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YOUR BOTTOM LINE
Evaluating Stimulus Plan; Economizing Your Life; Shaun Donovan Interview; Testing Infomercial Products
Aired February 7, 2009 - 09:30 ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
GERRI WILLIS, CNN HOST: Hello. I'm Gerri Willis this is YOUR BOTTOM LINE, the show that saves you money. Every weekend, we're here to help you save, protect and build your money.
On tap today, evaluating the stimulus plan, economizing your life, plus my exclusive interview with Shaun Donovan, President Obama's new Secretary of Housing and Urban Development. From your house to your job your to saving to your debt, this is YOUR BOTTOM LINE.
Well, President Obama says the stimulus plan is necessary to rescue the U.S. economy, and your very own personal finances. But just how much will it help you?
Jeanne Sahadi is a senior writer for CNNmoney.com, Hilary Kramer is the "AOL Money" coach and author of "Ahead of the Curve," and Eamon Javers, financial correspondent, he's back again, he's from "Politico," joining us from Washington.
Welcome, all. Eamon, I want to start with you. Listen, I listened to all of this debate this week going on between the Democrats and the Republicans.
You know, there's also $900 billion of our taxpayer money hanging in the balance and I have to tell you, sounded like every other political conversation I've ever heard. How is this different? Is it different?
EAMON JAVERS, FINANCIAL CORRESPONDENT, POLITICO: It's not different. I mean, this is how Congress works. Right? I mean, the House gets a bill together, the Senate get a bill together, the Democrats and Republicans are at loggerheads with each other. The problem that's been in this process is that Democrats and Republicans basically live on totally different planets when it comes to this concept.
You know, you've got sort of planet spending, which is where the Democrats live and planet tax cut where Republicans live and they've got to meet somewhere in the middle, here, and so that's led to a lot of just old-fashioned horse trading as they go in, a billion here, a billion there, some for your program, some for my program and that's how they work it out. That's why they say, you know, you never want to watch the process of legislation put together, it's like making sausage, it's pretty ugly.
WILLIS: It's pretty ugly, but we're all riveted to this. Jeanne, I have to tell you, one of the most important things, for us, for our bottom line, tax cuts. Give us the details.
JEANNE SAHADI, CNNMONEY.COM: The biggest tax cut you're going to see in your paycheck and it's not going to look like a big tax cut, is make or pay credit. That goes to workers making $75,000 or less for individuals and for couples making $150,000 or less. It's $500 per person, $1,000 per couple and refundable meaning if you don't have tax liabilities at the end of the year, you will still get money back from the government.
WILLIS: So, there is money for you in this bill if you want it. And Hillary, is that a good idea, though? Is it all upstid (ph) a tax cut?
HILARY KRAMER, AOL MONEY COACH: Absolutely, because right now we need all the help that we can get. So, whether it's the $145 billion pay roll tax credit that's going to go right into our pocketbooks or for those already unemployed, an extra $25 a week, it's all going to help. It's we need to get people out there spending and we need to get money in people's wallets again.
WILLIS: All right, so Eamon, let's talk about job creation. You know, a lot of promises on the table. You go to President Obama's Web site, the one he used when campaigning, three to four million jobs created. You look at the numbers. There are even numbers of jobs per state. Wouldn't California like to see the 400,000 jobs that the president says that he can create there? Are these real?
JAVERS: Yeah. You know, I think it's interesting to go to the web site and look at some of the job numbers that are being promised, but take that with an enormous grain of salt here, because that's basically an educated guess, maybe a very educated guess. But, there really, I wouldn't say it's exactly pulling numbers out of a hat, but it's kind of close.
I mean, they don't really have any sense exactly how many jobs are being created, here. But, they need to put a number out for the political argument. They need to go to senators from California and say, hey, you got back this thing because, you know, X-number of jobs are going to be created in your state. That's why those numbers are out there, whether they're real or not I think is kind of anybody's guess.
WILLIS: Wow, OK. Well, I was hoping for better news than that.
Jeanne, you know, so many people unemployed, right? When we talk about job creation, those number, real. The good news here, yet again we're talking about extending, expanding unemployment benefits. Let's talk about that in detail.
