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Election Toss-Up; Middle Class Falling Behind; Economy on the Edge; Can Voters Handle the Truth?; The Ayn Rand Economy; Time to Buy Facebook?
Aired August 25, 2012 - 13:00 ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
CHRISTINE ROMANS, CNN ANCHOR: The presidential contenders may not tell you the truth about the economy, but we will.
I'm Christine Romans and this is YOUR MONEY. Ali Velshi is away this week but he has been warning us of an economic storm that could hit our shores. But do we hear any of that from the campaigns? No, they say this election is about Mitt Romney's tenure at Bain Capital. They say it's about Obamacare and whether big government spending will bankrupt our country.
That can wait because right now nothing, nothing is more important to our recovery than creating jobs. And for America's middle class, job losses and stagnant wages have hit them hard. It's the middle class in key swing states that will decide these elections. But as I'm about to show you the middle class is not created equal. Let's have a look.
The most obvious metric to measure the jobs market is the unemployment rate. This shows you what has happened to the jobless rate in these vital states since President Obama took office. The jobless rate has gone up in the states we've made red. It's gone down in the states we've made green.
Let's start off with the states in worse shape in terms of jobs. Nevada. Look at. The highest unemployment rate in the country, 12 percent. Florida, above the national average. And this is important. It's got 29 delegates. Wisconsin, up a little but below the national average. Why does it matter? Paul Ryan is from Wisconsin. Virginia and New Hampshire, still very low unemployment rates.
And I want to take a look really, though, at where things are getting better because one of these states is critical, Ohio. The unemployment rate there 7.2 percent. This is where Mitt Romney has to win. He has to win this to unseat President Obama. Eighteen electoral votes. Mitt Romney and Paul Ryan are campaigning there this weekend.
Iowa, also a very low unemployment rate, 5.3 percent. President Obama is campaigning there next week.
It's all about momentum in the market, though, right? Momentum in the jobs market. So let's look at the trend. Six out of the eight swing states have lower jobless rates than the national average of 8.3 percent. Take a look at this. This Florida and Nevada, they have higher than average unemployment rates and high, high unemployment rates.
We're going to be seeing both candidates campaign in these swing states right up until election day in November. And it's no surprise why.
CNN political director Mark Preston joins me now from Tampa. He'll be covering the Republican convention this week.
Mark, if most -- in most if not all of these swing states, jobs are the critical issue. So why are President Obama and Mitt Romney talking about Medicare and deficits instead of jobs?
MARK PRESTON, CNN SENIOR POLITICAL EDITOR: Well, because they're going to try to tie it altogether. And it's all about the message of the day. And quite frankly, for the Republicans, Christine, they have been taken off message because of this tropical storm that will likely turn into a hurricane. And then, of course, because of this Todd Akin controversy.
But they do want to talk about jobs and they're trying to tie all of this together. Meanwhile, you have President Obama talking about Medicare. Why is he talking about Medicare? Because here where I sit right now in Florida, in Tampa, Florida, it is such a huge issue. And Mitt Romney has to win Florida if he is going to win the presidency.
They think that they can take those electoral votes away from Mitt Romney. That is the Obama campaign. And what they say is this is all part of the bigger economy -- Christine.
ROMANS: Joining me here in the studio, Mark, our CNN contributor and resident conservative Will Cain, a columnist at the Blaze.com. Bob Herbert is a distinguished senior fellow at Demos, a liberal think tank here in New York.
Will, is it fair for voters to judge President Obama based on the unemployment situation in their state?
WILL CAIN, CNN CONTRIBUTOR: Yes, it is. I think President Obama has had a good almost four years of his economic policy. We all admit at this point that President Obama inherited an incredibly difficult economic situation. But he has had four years to put in place many of his policies to see if we can effectuate a recovery. And I think voters should be able to judge him on that.
BOB HERBERT, SENIOR FELLOW, DEMOS: Sure. I think it's fair. But whether it's fair or not, voters are going to judge the president on the state of the economy and what's happening with jobs. I've been trying to say for -- actually for years that employment is the biggest issue confronting ordinary Americans. You know, and it's been like that for the longest time.
What's happened, though, is I think really weird. One, President Obama would rather talk about these other issues because the economy is not in good shape. What would have made sense was for Mitt Romney and Paul Ryan to focus like lasers on jobs and the economy. But they've allowed the conversation to shift off to these other rounds, whether it's Medicare, abortion, what's happening, how women are being treated. So I think that that overall is a net loss for the Republican ticket.
ROMANS: I don't hear honesty, though, about -- Will, I don't hear honesty from them about what the options are here. I mean the options are, you know, things could still be tough for next year. You go off a fiscal cliff, things are going to be still very, very tough next year.
I hear them talking about how they're the man to fix it. But I don't hear anybody saying exactly how critical this moment is for the economy.
CAIN: Well --
ROMANS: I guess you can't win saying it's going to be bad if you elect me, really bad if you elect him.
CAIN: That's right.
CAIN: Look, I think you're right, Christine. There's no big political advantage to explain exactly the dire consequences to the situation we're finding ourself in. Both from a debt and deficit perspective and from an economic perspective. There is no big win there. But look, Bob talked about unemployment, right? I would also say in employment or economic issues, it's what -- which way we're trending, right? So you can be bad right now. But is it getting better or is it getting worse? That's how we should judge both of these candidates.
