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New Information About the State of Your Job; Unpopular Washington Spending Freeze; Super Bowl Controversy
Aired February 6, 2010 - 13:00 ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
CHRISTINE ROMANS, CO-HOST: Welcome to YOUR MONEY. I'm Christine Romans. Ali will be here in a minute. We've important new information about the state of your job. During the recession, 8.4 million jobs vanished. Nearly one million more than the government originally reported.
In January, the jobless rate unexpectedly fell to 9.7 percent dropping below 10 percent for the first time since September. We'll explain why in a moment.
But here's what 2009 looked like, 4.8 million workers lost a job last year alone. Another 20,000 jobs disappeared in January of this year. But you can see the pace of job loss is slowing, with November even showing 64,000 jobs added.
Ali, one of the president's top economic advisers Christina Romar, she says we are seeing signs of a healing labor market. It's not as simple as that is it?
ALI VELSHI, CO-HOST: It is anything but simple, Christine I guess you can like it if you are thinking you have a cold and a cough and you take cough medicine and you buy over the counter medication and it doesn't go away and gets worst, then you go to the doctor, and then it's an infection. So you finally go and get the antibiotic and you take it and you just want this infection to go away, and what happens is, some of the symptoms go away and others still linger and you've got to go back and then you're you know, you are immune to the antibiotic. It's not simple at all.
There are some bright spots. We created manufacturing jobs, even auto manufacturing jobs. But we're not growing at the pace that this economy needs to grow at in order to see a full recovery. But let's bring in some experts, Christine; we don't have to take our word for it. Rutgers professor William Rogers, he is the former chief economist at the U.S. Department of Labor joins us. Chrystia Freeland, our good friend, the U.S. managing editor at the "Financial Times" and Lakshman Achuthan is the managing director of the Economic Cycle Research Institute who has just published something that you can get at CNNMONEY.com.
Lakshman this is your business. You follow business cycles at the point that we're at in this business cycle, good, bad or mixed on the jobs front?
LAKSHMAN ACHUTHAN, MANAGING DIRECTOR, ECONOMIC CYCLE RESEARCH INSTITUTE: Well right here, 2010, the business cycle is finally your friend. It hasn't been your friend for a couple of year. This year regardless of all the initiatives for jobs, the business cycle wins are at your back. You'll see as a result, this is going to be the first quarter of positive, solidly positive jobs growth. And that's going to persist. There's no new recession in front of us. But as you were just saying, recovering does not mean you're recovered. There are a lot of fits and starts. We're not out of the woods.
ROMANS: Bill Rogers, you used to crunch these numbers for the Labor Department in the Clinton years. And one thing I thought was interesting is during the Clinton years we created, what, 20 million jobs or something?
WILLIAM ROGERS, FMR. CHIEF ECONOMIST, U.S. DEPT. OF LABOR: Twenty two million.
ROMANS: Twenty two million jobs and then you look at this recession, 8.4 gone. That shows you how staggering the depth of the job loss is for this recession. Good, bad or mixed? I'll ask you the same question Ali asked. Good, bad or mixed, this report?
ROGERS: It is a mixed record. The drop in unemployment, 9.7 percent, it is a tale of two stories. It's continued this whole man session that the unemployment rates fell for men, because they left labor force. They were the ones who saw the increase in discouragement. The increase in the number of men who --
ROMANS: So men simply dropped out? They said I have been looking for three years, I've been looking two years and they stepped out. That's why the unemployment rate fell?
ROGERS: That is part of it. The other part of it is that women's unemployment rate also fell. And it is white men, too, but women's unemployment rate also fell during this time and that was because they were not dropping from the labor force. They were getting jobs, continuing in education, health services, and the sector retail trade added jobs and I believe all sorts of manufacturing.
ROMANS: Good point that you make because we know that overall the unemployment rate for blacks jumped or crawled to 16.5 percent.
VELSHI: You know, Christine, that, you look at every other subdivision, you look at adult men, adult women, teenagers, whites and Hispanics, everybody else's unemployment rate as a percentage dropped. Blacks went up. They increased their proportion of the unemployed. That strikes me as something that's worrisome.
ROGERS: It has persistently been very high and Mark Morale, president of the National Urban League and others they have been championing a second jobs bill that would really focus on more targeted types of investments in urban communities. To adjust these long-standing --
ROMANS: One thing Chrystia I think is interesting is as we look at this volume of jobs lost and we think of what we were thinking about when the first stimulus was passed or actually the second stimulus, the big one, the $862. It was much worst actually than we thought when we were pushing that money out the door. Politically what do these numbers mean?
CHRYSTIA FREELAND, U.S. MANAGING EDITOR, "FINANCIAL TIMES:" Well I think at the moment these numbers are a fairly good sign. I think the real political worry is not so much, though, focused on this jobs report, which is backward looking it is about what already happened, but what we're seeing happening going forward. And this has been a really worrying week, because we've seen some real danger signals from Europe.
