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Make or Break for Health Care Reform; Sparring Over the Stimulus; George Foreman's Secrets to Business Success
Aired September 12, 2009 - 13:00 ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
CHRISTINE ROMANS, CNN ANCHOR: It's a make or break moment for health reform. The president takes the gloves off in the most expensive site in history where lobbyists outnumber lawmakers six to one.
Sparring over the stimulus: jobs boon or boondozzle? How many jobs are being created with your money? And from the rumble in the jungle to the George Foreman grill: the champ gives you his secrets to business success.
Step into the ring: it's time for YOUR MONEY.
Hello, everyone, welcome to YOUR MONEY, I'm Christine Romans. Ali Velshi is on the CNN Express in Harrisburg, Pennsylvania, we will catch up with him in just a bit. Ali is getting your reaction to President Obama's latest attempt to spur the country to pass the health care reform. It's still early in his administration, but the president knows his legacy could hang in the balance.
(BEGIN VIDEO CLIP)
BARACK OBAMA, PRESIDENT OF THE UNITED STATES: I'm not the first president to take up this cause. But I'm determined to be the last.
(END VIDEO CLIP)
ROMANS: It is make or break time. Will the president get this done? Let's bring in our CNN senior political analyst, Gloria Borger and Andrew Rubin; he is the host of Sirius XM "Dr. Radio." Gloria, will he get it done?
GLORIA BORGER, CNN SENIOR POLITICAL ANALYST: Well, I think in the end, the president is going to get something passed. And whatever he gets passed, he's going to call health care reform. He's got a majority of Democrats, the question is, how many votes do they get from the Republicans. I think maybe one, maybe two in the Senate. Probably not very many in the House. But he's going to get something done.
ROMANS: Get something done. But we don't know what it's going to look like yet. Ali, what do they want, Ali, in Pennsylvania? What are people telling you they would like to see in health care reform? And how is the president playing there?
ALI VELSHI, CNN HOST: Well, I'll tell you. I've been on the road for about three weeks all told and more than 3,000 miles. And what people are telling us is more in the middle of what you've been hearing. Either town hall meetings or at rallies or you know, on the extremes. People understand that there is something needs to be done.
This is a real crisis. There are real concerns about how to pay for it. Who pays for it and how efficiently it will be run. What sort of access people have to health care. Still a lot more questions and answers that more people I ran into don't know exactly what they're fighting about just yet.
So for all the money that is being spent and all the 6-1, six lobbyists to one legislators that you mentioned earlier, the bottom line is most Americans are still a little unclear as to exactly what they are suppose to be doing.
ROMANS: And now after this week there is a new name in the debate, a name we hadn't heard, a lawmaker named Joe Wilson, who suddenly is front and center. And what they are arguing about. I want you to listen to him.
(BEGIN VIDEO CLIP)
OBAMA: There are also those who claim that our reform efforts would insure illegal immigrants. This, too, is false. The reforms -- the reforms I'm proposing would not apply to those who are here illegal.
REP. JOE WILSON (R), SOUTH CAROLINA: Liar!
OBAMA: Not true.
(END VIDEO CLIP)
ROMANS: An awkward moment of indiscretion, that really made a lot of people angry at the lack of civility there and he apologized. But the point here is that many people, Andrew Rubin are very upset about the notion that you are going to have health care reform and either you are not going to address immigration issues in it or you are going to be giving subsidized health insurance to people in this country illegally. Where do we stand on that?
ANDREW RUBIN, HOST, SIRIUS XM DOCTOR RUBIN: Let's be very clear, health care reform is not immigration reform. And let's also be very clear. It's hard to get an accurate count of how many illegal immigrants are in this country. If the number is seven million, eight million that sounds like a reasonable place to start and that is what the Census Bureau estimates.
And the reality is that 13 percent of that population again by estimates seeks health care in the emergency room. A very expensive place to have it. And there is one study that came out that we're treating $11 billion a year on treating illegal immigrants in their health care needs.
ROMANS: Look if you are going to leave these people out of heath care reform right? Then you're not addressing those costs, you're not addressing the issue of the uninsured in this country. But it's political suicide Gloria Borger to go out there and say, let's try to figure out how everyone gets covered, no matter who is in the country. The president is never going to do that.
BORGER: Well, and the president has not done that. There are no federal subsidies for illegal immigrants to buy health insurance in any bill that we've seen. I think what we're fighting over is this question of verification. How do you verify, someone gets put into, brought into an emergency room, what do you do? There is no money. Your money is not going to go to subsidize health insurance of the illegal immigrants.
ROMANS: That is right and it already is federal law, and some people don't get this. It already is federal law, that if somebody is having, their appendix is burst and they go to a hospital and taxpayers pay for that. That happens because that's the kind of country we live in.
