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U.S. Gun Culture; Know What You Own
Aired December 22, 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. See you at the top of the hour.
Twenty million, that's how many guns could be sold in this country this year. It's big business but the conversation is changing.
Good morning, everyone. I'm Christine Romans.
America has pervasive gun culture. Laws protect it. Millions embrace it. And it generates billions for our economy.
There are 89 guns per 100 people in this country, according to an annual research by the Small Arms Survey.
Take a look at that rate compared to the rest of the world. The next highest is Yemen at 55 guns per hundred people and Switzerland at 46. And then all the way down to just one, Tanzania, in case you're wondering. No country is even close to the U.S.
So, where does the burning desire to own a gun come from? Well, it's predicated on the Second Amendment. Let's refresh our memories from elementary and high school when we studied this. "A well- regulated militia, being necessary to the security of a free state, the right of people to keep and bear arms, shall not be infringed."
And throughout our history, it's been a part of our fabric, the Minutemen took up arms to overthrow the British rule and earn freedom, now memorialized in statues like this one in Massachusetts, where it all started. The West was one in the 1800s with the help of firearms. Then, in the 20th century, it was cops and robbers, mobsters, bootleggers -- all of them were armed, right?
But today, the images born in our minds are grim. The history books will not be glorifying any of this. Cities where mass murderers have taken lives are now household names, Columbine, Aurora and now, Newtown.
And while our Second Amendment rights may be inked on the most important document this country has, its intention was not -- was to protect, not to hurt or kill innocent people.
For all you gun lovers, I get it. I grew up in Iowa, shot my first gun with my grandpa when I was 8 years old. I get it. I'm not saying we have to change our God-given rights as Americans. What I am saying it's time to talk about what makes us the gun culture that we are.
Jeff Toobin is CNN senior legal analyst.
Christiane Amanpour is also here. She's the host of "AMANPOUR" on CNN International, and she's ABC's global affairs anchor.
So, interesting. This is rooted, Jeff, in the Second Amendment. You say it's going to be determined as much by politics as by law.
Is gun culture driving politics, politics driving gun culture? And does it change? Does the Second Amendment change from here?
JEFFREY TOOBIN, CNN SR. LEGAL ANALYST: It sure does. I mean, the Second Amendment itself has not changed in more than 200 years. But the interpretation of the Second Amendment has changed dramatically.
For more than 100 years, the interpretation was that state militias, that mysterious first clause, they were the only ones who had the right to keep and bear arms. But starting in 2008, just four years ago, the Supreme Court of the United States said individuals have a right to keep and bear arms. They were talking about handguns in the home.
But how expansive that right is remains somewhat murky at this point. So, the idea that you have a constitutional right to bear arms is a legitimate one for better or worse now. And that's something that politicians will have to take into consideration as they decide what to do.
ROMANS: Christiane, you've pointed to incidents like what happened here in Newtown, that happened in Australia, and in Scotland, and how they moved quickly and changed their laws.
CHRISTIANE AMANPOUR, HOST, CNN'S "AMANPOUR": Very quickly. In 1996, children as young as those who were slaughtered in Sandy Hook Elementary School were gunned down in their elementary school in Dunblane, Scotland. It was covered all over the world --
ROMANS: That's right.
AMANPOUR: -- including here in the United States.
ROMANS: Because here in United States, we said, look, other countries have gun violence, too. It's rare to see another county have such gun violence.
AMANPOUR: Very rare. And what the politicians did there, though, was leapt into action. And they put a ban on handgun ownership and they backed that up by fines, by prison terms. And lo and behold, the gun crime violence did not go down in the initial one or two years afterwards. But by the time of 2002 until 2011 or '12, gun violence in the U.K. has plummeted by 44 percent. You simply cannot argue with facts and statistics like that.
In Australia, a massacre in 1996, in Tasmania. And after that, the politicians leapt into action. And in a consensus, they instituted a ban on the sale, the import, ownership of semi- automatics, what's known as assault rifles and pistols. And again, the gun crime plummeted like a stone.
And Harvard University did a really important study. They looked at massacres in the 18 years before the new laws. There were 13, 102 people were killed. After the new laws in Australia, not one multiple shooting. Facts don't lie.
ROMANS: But they don't have a Second Amendment. They don't have the Second Amendment.
TOOBIN: Well, it's not just the Second Amendment, though. We're in a political moment here where two forces are in tremendous conflict. One is this national revulsion at what happened. I mean, obviously, the polls have moved very quickly.
ROMANS: Six in 10 now says they would like to see the kind of gun used to kill those children, that Bushmaster rifle outlawed.
TOOBIN: Absolutely. That's a real phenomenon and you can see it in the reaction to even some politicians.
However, the support for guns in the Congress is real. It's enduring. And when the heat of the moment passes and the media focus changes, you can be sure that the supporters of gun rights will be there, fighting every step of the way, especially in the Republican Party.
AMANPOUR: This is not about freedom. In my view, looking at the United States, it cannot be framed as a -- as an attempt to draw back freedoms. This isn't about taking away people's guns, their shotguns for hunting, their sporting guns or their self protection handguns. It's about limiting the kind of military assault rifles that I've spent my career watching the effect of on the battlefield.
