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President Obama's Jobs Plan; GOP Candidates' Jobs Plans; Today's Acrimony In Washington Is A Far Cry From United, Patriotic Mood On Wall Street After 9/11
Aired September 11, 2011 - 15:00 ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
(THIS PROGRAM WAS INTERRUPTED FOR MORE 9/11 ANNIVERSARY COVERAGE. THIS TRANSCRIPT IS FROM THE 9/10 AIRING, WHICH WAS ALSO INTERRUPTED, BUT ONLY IN THE LAST FEW MINUTES.)
CHRISTINE ROMANS, HOST: President Obama wants $447 billion to create jobs. The president calls it a jolt, not a stimulus. But it is. Still, the big question remains, will it work?
I'm Christine Romans. Welcome to your YOUR MONEY. Ali Velshi is off this week.
Here's what's in it. The American Jobs Act includes payroll tax cuts for 98 percent of businesses, a tax credit for hiring unemployed veterans, modernization of 35,000 public schools, a tax credit for hiring the long-term unemployed and a provision to help refinance mortgages at very low interest rates.
Stephen Moore is an editorial writer with "The Wall Street Journal." Stephen, the White House is steering us toward analysis from well- known economist Mark Zandi, a frequent guest on this program, who says this plan, if it was enacted in its entirety, could create almost two million jobs. Let me guess, you're skeptical.
STEPHEN MOORE, "WALL STREET JOURNAL" EDITORIAL WRITER: Well, I am skeptical. I'm friends with Mark. I've known him for a long time. But you know, he's been pretty wrong on his projections on jobs. He's the one who said that we were going to create three-and-a-half million jobs if we passed the original stimulus bill.
An amazing statistic, by the way, Christine. I just looked up these numbers. You know, we have one million fewer jobs today than we did in February of 2009 when we created the $800 billion stimulus plan. So a lot of this hasn't worked.
And let me just use a football analogy, if I may, since we're in football season. If you run the ball up the middle three times and you don't gain any yards, on fourth down, you don't run the ball up the middle again. And that's essentially what the president is proposing here, is a lot of these proposals that you just mentioned, Christine, are things that were in the original stimulus plan or the payroll tax credit -- we did that in January of this year. None of it has really worked to create the kinds of jobs. So I'm very skeptical.
ROMANS: All right, Harvard professor Ken Rogoff is the former chief economist for the IMF. Ken, in order to find a solution, let's make sure we understand the problem here. Simplest terms you can think of, why can't we create more jobs in this country right now?
KEN ROGOFF, HARVARD UNIV., FORMER CHIEF ECONOMIST, IMF: Well, there are two basic problems. One is we're in the worst recession, whatever you want to call it, since World War II and it's lasting a long time. We're coming out of it slowly. And of course, there's the slow, grinding overhang of our growing trade with Asia, the growth of China, India, Brazil. And that also is hitting American jobs, particularly for lower-educated workers.
ROMANS: So is it right to throw money at the problem right now in the near term? What it sounds to me like you're talking about is some structural -- big structural issues, Ken, in the economy.
ROGOFF: Well, I'd certainly like to see some big structural solutions coming out of this crisis, coming out of Congress and from the president. They don't seem to be able to agree on everything.
That said, I don't think it's wrong to necessarily to try to at least not pull back the stimulus. That's what's going on right now. You have to put something new to replace what you're taking out. But think of this like taking aspirin when you're pretty sick. It'll make you feel a little better, but this isn't a cure.
ROMANS: All right, we have a football metaphor. We have an aspirin metaphor. Gloria Borger, I can't wait to come up with (SIC) she comes up with.
ROMANS: CNN's chief political analyst. A CNN ORC poll, Gloria, finds two thirds of Americans say creating jobs is a more important goal for this administration than reducing the deficit. Gloria, the president called for a joint session of Congress to deliver that jobs plan. Clearly, he wanted the American people to view him as a leader on job creation. Did he convince Americans?
GLORIA BORGER, CNN CHIEF POLITICAL ANALYST: Right. Well, we're going to have to wait and see. He was talking to independent voters out there, those swing voters that are so important, that are so upset about the fact that Congress isn't able to get anything done.
And what the president was trying to do was to say to voters, Look, I am the reasonable man. I'm laying down a gauntlet for Congress. They can decide if they're going to take it or they're going to leave it. But if Republicans out there decide that they don't want to take this package, they're going to have to explain to the American voters why.
What was very important was the president said, I'm going to take this on the road, which means the game is on here for the 2012 campaign. And he's clearly positioning himself, a la Harry Truman, against a Congress that if it doesn't act, he's going to say, They're do- nothing.