Another issue here is that the Congressional Research Service put out a report saying that a prohibition on people not being able to get the subsidized health insurance is unenforceable and I think that's something that the right has really jumped on Andrew Rubin. To say look, this means it's going to happen. We don't know what's going to happen.
RUBIN: We don't know what's going to happen. We absolutely don't know what's going do happen. We are already paying for the illegal immigrants to be in the emergency room. That comes out of the funds that are available for health care. So to not really find a way to treat them in a more cost-effective setting I think is a little silly.
ROMANS: The whole debate -- because people are just so riled up about the politics of the whole thing. You know Ali, one thing about this that I think is just fascinating is that I think lunch bucket Democrats and moderate Republicans the reason they get -- they don't believe it when you say no illegal immigrants are not going to be included in subsidized health care, government subsidized healthcare.
It is because illegal immigrants are precluded from just beating the labor market and they do. So people look around and they say yeah, you make laws but how are you going to enforce them. I think people just generally mistrust this whole thing and it shows that you got immigration reforms and health care reform that is sliding together and really riled people up.
VELSHI: Yeah, lets go further than that we are a year a way from the collapse of Lehman Brothers, exactly one year away as of Sunday night. The reality is people don't generally trust government, they are not trusting Wall Street, they are not trusting government to get things done. And unfortunately these red meat issues are what dividing people are.
I was in the Southside of Chicago where so many people feel that their access to medical care and hospitals is crowded by people that have no health insurance who use the emergency rooms for their healthcare, that they are only support of government sponsored option for healthcare. Because they said if we can get all these people who use emergency rooms for their medical care to use other medical care, my emergency room will be available, the hospital will be available to me.
So depending on where you come from in this country, I should tell you and I was at a tea party rally in Scranton at the end of the week in Pennsylvania. It was the first time that the pro health care reform people has been there in larger numbers and it got very testy in fact you can probably see it in some of the video that I have got.
There is a pushing match that ensued and it was brought under control, but there was no real discussion about heath care going on there, it was all the red meat issues, immigration, communism, all that kind of stuff. We are still missing the meat and potatoes of this discussion. I am glad we are having it here; it is not being had enough across America.
BORGER: You know there is also another issue that people don't believe which is that the president said his in speech last week that he won't allow this to add a dime to the deficit. People see oh a trillion dollar program how is that not going to add to deficit in the out years and we are going to end up paying for this, our grandchildren are going to end up paying for this. So they are very, very worried about what this is going to cost them maybe in higher taxes in years to come.
ROMANS: All right. Gloria Borger, our senior political analyst, Ali Velshi on the road and Andrew Rubin, Sirius XM Radio. Thanks so much.
All right. One year after the largest bankruptcy filing in U.S. history what have we learned anything? Where do we go from here?
Plus, the president said the economy is stepping back from the brink. But do you feel it? You don't feel it if you don't have a job, that's next.
ROMANS: It's the backbone of your personal economy, your job. So how do you tell the story of just what's happening in this jobs market? Let's start with your paycheck and the money that you're bringing in. Here's a hint, its dropping. The Census Bureau said median household income fell $1,860 last year.
So how about the workforce, 9.7 percent are unemployed that number is expected to rise, maybe to 10 percent. That's the labor market. What about the population? Look at this, the proportion of Americans working is shrinking; only 59.2 percent of the adult population today has a job. That leaves more than 40 percent of adults jobless.
Now this includes people not counted in the labor market. People like stay at home moms, retirees, students. We know that today, more and more of these people are looking for work. It's a grim assessment, but will it get better from here? Why, and when? Ali Velshi joins us from the CNN Express in Harrisburg, Pennsylvania, and Peter Morici is a professor at the University Of Maryland School Of Business and Alfred Edmond is editor in chief of "Blackenterprise.com."
Peter, I want to start with you, you're a labor economist. I look into the proportion of the population actually working and I start to get a little concerned that we have a very large untapped pool of talent in this country, when is it going to turn around? When are people going to be able to get back to work?
PETER MORICI, PROFESSOR, UNIVERSITY OF MARYLAND SCHOOL OF BUSINESS: Absolutely. The real unemployment rate is something like 17 percent, if we include all these discouraged workers or people who are working part-time but want to work full-time. The reality is we're not going to get them back to work very quickly because most economists don't expect the economy to recover rapidly enough. You know we have 2 percent productivity growth every year, a 1 percent increase in the labor force. The economy has to grow at 3 percent for just the unemployment rate to stay even.
ROMANS: Ali, one of the things we keep hearing is when we talk about these numbers, how the economy may be turning around, how the financial sector is back from the brink. Any kind of optimism you hear about what's happening in the economy, and I get feedback from people who say, unless I have a job. None of that matters to me.
VELSHI: Yeah, you're absolutely right. Now what's different from several months ago is not the same panic that jobs are going to be lost. But there's sort of a settled anxiety about it. We have run into a lot of people who say they're not clear that their job is going to be lost. But they're clear that they're not immune. No one is proud enough to think that they can't lose their job.