ROMANS: You know, Mark, everyone thinks that they're middle class. I mean, all these polls show people relate to the middle class either how much money they make or the middle class values. It is the -- I don't know, the holy grail, right, for candidates to try to appeal to the middle class.
But the middle class has been hammered. It is smaller. It is poorer. It's harder to stay in it. And is there honesty within these campaigns that a lot of this has been going on for years and years?
PRESTON: Well, you know what's interesting, Christine, you're right. You know, the Republican Party traditionally gets the more affluent voters, right? They're going to get the wealthier voters to support them. And then you have the Democratic Party which tends to get the -- you know, folks who are not making as much money, you know, the poor some might say.
But really, you know, the golden vote is the middle class. And if you were to break that down even more, it's the independents in the middle class and even to take it one step further, it's the independents in these swing states that we're talking about such as Florida or Nevada, Ohio, Virginia. That's where the candidates are really, you know, obviously zeroing in on.
What I find interesting, though, Christine, is that Republicans are in a little bit of a conundrum when you look at a state like Ohio or you look at some of these other states like Virginia where the unemployment rate has gotten lower.
The governors of those states want to take credit for it. The Republican governors. At the same time, though, they don't want to say that President Obama had anything to do with it. I'm not saying he does. But it's a tough messaging point to work off.
ROMANS: You know, one last point, too, I want to ask, Mark, I know you've got a lot of hard work to be doing there, for sure. But I'm hearing nothing about Europe. I'm hearing nothing about China and a potential slowdown in China. I'm hearing nothing about -- nothing about the fiscal cliff from the campaigns.
The bottom line is whoever is the next president is going to have to navigate us through a bunch of stuff they might not have any control over.
PRESTON: Yes. And right at the top, you said, look, they're talking about Medicare. They're talking about some of these other things. I talk about them being taken off message. But you're absolutely right because it just comes down to jobs. Jobs here in the United States. The unemployment rate and we haven't even talked about housing.
The voters are concerned about China. They're concerned about Europe. But that seems like too big of a macro issue for the voters really to put their arms around. They just want jobs here in the United States.
ROMANS: I don't know. I would argue that it's too much of a macro issue for voters to get their arms around. It's one of the reasons why over the past 25 years we've seen the middle class get hammered because it's been short-termism and election that have driven American policy, economic policy. And that has hurt us.
We're going to talk more about that when we come back.
Mark, have a great week in Tampa covering the Republican convention.
Will and Bob are going to stay here and argue with me about my last comment.
ROMANS: This election is all about the battle for the middle.
(BEGIN VIDEO CLIP)
REP. PAUL RYAN (R), VICE PRESIDENTIAL CANDIDATE: The Romney plan for a stronger middle class.
JOE BIDEN, VICE PRESIDENT: This is a make or break moment in middle class.
MITT ROMNEY (R), PRESIDENTIAL CANDIDATE: We're going to rebuild the middle class in America.
BARACK OBAMA, PRESIDENT OF THE UNITED STATES: We can't just balance our budget on the backs of middle class families.
(END VIDEO CLIP)
ROMANS: Sounds great. But what can these guys actually do for America's shrinking middle class? That's next.
ROMANS: Twenty years of wealth erased. That's the story of America's middle class. A Pew study this week found this was the worst decade in modern history to be stuck in the middle. But stuck would be better than reality because the middle class is actually falling behind.
Take a look. From 2001 to 2010, median net worth for a three-person middle class household fell from $129,000 to just $93,000. Part of the reason there's such a dramatic drop, income has fallen over the last 10 years as well. Going from $73,000 to $69,000 for a family of three. It's become a struggle for those clinging to the middle to maintain their standard of living.
I'm rejoined now by Bob Herbert and Will Cain.
Bob, what do middle class Americans need from the government? And what do they need to hear from candidates so that they can get back to where they were 10 years ago?
HERBERT: Well, you were talking about honesty in a prior segment. And that's what they need to hear. They need to hear the truth about what's going on in this economy. There is no -- and we ought to realize this by now, there is no quick fix for this economy. The economy cannot create enough jobs and not nearly enough good jobs to sustain a healthy middle class in the U.S. so we need a big time national conversation about a long term plan to rebuild the economy.
ROMANS: We're not hearing that.
HERBERT: And there's nothing like that out.
ROMANS: We're not hearing. We're hearing differences of opinion on wedge issues or --
ROMANS: Or tangentially related issues. I mean Medicare is important. You're right. Abortion policy, it's important. You're right. But the big, big story of how we're going to fix the economy is not there.
HERBERT: It's not there.
ROMANS: Will, I want to talk to you. The majority of Americans consider themselves middle class. CAIN: They're wrong.
ROMANS: So appealing to the middle class is the Holy Grail for politicians. Bear with me.
(BEGIN VIDEO CLIP)
ROMNEY: Let me tell you, the heart of my tax proposal, I will not raise taxes on the American people. I will not raise taxes on middle income Americans.