ROMANS: You know, Stephen, one -- repairing schools, 35,000 schools in the face of budget cuts and giving states more money so that they can keep teachers in your kids' classroom, the hiring benefits for unemployed veterans -- there are things in here -- you go down the line, it's going to be hard for a Republican seeking reelection to stand up and say, I have voted against American veterans.
MOORE: Yes, look, I agree with a lot of what Gloria just said. I mean, there's no question that jobs is priority number one, no question, with the voters. And it's also true that the voters want some quick action here.
The problem, Gloria, is that if you look at the last election, I mean, why did Republicans win this resounding election? What was their central promise? We're going to stop the spending. We're going to stop the debt. And so to then turn around and say, Oh, by the way, we're going to have to pass a half trillion dollar new spending and debt deal, I'm just not so sure...
BORGER: Right. And...
MOORE: ... that goes down very well...
BORGER: I agree.
MOORE: ... with the people who voted for these...
BORGER: I agree. And we were waiting for the other shoe to drop, which is on September 19th, when the president says he's going to lay down his plan for the super-committee.
BORGER: And that is apparently going to include how to pay for this. You know, the one interesting thing I heard from the president, which is that he's willing to take on his own Democrats on the question of Medicare reform. So let's see how far he goes with this.
MOORE: Yes, but you know what? I've been in Washington for 28 years. You've been in this town for a long time. I mean, the one promise that is always made that is always broken is that, We're going to spend now and save money later. We never do that. I mean, we've been doing that since the -- since the late 1970s, and that's the reason we have a $15 trillion debt.
And what the president's going to say is, By the way, we're going to cut spending in 2018 and '19 and '20, two presidential elections from now. I mean, who -- who really believes that?
ROMANS: Let me bring in Ken because an interesting thing here is people will say that they want to balance the books and they want deficit reduction and they want, you know, to live within our means until they realize that the entire country for years has been built on living a little bit beyond our means and sometimes a lot beyond our means.
Ken, When people realize that budget cuts mean jobs and maybe their job could be lost, then they change their tune a little bit. ROGOFF: Well, they certainly do. I mean, Americans have wanted lower taxes and more spending for a long time. Now they say they want not to have so much debt, but they still want lower taxes and they don't want to cut the spending too much. I mean, I think it is a very angry populace. And I think a hard thing for the president as he, you know, tries to present a rational plan to these very angry voters who are quite unpredictable.
ROMANS: Yes. Ken, do you think this would create jobs if the president, in some ideal world -- ideal for him and not ideal for his opponents in the House -- if he were to get this whole thing through, would it create jobs?
ROGOFF: Yes, I think it would create some jobs. Putting a number on it's really hard. But I don't think there's any question that these awful debt negotiations and debt deal that they had over the summer sort of overdid it in the short run, with cutting back stimulus while the economy is still weak. It didn't really do anything. They kicked it all to the super-committee, like Stephen said, pushed everything into the future.
This is more of the same. It's getting pushed into the future. But we are in a very deep downturn at the moment and need to be very careful.
MOORE: But you know, Ken, I read your book. I loved your book. I think every economist should read it. I think there's so much wisdom in that. But the one thing I would maybe challenge you on a little bit is what I glean from reading your book is that on this recession that we're in, this is a classic kind of debt recession, where Americans at the business level, at the individual level, and of course, at the government level are overleveraged. There's too much debt out there.
And what I don't get about all this -- and this is my kind of question for you -- is if we have too much debt, how is more debt the solution to getting out of this crisis? I think it's probably exactly the wrong thing to do right now.
ROGOFF: Well, I certainly agree, Stephen, that this idea of a jolt, and suddenly, you'll be better again is wrong. And the president did talk about doing something about the mortgages and the housing. That's where I'd like to see more of the focus. I think that would really help pull us out.
ROMANS: All right...
ROGOFF: I'm not giving a blanket endorsement to it, but just saying we really need to be careful.
ROMANS: All right, more on this in a minute, guys. Let's take a break here quickly.
The economy is slowing down again. Recession fears are everywhere. If it's about to get worse before it gets better, just how long can we expect the downturn to last? We're going to look at that next. Don't go away.
ROMANS: Well, economists differ on whether America is headed for another recession, but most Americans find that question irrelevant. Eighty-two percent of those responding to a recent CNN ORC poll say we're currently in a recession.
Ken, if four out of five consumers are walking around right now feeling like this is a recession, then a continued slowdown seems to be inevitable.
ROGOFF: Well, it's not a good sign. I mean, the only thing I can say is these polls have a lot of interpretation in them, and what consumers are doing matters more than what they're saying. You know, not so long ago, in July, durable goods -- refrigerators, things like that -- were actually picking up rather crisply. So maybe the hard numbers are not as bad as the mood. But if the mood keeps this way, of course, it will feed into the hard numbers.
