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YOUR MONEY

Obama's Grand Plan Coming in September; Rick Perry's Fightin' Words; Starbucks CEO Declares No More Political Donations Until Congress Does Its Job; Is Our Political System Broken?; Questioning the Credibility of the Ratings Agencies; The Power of Words

Aired August 20, 2011 - 13:00   ET

THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.


ALI VELSHI, HOST: Your financial security depends on your job, and with nearly 14 million people out of work -- officially -- Americans are looking to Washington for answers.

Welcome to YOUR MONEY. I'm Ali Velshi.

President Obama saying this week that he'll announce a new jobs initiative in September.

John King is CNN's chief national correspondent.

John, unemployed Americans need help now. The president, apparently, is going to offer something next month. What's the delay?

JOHN KING, CNN CHIEF NATIONAL CORRESPONDENT: Well, the -- well, next month because the president says he wants to talk to his economic advisers. They're reaching out to CEOs across the country. The White House tell us this will not just be a repackaging of things the president has previously put on the table, Ali -- you know those well, extending the payroll tax cut, which the administration says will not only put money in people's pockets but they hope create some jobs, extending unemployment insurance for people who are out there frustrated, long term can't find a job -- there will be some new proposals. The question is, what will they be.

And here's one question. We know some of it will involve spending, government spending. Well, House Republican leadership have already said that's stimulus. We're not going down the stimulus road again. The administration says it will offset that spending with cuts elsewhere. So the president believes he will have the high ground politically. We'll see from a policy standpoint what new ideas they put forward. But the question is, even when the president has a new package after Labor Day, can he get it through a Republican House?

VELSHI: He's been sort of letting out dribs and drabs of ideas, some of which may actually work. Here's what the White House says the initiative will likely include -- some tax cuts, some infrastructure ideas, measures that target the long-term unemployed and struggling sectors.

Diane Swonk is the chief economist at Mesirow Financial. Diane, we've seen such volatility in the markets recently. We know that this uncertainty about the economy makes businesses hesitant to hire. As an economist, what do you think the president should do, and the president and Congress should do, that would boost business confidence enough to trigger hiring? Because we know businesses have some money.

DIANE SWONK, CHIEF ECONOMIST, MESIROW FINANCIAL: I think, actually, at this stage of the game, the best thing that Congress and the president can do is lay out the long-term plan for our fiscal solvency in the United States. That may leave some room for additional fiscal stimulus in the near term, but if we know what the long-term cuts are and the changes to the tax code will be over the next 10 to 15 years00 we're in uncharted territory. Businesses need to know what the path is. As long as they know that, even if the path is rocky, they can deal with that. They can deal with some level of certainty if they're given it.

And I think given some level of certainty, we'd see that confidence rise a little bit, even if it's a tough road ahead. We know it will be. That's where I think that we can have a biggest impact. Everything else the president's talking about will only act on the margins. Of course, an economy that's only operating on the margin, that's important.

VELSHI: And well, that is true, but it makes it very easy to take political potshots because I think people need to -- you know, some people want something that feels big and others think that anything big that comes out of Washington is yet another stamp of big government.

Let's bring a guy who doesn't love big government into the conversation. Stephen Moore is the editorial writer for "The Wall Street Journal."

Stephen, is it realistic -- and I think we -- you guys have all been on the show, and you -- you all have such good ideas. Stephen, is it realistic to think that if something happens that gives Diane what she is suggesting, that businesses might actually start hiring?

STEPHEN MOORE, EDITORIAL WRITER, "WALL STREET JOURNAL": Yes, it is, except the only difference I'd have with Diane a little bit is I think it matters a lot what that path is. One of the things, for example, that happened, as you know, Ali, this week was that Warren Buffett had that famous piece in "The New York Times" talking about raising taxes on the rich, and President Obama on his magical mystery tour this week has really picked up on that.

I think the more the president talks about things like raising taxes on investment -- I think that, Diane, is actually kind of holding back the economy a little bit, and I wish the president would get off this kind of bearish message of, you know, raise taxes on the rich.

Let's get the entitlements under control. And as we've talked about many times on this show, now is the time really fix the tax system once and for all.

VELSHI: Well, OK, let's -- SWONK: Well, and you and I agree on that. I mean, you know, Steve -- you and I both agree on the idea that we need to fix the tax code, and not just raising taxes only on the rich, although I'm more sympathetic to that than certainly you are.

But I do think that revenues have to be a part of the equation, but it has to be a part of a more streamlined, better understanding (ph) tax code, a simpler tax code.

VELSHI: Right.

SWONK: Broaden the tax base. I mean, we need to get these behavior-distorting things out of the tax code for corporations so they can figure out how to plan going forward.

VELSHI: Yes, and --

MOORE: But you know, there's one other thing that the president can do right away, I think.

VELSHI: Yes. What is that?

MOORE: I'm a very -- he could just call a time-out on regulations on business. For example, you know, there's probably 100,000 jobs you could create almost overnight by allowing drilling in the gulf right now. And by this kind of black cloud of uncertainty about regulation is something we don't talk a lot about, but when I talk to businessmen and women, they say that's something that's really --

VELSHI: Yes, I mean, I sort of --

MOORE: -- holding back hiring.

VELSHI: You know, we go back and forth on this, and you have to take me out to lunch to explain this.

(LAUGHTER)

VELSHI: But the fact is, ultimately --

SWONK: You guys still haven't gotten together for lunch? We have to keep working on that!