OBAMA: The Republicans say they don't want to raise taxes on the middle class. I don't want to raise taxes on the middle class. So we should all agree to extend the tax cuts for the middle class.
(END VIDEO CLIP)
ROMANS: Will, you said that neither campaign can really be telling the truth here because of the state of the economy. Explain.
CAIN: So I want honesty as well, Bob. Let's just stop talking about the middle class.
CAIN: Because the middle class has been overpromised and they've underpaid. And you laid out how bad it is for the middle class? Let me tell you something, it's about to get worse.
ROMANS: They've underpaid or they've been underpaid?
CAIN: They have underpaid. And that's why it's going to get worse.
Let me show you what I'm talking about. OK?
ROMANS: All right.
CAIN: If you accept this premise, and I don't know if you do, Bob, but if you accept the premise that the United States' deficit problem, our mounting debt is a problem that must be addressed, well, it's going to focus on the middle class. First of all, most experts suggest we need to cut $4 trillion over 10 years on our debt and deficit. Well, let's just say we accepted the premise that actually both President Obama and Mitt Romney promised in that clip we just played, that is, we're not going to raise taxes on the middle class.
Well, if you confiscated 100 percent of the income of people that make over $250,000 a year, you'd get roughly $2 trillion in one year. Now what do you think would happen after year one if you took 100 percent of their economy? You made a dent in that $4 trillion need but you're not going to get there based on the backs of the rich or the top 2 percent.
So your eyes feast quickly where all the money is. The middle class. But wait. What if we do what Mitt Romney said? What's -- what if we cut our way to getting our deficit under control? Well, as of recently, he's promised he would protect Social Security, Medicaid and Medicare. He's shown no real interest in cutting the defense. That leaves essentially other programs and safety net programs, which we call discretionary spending, which is about $600 billion a year.
Now again, if you cut that down almost all the way to zero, you could get to your $4 trillion pretty quickly. But you're dismantling virtually everything the federal government does outside of insurance and armies.
So here's my point to you. The middle class, if you accept we have to do something about this debt and deficit problem, the middle class is going to be who has to pay for that.
ROMANS: Right. The middle class has the money and the middle -- you're right. And the middle class is the one who benefits from the services.
So Bob, what services should taxpayers be prepared to lose? Because clearly we can't pay for it all.
HERBERT: Well, before we start talking about --
ROMANS: We can't afford our middle class according to Will.
HERBERT: Before we start talking about losing services, I'm going to agree with Will that we can't do anything serious about debt and deficits just by raising taxes on the wealthy. But I disagree that we should be focused on the deficits at all right now. The number one focus in this country should be on putting people back to work.
I think taxes probably need to be raised across the board. But we need to raise the taxes in order to make investment that will bolster the economy and put people to work. Because if you don't have the overwhelming majority of American working people actually working at decent paying jobs, you're never going to get enough in terms of revenue to do anything substantial about deficits.
CAIN: I think we have to focus on both at the same time, Bob. And what I'm suggesting in the end is this. Don't select your president on who's making the most promises to the so-called middle class, which by the way most people are not, even though they perceive themselves to be.
ROMANS: It's what they consider themselves.
CAIN: Instead ask yourselves these two questions. Do I want to pay for the services that I must eventually pay for? So therefore, should I pay more or cut back? But more importantly, and this is where we might agree, who, which candidate can grow the entire economy? Whose policies are better for growing the entire economy? Not one class versus another, but the entire economy. ROMANS: But you're not hearing that, right? You're hearing -- you're hearing bits and pieces of that but you're not hearing that whole story about who's going to grow the entire economy.
HERBERT: We're actually not hearing any of that. And, you know, I'm getting a little frightened because I'm starting to agree with what some -- of what this guy -- what this guy is saying.
CAIN: Who me?
HERBERT: But -- yes.
HERBERT: But the important thing is, even if there are areas of disagreement between the right and the left, the whole point is to have a conversation that have a serious debate, you know. And maybe you can make some headway. We're not having that debate at all.
ROMANS: Yes, we're not having that debate. And the other thing about all of this is we've got a bond market that's at 1.65 percent for a 10-year note. So there's no pressure from markets for us to do anything right now on the deficit and debt. There really isn't. Other than our -- other than our credit rating which is, I'm very concerned about it. There is some relief that the markets are giving us at the moment. But we don't know how long that will last.
CAIN: As long as you're right, the bond vigilantes are what matter. That the bond market is what matters. And I'm not convinced that our debt and deficit problem is merely an extension of how the bond market feels about our debt and deficit.
ROMANS: Yes. So many moving parts.
Guys, thank you so much. Really nice to see both of you.
HERBERT: Thanks, Christine.
ROMANS: Election day may be marked on your calendar. But New Year's Day is even more important if lawmakers don't get their act together. Is Washington -- is Washington really ready to throw you over a cliff?
ROMANS: I've called it congressional malpractice. The Congressional Budget Office calls it a certain recession. It's the fiscal cliff. We're talking about the effects of $1 trillion in automatic across- the-board spending cuts mandated by Congress known as sequester. That combined with a series of tax increases including an end to the Bush era tax cuts and a higher payroll tax. Measures scheduled to start on January 2nd unless, unless Congress acts.