And as a result, certain expenses are held up. Certain expenditures are held up. You've got a whole cautious economy going on. You've got a whole bunch of Americans who are chasing as consumers. They don't know if they can get the credit and they certainly don't want to be in new debt as a result of it. And until we are more certain if jobs are coming back, we're not going to see that spending again and that is holding more jobs from coming back.
ROMANS: And Alfred that's why you've got a recovery here that will be led by the government spending and business spending when it returns. We shouldn't count on this consumer to dig us out of this?
ALFRED EDMOND, EDITOR IN CHIEF, BLACKENTERPRISE.COM: No we shouldn't. I was coming out of college in '83 the last time the employment picture was looking this bad. And a lot of people are going to be doing what I call the side hustle economy, the part-time jobs, network marketing. Most of the marketing type jobs, just trying to find out ways to bring in extra income until things get better. But the short-term picture is that it will be tough if you're looking for a straight-up standard job.
ROMANS: Peter Morici, let me ask you how difficult is this for the Obama administration, an administration that named a manufacturing head earlier this week, someone to coordinate that policy. It feels like the barn door is closed and the horse is out of the barn. I mean we really have some big structural things happening here. This isn't your garden-variety of bad labor market.
MORICI: Absolutely. This is not a garden variety recession, the manufacturing sector is imploding. Mr. Blum has been brought on board to be the manufacturing czar.
ROMANS: They don't call him the Czar. They call him the point person for the president of manufacturing.
MORICI: But in any case, he's the guy who restructured General Motors and Chrysler. If we're going to have to spend as much money restructuring the manufacturing sector as we did on General Motors and Chrysler, well that is just going to bust the bank. The problem with manufacturing in macro economics, the dollar is over valued against the Chinese Won, the imports are coming in. But the exports are not going out to pay for the stuff. Until we start creating exports, as Bill Clinton did, we're not going to win.
EDMOND: We know that retooling of the manufacturing sector is long overdue. If we think that's going to be a solution to our current economic situation, we're kidding ourselves. It has to be done, I'm glad they're putting somebody on it. You're talking about something that's going to take maybe a decade retool or refocus.
ROMANS: Critics have said they're putting people on it after 40,000 factories have closed over the past ten years or something. I want to talk about the last year. The last 12 months and what" we've sort of lived through and endured. September 15, 2008. The financial world is rocked by the collapse of Lehman Brothers. It has been a year. Ali Velshi, what have we learned? What's different today? What did we learn?
VELSHI: You know, September 15 this year is Tuesday, but last year it was a Monday. If you recall, because you were involved in this, it was Sunday night that this was all happening. It was about midnight that we realized that the government had gone in to sell Lehman Brothers to just somebody. Nobody would buy Lehman Brothers.
And Bank of America ended up buying Merrill Lynch that very same weekend as part of that deal. But nobody bought Lehman Brothers. And when everybody woke up Monday morning, the credit markets around the world had shut down, they froze solid. And nobody understood how serious that was.
What it meant was that companies around the world could not raise money. And the first thing you do when you can't raise money is you start laying people off. And that's what took, in your words, a garden-variety recession and turned it into a jungle-variety recession. It was the beginning of the worst period that we have seen in 75 years, one year ago this weekend.
ROMANS: You know, Peter Morici, when we talk about or we hear the president say for example, that we've stepped back from the brink. And then you remember what it was like that weekend. We were on the brink, weren't we? The fear and the panic in the voices and in the eyes of people who were watching how the economy works and they were watching it literally shut down before their eyes. That has passed. That has definitely passed.
MORICI: Well, it has passed. We've stepped back from the brink. But now there are reports that Wall Street is getting back to its old tricks. The banks are getting involved in heavily-engineered products. And at the local level, the regional banks who are having a lot of failures, we've had 83 regional banks fail so far this year and another 410 are on the watch list.
ROMANS: So what you're saying, Peter is that we've entered a new phase of crises; we're not out of crises?
MORICI: Absolutely. Now the regional banks have a lot of commercial real estate on their books. That are going into foreclosure, just as we had in the residential real estate. And this is creating a real crises for the regional banks. The FDIC Insurance fund is not nearly large enough to even cover all the promises it's already made.
EDMOND: The real question is the question you started with, what did we learn? Yeah, we were afraid, we were panicking, and we were shocked at what happened last year. But as we just heard, it seems like, OK that's passed. Let's go back to the way things used to be. And maybe we, I don't know if we really learned anything yet. I hope we don't have to have another scare that big before we really get shaken up.
ROMANS: What did we learn from Bear Stearns and then suddenly, six months later, we were relearning those old lessons and learning new ones as well. Thanks so much Alfred Edmond, also Peter Morici, and my friend Ali Velshi in Harrisburg, Pennsylvania.