VELSHI: We're way -- you know, we're beyond the point that regulation is the thing that's not -- that's mainly not driving business because --

(CROSSTALK)

MOORE: I disagree.

VELSHI: -- underlying demand, there would be --

MOORE: No. VELSHI: And I think it's really sweet that Diane and Stephen agree on these things because nobody in your town does and we actually need them to agree, to get something done. Is there any likelihood that any of the very smart conversation that we're having on this TV show might get replicated in a room somewhere in Washington and somebody might say, Let's get this done?

KING: The conversations do happen. What it is, is then taking the plans or the tentative plans --

SWONK: Right.

KING: -- and moving them into the political environment because everything that was just mentioned, whether it's drilling, whether it's bringing entitlement spending under control --

VELSHI: Yes.

KING: -- whether it's the debate about taxes, whether it's taxes on the rich or a broader tax reform, every one of those has a powerful political constituency.

So is the president ready to cut Medicare in a substantial way and anger his base, which thinks that's their best issue in the congressional elections against the Republicans next year? Are the Republicans to give --

MOORE: You know, John --

KING: Are the Republicans ready to give the president a big deal on tax reform if he gives them lower rates across the board, a lower corporate tax?

SWONK: Right.

KING: Will they negotiate that in the short term, Ali, heading into a presidential election in which this president -- look at the data, historically or just real -- real news data today on the economy --

VELSHI: Yes.

KING: -- is back on his heels --

MOORE: John --

KING: -- and the Republicans know it.

MOORE: John, one thing I can tell you with almost complete certainty the Republicans will not allow is another big stimulus plan. I mean, you mentioned this, Ali. I just don't think the Republicans believe that this works, and they're basically saying, Look, we tried this already. It hasn't worked very well. So the president's going to have to come up with some new idea for jobs. He's not going to get a big spending package through this House of Representatives.

VELSHI: Yes, well, Diane --

SWONK: But he might get some tax --

(CROSSTALK)

SWONK: It's marginal. Come on.

VELSHI: It's becoming more important in Europe. They're looking much more to the European Central Bank. And that's part of the -- partly because of the political structure of the euro zone.

SWONK: Right.

VELSHI: But here in the United States, we've got Rick Perry saying that if Fed chairman Ben Bernanke does anything, it'll be treasonous. Should we at least be having -- should we be keeping the Fed around as an option for helping us out?

SWONK: It's not only the option, it's one of our only options. The Fed is having to bear the burden of holding this economy together. And to not understand what role the Fed has played in averting a recession in the first place -- or a double -- a depression in the first place --

VELSHI: Right.

SWONK: -- the role that it played in stemming much of what was a worse crisis than the Great Depression -- I mean, we should be -- I think it's a very dangerous road to walk down to cut the Fed off entirely. And I don't want to even go into -- I don't -- just -- as much I don't like a lot of people in Washington, I'm not threatening them.

VELSHI: Right. There's --

(CROSSTALK)

SWONK: There's something very wrong with that.

VELSHI: Well, I like you all, so the only thing I'm going to threaten you with is that you actually have to wait there for a few minutes because I want to continue this discussion with you, the very important discussion of jobs. What if the president and Congress put the same urgency behind job creation as they did with solving the debt ceiling? And why aren't they doing that? We're going to talk about it with this great panel when we come back.

(COMMERCIAL BREAK)

VELSHI: If you ask the American public what the most important economic issue facing the country today is, the answer is very clear. A recent CNN ORC poll shows that nearly half of Americans say unemployment is the most important issue, followed by the deficit, which is, by the way, less than 30 percent.

So for folks, Stephen, who make the case that the deficit and the debt is the most important issue to Americans, as far as they see it, most important economic issue still is jobs.

What's it going to take for Washington to tackle the jobs crisis with similar urgency that we saw around the debt ceiling? And obviously, we all know there isn't a debt -- a job creation deadline, so we can't fake it. But it does seem that Washington gets more effective when backed into a corner.

MOORE: Yes, well, look, I mean, I think for the last three months, all we've been debating is the deficit issue and the debt issue. And I agree with Americans who say jobs is jobs is job number one right now for Washington. And by the way, these are related, Ali, because if you put more people to work --

SWONK: They are.

VELSHI: Yes.

MOORE: -- and you get people paying taxes, the deficit --

(CROSSTALK)

SWONK: -- smaller deficit. Absolutely.

MOORE: Let me just make one last point. I had a piece in "The Journal" this week that showed that, actually, the number of millionaires fell by half from 2007 to 2009 in this recession. And that -- what that meant is the tax payments by these rich people collapsed. We got to get the economy moving so we can get tax revenues up so we can lower the deficit.

VELSHI: Right. See, this is funny. We've been talking about this for so long that we're all kind of on the same page about this.

MOORE: Right.

VELSHI: We'd like more tax revenue. We'd probably like some people to pay less tax, but we'd like it to be applied more fairly. Now, we all know that the president inherited a bad economy when he took office in 2009. But even the president this week told Wolf Blitzer that he realizes that regardless of who created the mess, the American people clearly are looking to him to lead them out of it. Listen.

(BEGIN VIDEO CLIP)

BARACK OBAMA, PRESIDENT OF THE UNITED STATES: People understand that this financial crisis was the worst since the Great Depression, but ultimately they say, Look, he's the president. We think he has good intentions, but we're impatient and we want to see things move faster.