But don't hold your breath, folks. If you recall, the sequester legislation was passed a year ago to end a bitter debate then over extending the government's debt ceiling. Intense partisan blackmail by both sides nearly shut down the government and led to a downgrade of the United States credit rating.
Now the enormous amount of spending cuts and tax increases, if they stand, will shrink your economy at a time when you expect your political leaders to do everything they can to stave off another recession. And a new report from the CBO says unemployment will rise, will rise to 9 percent in the second half of 2013.
But what happens if lawmakers act and avoid taking us over a fiscal cliff? Well, the CBO says the economy will grow by 1.7 percent the next year. Sure, that's, you know, a normal circumstance that will be considered dismal. But hey, it's still growth, right? Compared to the alternative.
In addition, the CBO projects two million jobs will be created while the unemployment rate would stay steady at 8 percent. That's if -- if Congress gets its act together.
Greg Valliere is chief political strategist at the Potomac Research Group in Washington.
Greg, we all know that Congress won't act before the election. But they should. Would these guys really, really risk taking us into a recession because they're fighting politically?
GREG VALLIERE, CHIEF POLITICAL STRATEGIST, POTOMAC RESEARCH GROUP: You know, Christine, just when you think you can't be any more disgusted by the gridlock and dysfunction in Congress, a story like this comes along.
I got to tell you, I think the markets, the stock market in particular, have been on happy pills for most of the summer. The reality often sets in in the fall. And I think the reality is that none of us will know what the tax rates will be in January until late December at the earliest.
ROMANS: There's this idea, Greg, that people think, oh, there must be backroom negotiations going on.
ROMANS: They must already be talking about how they're going to avert this crisis. I don't think that's happening.
VALLIERE: No. You know, both sides, Christine, are using this for their best sound bites. They want to try out their best arguments against the other side. And they're all saying we'll get something done in December. Probably in December they'll kick the can down the road which is what Washington always does. And they may extend everything through the winter.
But this is not a great way to run a railroad, to have nobody sure of what the capital gains rate will be, what dividend taxes will be. This uncertainty I think already is hurting the economy.
ROMANS: You know, it's interesting. I want to bring in Dan Gross, columnist in business -- global business editor at "Newsweek" and "The Daily Beast." Because he talks about that uncertainty.
And Dan, you hear a lot from Wall Street and the business community that it's the president's fault that there is so much uncertainty. But you could read it this way? That the Tea Party did this. The GOP leadership could not reign in the Tea Party. Democrats did not the skills to match Tea Party obstruction. Why -- really, really how did we get here?
DAN GROSS, GLOBAL BUSINESS EDITOR, NEWSWEEK AND THE DAILY BEAST: Well, I would blame the Tea Party, the GOP and, but I would also blame this sort of very large industry of deficit hawks. There are a lot of outfits in Washington and New York that have been clamoring for years and decades, saying we have to do something about the deficit. We need a big deal. We need a grand bargain.
But they were advocating this in an -- in a climate where Republicans are simply, if they're unwilling to cut a deal that would make President Obama look good, that's been the dynamic since 2009, and they're unwilling to raise taxes. And you can't have deficit reduction, A, without a deal, and B, without raising taxes.
So the forces that were pushing for the Simpson-Bowles Commission and the gang of six and all the editorial boards that were sort of applauding this and pushing this are creating this real impetus for some action and some real action. And what we ended up with by default was this sequester and the fiscal cliff because the parties as currently arranged, they couldn't make a deal on stimulus.
They couldn't make a deal on health care. There was no reason to think they were going to be able to make a deal on taxes and spending especially in an election year. So this -- I feel like this is sort of one of those slow motion train wrecks that you could have seen coming for, you know, many miles away.
And as journalists, you know, I'm not saying this is something we look forward to, but, you know, we always like to be on the front page and for people who cover fiscal and financial issues, this is promising a lot more ink for us.
ROMANS: I don't think it's a slow motion train wreck. I think this train is coming very, very fast. And I think it's loaded with explosives. And that's what I'm really, really concerned about.
You know, Greg, you hear people say -- and the CBO even says, OK, there'll be a recession next year if Congress lets us go off the fiscal cliff. But it would put us in a better debt situation. That's, I guess, the silver lining. Is a better debt situation worth a possible recession and 9 percent unemployment rate right now?
VALLIERE No. Absolutely not. I tend to share Dan's views on the deficit. The bond market doesn't care about the deficits. Interest rates are extraordinarily low. As long as the bond market doesn't care about the deficit, it doesn't keep me awake at night. So, no, I don't think fiscal austerity is the answer right now.
I would say this, though, just to perhaps counter with what Dan said. That there's plenty of blame to go around. I think both parties --
ROMANS: Yes -- tell me about the Tea Party angle because I'll tell you whenever I talk about fiscal cliff --
ROMANS: -- I get a lot of mail from people who say, why don't you say it like it really is? The Tea Party said on day one we're going to oppose this president and that's why we're here. Do you agree with that?
VALLIERE Yes. But at the same time, I think both parties are complicit in not getting much done. And to be frank, Barack Obama has largely advocated on this. He really hasn't taken a very forceful role especially on entitlement reform. I would like to see him get a little more involved and he should because his reelection would hinge on that.
