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4 Million to Lose Jobless Benefits Come December; Tax Cuts Still Under Debate; The Battle Over QE2; Will the Tea Party Hold Fast to Their Campaign Promises?
Aired November 20, 2010 - 13:00 ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
ALI VELSHI, CO-HOST: Do you want a quick fix or do you want a long- term solution? The clock is ticking on a lame-duck Congress deciding which option to choose to deal with your taxes and millions of unemployed Americans.
Welcome to YOUR MONEY. I'm Ali Velshi.
Here are the numbers that matter. Jobless benefits which currently last for an unprecedented 99 weeks will begin to run out for some people on November 30th. Democrats are pushing for another $12.5 billion to extend the deadline to the end of February. This would extend the safety net for 4 million Americans by another three months.
Christine Romans joins me now.
Congress has already extended this deadline four times in the past year. Unemployment still above 9 percent. What are we supposed to do? What happens if this doesn't pass? What happens if that life line to so many millions of Americans who are depending on this unemployment check goes away?
CHRISTINE ROMANS, CO-HOST: Four million people will not have a $290 to $410 check every week, and that is going to mean that money doesn't go into the economy.
We know that economists say a very quick way to get money in the economy is food stamps. Forty million Americans are accepting food stamps right now and jobless benefits because there's no margin for error. Those people take that money and they use it right away.
But we're under a new kind of reality in Washington. That is this is an emergency situation that has become chronic and we need to figure out how to pay for these benefits and what the real long-term solution will be.
VELSHI: So new reality, there is a new sentiment out there, too, as we saw in the midterm elections.
Roland Martin is a CNN contributor.
Roland, the tide is turning to when it comes to how Americans think about government spending. In 1983 and 1994, when we polled, just one in three Americans wanted the government to spend less on domestic programs, just one in three. Today, Americans are split evenly on whether to cut government spending or not.
Washington has spent $109 billion in the past three years on jobless benefits. Roland, are Americans ready to cut off the long-term unemployed because it's costing them too much on their taxes?
ROLAND MARTIN, CNN CONTRIBUTOR: Well, first of all, the people who likely have jobs, the people who have not been adversely impacted, of course they are saying that. When you look at the people who talk about the deficit, these are likely not the people who have been struggling.
Earlier this week on the "Tom Joyner Morning Show", Tom read a letter, Ali, from a woman who for three years has been unable to find a job. Her son talked about how she's been sending out resumes, going to the library, pounding the pavement. How she couldn't afford the $70 for a drug test to become a trucker. And so, she pays $600 for her rent. If she was late, it cost her an extra $800. Her mother is moving in with her.
Now you tell me, you have Republicans who are talking about extending all the tax cuts, the tax cuts for the rich will cost $700 billion, $700 billion for them, we spend $100 plus billion on unemployment benefits. I say, money well spent, because as Christine said, that money goes right back into the economy.
So what happens, they become homeless? They go on food stamps? What happens to those 4 million people?
VELSHI: Let's bring Stephen Moore in he is the editorial writer with the "Wall Street Journal."
Stephen, Roland makes an interesting point, $109 billion dollars over three years for unemployment benefits which we know, we all agree goes quite directly into the economy, because people on food stamps and unemployment benefits don't have a cushion, they have to spend their money versus the 700 billion or so for extending the tax cuts, so first I want your view on that.
Secondly, is there some trade to be had here with Republicans saying you extend the tax cuts, we'll extend unemployment benefits?
STEPHEN MOORE, EDITORIAL WRITER, "WALL STREET JOURNAL:" Ali, I do believe that we should provide a cushion for people who lose their job, there's no question about that. But I think two years of unemployment insurance, it's unacceptable.
I think this example that you all are talking about somebody three years getting government benefits -- look people should be able to find a job, any job after six months, nine months, and a year. It's tough economy out there but unemployment insurance extensions don't expand the economy at all, they hurt the economy. Because what people do is they don't start looking for a job until the benefits run out.
VELSHI: We were talking about this just the other day, Christine.
ROMANS: We were talking about this, because in normal times economists say that's true. That there's a percentage of people who don't go looking for a job.
But these aren't normal times. After three years, you should go out and get a job. There aren't any jobs. We don't have enough jobs.
Wait, Stephen, the issue is not whether we should keep extending unemployment benefits, I agree with you, you can't do that forever. The question is when are the jobs going to come so people have a job to go to. That is the big question and concern.
MOORE: And here is my problem with the kind of compromise that was laid out. I think it's essential that we extend these tax cuts, quote, "for the rich," because those are the employers in the country. If you take money out of the hands of the employers, then they don't have money for hiring people.
I mean, we know from the statistics that most of the people would get hit with the tax increase are people that are employers. Let's face it, without employers you don't have jobs.
