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YOUR BOTTOM LINE
Obama's "To-Do" List; Obama's Win & Your Health Care
Aired November 10, 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: Thanks, guys. See you at the top of the hour.
Good morning, everyone. I'm Christine Romans.
President Obama won four more years. Now it's about his legacy. Standing in his way: an unnecessary fiscal disaster, the struggling labor market, a global economy that's slowing and the uncertain future of our children and grandchildren.
ROMANS (voice-over): Dear, Mr. President, when it comes to this country's financial future, you've got four years and four major tasks.
First: the fiscal cliff. There's no time to waste. On January 1, taxes rise and government spending is cut, sending not just us but potentially the world back into a recession.
Next on the list: jobs. Hiring is picking up, but we must do better. The middle class has been hit hard. Its wealth fell 28 percent in the last decade. Why?
REP. NANCY PELOSI (D), CALIFORNIA: Changes that were taking place in China.
BEN BERNANKE, FEDERAL RESERVE CHAIRMAN: Some emerging markets like China.
REP. JOHN BOEHNER (R-OH), SPEAKER OF THE HOUSE: China needs the United States.
ROMANS: Mostly by keeping its currency low, China can sell products for less than they're worth, making it hard for American companies to compete.
That means fewer jobs and lower wages here in the U.S. We need a smart trade policy that protects American workers without hurting American businesses. To compete, America needs a 21st century workforce. That comes through education. To keep our place at the top, we need science, engineering and math skills taught earlier and with more efficiency.
Mr. President, there's your list. Let's keep this economy working.
ROMANS: These four things: the fiscal cliff, jobs, China, education -- they could define President Obama's legacy and maybe immigration reform, too.
Let's start at the top of that list. The most pressing issue: the fiscal cliff.
You've seen the big picture, potentially the larges tax increase in history. Here's what you will feel -- your household tax bill will increase by $3,500 on average, less if you make under 64 grand a year, more if you make six figures. That's according to the nonpartisan Tax Policy Center.
Fifty-five billion dollars would be cut from defense spending. That will likely mean job cuts, slower production, not good for those connected to the defense industry.
Another $55 billion would be cut from things like education, food inspections and air travel.
We've assembled CNN's best to pore over this.
Ali Velshi is CNN's chief business correspondent and the host of "YOUR MONEY". You can catch that show later today at 1:00 p.m. Eastern.
Jessica Yellin is the White House correspondent.
Lisa Desjardins is the Capitol Hill correspondent for CNN Radio. She also authored the great book, "Zombie Economics: A Guide to Personal Finance".
Ali, you and I have been yelling from the rooftops about the fiscal cliff for months. The election is now out of the way, so the rest of the world is beginning to get how serious this is. So people are now aware that deep cuts are coming and economic disaster could happen. No one wants it to happen, but not a whisper about what the deal looks like.
Are you worried?
ALI VELSHI, CNN CHIEF BUSINESS CORRESPONDENT: I am worried and I'll tell you why I'm worried. I also thought they'd get the debt ceiling debate done a year ago when they were going to and they almost brought us to the brink of disaster on that. So I'm worried that Washington, even under remarkable pressure, doesn't always do the right thing.
I will tell you, I'm quite not satisfied now that the fiscal cliff is getting the love that it deserves. Everybody is talking about it. It's the first order of business. Nobody in Washington is talking about anything else right now. So I think everybody gets this is very serious.
I just want to remind people the U.S. is growing at 2 percent right now. That is not very strong. The fiscal cliff, if we went over it, could take 3.5 percent off of that taking us down to 1.5 percent negative growth and that is a recession.
ROMANS: But there's something interesting happening among -- among, I would say, progressives. There's a lot of talk about compromise this week from the major players, Ali.
ROMANS: But let's talk about what progressives are saying. Nobel Prize-winning economist Paul Krugman wrote an op-ed in "The New York Times" saying the president shouldn't do anything about the fiscal cliff at the moment. He writes, quote, this is definitely no time to negotiate a grand bargain on the budget that snatches defeat from the jaws of victory."
