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YOUR BOTTOM LINE
What's Your Personal Debt Ceiling?; America Rages at Washington in 140 Characters or Less; Meet Three Trailblazing Women of Science
Aired July 30, 2011 - 09:30 ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
ALI VELSHI, GUEST HOST: We know America's debt ceiling but do you know yours? Good morning, everyone.
I'm Ali Velshi. Christine Romans is off this week.
From your credit card debt to your home and car loans your child's education and your retirement, how close are you to reaching your financial limit? We tell you what you can do now to avoid defaulting on your bills later.
Plus, the latest rage on Twitter is the rage against Washington. Can we still trust our politicians to do what's right for the country?
And this one I love, meet America's future leaders. They are girls aged 13 through 17, and they have just schooled the boys at the first Google Science Fair. Wait until you hear what inventions got them to the top.
We begin with the debt ceiling. While Washington continues to try to figure out how to pay its bills, you might be as well. John Ulzheimer is with Smartcredit.com. Carmen Wong Ulrich the author of "The Real Cost Of Living."
Welcome to both of you.
Carmen, this is a fantastic opportunity while everybody is talking about the debt limit and people keep using analogies to the American family, and credit card limits. It is a good time to take stock of your own life and how it compares to what's going on in Washington. What's your view on this?
CARMON WONG ULRICH, AUTHOR, "THE REAL COST OF LIVING": I think there's a actually a really big difference between the two. So the comparison doesn't really ring true with me, because we can't do things like raise taxes. The only thing we can do is get job number three and job four. And the case of that happening, it's not going to happen.
It's important to, of course, look at your own budget and own debt levels. In terms of the government's situation, it's very, very different. I don't think the comparison really gels for right now. Again, we can't raise the money like they can. VELSHI: Right. ULRICH: We do have to pay attention to how much debt we're holding on to, and how much we're paying for it. Because of the rating changes of our country and debt.
VELSHI: Your rate may go up.
ULRICH: Our rates are going to change and that's going to cost a lot.
VELSHI: I agree with you. I agree that it's not the same. I would say the closest analogy for many people is how much money they have invested in their house, which may not be worth what it was when they paid for it.
ULRICH: Oh, my goodness, this is huge. We had a big report from Pew Research Center about the drop in minority wealth. The biggest culprit for African-Americans and Hispanics, of course, is the housing market, because so much of the net worth was put into the housing market. We can't do that. The best thing you can do, especially in times like this when you are nervous about investing, is diversify. If you diversify your holdings and your assets no one thing can bring you down.
VELSHI: John Alzheimer, let's talk about this for a second. We've talked about the this debt discussion causing interest rates to go up. You know what, we were probably due to see interest rates going up in the longer term anyway. We have historically low interest rates. What does the person watching this show need to think about with respect to interest rates that Carmen was mentioning?
JOHN ULZHEIMER, PRESIDENT, SMARTCREDIT.COM: Look, if you're managing your credit like the country is managing their credit, you're not doing the right thing. And you are doing it completely wrong and you are going to see your interest rates go up.
Most experts believe that if we, in fact, do default, that we will see the interest rates on our credit cards, if you have a variable rate go up about 5 percent, which means that the average interest rate of about 15 percent is going to go to 20 percent.
ULZHEIMER: Remember, Ali, the Card Act insulates us a little bit because they can't apply that new interest rate retroactively to existing balances. However, going forward, for every $1,000 that you choose to finance at the new interest rate of roughly 20 percent, that's about $1300 more that it's going to cost you to pay it off over the term, of paying only the minimum. So, keep that in mind if your interest rates go up it may be time to shelf those adjustable rate cards.
VELSHI: John, best thing that ever happened, is when they started putting on credit card bills what you would pay if you just paid the minimum, and how long it will take you. That's a great wake- up call.
Carman, let's go back to housing for a second.
VELSHI: And 28 percent of homeowners are currently underwater on their mortgages. That's according to Zillow. But, we got a report from Case-Schiller, which said that home prices compared to last year dipped 4.5 percent in May. However, month to month, there seems to be some relief. It seems to be maybe bottoming out. What do you do it if you're in that situation? It is not about revolving credit, it is not about credit cards, it is about your house. There's nothing you can do, can you?