This whole recession, the financial crises were a reminder to us of how closely tied the U.S. now is to the world economy. And we are seeing real shakiness in Europe, a lot of people are starting to talk really seriously about their being an asset bubble already and you're seeing, I interviewed one the leading private equity guys on Wall Street this week. He said, I am selling everything I can. I think we are going into another bear market.
Now if you haven't felt the recovery happen yet, that's terrifying, if the money men are saying, actually, we're heading for your downturn. I think that's becoming a possibility.
VELSHI: Yes, we knew that jobs would be a lagging indicator, which means that they recover after the rest of the economy. But we know Chrystia that the markets are a leading indicator. So if the markets start to fizzle before the jobs start to grow you're left with this tepid growth period and that could be a problem.
FREELAND: That is now looking like a real possibility. In a way that maybe it wasn't at the beginning of the year. People had been talking about you know, the possibility of a double dip recession. I think it's still too early to call that for sure. But is it looking now more likely than it was a couple weeks ago? Sure.
ACHUTHAN: I would take the other side on that. OK. Respectively. Now I would say that you're not going to have a double dip recession. It's a misread here and it is reminiscent of the fall of '08, the system is fragile, it can't handle this. But here the leading indicators are telling us very clearly there is no new recession any where in sight. Yes, we have an easing of growth later on, because the U.S. economy cannot grow at around 6 percent. It just can't do that. That's way too fast for an economy of our size so you will have some throttling back, but that's normal and you will have this jobs growth coming in sooner than you think. We are just popping the surface here.
ROMANS: Let me get those last thoughts from you Bill. I mean because you are the guru on these numbers, really, help us understand what this means, because when we look back at that many jobs lost and then we are told by the administration that we're healing, the labor markets are healing, there are millions of people who don't feel like anything has been healed?
ROGERS: Well, yes, and my sense is this additional 800,000 that were lost, they were going to announce this number, and they were going to announce it several months ago. So it's been in the market. But I think -- a little more psychological issue, is to whether or not one would say, yes I told you so. Now here's the proof in the pudding that things are really this bad and therefore, some people are going to play it out as, again, we need the second stimulus or we got to get the funds that have already been committed, $7 billion out much faster in particularly unemployment insurance benefits, health insurance benefits, food stamps for individuals.
But then also what I think we've learned from the criticism about the first stimulus, the most recent stimulus, is if you're going to do it, it has to be targeted, targeted, and targeted on infrastructure. A dollar spent will get you more back than what do you if you keep the Bush tax cuts in.
FREELAND: Mike, real concern, just the rest of the world. The question is, can America do it alone I think Christine Romar is right that the American jobs market is starting to heal, but if you start to see real flatness in the rest of the world, it's going to be really tough.
ROMANS: All right. We'll leave it there.
The president says it's time for a serious spending freeze. But even as the massive stimulus continues to trickle out there are plans for billions more of your dollars to be spent on job creation and small business loans. Is this the best way and the best time to spend your taxpayer dollars?
ROMANS: President Obama proposed a $3.8 trillion budget for 2011. The goal, reeling in soaring deficits at the very same time still spending money we don't have to save the economy. The president called for a three-year cap on discretionary spending outside of defense to save about $250 billion.
But in Washington a spending freeze is never popular especially in an election year. On one hand we have a budget designed to save $1.2 trillion over the next decade, but for now it seems the spending continues. The president wants Congress to redirect $30 billion in T.A.R.P. money to boost lending to small businesses and get them hiring again. Senate Democrats are also poised to pass a new bill, a jobs bill at the urging of this president. The house passed a $154 billion version, but with Democrats eager to avoid the appearance of another round of stimulus, the Senate is expected to push through smaller measures in stages.
Stephen Moore is co-author of the "Return to Prosperity." Stephen the president continues to juggle a long-term commitment to reduce our debt but a very short-term commitment to spend, spend, and spend. Can you make sense of this for us?
STEPHEN MOORE, CO-AUTHOR, "RETURN TO PROSPERITY:" It sounds pretty schizophrenic to me, Christine. My view, we really have to start by getting this debt down and slowing the rate of borrowing. I think it risks another kind of financial crises. You know, the president wants all of these new initiatives to help small businesses. Some of them have been tried before.
The jobs credit is something that was tried under Jimmy Carter back about 30 years ago. It didn't work very well then. I don't think it's going to work now. I would like to see by the way one of the things I think the president could do to really help small business expansion, is just say we're going to keep those Bush tax cuts after 2011 in effect. Because small business are the ones who are impacted most by those increases that are coming.
