Return to Transcripts main page
The President's New Plan to Keep the Economy Moving; Examining the Good and Bad of Estate Taxes; The Legality of the Health Care Legislation; How Will the Health Care Legislation Work?; Should America Adopt A National Value-Added Tax?; How to Make 2011 Your Year For Financial Success; Deepak Chopra on Leadership
Aired December 18, 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: He is the same president, but apparently, he has a new outlook on how to get this economy moving.
I'm Ali Velshi. Welcome to YOUR MONEY.
President Obama now says tax cuts for all will mean millions of new jobs.
While some House Democrats were railing against including the wealthy as part of a compromise with Republicans, a pro-business Obama meeting with 20 of the nation's top CEOs.
Stephen Moore is an editorial writer for "The Wall Street Journal."
Stephen, in fairness, the president also met with labor leaders this past week, but it does start to look that some Republicans suddenly have more in common with this new economic direction of the president than Democrats do.
STEPHEN MOORE, EDITORIAL WRITER, "THE WALL STREET JOURNAL:" You know, Ali, it's almost like John Maynard Keynes is out and Milton Freedman is in. I never thought that would happen under this president.
Look, I think it's a good thing that this tax deal looks like it is going to go through; I think it is going to provide some juice for the economy. And I also think, Ali, it is a very good thing that President Obama is starting to sit down with business leaders and kind of ask what they need, what do they want for to get the economy moving again.
For the last couple of years, when I talked to business leaders, they said they felt like they were kind of under assault from this White House. So maybe this is a change of tone and change of direction that will get jobs back for 2011.
VELSHI: Let's bring Roland in; Roland is a CNN contributor.
Roland Martin, if the president felt like extending these tax cuts for everyone including the rich and it would potentially create millions of jobs, as he said, you know he said a couple days after announcing this deal that every economist he's spoken to says this is going to create jobs, why didn't he speak to his economists earlier and come up with this plan in June?
ROLAND MARTIN, CNN CONTRIBUTOR: Actually, he was not speaking of tax cuts specifically for the rich. What he talked about was the actual overall tax cuts for the people under $250,000. So it's disingenuous for anybody to suggest that somehow he was really adding on those folks at the top of the list.
He also was talking about, again, also the payroll tax. Remember, that was an important aspect of how that could affect individual worker as well, but it was not above 250.
VELSHI: I want to bring in CNN's national political correspondent Jessica Yellin.
Jessica, the one thing about this bill, unlike most of the bills that lawmakers vote on, this one directly affects almost everybody. Whether or not you agree with it, the taxes that have been compromised centers on a two-year extension of the Bush-era income tax rates for everybody, it extends for 13 months emergency Federal jobless benefits, and grants a one-year break in the payroll tax from 6.3 percent down to 4.2 percent, so that affects anyone who pays the payroll tax for Social Security, and the tax on estates restored; that we were expecting to happen, but only on big ones worth more than $5 million. Now, we're going to break down the estate tax debate in a moment, separately.
Jessica, this compromise by President Obama, which has angered so many Democrats, what choice did they feel the president actually had in this case? Because if he didn't make a deal, he wasn't going to get his unemployment benefits passed.
JESSICA YELLIN, CNN NATIONAL POLITICAL CORRESPONDENT: They actually will dispute that, Ali. They will say they have proven time and again that they do have the vote to pass unemployment insurance on their own without the Republicans or with a few Republicans which will come their way.
Their argument was the president should have put up more of a fight. He should have resisted longer and made a stand to try to move Republicans their way but also to simply point out the political gain of what the progressive side thinks they are losing in this, which is sort of endorsing the biggest piece of President Bush's economic policy, his tax cut vision. They really just wanted a larger political fight for political gain even if we would have ended up in the same place at the end.
MARTIN: Ali, one thing it would have came down to is the fact that Democrats felt that the estate tax provision was never a part of the conversation. I talked to House Majority Whip Jim Clyburn. I talked to other senior Democrats who said they had a conference call on the Sunday before the announcement was made and it never even came up. All of a sudden the announcement -- when the announcement is made as a part of that and so, obviously, the benefits bill is above 250 was a major issue but they thought the state tax was really the one piece that that made no sense.
VELSHI: OK. We are going to talk about that. I want to talk about estate tax in another segment.
I want you listen to this. Democratic representative Donna Edwards of Maryland summed up the emotions that a lot of Democrats were expressing.
Listen to her.
(BEGIN VIDEO CLIP)
REP. DONNA EDWARDS, (D) MARYLAND: Where is Robin Hood when you need him? I rise today to express profound sadness about the tax bill that was passed by the Senate and set to pass in this House that benefits the wealthiest of Americans at the expense of putting billions of debt on to the backs of our children and grandchildren.
