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The Politics of the U.S. Economy; Is President Obama Doing Enough to Help African-Americans?; Supreme Court and the Affordable Care Act
Aired June 23, 2012 - 09:30 ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
CHRISTINE ROMANS, HOST: What if I told you there could be a recession no matter who is sitting in the White House next year? What if I told you neither President Obama nor Governor Romney can create a single extra job quickly?
Good morning, everyone, I'm Christine Romans. What if I told you there's no one riding in on a white horse to save you on election day? Our problems are global, structural, and decades in the making. And that presents a tremendous challenge for President Obama. Six in 10 Americans say their personal finances will be an important factor when deciding who to vote for in November. That is according to a new poll from Bankrate.com.
Now, President Obama didn't break this economy, but he hasn't fixed it fully either. There can be no doubt, the recovery is ailing here. This is what the economy looks like since the president took office three and a half years ago. This is economic growth. GDP growth below 2 percent here. That means our economy is not growing fast enough. It's growing, but not fast enough.
Your most important asset, your home, despite government efforts to prop up the housing markets, home prices have fallen in the last three and a half years.
And jobs, 20 consecutive months of jobs gains, but it's these last five months right here, this slowdown in jobs growth right here, that could cost the president his job. That's at least what the Republicans are hoping for.
Pete Dominick is the host of Sirius XM Stand Up, and Stephen Moore is the editorial writer at the Wall Street Journal.
Pete, President Obama did not cause this recession, but three and a half years into his term, the recovery is now slowing. I want you to listen to this clip from the Today Show. It was taped in February of 2009, just two weeks after the president took office.
(BEGIN VIDEO CLIP)
BARACK OBAMA, PRESIDENT OF THE UNITED STATES: A year from now, I think people are going to see that we're starting to make some progress. But there's still going to be some pain out there. If I don't have this done in three years, then there's going to be a one-term proposition.
(END VIDEO CLIP)
ROMANS: Pete, did we just hear the president say he doesn't deserve a second term?
PETE DOMINICK, SIRIUS XM STAND UP: Not necessarily. The problem is you say he didn't get it done. The problem is he says I didn't get it done. It's not all political.
ROMANS: He also said he didn't cause it.
DOMINICK: Of course. It's not all political. Not everything -- we can blame Republicans for being obstructionist, and that is absolutely true -- their only solution is to get rid of regulation and taxes, even though small businesses don't ever cite that anywhere near the top where the problem is, they say there's not enough consumer demand. It's not all political. A lot of it is our system, a lot of it is there's massive job cuts during the recession. And now companies, every company, everybody can relate to this, are doing more, and making more with a lot less people. What's the incentive to hire more people if you're still getting the job done?
ROMANS: I think Newt Gingrich said the president won on "yes, we can" and now he's campaigning on why we couldn't.
DOMINICK: Yes, well, it's hard to prove a negative. It's hard to say, well, if we get this done, then there will be more jobs. If we pass the American Jobs Act, we'll have more. But we do have data, we do have evidence, I'm sure Stephen Moore will cite plenty of it that I'll disagree with. But I just simply cite the recessions, which were not nearly as deep for Reagan, and Bush, and Clinton, those downturns. But public sector growth actually increased. We have 657,000 jobs that have been cut from the public sector. Those are real people, and they do have real money that they spend.
ROMANS: Stephen, Republicans love to blame the president. Congress can fix some of this, but they have refused to act. When will GOP leaders step up?
STEPHEN MOORE, WALL STREET JOURNAL: Well, I don't think it's fair, Christine, to say the Republicans haven't done anything to try to get us out of this recession. They passed about 20 to 30 bills out of the House -- as you know the Republicans run the House, the Democrats run the Senate. And the Senate hasn't done anything on these. Repeal Obamacare, get those tax rates down low.
Now, look, there is a difference in how you fix the economy. What Barack Obama is saying right now, Christine, in my opinion, is let's have more of what we did in 2009 in terms of stimulus, aid to states and local governments. And the Republicans are saying, hell, no. I mean, in fact--
ROMANS: But where would we be, Stephen, without that? If you look at 1.9 percent economic growth, you could argue that without all of that support to the economy, things could be much, much worse.
