do matter.
WALKER: We have a teachable moment because of the market meltdowns and because of the bailouts that institutions people thought were too big to fail. Nobody can spend more money than they make with impunity forever, including the United States.
ROMANS: All right.
Thank you so much. Both of you. We'll have some entire film at the top of the hour and we'll have incredible discussions from our acclaimed panel to talk about how we get out of here. Ali?
VELSHI: Thanks, Christine. Time now for family money. The job losses in 2008 were staggering so you will need to find every edge to find a job whether you're just graduating college or you've been out of school longer than you care to remember. The key is the first impression and that means you need the perfect resume and that's why we turn to Brad Karsh, he is the president and founder of Job Bound and the author of a new book "How to say it on your Resume" which is chock full of information and examples of how your resume could look.
Brad welcome back to the show. Good to see you. Let's get right to this. What do you have to say about networking? There's a resume and then there is the idea that you use people in your network to get a job. Let's start with networking.
BRAD KARSH, PRESIDENT, JOB BOUND: Absolutely. Networking is always the best way to get a job and two out of three people get their job from networking but when common misperception about networking is that when you network that means somebody gives you a job. Not true.
Networking means that somebody gives you the opportunity on get a job, so you still need to have a resume. When I worked as a recruiting director I'd get a stack of 500 resumes just online and I'd go in and pull out five of those resumes from people I'd want to hire, but at the same time I'd have a stack of ten resumes from people from within my organization who forwarded those resumes to me and said hey, this is my sister-in-law Tracy, you have to check her out, or I know this girl Jen, who I think would be fabulous. I'd go through those resumes and I'd pull five of them out and I would interview those folks.
What would you like? Five out of 500, but that's why you need a great resume as well.
VELSHI: Let's talk about the great resume. You have always made the point with me that the resume is not your life story. You need to talk about what you achieved rather than what jobs you held. Tell me a bit more about that.
KARSH: The biggest single mistake that job seekers make and this goes from college students to CEOs. Ninety nine out of 100 people write a job description. They write what anyone has ever done in that position and what you need to do is you need to write an accomplishment resume where you talk about what you specifically accomplished and here's what I mean.
If you're an anchor, let's say, for a television show you might write a resume that says, Ali, interviews, political figures and business professionals. Worked with production team, direction team and sponsors. And you'd write that on your resume. That describes what you've done and that describes every other anchor in the history of CNN and television. You need to tell me what you specifically did.
VELSHI: Let's talk about what you don't put on. One of the things you don't want to have showing up your resume.
KARSH: A lot of times people fill their resume with extraneous information. First of all, it should never be more than two pages for a business resume, one-page if you're a student, two pages if you've been working for a while. People put on their marital status and Social Security number and they talk about irrelevant skills and people applying for a job as a finance analyst and they'll list they are knowledgeable of CPR. That's great, but it's want relevant to the job. Keep it relevant and specific to the job. You only have 10 to 15 successes to impress the person reading your resume.
VELSHI: Very quickly. Extra curricular. Does that tell your employer something that they need you to know?
KARSH: I think it's a nice idea to help round you out as a candidate to put in things that you are involved with outside of work earns specially if they're significant. So if you do sit on a board and if you were involved as a volunteer in a meaningful role and interests you could list on a resume. One it helps route you out as an individual and two also it provides skills that could be valuable to the job. It is fine to put those on if you have the room.
VELSHI: You mentioned that once saw a resume of a guy who said he liked spicy food. You thought that was character.
SCHIFF: Exactly not last line of your resume, if you like, can say something like interests include, and list in one line four or five of your interests and you might make a connection with someone. I remember reading a resume of some guy and in that section he said llama trainer. How could I not interview this guy and say, dude, what's up with the Training the llamas?
VELSHI: Thank you for that upon I enjoyed looking through the book and for those of you interested in it is chock full of resume examples. Brad Karsh is president and founder of "Bob Bound" and "How to say it on your Resume." Why you're looking for advice of how to get out of the situation that we're in, check out my book and it's called "Gimme my Money Back" because that's what you've said over the course of the last year -- Christine. ROMANS: Hey Ali. A lot of people are saying gimme my money back to Bernie Madoff and he wiped and ruined lives.
ROMANS: Bernard Madoff, the man accused of the largest Ponzi scheme in history. The scandal hurt a lot of folks out there who invested their life savings in many cases with Madoff and it looks as though it's gone. There's a silent victim here as well.
CNN senior correspondent Allan Chernoff is here with more. We have seen the celebrities and the foundations. We have seen rich people and well-known people, people who in some cases it's hard to feel sorry for are very, very rich person who lost their personal money but that is not everyone who's touched here.
ALLAN CHERNOFF, CNN SENIOR CORRESPONDENT: The impact is far deeper than that unfortunately. The scandal has been absolutely devastating to the world of Jewish philanthropy. Dozens of wealthy American Jews were among those who trusted Madoff with their money and many of those investors are very charitable, given to organizations that benefit Americans of all background.