Where is Robin Hood?
(END VIDEO CLIP)
VELSHI: Stephen Moore, where is Robin Hood?
Let me put it this way, before I ask you to answer this, because I do want the answer, where is the economic benefit that came from those two things that Roland was just talking about, extending the Bush tax cuts to the wealthiest Americans and dealing with estate tax, which, as Roland said, while it's always been on the table, guys like you who think about it a lot, it was certainly not part of this discussion that the president went in to the room to negotiate?
MOORE: Well, I totally hope we don't bring back Robin Hood, because he didn't create wealthy. He stole from the rich and gave to the poor, I don't think that's a great way to get the economy moving.
You know, Roland, one of the things you seem to forget and some of your Democrat friends is something that happened 45 days ago, and that was called an election. And these Democrats who are raising holy hell about this tax deal don't seem to understand that if this doesn't get done, and I do think it will get done, then Republicans take over Congress in about three weeks. A lot of the Republicans I'm talking to, Ali, think you know maybe we could get a better deal when we're in the majority.
So I do think this is going to get done. The Democrats are acting like the election didn't happen.
MARTIN: On the Republican side as well, they also take issue for the same tax deal. So don't assume it's all Democrats that have an issue with this actually tax proposal.
VELSHI: That's a good point.
Jessica, let's talk about what that point was. If the Democrats, those who you said, argued they had the votes to get this through, isn't the danger that if they don't get something through that somewhat bipartisan it will get undone in January?
YELLIN: Their point is, this was an election, this is their last actual chance to make a stand for their principles, so why should this Congress be the one to cave? That's their argument.
The other reason, one of the reasons they were so angry, because they did feel blindsided by what Roland pointed out, they didn't realize this was on the table. But it was crucial to the White House to get that payroll tax reduction included and so they were willing to barter. A lot of that bartering went on with Republicans which is what really PO'ed the Democrats, they were locked out of the room. There's some ego here. He's our president, why are we locked out?
MOORE: But, Jessica, the problem with waiting until January, as a Republican, I wouldn't be so disappointed with that outcome.
The problem, though, as you know, Ali, the tax cuts expire on January 1st. It could take three months for a new Congress to pass a tax bill. I think that would really put this recovery in jeopardy. You know what? Larry Summers believes that and Tim Geithner believes that and Barack Obama believes that.
VELSHI: Hold on, Roland, I've got a lot of show here. I'm going to get you back in on the other side.
Jessica, thanks a million for that. Roland, Stephen, stick around.
Even in death -- I promised we'd talk more about the estate tax or the death tax, depending whose side you are on in this one. Even in death, we're going to tax you. Breaking down the estate tax debate coming up next.
VELSHI: As you may have noticed, if you were just watching the show, one of the biggest points of contention in the tax package has been the future of the estate tax. Estate tax is simply a tax on your right to passing your property to your heirs after your death. It doesn't typically affect your ability to pass your assets to your spouse. Your estate is made up of the fair market value of the assets that you've built up in life. Things like cash, real estate, securities, insurance, and annuities.
Here, this might be the biggest problem, business interest as well as other assets, there's some exceptions to it. Exact details of how much estates are taxed and which estates are taxed have been in limbo for the last year.
This is where we would have been in 2011 if this tax package goes unpassed or had gone unpassed. Inheritance up to $1 million would be exempt from any taxation. In other words you can pass on $1 million to your heirs with no taxation. Any estate above a total value of a million dollars could have been subject to 55 percent taxation.
Since this tax package looks like it's going through, this is what the estate tax will look like next year. Inheritances up to $5 million are going to be exempt from taxation. Those above that will be taxed at a much lower rate, 35 percent.
Now, Republicans who supported this more lenient estate tax say it makes it more affordable to pass on family-owned businesses from one generation to the next. Democrats who were against it say a more lenient estate tax will simply benefit the rich, allow the transfer of wealth and not the overall economy.
Now, Stephen Moore and I have talked about this a few times. We're going to pretend we haven't. We're going to start all over again.
Stephen, here is one of the most compelling arguments here, and that is if you have let's say a farm or a large business that doesn't throw off a whole lot of cash, but it has been in the family for 25 years, now it gets passed to one's heirs there may not be enough cash around to pay the tax that is due on that so many people have to liquidate whatever business it is in order to do that.
On the other side, Stephen, there are people who say, some Democrats who say, too bad. You just got something worth a lot of money, so sell it, pay the tax, do something else with the money.
