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Do We Need More Stimulus?
Aired July 11, 2009 - 13:00 ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
ALI VELSHI, CNN HOST, YOUR MONEY: Why are some Democrats calling for yet another round of stimulus? Kate Bolduan joins us now with more.
(BEGIN VIDEO CLIP)
KATE BOLDUAN, CNN CORRESPONDENT (voice over): Even as the Obama administration touts the jobs being created by Recovery Act Spending --
(UNIDENTIFIED MALE): We're starting to see some real progress.
BOLDUAN: Unemployment has soared to 9.5 percent and 3.4 million jobs have been lost in the past six months. Republicans say the stimulus isn't working, and Wednesday they pounce.
REP. BRIAN BILBRAY, (R) CALIFORNIA: I think that we need to justify how much money we're spending, and where are the jobs saved, and where -- how have they been preserved and I think that we've got a major credibility crises here.
JASON CHAFFETZ, (R) UTAH: The president is quoted as saying that, quote; the stimulus has done its job. Is that true or not true?
BILBRAY: We believe the stimulus has had the impact which we had predicted which is job creation.
BOLDUAN: In the hot seat, the president's deputy budget director Rob Nabors who said the stimulus plan is slowing the economic free-fall. Nabors said 150,000 jobs have been created or saved.
ROB NABORS, DEPUTY BUDGET DIRECTOR: It's a work in progress, but its steady progress.
BOLDUAN: The Government Accountability Office says of the $29 billion delivered to hard-hit states so far, most has gone to pay Medicaid costs, balance budgets, and avoid layoffs. At the same time, Tom Evslin, Vermont's chief recovery officer, says funds for big, job- producing investments like broadband and the electric smart grid are still caught in the stimulus pipeline.
TOM EVSLIN, VERMONT OFFICE OF ECONOMICS STIMULAS & RECOVERY: The frustration has been that the money hasn't come out, and we kept hearing later and later dates for the money coming out.
BOLDUAN: Massachusetts Governor, Deval Patrick, says states are ready and waiting.
REP. DEVAL PATRICK, (D) MASSACHUSETTS: No funds, no projects. And no projects, no jobs.
BOLDUAN: Now, also in that hearing, Rob Nabors, the White House's deputy budget director, he seemed to criticize states for making what he called unwise choices to simply use stimulus money to balance their budgets. Now, the administration has said actual stimulus spending will peak in 2010. Ali, Christine.
ROMANS: Kate, you know, it's only a fraction, then, of the $787 billion stimulus distributed so far. Why are some Democrats already calling for what would be round three? Remember last year we had $168 billion under the Bush administration, and now this one. Some Dems want another already.
BOLDUAN: Ye, it is difficult that we are talking round three. Many people's eyes pop open and say what are you talking about just five months into this one? But some Democrats are saying that, really, it's prudent to start planning now, planning ahead, if this round of stimulus, this jolt, doesn't help the economy recover. But at the same time, Christine, it's really politically risky.
Already Republicans are jumping on that as simply they say an admission that the current stimulus isn't working. And economists say it could be October, November, December before we really have a clear picture of the success or failure of this current effort. But I think the big question, and I'm sure you're hearing it as well, is will the American public, can they stomach, even a conversation about round three already?
ROMANS: All right, Kate Bolduan thanks so much.
You know Ali, Kate, it's so interesting, too, because you look at Japan in the '90s, I think they had nine different stimulus plans --
VELSHI: And no interest rate, same problem.
ROMANS: A very similar problem, and it's a lot of challenges and a lot of very smart minds have been working on it. When President Obama took office in January, he led a chorus of top Democrats urgently demanding the passage of that stimulus. You know their argument then, jobs, jobs, jobs.
(BEGIN VIDEO CLIP)
SEN. MAX BAUCUS, (D) MONTANA: If we do not act, 3 million to 4 million more could lose their jobs.
ROBERT GIBBS, PRESS SECRETARY: We're not going to grow the economy; we're not going to see a lessening of those deficits, if unemployment hits 10 percent.
BARACK OBAMA, PRESIDENT OF THE U.S: By necessity, we are moving quickly. We're not moving quickly because we're trying to jam something down people's throats. We're moving quickly because we're told that if we don't move quickly, that the economy is going to keep on getting worse. We'll have another 2 million or 3 million or 4 million jobs lost this year. (END VIDEO CLIP)
ROMANS: Today 2.3 million jobs have been lost since the stimulus passed since the president has been making the arguments.
So is this progress or Ali is this broken promises?
VELSHI: Let's pose that question to Democratic Congressman Chris Van Hollen of Maryland, now joining us from Capitol Hill. Representative Van Hollen, thank you for being with us.
REP. CHRIS VAN HOLLEN, (D) MARYLAND: Thank you.
VELSHI: Now what is the situation? The stimulus bill was passed in large measure because it was going to create jobs, amongst other things. But really key to most Americans was the creation of jobs. And while things are a little better than they were in February, they're still pretty bad.