VELSHI: Hey, Chrystia I have a question for you. To Stephen's point, do you feel there's been a shift with this administration? Guys like Stephen have been saying for some time, that when you're looking to create jobs and get this economy going you do have to put some focus on taking the burden off of small businesses which have traditionally been the growth engine for new jobs. Do you feel like the president in the last six or eight weeks has given small businesses of America a bit of a hug that wasn't there earlier in the year?
FREELAND: I think a hug is exactly the right word for it, Ali. I think although $30 billion would be a lot of money to you or to me, for the White House it's not a lot of money. And I think that this small business measure is largely cosmetic. It's a largely about the White House wanting to say, you know what? We love business. Maybe we don't love Wall Street right now, but we love you. The small business person who is responsible for most employment in the United States, and who, guess what, will be going out and voting in November.
VELSHI: Lakshman you study this for a living. This is what you study, business cycle, is what your company does.
VELSHI: And you have taken the view at various times over the last year that some of the stuff that the administration does or the federal government does doesn't actually matter. Something is going to happen; sometimes the economy is going to go through the cycle regardless of what they do. So should the administration do what Stephen is suggesting or what the president has even suggested with respect to this hug for small businesses or tax breaks for individuals?
ACHUTHAN: Well think about it. In 2008 you had the Bush first stimulus. In 2009 you had the Obama second stimulus. The recession swallowed those stimulus's without a burp. OK. Now you are going to get, let's say we have a $30 billion redirecting of some money here towards small businesses, it is a totally different phase of the business cycle.
In 2010, you are in a business cycle recovery, and it is going to maybe for political purposes going to look good, because you're at the right place at the right time, and even though I don't know that this is going to actually create a lot of jobs it will look like it did, because you're going to see job numbers go up.
VELSHI: So to be clear, you're saying that whatever they apply now will just have better effect than having done it --
ACHUTHAN: It will look like it. This what I'm saying. It will look like it did, because Washington will take the blame or the credit, of whatever happens with the economy, but the business cycle dwarfs what these guys are doing. Thirty billion sounds like a lot as Chrystia was saying, to you or me it is small change for Washington. A trillion dollars sounds like a lot to the country. It's small change for the business cycle.
ROMANS: They make it sound like they have the keys to the car. So in November what does this all mean for November, I mean the Democrats are they going to be able to get reelected if we still have a 9.7 percent unemployment rate?
FREELAND: I think the really big issue for November is going to be what is unemployment at? But I think that at least by looking like the president feels people's pain, I think that's important. The big question for me is, what happens after November, and Stephen started our conversation by accusing the White House of schizophrenia.
The problem is I think Stephen's position is a little schizophrenic, too. Because he has -- no. Because and this is going to be the center of the debate which is, I think there's going to be a national consensus, at least in an intellectual level around the need to get the deficit down. But Stephen you were also talking about how great it would be to extend the Bush tax cuts.
FREELAND: So America is going to have to take a big decision of, if you want to get the deficit down are you prepared to actually pay more taxes than you're paying now? I don't see anyone saying we're ready to pay more taxes.
MOORE: But here's the most important point, though. The most important point to bring that debt down is to get the economy going. We've learned over the last 30 years, the best way to do that is cut small business taxes.
FREELAND: Except George Bush did that and he got the deficits going up. Right?
MOORE: We had a lot of growth after we did that.
FREELAND: And you also had growing deficit.
ACHUTHAN: Hang on. Let's step back here and look at the actual data. It is no forecast. The pace of every single expansion since basically World War II is getting weaker and weaker. Regardless of who's been in office, regardless of, you no, either a left wing or a right wing kind of policy. That has been happening throughout to this country. And at the same time, we're now getting a larger business cycle. It's not mellow anymore. Now we're getting -- the business cycle is back with a vengeance. When you add lower growth with higher volatility, I don't care what your policy is; you're going to have more cycles to deal with. MOORE: I don't agree that. I think policy makes a big, big difference. That is the lesson over the last 30 years. You do the right things for the economy on trade and on monetary policy and on taxes --
ACHUTHAN: Wait. 2008, how does policy run into this recession you can't say that.
MOORE: Because we had a big bubble that burst because of loose monetary policy. It wasn't tax policy that caused the -- almost everyone agrees it was a result of what --
VELSHI: Just so we don't lose our friendly viewers, loose monetary policy. Printing money, low interest rates, and the easy ability to get loans.
MOORE: So Stephen what are they doing now? What is going on now?
ACHUTHAN: They are holding interest rates way too low. I'm really worried about a kind of stationary cycle where we are going to have higher inflation --
MOORE: Do you know how to pull the stimulus out? This is a big issue. How do you pull the stimulus out without causing a disaster? That is a huge issue.
VELSHI: That would mean interest rates going up? Houses --
ACHUTHAN: No. Let's put stimulus on hold for a second. Because we've all admitted it's a relatively small number.