Tell me, Stephen, take the politics out of it, as you're good at doing, how does a lower estate tax help the economy?
MOORE: First of all, you asked the question, you know, should we call this the death tax or the estate tax, and what I call it is the American dream tax, because I really do believe that it's part of the American dream, American culture that you can build up a business, build up a ranch or farm throughout your whole life, pay your taxes by the way.
Remember, when we're talking about this tax, we're talking about a tax on top of all the taxes you paid during your lifetime. I think this idea that people shouldn't be able to pass on their wealth to their kids and grandkids is just wholly un-American.
By the way, this is the reason that people save and build up wealth and build up businesses during their lifetime. People like my father, they want to pass it onto their kids. If you don't allow that to happen, I think it really destroys the ability for businesses to grow.
VELSHI: Roland Martin, let's look at it another way. There are some people who say the estate tax itself is inappropriate. You were taxed when you earn the money and this is simply double dipping by the government.
What's your take?
MARTIN: Well, first of all, I don't think it makes a sense when you have actually gone through a process where you have actually paid taxes on something and all of a sudden you're taxed a second time. I certainly believe in the concept of being able to pass along wealth. But, Ali, in the chart that you show, you said the current deal is $1 million above. The tax compromise raised it to $5 million. One of the reasons Democrats in the House were so angry, is that they actually passed an increase up to 3.5 million for individuals, 7 million for a couple. So they felt that was a fair compromise. So what angered them was the president and his deal raising that to 5 million and then $10 million for a couple.
VELSHI: Right. So there's really two areas of anger here about this tax deal, one is what's in it and the other one is how it came about.
Let's bring Chrystia Freeland in, she is a Reuters global editor at large, good friend of our show.
Chrystia, just take a look back for a minute with me. These exemption and taxation rights have been about the most inconsistent thing in taxation over the last decade. Take a look at every year from 2006 it's changed, the exclusion amount has changed, the taxation rate has changed. It's been stable for a couple years in between there.
This legislation that we're talking about is only good for two years. It seems we really are very confused as to how to deal with estate taxes in the long term. I understand you think it's a good idea to tax estates to some degree.
CHRYSTIA FREELAND, GLOBAL EDITOR AT LARGE, REUTERS: Yes, absolutely. I mean, look, no one likes paying any type of tax. I, personally, would love to live in a society or economy where I didn't have to pay any tax at all. Unfortunately, I also understand that deficits exist. I like there to be roads that I can drive on. I like there to be infrastructure, I think we need a military.
So to argue about each tax sort of on principle as if does the government have a right to tax at all, which I think Stephen is sometimes inclined to do, is a little bit disingenuous. I think he does want government to do some things.
When it comes to the moral and the economic arguments, though, I think the estate tax is the simplest and the easiest one to be in favor of. Stephen talked about it as the American dream tax, that is completely wrong. I would talk about this as the silver spoon tax or the trust fund baby tax. This is not about making it difficult for people to pass on businesses to their kids. If you are concerned about that, you take care of that well in advance. That's why estate planning exists.
People who are running farms together with their children do that far, far in advance of the moment when they pass on the estate.
Hang on, just let me finish here, Ali. I'm not wrong about it, just let me finish here.
On Stephen's point the American dream, that to me is central here. The American dream, in my view, is about social mobility. It is not about creating a hereditary aristocracy.
VELSHI: Everybody stop for a second. We have drawn a line in the sand. We also have a line in which we have to get a commercial break.
We're coming right back and Roland and Stephen will get to answer this. Stay right with us.
VELSHI: Clockwise starting from me, Stephen Moore from the "Wall Street Journal," Chrystia Freeland from Reuters, and CNN's Roland Martin.
I love you guys because you respectfully, but enthusiastically underscore some of the differences, some of the cleavages that we face. They are really philosophical, and the estate tax, the thing that got snuck in the back door in this tax deal, has ignited people's emotions almost like nothing else in the bill.
Stephen Moore, Chrystia, in the last segment, dragged your conservative name through the mud. I'm going to give you a chance to build some of your honor back.
MOORE: This isn't a chasm of difference, it's a grand cannon of difference. I think, a couple of points.
First of all, with respect to the deficit, it's important for your viewers to understand something. The estate tax that we're arguing so much about, Ali, do you know what percentage of federal revenue it raises? One percent. One percent.
So we're talking about a tax, Chrystia, that is completely fiscally inconsequential. We're having this big debate --
VELSHI: I will tell you this, its 80 some-odd billion dollars of what it costs and it effects. What did I hear? Four thousand people, 4,400 families, maybe? That's what seems a little out of whack.