ULRICH: Here is the thing, too, if we see interest rates go up on mortgages you may see some folks that were being a little skittish to buy, not buying. Which they should anyway because any mortgage rate at or below 7 percent is historically cheap money anyway. And you are holding onto your home. As for sellers, sell because you need to sell. Sell, not because you're waiting for some big check to come, because you're going to be waiting about 10 years or more.
VELSHI: Right, before you get back.
ULRICH: We're not going to see another housing bubble, another housing boom, this is a long-term investment. It is a long-term decision. But if you need to sell, then sell, and do it smart and do it right.
VELSHI: John, time to buy? Do you agree?
ULZHEIMER: You know --
VELSHI: If you got the credit, and if you have a down payment, and if you have a job?
ULZHEIMER: If you are, in fact, on the buyer's side of the equation, Carmen is right. There has never been a better time to buy a house because of primarily the interest rates being so aggressively low.
Now, I'm not sure that we've actually seen the bottom of the housing market and with all due respect I would almost rather see people wait to buy when all on the way back up, not necessarily trying to predict whether or not we have actually hit the bottom. I'll tell you what, 50 percent of your guests today are underwater on their homes, because I am way underwater. And right now I would never choose to sell my house because I would take a massive, massive loss despite the fact I'm essentially renting my house, right now. I am enjoying negative equity in my home.
ULRICH: But I have to disagree on the buying end. I mean, listen, if you're in a position to buy, I'm not a fan of -- this is not like a stock. This is your home. This is where you live. This is a community. And this is a long-term decision here. You're going to stay put for at least five to 10 years. If there's a time to buy now because the problem is, if interest rates go up, whether the market goes down, and you wait for a cheaper price, you're going to end up with a higher interest rate. It ends up balancing itself out. Don't wait for either. If you're set to buy, just buy, and buy the right way.
VELSHI: Either way, I think you're both going to agree you need to understand the new rules around credit. John, on July 21st the rules changed for you, and how you access your credit score. Give me some sense of what -- how it works now, the new rules.
ULZHEIMER: The rules actually got better for the first time. The consumers are actually enjoying unprecedented access to their credit scores. If a lender uses a credit score to do a variety of things, decline you, adversely approve you, which means to approve you but not with aggressively good terms; or if they choose to increase the APR on your credit card because of your credit score, they have to proactively disclose the credit score that they used to make that decision in the form of a letter. So, if you apply for credit, look at your mail because you may be actually getting your credit score in the mail soon.
VELSHI: Good advice from both of you. Thanks so much for being with us. Good to see you both. John Ulzheimer, is the president of consumer education at Smartcredit.com. And Carmen Wong Ulrich is the author of "Real Cost of Living."
ULRICH: Thanks, Ali.
VELSHI: Americans weigh in on the debt debate, in 140 characters or less, the message get your act together Washington. It wasn't done as politely as I just said it. Can we trust today's politicians to do what's right for the country? We'll talk about it next. Stay with us.
VELSHI: Americans are mad at Washington's inability to find common ground on the debt ceiling. And they are venting their rage in 140 characters or less, far less in some cases like this one, for instance. Here's the abbreviated, somewhat edited version.
Hey, Washington (EXPLETIVE DELETED), it is our country, our economy, our money. Stop (EXPLETIVE DELETED) with it. "
That struck a chord or hashtag as it is, with the Twitterotti (ph). And it got us wondering is Washington still a good role model for citizenship? With us now to discuss this, are Democratic Strategist Julie Roginsky, comedian Chuck Nice, and CNN Contributor John Avlon.
Welcome to all of you. All of you good citizens, who I know have over the last few months, you know, just shaken your heads at what's going on.
Julie, start with you. There was a time when a handshake with the president of the United States was a life inspiring moment, as it was here for a young President Bill Clinton, seen here meeting President Kennedy. This debt ceiling debacle in Washington, has the presidency itself lost some of its gravitas. I'm not talking about the president, I'm saying the presidency?
JULIE ROGINSKY, DEMOCRATIC STRATEGIST: I think the presidency has not lost its gravitas because the presidency is still the presidency. Both parties are acting like school kids in junior high school, who are trying to figure out who's going to ask who to the prom, and both trying to playing hard to get.