So maybe, Ali, I like your idea. I'd go for a deal that says lets extend the tax cuts for everybody, because I don't think the economy could stand a tax increase but then we would also extend the unemployment insurance. You've got the framework for a deal.
ROMANS: That's money we don't have.
MARTIN: Here is an example, again it points to it. In Soledad O'Brien's "BLACK IN AMERICA THREE, ALMIGHTY DEBT" she profiled a gentleman who had an executive job. And she showed how many months he has been unemployed, how many times he has been sending out resumes, how he has taken off his vice president title. He is applying for jobs not even close to what he's making and still unable to find it.
So, Stephen, when you sit here and say, oh, you should be able to find a job. Stephen, you have a job, I have a job, but the people out there we're hearing from them who are busting their butts they can't find a job, even one tar below where they were before.
VELSHI: Everybody hold on right now. I want to continue this discussion. Hold on. You're going to get -- save it for the other side. I'm coming back to all of you. Stay right there.
In January, the Republicans do take over the House. What Stephen says is going to go a long way. We're going to ask him what changes when the Republicans take over when we come back.
VELSHI: OK, before the break everybody was hot under the collar. In fact, we had to put some asbestos down Stephen Moore's collar because he was jumping out of his skin.
But unemployment benefits, the extension of unemployment benefits versus cutting those people off and having them fend for themselves in this economy? MOORE: No, it's true this is a tough economy, no question, but answer me this question, how is it that immigrants can come into this country from Mexico or Central America and within weeks of being here they have two or three jobs? There are jobs for people who want to work. A lot of people --
VELSHI: Picking lettuce and citrus and things like that.
MOORE: No, but here is the point. People who are really working hard to make ends meet, working two or three jobs, why should they pay more taxes for people two years who aren't going out to McDonald's or something and just getting a job.
MARTIN: Actually a couple of things there, Stephen.
First of all, you just contracted yourself. Because earlier you talked about the rich folks with more money, they aren't working two or three jobs. They are forcing the people below them to work two or three jobs. That is first.
Secondly, CNN has showed, based upon previous data, where you had immigrants from Mexico who actually, some 4 million who went back because of the economy last year. So don't simply assume they are coming here and taking jobs when here is the other piece when you talk about those very people.
Christine mentioned 4 million. The 4 million also have children. The 4 million have children who are in school. It goes beyond just the 4 million. The question you talk about housing, homeless shelters, philanthropy is down. So as a result the normal safety net that's now fallen because of a tough economy.
VELSHI: Guys, I want to ask you, I want your opinion on both these things. Hold on a second. We have another poll here I want to show you.
Take a look at this. We asked people on the recent CNN/Opinion Research poll, were the Republican victories in the U.S. House races, were they a mandate for Republican policies or were they a rejection of Democratic policies? Seventeen percent say they were a mandate for Republican policies, 70 percent say they were a rejection of Democratic policies.
Stephen Moore, how do the Republicans in Congress now govern, given that kind of a response?
MOORE: Well, I agree with that poll completely. I think these election results were a repudiation of Democratic policies. What were those policies? What were people saying around the country? Stop the spending. I think that is the mandate for this new Congress.
That means we have to bring some of these programs under control. But we also have to; you know I keep hearing this talk about how we have to help people who don't have jobs. The best way to help people who don't have jobs is get them a job. And I just rejected the idea that putting more taxes on employers is the way to get more jobs. ROMANS: We need more jobs. We all agree on that.
MARTIN: First of all, can you answer the question? OK, all you did was protect the same thing.
The bottom line is this here, you asked the question, what are Republicans going to do. You know what, Ali they are not going to touch defense. They are not going to confront Medicare. They are not going to confront Social Security. You know why? Because they understand when you tackle such a monumental issues you're going to get burned.
They are not going to touch immigration reform. They saw what happened to their Democrats when they touch health care. So where the bulk of our spending is, those three issues, Republicans are not going to do it. They are going to focus on discretionary spending.
MOORE: I don't think that's fair. I'm very much -- I like a lot, Christine, what that bipartisan commission came up with. It does touch Social Security, it does touch Medicare, actually -- on the left New York City, no, and we can't touch any of these programs.
MARTIN: But here is the deal though, it is a nonelected commission. My point is this here, politicians, Democrats and Republicans do not want to tackle the tough issues. They are not going to take the tough votes. They are going to nibble around the edges. But again, that is $500 billion discretionary spending. But most of the money on those three issues show me --
VELSHI: We'll wrap up you guys. We're going to continue this discussion lots. Love having you guys on here. I wish we had voted for both of you in Congress.
Christine, Roland, and Stephen, always a pleasure to have you all here.
Hey listen, Congress, world leaders, economists, even cartoons lining up to get their shots in at the Federal Reserve.
(BEGIN VIDEO CLIP)
UNIDENTIFIED FEMALE: So has the Fed ever been right about anything?