SAHADI: Right, as Hilary mentioned, it's going to be $25 a week in addition. The amount of time you can collect benefits is being increased by at least 20 weeks or by a total of 33 weeks if you live in high-end unemployment states and there are about 30 states or so that qualify. In addition, you're going to get a health care break. If you lose your job, there's something called COBRA where you can keep your health insurance from your employer, but it's expensive for most people because you pay full fee.
WILLIS: But, let's just mention it's a state-run program, that, that exists. This is not something that you have to go out and buy from the private market?
SAHADI: Right. It's basically continue your health care from your employer, but the government will steps in give you a 65 percent subsidy and it will increase the eligibility or extend the eligibility for workers over 55 and people who've had at least 10 years tenure at their company.
KRAMER: Right, and those that are unemployed that don't have the COBRA option, hopefully will be able to qualify for Medicaid, if today they wouldn't ordinarily be able to qualify.
WILLIS: Jeanne, Hilary and Eamon, from the stimulus to housing to unemployment, you know, there is so much here to discuss. Plus Shawn Donovan's very first interview since being sworn in as the secretary of Housing and Urban Development. What he plans on doing help restore the value of your home.
WILLIS: Welcome back to YOUR BOTTOM LINE, the show that is all about helping you manage, protect and save your money. Back with us, once again, Jeanne Sahadi, Hilary Kramer and Eamon Javers.
OK guys, I have one word for you in this whole conversation: housing. In the original stimulus bill, what was there for housing was not impressive. The Republicans came back and said hey, we need some housing help, because it is, after all, sort of at the center of all of these problems we've been having. I want you to hear Senator Mike Enzi from Wyoming, what he had to say about what needs to be done.
(BEGIN VIDEO CLIP)
SEN. MIKE ENZI (R), WYOMING: We've got to fix housing first. That's what started the problem, that's what's continuing the problem, that's what tightened the pocketbooks of Americans.
(END VIDEO CLIP)
WILLIS: All right. So, fix housing first. Jeanne Sahadi, there was an amendment this week about fixing housing first. Let's talk about the tax credit, how it works.
SAHADI: Republican amendment, got bipartisan support. What the Senate passed this week was an expanse of a homebuyer credit, it expands it in three ways. It will not longer just be for first-time homebuyers, it will be for all homebuyers. It will no longer just for $7,500, but it will be for $15,000 and it will be, I think part will be refundable, as well.
WILLIS: All right. Eamon, when you look at this, when you drill down and really start thinking about housing, this is really the thing that is getting ignored in a lot of this conversation this week, and there are promises, that President Obama is going to come out with a specific plan for foreclosures. Where is all of this going?
JAVERS: Well, I think we're going see a lot more out of the Obama administration. I mean, Washington is sort of choking on the size of this massive stimulus package. But my guess is the Obama people have a lot more coming after this, so get ready for even bigger stuff next. I think they're going to need to address housing, because that is the place where this economic meltdown started. But don't forget, every time you make an incentive program like this tax credit, you're picking winners and losers. Right?
So, this credit would stimulate demand for Houses and in theory would help keep housing prices fairly high, but if you're a first-time homebuyer you kind of want prices to come down. You'd like to see those prices come down to something that's more affordable than these sky-high prices we're seen in the past couple of years, so that...
WILLIS: And you'd like to be able to get a loan, I think, is another part of the problem.
JAVERS: Well, that's right. That's right. We've got a lot of crises going on here simultaneously. But every time you do one of these, you're favoring somebody over somebody else. And so, that's why there's always a debate in Washington.
WILLIS: Well, and Hilary, talk to the problem of unemployment, right now, because that's the old-fashioned way of getting foreclosures, it's that people lose their job, they can't make their mortgage payment, they are in foreclosure. When you look ahead, what do you figure are going to be the problems in the housing market as we go forward, even as we get a comprehensive plan for change?
KRAMER: We'll still have a major housing problem and we could even create a new housing bubble, Gerri, because one of the amendments that they want in this bill will be, and we'll see how it comes out, but this 4.5 percent and lower guarantee for credit-worthy homebuyers.