A million jobs, really? The White House said the stimulus is creating and saving jobs, a million of them. Republicans say that's hogwash. We'll tell you who's right.
And it's one thing to be nickel-and-dimed to death about your credit cards. But the fees on your debit cards are getting outrageous. What you can do about it, next.
ROMANS: All right, you thought you were being nickel-and-dimed to death with your credit cards. Oh wait, there's more. We all know there's a feeding frenzy on credit card penalties. Banks are expected to pull in 20.5 billion dollars this year. The real money, the real money is in overdraft fees attached to your debit cards, checks and ATMs.
Adam Levin is chairman and founder of Credit.com. I can't believe how much money they can make from broke people. We're all broke; we are using our credit cards and our debit cards. It's astounding how much money that they are bringing in. ADAM LEVIN, CHAIRMAN & FOUNDER, CREDIT.COM: Oh, $27 million. When you add it to all the other fees associated with different kinds of bounced instruments and overdrafts, you're talking about close to $39 billion a year. That's a number.
ROMANS: You buy a $29 Barbie doll with a debit card, and if you don't have enough money in your account, that $29 Barbie doll just became very expensive, because she's got a $34 overdraft fee and now you've just kicked in really high interest rates to pay for it. People don't realize the percent interest they're paying on this borrowed money when you become overdrawn.
LEVIN: There is no question that they've done studies that if it takes you a couple weeks to sort this whole thing out you're paying the equivalent of about 3500 percent. And people thought payday lenders were tough.
ROMANS: I thought debit cards were supposed to be safer though. I've heard so many personal financial experts say put the credit cards away, pay the minimum, you don't want all these fees and fines, and get a debit card, because that takes the money right out of your bank account.
LEVIN: Well, if you use the debit, the p.i.n. function of the debit card, it will. If you use the credit function of the debit card, it may in fact be a couple-day delay, which could throw off your calculation, which is a problem. But the most important thing is if you want your happy meal to stay happy. Be very careful with your understanding of where you are, relative to the limit on your debit card.
ROMANS: The "New York Times" did an amazing piece about this, showing how some companies can reorder, reorder your purchases, so that you can get hit many times in one day with an overdraft charge.
LEVIN: I dare say most companies reorder your purchases.
ROMANS: Is that fair? It's not fair. Is it legal?
LEVIN: It's not illegal. That doesn't necessarily mean that at some point the Congress of the United States might decide it shouldn't be the way it is. But at the moment, it is the way it is. And the problem is, banks do what they do. They never met a fee they didn't like. But we let them do it.
ROMANS: Right, because we have gone overdrawn in the account or we have spent more money that's in the account and so now we've opened ourselves up to these fees.
LEVIN: Why give them a high inside fastball. As I've said with the whole credit card debate. It doesn't matter how big, how bold, how bright, or better positioned to know less the fine print will be. If you don't read it, what does it matter? There are things that consumers can do in order to be a lot smarter with the way they deal with it.
ROMANS: Like what?
LEVIN: First of all, you could shut off the overdraft function of the debit card if you want to.
ROMANS: You can say, if I'm overdrawn, I don't want the purchase to go through.
LEVIN: Right. It could be embarrassing. But sometimes the price of not being embarrassed is worse than being embarrassed.
ROMANS: I think that's excellent advice. Thank you so much for joining us.
LEVIN: Thank you.
ROMANS: All right. President Obama promised that stimulus spending would spur innovation and create jobs. And there are piles of money available for universities to do just that. Across the country schools are scrambling to get their hands on as much stimulus cash as possible to fund their dream projects to get their labs humming.
ROMANS (voice-over): Bending a 40-foot, 5,000-pound steel cylinder is part of a typical day at this North Carolina State University lab. Researchers bend and crush construction materials to test their strength.
SAMI RIZKALLA, NCSU CONSTRUCTED FACILITIES LAB: It made me focus on new material. Used for innovative structures.
ROMANS: Those new materials could lead to greener buildings, bridges and roads. And over the next two years, researchers here will keep working, thanks to $315,000 of your stimulus money. NC State is hoping for a big payday from stimulus cash, a 10 to 15 percent increase over a typical year's research funding.
TERRI LOMAX, NCSU VICE CHANCELLOR: Our faculty has applied for 237 grants for $219 million. So far, we've received about 35 grants, for around $15 million.
ROMANS: About a million of those dollars go to developing batteries for electric cars. The work is happening in this lab, and that means, more jobs.
ROGELIO SULLIVAN, FREEDOM SYSTEMS CENTER: We will be able to hire additional staff. We'll certainly buy more equipment and that will come from vendors in the local area, as well as across the United States. So, yeah, it will create jobs, both directly and indirectly.
ROMANS: its good timing. State cuts will slash 5 to 10 percent from the school's budget this year. Stimulus will offset some of the loss.