VAN HOLLEN: Well, look, the Recovery Act has succeeded in slowing job loss, in many cases creating jobs. I know in my own district people have been put to work on transportation and roads projects that were shovel ready. I know there were a lot of people that would have been laid off, teachers especially, but for the fact that this passed. The president made clear very early that this was going to be a long and painful recovery, but it would be more painful and it would be longer if we had not passed this economic recovery plan.
So, it's beginning to kick in. But this is like trying to walk up an escalator that's going down. If you do nothing, you're going to go down a lot faster. But even if you're doing things, because the economy was in free-fall, an economy that the president inherited, progress is -- is slow. And you have to measure it in terms of reduced pain. It will take a while before we actually turn the corner.
ROMANS: You know, unemployment back when they were trying to sell the stimulus was 7.2 percent. Now it is 9.5 percent. I want you to listen quickly to what the vice president said about a week ago about the economy and how we must thread this.
(BEGIN VIDEO CLIP)
JOE BIDEN, VICE PRESIDENT OF THE U.S: The truth is, there was a misreading of just how bad an economy we inherited. Now, that doesn't -- I'm not laying the -- it's now our responsibility.
(END VIDEO CLIP)
ROMANS: So, here's my question -- if the White House misread the depths of the problem or how far it would go, because the White House was saying it would be 8 percent would be the peak in unemployment if the stimulus was passed. Does that mean that the stimulus wasn't the right package in the first place and does that mean there needs to be another one?
VAN HOLLEN: No, I think the stimulus was the right package and I think it is beginning to kick in. The fact of the matter is, in the third quarter, the next quarter; you're going to see more of the stimulus funds entering the economy. This was a package that was designed to put more funds into the economy over a two-year period. The initial tax cuts went up very quickly. But the transportation moneys and the other moneys are beginning to kick in now.
So, you're not going to see a dramatic reversal, I mean, the president was very clear about that. But I do believe that it's pretty clear that things would be worse and that the decline would be steeper if we hadn't done this.
VELSHI: Let me ask you this. There have been some criticisms that the states have used the money to plug very immediate holes that they had that addressed some short-term matters and that are not really simulative in the long term. In another words there were budget gaps and the states have used that money and that's not actually going to create jobs or long-term work. What do you think about that?
VAN HOLLEN: Well, as you know, the states have to balance their budgets, so if they didn't use some of the money to balance their budget through Medicaid, they would have to make cuts elsewhere, which means laying off teachers and which means laying off public safety people. So at the end of the day because of the balanced-budget requirements in the states, if they don't use those funds to balance the budgets in the states, it means more cuts and it means more layoffs and of course that continues the vicious cycle downwards.
It means the teachers don't have the funds to go to the local store and buy goods. So the fact that there are fewer layoffs in states is a good thing. And if we hadn't passed this bill and states hadn't been able to use some of that money for their budgets, you would have a continuing, rapid decline. We know that even with this money, states like California and other states are having a tough time. Imagine how much tougher a time they would be having if we hadn't passed this.
ROMANS: Now we do know of one school district that kept 2,000 teachers on staff that would have been fired without this money. Congressman Chris Van Hollen, Democrat from Maryland. Thank you so much for joining us. I know you have to run out for a vote. Thank you for your time sir.
VAN HOLLEN: Thank you.
VELSHI: All right. We were talking about Representative Van Hollen about unemployment. The unemployment rate now stands at 9.5 percent, as Christine said, but would we be in worse shape, would that unemployment rate be higher if the stimulus bill had not passed? Republican Paul Ryan of Wisconsin is the ranking member of the House Budget Committee, he joins us now. He did not support the stimulus bill. He does not support it now. Congressman, give us your views.
REP. PAUL RYAN, (R) WISCONSIN: Well first of all, the claim was that the stimulus would keep unemployment below 8 percent. It's now 9.5 percent. What we've already lost is 2 million jobs since the stimulus passed. More to the point, the stimulus will cost $1.1 trillion in borrowing and that's pushing interest rates up and that's hurting people that are trying to buy homes and who are trying to avoid foreclosure and who are trying to invest.
So, when we see the stimulus which is spent very slowly, the kind of spending in this stimulus, most of it doesn't even occur until after 2011, it's not working. We should do something better and only 3 percent of the stimulus package actually goes to encouraging businesses to keep or create jobs. The rest of it is rebates in spending; most of the spending is slow, wasteful, and ineffective.
ROMANS: And you fundamentally just don't believe we should be borrowing money.
RYAN: That's right.
ROMANS: Money that we don't have because we were running all these deficits, we should be borrowing money to try to get ourselves out of the debt problem. That's your philosophical point of view on this. You know the Paul Krugman, who won a Nobel Prize, a "New York Times" economist. I want to read to you something that he just said about how some of these issues are playing out politically. "The bad employment report for June made it clear that the stimulus was, indeed, too small. Republicans and some Democrats have treated any bad news as evidence of failure, rather than as a reason to make the policy stronger." So, he's saying that it's not necessarily; he would like to see maybe even a bigger stimulus.