So, what happens if we create another great rush into home ownership, but for people who can't afford their homes or another part of the economy, unemployment, as you just mentioned, continues to rise, then we're going to have even more foreclosures. What we need to do, work through the excess inventory and that's going to take time.
So, that's the only answer in this particular case and that's why, I think, it was forgotten originally is that no one really has an answer for how to you prevent people from losing their homes. You keep them in, then the bank doesn't get their money.
WILLIS: Right. Eamon, Jeanne, Hilary, thanks so much for being with us, today.
WILLIS: The crisis in housing started a chain reaction in the economy and led us to the troubles we're seeing today. The housing crisis continues, Foreclosures, homes sitting on the market, adequate housing out of reach for many Americans.
I sat down with the new Secretary of Housing and Urban Development Shaun Donovan, to find out how he plans to fix the problem.
WILLIS: Mr. Secretary, in your confirmation hearing you talked about housing as the foundation for American families, American businesses, and, of course, we know that foundation is crumbling. What will you do to help people in this situation?
SHAUN DONOVAN, SECY., HOUSING AND URBAN DEV.: Well, let me say, there are really four things that we have to do. First and foremost, this crisis started as mortgage crisis, but what is really driving the foreclosure crisis right now is that people are losing their jobs and so job No. 1, is to pass a recovery bill that will add three to four million jobs in this country. That's first.
Second, we have to limit the number of foreclosures. As the president has said, we will have a comprehensive, aggressive plan to limit foreclosures announced in the coming weeks.
Third, we have to make sure that the foreclosures that actually happen don't have a devastating impact on families and on communities. And then, finally, we've got to put a bottom on housing prices and begin to help the market turn back upwards.
WILLIS: Let's talk about the stimulus plan, the original stimulus plan put out by the president. It really includes no thorough going measures for housing and housing, of course, was the epicenter of the current economic crisis, it really started the crisis. Why is there nothing for housing in that list of suggestions for turning around the economy?
DONOVAN: Well, as I mentioned earlier, there are a series of pieces in the recovery bill that go right to housing. To all those elements that I talked about, there are pieces that help to limit foreclosures, there are pieces that help to limit the impact of foreclosures on families and on communities, there are comprehensive pieces in the recovery bill.
Also, remember that we have other tools at our disposal as well that will compliment that strategy. The president's made a commitment of a substantial set of resources from the TARP that will also go limit foreclosures. And also, remember that using macroeconomic policy, we now have the lowest mortgage rates in this country since the 1960s, so we have a broad set of tools including the recovery bill that can help to do all of the pieces that I talked about.
WILLIS: These programs are all admirable, but how do they go to it private American homeowner who is worried about holding on in their homes and still don't see the connection between the programs you're describing and this American homeowner's plight? DONOVAN: The key effort at limiting foreclosures will be using a significant amount, tens of billions are dollars, of TARP money to be able to accelerate, dramatically, modifications of mortgages. And what we are working on is a plan to create a set of incentives, assistance, to do that, while at the same time making sure that we have the tools that will ensure that lenders do it, through a range of options.
WILLIS: Such as possibly, and this has been discussed in many places and I think some programs already do this, the government stands behind these loans. Essentially, if they fail, the government pays and I think that's what happened at the FDIC?
DONOVAN: Sheila Bair has been a real leader on this issue, has developed the program through IndyMac at FDIC that uses a range of tools, but particularly the guarantees, that's something that we're looking very closely at and there are many different aspects of the plan that we think really work well and I think what you'll see is that that is a model for the kind of efforts that we're looking at.
WILLIS: Everybody is on a budget these days, but which corners should be you cutting and where can you get the most bang for your buck? We've got tips to help you economize your life.
WILLIS: So, if you're trying to cut back on spending, but don't know where to start, that's what we're here for on YOUR BOTTOM LINE. Here with some unique savings ideas is Suzy Coehlo, she's a lifestyle expert and author and joins us now from Los Angeles.
SUZY COEHLO, LIFESTYLE EXPERT: Good morning.
WILLIS: You got some great ideas for buying in bulk, a smart way to do it. Tell us about that.