LOMAX: It will definitely help us retain and bring in more graduate students. And those were positions that we were losing. ROMANS: Researchers in this department are working on advanced technology for the electrical grid. Potentially changing the way we use power in our homes. Department leaders have applied for more than $7 million for the project.
SULLIVAN: We're really true believers, a lot of this advanced energy technology and the stimulus money is helping us to develop these further and get things in place fairly quickly. So we've done all we can to get our share of it here at North Carolina State.
ROMANS: NC State is planning carefully how it will use its money. In just two years the stimulus cash runs out and researchers need to find other money to keep going, Ali. But at least for now, some big ideas, very good innovations being developed on and worked on in the labs, thanks to the stimulus money.
VELSHI: Last week when I was at the University of Wisconsin, Madison, a debate broke out among some of the students about how manufacturing really does need to be the heart of this recovery. I said you have got to be kidding me with all the manufacturing jobs we've lost and what they settled on was that manufacturing of high- tech and batteries and of energy technology, may be the thing that saves us. At least that's what the students were thinking. So it's interesting to see some of that actually at work.
VELSHI: It is one of those things that you wonder how much you can get out of it because of the amount of research they're doing. But hopefully it does work. It all makes you wonder just how many jobs the stimulus has actually created, we're going to check that out.
Plus we are going to find out which of the biggest cities in America is facing a huge financial crunch, and how they're dealing with it. My conversation with the mayor of that city, up ahead.
ROMANS: Welcome back to YOUR MONEY. I'm Christine Romans. Time now for the ticker, where every week we take you beyond the headlines, Ali Velshi is in Harrisburg, Pennsylvania, he is traveling with the CNN Express. And Michael Shvo is president and CEO of Shvo International Real-estate Marketing Firm and Peter Morici, is a professor at the University of Maryland School of Business.
Gentleman, I would like to start with what we would like to professionally call the Romans Numeral. Here is my number for this week, it is six. It has to do with the now-record spending to influence the health care reform debate. There are six lobbyists for each lawmaker working on health overhaul, and wait till you see the bill.
In 2009 alone, more than $279 million dollars have been spent on health care lobbying. Here is how it breaks down, makers of drugs and health care products spent more than $134 million in lobbying, hospitals and nursing homes, $50 million. Doctors and health professionals, nearly $40 million. Health services, HMOs nearly $35 million and insurers, health care insurers, more than $16 million.
Peter Morici, I hope somebody around there is spending money for when I need health care reform. And I guess some of them must be working at cross-purposes. But this is the most expensive fight in American history for reform.
MORICI: Well, health care is 18 percent of GDP. The government spends nearly half of that money. It's a highly regulated sector. And if you're in the drug business or hospital or a doctor, the best way to make more money or to keep your income up is to make the regulations go your way. 1900-page bill, there's a reason for it. All of these lobbyists getting things written in, getting things their way.
ROMANS: Ali, how does that play in Harrisburg, Pennsylvania, when people aren't quite sure about what's in all of those pages. They haven't really seen the bill. There isn't really a bill and so much money has already been spent.
VELSHI: On one level, as Peter said, this is so complicated. You think of all of this money is being spent to inform people about things that they'd have a better idea of what's going on. But the reality is while the feeling out on the streets here where we have been traveling is that people know a little bit more about these health care proposals than they did lets say a month ago. The reality is most people are very confused and will tell me straight out you know, I don't really know how I feel, because I don't really understand it.
So it sounds to me like a whole lot of money being spent that is not being used to inform people who want to make decisions about health care and how they want to go about this. It's being spent to influence politicians and perhaps put TV ads on that are not very clear and not really helping the situation all that much.
ROMANS: Just think for every lawmaker is going to cast a vote, there are six people being paid a lot of money to try to influence their position.
MICHAEL SHVO, PRES. & CEO, SHVO: There's a lot of people that are paid to influence the decision. But it seems like this is the 11th hour. People believe and that's why the spending has doubled from last year. They're spending at this point, more than a million and a half dollars a day to influence the decision-makers. The reason they're spending the money is because everybody knows this is happening.
President Obama has made it very clear that this is it; he's determined to make it. And even this morning on the news, both Democrats and Republicans believe that something is going to happen between the end of October to anywhere end of November. So I think there's, it seems like everybody is pulling their guns, the best bombs, this is it. And maybe after this, the spending is going to go elsewhere. ROMANS: That's a very good point. I mean if it looks likely then they're really going to double down to try to spend money. To make sure it's written the way they want it.
All right. You know the president sounds like a man who feels we have hit a turning point on the road to economic recovery. Listen.
(BEGIN VIDEO CLIP)
OBAMA: Thanks to the bold and decisive action we've taken since January, I can stand here with confidence and say that we have pulled this economy back from the brink.