RYAN: That's right. I've heard his argument. I just don't agree with that. More borrowing -- look, we're already borrowing 50 percent of the federal government's budget this year alone. We're borrowing $2 trillion just this year. All this borrowing is going to push up interest rates. It's going to give us an inflation problem. And we believe that the stimulus and we proposed an alternative -- ought to go to businesses, small and large, to encourage them to keep people working.
To encourage businesses to invest and expand and hire more people. More spending through Washington. Look, if more spending from Washington was the answer to our economy, then we wouldn't have a problem in our economy, because we're spending more than we ever have in the history of this country.
VELSHI: Let's talk about that, Representative. Let's talk about that. You're talking about more money to businesses. Ultimately businesses don't invest if consumers aren't going to buy. But what specifically are you saying we should do? What kind of incentives do you provide for businesses and who pays for that?
RYAN: What we say is give businesses the ability to write off 100 percent of their investments. If they hire people and if they buy more plant and machinery to put people to work, they can write that off immediately. We also tax our companies, our corporations, and the second highest rate in the industrialized world, so what happens in the 21st century global economy is when you tax your employers a lot more than your competitors are taxing theirs, we lose jobs overseas. We've got to be more competitive.
So those are the things we're saying we ought to do. Also we think we ought to help people make the money back in their savings portfolio that they lost. We think there ought to be a sunset of the capital gains tax for at least two years. It's not a huge revenue razor for the government, but it's a huge punitive tax on our savings plans. Let's help the economy get back into investing. Let's encourage investors to take risks and let's help people make back the money in their I.R.A.s and the 401(k)s and their kids' college savings plans that they've lost so much money from.
ROMANS: Meanwhile, many of the Democrats are preaching patience. They say only 10 percent of the money is, let's just give it some time. We have to leave it there, Congressman Paul Ryan. Thank you very much.
You know a shocking forecast for the housing market. What's in store for the value of your biggest asset, your home? Will it be worth more or less in two years?
Plus, over 40 and out of work, how to take steps to land the next job.
ROMANS: The housing market is going to get worse before it gets better. That's the news from mortgage insurer, PMI Group. PMI reports more than half of the nation's largest cities will likely see home prices drop in the next two years. Many of those cities are in hard- hit states, Florida and California. PMI points to unemployment and rising foreclosures is the reason for the continued price drop.
But Ali, I will say they do say that 98 percent of the homes -- home areas now are higher in affordability and so that's good if you're looking at low interest rates and you've managed to save up money for a down payment. There is some chance of getting that first-time home now for the first time in a long time.
VELSHI: You know, we use California often as the example of that where back at the height, you know, a house was maybe $600,000, now it's under $200,000.
ROMANS: That's right.
VELSHI: Which means you can get into it with a lower monthly payment and without have to take a risky mortgage. But it depends you getting that mortgage. It's an interesting time, a glass half full or a glass half empty depending on where you stand in the housing market.
Well, T. Boone Pickens is shelving his plans to build the largest wind farm in the world. It is was going to be in Pampa, Texas and would used thousands of wind turbines to generate electricity. But he says transmission problems in getting the electricity to where it needs to go and trouble getting capital have made the project unfeasible for now. Pickens talked up the Pickens plan, you might remember, with television commercials like these and lobbying efforts.
His goal was to wean the U.S. off of foreign oil. Move us over to wind and natural gas a little bit more so we use less oil for transportation. I spoke with T. Boone Pickens about his scaled-back plan for some of the turbines that are already ordered. (BEGIN VIDEO CLIP)
T. BOONE PICKENS, CHAIRMAN, BP CAPITAL MANAGEMENT: We'll be right on schedule. We may not build the wind farm in Pampa, Texas, you may find it in Wisconsin or Nebraska or someplace else, but we'll be actively building a wind farm someplace with the turbines. My garage is not big enough to take all those turbines.
(END VIDEO CLIP)
ROMANS: I bet he's got a big garage. I really do, but I don't think it's big enough for all those.
VELSHI: Yeah, this is a big bet that he made. He had a lot of money to make a bet with and he made a big bet on wind. There were a lot of moving parts to this. It needed private investment and it needed municipalities and states to participate in building those transmission lines and he said that wasn't happening fast enough in Texas.
But he will have to find a way out of it, and it's probably good news for those people depending on greater use of wind or solar or natural gas in this country, that they've got to find someplace to put these things. There are a lot of people looking for wind fares.
ROMANS: We were bullish on oil when it was $140 a barrel.
VELSHI: He also made that comment, he said oil's going back up to the $140s in the next few years, but I guess it's in his interests at this point for oil to go higher to push his plan. When oil is lower, he's not worried about it.
ROMANS: He told us he was long natural gas.
All right. Bailed-out insurer AIG is asking the government Pay Czar to review $235 million in bonuses that it owes employees of its famous now financial products division. Pay Czar Kent Finberg (ph) is also reviewing $2.4 million in scheduled payments to 43 top executives. Those bonuses are part of pay packages that were already contracted in 2008. That means AIG is not required to receive approval before making the payments. A source close to the matter said AIG wants to make sure the government is completely comfortable with the company's compensation plan. And Ali --
VELSHI: Which they can't possibly be.