FREELAND: No. But that's exactly the point. And Stephen made the point that you know he thinks we have to raise interest rates. That is a consensus that you know when people talk about exit strategy from the general pumping of money into the economy, it's not so much the $30 billion to small business. It's the incredibly cheap credit, which banks have access and --
ACHUTHAN: Said that nicely.
FREELAND: That is the big challenge. I don't think anyone has the magic answer to that.
ROMANS: All right. And you know we're going to have you all come back so we can have the magic answer. Boy, on a Super Bowl weekend, when we were expecting this big snowstorm, what a fascinating conversation to be having about where we're going in the economy.
FREELAND: Monetary policy, it's great on the weekend.
ROGERS: Go Colts.
VELSHI: You guys are the only people who can make this as much fun as it is.
ROMANS: I absolutely agree. Stephen Moore, Chrystia Freeland, Lakshman Achuthan thank you, everyone for your time this weekend.
The word freelance, what do you think? Do you think no health care, no life insurance, no benefits, and period? But that could soon change. We'll explain, next.
ROMANS: Well, you know that army of independent workers, freelancers, consultants, temps, self-employed. All folks who don't have the benefits that comes with a full-time job. Our next guest has found a way to help many of those workers. Sara Horowitz is the founder and executive director of Freelancers Union. Welcome to the program Sarah.
I think it is fascinating, 30 percent of the work force are these independent workers and it's growing. Because companies have become more tentative after this recession, they don't want the full time commitment in some cases of bringing somebody on and paying their benefits and everything. We could see this become even more a bigger part of the economy going forward. Couldn't we?
SARA HOROWITZ, FOUNDER & EXECUTIVE DIRECTOR, FREELANCERS UNION: Yes, definitely. I think what we're seeing is that this is the way that people are going to be working into the future and just for the reason that you said.
VELSHI: When we talk about freelancers, I mean we hear a lot of people describing themselves as contractors. When I went across the country on the CNN Express I heard a lot of small businesses saying the Obama health care plan forces me to get health care for my employees I'm switching to just using contractors. Have these two terms become interchangeable? In other words staff that does not receive benefits?
HOROWITZ: Yes, I mean I think really what we're talking about is that the way that people are going to work is short term. People are going to go from project to project and job to job. That's what business is going to want, but what I think is really important is that we have to start saying that we need to think about, what is this new work force need? What are going to be the things, like health insurance, retirement, unemployment? How are we going to be building the next safety net if this is going to about what this next economy is calling for?
ROMANS: You say it's incredibly important if you're one of these workers, that you have to, if you're going to be paying taxes four time a year, you are going to have to put money aside in one account to pay taxes, another one to pay -- you have to really arrange how you are going to live your financial life, because you don't have a company that is taking care of these things.
HOROWITZ: Yes. It's so true. People are going to have to start thinking about these kinds of things, but also joining organizations and other groups, because the secret of this economy is on the one hand you're on your own, you're moving around. On the other hand, you have to be connected to other people. You have to build a network of contacts. You must be able to market yourself and that's going to --
ROMANS: And buy insurance together. A 401(k) plan or an I.R.A. together and have a little bit of more, you know safety in numbers, really.
HOROWITZ: And also have a pact, have ways that people join together and talk about how to change the political process. So, for instance, this new work force is largely not eligible for unemployment insurance.
HOROWITZ: Yes. Because they're independent contractors, so when they have a downturn, they have nothing. We've seen --
VELSHI: You can't buy into that yourself? Right necessarily? You can't sort of as a freelancer put in money to a fund that gets you unemployment insurance?
HOROWITZ: In fact, we have a proposal to do just that and let people save pre-tax, but we would like the government to start thinking about what is this new work force? We're having a whole discussion about jobs and the fact independent workers aren't even counted. The Bureau of Labor statistics really has no idea about what is happening, and on these job summits, they don't include independent workers at all.
ROMANS: Sarah Horowitz, the Freelancers Union, thank you so much for joining us.
HOROWITZ: Thank you.
ROMANS: All right. Chances are you either have a Toyota, or you know someone who drives one. So what exactly does the recall mean for you and why a brake problem, a brake problem, could be the next big issue.
ROMANS: Welcome back. Ali Velshi, I don't know about you but every day this week I have been talking about Toyota. What to do next about your Toyota car? What will the company say? What questions still need to be answered? Dealers still have to get the parts. Mechanics still need to be trained and all at the same time, Toyota looking at the possibility of maybe an additional problem with Prius brakes.
ROMANS: I mean this story just keeps going.
VELSHI: Let me just tell you, before we get to Mike who is a good friend, let me just tell you this, not only is Toyota the benchmark for when people buy a car. You may not even have wanted to buy a Toyota but you compare it to your Honda or you compare it to your Malibu. But not only that a lot of people own them and they are all around you when they drive. So if they have a problem with sudden acceleration or sudden braking it concerns me even if I'm not driving a Toyota so this is on everybody's mind. ROMANS: Let me ask you quickly, Ali, before we turn to Mike Quincy our automotive contents specialist at "Consumer Reports." Let me ask you quickly, the response from the company, Friday night, 9 pm in Tokyo hastily arranged a news conference; I'm sorry two hours from Tokyo.