ROMANS: An election year, a fiscal cliff. I thought the debt ceiling debate was bad last year.
ROMANS: I didn't know it could get worse. And it has.
ROMANS: Dan and Greg, stay right where you are because inside the head of politicians, we're going to be joined by a political psychologist. He's going to tell you why you let your elected officials lie you to. That's right. This is only an hour-long show, folks.
(BEGIN VIDEO CLIP)
UNIDENTIFIED MALE: In Florida, they're already talking about how the Ryan-Romney plan will end Medicare and replace it with a voucher.
UNIDENTIFIED MALE: Under Obama's plan, you wouldn't have to work and wouldn't have to train for a job. They just send you your welfare check.
(END VIDEO CLIP)
ROMANS: Those ads may sound scary and convincing, but there's one small problem, those ads are not true. PolitiFact rated the Medicare ad mostly false and gave the welfare reform ad the lowest possible rating, pants on fire. Team Romney and Team Obama criticized each other for running misleading ads all while running false ads of their own.
It's so bad that a team of former MIT students have created an iPhone app that can listen -- help you listen to an ad and verify its claims. And then there are that the candidates themselves. PolitiFact has rated 155 of Mitt Romney's statements, 155. They found that just 29 percent of them were true or mostly true. President Obama's scores -- a little better, 47 percent. Less than half for both of them.
Political psychologist Jonathan Haidt is a professor at New York University School of Business. He joins me now.
Jonathan, you say that we hold politicians to an unfair standard. When did truth become a luxury?
JONATHAN HAIDT, PROFESSOR, NYU SCHOOL OF BUSINESS: Well, first, let's step back and let's look at our basic moral psychology for how we deal with each other. Forget politicians. Somebody, I forget who it was, said why do you complain about the spec in your neighbor's eye when you cannot see the plank in your own? From the bible.
We're all hypocrites. We have all this sort of social cognitive software running in our heads to catch other people at deceptions and to cover up our own. So we're all hypocrites ourselves. And then we apply the psychology to politicians who are put in an impossible situation and can't possibly tell the truth all the time.
ROMANS: Why can't they tell the truth?
HAIDT: There is this thing called democracy. And in democracy, people weigh in on all these topics, and basically they always want more services and lower taxes.
ROMANS: So they're playing a game? They're playing a game to get elected and they're playing a game to further what they want to do for the country and that includes lying? They have to lie to do that?
HAIDT: They're playing a very complex game that works at multiple levels. There's the election where it's them versus their opponent. There's the game of trying to please donors. There's the game of watching what they say which will be taken out of context and shown in an attack ad. So we're putting them in this three dimensional chess game which nobody can really play and then we're saying, hey, look, you screwed up there. But we only do this to the guy on other side. We give our guy a pass.
ROMANS: If a friend, if a friend of mine were to -- if half of the things a friend told me were misleading, that person wouldn't be trustworthy as a friend but that person can be a president?
HAIDT: That's correct.
ROMANS: That's crazy.
ROMANS: So you're saying that's the way it is?
HAIDT: So I guess I have a very low baseline, I a very low set of expectations for our species. To me, look we evolve to be these little tribal species living in little groups in the jungle. And it's miraculous that we can come together in vast groups that are not kin, and actually we live pretty peacefully. And when one side loses an election, there's no shooting. So this is a miracle to me.
Now democracy comes out of this. Democracy has us all shouting at each other. And basically, yes, they have to lie to get elected. There was a president once who said I will never lie you to. He was not very effective.
ROMANS: You know, I want to bring in Greg and Dan because they both follow this very, very closely.
And Greg, you know, it's interesting, you say we're all very easily seduced. Do we deserve the politicians we elect?
VALLIERE: No. I don't think so at all. I disagree with much of what the professor said. I think that these politicians are doing a great harm, a great disservice to our country because they deliberately dumb things down. They -- try to seduce people with easy answers like we can reduce the deficit, eliminate it, if we get rid of waste, fraud, abuse and foreign aid. They talk about ridiculous prescription that cannot be accomplished. Then people get disappointed when these things don't occur.
ROMANS: Dan, why do -- we know that -- we know that they lie. We know they lie to get elected. Do we let them off the hook because we know there is the campaign -- the campaign candidate and then the presidential candidate or the elected candidate?
GROSS: Well, I actually take sort of the opposite side of what Greg is saying. I think it's our citizens, as citizens, we frequently lie to ourselves. The information is all out there. And you did these polls. People think 10 percent of the budget is foreign aid. And of course, it's like less than 1 percent. People saying, you know, get your government hands off my Medicare.
ROMANS: The electorate is lazy? Do you think the electorate is lazy, Dan?
GROSS: People who believe -- you know, other people don't pay taxes. The information is all out there. The truth is out there for anybody who wants it to get. I think there are large chunks of the population that when it comes to politics are either diluting themselves or sort of lying to themselves. And the politicians respond to that.
ROMANS: I wonder, Professor, if it's also people believe what they want to believe or what they want to hear, what fits their own -- their own wishes and moral views.