ROMANS: No one is comfortable with that.
VELSHI: No one is.
ROMANS: Even the people getting those bonuses --
VELSHI: It's the world's worst compensation plan. There is no question about that. However, we've already -- we've already had our chance to be outraged about this. This is the same one we were outraged about. This is another installment of the same outrageous compensation plan that we talked about a few months ago.
ROMANS: It's the same money we were all angry about before.
ROMANS: Taxpayer money has to pay the bonuses, but now it looks like the government and AIG are together trying to figure out what's the most appropriate way to do that or not do that. That's not the end of the story.
VELSHI: I tell you how you do it. Your hold your nose and you pretend you don't have to do it because it's terrible.
ROMANS: All right, we'll leave it there. We'll give the technical advice. We'll draw it up and send to Finalburg (ph) at treasury.
All right. The power of facebook, while promoting yourself or your business right online could mean lots of money in the future.
VELSHI: Social networking sites are not just places to chat with your friends anymore. Whether you're airing your grievances over your shrinking 401(k) or you're networking to find a new job, the way you are using these sites has changed with the economy. Randi Zuckerberg is the marketing director at Facebook. She joins me now from Palo Alto, California, via Skype.
Randi, good to see you again, thank you for being with us.
RANDI ZUCKERBERG, MARKETING DIRECTOR, FACEBOOK, (via Skype): Great. Thank you so much for having me.
VELSHI: Randi, I know that you really do follow the trends what's been going on facebook and I know that in the last few weeks because of Michael Jackson and because of Iran, there's been really an increase in not only usage but the way people use facebook. But, with respect to the economy, what sort of trends have you seen in terms of people struggling through the economy? How are they best using face book to make things better for themselves?
ZUCKERBERG: That's a great question. And because facebook is really a representation of what people are talking about offline in their daily lives, people have really been turning to facebook in a huge way to discuss the economy, ever since last year we have been tracking how people have been discussing terms like money, the economy, being laid off on facebook. And we've seen a tremendous increase in these terms being discussed with people and their friends.
VELSHI: All right. So, the first thing that we typically, in business news, discuss when we think about social media and social networking with respect to you is jobs. Networking, because you may know someone, there may be somebody in your group of friends who works at a company that -- that you might want to get into, so you can get your resume right to them, or they'll pass it on to someone, so the networking aspect seems to be the most obvious aspect of it. But apparently there are other creative ways; people who are looking for work or coping with being out of work can use facebook.
ZUCKERBERG: Definitely, the job networking question is interesting. We actually asked over 1,000 facebook users this morning; we asked a question real-time asking if they had looked for jobs. About 25 percent of people said that they had looked for a job on facebook or a friend had looked for a job, which is a pretty outstanding number.
And when you think about the fact that a lot of people really do turn to their friends to connect them, on facebook you can really see very easily where someone works, what industry they're in. And it's -- it's very easy to reach out and make a personal connection with someone or have a friend introduce you.
VELSHI: Now, we don't want go too far away from the idea that these things, things like facebook really developed originally because of social connections and there's a social aspect to people who have been out of work or laid off. You're finding there are some support groups that exist on facebook, ways of coping with recessions or people with similar interests who are out of work trying to sort of create a community?
ZUCKERBERG: That's right. There are groups with hundreds of thousands of people that are dedicated to either people who have been laid off, sharing tips of balancing budgets. There are groups that are especially related to people with lots of student debt and what they're doing in this economy to help pay it off. And there are just lots of groups that are around of discussions, so if you're interested in discussing economy or money or a job on facebook, there are tons of groups you'll find with millions of people discussing this topic.
VELSHI: And there are tons of recession specials that are targeted towards you. In fact, on Friday there was one where Chick-Fil-a (ph) said if you dress like a cow, you can get free chicken. So, I actually gathered up a little cow outfit and I made sort of some surgical gloves into an udder and I went to get free chicken. Randi, good to see you.
VELSHI: Always a pleasure, Randi Zuckerberg, managing director at facebook, joining us via skype from California.
Well say good-bye to Hollywood, we're going to show you which town is trying to ramp up film production as a way to add jobs to one of the highest unemployment rates in the country.
VELSHI: General Motors is out of bankruptcy. It took just six weeks. What does the new GM look like? Well, it's keeping the Chevrolet, Cadillac, GMC, and Buick brands. It's keeping most of its overseas operation, and it's keeping about two-thirds of its U.S. dealerships. But it's closing 14 U.S. plants. It's eliminating about 20,000 of its 88,000 U.S. employees. And it is selling off Saturn, Saab, and Hummer brands, and it's discontinuing Pontiac. ROMANS: Now, the unemployment rate in the metro Detroit area stands at 14.9 percent, more than 5 percent higher than the national average, Ali.
VELSHI: The contraction of the U.S. auto industry is one factor. But what else is at play in Detroit? Charles Anderson is the president of the Detroit Urban League; Naomi Patton is the city hall reporter for the "Detroit Press." Naomi what do you think is at play? Is it just the fact that this is a city that was built largely on the auto industry and that industry has collapsed?