UNIDENTIFIED MALE: Let me see if I can think of anything. No, nothing.
UNIDENTIFIED FEMALE: Who runs the Fed?
UNIDENTIFIED MALE: The Fed is run by Ben Bernanke.
(END VIDEO CLIP)
VELSHI: Why is the Ben Bernanke so unpopular this day? We'll find out what's really behind all of the criticism.
(COMMERCIAL BREAK) VELSHI: Don't change the channel. I'm about to say QE2 again, don't change it.
I'm with you, I have all sorts of people around me, including Christine Romans, who think it is an absolutely fantastic description. And the Federal Reserve's latest plan to stimulate the economy by purchasing $600 billion in bonds is coming under attack this week from conservatives, from economists and Republicans.
A letter signed by more than 22 political strategists and economists sent to Federal Reserve chairman Ben Bernanke says, and I quote, "We believe the Federal Reserve's large scale asset purchase plan, so- called quantitative easing, should be reconsidered and discontinued."
Douglas Holtz-Eakin is president of the American Action Forum, he is the former director of the Congressional Budget Office and he is one of the signatories of this letter.
Doug, good to see you. Your signature is here, boil it down to 30 seconds for our viewers. What is the absolute bottom line objection to QE2, the second round of quantitative easing? This Fed buys up of bonds to put more money into the economy?
DOUGLAS HOLTZ-EAKIN, PRESIDENT, AMERICAN ACTION FORUM: This particular episode has cost that is far exceed the benefits. No one expects it to do much, but it is going to create some inflation. It has already created some international economic tensions, puts the Fed back in a political cross fire, it is not worth it. And it also represents a return to activism in monetary policy that didn't serve us well in the '60s and '70s. We have to look at these lessons and not do this.
ROMANS: Doug, you don't buy that Ben Bernanke and the Feds that they want to get the U.S. economy on a stronger footing and that that's the most important thing here over all first and foremost. If you don't get the economy on stronger footing, then we can't resolve some of these global imbalances and some of these international issues you are talking about.
HOLTZ-EAKIN: I absolutely believe they want to put the U.S. on a stronger footing, this just won't do it. So we disagree on the substance of this policy.
ROMANS: So what should the Fed do? Nothing?
HOLTZ-EAKIN: I think the Fed should hold onto this in case we have an adverse shocking of a double dip recession, it would be valuable in that moment. It is not valuable now.
VELSHI: All right, let's bring Richard Quest in, he is the host of CNN International's "QUEST MEANS BUSINESS."
Richard, you have paid considerable attention to this and there has been considerable opposition from leaders around the world, including at the G-20, about this QE2. That the U.S. is devaluing its currency and it's throwing off international efforts to fend off the remains of this recession.
RICHARD QUEST, HOST, "QUEST MEANS BUSINESS": Well, the Germans have called it clueless. The Brazilians have said it's a bit like throwing dollars out of a helicopter and just as useful. The South Africans have criticized it, as, indeed, have the Chinese.
The reasons they have all criticized it, well one of the reasons is because one of the side effects of QE2 will be to drive down the dollar. That's effectively a competitive de-evaluation otherwise known as beggar thy neighbor policy. And those countries around the world are very concerned and we're seeing a certain amount of protectionist, albeit small at the moment in response.
To come to Douglas position, there are really two major oppositions in this. There are those who basically say that this QE2 will not work for the Feds mandate of unemployment and inflation. But there are those who are philosophically against it. They believe, as you were saying, the interventionist way to massage the economy in this manner is simply wrong.
VELSHI: Christine, what we've also seen is a currency war going on. We've seen the world telling China to raise its currency. What did the U.S. do, in the end, by doing this, it is not the reason they did it, but by introducing this money by the way over the next year into the economy or just suggesting they were doing so it has devalued the U.S. dollar, it has made the U.S. dollar lower versus other currencies.
ROMANS: But the Treasury Department doesn't run the Fed but Treasury Department defending what's going on in Washington and saying actually we're not devaluing the dollar. We're trying to make the U.S. economy stronger.
VELSHI: But in the end it does make Americans goods cheaper to purchase right and it makes it harder to buy goods from other places. So it has had the effect why wouldn't that help the U.S. economy?
ROMANS: Well, that's the goal right by creating jobs? Doug, I really want to zero in on Doug here on this idea that this will not create jobs. That you don't think this is the way, this is what Ben Bernanke used to sell this whole idea to people that this is going to be about employment. Do you think the jobs are going to come?
HOLTZ-EAKIN: Look, this is at best going to drive down medium to long-term interest rates by 30 or 40 basis points when interest rates are at historic lows. This is not about the jobs; we've got low interest rates. That's not our problem.
Our problems are deeper and involve the need for program policies, cessation to the heavy regulatory hands a rollback on health care reform, not raising taxes. All of those things are controlled by people other than the Federal Reserve. They are well intentioned. But all they are going to do is create inflation. They are not going to change unemployment. That's going the wrong direction from the mandate.