HAIDT: Yes. This is what my own research is on. And this has been an enormous trend in social psychology recently. It's called motivated cognition and the confirmation bias. Basically we use our reasoning not to figure out what the truth is but to find evidence to support what we want to believe. So whatever you want to believe about Medicare or taxes or anything, you don't say well what's the evidence on both sides you? You just say, can I find some justification?
And now that we have cable news channels devoted to every micro slice of the political electorate, it's very easy.
ROMANS: And that's why those ads work. And that's why stump speeches that focus on one saying and not another, that's why their work because they're -- what do you call them, the motivational --
HAIDT: Motivated cognition.
ROMANS: Motivated cognition.
HAIDT: And confirmation bias.
ROMANS: Confirmation bias.
HAIDT: So in a sense, yes, we do get the politicians we deserve. But that's sort of our human nature is that we can't just deal with this rationally and equally.
ROMANS: Gentlemen, it's a fascinating conversation. Greg, Dan, Professor, really nice to see all of you. Let's talk about it again. We have, you know, 70-some odd days to be lied to until we start it all up again.
Up next, who is John Galt? And why the answer to that 55-year-old question could shed some light on another question. Who is Paul Ryan?
ROMANS: Remember this?
(BEGIN VIDEO CLIP)
OBAMA: Because if you've got a business, that -- you didn't build that. Somebody else made that happen.
(END VIDEO CLIP)
ROMANS: If you were to do 180 degrees from what the president just said, you'd get Ayn Rand. Thirty years after her death and more than 50 years after the release of her controversial novel, "Atlas Shrugged," Ayn Rand is stirring up dialogue and debate on the right and the left. Why? Because a young Paul Ryan, now House Budget chair and candidate for vice president, has said he was influenced by "Atlas Shrugged" since 2009. Sales of this book written in 1957 have skyrocketed.
Her views on the economy very simply, laissez faire capitalism, less government, much less government, much more private entrepreneurship. Her work has influenced the likes of former Fed chief, Alan Greenspan. He was a personal friend of Rand. Supreme Court Justice Clarence Thomas reportedly shows the movie version of Rand's novel "The Fountain Head" each year to the new law clerks who work for him. And "Playboy" founder Hugh Hefner as well.
Of course, not all of these men buy into Rand's philosophy lock, stock and barrel. Her social views get in the way, particularly for Republicans like Ryan. Beyond her whole exist-only-for-yourself mantra, many have trouble getting past the fact that Rand was an atheist.
Our good friend, Stephen Moore, editorial writer at the "Wall Street Journal", is a fan of her work and I can't believe how much we keep talking about this woman and her work and the fact that her book sales are still so strong --
STEPHEN MOORE, EDITOR WRITER, WALL STREET JOURNAL: Yes.
ROMANS: -- after "Atlas Shrugged" was, you know, written in 1957. Paul Ryan, another reason why we're hearing so much about this. In a 2005 speech Ryan told the Atlas Society, that's a think tank devoted to her philosophy, that she inspired his interest in public service. But then a few days ago he told FOX News this.
(BEGIN VIDEO CLIP)
RYAN: I really enjoy her novels. "Atlas Shrugged" in particular. It triggered my interest in economics. That's where I got into studying economics. That's why I wanted to study the whole field of economics. I later in life learned what her philosophy was. It's called objectivism. It's something I completely disagree with. It's an atheistic philosophy.
(END VIDEO CLIP)
ROMANS: Can a Republican embrace Rand's philosophy on the economy without getting hammered on the atheism front?
MOORE: I sure think they can. And by the way, thank you for doing this segment on my favorite book in the world. And you know, I hope, Christine, that you have read "Atlas Shrugged."
ROMANS: Of course.
MOORE: Because we call people who haven't read "Atlas Shrugged" virgins. So go out there --
ROMANS: Oh, my.
MOORE: Go out there and read it if you haven't, folks. You know, it's amazing. That book was written 60 years -- almost 60 years ago. It is still so influential. In fact, a survey came out of young college students and found that it was one of the most three or four most influential books. Even to this day, its sales have actually gone through the roof as you just said ever since Barack Obama came into office.
And you know, it is -- it is really about how do you grow an economy and the story is really about very contemporary to our situation today. Kind of an economy that is in slow collapse. The government keeps trying to do more and more to solve the problems with stimulus plans and cash for clunkers and all of these things. And it's so --
ROMANS: Well, you're not going to find -- MOORE: -- similar to what's happening right now.
ROMANS: You're not going to find food stamps in a Ayn Rand novel, right? I mean, look, we understand that she --
MOORE: That's right.
ROMANS: She celebrates the wealthy, successful people. And --
MOORE: That's right.
ROMANS: And that wealthy is because of the success and the ambition and the hard work. They worked hard for their money and they deserve it in her view. But why is this that you guys --
MOORE: And by the way, one of the things that --
ROMANS: Why aren't there poor people in -- why don't you celebrate poor people? Is there a problem with a lack of morale? Is the morality off for the Rand-ians?
MOORE: Well, I think that the idea behind the book is that people are the real resource creators. The people who create innovation and businesses. And create jobs are the people at the top. The people who took risks. The people who put sweat equity in the businesses, that employ people. And the point of the book is look, once you start abusing those people and treating them as if they're cash ATM machines, you know, what happens in the book, as you know, Christine, is that the wealth producers, the job creators, they sort of drop out of society and the whole society collapses.