NAOMI PATTON, CITY HALL REPORTER, "DETROIT PRESS:" Yeah, that's a huge factor, and which would seem obvious, but there are a number of other factors at play, but that's -- that's the most obvious hit. There were these people that relied on these jobs for decades, now they are gone. They are looking to find out what's next. But it's not apparent at this point.
ROMANS: Yeah, Charles, let me ask you. What is next? Many say that Detroit was the birthplace of the black middle-class in America, although Chicago claims the same mantle. What is next, I guess, for the middle-class, the middle-class life, in Detroit? And what are -- what are people doing to try to -- to proceed with a future that is bright for the middle-class there?
CHARLES ANDERSON, PRES., DETROIT URBAN LEAGUE: Well, you know it's not just the jobs that GM has cut and Ford and the other companies, it is also the jobs that connect to the General Motors and automobile dealers and the workers. So what we have today are a number of people who need to readjust their life style.
They need to reconfigure and regroup and figure out how they are going to move forward. It will require people to look for new kinds of work to do new job training. Some are moving into health care, because it's still a growing profession. Others are moving into business on their own. But it's -- it's a change in demographic, it's a change in direction. A lot of people need to figure out another way to go.
VELSHI: Naomi, you look at those -- you look at some of those cities that have had similar problems. There's really no city in America that has had the same type of problems as Detroit. But take a look at Pittsburgh years ago when we started to see less emphasis on steel and less emphasis on that type of manufacturing. There's a city that sort of started to emphasize its educational facilities and health care, and really, while it is still struggling in this economy, ended up doing better than Detroit.
We've got a similar situation in Detroit. You've got a perfectly located city geographically. You've got a workforce. Great highways, waterways, facilities, infrastructure. Can Detroit reinvent itself as something else? Because I don't think the auto industry's going to do it for Detroit anymore.
PATTON: No, it isn't. But it can absolutely reinvent itself. It was headed in that direction prior to the financial crash last year. Right now, there's a burgeoning film industry, the state is giving tax credits, and they have sworn to Detroit there will be a couple of studios opening up in Detroit proper and just outside in the Burbs. That's one aspect.
The city itself has taken on initiative to provide tuition assistance through its workforce development department to get some retraining, hospitality industry. We have the permanent casinos with hotels that have provided some jobs. Retail programming training, retraining, health care obviously. And in some, you know -- there's still some manufacturing-based elements to -- to the Detroit economy that will remain, clearly, and the state is even pushing initiatives, you know, to -- to become a hub for developing these batteries for these future hybrids. I mean, there are some options, and they were certainly headed in that direction prior -- prior to the crash, in the fall, which obviously led to the fall of the -- of the domestic three.
ROMANS: Charles, Naomi mentioned the film industry. Is the film industry so far; is that going to be enough to kind of push this forward? Is that going to make up for some of these auto jobs? And the federal government has been -- has been spending money bailing out the automakers. Does that translate to the city of Detroit? I mean, has that been helping?
ANDERSON: Well, I think it will help. I think what the city of Detroit needs is a more diverse economy. We don't need to be as reliant as we were once on the manufacture. So, the movie industry is one way to do it. The battery technology, the green technology, all of the opportunities of tech -- even google coming into the vicinity of Detroit, all of this is helpful to diversifying the economy of Detroit and getting us to rely on a multitude of different careers and opportunities as opposed to being so wedded to one.
The auto industry paid well. It helped move, as you said earlier in the program, a lot of the African-Americans to the middle-class ranks. And some are really struggling to stay there right now. But the opportunity to diversify our economy is what we really need to take advantage of. We certainly can reinvent ourselves, as was said a moment ago. We have all of the right demographics. We're in the right spot. We just have to explore the positive aspects that we have in our community.
ROMANS: All right, Charles Anderson, president of the Detroit Urban League. Thank you so much. Also Naomi Patton, city hall reporter for "The Detroit Free Press." Thank you, both of you.
VELSHI: I have to tell you Christine, I spent a lot of time in Michigan covering the auto story. I really look forward to the day when Detroit really starts once again to turn that corner. Because it's a great place and it can be. Michigan can be really prosperous.
ROMANS: It's a great American city. And as we've said over and gain, there was a middle-class that was born there that set the standard for the middle-class across the country. And that means a lot of people look to what's happening in Detroit with great fear about how the rest of the country could --
VELSHI: So it's important that it comes back around. ROMANS: The state of Michigan is desperate for jobs, especially outside of the troubled auto industry, as mentioned, there's some hope coming from an unexpected place. CNNMONEY.com's Poppy Harlow explains.
(BEGIN VIDEO CLIP)
POPPY HARLOW, CNNMONEY.COM (voice over): Don't be surprised to see George Clooney or Robert De Niro next time you're in Michigan. Those Hollywood a-listeners have joined others like Clint Eastwood to make major motion pictures in the embattled state as it works to reinvent itself.
GOV. JENNIFER GRANHOLM, (D) MICHIGAN: We are focused entirely on diversifying our economy, for example, in the creative economy, whether it's filmmaking.