(END VIDEO CLIP)
ROMANS: That was Wednesday. Mark it in your book and the president's Council of Economic advisors this week determined that the massive $787 billion stimulus has saved or created one million jobs. Saved or created a million jobs. Peter Morici has President Obama indeed brought this economy back from the brink and will we ever be able to count every one of those million jobs?
MORICI: I think Ben Bernanke brought the economy back from the brink. So far, from the stimulus package, most of the money that went to taxpayers has been saved. And the government has managed to spend very little. I've been tracking government employment. It kept going up at about the same pace after the stimulus package was passed, as before. Except in recent months it's gone back down. I can't find those million jobs. No matter how hard I look.
ROMANS: You can't find them and you're a labor economist.
MORICI: I can't find them; they're not under any rocks I can find.
ROMANS: I keep saying, I'm never going to be able to have a list of what all those jobs are. And I do know that I've met people who have some of these jobs. Some teachers, firefighters and the like. But there are some of these jobs that have come and gone already. Some of these road-paving jobs. Ali, what are people out there saying about the president bringing us back from the brink? Do they believe that we've turned the corner?
VELSHI: Christine, that kind of talk doesn't play out in Middle America. Because everybody knows they can't calculate it. If you can't calculate how many jobs are saved, it's a virtual impossibility. The bottom line is there is no point in saying things out there because it just opens you up to have the holes shot through the argument.
What people I've been talking to want to know is where they should get educated, what areas they should train in, where the jobs are coming back and what it is going to look like? People in the Midwest of this country where I spent a lot of time were very interested in this manufacturing czar idea. Even though as you said the horse is out of the barn the bottom line is people need to know where these jobs are coming from. They don't want to hear statistical hocus-pocus about what's actually happening they feel it in the streets.
ROMANS: All right. Well we're talking about feeling it in the streets. There's a guy who is cooling his heels. Let's talk about the lifestyles of the rich and imprisoned. The life styles of the rich and felonious. U.S. marshals preparing Bernie Madoff homes in Florida and Manhattan for sale. Let's take a peek inside shall we?
First let's look at the Manhattan penthouse, here you can see Bernie Madoff study, lots of cherry wood paneling, expensive furniture, a couple of shabby couches actually. This is his desk apparently where he uses to do his work; it's about 4,000 square feet, two floors. It is on the upper east side of Manhattan at Lexington Avenue.
Now check out this beauty in Palm Beach, it comes with a pool and an 80-foot dock on the inner coastal waterway. Do you think he has good taste for these good properties?
SHVO: It's the right addresses, but when you deal with properties at this level, and I've seen many of these, it's just another $8 million or $9 million property. Compared to his neighbors, compared to other properties, its average to say the least.
The big question is why? Was he doing this because he was kind of hide the scam? To show the people I'm living, I'm rich but I'm living an OK life? Or is he really Bernie from the neighborhood and with all the money he made, he couldn't buy himself taste and he couldn't buy style. I'm fortunate to not to have met him, so I can't really answer that.
ROMANS: You say about Palm Beach, you say he single handedly destroyed the Palm Beach real estate market. Because here is a guy who all these people that use to invest with him are all living in Palm Beach.
SHVO: Palm Beach is a micro market. Palm Beach at this point is the biggest source of -- in this country money that was given to him or for people that had homes there. And selling his house in Palm Beach is going to be the biggest challenge of all of these just because the Palm Beach market right now is completely killed.
There's tremendous amount of properties on the market. And like a broker down there I was reading, he was saying it's another $8 million property. The house itself supposedly is not worth more than $700,000 to $800,000, it's the piece of land that it's sitting on that has tremendous amount of value.
ROMANS: The American median household income fell $1800 dollar last year but then you look at these places from Bernie Madoff, and you think wow, and it just still shows you how much money is out there.
SHVO: But the real estate has fallen. Falling a lot faster than the median income is.
ROMANS: That's true. And maybe those were the only really legitimate decisions this guy ever made, buying those places.
SHVO: The only decision that was real.
ROMANS: Michael Shvo, Pres. & CEO of Shvo. Peter Morici, thank you sir, University of Maryland School of Business and our friend Ali. We'll go back on the road with Ali in a minute.
The cradle of liberty on the chopping block. Budget cuts in a major American city.
Plus how you can change your life, changing your life because of George Foreman and 100 million Foreman grills.
VELSHI: In less than two weeks, Pennsylvania will play host to the leaders of the G-20, the 20 largest economies in the world. But America's sixth most populous state is also the last one to have a state budget. At the state capital here in Harrisburg, Pennsylvania, lawmakers are spending the weekend trying to hammer out a budget.
This issue is all the talk here in Pennsylvania, as residents wait to find out what state and city services will be cut. But it's already too late for thousands of state and municipal workers, including many in its largest city, Philadelphia, about a hundred miles from here.
