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YOUR MONEY

Slowdown in Hiring in March Causes Worries; Romney's Wealth; Stocks Soaring; Start Me Up

Aired April 8, 2012 - 15:00   ET

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


ALI VELSHI, HOST: Getting back to work in America. The latest numbers leave us with a few more questions than answers.

I'm Ali Velshi. Welcome to YOUR MONEY. One hundred and twenty thousand jobs were added in the United States in March, but that actually represents a slowdown in hiring and leaves us wondering why. Are there enough jobs out there to sustain our fragile recovery?

Christine Romans is the host of "YOUR BOTTOM LINE." She's been studying the numbers. Christine, break it down for us.

CHRISTINE ROMANS, HOST, "YOUR BOTTOM LINE": Well, I put it all on this big chart for you, an infographic to show you kind of all of the elements of the jobs report, Ali.

And you make a really good points because 120,000 jobs created is a big slowdown from the pace we've seen over the last three months. And 8.2 percent unemployment is a drop, but it's not making economists very happy because you had people dropping out of the labor market -- 164,000 people dropped out of the labor market. That's why the jobs number went down here, the unemployment rate went down here.

And really, the big focus is on overall job creation. I want to show one other thing to you I know that you've been watching very closely also, the public sector jobs. Only about 1,000 government jobs were lost. We lost about 6,000 the month before. So there's a slowdown in that trend. Private sector is carrying things here, no question, but the private sector slowing down a bit, too, Ali.

VELSHI: Christine, something that you and I study very carefully -- this is a consumer-driven economy, so we study retail sales. The retail sales for the last month came out this week, and they were exceptionally strong, much stronger than economists were expecting. So why did we see losses in retail jobs?

ROMANS: It's so interesting because you saw 33,800 retail jobs lost in the month, and that was a little bit of a surprise to people. The only place you saw strength in retail is home and garden centers...

VELSHI: Right.

ROMANS: ... surprise, surprise, because of all of the great weather. So even though you've seen some strength from the consumer lately, this is something overall that might be a little bit of a concern.

We did see some strength -- quickly, I want to show you -- in manufacturing, Ali -- 37,000 jobs created in manufacturing.

VELSHI: Yes.

ROMANS: That's a trend we've seen kind of picking up. I don't know how much it eats into all of those jobs lost...

VELSHI: Yes.

ROMANS: ... in manufacturing since the '80s, really, but that's something that bears watching.

And finally, I know you love this -- this is a political number in an election year, no question, right? So you look at the overall trend, the trend of job creation. Here's that big jobs -- this is the financial crisis right here...

VELSHI: Right.

ROMANS: ... 8.8 million jobs lost from the peak of labor market to the trough. Here's census, remember...

VELSHI: Yes. (INAUDIBLE) hiring.

ROMANS: ... stimulus. Wow, we thought that we were coming back, and then faltered. And then this is what the -- this is the slow, steady, some would say unremarkable recovery...

VELSHI: Right.

ROMANS: ... not as strong a recovery as you'd like to see, and now a little bit of a faltering at the end of it.

VELSHI: All right, and you know, and 120,000 jobs -- most people say we need closer to 300,000...

ROMANS: Yes.

VELSHI: ... jobs a month to get back to where we were before the economic crisis. So bottom line, is -- this is a glass a third full, would you say?

ROMANS: I would say so. But I want to know why.

VELSHI: Yes.

ROMANS: And I also want to know -- look, you got seven reports, Ali, until the election, right?

VELSHI: Yes.

ROMANS: All these numbers have noise in them. Sometimes they go up, sometimes they go down. In fact, a few people were telling me this week, you know, we're due for a disappointment...

VELSHI: Right.

ROMANS: ... because jobs have been -- it has been steady. We're due for a little bit of a disappointment. I mean, you got it.

VELSHI: Yes.

ROMANS: I think you got that little bit of a disappointment, but we don't know what's going to happen next month.

VELSHI: All right, well, your job and mine is to give you the what. But as you said, the question is why.

ROMANS: That's right.

VELSHI: I'll talk to you in a bit, Christine. Let's bring in Harvard University professor Ken Rogoff. He's the former chief economist with the International Monetary Fund.

Ken, there you go. We've laid out the numbers. You've looked at them. Why? Why is hiring slowing down, when so many other economic indicators indicate strengthening in this economy?

KEN ROGOFF, HARVARD UNIV., FMR. IMF CHIEF ECONOMIST: Ali, honestly, I think it's hard to tell from a month's number because you're right, overall, things are not so bad. They show a modest recovery. This is really tepid.

I think you have to look at the longer term here, where the arc of the economy has been pointing to moderate growth. People were getting a little hyper-excited...

VELSHI: Right.

ROGOFF: ... 200,000, 200,000, now it's going to go to 300,000, 400,000. Well, you know, it's probably going to continue at this modest rate. Let's hope that nothing shakes it up.

VELSHI: That's a good -- that's a good observation, which we've had from a number of people who have said, Guys, this is not 6 percent GDP growth. This is 2 percent.

ROGOFF: Absolutely.