So I think what Ayn Rand would say if you were asking her this question is look, we want a system that generates more people creating wealth and businesses. And if we don't celebrate the capitalist system, the whole economy -- the whole might collapse.
ROMANS: You know, I wonder -- Stephen, does the left have an Ayn Rand?
MOORE: Good question. Maybe Paul Krugman of the "New York Times".
MOORE: He would be the contemporary version but --
ROMANS: Why is the left -- why is the left -- why are they so suspicious of people who embrace her? And, you know, I mean you look at Paul Ryan now.
ROMANS: And he's being careful about talking and separating her economics from her philosophy. MOORE: Because some people think her view of the world is utopian. That, in fact, that she doesn't see the nuances of the economy and the good things that the government does. And she believed in almost no government. Now I'm not in that camp, as you know, Christine. I mean I want to limit the government. But I do think the government does some important things.
But her book is a very important insight about how wealth gets created. And one of the things -- I'm glad you played that little clip from the president saying, you know, you didn't create that because that's a -- that's a direct attack at the ideas that Ayn Rand had, which is that, yes, the people who create the businesses, the people who put their sweat equity and their risk --
ROMANS: But you know she --
MOORE: -- they're the ones who created the businesses, not government.
ROMANS: But is it -- you know, look, as with all -- it's a novel, right? A novel that wraps up her philosophy.
ROMANS: And sometimes you can explain economics better in a novel. And you can --
MOORE: Right. And by the way --
ROMANS: You can like that --
MOORE: That's something, Christine, that made her so --
MOORE: -- famous was that she had a way of talking about these issues you and I talk about every week but in a way that kind of made it really entertaining and in a gripping novel.
ROMANS: But where is the morality or the -- I mean there is no room for morality or god in these novels.
MOORE: That's true. And that's one thing that a lot of conservatives like Paul Ryan didn't like about Ayn Rand is that she wrote a book called "The Virtue of Selfishness," which, you know, some conservatives fringe at that idea because look, conservatives believe you should help your fellow men, you should be charitable. The issue is whether the government should compel you to do it or whether government charity works better than private charity.
I would make the case, you know, give your money to the Salvation Army, not to the food stamp program.
ROMANS: Well, it's certainly more interesting than reading economics 101 manual.
MOORE: That's For sure.
ROMANS: That offends economic professors anywhere, or economists. Sorry, Stephen Moore but --
MOORE: And Christine, I'm so happy to learn that you read "Atlas Shrugged."
ROMANS: Well, I mean, isn't it --
MOORE: Just made my day.
ROMANS: I mean I read it in high school. Wasn't it in all the high school reading list? I mean I assume that most people read it but --
MOORE: It should be.
ROMANS: OK. From your list to -- I don't know.
All right. Thank you so much, Stephen Moore. Nice to see you.
MOORE: Nice to be with you.
ROMANS: All right, remember the frenzy around Facebook's IPO? The stock has lost around half of its value since its debut. Coming up, we're going to ask the question that's on everyone's mind. Hey, now, is it finally time to buy?
ROMANS: Remember back to May Facebook was riding high. It was about to execute the biggest tech IPO ever. The question you were asking then was, should you buy? And how fast would the stock rise?
Venture capitalist Peter Field was Facebook's first big investor. Late last week he sold off the majority of his portfolio turning his initial investment of $500,000 into $1 billion. He's not the only Facebook investor selling shares. Dustin Maskovitz, one of co- founders, sold part of his portfolio this week. These guys aren't taking a loss, but if you bought in at the IPO and you sell now you will.
The stock has lost half its value since it debuted three months ago. Half, but you're still asking the same question, aren't you? Should you buy?
Here to answer that the president of Penn Financial Group, a good friend of the show, Matt McCall.
Matt, you wouldn't buy at 38, you wouldn't buy at 25. Are you buying at 19?
MATT MCCALL, PRESIDENT, PENN FINANCIAL GROUP: I'm not buying yet, and I know it stayed -- where is that, 38? Well, let's take a look at it in the high teens. It's now in the high teens, I'm still not ready to buy it, Christine.
ROMANS: How come?
MCCALL: I still think it goes lower. I do still think the stock is overvalued. The management has not figured out how to monetize the mobile world. I mean now that I check Facebook all the time it's always on my iPad or my iPhone. They're not making money off that because there's no advertising.
MCCALL: So that's a big struggle to me. Until management can figure it out, until Zuckerberg gets out of his own way, it's -- you know, social (INAUDIBLE) actually starts making money, I'm going to stay on the sidelines.
ROMANS: I want to bring in Richard Quest now. He's the host of CNNi's "QUEST MEANS BUSINESS."
Richard, Facebook is adding users but its revenue is not keeping up. But investors, you know, investors and people who could be investors like Matt McCall, they worry about the growing number of users who access Facebook on their smartphones.
CNN Money's Lori Segal, she was in California, Richard, she asked Facebook's director of product management how the company plans to make money from mobile users. Listen.