Jessica -- Jessica Yellin, this is the counterargument to compromise. Is the president viewing his re-election as the opportunity to make a deal or is he going to use the big win to make the Republicans bend as Krugman would like?
JESSICA YELLIN, CNN CHIEF WHITE HOUSE CORRESPONDENT: They'd like a little bit I think of both, Christine. What they really would like is a compromise, and that's what the president is going to make a play for initially. And they feel that they have hopefully the potential for a bargaining partner in Speaker Boehner and the opportunity to reach a deal because both sides do want to avoid the fiscal cliff.
At the same time, the president and Democratic team recognizes and believes they have leverage now. In the worst case, while it would be going of part of the cliff, if the Bush tax cuts expire, then all the tax rates go up and everybody will be forced into a position to renegotiate the tax rates.
So while they're not saying that from the White House, that does give the president a position of extreme negotiating force and he can really make some serious demands. They don't want that, they are not saying that that's where they're headed, but we all know that that's what stands out there as the threat and it's a serious forcing mechanism that gives the president a lot of leverage in these deals if Speaker Boehner won't come his way.
ROMANS: But all of that politics. You know what's so interesting? There's all these politics being played but, you know, companies and people need the certainty of how much is going to be in their paycheck, what their tax breaks are going to be, what their tax breaks are going to be, you've got a kid in college, you're a senior citizen, you're a working person with two kids.
I mean, they can't go over for just a couple of weeks because of the politics.
YELLIN: Actually, they tell me that you can because you don't see the hit in most of your paychecks for at least two weeks, so they could negotiate another two weeks and retroactively fix it, is one thing that I've told.
Now, please don't think I'm being told this from the White House because I'm standing here.
YELLIN: This is what a lot of the strategists around town are saying.
ROMANS: That's what you're hearing from around town. And what we're hearing from around town here is the opposite. That it would be so bad for markets and sentiment and could spark a financial crisis, a recession down the road, but a financial crisis if you have all of this uncertainty, the signal that you're sending to the world that they can't get this done by the end of the year.
YELLIN: One thing they point -- if I could just add.
YELLIN: One thing they point out both sides is that it would be enormously helpful to both sides of Pennsylvania Avenue if business leaders would speak out. They say the thing that was missing, the big vacuum during the debt ceiling negotiations, was that CEOs and the heads of Wall Street were silent. And while they would call and whisper privately what they would want to get done, they did not say it publicly.
ROMANS: But they're very public now. You've seen the CEOs from Business Roundtable who have said let's use Simpson-Bowles as a framework. You have hundreds of CEOs who have come out together in a new coalition to try to say, look, let's try to figure out how to get this done, because we're not going to --
YELLIN: They're applauding it and they want more of it.
ROMANS: Right. So they are at the table now.
Lisa, I want to bring you in. It's the same players but everything has changed because the president won and that is a reset here. Does he have more bargaining power today than he did a month ago?
LISA DESJARDINS, CNN RADIO CAPITOL HILL CORRESPONDENT: You know, I think both sides in the Capitol are watching the president. I talked to both Republicans and Democrats yesterday, who said, and they put this in different ways, but basically what they're saying is they're watching the president's leadership on this.
In the past, we've heard Republicans say that. That was kind of a talking point when they were challenging the president. Oh, the president has to be a leader.
Well, now it's changed. Now I think sort of as both sides in this next Congress are feeling each other out, the consistent thing is the president and they're looking to see what kind of leadership he shows, how he flexes his muscles, how he moves ahead. Both sides truly are looking to him, Democrats and Republicans, right now, on this exact issue.
I know I heard Ali say earlier that he's worried. He does have reason to be here at the Capitol and I'll tell you why.
As much as we've heard in this last week, including yesterday with Speaker Boehner, talk about working together, compromise -- there are two huge points where Democrats and Republicans behind closed doors are still very separate. One is the timing. In truth, a lot of Republicans would be fine as it stands right now with not doing anything during lame duck, with just having sort of a measure that extends everything as we have it right now for another few months, three, six months, that kind of thing. So they wouldn't fall over the fiscal cliff but they just extend the exact same policies we have now, kick the can down the road.