VELSHI: Hopefully, we get to 3 percent. So when people say we'd like to see 300,00 and 400,000 and 500,000 jobs created a month, that might be creating expectations that can't be met.

Diane Swonk is the chief economist with Mesirow Financial. Diane, the one thing that Christine pointed out which -- which we're happy about is that the massive public sector cuts seem to be over. We've seen very few of those in the last few months. The private sector has been leading this jobs recovery.

So what is it that's holding us back from -- I'm inventing a number here -- 300,000 jobs added every month? What needs to happen?

DIANE SWONK, CHIEF ECONOMIST, MESIROW FINANCIAL: Well, you know, frankly, you know, this is Ken's area of expertise. We're still in the wake of a financial crisis and we've still got a lot of things to heal, a very uneven recovery out there.

I think this month's number also is a little bit reflective -- we got a little extra boost from unseasonably warm winter weather over the last several months. And there was some payback. The retailers that didn't hire this month actually already hired because they were selling spring stuff in January and February...

VELSHI: Right.

SWONK: ... instead of March. So some of this is a payback to the earlier gains we saw. And the earlier gains were extra hyped because of that unseasonably warm weather. But the reality is, we still have a subpar recovery. We're talking about growing around 2 percent in the first quarter, a little above that during the remainder of the year.

That's just not fast enough to create jobs quick enough to bring down the unemployment rate...

VELSHI: Right.

SWONK: ... in a way that's substantive. And it's something that Ben Bernanke has brought up, as well, because he's now worrying about -- we've got 38 months running above 8 percent unemployment.

VELSHI: Right.

SWONK: That ties the 1980s, and the cumulative effects of that are really starting to show.

VELSHI: And you're echoing Ken's, you know, idea that this is not -- these numbers that we have -- I mean, while we may be surprised that we've slowed down to 120,000, that may be more in keeping with the economic growth numbers that we see.

Stephen Moore is an editorial writer with "The Wall Street Journal." Stephen, what's your sense of these numbers? If it wasn't an election year, if you had not heard Mitt Romney -- he's already called this a troubling report, other Republicans were quick to point out that President Obama's policies are holding the U.S. back.

Make the case as simply as possible as to what President Obama and this administration could be doing differently that would result, in your opinion, in more jobs being created.

STEPHEN MOORE, "WALL STREET JOURNAL" EDITORIAL WRITER: Well, let me first start to say that, obviously, this is a bit of a disappointing report. You know, I debate Robert Reich on your channel all the time...

VELSHI: Yes.

MOORE: ... and he's told me for years, Ali, that you need 150,000 a month just to keep pace with labor force growth. So we fell short of that.

And I'm very worried, by the way. I'd love the others' take on this. I think the most distressing statistic we've seen on jobs over the last two or three years has been what we call the decline in the labor force participation rate, which means, Ali, people have kind of dropped out. These discouraged workers are still out there. And that means you don't get the output and the oomph in the economy that you need.

Now, look the unemployment rate today politically doesn't matter. What matters is what the unemployment rate is in September, October and November. And so, you know, politically, I think you can read too much in this.

If I were President Obama's adviser, which I'm not, I would say maybe we should cancel the big tax increase that's scheduled for January 1, 2013. I think the economy is way too fragile right now to take that. I think that we should have a much more aggressive energy policy.

And the one thing to think about -- let me just add one other policy variable. We have had this kind of crack cocaine of easy money now for three years, and it doesn't seem to be providing the real revival of the economy that most of us would expect and hope.

You know, we're three years now into a recovery. If you compare this with past recoveries, it's just much lower than we should expect. We should be expecting 4 or 5 percent growth in this phase of a recovery. We're not getting it.

VELSHI: Well, I want to take that up with our other two guests. How much of this could have been worse if we didn't have that, as you call it, the crack cocaine of cheap money? Where we would be?

But I want to take a break before we get to that, so Diane and Ken, think about your answer to that.

Up next: Two threats outside America's borders that could shatter this fragile recovery. Plus, believe it or not, a bipartisan effort in Washington designed to help startups and small businesses.

(BEGIN VIDEO CLIP)

BARACK OBAMA, PRESIDENT OF THE UNITED STATES: If these entrepreneurs are willing to keep giving their all, the least Washington can do is to help them succeed.

(END VIDEO CLIP)

VELSHI: Republican Eric Cantor was there when the president signed the bill and AOL co-founder Steve Case was there, as well. It's called the Jobs Act, Jump-start Our Business Startups. He's going to talk to me -- Steve Case is going to talk to me about what this means for innovation in America and how it actually creates jobs. That's all coming up on YOUR MONEY.

(COMMERCIAL BREAK)

VELSHI: Hey, welcome back to YOUR MONEY. I keep referring to this fragile recovery in the United States. I'm not just making that up. There are external factors that actually could have an effect on this recovery. Now, while the jobs picture appears to be improving here in the United States, that is not the case in Europe.

Take a look at the 17 countries that use the euro. Unemployment in that area is at the highest level since 1999. Take a look at Spain right down here, 23.6 percent. Greece, the one that's been in the news all the time, 21 percent unemployment. Portugal back here, 15 percent unemployment. And Ireland is at 14.6 percent unemployment.