Very difficult for some reporters to even get there.
VELSHI: Our Tokyo based correspondent could hardly get there on time. I mean I just do not understand, and Michael's going to tell us about this, because "Consumer Reports" knows about reputation and brands. I don not understand how this company has mishandled its brand so badly over the past couple of weeks.
ROMANS: And that brings you Mike. Now we want you to tell us why the company has poorly defended its brand and should we be driving these cars?
MICHAEL QUINCY, "CONSUMER REPORTS:" Don't get me started on that. "Consumer Reports" maintains that the Toyota products, even the ones during recall are fundamentally sound cars. That the odds of your Toyota winding up in a sudden unintended acceleration are very, very rare, but we still, we advise people, keep on top of how the accelerator pedal feels.
In other words, if it's stiff to go down, if it doesn't return to its upright position, if you don't think that it's performing smoothly at all, then definitely bring it in to get it looked at. But for most people, their Toyota's are probably running OK.
ROMANS: I talked to a dealer earlier in the week, which said look if you feel like you have this problem, don't drive it. We'll come and get you. I mean most dealers are trying to make a deal with the dealer to have them come get you if you have a problem. But otherwise, if there is no problem he said then just drive it.
QUINCY: Just drive it. I would agree that. It is interesting that you brought up the dealers. Because we are talking about Toyota from a global stand point from a North American standpoint I actually feel bad for the dealers. Because they didn't design the car, they didn't build the car, they're losing customers. So you want to feel bad for somebody? Feel bad for a Toyota retailer right now.
ROMANS: We are having this fascinating discussion about Toyota and its mess and Richard Quest actually is getting ready for a segment later, he is listening in and he is dying to jump in. Richard, weigh in.
RICHARD QUEST, CNN HOST, "QUEST MEANS BUSINESS:" No. Look, I don't want to be an apologist for Toyota, but can we, please, have a little bit of a reality check on a business program. Here you have a global corporation that is in the midst of a major crises. Now, you just think of how any company deals with a crisis. Are they going to rush out? Are they going to make through mea culpa.Are they going to frustrate themselves in front of the world? VELSHI: Yes, if your reputation is built on that very thing. You're a JetBlue and your reputation is about how you are better to your consumers and your passengers than anyone else and when you get stuck two Valentine's Day ago and you strand every single passenger, you get out there and you apologize and you tell your lawyers to stay out of the way and you take full page ads out, Richard. When you're Toyota and your reputation is based on this, you get out in front of it.
QUEST: No. First thing you do, is you find out what happened. First thing you do, is find out what went wrong. Then you decide whether an apology needs to be made. You are --
VELSHI: Apparently the U.S. government, the Department of Transportation would figure it out before Toyota could.
ROMANS: Wait, wait. Richard we still don't know what went wrong and today that is what the reporters were asking, they were saying what went wrong? Where? Why weren't you telling authorities earlier when you were looking at your brakes in certain hybrid models? These questions have not been answered so that is what fundamentally customers want to know. Is my car safe to drive? And they still feel like they don't have that answer.
VELSHI: Basic question.
QUEST: You expect the whole thing to be done within the confines of the 24-hour news cycle, and I speak as somebody who pushes hard within that cycle to get contents, but the reality is, let's have a bit of common sense. It takes time for companies to discover, particularly a global corporation across continents and oceans.
ROMANS: All right. Mike Quincy gets to wrap it up. Because he is over here agreeing with Richard Quest.
QUINCY: Yes, to Richard's point, I think one of the reasons that Toyota had a stop sale on the heart of their products is, they probably weren't exactly sure what the problem was, what the fix is. You are to talk about millions and millions of cars, these components are coming from various suppliers. They are built in the United States, they're built in Japan. You've got to get all of these components to talk to each other, to work together. I think by federal law, the company couldn't sell the products, because they didn't have the fix in place, but they knew there were --
VELSHI: And the law stepped in, that is I got to say.
QUINCY: The Quest and Quincy program.
ROMANS: All right. Ali Velshi, Richard Quest, Michael Quincy from "Consumer Reports." Guess what? We're going to be able to talk about Toyota I'm sure again next week. Because we have millions of cars and still a lot of questions to be answered inside or outside, the 24 news cycle, Richard Quest. Thank you everybody, we will talk to Richard again in a moment. Some big changes could be coming to the skies; we will talk to one top airline executive to find out what you and your wallet could be facing in the very near future.
VELSHI: Well for baggage fees to finding fault when your flight is delayed, there are lots of questions that you have when it comes to flying, but are big changes in store for the airline industry and for you? I went straight to the top. Continental CEO Jeff Smisek for answers.