MOORE: You could always argue things could be worse. Here is the problem for the president, Christine. I'm glad you played that clip, because he did say, look, give me three years, five me four years, if I haven't fixed things, bring in a new coach. And a lot of voters are saying, well, it's been three and a half years, the economy is really pretty flat-lined. Ben Bernanke said this week that he's expecting growth of 2 percent. Look, if you look at the growth rates coming out of the past recessions, the growth rates were 5, 6, 7 percent.
DOMINICK: But look at those -- you always cite that. But those recessions were not this recession. This is much deeper. It's really important.
MOORE: That's true.
DOMINICK: And Ben Bernanke isn't helping. Everyone is looking at him, but he's not doing anything brave and courageous.
MOORE: Wait. Hold on there. I mean, we've had the easiest monetary policy and the cheapest money we've had any time in 40 years. The Fed has held interest rates to practically zero. They can't get them any lower than that.
MOORE: Banks are getting that cheap money, but students can't get that cheap money for loans.
ROMANS: It's 3.66 was the mortgage rate. 3.66 percent on a mortgage rate, but people keep telling me they can't get a mortgage. So the rates are cheap. The money is flowing, Stephen, but the middle class isn't feeling it. It's not meaning jobs yet, and it's not meaning--
MOORE: That's true.
ROMANS: And it's not necessarily meaning people are getting--
MOORE: You know what, let me just say this. Christine, I disagree with one of the things you said right at the outset, that if we have new leadership, that it's not going to matter that much.
ROMANS: You think it will matter, like psychologically it will matter? Like businesses will start hiring?
MOORE: I do. Because I do think there's this kind of a cloak of fear over the economy right now. You have record low interest rates. I actually think this economy is prepped for a big, big powerful expansion when you look at some of the fundamentals of the economy.
MOORE: If Mitt Romney is elected?
MOORE: I just think people, businessmen and women are afraid of Barack Obama. He comes across as anti-business both in his policies.
MOORE: In his rhetoric. High taxes, the regulation.
DOMINICK: High taxes? Low taxes! Wrong, lowest taxes we've had since Eisenhower, hasn't raised one tax, Stephen, and you know it.
MOORE: Yes, but they are going up next year big time.
ROMANS: All right, we have got to leave it there, gentlemen. Let's fight about -- we got -- by my calendar, we have five months to go, so we can revisit this. Stephen Moore and Pete Dominick. Thanks.
Coming up next, no matter what the Supreme Court rules on health care reform, millions of Americans aren't going to like it. And they might not understand it. Stick around and you will.
And later, African Americans were crushed by the recession, and left behind in the recovery. Has the first black president in American history let them down, and could Mitt Romney do any better?
ROMANS: It's the signature achievement of President Obama's presidency, health care reform. At any moment, the Supreme Court will rule not on whether it's right or fair, but whether it's constitutional.
The battle centers on the individual mandate. It requires most Americans buy health insurance if they don't already have it. My next guest says the law will be fine even without that mandate. Economist Dean Baker is co-director of the Center for Economic and Policy Research, and CNN contributor attorney and resident contributor Will Cain also with us.
Dean, I want to start with you. If the individual mandate is struck down and the rest of the bill is upheld, it's a numbers game that says a lot of sick people will come into the system while many healthy people will choose to stay out, and that's going to drive up premiums. So how are policy makers going to get healthy people to buy into the system without mandating it?
DEAN BAKER, CENTER FOR ECONOMIC AND POLICY RESEARCH: Well, you have to go back to the drawing board, and basically what they are going to do is what people have often referred to as mandate right. What that means is that they will have a system where people will have very strong incentives to sign up while they are healthy and not wait until they get sick.
And sort of the most simple way to put this or the most obvious mechanism would be to say that if you don't get insurance, you go I'm healthy, I don't need the insurance, and then suddenly you buy it after you get sick, you aren't covered for that condition for say six months, nine months, a year. That will give people a very strong disincentive to try to play that game. So you'd be taking a very big risk saying, OK, I'm healthy, I don't need the insurance. If I get sick, I'll then buy it. That's a big risk.
ROMANS: Will, last week you said that covering those with pre-existing conditions is not insurance. You told me that's not insurance. Covering someone who is already sick it not insurance. You said it's something else. What is it?