(END VIDEO CLIP)

VELSHI: John, the unemployment rate, 9.1 percent. We are not creating jobs as quickly as we'd like to. But there is, by the way, a little light at the end of that tunnel. Bottom line is, Can the president win reelection with this situation on his hands?

KING: Can he? Yes. Will he? That's a very steep hill. And if you look at the historical data, if you go back World War II, the data tells you no, he will not win reelection. But again, you know, the data also didn't tell us we'd have our first African-American president or the Tea Party would come out of nowhere. So the data isn't always helpful, but it's a very, very steep hill for an incumbent president with high unemployment, consumer confidence diving, Ali, and people looking around for signs of hope --

VELSHI: Unless, John --

KING: -- and they don't see it.

VELSHI: Unless he doesn't have an opponent who has a better plan.

KING: Sometimes, it comes down to a choice. But often, when you're the incumbent, it comes down to a referendum. And people just decide, You promised us something, you didn't deliver, we're going to try something new, even that something new looks a little risky.

In the debate over jobs you were just mentioning -- you know, a lot of people out there will say, Well, why can't these politicians get along? The American people bear some reasonability for this. In 2010, they elected a president --

SWONK: Absolutely.

KING: -- left of center, who came to Washington, who said, Government must take a bigger role in people's lives --

VELSHI: Right.

KING: -- in helping the economy. Then in 2010, they sent in a new Republican majority that said the exact opposite, that government is the problem.

SWONK: Right.

KING: And so you have this -- this isn't just ugly politics. This is a competition of some big ideas --

VELSHI: Yes.

KING: -- and big approaches to government.

MOORE: Good point, John.

KING: It's not just D's say no, R's say yes, and then vice versa. They're fighting about big things, and the American people sent them here.

VELSHI: Which is why later on, Fareed Zakaria is going to make the case that a parliamentary system would work better. Give it -- give it -- give the keys -- (CROSSTALK)

MOORE: No! Hell, no!

VELSHI: -- to somebody for four years, and then --

(CROSSTALK)

VELSHI: You know, Diane, you said something to me a week ago or two weeks ago that has stuck in my mind, stuck out particularly clearly when Michele Bachmann said that if she is elected president, she'll make gas $2 a gallon. And you said something -- you said if there were these silver bullets, someone would have shot them already.

How realistic is it from an economic perspective that the president can have this type of control over economic growth, or even influence over economic growth and job creation?

SWONK: Well, I guess she must be advocating for some kind of a socialized subsidized system?

VELSHI: Or a big recession.

SWONK: That's all I can imagine.

VELSHI: Or a big recession. Those are the only (INAUDIBLE)

SWONK: Or a major -- a depression, actually. We already have a very weak economy, and look at where oil prices still are. They're still very high and they're nowhere near $2 a gallon on gasoline. So I find it -- it's just an intellectual inconsistency for me, so I can't even comment on it.

VELSHI: I've never seen Diane actually speechless about it. Stephen, we have -- let's just agree --

SWONK: Sometimes it's better not to say anything.

VELSHI: There you go! Stephen, look, it's very clear, as John said, we have differences in opinion about how we're going to get there. But actually, I think the American people are going to say, That's too bad for you. You have to get something done. We can't just plant people from different parties in Washington to get nothing done for a two-year period.

So what's it going to take to break this and to come to the agreement that if more people are unemployed (SIC), they're not getting social assistance, they're paying taxes, we start to get economic growth and cutting that deficit. What, from your perspective, will it take?

MOORE: Well, I think John really nailed it. I think these are big philosophical differences right now between these two parties, and they're represented by the conservatives in this country among the electorate and the liberals who have totally different views about what to do. So I guess what I'm saying is I'm not so sure that the next 18 months is going to bring big solutions to these problems because they see the world in a totally different way. And that's why I think the 2012 election is going to be huge because it's going to be a debate about everything we've been debating on this show for months, about whether the government should have a bigger role, whether we should do a big tax cut and get back to Reaganomics.

I think this -- you know, we'll see what the super-committee comes up with. I think that's the last sort of hope for a bipartisan agreement on cutting entitlements and getting the tax system fixed.

VELSHI: Yes, with these markets doing what they're doing and people's 401(k)s doing what they're doing, with people out of work, they're impatient about -- about --

MOORE: Oh, yes. No question about it.

SWONK: They have every reason to be.

VELSHI: And we --

SWONK: The one piece of hope out there is that everybody's talking about the same thing.

VELSHI: Yes.

SWONK: And although we don't agree on it, all of us can have overlap. And we all have intellectual differences and ideological differences --

VELSHI: Yes.

SWONK: -- in terms of what we think is right, but we can agree on this show. They can agree --

VELSHI: Yes. No, you're right.

SWONK: -- when they try behind closed doors.

VELSHI: You guys are optimistic. Hey, thanks for all of you being here. I know from watching TV, you're all very busy, so thanks a lot. Diane Swonk is the chief economist for Mesirow Financial. Stephen Moore's the editorial writer with "The Wall Street Journal." And John King -- you can watch him every night at 7:00 PM Eastern on "JKUSA" right here on CNN.

Hey, listen, coming up next, why Republican presidential candidate Rick Perry has a problem with Fed chair Ben Bernanke, and why the king of coffee is taking a direct shot at Washington, D.C., politics. I'll explain next.