ROMANS: You know, Stephen, is this a crisis instead of a recession, which may require an entirely different approach to achieve a typical recovery, do you think?
MOORE: Well, I think it does need a total different approach. I mean, when Ken was talking in the previous segment about this being the worst recession since the Great Depression, in some ways, it is. But the 1970s, that whole period from the late '70s through '81, '82, I think, arguably, that was even a worse time for economic decline for this country. Stocks lost 67 percent of their value in real terms.
And what makes this different from that recession that we had in the '80s is that Reagan came in and did use an entirely different approach. He deregulated the economy. He got federal spending under control. He fought inflation. And we did a big tax cut.
And I think, you know, within 18 months of that presidency, we had an incredible expansion. We were creating about 250,000 jobs a month.
So I guess I would say, look, if we got the policies right, there's no reason this has to be a three or five-year-long recession. I think the economy can turn around pretty quickly, but I don't think these prescriptions that we're using right now are working very well.
ROMANS: So you think, Stephen Moore, that the president's policies are what's delaying a recovery. But Ken, I mean, you've written about this pretty extensively. What we went through was pretty horrific. It's going to take time, no matter what anybody does.
ROGOFF: Yes, I disagree with Stephen on this one. I mean, I think this is worse than what we were in the in the '70s. That was bad, but I'm sorry to say this is worse. And the state of the financial system, the financial crisis, typically is associated with something much worse.
I do think we could have expected three or four years of very difficult employment. But the trouble is, it's not looking better still going further out. And it's a legitimate question. Well, should we try something else? What should we be trying? That's a fair question. I don't think anyone -- I think -- if John McCain had won and became president in 2009, I don't think it'd be real different today.
BORGER: Christine, you know, I think the political problem here is that we're trying to spend and we're trying to cut at the same time.
BORGER: And we're -- the American public wants everything. And that's what politicians want to give them. So they want to say, OK, we really care about deficit reduction, we understand that's the key to the future. On the other hand, we want to spend some money and give you your -- extend your payroll tax cuts so that we can put some more money in your pockets.
So it's a very difficult political situation not only for the president, but also for the Republican Party and for members of Congress, whose approval rating, by the way, is at 14 percent. So they understand the public wants them to get something done.
MOORE: But there's also been -- if you look at the data -- and I've been looking at this very closely. I think there's been a misdiagnosis of what the problem is with the economy. The kind of Keynesians that Barack Obama listened to say, The problem is, we don't have enough demand. We don't have enough consumer spending. But in fact, if you look at what's happened since late 2009, consumer spending has been rising at a pretty -- you know, not a robust pace, but it's been rising.
What has fallen dramatically and has not caught up to where it was pre-recession is business investment. And I'm just a big believer that investment, spending by businesses, is what creates growth. And you're not going to get growth in spending...
ROMANS: Stephen, I thought all those years of tax cuts were going to make people -- the wealth creators want to, like...
ROMANS: ... create jobs and spend money and build the infrastructure. Why didn't that happen?
BORGER: And in the president's plan -- in the president's plan, he talks about small business and helping small business. And there are some things in his jobs proposal...
BORGER: ... that would encourage small business to hire, which I think Republicans will embrace, right? MOORE: Yes, but Gloria, don't forget, the other thing he said last night is, We're going to pay for this with a big tax increase on small business in 2013. Small businesses don't hire on the basis of one or two years. They're looking forward and saying, The president's going to raise taxes on employers in 2013, that's a negative. That's bearish for the economy.
ROMANS: I know, Ken, I think demand is what makes small businesses hire and makes -- I mean, everybody wants demand, right, Ken?
ROGOFF: They do. But I certainly agree with Stephen, they have misdiagnosed this as a typical recession. They've said that we need a big jolt of spending or stimulus, or whatever you want to call it, and we'll get out of it. It is not a typical recession. In fact, we never got out of the last one.
(INAUDIBLE) I think President Reagan did a great job, a great president, but you know, nobody's perfect. We almost had a catastrophic savings and loan crisis.
ROGOFF: We almost had a big financial crisis from over-deregulation.
ROGOFF: It's very tough to be president in these situations.
ROMANS: It's tough being president in even the best of times. And I do think -- and I bet you guys all agree -- that presidents get too much blame and too much credit. You know, bottom line, they too much blame and too much credit, and there's a lot of different moving parts. But you do need leadership and confidence, and that's what we really are looking for right now.
Ken Rogoff, thanks so much, Stephen Moore, Gloria Borger...