Now, the three largest economies in the EU are faring a little bit better. France has just 10 percent unemployment, Britain around 8 percent and Germany only 5.7 percent unemployment.

The treasury secretary, Tim Geithner, said this week that economic fallout from the debt crisis in Europe is a threat to the recovery here in the United States. But that's not the only threat. In fact, one gets the feeling that Europe is starting to get its act together.

Oil markets are spooked by geopolitical tension in the Persian Gulf as the Obama administration is moving to tighten sanctions over Iran and its nuclear program. Now, take a look at this. This is the Strait of Hormuz, OK? That's Iran above it. Now, Iran is a notable oil producer. The West is no longer buying oil from Iran, but China is and India is.

But this is the more important part. This Strait of Hormuz -- it's a very narrow strait through which one fifth of the world's oil passes. Now, that straddles Iran, and Iran has from time to time threatened that if anything goes wrong, if anybody attacks Iran, if Israel or the U.S. attack Iran, they may close off that Strait of Hormuz.

Now, Americans are already paying 20 percent more at the pump for gasoline this year. Let's bring the panel back in. Ken Rogoff joins us again. Ken, when it comes to this recovery, what is the bigger threat? Is it oil prices. Is it Europe? Is it something else? Is it neither?

ROGOFF: I think Europe is probably the more uncertain threat. I'd have thrown in China, by the way. That's the huge economy slowing down.

But the big picture is that there's still a lot of debt, household debt, other debt in our economy that's going to take a long time to come down. And there are a lot of areas where wages are still too high.

Stephen had said the Fed has been putting the economy on crack cocaine, it's too easy a monetary policy. I don't want to say that Ben Bernanke should be passing out candy in a schoolyard...

VELSHI: Right.

ROGOFF: ... but I actually think that a bit more inflation is what we need, that it's not they've been too bold, they've been too timid.

VELSHI: Very interesting. All right, Diane, let's talk about what people think is the big threat. A recent CNN Opinion Research Corporation poll found that 71 percent of Americans say rising gas prices have caused them financial hardship. Now, forget a recovery. Is there a tipping point for gas prices? And we've seen this in the past. Is it $4.50 a gallon, is it $5 a gallon where Americans really cut back on spending and send the economy reeling because they're spending more on gas, money that they otherwise would have been spending at restaurants or making purchases?

SWONK: Well, actually, I think that gets into the issues that we talked about earlier, the unseasonably warm winter weather. We had extremely low natural gas prices and low heating bills as prices at the pump went up...

VELSHI: Right.

SWONK: ... which was completely different than 2008.

VELSHI: Right.

SWONK: And that allowed Americans to keep spending and filling their tanks. What I worry about going forward is the crimp that higher prices at the pump could play as we have to turn on our air- conditioners, which are much more expensive, through electricity, and pay for that at the same time we're paying higher gas prices. So there's a lot of moving parts.

And I do underscore, as well -- you know, Ken had talked about, you know, the Fed maybe not doing enough, and that is something -- the National Association for Business Economics survey is in complete approval with what the Fed has done and setting expectations on the Fed funds rate, as well, on the majority of us surveyed, which is almost 300 economists...

VELSHI: Right.

SWONK: ... actually said we approve and think that the Fed is doing the right things because committing to reflating an economy like this is exactly what Ken wrote a book on, is what you need to do at this stage of the game.

VELSHI: All right, so Stephen Moore, you got your answer. Our two economists think that those interest rates should remain low for a while. Put that aside for a second, though.

If the recovery is fragile -- and I think we all agree on that. I mean, there was definitely some sense that it was -- it was moving on its own, but clearly, things can set it back. Who's got a leg up here? Because conservatives spent the better part of the last few years saying that Barack Obama couldn't get jobs going in America. And generally speaking, he's had jobs going in America. We've got a bit of a setback this month.

What do conservatives do? Which party has a leg up?

MOORE: Well, this is not a hard election to predict, in my opinion, Ali. If people go into the voting booth in November, they're going to ask themselves one question. Can we afford four more years of these policies? And if people are feeling confident about the economy, if they feel like jobs are coming back, then Barack Obama will be reelected. If they have a real sense of unease and a continued sense of panic about their own finances and about gas prices and about jobs, then I think Mitt Romney will win.

But look, I just have to say that -- let's say that the economy weakens -- and I think it's going to -- I do think this is just a blip. I think this -- we're going to see some better job numbers in the months to come.

But if the economy doesn't get better, you have to ask yourself the question, Ali, what do we do next? What's plan B?

VELSHI: Right.

MOORE: Because we've had record amounts of Keynesian debt. We're borrowing a trillion dollars a year. We have record low interest rates and all this money being deluged into the economy by the Fed. And it's almost like the Keynesians are out of ammunition.

Look, I respect Ken Rogoff. I think he's one of the great economists in the country. But Ken, the problem is if we have more what you called -- you know, some more inflation, you're going to see the gas price go to $5 or $6 a gallon. You're going to see the gold price go to $2,000. You know, I just don't see how that's going to really help this economy improve. It sounds to me more like what happened in the 1970s.