(COMMERCIAL BREAK)

VELSHI: Welcome back to YOUR MONEY. Let's talk politics and your money. Seems that we do that a lot. Will Cain and Roland Martin, both CNN contributors, excellent friends. But don't be fooled because they don't agree on anything.

(LAUGHTER)

VELSHI: Also with us, from Portsmouth, New Hampshire, is CNN senior political editor Mark Preston.

Guys, good to see you. It is not completely clear, but I think the Texas governor and Republican presidential candidate Rick Perry may have threatened to beat up Fed chair Ben Bernanke.

(LAUGHTER)

VELSHI: Listen.

(BEGIN VIDEO CLIP)

GOV. RICK PERRY (R-TX), PRESIDENTIAL CANDIDATE: If this guy prints more money between now and the election, I don't know what y'all would do to him in Iowa, but we'd -- we would treat him pretty ugly down in Texas. I mean, printing more money -- to play politics at this particular time in American history is almost treacherous, or treasonous, in my opinion.

(END VIDEO CLIP)

VELSHI: OK, so I got -- I got -- Mark, you're from -- you're from Massachusetts, right?

(CROSSTALK)

VELSHI: You just sit this one out, Mark. You just sit this conversation out. I got two Texans here. I got Roland and Will. I'd stay out of Texas if I were Ben Bernanke. Will, Rick Perry's fellow GOP hopeful, Rick Santorum, who's said a few inflammatory things himself from time to time, joined President Obama and others in calling the comments irresponsible.

Your thoughts, or is that just how you folks in Texas talk?

WILL CAIN, CNN CONTRIBUTOR: It is how we talk. And also how we talk is -- I've been on show for several months saying this, Ali, that I think we're going through a monetary contraction and we should print money. That being said, there is an intelligent opinion that is an opposite of me, that thinks we shouldn't print money.

VELSHI: For instance, Ron Paul, who has written five books on the issue.

CAIN: And Rick Perry attempted to here, but --

(CROSSTALK)

CAIN: But here, Ali, he is putting an issue out front that I do think listeners should understand, and that's the role of the Fed, what they do, and begin to understand that monetary policy really effects our economic environment. Certainly, Rick Perry didn't do that in an artful way, but I do think it's something we should be talking about.

VELSHI: All right, well, you know what? And I know for once, Roland is not going to say something bad about a Republican because Rick Perry's a fellow Aggie.

CAIN: Right.

ROLAND MARTIN, CNN CONTRIBUTOR: Actually, that's incorrect. First of all, that wasn't an intelligent conversation. And I'm quite sure when Rick Perry goes to the folks who he wants to give money to his campaign, especially those bankers on Wall Street, especially those petrochemical companies in Texas who depend upon those credit lines from those various investment banks, I'm sure they will say, No, thank God Ben Bernanke did what he did.

It's also amazing that the policies of Ben Bernanke, who's frankly following a pillar of conservatism, Milton Friedman -- and this is the fundamental problem here. You know, Rick Perry wants to throw out these crazy kind of comments that, sure, gets a reaction from people, but if you even ask these people, What does the Federal Reserve do, they couldn't even answer the question.

And so we have a financial crisis globally, and we don't need people popping off, sounding like an arrogant Texas cowboy, OK, who wants to be president. Have some sense and talk with common sense, not more cowboy talk, Governor Perry.

VELSHI: I have never heard Roland speak ill of a fellow Aggie. You're not even admitting -- you're not even acknowledging.

MARTIN: No, I have --

CAIN: Were you a cheerleader, Roland?

MARTIN: Trust me -- excuse me. First of all, at Texas A&M, we have yell leaders. At your school, you have cheerleaders. But then again, you're a T-Sep (ph), so that's what I would expect, Will.

VELSHI: Mark, let's have a non-Texan conversation about this. By the way, you've been around Rick Perry this week. He didn't back off from any of this.

MARK PRESTON, CNN SR. POLITICAL EDITOR: No, he hasn't backed off from any of this. And this week, he actually brought it up himself. And he said that the president was lecturing him. He was speaking to a bunch of business and political leaders up here in New Hampshire, in fact, in Nashua, New Hampshire. And he wouldn't back down.

Now, what's interesting that (ph) is that this has kind of clouded his whole message, though, this week, which was just about the economy. He was talking about the economy in very macro terms. He was also taking a lot of credit for the jobs that he's created down in Texas. Now, Ali, you and I spoke this past week several times that that has actually come into question. Is Rick Perry really responsible for all the jobs down in Texas? And I'll leave that to the three of you to figure that out. (LAUGHTER)

VELSHI: All right, well, look, there -- look, this is the thing. Once you declare -- you actually -- these things, these statements you make get counted, and there some issues about whether the population growth into Texas reduces the percentage growth of the jobs he's created, and how much oil had to do with it.

But Will, the bottom line is that all of this is an aside to the fact that Americans are looking for economic leadership. It has not fully surfaced amongst the Republican presidential nominees, the crowd, because they're fighting each other on other things. Where is the clearest plan? And is Rick Perry in your running for that?

CAIN: Well, look, Ali, I think that between Republicans and Democrats, you have an inherent philosophical difference over what an economic plan is.

VELSHI: Right.

CAIN: Look, conservatives believe it's like planting a garden. You plant some low taxes, as low regulatory environment as you can, you facilitate free trade and you grow economic growth. And I think liberals come in and go -- I'm really torturing this metaphor here -- Let's put some irrigation on this thing. Well, I think we'll put some water, some false (ph) water.