(BEGIN VIDEO CLIP)
VELSHI (voice over): All right. Jeff, the question that I've got, most of our viewers have, I'm sure people who work for Continental have is where are airfares going in 2010? We worked through 2007 with fuel pricing increases, we worked through 2008, and probably not a terrible year for airfares and 2009 was really the year of inexpensive traveling. Really a cheap year for travelers. What's 2010 hold for the airline traveler?
JEFF SMISEK, CEO, CONTINENTAL AIRLINES: You know, we've as airlines we've become really adept at losing money. And we need to start making money again. So I think you're going to see a lot of changes in the industry. As we focus on ancillary revenue and as we focus on investments in technology to help customers through self- service, which kind of they prefer. So I think you're going to see a lot of changes in 2010 and going forward in this business, because we've got to start making money.
VELSHI: Of course, now we have this brand new problem again in January of this year. It's not brand new to us, but it seems to have recurred again with the Christmas Day attempted issue with the Delta Flight, Northwest Flight going into Detroit. So now we have airport security beefed up again, all of which means more delays for the traveler. That's not really your reason, that's not a cause that you've come up with, but it does reflect on you when travelers are upset, because it's taking them too long to get to where they have to get.
SMISEK: Sure. I mean take a look at the security breached that happened in Europe. That inconvenienced thousands of travelers. There is very little we as an airline can do about that except to provide the best service we can when there aren't issues. One of the biggest issues we have is with the air traffic control system and the delays that engenders. That causes anger among our customers.
And candidly we burn about 12 percent more fuel today than we would if we had a modern air traffic control system. That would be better for the environment, better for us financially and clearly better for the traveler.
VELSHI: When people are frustrated I guess they don't really know what they're supposed to be frustrated about. We all fly a lot and we all get delayed a lot. Should they be looking at the airline to complain to? Should they be talking to somebody else? I mean how do we ever know that it's the air traffic control system to blame?
SMISEK: Well it is hard to know. If it is a mechanical, it is our fault. And we fly a modern and very fuel-efficient fleet. So we tend to have fewer mechanicals and a much higher competition rate than our competitors. But we know if there is weather that is no one's fault. If it is delays through the air traffic control system, that's our government's fault. We need to invest in that. It's a $20 billion to $40 billion investment but it is something that really needs to be worked on.
VELSHI: 2007, 2008, we dealt with fuel increases. Now we are seeing a lot of airlines including yours adding on extra charges for baggage. What's that about?
SMISEK: Well you know as an industry we basically had sort of a, built a pizza with everything on it and that was the product that we delivered. What we're trying to do now is to let customers build their own pizza, their own topping, their own crusts, big slice, little slice, whole pie; we are giving customer's choice. And so they consume what they want to consumer and pay for what they consume and not pay for or consume what they don't want to buy.
(END VIDEO CLIP)
VELSHI: That's Continental new CEO, Jeff Smisek.
Now what if I told you one in five children are in need of food assistants? Not in a developing country. Right here in America. Think about that, one in five. We'll talk about it, next.
ROMANS: All right. Time now for our look beyond the headlines. Here to give us their take on some of the stories that got our attention this week is comedian, Hal Sparks joining us from London, our very own Richard Quest host of CNN "Quest Means Business" and of course Ali Velshi.
You know, if China and the U.S. were a couple, Valentine's Day would be anything but happy this year. Why? That is because our diplomatic relationship has been a little tense. You know more so than usual. There is a $6.4 billion arms deal the U.S. cut with Taiwan. The Chinese don't like that. There is the anticipated U.S. visit by the Dalai Lama. They don't like that either. And then there is some ongoing trade disputes. So basically, we have nothing in common and we are just married for the money. Is that right?
VELSHI: Like so many people in the world.
HAL SPARKS, COMEDIAN: Exactly. I think we have a lot more in common this year than we might think. Truth be told, I think a lot of this is window dressing. It's a lot of consistent; this is Saber rattling kind of stuff that has been going on forever.
The truth is, since the Unas (ph) peg to the dollar and since their trade deficit is all pluses for them and all negatives for us, even if we play around the edges, even if we bump stuff up, $40 million a year, it is still never going to touch the edge that they get, that they have.
ROMANS: Richard Quest, you know it is interesting because the president in his State of the Union said that he bowed to double exports and a lot of people just went oh, aye that is going to mean some kind of a revaluation relationship with China. What's that going to mean? Still haven't got clear details on how he is going to do that. But what are you sensing from the China-U.S. trade relationship right now?
QUEST: I think there is one substantial difference say between the Chinese relationship and the U.S. and say the U.S. and the European Union. Trade spats between the E.U. and U.S. are nothing new, just take the Boeing Airbus, or the pharmaceuticals, beef, it doesn't matter there will be lots of them, but there has always been an element of a tussle of equality between the E.U. and the U.S.