That's become increasingly frustrating to everybody. I don't care if you're Democrat, Republican or Independent. Everybody is fed up. They are sick of it. This is not high school, not even junior high school-I'm going to give them too much credit saying they're in high school. They got to suck it up and realize they're here to do work and not to try to out game play each other.
VELSHI: John, you follow what independents are thinking a lot. You think Washington politicians today, how could they possibly be seen as role models what message does this inability to compromise, inability to come to an agreement, inability to do what you were sent there to do, what kind of message does that send?
JOHN AVLON, CNN CONTRIBUTOR: Look, none of these guys are even trying to be Abraham Lincoln any more. The whole idea about being a role model you hold yourself to a higher standard. And if you enter public life that should be assumed. What do we get? On the private side of life we get tiger suit congressman Wu and Anthony Weiner. Stuff a drunk frat boy would think twice about doing.
And then on the public side of life, you have a fundamental inability to reason together. You have these folks playing, always thinking about special interests, not about the national interests and bringing the nation to the brink of default. This is an epic fail across all fronts. Congress is doing a terrible job of being a role model to average Americans and Americans realize if they behave this way they would get fired from their job.
VELSHI: Chuck's suggestion is-Chuck, you think that we shouldn't be looking at Congress as role models. You're thinking role models should be what you are to your kids, a parent.
CHUCK NICE, COMEDIAN: Yes, because Congress, they are role models, they're just the wrong kind of role models. A lot of rappers are role models, but I don't want my kid acting like them. I don't want my kid getting shot nine times like 50 Cent. As far as I'm concerned, these guys are role models, but they're the worst kind. I'm the best role model for my children. I'm an excellent father. I make Bill Cosby look like Joan Crawford.
VELSHI: Julie, what -- here's the thing. We think -- we live busy lives in our democracy, the sense here is we elect people who are smart to go in and do the tough things that have to be done, negotiate, come to compromise. Now we seem to have taken this view compromise is a bad thing, and that the thing you go to Washington to do is stand your ground and don't let the other side win.
ROGINSKY: Well, and I think what you've seen with the rise of the Tea Party, is that exactly. You have a bunch of people who have no experience in elected office going in with a strong ideological and very dogmatic point of view. And all of a sudden it is their way or the highway. Look, Washington has always been about compromise. You never get 100 percent of what you want. I frankly thought these guys were going to come to that conclusion before we defaulted, but I'm thinking they may be that nuts. They really maybe that guys that's going to put the girl on the train tracks, and let the train run over her. It is not just posturing, they really are out of their minds. They really are going to tank this country. It's unbelievable.
NICE: They need a civics lesson, that's what it is.
VELSHI: They need a combination of a civics and economics lesson. We thought we were getting with this groundswell movement that you wrote so much about, John, we thought we were getting the people taking control. The people saying I'm going to have a say in how things are done in Washington, and it seems to have set us back?
AVLON: Look, there's nothing better than the idea of citizen politician. The problem is the Tea Party Movement was motivated by this idea of bringing down the deficit and the debt, which is a form of generational theft. Instead, we saw these folks get a bipartisan grand agreement in place, whether it's Gang of Six, Simpson-Bowles, or the president and Boehner's plan, and they rejected it because it didn't meet an all or nothing, absolutist anti-tax pledge that wasn't the point of the Tea Party Movement in the first place.
The problem with all or nothing is that you usually end up with nothing. And that's what America is coming to realize here at the 11th hour. This is a dangerous game we're playing and it is not serving the American people well at all, which is why they are rightly furious about the dysfunctional debt ceiling debate in Washington.
VELSHI: Chuck, is it possible that you could ever talk to your kids and say, they should go into politics?
NICE: You know-no. I would rather-no! I mean, there are other far more, how shall I put it, noble professions, porn actor, no, I'm joking. I wouldn't want my kids to go into public service unless they wanted to be public servants, and that's the problem with our government right now. You have a bunch of people who are ideologues and they are not public servants, they are not serving the greater good. And that seems to be the problem.
VELSHI: Julie of the four of us, you get to see these people before they run for office. They can't all start off this way.
ROGINSKY: You know, they all start with the best of intentions. I say even these Tea Party guys in the minds have the best of intentions. The problem is they get down there, like being, you know, everybody always says politics is Hollywood for ugly people. And it really is. These guys think they're rock stars. They think all of a sudden they are Mick Jagger, they have women throwing themselves at them. They have perks, likes of which the American voter has never seen. It goes to their head and I think they start to believe they are the chosen and the bottom line is they are the chosen in the sense that we chose them to lead our country.