VELSHI: Let's let Ken get a word in there. Ken, what do you think of that?

ROGOFF: Well, you know, certainly, it's true that it would affect oil prices. But as I said, housing prices in many parts of the country are too high. It takes a long time for the price to grind down. Inflation is another way to deflate its value. Same thing with wages in many parts of the economy. They're still too high. That's why there's unemployment.

And there's a lot of debt. So yes, it's not a perfect instrument. But this is a once in 75 or 100 years problem. I don't really see another way out except grinding it really slowly. You could take some edge off it with inflation.

VELSHI: All right. Diane and Stephen, thanks very much for joining us. Ken, stick around. That's because a former top economic adviser to President Bush is quoting you, Ken Rogoff, in his "Wall Street Journal" op-ed this week, insisting that we are in the midst of the worst recovery of all time.

And if he's right, what does that mean for your economic future?

Plus, if the Kennedys equaled Camelot, why is Mitt Romney's wealth a top target in this election?

That's all coming up on YOUR MONEY. (COMMERCIAL BREAK)

VELSHI: Question. Is this the worst economic recovery of all time? Before the break, I asked economist Ken Rogoff to stick around because he was mentioned in a "Wall Street Journal" op-ed this week that makes that claim. It was written by Ed Lazear. He's the former economic adviser to President George W. Bush.

Now, Christine Romans rejoins us, as well. She had the chance to talk to Ed Lazear this week -- Christine.

ROMANS: Ali, we hear again and again from the Obama administration, other economists, that this administration that stopped the economy from going into a depression. But Lazear argues it's President Obama's policies, some of them, that are making this, in his words, the worst recovery in history.

(BEGIN VIDEOTAPE)

EDWARD LAZEAR, FMR. ECONOMIC ADVISER TO PRES. GEORGE W. BUSH: This hardly kept us from the great depression. What it did was it -- even at best, it softened the blow. But the big problem, at least to my mind, is that what we've done by engaging in those policies is created a situation where we have very serious long-term debt issues right now. And to my mind, those are the most important impediments to economic growth as we look to the future.

(END VIDEOTAPE)

VELSHI: All right, let's ask Ken Rogoff. Is this the worst recovery ever, Ken?

ROGOFF: Well, it's a matter of semantics, but the Great Depression was worse. I mean, it's really hard to compare. I mean, sure, there were a few good years in the early '30s, and Eddie Lazear points to them in his article. But we got to 25 percent unemployment first. I mean, it was bad here we got to 10. But it was really, you know, staggering. And frankly, it didn't come back -- I mean, it wasn't really until World War II that things really started to improve.

And this is the worst recovery since World War II. It is typical of a deep financial crisis. But the Great Depression, that was another animal.

ROMANS: You point out that, you know, the recovery from financial crises are slower than from other kinds of crises. And you were quoted this week by both Tim Geithner, the treasury secretary, and Ed Lazear, who worked for -- for Bush. I mean, your research is what all sides of the economic schools of thought use to talk about this recovery, Ken.

ROGOFF: Well, I think we -- my work with Carmen Rinehart, we certainly showed that recoveries are very slow after a financial crisis.

I think where policies really matter is affecting the arc of the economy in the longer run. How are we competing with China? Where are the jobs going to come? We have a population -- kids born today are going to, you know, have a 25 percent or something chance to live to be 100 years old. Can we keep our retirement age at where it is today? We don't seem to be able to do anything about it. There are state pension plans where they say they need to get an 8 percent rate of return every year just to break even.

ROMANS: Wow.

ROGOFF: Infrastructure, et cetera. there are a lot of problems that need to be worked on.

VELSHI: All right, and Christine, you talked to Ed about what some of the solutions to those problems are. He was heading towards something.

ROMANS: That's right. And how do we know which solutions are right? Remember, Ed Lazear was an economic adviser for George W. Bush. So we also talked a little bit about sharing the blame. I mean, I asked him specifically whether he, while in the Bush White House and during a time of excessive home building -- whether they didn't see it coming. Should they have seen the housing crisis?

(BEGIN VIDEOTAPE)

LAZEAR: The time would have been as early, actually, as the late '90s and then going into the early 2000s when we might have thought about that. But you know -- you know, again, hindsight is 20/20. And I think people at the time were thinking that that was actually a good thing for the economy. In retrospect, it probably wasn't a good thing for the economy.

(END VIDEOTAPE)

ROMANS: I think that's why when so many people, you guys, when they hear economists, present company excluded, talking about how we fix our problems, they say, yes, and I remember hearing Alan Greenspan and Ben Bernanke and Hank Paulson, the treasury secretary, all telling us, Don't worry, subprime isn't going to hurt the rest of the economy.

VELSHI: Right.

ROMANS: I mean, it makes -- people are a little nervous about how far we've come and how we're supposed to fix it.

VELSHI: Which brings us back to an earlier segment, Ken, where we were talking to Stephen Moore, where you and Diane Swonk suggested that this era of cheap money right now, stimulating the economy, is necessary, and he's warning that this is going to be the worst thing ever.

How do you deal with these things without the benefit of hindsight?