(BEGIN VIDEO CLIP)
PETER DENG, DIRECTOR FO PRODUCT MANAGEMENT, FACEBOOK: There are many different ways to add value. There's adding value by letting me connect more deeply with my cousin or keeping me in touch with my mom throughout the day or my wife. There's also a lot of value in helping businesses connect to their customers, people who like them. But also reaching their potential customers, so this is really just an extension of things we've been doing all along.
(END VIDEO CLIP)
ROMANS: Richard, is that enough for investors?
RICHARD QUEST, HOST, CNNI'S QUEST MEANS BUSINESS: No, no, no. He's merely stated the obvious. Thank you, sir, for pointing out that there are many ways of keeping in contact with Great Auntie Bessie in North Dakota, like we didn't know that already. He has singularly failed to answer the question, how he is going do it and monetize it.
Nobody thinks with 900 million users Facebook is about to disappear overnight. It is going to be part of the fabric of social networking and communication for the foreseeable future. That's a given, but there's a huge difference between being something that you keep in contact with and investors making money, with where we're looking at EBITDA, earnings per share, you're looking at return on investment, and the sort of nitty-gritty, that people want to know before they pass with their dollars.
ROMANS: But, Richard -- when Richard Quest says EBITDA it makes me blush.
Richard, I want to ask you when advertisers like GM are dropping off Facebook because they don't see it being an effective marketing platform, what does that tell you?
QUEST: The jury is out. The jury is not out on whether Great Aunt Bessie in North Dakota is using it or whether little Tommy in Florida is using it. That's a given, but the jury is out on whether this thing will make money in sufficient quantities and at the back of everybody's mind, MySpace, here today, gone tomorrow.
And always remember what one professor told me, when your mother's on the same social network as you are, it's time to head for the door.
ROMANS: Let's talk about Zynga, Pandora, Groupon, all those stocks way down since their IPOs.
Matt McCall, there is one bright spot. LinkedIn is up since it went public last year. You say LinkedIn is the only social media company you would consider buying.
MCCALL: It's actually the viable business plan. LinkedIn is used by professionals that actually pay money to get on to the Web site to connect. We're in a situation right now where unemployment is still extremely high. People use LinkedIn to find jobs and network with people they've worked with in the past. I have friends who own a recruiting companies that use LinkedIn and paid quite a bit of money to find new candidates.
MCCALL: So to me, I look at LinkedIn and it took just before I sat down today at what their earnings estimates are in the next couple of years, you're seeing earnings go from just over a dollar a share next year to almost $5 dollars a share next couple of years.
ROMANS: Have you bought it?
MCCALL: I do not own it now but I am watching it very closely.
ROMANS: Watching it very closely. Well, here's the issue, Richard. You know so many of us looked back to 1999 and we see that bubble talk and you look at social media stocks, then they haven't really lived up to the hype.
QUEST: I sold stocks last week that I bought at the top of the dot com boom. I'd always kept them in my portfolio as a measure of hubris to remind me of just how pathetic I am as an investor. I turned a large portfolio value into a small portfolio in value. And so I'm very cautious when I hear -- when I hear phrases like new paradigms, path to profitability, when I hear people talking about social metrics changing, I don't -- I'm much more cautious than I ever was before.
LinkedIn has found a niche, it's found a purpose. Facebook has found a niche, it's found a purpose. Unfortunately, Great Aunt Bessie in North Dakota isn't prepared to put her hand in her purse to pay for it.
ROMANS: I think Aunt Bessie is getting a lot of airtime today.
Richard Quest, thank you so much. And some day, Richard, let's sit down and I'll tell you all about my Lucent Technology woes.
QUEST: That's the one I sold.
ROMANS: You did? I still have it because to remind me every time I log in, don't listen to people, people will be great at 20, it will be awesome at 10.
ROMANS: It was heartbreaking at 2.
QUEST: No, that's exactly the one. I wasn't going to mention it, but I'll tell you, I've got a trade note which shows a reduction in value of 99.9 percent.
MCCALL: But Richard, based on your past performance, maybe I should be buying Facebook considering you don't like Facebook shares.
ROMANS: Matt McCall and Richard, thank you so much, Richard, for the big laugh over Lucent Technologies. All right, thanks, guys.
You don't have to tell me who you're going to vote for in November, but I do want to know what issues are helping you decide. I'll tell you how you and Ali Velshi are going to join that debate next.
ROMANS: The presidential election is now 10 weeks away. Swing states like Florida, Nevada, Iowa, Ohio, they will likely decide this election and middle class voters which most of you say you are, you'll be casting ballots with the economy in mind.
Unemployment is still about 8 percent, economic growth is mediocre, but there are signs of hope like housing and the stock market. So it's your choice in November. Stick with President Obama or turn to Governor Romney to take us in a new direction.
Whatever the outcome, Congress, Congress will be under immense pressure to work with the president to actually get things done.
Let me know what's influencing your vote. On Twitter my handle is @Christineromans and on Facebook, ChristineromansCNN. Also Ali Velshi returns next week. Let's start getting him fired up, can you? It won't be very hard. His Twitter handle is @Alivelshi. You can find him at Facebook.com/alivelshi. Thanks for joining the conversation this week in YOUR MONEY. We're here every Saturday 1:00 p.m. Eastern. Sunday at 3:00. Have a great weekend, everybody.