I think what's happening with China is a tussle for supremacy. Now clearly the U.S. is seven times, the economy is the larger at the moment, but the Chinese are tweaking the nose, if you like. There is a feeling that there is, unlike the U.S., E.U, where there is just a bit like this and this. With the Chinese we keep talking about shift in power.
It there's a shift in power that means someone wins and someone loses. And no prizes for guessing which way the power is shifting in this particular discussion. So every battle becomes a battle of virility, a battle of machismo. Which one is going to win? Who has the upper hand? And that I think is why these particular trade spats along with what you were talking about are so very, very destructive.
ROMANS: One thing interesting, too --
VELSHI: Christine I have to tell you, I always fascinated by any conversation on China. But the one thing that fascinates me most about this conversation am I right, Hal do you speak mandarin?
SPARKS: I do. I travel there and I go to Taiwan a great deal. You know --
VELSHI: And tell jokes in mandarin?
SPARKS: I can. It's true.
ROMANS: But do they laugh?
SPARKS: Absolutely. Absolutely. The Chinese people have a great sense of humor and are almost as disconnected from their government as we are from ours at times. The truth is, if you're looking at it from a governmental, the corporate structure in the United States and China is a lot, has a lot more in common than we tend to think.
And because they're a communist nation and we're a capitalist nation, the story that's told in the press is often very disparate, but the truth is that we have tons in common in that area and its normal business. That's why the EU fight with the U.S. is normal and even. The truth is, so is the Chinese-American one, it is just we talk in different terms because the assumption of a communist country. It's nothing like that over there.
ROMANS: Google it.
SPARKS: True. In all honesty, Americans could start eating panda meat at Panda Express every week and still the Chinese would not march over here and do anything about it, because we're so reliant on them and vice versa, as big as we are, and as much as that trade deficit is, there's just no way to skate around it. They can yell about Taiwan and Tibet all they want. But the truth is, neither -- you can't shoot someone in the head who owes a $500 billion.
ROMANS: Exactly. That is a very good way to look at it. I have a number for you here, 37 million; this is a country of 307 million people. That's how many people this country received emergency food help last year that is according to Feeding America a network of food banks nationwide. That means one in eight Americans rely on someone else to feed them.
For children that number is even greater, it is one in five. Here we are, we are the wealthiest nation in the world, yet poverty on the rise. Ali, what's wrong with this picture? We are talking about a recovery that's supposed to be coming, and a recession that is supposed to be over. You look at those numbers. I mean so many Americans can't feed themselves and as Richard Quest points out the wealthiest nation in the world.
VELSHI: And when you go back a year ago to the conversations that we use to have on TV and we would have people who would come in and say, let the business cycle do what it does and let the chips fall where it may and the government shouldn't be involved. And if companies have to go bankrupt, then people have to lose jobs so be it. The reality is what it did is it hit with such severity, that what we had worked against for so many years, what we had built up with the middle class and the disparities, the economic disparities that we worked again have now shown themselves stronger than before.
So now we have, we saw tent cities in the last year. We've got people who are really homeless and we've got kids going to food banks. This is what happens when you make the case that the government shouldn't be involved and let the chips fall where they may. In 2010, we are to sophisticated an economy to let that just happen.
QUEST: No. I take issue with Ali on his last point. This is not - I don't think it is an example of the government not being involved and let the chips fall. The chips have to fall regardless if you are going to have a proper well functioning capitalist economy. What you have to ensure --
SPARKS: That's not what we are talking about here at all.
There is no well functioning aspect of this. This is actually a deregulation run amuck that caused an amazing crisis that gutted the middle class and dropped a big chunk of them into the bottom of the middle class into the lower classes, pushing the lower classes literally on to the street in mass. This has nothing to do with soft regulation and evenness. This is criminal. There is no way to argue economic policy based on this. As Ali was saying, we are the wealthiest country in the world. This is despicable, and there is no sense to it.
QUEST: If I could just finish the argument, we might find we are actually agreeing with each other. What I was pointing out is once we were going into the mess; you've got to get out the other side. What this food stuff question actually is really all about is ensuring that a proper functioning society government does help those that are hit hardest by the irresponsible actions of others.
VELSHI: To be clear, I wasn't saying that the government didn't get involved. What I meant to say was that a year ago we were hearing a lot of arguments from a lot of free marketers who said we shouldn't have gotten involved. And what ever we think, one in five children is going to a food bank right now, it would have been a much more significant number.
SPARKS: The other thing we have to deal with is the fact that that number was incredibly high before this all went down. That is the other thing we need to deal.
ROMANS: All right. We are going to leave it there. Richard Quest, thank you. You are going to move off and work on "Quest Means Business." We are so glad to see you. Thank you for stopping by.
Hal Sparks, he is not going anywhere and neither is Ali.