COEHLO: Absolutely. A lot of people don't want to spend the time or effort or the space in their cabinets or refrigerators to buy in bulk. So, I have a great idea which is to share the items with family or friends' they buy half the items, you buy the other half. They go one week you go the next.
WILLIS: I love that, it cuts down on my time in the supermarket, too. Let's talk about buying local and online with coupons. How do I do this the smart way, save as much as possible?
COEHLO: Well, you know what? Actually, online, there's lots of coupons, you can go to "discount coupons" and search it on Google and you can find lots of discount coupons. You know, in the old days, people used to sit and clip coupons and your grandmother might have done that, it took a lot of time, but now days you can just look for coupons in the mail. The other day, I actually saved $10 on my pet food, on my dog food, because I got a $10 coupon off from PETCO, so keep an eye out for coupons that come in the mail.
WILLIS: All right, I love that idea. You know, there's a couple of great Web sites: CouponMom and FatWallet, check those out. You've got another great idea for family games around saving money on meals and let me tell you, this is where people waste so much dough. How do you do it?
COEHLO: Well, you know, I have two kids, I have an 18-year-old and an 8-year-old and by the end of the week, oftentimes, they're like mom, there's no food in the refrigerator. And I look in the refrigerator and there's tons of food, there's tons of food in the cabinet. So, sometimes I play a game with them. And I go, OK you guys, we're not shopping, let's just come up with some bright ideas and some great meals.
So, my eight-year-old daughter, she loves to do things like, you can take one apple, let's say you have one apple, you slice it up really thin, you put it on a plate, and I've taught her how to drizzle like balsamic vinaigrette over it or a little maple syrup. And you have this gourmet fair.
You can also do it with lots of different items. You can take an avocado, you just put two slice on the plate, or take lettuce and chop it up, you have a half a head of lettuce with some tomato and scoop it out with an ice-cream scooper and you just -- presentation's everything when you're eating. But you can actually make a meal that seems like a gourmet meal with just what you have left over in the refrigerator.
WILLIS: Wow, that's amazing, you're really training a gourmet chef, there.
Another idea you have that I liked is swapping things and that's particularly important in this economy. People can swap all kinds of things, feel like they have something new or even get an essential.
COEHLO: Well, you know, garage sales, flea markets all those places are great to buy inexpensive items such as Craig's List and eBay. But let's say you don't want to spend any money. I've had get- togethers with my girlfriends, we actually used to do this with wardrobe, with fashion, because many times you buy items and you actually end up with items in your wardrobe that have the tag still on it.
And I actually have a policy. Whenever I buy clothes, I never take the tag off until I'm ready to wear the item, because sometimes I'll put it on and I'll think, what was I thinking when I was in the store? This looks terrible on me.
WILLIS: That happens to everybody.
COEHLO: Yeah, and then I can swap it or give it to a girlfriend as a gift. So, you have a swap, you know, evening with girlfriend, come over for lunch or come over for dinner. Bring five to 10 items, they can be anything from kids clothes to your own clothes to jewelry, they can even be sunglasses. What about those great sunglasses that you got two years ago that are great for your friend, but maybe you're just over them, but they're perfectly good items. So, swapping is a great thing.
WILLIS: Great idea. Suzy Coehlo, thanks for joining us today, we really appreciate it.
COEHLO: You're very welcome, great having -- thanks for having me.
WILLIS: Infomercials, you see them all the time, but does anybody really buy those "as seen on TV" products? And the big question we all want to answer -- are they worth it?
WILLIS: You see the spots on our air and on other networks for infomercial products. So, which of these products are worth it and which are all hype? Here to test them out the Harry Sawyers, he's an associate editor with "Popular Mechanics."
Harry, welcome. We got a great segment to go on, here. And I just want to start with the first product, which is called get a Get- A-Grip.
HARRY SAWYERS, POPULAR MECHANICS: Get-A-Grip.
WILLIS: All right, so this is it right here. Right?
SAWYERS: That's it. So, the get a Get-A-Grip ad opens with people slipping and falling out of the shower and the voiceover says, "They need Get-A-Grip," and this is the shower wall handle that mounts to fiberglass or acrylic tubs.
WILLIS: How does it stick?
SAWYERS: Suction cups.