A lot of Republicans I think are hoping that might be what happens. Democrats say no way, that they are fiercely opposed to that idea. That they want something to come out of lame duck --
DESJARDINS: -- something substantive.
The other thing, of course, Christine, is that $250,000 tax break for -- in the Bush tax breaks. That is a dividing point that I don't see any room on right now and it's going to be a real problem.
ROMANS: And I think we have heard sort of the markers being laid down by the president and John Boehner at the end of this week. We're going to talk more about the fiscal cliff. Don't go away because, you know, business leaders are concerned about the timing as well.
America renewed the president's contract. Will Congress get the message?
(BEGIN VIDEO CLIP)
BARACK OBAMA, PRESIDENT OF THE UNITED STATES: Last September, I sent Congress a detailed jobs plan full of the kind of bipartisan ideas that would have put more Americans back to work.
(END VIDEO CLIP)
ROMANS: Of course, that will did not make it through Congress. Who creates jobs next? A jobs plan from Washington or is it the private sector?
ROMANS: President Obama is now a job creator. The economy has made up every job lost on his watch, but the jobs coming back aren't equal to the jobs that went away. We're seeing lower wages, less long-term employment, things like benefits and retirement plans are harder to find. President Obama says it's time for action and his political nemesis agrees.
(BEGIN VIDEO CLIP)
OBAMA: Tonight, you voted for action. Not politics as usual. You elected us to focus on your jobs, not ours.
REP. JOHN BOEHNER (R-OH), SPEAKER OF THE HOUSE: If there's a mandate in yesterday's results, it's a mandate for us to find a way to work together on the solutions to the challenges that we all face as a nation.
(END VIDEO CLIP)
ROMANS: Ali Velshi, Jessica Yellin and Lisa Desjardins are with me again.
Ali, you know, Governor Romney said he could create 12 million jobs in four years. The Obama camp said, hey, you know, we can too.
Now that the election is over, they have to figure out how to create jobs and avoid the fiscal cliff at the same time, which is interesting, because Washington hasn't really been known for being able to walk and chew gum at the same time, especially on the economy.
Can they do both? Can you cut the deficit, look to long-term pay down of the debt and create jobs at the same time?
VELSHI: Well, not -- maybe you can. You certainly can't do it with this fiscal cliff looming, so there will be no economic growth. That's what you need to create jobs. Economic growth creates demand. It creates more jobs. People buy things -- can't do that with this fiscal cliff looming.
So, the danger is what Lisa was saying, if they decide to kick this down six months, you stall that growth. We're at 2 percent right now economic growth. If we slow that down in the New Year, we won't create the 8 million jobs in four years we're expected to create.
So under the current circumstance, there's zero chance of 12 million jobs in four years. Many policymakers don't believe that could happen because nobody is predicting the 4 percent economic growth you would need.
So, right now, no chance. If everybody gets it together in Washington and things pick up faster than we expect, some chance.
ROMANS: Jessica, the president, OK, on jobs specifically, he didn't give many specifics about a jobs plan but voters -- they liked his big ideas. They liked him enough to earn him four more years of trying. He used much of his political capital in the first term on Obamacare.
Second term, can we expect a jobs bill?
YELLIN: Well, their argument is that they have a jobs bill, it was put before Congress in the end of 2011 and they will press to continue to get elements of that passed. There are elements of it that are outstanding that, you know, could get popular support and the president will push for it. I don't know what the political dynamic of this Congress will be. We have -- it's a little early to really know.
One thing he could do is front load some of the infrastructure spending that's already in the pipeline and some of that could get people back to work. There could be things that are related to health care reform that could jump start some jobs in the health care sector.
But as for his jobs plan, I wouldn't expect to see an entirely new jobs plan because their argument is they put one out there, they'd like Congress to continue to work on passing that.
ROMANS: Lisa, is the jobs bill deal in Congress?