WILL CAIN, CNN CONTRIBUTOR: Well, the concept of insurance is to cover risk, right?
ROMANS: I think I just said insurance, but I knew you were going to say--
CAIN: I'll get you saying it correctly here. The concept of insurance is to cover risk. But if you're certain somebody is sick, that's not a risk mitigation, that's certainty. So covering pre-existing conditions does not fall within the concept of insurance.
I think Dean's ideas, while they are very interesting, I think they are actually really good. They also recognize that that's a problem. You simply cannot ask the insurance companies to cover people with pre-existing conditions without mandating the healthy people get in there. You just bastardized the concept of what insurance is if you do that.
ROMANS: Dean, I want to ask you, what happens if this thing is struck down in its entirety, or even just the individual mandate, what happens immediately with how people feel health care? The one question I keep asking is children with some kind of major illness who are now insured, because they have to be legally, what happens to these different groups, kids under 26, what happens?
BAKER: Well, my guess, and you know, I'm not going to claim legal expertise, my guess, just based on people who do have expertise, have said is I don't think they will strike down those provisions. What's most likely at stake here is the mandate, you know, 50/50, If I had to place a bet they will strike that down. But provisions like requiring that insurance covers children under 26 under their parents plan, I don't think they are going to go that route. That would be a really strong move on the Supreme Court's part.
CAIN: You know, who knows. That's a complete jump on whether or not they will strike the whole law, or keep parts of it and just strike down the mandate. But we do know this, we know that Aetna, Blue Cross, and some of the biggest private insurers in this country have already said, voluntarily, they are going to extend insurance coverage to those up to the age of 26. So it's just an interesting example that sometimes you might not need the government to be the solution to what you see is the problem.
ROMANS: Well, you think Republicans, I mean, if it's struck down, it is a victory for them, clearly. But then do they go and they start legislating certain parts of this that are palatable to a lot of voters? CAIN: That's another good question that I don't know if I have the answer for. They have certainly advocated for repeal and replace, coming up with something different. I think there are a number of conservative Republicans who have said we like the concept of the pre- existing conditions clause because it's politically popular. And they might have to entertain ideas like the ones Dean talked about at the top of our conversation here, incentivizing people other ways, incentivizing healthy people to get into insurance other ways.
ROMANS: OK, Will Cain, Dean Baker, we'll keep talking about this, because we're still waiting to see on this ruling. It could be on Monday. Thanks, guys.
Still waiting to see this ruling, maybe it could come up Monday.
Coming up next here, the widening wealth gap. We're going to talk about that. Whites have 22 times more wealth than blacks. Why many voices in the African-American community feel the first black president of the United States isn't doing enough.
And later the story about your money is full of distractions. I'll show you how to tune out the noise from Europe and stay focused on your long-term financial goals.
ROMANS: We've seen President Obama take strong stands for many causes. The children of illegal immigrants, standing up for women by jumping to Sandra Fluke's defense against attacks from the right. The president's recent support of gay marriage even led "Newsweek" to dub him the first gay president.
But what has he done for the pocketbooks of African Americans? The latest Census Bureau figures show net worth for all Americans has collapsed in recent years. Median household wealth was nearly $103,000 back in 2005, median household wealth for everyone. By 2010, the average Americans saw their net worth drop down all the way down to $66,000. That's a crisis, but it is not a new crisis for African- Americans.
Let's look just at black households. Back in 2005, the median household net worth for blacks was just $11,000. By 2010, that figure was cut by more than half to less than $5,000. In fact, whites have 22 times more wealth than blacks, a gap that nearly doubled during the great recession. It's a crisis that many in the African-American community were hoping the first African-American president would focus on. Ryan Mack is president of Optimum Capital Management, former New York Times columnist Bob Herbert is a distinguished senior fellow at Demos.
Ryan, I want to start with you. Bob says that blacks -- they are still going down for the count economically in this country. He feels this president has an obligation to speak out and to do more on the issue. Do you agree that this president has not done enough for African- Americans? RYAN MACK, PRES., OPTIMUM CAPITAL MANAGEMENT: There's no doubt that when African-Americans -- when the country suffers a recession, African-Americans suffer a depression, and so on and so forth. And there's no doubt that we have a lot of work to do to improve our state.