VELSHI: Richard is groaning over there.
QUEST: First, I mean, the moment you heard Doug say roll back health care plans, you know there's a political position or quasi political position.
HOLTZ-EAKIN: No, no. I seriously disagree with that. This is a bad law.
QUEST: It's a quasi-political position you're taking in that respect. But the fact is to move to neutral territory, all those things that he just suggested were not possible because of the midterms now and the stalemate in Washington. So the Fed is the only game in town. If the Fed doesn't do anything, then things look a lot more risky.
VELSHI: Interesting thought.
Richard, thanks very much. This, of course, won't end any time soon.
Doug, thanks very much for clearing up your position and what this letter has been about. Always good to see you here.
Christine, as always, we'll be back in just a moment.
Listen, they preach a message of fiscal responsibility, but will they have a backbone when it comes to tackling the deficit? We're going to talk to one of the Tea Party founders and a controversial editor who thinks well they are just barking mad.
VELSHI: Take a look at this poll. There is a lot of controversy surrounding the Tea Party with Americans still trying to figure out what the party stands for, what the movement stands for. It's not even really a party, it's a movement. Thirty-eight percent have a favorable view of the Tea Party movement, 42 percent have an unfavorable view, very close. And look at that, 20 percent are unsure.
Let's bring in one of its founders. Mark Skoda is the founder and chairman of the Memphis Tea Party.
Mark, now that the Tea Party has had some remarkable victories in the midterm elections, a great deal of influence on the Republican Party and the voters of America, what is the number one issue that the Tea Party is going to deal with?
MARK SKODA, FOUNDER & CHAIRMAN, MEMPHIS TEA PARTY: Well unquestionably right now, it is the debt; it is our spending in Washington that's completely out of control. I would suggest to you based on the freshman orientations and discussions that are taking place here in Tennessee it's really about controlling the budget number one. VELSHI: Mark, I want to bring in Matt Taibbi, he is a contributing editor at "Rolling Stone" and he is also the author of a book called "Griftopia."
Matt, you have been critical of the Tea Party movement. What's your issue with the Tea Party movement? Are they not fiscal Republicans by another name?
MATT TAIBBI, CONTRIBUTING EDITOR, "ROLLING STONE": I think they are. I'm actually sympathetic with a lot of the things the Tea Party talks about, but I think they have been manipulated and collated by the Republican Party, which to me, is trying to make the Tea Party and their voters advocates of the economic policies that their campaign contributors would want, the people on Wall Street and the financial services industry are pushing for deregulatory policies that they hope the Tea Party voters will support.
VELSHI: It is a good question.
This is an interesting issue, Mark. Some people think the Tea Party manipulates the Republican Party. Matt is suggesting the Republicans with some of their economic issues are manipulating the Tea Party.
You and I have had this conversation. It's a weird alliance. Because a lot of the things that the Tea Party is concerned about with respect to spending and deficits and debts were born by the Republican Party.
SKODA: Absolutely. I think and what is interesting, Matt is right. I think a lot of perception is that somehow the Republican Party is co-opted the Tea Party. I think the reality is that there is a lot of disagreements that we have.
I will tell you, here in the state of Tennessee, and we just had an election last night for a nomination for House speaker. The Tea Party was against the particular nominee. She won by apparently one vote. We have a problem with that, the way that went about and we're frankly antagonistic to the process.
You can't segment the Tea Party in the sense of saying it's a Republican extension. It is not. We have fundamental disagreements.
If you're looking at the food safety bill that is now before us, it is going to committee, it is apparently a problem that we're going to deal with. If you look at our spending generally we disagree with that we're not interested in supporting a specific agenda of the deregulatory environment that Republicans have reported, we are focused on fiscal responsibility and making sure the Constitution is adhered to to the greatest extent possible, fidelity, if you will, and finally focusing on those free markets.
So I think you'll find quite frankly in the coming two years now that we've had this great legislative victory, and I would argue that the Tea Party frankly amplified the affect. I won't take personal credit for it but it amplified the affect. I think that's a very positive outcome. VELSHI: Let's look at this other poll that I've got for you. It shows a real split on whether the Tea Party movement should become its own party, because right now, you're operating in Congress with Republicans. As you said, 48 percent, the same number said yes and no to the question.
Should the Tea Party movement become a third party that runs against the Democrats and the Republicans? Mark, your view on that.
SKODA: Boy, you know, I have been one of the voices that suggest that doesn't work. Because you know there's such a huge infrastructure in place on both parties to overcome come that is difficult. And so, one of the things that I have suggested is getting involved in these executive committee positions so we can select candidates, focusing on the primaries.