Philly municipal workers will get layoff notices this coming week, in anticipation of how deep the cuts will be in this budget, Philadelphia Mayor Michael Nutter has spent many days and nights recently camped out here in the state capitol, pleading his city's case to the state legislators and he joins me now.
Mayor Nutter, thank you for being with us. This is a very serious problem for a city like Philadelphia, which has really struggled over the last few years to make great strides. Tell me what's on the block, what's at risk here?
MAYOR MICHAEL NUTTER, PHILADELPHIA: What's at risk is that we would-- because of a bit of legislative log jam here in Harrisburg, we would literally have to lay off thousands of public employees, reduce the size of our police force by nearly a 1,000, 200 fewer firefighters and paramedics and a host of other very negative activities.
We're trying to get one bill passed that allows us to temporarily increase our sales tax, make some changes in our pension payments, unrelated to the budget at all. It doesn't cost Pennsylvania a dime. But because of all the other activity going on, we've not been able to break through and it's been difficult for us.
VELSHI: What's the problem, what's the problem in Pennsylvania? Why is this not getting done?
NUTTER: I think it's a combination of the magnitude of the recession and its hit on Pennsylvania. A reluctance to do any major tax revenue increases. And unfortunately, I think just the day-to-day politics that takes place in a big state, a big general assembly. And the governor's race next year, the House of Representatives all up for re-election, many in the Senate. So it's a very complicated political environment that has infected the whole situation.
VELSHI: This business about not wanting to raise taxes. This is something that is felt across the country; lots of states have legislatures, elected members who don't want to raise taxes. But their revenues are way down. What do you would about this? How do you solve this problem?
NUTTER: Well, look, unlike the federal government, we don't print the money. We can't spend what you don't have. No one likes paying taxes, let alone raising taxes. But the drastic cuts in services, the impact it would have on families, on vulnerable populations, children, senior citizens, and the like, I mean you have to get real with this and do what you need to do.
VELSHI: What will people in Philadelphia feel as a result of this? You've told me about the city workers that will have to be laid off. The police that will be laid off. How will it make their life different?
NUTTER: Well, look, we've made a number of gains. I've been in office for a little over a year and a half. Crime is going down; we have had a 30 percent drop in homicides over the last year and a half. Shootings, things are going better in our education system. Our governor and many in the general assembly, strong supporters of education. Philly is on the way back. This will be a major setback for us.
So I've spent a lot of time here in Harrisburg, talking to the legislators, talking to the governor's office. To get us out of the budget situation, give us the legislative authority we need. We are not asking for any money but we need authority to do something.
VELSHI: You want the ability to make the decisions you need to make.
NUTTER: Absolutely, at home.
VELSHI: And right now, that's controlled here.
NUTTER: Absolutely. That's why I'm here.
VELSHI: All right. Are you making headway?
NUTTER: We've made some gains there's been action on our legislation actually by both houses. They've made amendments that neither agreed with. So we're working through that process. So it's step by step, day by day. In the meantime, unfortunately, Friday, the 18th, we will, without legislative action, we will have to send out these layoff notices and Philadelphia would be changed. So we're going to keep working on it every day. Trying to make some progress and get this thing nailed down. Hopefully early next week. VELSHI: We in the country will be keeping a close eye on what is happening in Pennsylvania. Thank you for joining us, Mayor Michael Nutter.
NUTTER: Thank you.
VELSHI: Coming up, guess who's coming to visit, George Foreman is going to be with us to tell you how he's made millions and millions of dollars outside of the boxing ring and what you need to do to be successful in your own business. Stay with us you are watching YOUR MONEY.
ROMANS: George Forman was a force in the boxing ring feared by opponents all over the world; he has won everything from an Olympic gold to a world boxing title at age 45. But today you likely know George Foreman as the master of the grill, the George Forman grill. Closing in now on 100 million sold according to his company.
And now he wants to share his secrets on how to become a knockout entrepreneur. George Foreman joins us today from Houston. Congratulations on the book and the success and all those Foreman grills, I don't know a single person who doesn't have one. Welcome to the program.
GEORGE FOREMAN, AUTHOR, "KNOCKOUT ENTREPRENEAUR": Yes, thank you so much. Actually we've already long past 100 million of the grills.
FOREMAN: Yeah, we into other things now. There's George Forman cleaning products out there now. We have green products that is are safe for kids.
ROMANS: That's a very good idea. You are always thinking of the next idea and moving on to the next thing. Some of the stuff in this book is pretty interesting. I think, very pertinent for today when so many people are feeling failure on the work force or they can't get a job. Part of your mantra here is if you keep failing; don't give up because success is around the corner
FOREMAN: That's true. Don't be afraid of starting over again. If you have a big job or big business and you loose it, start small you can be big again. Don't get scared because proof that you can make it is that you did it once.