But I would rather have the pen of Barack Obama much more than the voice of Barack Obama. The pen, and use the voice of the people over the voice of the person.
ROMANS: What is the political fear, if he's too vocal specifically about African-Americans and money?
BOB HERBERT, NEW YORK TIMES: I think he believes that if he speaks out too strongly on black issues or on issues relating to poor people, that he'll lose white votes as a result of that.
ROMANS: So what's the president supposed to do about it?
HERBERT: Well, in that case, the president, because we have a jobless crisis across the country that is much worse for blacks than for whites, the president needs to push specific job creation programs, which I don't feel that he's done. He certainly has not done enough.
ROMANS: Specifically for the African-American community?
HERBERT: No. He needs to have a much stronger jobs program in general. But then he does need programs targeted toward the African-American community. For example, if those programs are not reaching blacks, then we need something like the old WPA or the CCC updated for the 21st century. We need--
ROMANS: Tell that to Congress.
HERBERT: We need job training programs in inner cities, where young black Americans are working at levels that are just desperately low.
ROMANS: But, Ryan, you go to some of these very neighborhoods, and you tell people, no one is coming to your rescue. You've got to fix it yourself. You can't just say because there's an African-American president in the White House, suddenly my situation is any different today than it was yesterday.
MACK: Right now -- we're being sponsored by the Campaign for Black Male Achievement to do a national tour, less talk and more action oriented type tour, making sure that we go to inner city neighborhoods and let them understand that we are the cause of our own economic--
ROMANS: But that's -- that's $5,000, that's mind boggling. You can't invest in education or build for a future if you only have $5,000.
MACK: OK, first of all, let me say this, no one else is saying it, I'll say it. What the black community does not need is more speeches. I mean, we've seen speeches, we've seen State of the Black Union type events where we'll go to these types of speeches, we'll get all excited, we'll get riled up, and then when that single black mother goes home, she'll be excited, but she'll still be going home to that still economically depressed neighborhood.
But that pen of Barack Obama can sign legislation if she's unemployed so she can still feed her family. That pen of Barack Obama can sign legislation to make sure she can still get insurance for her family and her children.
ROMANS: She's going to vote for the president? If she's going to walk from that speech inspired but her life is not going to change, and she still votes for the president, why does he have to give her anything?
HERBERT: Well, I'm certainly not talking about just a speech. I would wholeheartedly agree that a speech is not going to do it. But look, for example, the president feels that be needs to shore up the Latino vote in the presidential election, so he took a step by executive order that would help young Latinos who are in the country illegally. He could take steps to help young black Americans who have been having a desperate time.
ROMANS: Do you think he will?
HERBERT: Finding work. No, I don't think he will, but he could. Beyond that leadership means that even if for example --
ROMANS: You have to be a voter (inaudible)?
HERBERT: You can't begin to get Republican support, for example, Republicans have been standing in the way, but leadership means that you help generate the support in the public that helps push the parties along.
MACK: I also want to say as well, that DREAM-eligible Act also helps a lot of Caribbean black Americans who are here in this country who are DREAM eligible youths as well, so it's not just Latino voters. But even further, beyond that--
ROMANS: That's a good point.
MACK: -- when we're looking at, in terms of the first black president and still a politically or racially polarized nation, to some degree, and still one of the most obstructive governments that we've had in the history of this country because of the racial tension that exists, for us to ask him to say, let us go out and give more speeches and risk the power that he has in that pen to continue to push legislation that's going to actually influence and help the African-American population, I think that's a little bit too much of (inaudible) just to talk, and let us be our own advocates and speak up more as opposed to letting him speak for us.
ROMANS: We'll come back and we'll talk about it again. Bob Herbert, Ryan Mack, I really appreciate you guys coming -- I appreciate you guys coming by today. Thanks, guys. Coming up next, how to keep a steady hand on your portfolio in a not- so-steady economy. We'll do a midyear checkup of your investments. Don't miss it, next.
ROMANS: It's been a bumpy second quarter for stocks, but the three major indices are all up so far in 2012. The year's halfway mark is the perfect time to check in on your portfolio.
ROMANS: The debt crisis in Europe, slowing growth in China, gridlock in Washington, a fiscal cliff looming. Enough to make the markets jittery, but Karen Stone is calm.