CLINT EASTWOOD, ACTOR: If you stay here, because if I have to come back here again, it's going to be ugly.
HARLOW: Clint Eastwood's movie takes place a few miles from Detroit. So, what's the incentive to film here? A 42 percent tax break for studios that hire local workers rather than bring in their own crews. Sounds great, but here's the problem, even though Michigan has a skilled labor force, most don't have any experience working on film sets.
(UNIDENTIFIED MALE): OK.
HARLOW: Enter. Mort Meisner and the Center for Film Studies. Started in March, the school gives Michigan workers the chance to hone their skills to meet the needs of movie execs.
MORT MEISNER, PRESIDENT, CENTER FOR FILM STUDIOS: I don't think Hollywood woke up this morning and decided, hey, let's go to Michigan! They're coming to Michigan because the tax incentives are here.
(UNIDENTIFIED MALE): These are normally just painted black.
HARLOW: A full course isn't cheap, it costs five grand. But 75 percent of the workers in the program are getting a free ride, thanks to funding from Michigan's "No Worker Left Behind" program. At this class, construction workers that are used to building homes are learning how to build sets.
(UNIDENTIFIED MALE): And I think it was --
SAL PALAZZOLO, SET CARPENTER: It seems like the movies are coming here. There's a demand for carpenters. So, I want to be -- we're actually right at the front of it right now, so I want to be right there.
(UNIDENTIFIED MALE): The real mission, pure and simple, is leave a legacy of jobs.
(END VIDEO CLIP) HARLOW: And, boy, the people across the state of Michigan, desperate for jobs right now. Michigan not a movie Mecca just yet, but the state is certainly making progress, 35 movies were shot in Michigan last year, bringing in $125 million revenue to the state that is up from just $2 million in 2007, so a big improvement.
ROMANS: Nothing compared to a multibillion dollar auto industry that is shrinking.
ROMANS: What is your experience? You spent a week in Detroit talking to people, trying to get a sense of is there going to be, will the city be the phoenix from the ashes?
HARLOW: You know, it just may because of the hope there. The people were so kind, it was that Midwest, nice, mixed with hope and people want to stay there. It is their home. They don't want to leave. Most of the people very positive about it. But they have to retrain, and they have to change their mindset.
Governor Granholm of Michigan, we sat down with her when we were in Detroit, and she said, people have to get out of the mentality that they can graduate from high school and get a great-paying job at an auto factory and make $100,000 a year. That's what a lot of the autoworkers were eventually making. You can feed a family well on that that. That is not going to happen any more, she said they have to change their mindset, that you can't do that now. You have to retrain maybe the film industry and she's big on the renewable energy industry coming to Michigan. I have hope for Detroit. The people there are fantastic.
ROMANS: Charles Anderson from the Detroit Urban League said, they have to diversify. It can't just be the film industry. They have to diversify.
ROMANS: It's interesting to see what they are working on. Thanks, Poppy.
Are you middle-aged? Are you out of work or do you know someone who is middle aged or out of work? Grab a pen and paper and we're going to tell you how to take control and land a job even in this market, even if you're over 40, next.
ROMANS: Well the baby boomers are soon joining the ranks of those aged 65 and over. The graying of the American workforce is only just beginning, so why, then, is it so hard for those who are middle aged and unemployed to find a job. Our next guest says it doesn't have to be that way.
Steven Greenberg is the founder and CEO of Jobs4.com, a job search engine that is specifically geared to people who are 40 years old and older and unemployed. Welcome to the program. I want to first look at sort of the graying of the American workforce, because these statistics from the Labor Department pretty clearly show that this is a workforce that is getting older and older. I mean, are employers up to speed on this? How the workforce is changing.
STEVEN GREENBERG, FOUNDER & CEO, JOBS4.COM: They're not acting as if they are, Christine. What we see in that chart there is a rather startling trend. You know, over the next seven years, about 76 million Americans will hit retirement age and only 46 million are going to come and take their place. So, for next year, for the first time in over 50 years, the median age of the workforce is going to be over the age of 40.
Which means that employers really should get on the bandwagon and start attracting older workers and in an ordinary market older job seekers would be in good shape now, but, of course, with 20 million Americans now either unemployed or underemployed it's once again the older workers who are getting the brunt of it.
ROMANS: And we know that there are six job openings for every position out there.
ROMANS: So, for someone hiring a job, there are a lot of people to choose from. How to land the job if you are middle aged? If you're young, on your resume, you focus on potential, you know this is my education, I'm energetic, this is what I can do, I'm flexible, if you're middle age and over, if you're over 40, you want to focus on your accomplishments, but you don't want what you call the gold-watch resume.
GREENBERG: Right exactly. By gold watch resume, I mean, an older job seeker's resume typically is an exhaustive list of every milestone and every achievement and promotion they ever had.
ROMANS: It looks like a eulogy or an obituary at times.
GREENBERG: Exactly. A potential employer will take that and say, wow I want to give them a gold watch for all the work they've previously rendered, but do they have anything left for me? I want them to work for me for the next ten years. So beware of writing your resume that generate all but not interviews, you want to taylor your resume instead to the qualifications of that job going forward.