ROMANS: Right. You say losing can lead to winning. You have to be in the game and trying to lose. Even be engaged in it. What is the advice you have for people who are trying to start a business, or are in a business and are watching the worst economy for entrepreneurs they have seen in 25 or 30 years?
FOREMAN: I walk down the street every day and you pass hundreds of people. It's a shame that you don't have something to sell them. I heard a woman once say 25 years ago; she went on to become a successful in perfumes and cosmetics dealer. Her dad told her, learn to sell and you'll never starve. Don't be afraid to sell. A lot of people are embarrassed to get out and start selling. You'll be a millionaire overnight.
ROMANS: Do you think there is an entrepreneur in every body? Or do you think that some people, like you, were born to be an entrepreneur?
FOREMAN: Oh, no. I learned, there was a guy that use to and I wrote about him in my book and his name was Mr. Ice Cream. He would go down the street and scream, I have potatoes, I've got greens and I've got peas. People came out to hear the noise. He would sell something to people without money. Anyone, that's when I decided I was going to sell sooner or later. Anyone can become a salesperson.
ROMANS: So you're 45 years old, in the ring, and you are on the verge of your second heavyweight title of your career at 45. You were able to remake yourself and even at that very moment you were thinking of your next job as a pitchman or you are thinking of your next reiteration of George Forman. What kind of advice is that for people right now who are on the verge of something new and different or the next phase?
FOREMAN: In the ring, that was the most excellent selling job. I would have to sell it didn't hurt when I got hit in the stomach. On television, forget about your problems. Everybody has problems. When you are in front of the camera, sell, sell, and sell. Doesn't matter who you are, how far down you are, there's someone walking down the street ready to buy your product, you have to believe in it.
ROMANS: All right. We'll wait to hear more about those green cleaners. You're always looking for the next thing. George Foreman, long past the 100 million grills we are told. Thank you so much. We could use that knock out punch in the labor market.
Who knew the recipe for success could be found in jail. Yes, in jail with hot sauce, don't be confused. We will explain that next.
ROMANS: We have a little story for you that packs some punch. A Florida jailhouse had a plan to rehabilitate convicted criminals and successfully start a small business at the same time and its working.
CNN's John Zarrella explains.
JOHN ZARRELLA, CNN MIAMI CORRESPONDENT (voice-over): Marshall Deline is a bit frustrated.
MARSHALL DELINE: It looks like its dying. I trimmed it up yesterday.
ZARRELLA: Deline worries about all the plants. But in this garden, everybody's biggest worry is the cash crop. These are the famous peppers.
ALLEN BOATMAN, INSTRUCTOR OF HORTICULTURE: These are the peppers we have had a hard year this year. We had a lot of rain.
ZARRELLA: Not just any pepper, hot peppers. 1200 varieties of hot peppers. They are used to make your eyes water and tongue tingle.
BOATMAN: Oh, man. Don't munch of than, man.
MANZARELL: The peppers go into making Allan Boatman's secret recipe hot sauce. The mild called Misdemeanor, original Felony.
BOATMAN: We also have a smoke and chipotle.
ZARRELLA: The names are fitting. The greenhouse is in a jailhouse. Inmates at the county jail in Tampa volunteer for the horticulture program. Tending to the peppers is part of it.
BOATMAN: They actually see something growing that they have been involved in. It gives them a sense of pride. They are worth something.
ZARRELLA: The sauce is, too. Since they have started selling it a few years ago the jail has brought in more than $10,000. The money goes toward building a greenhouse, a lawn mower and computers. The program pays for itself and the inmates get an education; a few have gone into landscaping businesses after being released. At $7 a bottle, it's a steal.
UNIDENTIFIED FEMALE: I got this one here from Ontario, some from Massachusetts, Texas, California and North Carolina, New England.
ZARRELLA: There's even a jailhouse hot sauce website with commercial.
UNIDENTIFIED MALE: It packs more heat than the heat.
UNIDENTIFIED MALE: We make some in here that's hotter than the public gets.
UNIDENTIFIED MALE: Yeah, like who's the baddest?
ZARRELLA: Right now, the only way to get your hands on it is if you're behind bars.
John Zarella, CNN, Tampa.
ROMANS: I don't know about you, Ali, but that story made my eyes water. It was special.
VELSHI: It's a great story. John always does great job of crapping that, but I love that misdemeanor, felony and no escape hot sauce. I have to get my hands on that.
ROMANS: Thanks for joining us for YOUR MONEY. CNN will have full coverage this Monday of the anniversary of the Lehman Brothers collapse, including President Obama's speech to Wall Street on the state of the financial crisis. Ali and I will be all over that all day Monday starting on "AMERICAN MORNING" at 6:00 Eastern.
VELSHI: We're here every week protecting your money Saturday's at 1:00 p.m. Eastern and Sunday's at 3:00 p.m. You can also log on 24/7 to CNNmoney.com. Christine I will see you in New York and every one else have a great weekend.