My problem is, I think you too often, liberal economists, over- water. So -- boy, I really tortured that metaphor!

VELSHI: It was good. I liked that.

CAIN: I think that is the difference here. So you're not going to hear things from Republicans about jobs plans, infrastructure plans, because that's the over-watering.

VELSHI: All right. Well --

MARTIN: But I got to say this here. It's amazing how he called over-watering on the liberal side, but he also -- Will could not acknowledge that when you keep trying to throw out tax cuts as the be- all to end-all, that's also going to the extreme. Forty percent of President Obama's stimulus bill was tax cuts.

VELSHI: Right.

MARTIN: Republicans don't want to mention that. The Bush tax cuts increased our deficit. And so look, liberals want to go to the extreme, when you talk about over-watering, Will, but also, Republicans want to go to the extreme when they say, Tax cuts, tax cuts. That's also not the answer.

VELSHI: Will, Roland, Mark, hold on a second. We want to keep this conversation going.

When we come back, I want to talk about the influence of corporate America on the next election.

(COMMERCIAL BREAK)

VELSHI: Welcome back to YOUR MONEY. Will Cain, Roland Martin, Mark Preston, back with us.

Starbucks CEO, guys, Howard Schultz, urged Americans and fellow business leaders to put down their coffee cups and join him to stop all campaign donations until Washington gets its act together. Here's what he told CNNMoney's Poppy Harlow.

(BEGIN VIDEO CLIP)

HOWARD SCHULTZ, CEO, STARBUCKS: Let's send a powerful message to Washington that we no longer want to embrace the status quo and we want to see change. Unfortunately, in this case, that change, I think, and the signal of change, is about the fact that we're not going to contribute any more money until we ask, respectfully, Congress to go back to work, reach a long-term debt ceiling deal that will remove the cloud of uncertainty in the world. And I think begin to focus, like a laser on the most important aspect of the American economy, which is job creation.

(END VIDEO CLIP)

VELSHI: You can watch more of that, by the way, on CNNMoney.com.

Mark, let me ask you. That kind of message, I mean, it gets on CNN. We talk about it. I've seen him on other TV shows. Anybody in your circles that do politics, anybody care?

PRESTON: No. And that's utopian viewpoint. I'm sure there's several very wealthy folks who believe that, but they're going to play in the game because they feel they can act change. So, we see Rick Perry on the campaign trail, Mitt Romney on the campaign trail, talking about how they can fix the economy. Well, the only way they can fix the economy is if they win the Republican presidential nomination, and the only way you can win the Republican nomination is --

VELSHI: Is with money.

PRESTON: -- is if you have money. So they are going to need those donors to try to win the nomination. Of course, President Obama's got all his donors, so while you'll see some sit it out, it's really not all that many that will sit it out, Ali.

VELSHI: Will Cain, let me ask you about this, because clearly, most average Americans think that corporate interest dictate what goes on in Washington. Where is that money going? It is unclear. We thought once Rick Perry got into the race, there would be some culmination of these donations that have been sitting on the sidelines. Is he the candidate for corporate America, or have we not figured that out yet? We heard Mitt Romney saying that corporations are people, so that might have helped him a little bit. CAIN: Yes, I don't think we've figured it out. Most likely, if I was a betting man, I'd put it on Mitt Romney. But Rick Perry has a chance to be that establishment candidate and get big money out of corporations. But I do think we should log guys like Howard Schultz. This is the way that you invoke political activism. This is the way you make change, not through campaign finance reform, through private citizens and corporations doing it this way.

VELSHI: What do you think, Roland?

MARTIN: I think it's crazy for anybody to pay five bucks for a cup of coffee.

(LAUGHTER)

MARTIN: Let's start right there.

VELSHI: But lots of people do.

MARTIN: Look, lots of people do and I think they're absolutely nuts.

Look, I get the sentiment, but I think the problem is that we don't have enough people who are regular, ordinary people, who are investing in what is happening. In terms of what is going on. So, I get this whole deal about saying, don't give money until they actually get back to work. No, I think we need to have people who are organizing, mobilizing, marching on Washington, who are showing up in congressional offices. Who are demanding action from their members of Congress; and I don't think not cutting a check is not going to solve it.

VELSHI: OK, but you say you get the sentiment.

MARTIN: You must be able to say, I'll give but also --

VELSHI: You say you get the sentiment. I do, too.

MARTIN: I get it, but --

VELSHI: I'm not empowered in this conversation. I mean, we are, obviously, because we're sitting here on TV. But generally speaking if you don't feel empowered by the gridlock, by the paralysis, in Washington, what, Roland, do you suggest most people should do? Is marching -- does that sensible? Is calling your congressman sensible?

MARTIN: It is absolutely sensible because it is amazing in this country when people say, oh, marching, that's old school. But it is amazing, look what happened in Egypt and other places.

But also, again, marching is one thing. But mobilizing and organizing is another. When you look at the civil rights movement, that is a perfect example of how this country was forced to change by regular, ordinary people standing up and saying, no more, I'm not going to tolerate an unjust system.

VELSHI: Will?

CAIN: I just think it's odd that -- and I don't know if you've done this personally, Roland, so many people lament the effects of campaign contributions, specifically through corporations, and their influence on politicians. And now, the corporations suggest they might voluntarily withdraw their contributions, we say it has no effect. This seems like the exact right move.