Having a said that, if the Republicans don't govern appropriately and if they do not begin to embrace some of the concerns and aspirations of the Tea Party you're going to see states, I believe, begin to form a third party efforts. Regrettably, I think that's a potential disaster for conservatives.
On the other hand, this is America and we have freedom of choice still. I would suggest to you that I think the Republicans just need to be aware of the aspirations of the Tea Party movements and, indeed, govern as such.
VELSHI: Matt, to what degree did the Democrats cause this movement in perhaps not dealing with what felt like regular people, regular workers, regular tax payers in America. There are some people who think this administration is focused too much on the financial sector and rescuing the financial sector.
TAIBBI: I think that's absolutely true. A lot of my sources on Wall Street say exactly the same thing that after the crash in 2008 when the economy was in ruins, everybody said that this should have been a teaching moment for the Democratic Party where they went out to ordinary people and blue-collar Americans and said, look, this is what happened to you. You've been robbed; you have been stolen from in the last ten years. Here is who did it. Here is who is responsible and we're going to fix this problem, we're going to come in with big changes.
Ordinary Americans were screaming for an explanation, what happened to us, the Democrats didn't provide that explanation. The Tea Party did. They came up with a coherent simple explanation that was digestible to people. And the only thing the Democrats did that was really was a mistake is, Barack Obama brought back Timothy Geithner and Ben Bernanke, were the two big architects of the Bush bailout policy. And I don't see how you --
VELSHI: But you remember at the time it sounded like a smart move, bring people in who know how the financial system works because it was coming apart at the seams.
TAIBBI: Sure, but I just don't see how you can run against the Bush bailout policies if you have absolute continuity with their policies. I think that was a big debate and it really seeded a lot of the debate with the Tea Party.
VELSHI: Mark, would that change things if the administration were to shake up some of the advisers who seemed to be too close to this Wall Street and deregulatory environment?
SKODA: Well I think sort of that's one element, right. But I think it's more about fundamental policy issues, about how big government should be, how intrusive. I mean look what's happening today in this discussion of TSA. We can't get away from, now we are talking about who is justice, it is just beyond the pale I think with in the Tea Party saying look leave us alone a little bit. We are not suggesting eliminating the social net by any stretch of the imagination.
But we are suggesting that this big government idea of federalizing, if you will states right, is really what we oppose a lot of the policies particularly of the left and the Democratic Administration. On the other hand I will tell you that it is very clear to me discussing with people here in Tennessee that a lot of people in the Tea Party movement today are focusing on the state issues. We won 985 seats in state legislatures, I believe it was 21 seats have gone fully Republic and now it's time to actually act as legislators and be appreciative of the Tea Party's impact.
VELSHI: Excellent discussion. Guys thanks very much for joining us. Mark Skoda is the founder and chairman of the Memphis Tea Party. Matt Taibbi, is a contributing editor with "Rolling Stone" and the author of a book with a fantastic name, "Griftopia, Bubble Machines, Vampire, Squids and the long condom is breaking America." Fantastic talk with you guys. Thanks very much.
SKODA: Thank you.
TAIBBI: Thank you.
VELSHI: Once bankrupt General Motors comes roaring back to Wall Street this week literally and figuratively. Can the White House take credit for it?
But first how a New York institution known for clowning around found itself in very serious financial turmoil. Stephanie Elam explains in this week's "Turnaround."
(BEGIN VIDEO CLIP)
STEPHANIE ELAM, CNN CORRESPONDENT (voice over): Life isn't always a circus, especially if you're the big apple circus.
GARY DUNNING, EXECUTIVE DIRECTOR, BIG APPLE CIRCUS: We've gone from $23 to $17 million over the past couple of years. That's a pretty big cutback.
ELAM: A severe budget cut meant layoffs and furloughs at the big apple but the show had to go on. DUNNING: What happens here in the ring is everything. So we really made sure to protect that portion of the budget and just made cuts elsewhere that we needed to.
ELAM: Cutting the budget without cutting the quality of the performance.
GUILLAUME DUFRESNOY, ARTISTIC DIRECTOR, BIG APPLE CIRCUS: We are extremely careful. There were some choices that I made to contribute to the overall savings. But we have not cut corner in the product and the artistry that we deliver. I think there is a lot to be said about that.
ELAM: And precision has paid off. Ticket sales are up and the circus raised over a million dollars at its annual benefit gala.
DUNNING: We're beginning to see positive trends. Clearly we need to build on them and continue to do the work that we do. We're beginning to see some signs that the audiences are coming back. That's exciting to see.
ELAM: Exciting signs for a company that's been walking a financial tightrope.
DUNNING: Is this a turnaround season? I hope so. The thing about the business, though it's not going to all happen in one second. We have a long season. Our performers know how to pace themselves because it is a long season. I think that's what we're going to have to do as a business. Pace ourselves and build ourselves back. Don't expect the silver bullet. Just keep working, keep doing the good work. I know that people will support us.