MOORE: Nice to be with you.
ROGOFF: Thank you.
ROMANS: ... another great discussion, guys.
Republican presidential candidates have a thought or two, or in Mitt Romney's case, 59 thoughts on just how to create jobs. But will any of their plans make a difference? We're breaking it down next.
ROMANS: The first thing I ever learned covering the markets is that gridlock is good for business. Diane Swonk is chief economist at Mesirow Financial. And Diane, full credit to you. A year ago on this program, we were heading into a mid-term election. We knew that it would result in Republicans at least taking over the House. You stood up against that conventional wisdom. You said this was exactly the wrong time for gridlock in Washington. You were so right. Since then, we've had a near government shutdown, a debt ceiling crisis that resulted in an unprecedented downgrade of our country's credit rating. We now have competing jobs plans from both the president and some of the Republican presidential candidates. And more importantly, we've got an economy that literally didn't create any net new jobs last month.
Do you think things will get better in the year to come?
DIANE SWONK, CHIEF ECONOMIST, MESIROW FINANCIAL: I think the status quo is more likely. The problem is we're about a 50-50 coin toss chance of recession at this stage of the game, and I think that's one of the hard issues as we debate all these different jobs program. The reality is, the old models, the historical models that tend to give us estimates of what they might do for the economy just don't work.
You already had Ken Rogoff say, you know, a post-financial crisis economy is just different. It really is different. And I think that's what is the problem here, is that people keep trying to use the old solutions to new problems. And that's not going to help us, although it is important to preserve the status quo because as bad as the status quo is, it could be worse. And many of the proposals that are out there will help to preserve the status quo, and that's what we need to focus on at this stage of the game.
ROMANS: I mean, the president's jobs plan, is that preserving the status quo and that's the best we can do right now?
SWONK: Well, parts of it. The whole plan, no, it isn't. And there are parts where they, you know, made estimates. Models have estimated it would create as many as two million jobs. I think as much as I respect and admire the people who make those estimates, I don't agree that that's how many jobs will be created out of it because of the structural problems we face.
That said, there are parts of the president's plan that are very important. We can't have a tax hike, which would be the equivalent of letting the payroll tax cut expire at the end of the year, at this critical time. Unemployment insurance benefits are keeping a floor on consumption. So being able to keep treading water and keeping our head above water, even though it doesn't really feel like we're moving forward to most Americans, is really critical because the alternative is going under.
ROMANS: All right. Roland Martin is a CNN contributor. You know, Roland, the unemployment rate for January 2008 when President Obama took office was 7.8 percent. Today, it is 9.1 percent. Last month, the economy didn't create any net new jobs. Republicans argue this is because of his policies, not despite them.
Roland, why aren't the president's policies then creating more jobs?
ROLAND MARTIN, CNN CONTRIBUTOR: Well, first of all, that's if you accept the Republican rationale, which is absolutely idiotic, because somehow, it ignores the rest of the world. And so we're sitting here acting as if that what a president can do alone somehow can fix the economy.
Look, we gave banks money under the view that somehow, they were going to lend the money out. They didn't. They shored up their balance sheets.
Also, our economy is all based upon consumer demand, consumer spending. If you don't have the confidence, they don't spend. If you own a restaurant, you're not going to add more employees if you don't have more customers. And so it's ridiculous to somehow think that a presidential policy alone somehow would drive this.
We're operating in a whole new world these days, and politicians don't want to accept that. Any time you hear Republicans and Democrats say, This is the sole reason, they're playing a political partisan game and not a real game of what's happening in the real world.
ROMANS: All right, guys, let's -- I want to take a look at the economic plans that Republican candidates would put into action, if elected. I mean, overall, the candidates overlap on a few, you know, conservative ideas. You know, they all want to cut the corporate tax rate, repeal, quote, unquote, "Obama-care," shrink government. You know, so that's the traditional sort of conservative model.
But the Republican candidates do diverge on a few key elements. Mitt Romney wants to develop this "Reagan economic zone," and he's talked tough about China, more tough talk from him on China than anybody else. Jon Huntsman wants to cut tax rates for individuals to 8 percent, 14 percent, 23 percent, do total tax reform, repeal the mortgage interest deduction. And he was endorsed by "The Wall Street Journal."
Let's talk about Michele Bachmann. Mostly, people are talking about her pledge for $2 gas, but there's a lot more in there. She would also like to lower corporate tax rates.
You know, Greg Valliere, chief political strategist for Potomac Research Group, I want to bring you in here. Simplify it for us. What's different about those GOP plans that's not a part of President Obama's solution?