MARTIN: No, no, first of all, I never said that. I'm speaking of the -- I'm speaking of the person out there who wants to give $5 and $10. I don't care what the corporations think. They're going to screw us regardless because, you know what? They have their mega lobbies. And I guarantee you Starbucks has lobbyists on Capitol Hill.

VELSHI: Mark, let me ask you this--go ahead --

PRESTON: Yes, but Ali, Ali.

VELSHI: Go ahead.

PRESTON: If I can, just very quickly. Roland is correct when he says that look, people should be more engaged in the process, but as far as them making a phone call here and there, that's not going to work. It has to be in the masses. There's power in numbers. And the way that these numbers work is through donations to these front groups that are created that try to bring people together. There's always going to be money there. That's the fact of the state of play here in politics.

MARTIN: I get Mark's point, but the only reason I disagree with that, look, if you have 5,000 10,000 12,000, 15,000 people who are sitting here and mobilizing an organizing, they could actually switch an election. So trust me, you may have people who don't have lots of money, but when a member of Congress sees 12,000 and 15,000 folks show up, they will sit here thinking, wow, that's votes.

VELSHI: Yes. Unfortunately, the middle class doesn't all do that all that much. I mean, look, we saw it for Obama, we saw great grassroots gatherings. And we saw it for the Tea Party, so we have seen it a couple of times, but we still seem to be seeing it around the fringes, and not right in the middle.

Guys, great conversation.

Mark, enjoy yourself out there.

Roland, always good to talk to you.

Will Cain, always a pleasure as well.

MARTIN: Ali, don't forget, get them Aggies.

VELSHI: Will, was saying something about yellers versus cheerleaders.

(CROSSTALK) CAIN: Call them cheerleaders all you want, they are still cheerleaders.

MARTIN: At his little school, they don't even know how to cheer, so they've got to have the cheerleaders.

CAIN: We win, we don't need cheerleaders.

(CROSSTALK)

VELSHI: Mark and I feel very left out of this Texan conversation.

All right, guys, the debt ceiling debate showcased the ugly side of the U.S. government. Fareed Zakaria raises the question, does America need a prime minister? A parliamentary system? Would that make our government more efficient? Listen to him, next.

(COMMERCIAL BREAK)

VELSHI: The politics of the debt ceiling debate got downright ugly and it has to make you wonder if our system of government is broken. That's a topic taken on by our own Fareed Zakaria on his CNN.com/Global Public Square blog. It's titled, "Does America Need A Prime Minister?"

Fareed is never one to shy away from controversy. He is the host of "FAREED ZAKARIA GPS" right here on CNN every Sunday at 10:00 a.m. and 1:00 p.m. Eastern.

Fareed, as soon as I saw this, I Tweeted it out. And I got some responses within seconds, which means people didn't read it. The title is provocative, so I asked people to actually read it and get back to me. Because it's a critique on our system's inability to make fast decisions. Something that has served America well in the past and may not be serving us very well right now.

FAREED ZAKARIA, HOST, CNN'S "FAREED ZAKARIA GPS": When I was in graduate school studying political science, we used to read a very famous essay by a Yale political scientist, which talked about why presidential systems had a an inherent flaw that parliamentary ones didn't.

Think of David Cameron. David Cameron is the head of both the legislature and the executive.

VELSHI: Right.

ZAKARIA: He controls both the majority in the legislature and he executive. So he can get stuff done. And whether you agree or not, he has been able to do impressive stuff on the U.S. -- on the British budget.

VELSHI: Yes.

ZAKARIA: In our case, we've got a whole bunch of solutions out there, which are pretty sensible, middle of the road, a little bit of taxes, a lot of spending cuts. You know, doing it in an efficient way. But we can't get it done because our system has two centers of power. They aren't fused the way the British system is.

VELSHI: So, the president and Congress -- and Congress by the way, two sides of it, both claim to have the mandate.

ZAKARIA: They both claim to have legitimacy, they both claim to have the mandate. It's a complicated story, right? The Tea Party says we won the most recent election. President Obama says I'm the only guy elected by all the American people. The Democrats say, yeah, but we are in control of the Senate. So, who's voice are you going to listen to?

Now, there have been times when it has served us well. Gridlock has been part of the American system.

VELSHI: Right, there have been times when, as you said, paralysis has worked for America.

ZAKARIA: In 1945, the British implemented a kind of national socialism policy.

VELSHI: Right.

ZAKARIA: A nationalized socialism policy, we didn't. Partly because we had these checks and balances. But right now, what I find in Washington is there are a series of areas, from Social Security to energy policy, where there is a set of sensible centrist solutions that a majority of the public agree with.

VELSHI: Right.

ZAKARIA: They can't get through Washington because we have this broken system where each side claims they have the mandate of the people, and the system allows them to veto.

VELSHI: And yet, our political parties are no more extreme than they are in parliamentary systems. I mean, you definitely have two or three or five political parties in a parliamentary system. All of which will have distinct and ideological positions.

ZAKARIA: No, the difference is in parliamentary systems, if you win the election, you get a go at it for four years.

VELSHI: Then they can throw you out.

ZAKARIA: Right. You implement your plan. It either works or it doesn't work. I think the world we are living in, where so many countries are catching up with us, where we need to change these very antiquated systems of government, these old welfare state programs that we have. We've got to reform them. We've got to make them leaner and meaner. We need that ability to make quick turns. We'll do some things that are wrong for sure, but we can correct them. Right now our problem is think about it, Social Security, Medicare, Medicaid, energy policy, immigration policy -- VELSHI: All of which we have all the data points to fix, tomorrow, if we need to.