MOORE: Let me make a second point that's important.
I hear Roland say this is a rich man's tax. We are going to tax these huge multimillion, billion dollar estates. Do you know how much estate tax people like Warren Buffett and Bill Gates are going to make? Zero. They have taken advantage of exactly what Chrystia was talking about, all the estate tax planning. The people that get killed by this are the middle class businesses.
And by the way, there is one last point that is really important. The reason I hate this tax is the way you avoid paying this tax is you die broke. You spend down your assets to zero so that the government can't take them. That's not the kind of society we want where people aren't leaving money and businesses to their kids.
MARTIN: Ali, first of all, I need to correct Steve on a couple of things. First of all, Stephen, I didn't say anything about taxing these millionaires and billionaires. If you actually listened to what I said, I said I don't believe that you should be taxing folks who actually are creating these businesses and passing it on. That's the first thing.
MOORE: I agree with you.
MARTIN: One second.
Second, you're also being disingenuous. All of a sudden saying, oh, it's only 1 percent of all revenues, it's inconsequential when you're the same person when it comes to earmarks and when it comes to cuts by saying 1 percent of cuts makes a difference. So please don't play that little political game here.
Here is the deal, Ali, you also see a difference of opinion on the estate tax when you also factor in African-American, Hispanics and women business owners. Because we're seeing now, this is the first, really second generation of those business owners creating businesses generating the kinds of revenue. Even seeing some shift among members of Congressional Black Caucus and Hispanic Caucus because they are representing people who are saying wait a minute, we are now building up these businesses. It's not some white guy out there.
Chrystia, you're wrong. It's not this whole notion of a silver spoon in somebody's mouth. There are people out there who have businesses around $2 or $3 million a year who don't have 30, 40, 50 million who are saying I want to put my child in a position to pass it on and create wealth. There are very few African-Americans historically that have been able to create the kind of wealth through building businesses. That's why you see this sort of uneasiness when it comes to certain factions among African-Americans.
MOORE: I agree with everything you just said Roland.
FREELAND: Can I have the last word in here?
VELSHI: Last word to you, Chrystia.
FREELAND: OK, quick last word.
I think this is deception on a grand scale. Ali, you said the most important number. This is about 4.5 or 5,000 families. To me, it is absolutely outrageous that those 4.5 or 5,000 families who, by the way, are families that think they are going to be able to pass on $5 million-plus dollars, are not sufficiently committed to America and the American dream to be willing to pay for part of it.
One of the things we've seen right now is the income distribution is more skewed to the top 1 percent of America than it has been at any time since before the great depression.
MOORE: Chrystia, they already paid the tax. They already paid the tax.
FREELAND: It's one small way to prevent America from becoming the way Europe was in the 19th century with a hereditary aristocracy.
VELSHI: All right, guys, excellent discussion. You have represented three views on a topic that I came into this conversation only thinking there were two views on, which is why we love you guys.
Stephen and Roland, always a pleasure to see you.
Chrystia, come back in a couple more blocks, because I think you're going to come in with another taxation idea that these two guys aren't going to like it, but they won't be around to hear it.
So stick with us, there's some good stuff. You are definitely going to want to stay through this entire show.
New doubts are persisting over President Obama's health care reform after a key judge's ruling this week. Sanjay Gupta is in the house; Jeffrey Toobin is here as well. We'll get to the bottom of what this health care ruling could mean for your health coverage next.
VELSHI: President Obama's signature legislative achievement health care reform hit a legal roadblock this week. A federal judge in Virginia says a key provision forcing Americans to buy health insurance is unconstitutional. The case was brought by Virginia's attorney general, Kenneth Cuccinelli.
(BEGIN VIDEO CLIP)
KEN CUCCINELLI, VIRGINIA ATTORNEY GENERAL: They don't have the power to order us to buy a product, in this case health insurance. But if they can do it here, they can order us to buy cars, to buy asparagus, to buy gym membership.
(END VIDEO CLIP)
VELSHI: So where do we go from here and what could this mean for the future of your health care?
Let's bring in CNN senior legal analyst Jeff Toobin and CNN chief medical correspondent Sanjay Gupta.
Jeff, let's start with you.
First of all, is this a serious challenge? It's one of many, is it going to undo this legislation?
And to Cuccinelli's point, they don't force us to buy asparagus, but some government does force me to buy car insurance if I want to drive.