ROGOFF: Listen, it's very hard. The fact of the matter is, this kind of situation we're in at the moment, where interest rates are near zero, the policy interest rates -- we almost never see that. There was Japan. It's one example. And we have on our blackboards -- we have theoretical models of what the Federal Reserve should do, but we don't know.

And a lot depends on expectations, how people are going to think about the future, adjustment processes the likes of which we've never seen. We don't know.

But nevertheless, my instinct is I that would rather err on the side of ending up with a little too much inflation than having this thing drag on another decade.

VELSHI: Ken, good to talk to you, as always. Thanks very much. Ken Rogoff is...

ROGOFF: Thank you.

VELSHI: ... a professor of economics at Harvard University. He's former chief economist with the IMF. And of course, my good friend, Christine Romans, host of "YOUR BOTTOM LINE"...

ROMANS: Thanks, Ali.

VELSHI: ... which you can watch on Saturday mornings.

All right, what one word do you think best describes Mitt Romney? A thousand people were asked that question and their answer might surprise you.

That's next on YOUR MONEY.

(COMMERCIAL BREAK)

VELSHI: Mitt Romney sure is rich, but he's not the first wealthy presidential candidate. Don't tell that to his opponents who revelled in holding it against him. Even his fellow Republicans, as you know, have aimed to tie Romney to his riches in the minds of voters. Is it working?

Take a look at this recent Pew/"Washington Post" poll. Out of a thousand people asked what one word best describes Mitt Romney, more people identified him as rich than Mormon on the right side. That's quite a change from just a few months ago when his faith was mentioned far more than anything else.

Mark Preston is CNN's political director. Mark, why and how did Romney's wealth, which has been no secret for years, become such a negative for him on this campaign?

MARK PRESTON, CNN POLITICAL DIRECTOR: Well, for two reasons. One, because as you said, his rivals for presidential nomination have made a deal or a big deal about it especially when we look at some of the primaries that have played out over the past couple of months.

Mitt Romney does very well with voters who are making over $200,000. Rick Santorum, Ali, does very well with voters who are making under $100,000. So the big argument there, Rick Santorum has been making over the past few months is that he is better equipped to defeat President Obama in November. But in addition to that Mitt Romney has put some self-inflicted wounds upon himself. A couple of things he said on the campaign trail such as his wife owns two Cadillacs. Well, Ali, I don't own a Cadillac, sure most Americans don't own a Cadillac.

He also talked about how he wasn't concerned about the poor. Now he wasn't saying anything terribly bad about the poor, but he was trying to convey across during an interview was that basically there were controls in place to take care of poor.

But yet, Mitt Romney is stumbling over his own words. You know what, Ali, he also has offshore bank accounts and for most Americans, what does that say? It says that you're hiding money.

VELSHI: Interesting, Mark. Thanks very much for that. Let's discuss this a little more. Let's take a look back. John F. Kennedy, rich, considered American royalty. Men and women had their haircut to look like JFK and his wife, Jackie O in 19690.

When he was elected unemployment was 5.5 percent, it's 8.2 percent now. GDP was 2.5 percent, roughly around where it is right now. George H.W. bush also wealthy and yet a popular GOP nominee after two terms as vice president under Ronald Reagan.

In his election year unemployment same as under Kennedy, 5.5 percent, GDP, much stronger, 4.1 percent compare that with this election year, unemployment right now 8.2 percent. GDP, we're lucky, 3 percent.

So what is it? Is it the high unemployment rate that the reason voters seem willing to overlook the sizable bank accounts of Kennedy and George H.W. Bush, but seem to be hung up on Mitt Romney's money?

It's a good question for CNN contributor, Will Cain and the Demos senior distinguished fellow, Ben Barber. Gentlemen, good to see you.

Let's start with you, Will. Using "Occupy Wall Street" lingo, Mitt Romney represents the 1 percent in the minds of the 99 percent. In fact, his wealth would put him in the top 1 percent of the top 1 percent. He would be amongst the richest in America. Is that a problem?

WILL CAIN, CNN CONTRIBUTOR: I don't know why that would be a problem? We generally in society frown upon someone, holding poverty against someone. So why is it okay to burn the wealthy at the stake?

Unless you can convince me that his wealth has been cheated, lied, and stolen in some way, that's how it's accumulated then I don't understand why wealth is a negative.

VELSHI: That's an interesting question. Because there are some who feel he made his money, some said this morning, by running a company that took apart other companies and divided them up.

Again, this is one of those things we have traditionally thought of as OK in American society, but somehow it's being held against -- CAIN: You know what that is, Ali, that's this concept that the 1 percent is completely made up of these financial wizards. That we don't like finance for some reason when in fact, by the way, the 1 percent is only 14 percent of that is in finance.

The rest is doctors, lawyers, and business executives. We just don't understand finance. We think that's sorcery, that's magic money, how did they get that.

VELSHI: Well, Ben, you say that Mitt Romney puts the wrong face on wealth. Political campaigns are all about perception. Romney has certainly had trouble with moments, Mark Preston talked about some. Listen to this one.

(BEGIN VIDEO CLIP)

MITT ROMNEY (R), PRESIDENTIAL CANDIDATE: I like being able to fire people that provide services to me. Corporations are people, my friend. We can raise taxes -- of course they are.