VELSHI: Yes, they are, yes.
ROGINSKY: But instead they've chosen to -- a lot of guys have chosen to basically submarine our economy. Look, the S&P was down 2 percent. If that's not a wake-up call to the Tea Partiers, I don't know what is, but for them, Wall Street is evil. So it doesn't really matter if the S&P is down 2 percent, as long as they stick to their ideological guns. It is so destructive and it is unhealthy.
VELSHI: It is a very different and uncompromising way to look at things. Let's hope everybody starts to see things a little differently. Thanks to all of you. If it were up to me, I would let you guys solve this debt ceiling problem.
Julie Roginsky, is a democratic strategist, John Avlon, a CNN contributor, and chuck nice, of course, is a brilliant comedian.
Speaking of role models meet three average teenage girls who are definitely going to change the world. I'm going to talk to them next. Don't want to miss this.
VELSHI: You watch Christine every week, you know she feels very strongly about this. Science as a subject turns away not just American students, generally, but especially female American students.
According to the study by the American Association of University Women, more high school boys than girls took advanced placement tests in mathematics and science. The things so important to our future in this country and a far greater number of men earned bachelor's degrees in science and engineering than female bachelor's agrees in science and engineering than their female counterparts, despite the fact that more women in America go to men-got to college than men do.
But the tide might be shifting. At Google's first-ever science fair, where more than 10,000 students, from 91 countries entered, it wasn't just an American sweep, but an American girl sweep in all three age categories.
With me now are grand prize winners, Shree Bose, she won in the 17 to 18 age category; Naomi Shaw, the winner in the 15 to 16 age group category, and here with me in studio is Lauren Hodge, she won in the 13 to 14 age group.
Congratulations to all of you. Brilliant, brilliant girls. We are counting on you to help us out in the future.
Shree, let's start with you. In the second grade, when you were in the second grade, while I was seeing how ants reacted to having water put on them, you were turning spinach blue, because you thought it might be more appealing to kids. That is not what won you the grand prize this year, but something substantially more sophisticated. Tell us what you did.
SHREE BOSE, GOOGLE SCIENCE FAIR GRAND PRIZE WINNER: My project this year was actually about drug resistance in ovarian cancer. Basically we found a link between this one protein in the cell, called ANP kinase (ph), and the development of drug resistance in ovarian cancer to this drug called Tsislat (ph).
VELSHI: What a brilliant-
BOSE: Slightly more complicated.
VELSHI: It is complicated. I'm certainly not going to ask you to try to simplify that for me. But ovarian cancer is a difficult cancer. It's often detected very late in women and we really are trying to figure out where it comes from, and how best to treat it. Why did you decide to go down this road?
BOSE: Actually, two years ago, my grandfather passed away of cancer and I decided I really wanted to do cancer research and go into the medical field. So I started e-mailing professors and the one who actually accepted me, Doctor Luken Mubasu (ph), at the UNT Health Science Center here in Fort Worth, actually specialized in breast and ovarian cancers. So that's kind of how I got started down this road.
VELSHI: Brilliant. And Naomi, with let's talk about you. You did some studies on indoor air quality and how it -- how that can relate to asthmatics who have to take medication?
NAOMI SHAH, GOOGLE SCIENCE FAIR GRAND PRIZE WINNER: Yes. So my research focuses on how the pollutants in our home and workplace, like the particulate matter and the chemical pollutants affect the lung health of asthmatic patients.
VELSHI: Wow. Again, what got you in there?
SHAH: So a lot of my friends and family suffer from severe allergies. My dad, my brother and I, we all have severe allergies. And that could develop into severe asthma in the future. And just seeing a lot of my family suffer from asthma, it got me really interested in this. So I have been doing a lot of research and I found that over 1.2 million people die from asthma every year. So I really wanted to target this disorder from the root, and that's why I was focusing on the environmental aspect, which is the pollutants in our homes, workplaces and schools, where we spend over 90 percent of our lives.
VELSHI: That is brilliant. Amazing.
All right, Lauren from Pennsylvania, Lauren Hodge in the 13 to 14 age group.