KAREN STONE, INVESTOR: I watch it go up, I watch it go down, I'm pretty aggressive. Yes, at this point I don't have any need to take the money out.
ROMANS: Karen is a 29-year-old realtor living in New York City. She doesn't have a retirement plan through her job, so she's hired financial planner Stacy Francis to help her look long-term.
So we're about halfway through 2012. Markets are up, stocks are still up, but it's been a pretty volatile -- a volatile year so far. Tell me about a woman like Karen Stone. What should her asset allocation, her risk tolerance be?
UNIDENTIFIED FEMALE: Well, it really can start with a rule of thumb, and that is take your age minus from 100. So for Karen, we would expect her to have about 71 percent stocks. Her portfolio should be primarily focused on growth-oriented stocks and value, mostly in the equities area, but also she does need fixed income as she nears retirement.
ROMANS: Let's think about it as a midyear portfolio checkup, if you will? How should you -- how often should you reassess?
UNIDENTIFIED FEMALE: Well, we go to our doctors once a year for a major checkup. Guess what? Your portfolio at least once a year. You want to shift it back to that ideal asset allocation, because over time, stocks mostly likely are going to grow faster than your bonds.
ROMANS: Karen is comfortable keeping her portfolio at arm's length, allowing her to focus on her career instead of her investments.
STONE: I just found out that my money actually grew over the last quarter. And I was like, OK, they're doing something right. You got this. You know? Let me go deal with what I know best, and you deal with what you know best.
ROMANS: And my colleague Ali Velshi and I have a risk tolerance calculator, so you can decide just how much stocks, bonds and cash you should have in your portfolio for your age and your financial future and financial goals. Go to my Facebook page or go on Twitter, follow me on Twitter. I'll make sure you get a link to that.
Meantime, Pete Dominick is still here. Pete, why are you here?
DOMINICK: Well, I'm sorry, Christine, but I had to hijack this last segment, because it's about you. So everybody is anticipating the legendary creator of "West Wing" Aaron Sorkin's new show on HBO tomorrow night.
ROMANS: Oh, yes, oh, yes, yes, yes.
DOMINICK: You know what it is, you were at the premiere.
DOMINICK: 10:00 p.m. tomorrow night. And there's a character based on you. Let's take at what Aaron Sorkin has to say about Christine Romans.
(BEGIN VIDEO CLIP)
AARON SORKIN, CREATOR, NEWSROOM: I'm always been a fan of Christine Romans' broadcasts. And I try to understand what she's saying. I'm illiterate when it comes to finance and the economy, but Olivia is playing who I've always imagined Christine Romans is. I'm sure I got it wrong, but that's who inspired Sloane Sabbith, Olivia's character.
(END VIDEO CLIP)
ROMANS: Anything unflattering about her character he did get wrong.
DOMINICK: Look at you. Olivia Munn is playing you? I mean, just--
ROMANS: Loosely based on. Loosely based on.
DOMINICK: We actually have a clip of Olivia Munn playing a character loosely based on you. Let's take a look and decide.
(BEGIN VIDEO CLIP)
OLIVIA MUNN, ACTRESS: I get that I don't necessarily look like it, but I'm an economist.
UNIDENTIFIED MALE: Here to explain what I just said, Sloane Sabbith. How did that happen?
MUNN: By spending roughly 30 years being dumber than a sack of doorknobs.
UNIDENTIFIED FEMALE: Do you have any human knowledge?
MUNN: I have been told I do not.
(END VIDEO CLIP)
DOMINICK: Like would Olivia Munn hang out with you, be like show me how to do it.
DOMINICK: Clooney based his character on me, we've spent a lot of time together.
ROMANS: No, it was just Aaron Sorkin watching me over the years and then deciding that he wanted to have a character like that, imagining, he said, what that character would be like.
DOMINICK: Well, congratulations. We'll be watching.
ROMANS: Thank you. All right, "The Newsroom" premieres tomorrow night at 10:00 p.m. Eastern on HBO. If you are a news junkie, you must see it.
That's going to wrap things up for us this morning. But the conversation continues online. Find us on Facebook and Twitter. Our handle is @cnnbottomline, my handle is @christineromans.
Back now to "CNN SATURDAY" for the latest headlines. Have a great weekend.