Everything corporations earn ultimately goes to people. I'm in this race because I care about Americans. I'm not concerned about the very poor. We have a safety net there.

Rick, I'll tell you what, $10,000 bucks, $10,000 bet? I should tell my story. I'm also unemployed. Ann drives a couple of Cadillacs actually.

(END VIDEO CLIP)

VELSHI: Ben, these are moments that Romney's opponents have seized on. Why is Romney's money such a target?

BENJAMIN BARBER, DISTINGUISHED SENIOR FELLOW, DEMOS: I think the issue is not money per se, but that he has allowed money to define him. We've had a lot of rich people in this country. People don't resent money.

Oprah has a lot of money. Oprah has a ton of money, nobody -- Derek Jeter has a ton of money. Kennedy had a ton of money. Roosevelt in much worse times, and you were talking about, had an awful lot of money.

We have not allowed either class or money to define people. That's a good thing. Most of the rich call themselves middle class and a lot of the poor call themselves middle class. To find ourselves by our aspirations, what we want to bo.

And everybody wants to be middle class. So I don't think that's not the issue. But in a very peculiar way he's lost any other signifier but money. He seems constantly to bring us back to it.

Cars, it's a great -- I want to talk to Americans cars. That's great, but he says we should have bailed out Detroit. He talks about cars. He puts a dog on it. He has an elevator that brings one up to his home. I mean, with him -- it's weird.

NASCAR, you know, he says I know the owners. He doesn't know the drivers. He doesn't know the guys to fans, he knows the owners.

VELSHI: He's honest.

CAIN: He's certainly been defined by his wealth, but I'm not sure what you mean by allowed himself to be defined by wealth. This is a man, look, this is very principled human being, who gives away 10 percent of his money, rain or shine, every year he tithes 10 percent.

He gave away two years of his life to a mission for his church that had nothing to do with accumulating money. So I don't know what it has to do with allowing people to define you by your wealth.

BARBER: Because politics is about perception and here the perception, which he is encourage is that he talks about his money. I mean, he can say every American loves car. Our family likes cars, too. Detroit is a great city. He says my wife has a couple of caddies.

CAIN: So does Donald Trump. Nobody holds it against Trump.

BARBER: He doesn't talk about it.

CAIN: Trump?

BARBER: Trump talks about himself. He's made himself like Oprah. Donald Trump is a celebration of Donald Trump. It's funny, who would have thought Romney would wish for the days he was defined as a Mormon instead of a rich man. But in fact, the Mormon is a better definition.

CAIN: You concede that Romney can do something to translate this into, wow, I'm successful and, hence, should run your country as opposed to, I mean, these are gaffes.

BARBER: He does say though.

CAIN: They are gaffes because he's trying to deny it, Ali. I disagree with Ben. I think that's fine to defined by your wealth. Let it. Put it out forward. Do it as Trump does it.

Because, you know what, Romney is a success story. He earned his wealth. Unless somebody can show me where he lied, cheated or steal, he's a success story and we should celebrate success stories. Put it out front.

BARBER: That's not what we celebrate in America. We celebrate what you make your money for and how you make your money. Oprah has made a heck of a lot of money, but she's done on the way to becoming a celebrity, a special adviser to women in America, an emblem of what an African- American woman can do.

CAIN: What's Romney done wrong? He earned his money, right?

BARBER: But how and for what and to what purpose? He's got the money but what for.

VELSHI: In fairness, it's mostly been Republicans who have drawn this line, who have said what did Rick Perry called him vulture, capitalist, you know, this is mostly an internal Republican fight. Democrats have a sense of --

CAIN: They just haven't had a chance yet watching a couple of months. It's a fundamental lack of understanding of the role of finance in economies.

It's a fundamental lack of understanding of apportion capital into the most efficient mechanisms. That is what Mitt Romney has done throughout his career. If you don't think that's viable society, you've got some economics 101 to learn.

BARBER: But I think right here Will drives the wedge into the Republican Party because what Rick Santorum does is say to be a Republican is about values, how you live, how you relate to ordinary Americans.

And to say it's about making money, it's about being rich, it's even about solving problems technocratically doesn't speak to Americans whether they're Republicans or Democrats.

That's why Rick Santorum -- we're not talking about fair. We're talking about what works in politics. We're talking about perceptions.

If I had to choose a Republican, God forbid, you know, I'd sure take Romney before I took Santorum and for some of the reasons you're talking about.

CAIN: Don't we all agree that people don't understand finance. They don't understand Wall Street. They think it's magic or stealing.

VELSHI: That's finances own problem, its own PR problem. We know the banking system is essential and necessary. But find me 10 Americans, nine out of 10 Americans that will tell you that.

CAIN: They do not like that.

BARBER: It's a simple problem, but the reason why Romney won't be the next president of the United States.

CAIN: We shall see, Ben, on that.

VELSHI: Great discussion as always with the two of you. Thanks so much. Ben Barber is a distinguished senior fellow at Demos and Will Cain is a CNN contributor.

Well, stocks are up 70 percent since President Obama took office. Why? Is Wall Street calling for a change this November?