DESJARDINS: I have to tell you, Christine, I asked around about this and I was surprised. Democrats -- senior Democratic leadership sources were telling me that actually there's a chance for some possible jobs legislation to be attached to a deal on the fiscal cliff. Now, remember, as we've been saying, Democrats are the ones who are more gung-ho for something substantial to happen in lame duck in this session before the New Year.
So, it's hard to say if that will happen, but Democrats say behind the scenes there is a chance perhaps more infrastructure money will try -- they'll try to attach to a lame duck deal, perhaps that veterans jobs bill that failed in the Senate. Maybe the teachers jobs bill. Those are the three issues they're looking at, infrastructure, teachers and vets that could possibly be attached to something in lame duck. I honestly can't handicap the chances of that, but it is not out of the realm of possibility right now.
ROMANS: All right. Lisa, Jessica, Ali, CNN's best. Thank you, guys. Have a great weekend.
DESJARDINS: You, too.
ROMANS: Obamacare lives. It has survived a Supreme Court challenge, a presidential election. Next, I'll tell you what it means for you and your money.
ROMANS: The battle over health reform is over. The Supreme Court has ruled, the president has been re-elected.
The centerpiece of the legislation when everyone has to have health insurance or pay a penalty, it doesn't go into effect until 2014, but several key pieces of the law take effect next year.
First, if you're a big earner, your taxes are going up. A new Medicare surtax means an individual making $250,000 is going to pay $450 more a year into Medicare, and a family earning half a million will pay $2,250 more. On top of that, high income families may also be subject to a new 3.8 percent Medicare tax on investment income.
Next, if you contribute to a flexible spending account, the maximum amount you is can set aside is $2,500. Many companies used to allow double that. So if you're in open enrollment right now, plan accordingly.
Finally, lots of work is happening to get state health insurance exchanges up and running. Ultimately, this is where you're going to compare and buy plans if you need coverage. Enrollment is supposed to start next October, less than a year from now. So far, only 14 states and Washington citizen have set up or planning to establish their own exchange. The other ones in blue here. Other states offered to partner with the federal government or just want the federal government come in and run it all together.
States face a November 16th deadline this Friday to stay where they stand.
Andrew Rubin is the vice president of Clinical Affairs and affiliates at NYU Langone Medical Center.
Andrew, how much of Obamacare is now certain and will go into effect now that the election is behind us?
ANDREW RUBIN, VICE PRES., NYU LANGONE MEDICAL CENTER: Well, it's all certain, what goes into effect is the big question. So, as you pointed out, the state exchanges, states have to decide whether they're going to run it themselves or have the federal government do them for them.
But the benefit plans that are going to be sold in those exchanges have to still be formulated and there's something called essential benefits. And those essential benefits, what benefits will be sold has not yet been written by the federal government.
So a lot of states are waiting to see what they are going to be actually be selling.
ROMANS: I want to show you what exit polls and election said about the Affordable Care Act, and the way people feel about it. Forty-nine percent of voters said it should be fully or partially repealed, almost half of people. Forty-four percent said it should be kept or expanded.
That's not a rousing endorsement. Where do medical professionals stand on it?
RUBIN: I love this question. Only because the medical professionals are voters and they stand exactly with the rest of the public. There are a lot of doctors and hospital executives who are for it, and there's an equal number who are against it. I think everybody, whether you're for or against it, recognizes the current system doesn't work.
But when you're implementing something so vast and so different, and that fundamentally changes how health care is reimbursed in this country, you know, the people are -- physicians, hospitals are concerned. They want to make sure they're able to stay in business. Doctors tend to be small businesses. Hospitals are large businesses. We have lots of concerns about how this will get implemented and rolled out.
ROMANS: All right. You know, Congress and the president are also facing, you know, a financial crisis and a lot of soul searching. Obamacare keeps low income people -- helps them pay for their health insurance. The average subsidy for someone in an exchange is going to be $5,300 in 2014. It's going to rise every year, you see can there.