ELAM: Stephanie Elam, CNN, New York.
(END VIDEO CLIP)
VELSHI: So long government motors. Less than 18 months since the government steered General Motors into bankruptcy. The bailout automaker has roared back. GM's record setting initial public offering of stock raised more than $20 billion. A triumphant return to Wall Street that President Obama touted as a success story of the recession.
(BEGIN VIDEO CLIP)
BARACK OBAMA, PRESIDENT OF THE U.S: We are finally beginning to see some of these tough decisions that we made in the midst of crisis pay off, and I'm absolutely confident that we're going to keep on making progress.
(END VIDEO CLIP)
VELSHI: Peter Valdes-Dapena is a senior writer at CNNMONEY.com. He is our car expert. Christine the GM IPO. Is this confirmation that the Obama auto bailout worked? And by the way with credit to George Bush, he was into the idea as well. Did this work?
ROMANS: In a word, yes. But it worked in terms of surviving and keeping the company alive. Now it has to prove that it can make a car that people want to buy and it can compete against Ford and others, Ford who didn't have to have a bailout by the way, others had a nice turn around as well.
VELSHI: And by the way of the $50 billion tax payers put into GM, $27 billion is still outstanding.
ROMANS: That is right; taxpayers have not been made whole. But let's be honest maybe making them whole with saving a million jobs according to the Center of Research how many jobs were saved by saving the company in the first place. So it depends on how you rate the return on that investment.
VELSHI: Right. The number there is a million but some people doubt that is true. I tend to be a believer in that. Let's go over to the car, Peter for all the financials and for all the whether they can pay back GM ultimately has to do what any competitive privately owned car company needs to do, make cars people want to buy and make lots of them.
PETER VALDES-DAPENA, SR. WRITER, CNNMONEY.COM: Well the good news here is that GM has actually been on that path as you and I have talked in large by this for years, they have been on that path for a long time for building a better product. If you look at all their recent product, the Equinox SUV, the new Buicks, the Regal and the Lacrosse, and you look at the Cadillac CTS, these cars have been selling really, really well.
They have just been flying off the lots. One thing that GM has learned how to do finally is make cars that people actually want to buy. In terms of things like dependability, they have some work to do in that department. Ford Motor Company has become world-class on dependability. Their cars right now that they are turning out are as good as anything from Toyota and Honda. GM can do that, they are just not doing that consistently and quite frankly be honest even when they are not doing it that well it is still not like people --
VELSHI: It's unfair to talk about how American made cars suck.
VALDES-DAPENA: Absolutely. They don't. Not anymore. Chrysler still has a lot of work to do. They are doing major turnaround. They just unveiled a whole slew of redesigned products in L.A. that look a lot better than their old stuff. But GM in particular has learned a lesson at how to make cars that you look at across the street and say, I want to get one of those. When you drive it and you get inside, it's really more surprising.
VELSHI: And Peter knows this because he tries out everything that comes out there. All right. Peter has also been tinkering along with these electric cars and hybrid electric cars. Can the future of the auto industry be gasoline-free? I recently had the opportunity to test drive Nissan's all new electric car the Leaf. In my passenger seat was the CEO of the company Carlos Ghosn. (BEGIN VIDEO CLIP)
VELSHI (voice over): Is this a big stretch at this point for the average car buyer to get into this?
CARLOS GHOSN, CEO, NISSAN: No.
VELSHI: What's the --
GHOSN: It's not going to be a big stretch. I think first people would like to know what an electric car looks like. How does it feel to drive it? What kind of, you know - what is the interface with electric car. How do I charge it? Is it complicated?
VELSHI: But the only difference between this and a normal inductive car is the charging, from a driver's perspective. That's the difference.
GHOSN: The big difference between this and a combustion engine. First the charger, this is electricity. But you have a lot of things. There's no nose, no vibration, there is no smell. There is no gasoline. No gasoline. There is no exhaust pipe. There is no reservoir. So there are a lot of changes for the driver.
VELSHI: Right out of the gate there are two cars that people are going to think of as being electric cars. There's this and there is the Chevy Volt. You seem to think there's a distinct difference here because you walked me around the car and showed me no muffler.
GHOSN: Look there is no exhaust pipe in this car, which means this car no way use gasoline for nothing. We tend to say an electric car is a car that does not use gasoline. There is no exhaust pipe, no ejection. Any other car using gasoline is automatically a hybrid of some sort; you can have a motor and an engine. You can see the engine is not used to move the car, it is used to charge the battery, etc. but you're still using gasoline. The objective for us, obviously we have hybrids. But this is not about hybrid. This is about having a technology and having a car which is totally, totally neutral in terms of the emissions to the environment.
VELSHI: But ultimately how big a role will electric cars play not just in Nissan but in the automobile industry?