Lauren, you were inspired by something we do. It's the middle of summer. We all think of throwing something on the grill. You put chicken on the grill, it tastes fantastic, but people say it could have carcinogens in it. That beautiful, crispy blackened marks on the chicken. You decided to tackle that. LAUREN HODGE, GOOGLE SCIENCE FAIR GRAND PRIZE WINNER: Yes, basically what I found out about first, even before I considered marinating the chicken, which was what I used for my project, was actually an article in our doctor's office. But also the grilling of the chicken at summertime was basically the start of my project.
VELSHI: What did you find?
HODGE: I found that with lemon juice, saltwater and brown sugar, those marinades can actually stop a reaction that occurs in grilled chicken, that forms hetersetamines (ph), or carcinogens, and these three marinades can help stop the reaction.
VELSHI: You should be going into the 9th grade, and you're going into the 1th grade.
VELSHI: How do you react when you just heard what I just said, that girls don't like science. Girls turn away from science. They don't graduate. You're nodding your head. You love science?
HODGE: I love science and I always have. I think there's actually a lot of kids in my school, too. I think there has a been a trend that more and more girls are getting into science.
VELSHI: Why? Anything different? Is it because people are just not saying that girls shouldn't do science?
HODGE: I think, that also, that even from a young age, there used to be more of a stereotype against girls and boys, but I think that is disappearing.
VELSHI: I think you're part of the reason it's disappearing. When people watch the three of you and realize how successful and smart you are. I'm looking forward to follow the three of you in your careers as you find cures for things. And solve a lot of our world's problems.
Shree Bose is in Fort Worth, Texas, Naomi Shah, joining us from Oregon, and with me here, Lauren Hodge of Pennsylvania.
And speaking of Pennsylvania, a Pennsylvania school district is going to extraordinary lengths to trim costs. And they're being a little sheepish about it. I'll explain when we come back.
VELSHI: We talk a lot on this show about school districts struggling with budget constraints and the affect that it has on teachers, class sizes, and the community. Well, one district in Pennsylvania has come up with a unique way to trim costs, by having sheep trim the lawn.
CNN Photojournalist Effie Nidam takes a look.
ERIC SANDS, ASSISTANT PRINCIPAL, WILSON MIDDLE SCHOOL: The school district is saving approximately $15,000 this year on maintenance costs for the grounds. We're using the sheep to trim the grass.
UNIDENTIFIED MALE: I think that's funny.
SANDS: We have Kia and Kipper, their mom, Mist. I guess you could call me a shepherd. My name is Eric Sands, I'm the assistant principal here at Wilson Middle School in Carlisle, Pennsylvania. And my wife and I also run a small hobby farm called Woolly Wonders.
UNIDENTIFIED FEMALE: I thought we should ride down here and see if there were actually sheep at the solar panels, and there, in fact, are.
SANDS: We have about six and a half acres of solar panels. They solar panels are collecting energy. Solar power from the sun, reducing the district's costs for buying energy.
UNIDENTIFIED FEMALE: I think it's a good idea, because they won't need the gasoline that the lawn mowers need.
SANDS: The sheep sleep out here, they're out here 24/7. The only thing the sheep need are grass, water, and some minerals. Nobody lost their job. You know, everybody is still working this summer. Anything we can do to save money allows us to take that money and put it elsewhere, into programs, into athletics.
In the winter time, as the grass goes away, there's no need for the sheep here, I'll take them back to our farm. They don't see it as work, they're not getting paid, they are not getting any incentive, they're just doing what they do.
VELSHI: It is a good idea. Hey, listen before go we would like to spend a special congratulations to our Executive Producer Michael Kane and his wife, Jen, on the birth of their baby girl. Payton Ava Kane was born. Weighed in at a strong 8 pounds, 2 ounces. She joins big brother Aiden (ph), who is reportedly thrilled about his new baby sister. Let's hope that lasts.
That's going to wrap things up for us this morning, but the conversation continue online. Send Christine an e-mail with your thoughts or questions at Your bottom line at CNN.com and find her on Facebook and Twitter, @ChristineRomans.
I'll be back today at 1:00 p.m. Eastern and tomorrow at 3:00 for YOUR MONEY. Now back to "CNN SATURDAY MORNING" for the latest stories making news. Have a great weekend.