ZAKARIA: Right.

VELSHI: But we can't make the decisions.

ZAKARIA: All we do is we kick the can down the road. And we have kicked the can down the road for 20 years. I think that's what people are looking -- that's what markets are looking at saying, the American system can't work.

VELSHI: One guy Tweeted me back, after having read it. He was critical before he read it and then I had him read it -- he said there's nothing wrong with the system. It's worked for us in the past. It's just not working for us now. It will smooth over and work again in the future.

ZAKARIA: I don't agree. Because I think actually the system has gotten worse. Because the ability of minorities to veto has increased, so the filibuster, which is nowhere in the Constitution. It is a rather bizarre invention that the Senate came up with, which allows one senator to hold up business and certainly allows 40 of them to completely veto anything. That was used once a decade, 1940s, 1950s, 1960s, once every 10 years. In 2008, the Republicans used -- or the threat of it -- to block 80 percent of major legislation. Senators now routinely put holds on all nominations to an agency. Because of some obscure thing that has nothing to do with the agency.

VELSHI: Right.

ZAKARIA: They want pork in their district so they--

VELSHI: So they stop this from happening so they can get done.

Now all that kind of stuff, you're putting more monkey wrenches in the works because the system allows you to do it. I don't think that's how it was meant to function.

VELSHI: Right.

ZAKARIA: So I would agree with your guy. If you were to say the constitutional system could work. We don't have the constitutional system. We have the constitutional system plus lots of monkey wrenches.

VELSHI: I want to ask you one final question, because we were talking about this in the break. That is that right now these markets around the world are looking for growth somewhere. The big question underlying all of this turmoil is where will the growth come from that will pull the world back up? You have a view that maybe we shouldn't be looking for that growth. Maybe it's just not going to be there.

ZAKARIA: I think it's the most realistic scenario. I think that the reality is the United States is going to grow at 2 percent this year. Not the 4 percent which everybody, from the congressional Republicans to the Democrats were assuming. Europe is going to grow slower than people realize, even Germany. Of course, all that's going to do is it is going mean the deficit numbers will look worse. The debt numbers will look worse.

Maybe we'll get -- the new normal that Mohammad El-Erian and the PIMCO talked about, is much lower growth. Higher budget deficits, higher debt to GDP ratios. Look, I'm not advocating it. I think we should have a vigorous jobs and growth program. But that is not going to kick in for another six or eight months. For now, I think we're in a world of much lower growth than people realize. And I think that is what is spooking markets more than anything.

VELSHI: We may have to just find the way to deal with that new normal for a while.

Fareed, always great to talk you. Thanks so much. Don't listen to these people who say you're trying to dismantle the Constitution of the United States.

(LAUGHTER)

Fareed Zakaria, host of "FAREED ZAKARIA GPS"

All right, $2 gas. It is a great campaign strategy or is it a little farfetched? We'll talk about it next.

(COMMERCIAL BREAK)

VELSHI: Just weeks after downgrading the country's credit rating, S&P finds itself in the hot seat. The Justice Department is launching an investigation into whether S&P improperly rated dozens of mortgage securities leading up to the crisis.

Chrystia Freeland is here, she is the editor for Thomson Reuters Digital. Joining me, also, my friend Richard Quest, host of CNN's "QUEST MEANS BUSINESS."

Richard, let's start with you. We know these ratings agencies have some questionable credibility, but now, we're talking about an investigation into possible criminal wrong doing. Your thoughts?

RICHARD QUEST, HOST, CNN INTERNATIONAL'S "QUEST MEANS BUSINESS" : The nub of the investigation is whether the actual analysts wanted to give these securities a lower rating. But the business managers at the firm said, no, they have to have the AAA rating. If it is true, and it is always a big if, then that obviously is a serious matter.

And for S&P, which has already been lambasted for the way it handled the sub-prime and mortgage-backed securities, and its timing over the U.S. debt downgrade, I suspect if it's true, and it ends up going forward, it would be very bad for its reputation.

VELSHI: Now, Chrystia, one of the things we say to people, these credit ratings agencies, these global ones, they are a lot like the credit rating agencies that give us our credit rating. The difference is, we don't pay for ours. These guys were making money on the deals that they were forming. So, these bonds, these mortgage securities, they wanted to keep getting those deals, which might have influenced their decisions to rate them better than they should have been rated.

CHRYSTIA FREELAND, THOMSON REUTERS DIGITAL: Right, exactly. I think what this investigation gets at -- and I agree with Richard, you know, an investigation doesn't mean guilt has been proven and we have to be careful, you know, to assert that.

VELSHI: Sure.

FREELAND: But what it gets at is the conflict of interest which is at the heart of how the ratings agency business works. You know, it is as if when you are on trial, you personally are paying the judge. And all of us can see how that is not really a system that is guaranteed to produce the best result.

VELSHI: Let's move on to something else.

I thought we would have a relatively stable market week and then Morgan Stanley comes out with this warning, it says, quote, "We're dangerously close to a recession, it cites policy errors made in the United States and Great Britain. It says the debt ceiling drama contributed to it. It also said we might need further intervention from the European Central Bank and the Federal Reserve.