Some super controversial surrounding the Super Bowl this weekend but it has nothing to do with the actual game. The inside scoop on this next.
But first a New Hampshire resort overcomes a slippery slope. CNN's Mary Snow takes a look at this weekend's "Turnaround."
(BEGIN VIDEO CLIP)
MARY SNOW, CNN CORRESPONDENT (voice over): This isn't Jackson Hole or Vale or even Killington.
BOB FRIES, PRESIDENT, RAGGED MOUNTAIN: We are not the biggest mountain in the world, but it's great, great skiing, and great terrain.
SNOW: This is Ragged Mountain in the white mountains of New Hampshire. Three years ago it was just that, ragged and on the verge of bankruptcy. But new president and ski industry veteran Bob Fries has changed all that.
FRIES: We had to fix everything that was broken and there were plenty of those things and then we did a bunch of things to wow the customers, things like flowers in the bathrooms, tissues everywhere and magic carpet lift for beginners.
SNOW: Little changes to make a big difference. And to entice customers, the mountain started offering loads of family-friendly discounts.
FRIES: Weekends kind of take care of themselves a lot. But mid week we do women's day on Monday. Tuesday is two-for day. Wednesday is a big day, that's carload day. So eight people can come in one car if they can fit in. We did a deal with the Boston Patriots where on Monday you pay whatever the opponent scored on the Sunday game. You need to do a few things that show that you're really moving ahead and you are doing things differently than they were done before.
SNOW: And the promotions are working.
FRIES: We were up 27 percent last year. The ski industry was off across the country really, it was off anywhere from about 3 to 6 percent. If the economy starts to improve, we'll also start to build some ski and scale housing as well.
SNOW: And that's a run any ski company would be happy with.
FRIES: I'm pretty confident this will be our first profitable year. In the ski business to make a profit is a pretty good trick.
SNOW: Mary Snow, CNN, New York.
(END VIDEO CLIP)
ROMANS: A super controversy surrounding this year's Super Bowl. We turn once again to comedian Hal Sparks and Ali Velshi. Forget the football game, but the real battle lines are being drawn off the fields, as advertisers fight for the right to pay CBS nearly $3 million for 30 seconds of television. The network has agreed to run an ad centering around the mother of college football super star Tim Tebow and her decision not to abort Tebow against doctor's advice when she was pregnant with him.
The ad is sponsored by the Christian Organization focused on the family and has drawn the ire of women's groups and pro choice advocates. At the same time though, CBS has rejected a number of ads including one for a homosexual dating site. It's the Super Bowl; it is a diversion, its ads. What happened Hal to the funny ads about talking animals and Clydesdales?
SPARKS: I will tell you what happened. When so much money exchanges hands and there is so much attention on 30 seconds of space on television in particular, there's going to be a lot of benefit to not getting your ad on for creating a controversy. Every year this has grown. Where people have put up an ad that they know will be dismissed or that they know is edgy --
ROMANS: Then they put up a press release saying we were dismissed and it's not fair. SPARKS: And get more attention quite frankly, that ad will probably be watched more directly by a lot more people.
VELSHI: And you don't have to pay $3 million for it.
SPARKS: Exactly and they didn't have to pay for the spot. People will go online and watch it. Where as the rest of the ads that people paid good money for people will be peeing during. It's true. In this case, however, there is a kind of standard that CBS and the broadcast networks have been dealing with for quite a while, which is gay is not OK. Sex is not OK, but you can tap dance around other social issues or agenda type of issues and kind of find a way to sell it.
The Tebow ad itself, if I ran an ad, if I had a supplement I was selling that said I took this supplement and my cancer went away. The FDA would crawl up my --
ROMANS: Your something.
SPARKS: And destroy me as a business. This ad where she says the doctors told me not to have an abortion and I didn't and I had this guy. To some degree if they were really looking at it objectively like they did at the man crunch ad, you know what this kind of leans in a really weird way. It's not so much that we have a problem with the pro-choice aspect of it, but a woman denying her doctor's advice and doing this anyways when it could lead to her death and what about more women making this choice?
ROMANS: It's heavy stuff for a football game.
SPARKS: It totally is.
VELSHI: Clearly, they think the conservative audience is more lucrative than the gay male audience.
SPARKS: No question.
ROMANS: I'm fascinated to hear your take on this. Hal Sparks thank you so much.
SPARKS: Thank you.
ROMANS: My good friend Ali Velshi. There he is. Thank you for joining us on YOUR MONEY. You can follow us at Facebook and twitter, Ali is at AliVelshi and I am at ChristineRomans, it is easy to remember.
VELSHI: Join us we will give you tips on what is coming up. Make sure you join us every week for YOUR MONEY; Saturday's at 1:00 pm Eastern and Sunday's at 3:00. You can also log on 24/7 to CNNMONEY.com.
Christine, have a great weekend. And same to all of you.