WILLIS: Suction cups?
SAWYERS: Flip two switches, suction cups hold it in place. It's OK.
WILLIS: Does it work?
SAWYERS: It's OK. We were able to yank it one handed off of pretty much every surface that it's said to work on.
WILLIS: So, would it hold the average person's weight?
SAWYERS: I wouldn't trust my granny relying upon the Get-A-Grip. I'm sorry. I would prefer a mechanical fastener, "Popular Mechanics."
WILLIS: All right. OK, makes sense. How about Samurai Shark? Now, this is a knife, you're going to show it how well it cuts.
SAWYERS: All right, so this is the ultimate sharpening tool, sharpens all manner of kitchen knives, shears, pruners, scissors, axes, blunt blades galore. And so, in the ad -- sorry Gerri, I don't mean to threaten you -- in the ad, this knife is too dull to cut this ordinary dish sponge. And I found one in my house that is indeed too dull, but they say one, two, three passes through the Samurai Shark.
WILLIS: Wow. OK, does it work now?
SAWYERS: And, I'm going to do it. Well, maybe a few more passes through the Shark, here.
WILLIS: I don't know.
SAWYERS: The thing is it's a tongueston (ph) carbide sharpening blade that is not really the best thing to use if you really care about your knifes.
WILLIS: All right. OK, well, I got to tell you, I'm less than impressed.
SAWYERS: Well, there's answer.
WILLIS: Yeah, doesn't seem to work. Let's move on to the next. Bring in the ShamWow! All right, so everybody has seen this ad, right, for the ShamWow? It's supposed to pick up water, anything you spill.
WILLIS: All right, so let's do a little demo, here.
SAWYERS: All right.
WILLIS: I'm going to pour a coke, right here.
SAWYERS: Onto the carpet.
WILLIS: Oh, onto the carpet. Oh, even better. Look at that. All right, I'm going to give you that.
SAWYERS: OK, so...
WILLIS: Show me how it works.
SAWYERS: So, as they do in the ad, you know, you press it down, there's your moisture, there's your mildew, 50 percent of the moisture is supposed to come up without any pressure at all. Just kind of press it into place. And Vince wrings it out.
WILLIS: So, are you finding it effective for the price?
SAWYERS: I find that people really love it and everyone, when I was walking through with a box of fresh ShamWows yesterday, everybody wanted to tell me all their testimonials, voluntarily. It was like the ad. They were like: I use it on the car, the boat, the RV. Everybody uses it everywhere, but when pressed, they still admit that they still keep a roll of paper towels on hand just in case.
WILLIS: All right, so you give it kind of a 50/50 score, right?
SAWYERS: I say it saves you some money on paper towels, but it's not going to be the only true rag.
WILLIS: OK. We got to get to the Hercules Hook. This one I'm very curious about this. It's supposed to carry a lot of weight. Does it?
SAWYERS: Well, it does. It's a Billy Mays ad and he says, "The Hercules Hook has the muscle to hold 150 pounds."
SAWYERS: And, it does if you use multiple Hercules Hooks. You can distribute the weight across them. We were trying to see what one hook could do, so we hung a painting from it, no problem.
WILLIS: Did it work?
SAWYERS: Yeah. Hung a very heavy bag of books, double bagged, hardcover books. Two-part biography of John Adams, very dense, 41 pounds, held it no problem.
WILLIS: All right, well let's -- so it works sometimes. I'm sorry to rush you...
SAWYERS: I know I tried to hang a (INAUDIBLE), but it fell.
WILLIS: It fell. All right. Well, we ran out of time. Harry, thanks for helping us out, today. We really appreciate it.
WILLIS: As always, we thank you for spending part of your Saturday with us. YOUR BOTTOM LINE will be back next week, right here on CNN. You can also catch us on HLN every Saturday and Sunday at 3:30 p.m. Eastern Time. And you can hear much more about the impact of this week's news on your money on "YOUR MONEY" with Christine Romans and Ali Velshi, Saturdays at 1:00 p.m. Eastern and Sundays at 3:00, right here on CNN.
Don't go anywhere, your top stories are next in the CNN NEWSROOM. Have a great weekend.