JEFF TOOBIN, CNN SENIOR LEGAL ANALYST: To answer your first question, yes, it is serious. This is a major constitutional challenge. It's not a frivolous issue. Two courts have now upheld the law, one has struck it down. A Florida decision is due next week, very likely to rule against it like one of the Virginia judges. So, I think this is going to have to be resolved by the United States Supreme Court.
If it goes before the court, how will they resolve it? The answer is, I don't think anyone knows for sure. Certainly, courts have gotten more conservative in recent years, like the rest of the government. There are many judges, including some on the Supreme Court, who are very skeptical of the breadth of the federal government and that would certainly include this legislation. Whether they can get five votes for that proposition, I'm not able to say at this point.
VELSHI: This business about the fact that there are some things that you can be forced to do like get car insurance, is that because those are state laws?
TOOBIN: Yes. The car insurance analogy is a perfect analogy in terms of what the government is asking you to do, but state governments have very different authorities. They have broader authorities. There is no question that it is constitutional for New York to require me to go to GEICO and buy car insurance.
The federal government operates under what is called the Commerce Clause of Article One of the Constitution, which, at least historically, has been interpreted somewhat more narrowly than the very general jurisdiction states have.
So the question is, does the federal government have authority under the Commerce Clause to order you to get health insurance. Two judges say yes, one says no so far.
VELSHI: All right, let's bring Sanjay in.
Sanjay, you've been covering this in depth. You spoke with the Nancy DeParle, who is the director of the White House Office of Health Reform. I know you had the same questions that we have.
What does this do to the rest of the health care reform bill and what do they think is going to happen?
DR. SANJAY GUPTA, CNN CHIEF MEDICAL CORRESPONDENT: She's been very busy for the last couple of years and particularly, probably more so ever since the act was passed, Ali.
We asked her some of these same questions. The real attitude, I think, is we know this is going to be a fight for sure, but to some extent we welcome it. And I think she echoes a lot of what Jeffrey said as well.
Here is a little bit about what we talked about.
(BEGIN VIDEO CLIP)
GUPTA: You believe this is going to go to the Supreme Court?
NANCY DEPARLE, DIRECTOR, WHITE HOUSE OFFICE OF HEALTH REFORM: Do I believe it's on the way to the Supreme Court?
DEPARLE: Yes, I do believe that eventually the Supreme Court will have an opinion on this, yes.
(END VIDEO CLIP)
GUPTA: The individual mandate, Ali, and I know you and Jeffrey have both talked about this quite a bit, that's really at the heart of all this.
What is sort of interesting here, Nancy also talks about the fact that obviously the argument that keeps being made is the financial one. If you have a lot of people who are healthy, younger, who compromise a lot of the uninsured, they can help if they buy into the insurance system, help defray the cost of taking care of those people who have illnesses.
It's a little more than that if you talk to Nancy as well. This idea, if the law goes through without the individual mandate, insurance companies are told you have to cover everyone regardless of preexisting conditions. You cannot discriminate against them, cannot raise their premiums. So what would prevent anybody who doesn't have insurance saying, you know what, I'm not going to have it, I'm just going to buy it if I get sick.
VELSHI: In which case you've messed up the risk pool at that point.
GUPTA: You've messed up the risk pool and you've really changed the complete culture, because even people who are buying insurance right now may say, well hang on a second, I buy it because I want that safety net and I don't want my premiums to be really high. If I go buy it after I get diagnosed, that's not going to happen, so let's everybody just wait. That's a real concern as well that she brings up.
VELSHI: All right, this is going to go on for a while. We'll continue to cover it with both of you guys from the health side and how it affects you and the legal side, because Nancy DeParle and Republicans and these state attorney general all feel like this is going to end up in the Supreme Court.
Thanks, guys, to both of you, Jeff and Sanjay.
OK, let's talk about stocks. They are up. Everything else is lagging behind a little bit in this economy, unemployment, housing prices, but stocks are very clearly up. How does it affect you? I'll explain after this.
VELSHI: OK, study this chart and then go look at your 401(k). It starts -- we're looking into 2007 there, see when the market was hitting record highs, the Dow was at 14,000, one in 64, and then you saw that big drop. Look at the low in March, the Dow was 6,554, the S&P 500 in orange there, was 1,268. But look at what has happened since then. Look at what has happened since the depths of this recession. We're way up right now. The Dow, the S&P 500, the NASDAQ all up significantly since their 2009 lows, they are actually back up to levels they were at in 2008. Quite a contrast to what's going on in the rest of the economy. A sluggish -- but not bad -- sluggish housing market. Really quite a bad job market.
Let's bring in my old friend Ned Riley, he is the chairman and chief investment strategist with Riley Asset Management.