Chrystia, when it comes to financial stability, is this system of government causing us problems? We heard S&P first say it. Now we're hearing Morgan Stanley, I suspect we'll see other people saying it is our political problems that are responsible for some of our economic problems.

FREELAND: Well, I think it is the political problems. But I thought that John King made a great point in earlier discussion, where he said, look, it is not just that these guys, like, you know, kids in a playground, they can't get along. They don't have nice manners. There is a very real and very significant ideological disagreement that is a disagreement that I think exists in the United States. And it is reflected by people with very strongly, strongly divergent views, who have been elected and sent to Washington.

Now, the problem is the economy right now is so frail and so weak, this is not a great moment for us to have, I don't know, a college undergraduate type, you know, session of all nighters talking about existential questions about size of government.

As it happens, I also think -- and the verdict that we are getting from market participants, who are not making their judgments based on ideology, they are making their judgments based on what is going to go up and what is going to go down -- is that actually right now you do need government intervention.

That the problem in the economy is lack of demand; it is not lack of money. Companies have tons of money on their balance sheets, but it is lack of demand. It is unemployment. And because of this big political disagreement, I wouldn't call it dysfunction, I would call it sharp political disagreement. (CROSSTALK)

VELSHI: Richard, if you're a central banker, I wouldn't make any trips to Texas right now.

QUEST: No. And, I mean, I've got to be very careful because it does enmesh you into the deep waters of the U.S. political system. But one does have to wonder what on earth he thought he was saying. And this is not the time to be taking risks with impromptu comments about the central banker, when you are perhaps the front-runner or perceived to be one of the front-runner for the nomination. And that --

(CROSSTALK)

VELSHI: Right. Well, I'll tell you --

QUEST: And that -- go on.

VELSHI: No, well, Richard, whatever you think of America, you're going to want to move here because you already pay higher gas prices than we do and it is going to get a whole lot cheaper in America if Michele Bachmann wins the presidency.

QUEST: Ah!

VELSHI: She said on the campaign trail, this week, she said Americans will save money if she is elected as president. Listen.

(BEGIN VIDEO CLIP)

REP. MICHELE BACHMAN (R-MN), PRESIDENTIAL CANDIDATE: Under President Bachmann, you will see gasoline come down below $2 a gallon, again. That will happen.

(END VIDEO CLIP)

VELSHI: Richard, I didn't hear the rest of the speech, but I suspect she also said I she can grow on my head domesticate unicorns and make Canada the 51st state. I'm telling you, you might as well get your visa application going now. We'll have $2 a gallon gas in the United States, Richard.

QUEST: Right. And she didn't say how she was going to do it. And unless she's growing to completely rig the market, she won't be able to do it. If she's talking about, and I think she might have been macro-economic policies that would lead to reduction, a dramatic reduction in the global supply or global price of oil, well, which would she prefer? The dollar to be affected, would she prefer growth to be so destroyed that oil prices come down, there are a variety of ways you can do it. None of them palatable. I'm afraid it is a wonderful slogan, but if it was that easy, it would have been done.

VELSHI: You know the three of us, none of us are born here. Chrystia and I are both Canadians. We'll wait and see what happens. It could become very attractive for the United States. Chrystia, good to see you.

Richard, as always good to see you.

We're still 14 months away from the 2012 presidential election. You wouldn't know it because the intensity of this campaign is growing quickly. Why all the candidates should be very, very careful about what comes out of their mouths every single day. My "XYZ" is next.

(COMMERCIAL BREAK)

VELSHI: Time now for the "XYZ" of it.

As the 2012 presidential race heats up it worth remembering that words have power. Texas governor and now presidential candidate Rick Perry would do well to remember that. Perry's recent comments threatening to treat Fed chairman, quote, "pretty ugly if the fed were to print more money" were quite frankly ridiculous. And his comments have rightly so been criticized by both Republicans and Democrats.

Talking about the Federal Reserve, Perry said outright that it would be treasonous if Chairman Ben Bernanke tried to use Fed policy to stimulate the economy before the election. First of all, the Fed chairman is independent, appointed to a term that deliberately does not correspond to the presidential term of office. This particular Fed chairman has identified in the past as a Republican and was appointed by President Bush.

And even if he weren't, calling a public official who is doing his job treasonous is beyond the pale and unbecoming of Perry. Treason is such a specific and explosive charge that the Founding Fathers actually included it in the U.S. Constitution, defining it as waging war against the government, or giving aid and comfort to its enemies.

The Fed, which acts independently of both Congress and the White House, to shore up the economy and keep inflation in check, hardly qualifies. Now there are those who don't agree with what the Fed does, or that it even exists. But they make their arguments intelligently and reasonably.

Congressman Ron Paul has spent his career articulating his criticism of and his objection to the Fed. He's even written books about it. On the left, Vermont Senator Bernie Sanders criticized it, too. To disagree with how monetary policy is conducted in this country as Perry has done is wrong headed. In this overheated non- compromising political environment, the last thing we need is irresponsible rhetoric from a legitimate candidate for the nation's highest office.

That's it for me. Thanks for joining the conversation this week on YOUR MONEY. We're here every Saturday 1:00 p.m. Eastern and Sunday at 3:00 p.m.

I'll see you Monday morning starting at 6 a.m. on "AMERICAN MORNING." Be sure to stay connected 24/7 on Facebook and on Twitter. My handle is @AliVelshi.

Have a great weekend.