ROMANS: You have an example of this.
GREENBERG: We got a good example of a salesperson who had meticulously listed everything about their past. They traveled all over the country, and had all these achievements and won all these awards. You took this resume and you thought this person must be so tired of traveling, why would I want to hire this person. Instead, change this resume and say I traveled around the country and I have these 75 contacts that I can put today for you when I start.
ROMANS: How can you make money from my experience? GREENBERG: Exactly.
ROMANS: Very quickly, you have best employers. If you are 40 and older, you have a lot of experience, where should you be focusing, particular companies?
GREENBERG: Our business really is to find employers that reach out to employees of all ages; they want to value people for those skills and their experience and won't disqualify them because of how many birthday candles were on their cake last year. These are some of the better companies out there, companies like MetLife, GE Health Care, Deloitte, Home Depot, Stryker, all of these companies have hundreds of open jobs all over the country and older workers, you know, should be pursuing companies like this, many others.
ROMANS: Steven Greenberg, founder and CEO of Jobs4.com and he has another piece of advice I want to share with everybody quickly before we go. Look around your town, who is sponsoring the fireworks and who is sponsoring the picnics and the little league teams, it means that even if they are not hiring, they have money, they are making good, they might be a future place to look.
GREENBERG: You know 60 to 85 percent of all jobs are never advertised.
GREENBERG: So, you got to find the employers and not the jobs.
ROMANS: So a little sleuthing there. All right. Steven Greenberg, thank you very much.
All right. It's time to get revved up. Ali is going to ride with the founders of Orange County Choppers. Find out about the ups and downs of running a successful business. Isn't that cool?
VELSHI: Christine, you know that from time to time we get assignments that are simply no fun, but this particular assignment for me, well, felt like it was no work. I took a trip up on my motorcycle to Newburgh, New York, to have a chat and a ride with Paul Teutul Sr.; he's the founder of Orange County Choppers, and star of the TLC Show "American Chopper." That's us, me on the left, Paulie on the right. We talked about the bike business and his view from the top. Take a look.
(BEGIN VIDEO CLIP)
VELSHI (voice over): A multimillion dollar business. A hit reality TV program. And a 30,000-square-foot retail store that's become a shrine for his fans around the globe.
(UNIDENTIFIED MALE): Thank you.
PAUL TEUTUL, FOUNDER, ORANGE COUNTY CHOPPERS: You're welcome.
VELSHI: With all this, you'd think Paul Teutul would want to take a vacation once in a while.
TEUTUL: I love what I do. This is -- you know, I don't take vacations. This is my vacation.
VELSHI: Senior as he's called around the shop is the founder and owner of Orange County Choppers, a custom motorcycle shop with a clientele of celebrities, athletes and politicians. Tell me how you got started with the motorcycles and how it became the business that it is.
TEUTUL: Well, I mean, I had a fabricating business for 28 years, and when I started my business in 1973, I had a partner that was a real guy from Brooklyn that was really into motorcycles, and back then they didn't have after-market parts so you had to do everything yourself.
So, I would watch him stretch stringers and frames and whatnot, and I found it intriguing and that was kind of like the beginning. So, it was more about building bikes than riding them. Zero gravity we all this.
VELSHI: With the price tag of a custom bike ranging from $24,000 to $120,000, seniors not immune to the effects of this recession.
TEUTUL: The economy here is like most places. It has been bad. I think it is getting a little bit better. But people who are being very conservative with their money and they're not buying toys. So it is a different type of person that comes in here to buy bikes. I'm very aggressive person. Always, my 38th year of being in business. So, failure is not an option.
VELSHI: But fame hasn't come without a price. His sons, Paul jr. and Miky, featured in the popular hit TLC show "American Chopper."
(UNIDENTIFIED MALE): Did you fire Paul?
(UNIDENTIFIED MALE): Yeah.
VELSHI: Have quit the business that senior thought would one day be theirs.
In the TV show there was a lot of tension with you and your family. Was any put on? Or is it real?
TEUTUL: No, it is real deal. It's life. Nothing stays the same, changes is good. I welcome it. We could start with this here.
VELSHI: You look healthy, energized. But you are very central to this business. Will it go on if something were to happen to you?
TEUTUL: Yes. Yes. Yeah. I mean, because it -- it's a business but it means a lot more to me. My whole goal always was for the family to continue the business. But that's not happening. You know, so if I go, there is going to be somebody else who will continue the business because that's what I have been wanting.
VELSHI: Not just for his sons, Senior has a message for the younger generation of workers out there in his new book, called "Ride of a Lifetime."
TEUTUL: I started out of a pick up truck, no money, no family background. Nobody to say here is a dollar. So I am used to old school. I am used to using my hand. I am used to; you know if I got to clean the bathroom I will clean the bathroom. People today, younger generation, they think that they can just, you know, have a specialty in what they're doing. In business you can't do that. You have to be able to do everything.
VELSHI: Surrounded by all these bikes and being a motorcycle enthusiast myself. I couldn't resist going out for a ride with Senior.