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VELSHI: Stocks have been on a tear the first three months of this year making it the best first quarter for the S&P 500 in 14 years. A lot of your mutual funds in your 401(k), your IRA will look like the S&P 500.

Check this out. It generated a 12 percent return. That's where the market has been so far. But big question where is it going? Right now you and a lot of other folks are wondering if it's time to get back into the market, if it's time to start selling stuff.

Before you dig out the password to your e-trade account or whatever it is you use, you may want to listen to this discussion.

Jim Awad is a managing director at Zephyr Management, old friend of our show, Lex Harris, managing director at CNN Money, Kim Forrest, Vice President and senior portfolio analyst at Fort Pitt Capital. Welcome to all of you. Jim, you say that easy money is gone.

JIM AWAD, ZEPHYR MANAGEMENT: Well, the big after the last six months, the big gains mathematically it's very tough to replicate that. But that doesn't mean we're going to go down a lot. You can have any sort of correction after a 30 percent gain. So don't come in now expecting another 30 percent over the next six months. That's what I was saying.

VELSHI: These gains don't come without some risk. Kim, you say all the data points to the kind of volatility we saw last year. I like to remind our viewers this.

While everybody thinks they want gains, what most people sleep better with is slower, steadier gains, without the kind of volatility we go through in a year like last year. Tell me your thoughts.

KIM FORREST, FORT PITT CAPITAL GROUP: Well, there are a couple of factors that really haven't been solved between this year and last year. First and foremost is Europe. Europe has still not been involved. They keep kicking the can down the road.

Greece is taken care of, but guess what, Spain and Italy still are out there with very large debts and a very unsteady banking system that the EU has to step up and fix.

We don't believe that the actions that they have taken lately have really, you know, nailed what's fundamental wrong over there. That is doing to eventually blow up and make investors nervous.

Then there's the big misunderstanding about what's happening in China. It's very difficult to get good data out of China. We're all depending on China having a soft landing. I don't know that we can count on that.

But we're always looking over to China to see what they are doing. That affects this global stock market of ours.

VELSHI: Yes, in fact, earlier in the show we were talking to Ken Rogoff and when I asked him whether Europe and Iran and oil were the biggest threat to the economy. He said China maybe the biggest threat right now.

Lex, CNN Money just did a survey asking investment strategists the single greatest risk of the market, what did you find? I guess the list is very similar to what Kim just talked about.

LEX HARIS, MANAGING DIRECTOR, CNNMONEY: Absolutely. All of those things are addressed. You know, Jim and I were talking, too. It's just you could go on and on with how many risks there are in the market. The number one was what Washington, D.C. is going to do. There's going to be so much uncertainty. Wall Street, of course, hates uncertainty and you're talking about tax increases, spending cuts.

No one knows how it's all going to play out. I would point to two other things. We had -- if you think about the two things that drove the market so far, we had profit growth and easy money from the fed. Both of those things are a big question mark right now.

VELSHI: Jim, the fact is though our viewers should do in a smaller way what you do for a living. You don't sit around and hope you make money because the market is on a tear or hope you don't lose all your money because markets are going down. What should they be looking for?

AWAD: Well, you're in a low return environment over the next several years. Money markets pay nothing, bonds are very low. But I would say the best way to accumulate capital over a multi-year period is to own shares in companies that have growing earnings, dividends, and growing dividends.

So I would buy world-class companies, some in America, some in Asia, some in Latin America that are able to show reasonable growth in a slow growth, low return environment. That's the best risk adjusted way to make money.

VELSHI: All right, Kim, the stock market might be up 70 percent since President Obama took office. But another CNN Money survey show that the vast majority of investment strategists and money managers actually want a change in the White House come November.

Take a look at this. Stocks are up again 70 percent under President Obama and Wall Street wants a Republican president. Are you surprised by that, Kim?

FORREST: I am kind of, because, well, first of all, I don't know that the actual president has a whole lot to do with the economy at large. We like to have him as our mast head on the front of the ship pulling us forward or figurehead on the front of our big ship that's the economy.

But I don't know that they have all that much influence. But that being said, if you look at the donations so far from Wall Street, it's pretty even. I think that Wall Street who gave us hedging hedges the bets in the long run and will donate equally to both. Let's see what happens by the time November hits.

VELSHI: Yes, that's an astute way to look at it. As much as people say what they want, the big donors tend to hedge their bets unless they have some ideological dog in the fight. You guys were on top of the survey, Lex. What's your take on it?

HARIS: You know, Wall Streeters always say they want Republicans, right? It sounds good. We want low taxes. We want low regulation. But then, what are the things that make the market go higher, right?

It's easy money from the fed, which good conservatives are supposed to not like and even the stimulus spending that actually was goosing corporate profits along the way. So you definitely see this kind of funny disconnect there.

VELSHI: You're right. It's a strange look at it, but either way, don't expect the rally necessarily to continue. Do what Jim says, take a look at your investments and rebalance them as necessary.

Thanks to all of you. Kim, good to see you. Jim Awad is Zephyr Management and Lex Haris is the managing editor of CNN Money.