GREG VALLIERE, CHIEF POLITICAL STRATEGIST, POTOMAC RESEARCH GROUP: Well, they can make a case that what the president's doing hasn't worked. And I agree that it's not all his fault, but it doesn't look like it's working very well. I think that they can make a case that we have to try something different.
But let me make this point. I think in two important areas, they have touched hot buttons that they might regret. The first is Social Security. The rhetoric from Perry is so harsh -- even Mitt Romney called him out on it -- that he could start scaring senior citizens.
I have a rule of thumb. Don't scare my mother. If my mother starts to get scared about Social Security, I think the Republicans could be in trouble.
Number two, making Ben Bernanke a big issue I think is something that could start to unnerve the markets. They all beat up on Bernanke the other night. The markets like Romney. They might like Perry. But they don't like the idea of politicians meddling in monetary policy.
ROMANS: Let me ask...
MARTIN: Christine, I got to make this point because here's what's important. When we say it didn't work -- if you look at the consecutive months of private sector job growth and then you look at where we've been losing jobs, we've been losing government jobs. And so when people say -- because, see, the problem was when you had Christine Romer, who somehow said that, Oh, if this goes into place, unemployment is actually going to go down. So when we say unemployment has gone up, we're looking at what kind of jobs we're losing, what kind of jobs we're growing.
Also -- we also don't accept that if you look at the stimulus plan, 40 percent of that was tax cuts. Republicans never want to talk about that. But did the plans the president put in place stem the tide or could we have been worse had he not taken the action? We can't deny that reality (INAUDIBLE)
ROMANS: And I heard Michele Bachmann this week say that the stimulus didn't work, and in fact, is hurting America and hurting the economy.
MARTIN: That's nonsense.
ROMANS: Let me just say to you, Diane -- you've got these two very different world views that have caused this gridlock that, as you forecast a year ago, is not good.
SWONK: Yes, you know, I mean, the reality is that the stimulus did stem the hemorrhaging of the patient at a very critical time, and that's very important to acknowledge. That said, it's not enough for most Americans because we are worse off today than we were even during the beginning of the recession.
And so I think that's what's a hard reality out there, is that, you know, doing the status quo and stemming hemorrhaging, although I think that's incredibly important, most people just don't understand that because the bottom line is they think linearly. And linearly, they're not as good off as they were before, and that's what they're making their bets on.
And I agree with Greg that, you know, going after Ben Bernanke is one of the most dangerous things out there. You know, an independent Federal Reserve for financial markets is critical. And this is really important because, you know, the idea that -- I mean, the verbiage that's been used -- I mean, his life has been challenged -- that that's tolerable in any kind of political debate...
ROMANS: Let's leave it all here for a second. And I agree with you that the language has really, Diane, gotten pretty hot and that it doesn't help the dialogue much. And I want to talk a little bit about Social Security when we come back, too. Is it really a Ponzi scheme? A Ponzi scheme? Why one Republican presidential candidate thinks it is, next.
CHRISTINE ROMANS, CNN ANCHOR: GOP presidential hopeful Texas Governor Rick Perry blasted Social Security during this week's Republican presidential debate.
(BEGIN VIDEO CLIP)
GOV. RICK PERRY, (R) PRESIDENTIAL CANDIDATE: It is a monstrous lie. It is a Ponzi scheme to tell our kids that are 25 or 30 years old today, you're paying into a program that's going to be there. Anybody that's for the status quo, with Social Security today, is involved with a monstrous lie to our kids. And it's not right.
(END VIDEO CLIP)
ROMANS: All right, Diane, is Governor Perry right? Is it a Ponzi scheme or an insurance program that needs reform to make sure it's properly funded for the next generations?
DIANE SWONK, CHIEF ECONOMIST, MESIROW FINANCIAL: Social Security is the low-hanging fruit of things that can be fixed on the budget to make it very solvent. This is ridiculous talk. I mean, the bottom line is we live longer, it was a pay as you go system. Those people who are paying now are paying for those who are taking out now. We can change it with very modest changes to make it really very effective for the overwhelming majority and over 90 percent of Americans. Frankly, the wealthiest of Americans, I would hope that I don't need it. I'm very lucky to have made the money I have and I should have saving for my independence in retirement.
And there is means testing, there are ways. It is one of the easiest beginnings. Alan Greenspan once said, you get everyone in a room and spend 10 minutes, in the first five agree on how to fix Social Security, and spend the remaining five just having a nice conversation and having coffee.
ROMANS: You know, Greg, it's interesting, because you mentioned, that if it is anything that scares your mom is probably not a good political move to make. It allowed an entree for Mitt Romney to look like a centrist, to look like a realist. And to look like a frontrunner. Many people who know how the system works and how the economy works said it made Romney look like a frontrunner.