GHOSN: My projection is that in 10 years down the road, 2020, the global car market, 10 percent of the global car market will be made by electric cars.
(END VIDEO CLIP)
VELSHI: I have to tell you, I loved that car. Peter, you have compared it to the Volt. The difference is the Volt, when you run out of battery charge; an electric gasoline engine kicks in. This one you have to work around charging stations.
ROMANS: Right. VALDES-DAPENA: That is a big difference. It makes a difference in how the car feels but ultimately makes a difference in how people feel about the car and driving it. I think a car like the Leaf is going to have a little more of a challenge. I think initially it's going to sell better with the people who really want to help the environment. You're making a full commitment.
ROMANS: How does it feel? That's a big reservation that some people have, that it's going to feel like you're driving an electric car.
VELSHI: Peter said it very clearly; it doesn't feel like you're driving an experiment.
VALDES-DAPENA: It feels like you're driving a real compact car. I found it fun.
VELSHI: Well we will have to see, it is an exciting time for us. That we actually got the introduction of electric or mostly electric cars, your kids will look back on this year.
ROMANS: That is right.
VELSHI: And wonder and say you guys were talking about whether you thought it was going to work. All right. Thanks Peter good to see you. Christine thank you.
We've just barely come out of the last financial crisis, but could the next one be just around the corner? It's a question a lot of people are asking. We will talk about it next.
But first how prepared are you for retirement? Christine has this week's "Mastering your Money."
ROMANS: Joining us now, John Bogle, author of the book "Don't Count on It." Reflections on investment illusions, capitalism, mutual funds, indexing, entrepreneurship, idealism, and more. Welcome to the program. Are Americans prepared for retirement? What is the one thing they can do today to get back on track if they don't think they are?
JOHN BOGLE, AUTHOR, "DON'T COUNT ON IT:" Very few Americans are well prepared for retirement. The way to do it is start early. People forget that. And then invest more than you think you need to invest, month after month after month. Start early and invest regularly is the best way to get prepared for retirement. Make adequate contributions and make them early and then gets lower and -- the slopes gets less steep if you follow that rule.
VELSHI: We're probably far away from the financial crisis of 2008 to look back and try and figure out what happened, what went wrong and how it doesn't happen again. Lately on the show we focused on movies and books that are helping to bring some of the complex causes of financial crisis into focus for people who haven't been following it as closely. I've got another one for you. This is a must read. Bethany McLean is here, she is the co-author of a book called "All the Devils are Here." Along with Joe Nocera, these two have really, really dug into what caused this financial crisis and whether it can happen again? Good to see you again Bethany.
Bethany by the way, you will remember, author and article some years ago about the coming collapse of Enron and she blew the whistle on that quite early. So you're familiar with trying to get to the bottom of complicated things. I read your book. Is the cause of what we went through pure old-fashioned greed? Is it the fact that there hasn't been enough regulation of the financial industry? Or is it just a basic thing about how you used to be able to go to your bank to get a mortgage, they knew who you were and now that's not the case.
BETHANY MCLEAN, CO-AUTHOR, "ALL THE DEVILS ARE HERE:" All of the above. I think one of the things that's happened in the wake of the financial crisis, is we've been looking for a villain. So the debate has become very polarized, sometimes along political lines, sometimes along oh those greedy jerks who wrecked our financial system. We titled the book "All the Devils are Here." It spans many decades and a cast of characters.
VELSHI: In fact it is a little weird. In that some of the obvious villains are less villainous in your book and there are a whole lot of less obvious villains who might have actually been trying to get home ownership to more people and trying to keep mortgages accessible to more people, and they have ended up really messing up the system?
MCLEAN: One of the constant stories of Wall Street is good things taken to extreme let them become very bad things. The whole notion of creating securities out of mortgages started with a great idea. Really a simple idea with realistic concept, let's find a way to get more capital to American homeowners what is wrong with that? And it became over the decades a very dangerous thing. The story we tell is that story.
VELSHI: One of the impetuses behind the securitization of mortgages was all of these baby boomers. So many people needed money to borrow for houses and there were some sense that there just wouldn't be enough money to lend them. How do we create more money for more loans?
MCLEAN: Exactly. What nobody saw, is that two things would happen? One is that housing would become the investment of choice in a world of super low interest rates courtesy of Alan Greenspan and the others actually people did see this. That this mechanism called securitization would sever the link between the borrow and the lender such that there was no relationship anymore and the lender didn't have to care if the borrower could pay back the loan.
VELSHI: Securitization, in simple form was you take a bunch of these mortgages, you sell them to somebody else and they parch them out and sell them as bonds. The person actually holding that loan in the end has no relationship to the homeowner?
MCLEAN: Absolutely. One more ingredients in that, which is that the person holding the loan at the end can think they're getting something very safe without having done any of the underlying work, because this whole mechanism depended on the good housekeeping skill approval stamped on them by the rating agencies.