You know, these are subsidies for people to buy their insurance if they can't afford it on their own, an obvious target for deficit reduction. But if you don't make it affordable, the law's effectiveness is doomed.
RUBIN: So, this is tricky. This is really tricky. And it's really tricky for the public to understand.
But what's happening here is Obamacare -- again, whether you like it or not -- will extend and does extend the life of the Medicare trust fund. The question is, you now, it's paid for with taxes, rebates from pharmaceutical companies, and the like. And quite frankly, the taxes are designed to pay for the subsidies.
So, if you keep the taxes in place and you lose the subsidies, well then you've gutted the law. And it doesn't work any more the way it was intended to work. If you reduce the taxes because we don't want to increase them, then you don't have enough money to pay for the subsidies.
So, it's a conundrum that has to be worked out. I just don't see Congress changing the funding mechanisms for this law.
ROMANS: Change is very hard to swallow sometimes, especially very big change. I just hope the government does a good job of really educating people about how it's going to work. States, too, about how their state exchanges are going to work because a lot of confusion about it, people just think, they're going to be fined. I'm going to get fined.
I said, no, no, no, you will get a subsidy, or you might get a very good, decent health insurance policy for less money. I mean, they needed to do a better job of selling it out, I think.
RUBIN: Even those for the law still don't understand a lot about what's in it. And I think the Obama administration recognizes now that it's here to stay. They're going to have to put a lot into not only defining what happens and how it works, but making sure the public is educated.
ROMANS: Andrew Rubin, nice to see you.
RUBIN: Good to be here.
ROMANS: All right. The new president, same as the old one, Congress and the Senate haven't changed much either. So, when will they stop talking and start working on the fiscal cliff?
ROMANS: We started with a letter to the president. Now, now a postscript.
Hello, Congress. It's us, the American people. We hired you. We also renewed the president's contract. He's not going anywhere for a few years and he aims to build a legacy now.
Please don't forget what we hired you all to do, and we need you to do it now. Nothing is more immediate than this fiscal cliff.
Speaker Boehner told ABC News he's the most reasonable, responsible person in Washington. How about the lawmakers he represents?
If they don't act, this is what will happen: $7 trillion worth of tax hikes and spending cuts take effect at the beginning of the year, $7 trillion over a decade.
Eighty-eight percent of households face higher taxes. The Tax Policy Center estimates the average household will bay $3,500 more in taxes.
Unemployment could rise above 9 percent by the end of the year.
The U.S., even the global economy, could fall back into recession.
It's not just Congress, Mr. President, you sounded committed to doing what needs to be done to make this work when you spoke on Friday.
(BEGIN VIDEO CLIP)
OBAMA: I want to be clear: I'm not wedded to every detail of my plan. I'm open to compromise. I'm open to new ideas.
(END VIDEO CLIP)
ROMANS: And Speaker Boehner, you sounded like you were open to reason, too.
(BEGIN VIDEO CLIP)
BOEHNER: Mr. President, the Republican majority here in the House stands ready to work with you.
(END VIDEO CLIP)
ROMANS: Even Senator Reid says he's ready for some kumbaya.
(BEGIN VIDEO CLIP)
SEN. HARRY REID (D-NV), MAJORITY LEADER: It's better to dance than fight. It's better to work together.
(END VIDEO CLIP)
ROMANS: Maybe do-si-do is a better metaphor.
Anyway, Congress has less than two months to prove it. This lame duck Congress has one last chance to get in the history books for the right reason.
Everything is the same, but different this time. The president is reelected. Distraction by some in the GOP didn't keep him out. That fight is over.
Get the message, Congress, maybe accept some revenue with your cuts, and go home with pride before the 113th Congress has to preside over a recession.
Let's keep the conversation going about President Obama's second term, the fiscal cliff, taxes, whatever is on your mind. Find us on Facebook and Twitter. Our handle is @CNNbottomline, my handle is @ChristineRomans. I'll be back later today at 1:00 p.m. Eastern on "YOUR MONEY" with Ali Velshi.
"CNN SATURDAY MORNING" continues right now with top news stories we're watching.