GREG VALLIERE, CHIEF POLITICAL STRATEGIST, POTOMAC RESEARCH GROUP: Yes. Diane's right, this is very fixable. We're in a society now where in order to get on TV or sell a book, you've got to say outrageous things. Like, let's secede from the union. Ben Bernanke is treasonous. This is a monstrous lie. I mean, you've got to tone your rhetoric down. I understand the appeal of Perry, but the trick is not to throw red meat at the base. The trick is to be electable. When he talks like that, I think he diminishes his chances of getting elected.
ROMANS: That's a good point. Roland, I want you to weigh in on that point. Because one of the things, that by appealing to the base now, maybe he's helping President Obama's case down the road?
ROLAND MARTIN, CNN CONTRIBUTOR: Look, at the end of the day, look, I'm a native Texan. I've known Governor Rick Perry for so long. But this is classic Republican politics where you come up with a perfect bumper sticker that the people you're appealing to can say, that's it, Social Security, Ponzi scheme. The problem is, he doesn't look credible because when you talk to people who understand what's going on, they can break the argument down. But see, for him, it's an easy political ploy. The problem is you have too many dumb folks out here -- and, yes, I said it -- too many dumb people out here, who hear that rhetoric. And say, that's it, that's my guy. They're going to be the very people in these states, in these red states, Alabama, Tennessee, Mississippi, Georgia, who are gang to be depending upon Social Security as a result of the economic crisis. And trust me, they will not be saying Ponzi scheme. They will be saying, where's my check?
ROMANS: Diane, it motivates people, especially people who feel badly about what's happening in the economy. And you and I have talked about this before, but when you have unemployment at 9 percent. And you have such a big part of the unemployed who have been out of work for six months or longer.
SWONK: In the shadows, almost 20.
ROMANS: I know they are looking for something-it just starts-the social cohesion starts to come un-- you can see how extreme politics plays.
SWONK: Well, you certainly see why it plays and it is an economic story of why it plays. I grew up in Detroit. We had the Michigan militia training Timothy McVeigh. I mean, these are people who went off to fight for our country, and ended up turning against it. So, I've seen it firsthand. I know it first hand. I don't like it. And I never wanted to see it again. And now here it is.
That said, there's nothing that can substitute for the truth. What's unfortunate is how much little fact-checking that goes on in dealing with the political rhetoric out there. Both sides of the aisle are guilty of this. I think it's time for people to start telling the truth and be called out on the truth and not -- they'll say they're telling the truth, and they're lying straight to the American public.
The American public has been lied to for a very long time. We have not paid for the entitlements that we all collect. And I think at the end of the day, you've either got to cut those entitlements, raise the revenues, or do some combination of the both. And that's just not being accepted and it's not being told to the American public.
MARTIN: That's right.
SWONK: They've been sold a lie.
MARTIN: Also, Christine, the American people have to accept it as well. The CBS polls from several months ago, where you had 60 plus, percent of Americans saying, don't raise my taxes. The same percentage said, I want the deficit cut. And the same percent said, don't touch entitlements.
ROMANS: I know.
SWONK: It is an inconsistency.
MARTIN: We spend talking about politicians, but American voters also have to be honest with themselves.
ROMANS: Greg, Greg Valliere, you know the bottom line is we can't afford ourselves.
VALLIERE: But at the same time, Christine, the Treasury 10-year bond yield is like 2 percent. This hasn't bothered the bond market. To me this is the least appreciated part of the story. As we all know, if this doesn't worry the bond market, I'm going to sleep well at night.
SWONK: And to add to that, Greg, it's not as if we can't solve our financial problems.
SWONK: I mean, S&P, I think, made a very big mistake in downgrading us. But we have in reach much more than Europe does, given our demographics, to phase in reasonable deficit reduction plans over the next 10 to 15 years, that would get us out of these problems and we could afford stimulus. We can all debate whether or not it is really going to have an effect. But those are important themes to get out there that no one's really talking about.
VALLIERE: One other quick point, guys.
VALLIERE: All this talk about austerity. It's like having an ailing patient you're going to put leaches on. I don't get it.
SWONK: That's a good analogy, Greg.
ROMANS: Yeah! You know, I want to ask you--
MARTIN: The problem is simple. The problem is, when you are Paul Ryan and you talk about custom Medicare, guess what, Democrats leap on it. They win the Republican seat in upstate New York. When you talk about the same thing on the Democratic side, Republicans say tax cuts, fires their base up. Politicians are afraid to loose their jobs and when they actually speak truth-that we're all talking about-they are vulnerable to losing their jobs.
ROMANS: Those are the jobs they really care about.