CHERNOFF (voice over): City harvest, picking up food donations to one of hundreds of daily collections that help feed one quarter of a million New Yorkers of all faiths. City harvest received $150,000 last year from the pick our family foundation, which is now closing its doors because nearly all of the family's investments were with Bernard Madoff.
That's a significant blow for city harvest. So one of our tenour top ten funders. They have been a supporter of our work for nearly ten years now and this will be funding that will be difficult for us to recoup.
CHERNOFF: Clowns from the big apple circus visit critically ill children. Another program made possible through the pick ours and other Jewish philanthropists.
GARY DINNING, BIG APPLE CIRCUS: We make about 280,000 bedside visits each year. Their money supported those general operations in 19 hospitals across the country.
CHEFNOFF: The pick our foundation, which has donated more than one quarter of a billion dollars over the years, may have been hit the hardest but dozens of other Jewish charities and foundations have suffered millions in losses because of Bernard Madoff's alleged Ponzi scheme. Like the Carl and Ruth Shapiro Foundation Family of Boston.
It has given millions to improve health care, helping to fund the American Cancer Society, the American Heart Association, Brigham and woman's hospital and the Dana Farber Cancer Institute. The Dana Foundation said it invested $18 million with Madoff. Last year it granted $14 million to groups having no affiliation to Jewish causes, including a support group of victims of gang violence in Los Angeles.
Unfortunately, the impact is going to be on the average American not for profit out there and the fact that the American- Jewish community gives a proportion of the population So unfortunately the disproportionately to their percent of the population, so unfortunately the impact is going to be disproportionate as well.
CHERNOFF: The full impact may not be known for many months, if not several years, as foundations see if they can recover money lost from Madoff and they seek new sources of funding -- Christine.
ROMANS: Every day, a new secret emerges about this scandal. Every day we learn something new about Bernie Madoff. And every day we find another sort of corner of the globe, unite literally that is affected by what looks to be a scam of epic proportions.
CHERNOFF: It's astounding. He had people all over the globe collecting money, funneling money into his investment scheme. We don't know whether those people knew what Madoff was up to. We can presume for now that they did not. But we really -- we really can't be sure about that.
ROMANS: And investigators this week telling us, look, and our investigation focuses on Madoff. That money. We're trying to untangle that. We are looking into his records. We are looking over everything on the 17th floor of lipstick building, which was his lair. We don't know if this investigation will move on to his children, to other people who worked for him, to other parts of the company.
CHERNOFF: Oh, it is. It is at that point. It is -- well, I think there is little doubt among people who looked seriously at this that Bernard Madoff. This is all alleged, but let's say this really happened, how could Bernard Madoff, one man, how could one man scam thousands and thousands of people to the tune of potentially $50 billion? And I have seen those records, those statements sent out every single month. One man could not have just written out all of those different trades and sent them to thousands and thousands of individuals.
ROMANS: People we know on Wall Street are just like shocked by all of this.
JENNIFER WESTHOVEN, HEADLINE NEWS: They're shocked but people I know in this company who are not rich people have been affected by this, people whose grandmothers were felt so lucky that they can't pay their rent now. That's what is so sad about this story. It's not just rich investors but regular people. And even some regular people who took their money out and thought they escaped; now they may have to pay some of it back. It's shocking.
CHERNOFF: The trustee is charged, the court-appointed trustee is charged with recovering Madoff assets so that they can be distributed to all of the victims. ROMANS: Can you imagine if you get a call, and you're a small business owner, you have saved a lot of money and you get a call from your hedge fund manager who said, by the way, I didn't actually manage your money. I gave it to this guy Madoff and there's nothing left. That's happening all across the country.
WESTHOVEN: Warren Buffett says, you only know who's swimming naked when the lights go out. Oh, my gosh, we are finding all of these people swimming naked.
CHERNOFF: Personally, I think that's criminal if there's a hedge fund manager who said oh, I'm managing your money and really he was sending it over to Bernie Madoff without revealing that, that's really criminal.
ROMANS: And we talked to investors who got out over the past few years. But they got out. It was difficult to get out. We know from the criminal complaint Bernie Madoff told his sons that there was $7 billion and his investors wanted it back. He was having trouble with liquidity. And he couldn't get it all. He was having money problems. And one woman called early December and wanted her money out. And he said no worries, you're in treasury. This economy is not hurting you. You're in treasury.
CHERNOFF: We also know, we have statements where Madoff even in November, this past November was telling clients that they had money in a fidelity Spartan t-bill fund and, according to Dellty (ph), the name of that fund, that fund has actually not existed for three years.
ROMANS: Oh, I think we're going to be spending a long time finding out each detail as they emerge. Jennifer and Allan thank you so much.
We are learning more every day about the scandal, Bernie Madoff. Check out "Madoff: Of a Scandal" tonight at 8:00 p.m. Eastern. You will get the inside scoop on just how Bernie Mad f may have pulled this scanned off, you will hear directly from the victims and why the SEC may have been tipped off about this ten years ago and did nothing. That's 8:00 p.m. Eastern here on CNN.
And reminder, do not move. Ali and I are sticking around with you at the top of the hour to bring you "I.O.U.S.A" It's a look at a shocking documentary as well as more.