A new law makes it easier for you to invest in the next big thing. I'm going to tell you how coming up on YOUR MONEY.

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VELSHI: A new law makes it easier to get in on the next big thing. The Jobs Act allows regular investors like you and me to become stakeholders in companies that haven't gone public yet.

The bill passed Congress with bipartisan approval and President Obama signed it into law on Thursday. Now this law targets companies with gross revenue of less than a billion dollars and it relaxes SEC regulations for companies looking to go public to IPO.

It allows companies to advertise themselves to investors using the internet. Start-ups can raise up to a million dollars from investors over a 12-month period.

The co-founder of AOL now the chairman of the Start-Up America partnership and chairman and CEO of Revolution, Steve Case joins me now. He's also a member of President Obama's Jobs Council. He was at the bill signing ceremonies. Good to see you again.

This bill is trying to be a pro-business bill. I'm a little surprised at the amount of opposition out there to it. Tell me what this bill is supposed to achieve.

STEVE CASE, CHAIRMAN, STARTUP AMERICA PARTNERSHIP: Well, it's really part of the recommendation the Jobs Council made to President Obama in October, serious things how to really jump-start our community. It's really a source of all the net job creation over the last three decades.

Forty million jobs had been created by a young entrepreneurial company so if you want to get the economy moving, want to get employment moving, the way to focus is really on these young start-ups.

The bill that was passed was overwhelming bipartisan support in both House and the Senate and signed by the president does a number of things. One is allowing crowd funding for young companies to access capital, lots of people making small investments.

Another is on ramp for initial public offering, so later stage companies can access public markets right now because of the cost and complexity of some of the regulations. Right now, the same regulations that GE or IBM or Wal-Mart had to applied to these young emerging growth companies. With this new law, that's changed so you now have a five-year on ramp if they are in that emerging growth fast.

There are a number of important changes, but they're all about making sure entrepreneurs have access to the capital necessary to start and expand their companies, which really drives innovation, drives the economy and drives job creation.

VELSHI: So once this gets going, tell me the difference. In some of these start-ups, the way they would get funding now versus how it would work under the new bill?

CASE: Well, if you look at high-growth companies, only about 15 percent actually get venture capital, 85 percent are funded in other kinds of ways from friends or family or they get to (inaudible) a loan from a bank.

Crowd funding creates a whole new opportunity for a lot of these companies that don't have traditional venture capital. People focussed in Silicon Valley and the venture companies there, and why companies like Facebook are hot, that's really the exception to the rule.

If you look all around the country, in all sectors, not just technology, but services and manufacturing, most entrepreneurs are desperately in need of capital to get started in scale. So these new tools such as crowd funding enable them to aggregate investments from lots of people and get their company going.

Crowd funding has existed for a while. But up until now you could only use it to fund a project like a documentary not to invest in a company. But sort of perversely, you could use a site like eBay to sell 100 percent of your company.

You couldn't sell 1 percent so crowd funding essentially allows you to sell small interests in your company to lots of people to get the capital you need to get started.

VELSHI: Steve, where's the criticism coming from? Because you said, it's bipartisan. We know there's excitement in the start-up sector, as there has been for some time. Why so much pushback on this?

CASE: Well, I think there's a lot of support. Certainly, there are some critics. I think the concerns are legitimate. They want to make sure as the new tools are put in place, to give entrepreneurs access to capital, give small investor the ability to invest in young high- growth companies, which most people do agree is a good thing.

But sufficient investor protections are put in place so people don't get ripped off. Obviously, that's important. The final law that passed had some amendments particularly around crowd funding that forced those to go through intermediaries.

They have to register with the SEC. I think that's important. The industry there, the companies doing crowd funding are joining together to put their own self-regulatory practices in place, and the SEC itself over the coming month will kind of put the rules of road in place.

So crowd funding actually won't even though it was signed by the president this week won't actually go into effect until early next year because the rulemaking needs to happen.

I'm confident at the end of the day the rules will be right so that investors are protected, entrepreneurs have access to capital to start and grow their companies and individual investors up to now have been locked out of investing in these young companies will have that path as well.

VELSHI: Steve, good to talk to you as always. Thanks very much for joining us.

CASE: Thank you.>

VELSHI: Well, it's an industry everyone loves to hate. Yale economist, Bob Schiller, a pretty smart guy says finance can actually save society as Will Cain was saying earlier. We'll give you a sneak peek at how, next.

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VELSHI: Thanks for joining the conversation this week on YOUR MONEY. Next week, the financial world image problem, investing, saving, mortgages, insurance, all things that should better life, not complicate it.

So where did it go so wrong? Yale economist Robert Schiller will be here next week to tell us how finance can help the greater good once again. You're not going to want to miss that.

We're here every Saturday, 1:00 p.m. Eastern and Sunday at 3:00 p.m. Make sure to check out my book with Christine Romans, "How to Speak Money."

It's a step-by-step guide to understanding the language of money with everything you need to know at the amazon.com right now to get the book.

You can stay connected to us 24/7 on Twitter. My handel is @alivelshi. The show handle is @cnnyourmoney and, yes, I do read every single tweet. Have a great weekend.