SWONK: Then it is our jobs to tell them truth.
ROMANS: Diane Swonk, thanks so much.
SWONK: And they all have pensions, right?
ROMANS: Yeah. Roland Martin, and Greg Valliere.
MARTIN: That we pay for.
ROMANS: Thanks, guys.
MARTIN: And lifetime health care.
ROMANS: Have a great weekend, everybody.
VALLIERE: All right.
ROMANS: Coming up, 9/11, 10 years later, we're going to talk to the man who was running the New York Stock Exchange on the day of those attacks.
Plus, a look at how one company is giving back to those who lost loved ones on that day. That's next.
ROMANS: On September 11th, 2001, Dick Grasso was the chairman of the New York Stock Exchange. He joins me now from there, right now.
Dick, 10 years ago, the stock exchange just shut down for four horrible days. I was with you on September 17 when it reopened. In a moment we're going to talk about what it was like to lead the New York Stock Exchange during the panic that ensued on 9/11.
One thing I want to ask you about, first. I remember the patriotism of purpose that was in the air when the exchange reopened on the September 17th. Politicians from the right and the left, they were on the trading floor together. They were unified to move the economy forward and not let this be an attack on the American economy. Ten years later and the toxic environment in Washington has been cited by Ben Bernanke, Standard & Poor's, countless others, as a key factor in hurting our economy. Where has that unity gone, in your opinion, Dick?
DICK GRASSO, FMR. CEO, NEW YORK STOCK EXCHANGE: Sadly, I think it's fallen prey, Christine-and let me say, it's great to be with you again.
It's fallen prey to partisan politics. And people are putting elections ahead of what is best for this country. I think the American people are fed up with it. And I would not be surprised if in the words of the old Brooklyn Dodger fans, come the next election, they throw all the bums out.
ROMANS: You know, investors-like everyone else, in the meantime, because we have 14 months until that next election-investors trying to figure out where the economy is headed right now. Stocks, once a bright spot of the recovery, forecasting a recovery, they've been pretty rocked of late, Dick. I want to show you a 10-year chart of the Dow Jones industrial average was at 9,605, when those attacks took place. And really struggled in the months that followed. Look where we are now, Dick. What is it going to take to get the markets to stabilize? Does it take political unity and an economy that really is healing?
GRASSO: You're not going to get political unity simply because of the wildly disparate political ideologies we now see in the leadership roles. But hopefully what you can get is certainty as to economic output. And certainty, I mean by both tax policy, regulatory policy and a government that is willing to compromise, both sides of the aisle, both extremes of both sides of the aisle, for the betterment of the American people.
Short of that, the market will continue to oscillate. We have the underpinnings of, I think, a very important recovery. But until the marketplace sees a return to a philosophy of doing what is best for the country over what is best for one's own political future, the market is going to just continue to oscillate as we've seen.
ROMANS: I couldn't agree with you more. You said certainty, another thing is confidence, Dick Grasso. With that certainty then comes confidence and confidence in short supply.
Dick Grasso, I want you to come back with us in just a minute. Don't go away.
So many companies lost employees on 9/11. But none more than Wall Street firm Cantor Fitzgerald, which lost two-thirds of its New York staff. Days later that company was criticized for stopping the salaries of those who died and executives vowed to do the right thing. And ten years later, they've come through on their promise. Ali Velshi has the story.
ALI VELSHI, CNN BUSINESS CORRESPONDENT (voice over): It's been almost 10 years since Rich Pecorella lost his fiancee, Karen Judae (ph), on September 11th, 2001.
RICH PECORELLA, LOST FIANCE ON 9/11: She was the love of my life and we were together almost every moment.
VELSHI: Karen was an administrative assistant at Cantor Fitzgerald, the financial services firm that lost more employees on 9/11 than any other company. Rich, then a managing director at Bear Stearns, helped her get the job. PECORELLA: My friend who hired her, he loved her. And he left the firm, actually, about six months before 9/11 happened. And she didn't go with him. She liked Cantor so she stayed there.
VELSHI: Rich, who was diagnosed with pulmonary disease four years ago, is still coping with his loss today. Edie Lutnick heads up the Cantor Fitzgerald Relief Fund. She is the sister of the company's CEO, Howard Lutnick. Their brother, Gary, who was also a Cantor employee, died in the attacks.
EDIE LUTNICK, EXECUTIVE DIRECTOR, CANTOR FITZGERALD RELIEF FUND: My brother, Howard, called me on September 13th and he said, Edie, we need to do everything we possibly can to help these families. I want to start a charity and I need you to run it. I started ticking off in my brain all the people that I thought were much more qualified to do this. And then I realized that they were all gone.