VELSHI: Let's talk for a second about whether this can happen again. This is the biggest concern. Can this financial collapse, the likes which we haven't seen since the great depression happens again? Take a look at this poll, a brand new poll from CNN Opinion Research Corp, 63 percent of Americans say, yes, 36 percent say no. Which group is right?
MCLEAN: OK, here is the optimistic way to look at this. The expected never happens. So the fact that people think it's going to happen may mean it won't. The far less optimistic way to look at this is that the story of the crisis is a story of a society living beyond its means. It is a story of a debt fueled binge in the United States but also around the world and we are not out of that yet. In fact, we are still in the throes of it.
VELSHI: OK, a debt fueled binge means that we are all participants in this, those of us who liked buying houses that went up at a very low interest rate. What happens to us if the thing changes? What will our future look like if we don't have a debt-fueled economy?
MCLEAN: It is so hard to say. I think we are facing a more austere future under any scenario you can imagine. What I hope is that we made hard decisions now so that we make choices rather than having choices hoisted upon us.
VELSHI: Now that's I think the big decision. Bethany McLean thank you very much, an excellent book. Bethany is the co-author of "All the Devils are Here" she is a contributing editor to "Vanity Fair."
Thousands of dollars in credit card debt are bogging you down. It is a more common problem than you might think. How to be debt-free in just a few short years right after this.
VELSHI: $13,000 in credit card debit may not sound like a lot. It is. And it's not that uncommon.
VELSHI: No and Ali you've got to get out of that credit card debt. I mean here is the deal, $13,000 takes an awful lot of time to dig out from under, and you need to make a deal with yourself to get out of that kind of debt in just three to five years. You cannot invest in your future until you've paid off the past. Credit counselor David Flores showed me how to do it.
(BEGIN VIDEO CLIP)
ROMANS (voice over): You're on the ropes. Right?
DAVID FLORES, COUNSELOR, GREENPATH DEBT SOLUTIONS: Uh-huh.
ROMANS: You've got rent or mortgage. FLORES: Uh-huh.
ROMANS: You got a car loan. You've got groceries.
ROMANS: Got a student loan. And you can't afford -- you just lost your job. How do you prioritize the basics even? Student loan, you get a deferment?
FLORES: Yes. I was going say, you want to take a look at this and says OK, where is there assistance? Student loan companies typically will help with hardships.
ROMANS: They usually have lower interest rates too, right?
FLORES: Usually they do. Yes. So putting these into deferment or forbearance can help. You're eliminating this even if it's temporary.
ROMANS: You got to get tough on the groceries. You tighten up?
FLORES: You have to get tough on the groceries, on the renter, or mortgage, long term. Is your situation, do you see it changing?
ROMANS: You might need to downsize?
FLORES: Yes. This is the hardest part. A lot of times when it comes to rent downsizing an apartment, people don't want to do that. Sometimes it's needs to be done if their situation is a long-term situation, not short term.
ROMANS: I think bottom line, $13,000 of credit card bills, and credit card debt at 29 percent interest. If you paid only the minimum, it would take 35 years to pay it off. Most people don't know that they don't.
FLORES: They just don't know it.
ROMANS: That is a long time that is a life time.
FLORES: Right. If you can afford to make the minimum payment, where you can pay off your debt sooner, greats. If you can afford to pay the minimum payment, where you can pay off your debt sooner great, but if you can't afford to pay the minimum payment that interest rate, 30 percent is a lot. Seeking credit counseling will help to try and get those payments manageable, get that interest rate down to maybe a 10 percent interest rate, a 6 percent interest rate. Something manageable so that you can pay off that debt without shelling out, you know a ton of extra money.
(END VIDEO CLIP)
ROMANS: Seeking credit counseling, nonprofit credit counselors. States have specific rules for how much you end up having to pay to have somebody help you get out of debt. Be very careful of those debt settlement agencies, those ads that you see. Anybody that tells you can get out of debt quickly and easily for free is lying to you. David Flores says one of the toughest parts of digging out debt, Ali, is knowing how to get started. Realizing what the number is, Ali. What is the number?
ROMANS: And when I was writing my book I found so many people just put the bills in the top drawer, didn't want to face what that number is. You've got to know what that number is and you got to begin to chip away at it.
VELSHI: The book's going to make you smart. "Smart is the new Rich."
ROMANS: You got it.
VELSHI: Thanks so much. That wraps it up for this show. But you can join our running conversation on Facebook and twitter @Ali Velshi and @Christine Romans. We read everything you send. Put it on our Facebook pages to we'll read that. Make sure you join us every week for YOUR MONEY, Saturdays at 1:00 pm Eastern and Sundays at 3:00. You can also logon 24/7 to CNNMONEY.com. Have yourselves a great weekend.