Don't you love it, Ned, when we call you a year after everything has been going up and stocks have been doing well and smart investors have their money? And I'm now going to ask you, what should my viewers do, Ned?
NED RILEY, CHAIRMAN, RILEY ASSET MANAGEMENT: Basically, I think they should be buying this market. People are looking at the economy and saying it isn't really that robust, but unfortunately, we're confirmation based. We can't wait for the evidence that everything is fully recovered before we start putting our money back in.
And what has happened lately is a lot of people have put their money in bonds. They must remember that bond prices do go down if interest rise. I see a lot of money shifting out of bond funds into equity funds. I think this is a long time goal market. I really do.
VELSHI: I've heard that from others like you. I know you would like it to be. I think this might be the case; part of the problem is you are right; we're a confirmation-based society, so we need a year of evidence to say something actually seems to be working here.
Let's look at some of the best performers over the last year in terms of industries. Not in terms of stocks but in terms of industries.
Thirty four percent for industrial materials, hardware up 30 percent, consumer services up almost 30, media same thing, software. Take a look at the worst. Take a look at the worst. Even the worst didn't do all that badly.
First of all, we had a massive run-up in 2008. Look at some of the worst, utilities up three-quarters of a percent, healthcare up 8 percent; these are some of the worst industries going out there.
So what do I buy in this case, Ned? Do I buy the worst performers or I do buy the best performers because they are on a run? Tell me what my viewers should be thinking about.
RILEY: The stocks that have been down the most in the last two years. Because they inevitably will do up. I'm still very hot on technology stocks. I've been advocating to people they by this four fuse which is a top 100 stocks in the NASDAQ index, and basically just to get you to a cross section of everything, it gives you health care, it gives you biotech, it gives you big technology companies. That's the index actually in the last year and a half that's beaten the S&P and beaten the Dow. It's up almost 25 percent in the last 12 months and it has almost come close to the performance of gold. This is a very diversified group of stocks. The people who owe a hundred stocks, but the key is they are buying growth. Unit growth is going to be critical over the next two to three years. Because the market I think has already discounted some of this economic recovery. We're going to be looking for those unit growers that clearly can capitalize on demographics as well as global economy.
VELSHI: OK. Good advice. Good to see you my friend. Thanks as always for coming in to talking to us about this in people's language. Ned Riley is the chair and chief investment strategist at Riley Asset Management.
OK. Coming up next, a controversial idea to help deal with the deficit. A hint, it could change the way you buy just about anything.
But first, Christine Romans got together with a financial planner to talk financial resolutions for the new year in this week's "Smart Is the New Rich."
STACY FRANCIS, FRANCIS FINANCIAL: A budget is how you start. It really is the road map that you are going to follow to get you to that ultimate goal. Take a look and figure out what you're spending. I will tell you most of us do not know.
CHRISTINE ROMANS, CO-HOST (voice-over): After that, you make 2011 the year to get out of debt, to pay off your debt.
FRANCIS: Exactly, this is the year to pay off your debt. We just saw that we had tax cuts expanded and prolonged, so we're going to have more money in our pocket than we really thought. Make sure that you take that, you put it towards your debt.
ROMANS: Also, need to think about putting away the money for a rainy day. There's one thing we know is that we didn't put enough money away for a rainy day over the last years.
ROMANS: Three to six months is what you think?
FRANCIS: Exactly. That's why a lot of people have ended up with debt. So if we got our emergency fund here, we want to put in anywhere from three to six months of your living expenses, once you've done that, then you know that no matter what happens in your life you're going to have enough cash on hand that you can successfully get through it and not have to touch those visa cards.
ROMANS: Number four on the list is buy a new home. You think this is a good time to buy a house.
FRANCIS: You've done this, you created this emergency fund, you paid down your debt, and you have some money in the bank. You're able to put a 20 percent down payment and you have some extra money for those unexpected closing costs or those unexpected purchase costs and home ownership costs. Then now is a great time.
ROMANS: Get your estate documents in place. This is something that every family should do, and this is something, a priority for you for 2011.
FRANCIS: It is. It is. Getting your estate planning documents in place is the best gift you could ever give anyone for the holidays. That is making sure that they are being taken care of.
Also by really doing your estate planning you can save quite a bit in taxes, so that more money goes to your loved ones versus the pocket of Uncle Sam.
VELSHI: Joining me now my good friend Mary Snow and back with Chrystia Freeland of Reuters.
Chrystia, like me, is Canadian. Mary is like honorary Canadian. If you're in Canada or you are in Europe or you are in many other developed countries, it is normal that there is a value-added tax of some sort. Here in the United States we don't have one.