VELSHI (on camera): Cantor Fitzgerald lost 658 of its 960 New York- based employees on September 11th. Four days later, it stopped paying the salaries of those employees. Their families were outraged, but the company pledged 25 percent of its profits for the next five years to those victims' families. The Cantor Fitzgerald Relief Fund has now paid out over $180 million to the families of those victim, including their children, their spouses, their domestic partners and their fiancees.
(Voice over): Edie Lutnick has written about her journey with the Cantor families in a new book, "An Unbroken Bond".
LUTNICK: There were so many lessons that we need to learn from 9/11 so that, God forbid, there's another tragedy down the road, we can look at all of this, and say, OK, these are the things that we could have done better.
VELSHI: What the Cantor Fund has done is a rarity, say nonprofit insiders.
STACY PALMER, EDITOR, "THE CHRONICLE OF PHILANTHROPY: It's really quite remarkable that Cantor Fitzgerald has continued giving and is thinking about doing that at a time when the financial industry isn't doing as well. That's the real test of generosity.
VELSHI: For Rich Pecorella, the Cantor Fund's generosity has helped him tremendously in the wake of his fiance Karen's death, not just financially, but emotionally as well.
PECORELLA: Cantor just -- they did so much for me after she was killed. It wasn't the financial end that I really needed, it was just having people there to talk to that went through the same thing.
VELSHI: And Rich says having that support system will help him keep the memory of Karen alive. Ali Velshi, CNN, New York.
ROMANS: Dick Grasso is still with us. I want to talk about how much has changed in these past 10 years. Plus we'll show you how Lower Manhattan has gone through quite a change as well.
ROMANS: Welcome back to YOUR MONEY.
Dick Grasso is still us with from the New York Stock Exchange. Dick, we just saw a piece about Cantor Fitzgerald, the investment firm that lost more employees than any other company. With everyone concerned for their safety and their loved ones, when could you focus on the effects, the events 9/11 could have on the markets and the economy? Bring us back to that.
GRASSO: Well, first and foremost, obviously, that day and the few days following was the protection of life, on the day of the attack, obviously. But in the few days following, it was a rescue effort going on at ground zero, that we had hoped would've produced if not thousands, hundreds of people alive trapped under the rubble. We ultimately learned that very few, I think five in total would come out alive. And that of the almost 2,700 who perished that day in the two buildings, fewer than 40 percent of the remains were ever recovered.
So it was a time of great stress. It was a time of great collaboration between our fabulous mayor, at the time, the private sector, and the financial community. Realize to get the financial markets up and running again, Christine, you needed power and Con-Ed lost its substation that sat under the World Trade Center. You need voice and data switching, which Verizon lost when number Seven World came down and took out 140 West. And I must tell you a tribute to those technical workers at both of those organizations, Verizon and Con-Ed, they worked around the clock so that the financial community was in a position to reopen that following Monday.
And unlike any period in the financial market's history, those of us in the business took off the jerseys we wore of our respective organizations, and put on a team USA jersey, and one blood sport competitor became another one's helper. And we all locked arms to do one very simple thing, Christine, to send a message to the terrorists, you've killed thousands, you've destroyed billions in property, but you've failed. You've failed because the American spirit can never be broken. We will rise, we will rebuild, and we will never forget. And we did that, I'm very proud of what we did as a collective partnership.
ROMANS: I would give anything for a little bit of that unity right now. I'm going to be honest with you. I remember seeing you on the floor, I remember seeing all of those Con-Ed workers, traders, people at the stock exchange, journalists, security guards, policemen, firefighters, some people just coming into the building to get a drink of water. And then go back into the pit. And that unity of purpose as a country -- and I'll say it again, the patriotism of purpose, I feel, Dick, like we've lost it in this country right now.
GRASSO: We need it back. And we need the people in Washington on this 10th anniversary to reflect how unified the country can become in its darkest moments, and we don't have the terrorist attack to deal with, but we have an economic terrorism going on that's got to be cured. And you cure it with good public policy, with a partnership between the public and private sector, and with that old America esprit, saying there's nothing that this country can't do.
ROMANS: All right. Dick Grasso, pleasure to see you again, sir. Thank you so much.
GRASSO: Thanks, Christine.
ROMANS: Ten years, I can't believe how fast it's gone. Thank you so much.
GRASSO: Thank you.
ROMANS: 9/11 affected so many parts of the country, but perhaps none more significantly than the neighborhoods of Lower Manhattan. And now, 10 years later, Lower Manhattan is back and enjoying a sort of renaissance. We are going to take you there next.
(INTERRUPTED ON 9/10 FOR LIVE EVENT WITH FORMER PRESIDENT BUSH)