TEUTUL: Would I do anything else? No. This is my life. This is what I love. I'm here, seven days a week. Because I want to be here. Not because I have to be here.
(END VIDEO CLIP)
VELSHI: You can tell why he has done so well with his TV show. He has a lot of passion about that. Fun to be out with him. Frankly, Christine. Once in a while fun to have a job that has me go on the motorcycle.
ROMANS: My glam assignment is going to the Treasury Department. Your glam is riding a motorcycle.
VELSHI: That is why we are so good together.
ROMANS: All right, that was cool. That was very cool.
VELSHI: Well coming up next, we're going to go where few shows dare to go. Do not move. You are not going to want to miss this.
VELSHI: You know Christine as you know we have been doing these shows where we are not in the same place. We have been traveling so much. People always ask me, what are you reading? What do I always read; all I read are newspapers and business books. That can be a bit of a downer. Here is the business book that I need to read you an excerpt from. Listen to this. There was no mistaking who he was, the silver hair, those beady eyes, and the sheepish expression that makes him look like a guilty hamster. Hello, he said, I am Bernie Madoff, and I am about to offer you an investment opportunity of a lifetime. End quote. I cringed. Madoff had been in prison for less than an hour and he had already made the classic rookie's mistake never set up a ponzi scheme during your first week.
ROMANS: You are talking about Andy Borowitz our friend, the satirist, the author, the comedian, just an all around funny guy, author of the new book, "Who Moved My Soap" the CEO guide to surviving prison, the Bernie Madoff edition. Andy you had to update your corporate crime book, so many guys keep coming down the pike, right, Madoff was made for you wasn't he?
ANDY BOROWITZ, AUTHOR, "WHO MOVED MY SOAP:" Absolutely. There is just going to be more and more, we have this guy Allen Stanford, has been indicted we are going to have to see how that plays out. But this is a very upbeat message for them, this book. Because I am just saying you are just trading one gated community for another. Don't worry.
ROMANS: Let me ask you about Ruth Madoff, I mean everyone around here wants to know could she possibly have been involved. She has not been charged.
VELSHI: The fact that she didn't know wasn't plausible until we started hearing the stories about Mark Sanford, the governor of South Carolina.
BOROWITZ: That's right. Right. Bernie Madoff did tell her that he was hiking the Appalachian Trail. That is a good cover story when you are running a ponzi scheme. It is perfectly fine. We are making too much of this. A lot of corporate CEOs never speak to their wives, we know that is true. Who knows she may have known very little.
ROMANS: You said also in your book you know when you spend hundreds of millions of dollars with some one, you think you know them. This is not the man I co-own nine homes with.
BOROWITZ: That is right. She was shocked and appalled. All way the last to know.
VELSHI: There is a great reference in the books to all these things that you normally see in self-help books pertaining to CEOs. At one point, if jail is not going to be about being fun then what's the point?
BOROWITZ: That's right. It should be fun. This whole book is really like those corporate self-help books. Like the seven habits of highly effective prisoners. I am really trying to get people to be proactive when they are behind bars. There is no reason to be the end of your business career.
VELSHI: Tell me about the google chrome, its google, they're moving towards taking over every part of our computing life. They have the system. It will be like an operating system like Microsoft windows.
BOROWITZ: Google chrome is a brilliant idea. Because here is the thing Ali they have been hyping this, google chrome, we all want to know more about it. So how do we do that? By googling it, so clever. We are just googling more. I am introducing a new system called, Borowitzreport.com chrome. You will have to go to borowitz.com to find out more about that.
ROMANS: A new iphone application that has to do with Alaska Governor Sarah Palin, what's that?
BOROWITZ: Unbelievable, it's called the ipal. This actually translates the speech of Sarah Palin into English. Real-time text. It's fantastic. Very useful. Hold it up to the TV.
VELSHI: Hey, listen. Lot of talk about our currency, about our debt, China is the biggest holder of new U.S. foreign debt. What's the consequence of this, Andy?
BOROWITZ: I have just been reporting on this, big news. They're going to buy the rest of the United States. They don't currently own and they're going to rename the United States, Panda Gardens. It's a big deal. This is going to be huge news.
ROMANS: You know Andy; we cover a lot of serious subjects around here. For any one who could not. Possibly misses the point. Trying to have fun. You have to laugh about your money.
ROMANS: You will just cry.
hat's why you are here. Andy Borowitz, the book is called "Who Moved My Soap; the CEOs Guide to Surviving Prison the Bernie Madoff Edition." Get it quick. Because we are sure there will be another edition with some one else on the cover in the next year or so. We'll be talking about it. Andy will hopefully making a couple dimes on it. Thanks Andy.
VELSHI: Thank you. Christine, good to see you again. Thank you for joining us on YOUR MONEY. You can follow us on facebook and twitter at Christineromans and at Alivelshi.
ROMANS: Make sure you join us every week for YOUR MONEY, Saturdays at 1:00 p.m. Eastern and Sundays at 3:00. You can also log on 24/7 at CNNMONEY.com. Nice to see Ali in the TV. Have a great weekend everyone.