Earlier in the show, Chrystia was making the case of paying down the deficit in part by having a substantial estate tax. Here for part two of things you don't want to hear, Chrystia Freeland on why we should have some sort of a national sales tax or value-added tax -- Chrystia.
FREELAND: Ali, I'm glad that you referred to the estate tax because it is in my view two sides of the same coin. I think America inevitably will impose a value-added tax or national sales tax. There is simply going to be no other way to balance the books. That's doing to be really painful. And there is a strong and important argument against a national sales tax, which is that it hits poor people the hardest.
VELSHI: Right, let's just explain that.
Poorer people or lower income people consume a much bigger part of their salary. Somebody worth $40,000 or $50,000 consumes almost of that level if not more, where somebody who earns $250,000 doesn't spend $250,000 on food and housing typically, they have more cushion.
FREELAND: Right, exactly, which is why I did think you know advocate strongly partly for moral and justice reasons, that an estate tax is really, really important.
The reason I also, however, think you're going to have to impose this very broad-based value added tax is just the map. It's really hard to see any other way that you balance the book. I think in terms of how it makes the economy work if you have other parts of your taxation system working properly including making sure that rich people are paying their fair share, a value added tax is not so bad.
Because what it can do is help America achieve what I think is the overwhelming priority of the next decade, which is to move from being a consumption focused economy to a saving and production focused economy. So I would say for people lower down in the income distribution, lower the taxes that they pay on income. Encourage them to save, but we should all be discouraged from consuming too much. We've been doing too much in the past 20 years.
VELSHI: In places like Canada there's an offset to it for people who earn less, so you get some sort of deduction on your taxes.
OK, here is another story for you. It's one that we just are not covering enough in the news. I've made a commitment to it and Mary Snow has made a very big commitment to it.
You've heard 99ers, some places, 79ers, but 99ers it refers to people who exhausted the 99-week limit on unemployment benefits. This new deal by the way that is being agreed upon between the president and Republicans, the extension of unemployment benefits does not count people who have exhausted their benefits, who have gotten 99 weeks.
Eight million jobs were lost during the recession; just over a million have been recovered. No surprise that for some Americans these benefits already have run out, more than 2 million of them. What did they do? Mary you spent a great deal of time covering 99ers, and not from some policy perspective or analytical perspective, you've gone and spent time with them. These are real people who do not have something on the horizon for them.
MARY SNOW, CNN CORRESPONDENT: They don't Ali and they are in dire straits. I was talking to an economist recently about this. He said as we see signs of recovery for the economy, really when you think about the 99ers, and there are millions of them, for many of them, this is more like a depression in terms of the economy. What's happening is the longer you're out of work, of course, we're seeing that the harder it is to get a job. They are really being left behind.
Also their skill set is something that is getting -- they don't have the skills necessary to go ahead and get a job. You know, just seeing the people that we've met, profiling some of these 99ers, there's a lot of talk about training and all that. But when you see people who are on the brink of living in a car or homeless shelter, getting that training and applying for jobs becomes increasingly difficult on a day-to-day basis.
VELSHI: If I had to go and retrain for something that would be one thing. I have a house and I have a life. If you're trying to retrain and you are trying to retrain for something you're not even sure there's a job in and you don't know where you're sleeping that night and whether it might actually be in your car or what you're going to do in the cold. Look I understand that there're economic realities all over the place. Mary, you put a face on that story and we appreciate it. Mary Snow, Chrystia Freeland thanks to both of you for introducing us to ideas that we have to be thinking about all the time. Take a look at this, they are familiar faces but what do they all have in common? We're going to talk about it with Deepak Chopra coming up next.
But first a passion, how a passion for New York City's 438 subway stations translated into signs of success. It's this week's "Turnaround."
TREVOR MACDERMID, UNDERGROUND SIGNS: It was 2009 and everything had tanked. There were bigger and bigger gaps between the jobs and there was just a slowing down. This seemed like something that I could do where it could be something that was of on the side burner. Then as I immersed myself in it, it seemed to be more like a business that could take my full attention.
I got a little float from my dad. I got five grand from my dad; I dipped in $12,000 of my own savings. I began it like in the way one has a lemonade stand. Try to make a couple batches, go out, and see how you do. Any money that you make reinvest that in more materials and repeat. I began by putting up a very simple sign and just went along with it.
I was approached almost immediately by the MTA who had gotten word of what I was doing. They wrote me a very polite but very sternly written e-mail saying that what I was doing was a copyright violation. I played nice and I engaged with them in a license agreement. They've been just wonderful.
Well, it's just like shoveling coal into the fire. It's just more, getting the word out. Taking out ads in Google ad words and Facebook, trying to get myself into more and more retail locations. Frankly, I take it just walking around town with a sign if I can.
In essence there are three sign sizes, there are the 12-inch square, there is a 5-foot sign and there is the flagship 8-foot sign. They are $99, $299 and $399 respectively. It's steep, but show me another piece of artwork that is good-looking and substantial that's five feet long that's less than $300s.
VELSHI: Whether or not you like these people I'm about to show you, there is no denying their influence, but does that mean that they are all leaders? Let's bring in someone who teaches leadership.
Deepak Chopra is the author of "The Soul of Leadership" throughout this January and an adjunct professor at the Kellogg's School of Management at Northwestern University.
Deepak, great to see you. Thanks for being on the show. DEEPAK CHOPRA, AUTHOR, "THE SOUL OF LEADERSHIP:" Thank you very much, Ali.
VELSHI: Tell me about this, do these people all of them on the page; do they all qualify by your definition as leaders?
CHOPRA: I think you have to just ask one question, and that question is -- are they trying to fulfill a need, or are they exploiting fear? Are they bringing out the best in me, or are they bringing out the worst in me? Ask that question of Sarah Palin, and then ask that question of Obama or ask that question of anyone. In one sense or another, they're all sensing a need. You know, we have the need for safety. We have the need for material acquisition and success. The need for self-esteem, the need for belonging, the need for empowerment, the need ultimately for higher guidance and transcendence.
So in a way they're all sensing that. You know, Mark Zuckerberg (ph) sensed the need for belonging in and social contact, and he not only fulfilled that need but he also exploited it for his own success. So he's definitely a leader. Obama is definitely a leader because he's saying, you know, I'm going to fulfill the needs but he's not connecting emotionally. You see, in my book I go through the acronym leader, look, listen, envision engage emotionally, become aware, do become action-oriented, empower, take responsibility and be in the right place at the right time.
VELSHI: This is an interesting way in which these people do or don't connect. Sarah Palin clearly connects emotionally whether you like her or not.
VELSHI: Timothy Geithner doesn't have that sense of things. President Obama, some people think he does many people think he doesn't. Julian Assange, we hardly hear from, we only know him through the work that he does which seems to connect very emotionally with people but it doesn't seem --.
CHOPRA: Very emotionally because he's also saying, I'm starting a new year of transparency with special interest groups and the people who have selfish interests they are going to be exposed. That's a need we have, you know, to know what's going on. So he's very interesting actually.
VELSHI: Is leadership -- does it come into play what your motivation is? So if you're doing this for personal gain or your are doing this to feel good or look good, is that part of it?
CHOPRA: Absolutely. The greatest leaders not only fulfill needs but they bring out the best in us. I think for right now of people like Bill Gates or people like Warren Buffett or Nelson Mandela or Bishop Tutu (ph) or Mother Teresa, these are the great leaders of our times because their motivation is way beyond themselves.
VELSHI: Deepak, does it strike you that there is a greater depth of need for leadership here in the U.S. and worldwide right now?
CHOPRA: There is, Ali, but I think we have to take responsibility because we create the leaders that we see out there. They are a projection of our own state of consciousness so I think -- I personally feel we all need to be leaders, in our families, in our communities, in our social engagements and ultimately for the world. We need to unlock the greatness inside us, and we need to create an economy, since you're so into money, that is based on real service and real goods.
Of the $2.3 trillion that circulate in the world's markets, only 2 percent goes to providing really needs for us. So you know we're based on an economy that is spend money that you haven't earned to buy things that you don't need to impress people that you don't like. We need to go beyond that. We need to educate our children; we need to be competitive with the world.
VELSHI: Excellent. The book is going to be an excellent read. Thanks for joining us, Deepak it are a real honor to have you here. Come back more often. It is a pleasure to talk to you.
CHOPRA: I'd love to. Thank you.
VELSHI: Deepak Chopra, the book coming out is called "The Soul of Leadership," it will be out in January. Deepak is also an adjunct professor at the Kellogg's School of Management in Northwestern University. Thank you to Deepak.
Thank you for all of you joining our conversation this week on YOUR MONEY. The conversation continues all week. I'm here every Saturday 1:00 p.m. Eastern, Sunday at 3:00 p.m. Eastern.
Catch my great friend and colleague Christine Romans on "YOUR BOTTOM LINE," Saturday mornings at 9:30 am Eastern.
And stay connected 24/7 to both of us on twitter @Ali Velshi and @Christine Romans.
Have a fantastic weekend.