Jeff and Christiane, stay right there. We're going to have more on the U.S. gun culture, next.
ROMANS: Welcome back. I'm here again with Jeff Toobin and Christiane Amanpour.
Jeff, I'm curious to know if you think the president -- if he had a chance to appoint someone new to the Supreme Court, if it would take a landmark Supreme Court ruling to change anything?
TOOBIN: Well, you know, I'm sorry to give you a vague answer here, but this 2008 opinion, the Heller decision, which was about handguns, that has not really been extended -- no one exactly knows where it goes from there.
TOOBIN: Because if Obama has more appointments and if the conservatives don't have the power that they do now, that could be contained. It could be applied only to handguns.
But if President Romney had had the opportunity or President Paul Ryan in a few years gets the opportunity to appoint justices to the Supreme Court, that could be expanded.
The limits of the Second Amendment are not clear at this point. The Supreme Court has not really spoken on it. And that's one of the reasons why it's so important, who appoints whom to the Supreme Court.
ROMANS: At what point is gun violence in America a public health threat, right? You talk about the freedom, the freedoms we have in this country where the public health risk, you know, 30,000 some people killed every year because of gun violence. The cost, CDC says it's $38 billion is the cost of society of gun violence.
TOOBIN: What's so astonishing about the debate of gun violence, it's different from the '90s when I first started covering this issue, is that you have people arguing very seriously now that the way to stop or limit gun violence is to have more guns. Give guns to teachers. Give guns to security guards. More guns.
That argument was too ridiculous to even be uttered in the '90s. And now, you have governors, you have senators, you have lots of people saying that's the way to protect more people.
ROMANS: Bulletproof backpacks for kids.
AMANPOUR: But, I mean, you know, it's just common sense. Imagine if somebody had had a gun in an audience in a darkened movie theater in Aurora. Are you really going to start spraying in the dark?
The police officials who killed bystanders when they took --
ROMANS: At the Empire State Building.
AMANPOUR: -- on criminals at the Empire State?
I mean, come on, these are trained marksmen, you know?
TOOBIN: Think back to your teachers in elementary school and grade school. How many would you like them to see armed? Not too many.
ROMANS: When I was in grammar school in high school, we had tornado drills. We didn't have lockdown drills. And that's how much America has changed.
AMANPOUR: But, you know, America, I think, probably, in its heart and its gut, has probably changed in this last week. This was a red line by anybody's account. These were babies. This was a biblical slaughter of the innocence.
And I want to know whether this is the kind of society that we are going to accept for ourselves and for our children.
TOOBIN: We're going to have a test.
TOOBIN: Because President Obama is going to propose something. He has -- he has marked down a line in the sand that he is going to do this in January. So we will have a test, a new Congress, new House, new Senate and we'll see what they do.
AMANPOUR: And, look, Joe Manchin, the senator from West Virginia, an upstanding member of the NRA, he talked to me on Monday. He made one other interview and he pushed the national dialogue along.
In Michigan, we interviewed a lobbyist for guns who was writing this bill about concealed carry permits, et cetera. This week in the aftermath of Sandy Hook, the governor of Michigan, a Republican, has vetoed that, will not sign it into law.
You know, it takes everybody. It can't be vilifying one side and glorifying another. It has to be a consensus. Everybody has to come to the table and put everything on the table.
ROMANS: Christiane and Jeff, thank you so much. We'll see -- we'll see if we're talking about this again in January.
TOOBIN: We'll see.
AMANPOUR: We better be. It's on us.
ROMANS: Yes. All right. Thanks both of you.
The gun business is incredibly profitable. It's estimated 20 million firearms will be sold this year and gun shops report a surge in gun demand after Newtown, selling out of the AR-15 style rifle like the one used at Sandy Hook Elementary School.
Background checks for gun purchases, one barometer for sales, have doubled since 2002. As the economy has stagnated, gun sales have soared. There are more gun retailers than there are supermarkets and McDonald's locations in America combined. Profits for gun and ammunition industry are expected to reach nearly $1 billion this year, according to IBISWorld.
Smith & Wesson alone made $48 million in its most recent quarter.
And Freedom Group, the parent company of the rifle used to kill teachers and children in Connecticut, brought in a quarter billion dollars in profit last year. An industry analyst I spoke to says semi automatic rifle sales are booming.
(BEGIN VIDEO CLIP)
ROMMEL DIONISIO, SR. V.P., WEDBUSH SECURITIES: There's been a sharp consumer preference shift in the last several years to tactical rifles, modern sporting rifles, form the traditional bolt action rifles, hunting rifles.
ROMANS: I see.
DIONISIO: Yes, because they're lightweight, they're easy to shoot, ergonomically superior and they have a high magazine capacity.
(END VIDEO CLIP)
ROMANS: Meantime, the National Rifle Association, which spent $17 million on federal election funding this year, finally broke its silence on Friday. They say gun laws don't work and we should arm schools.
(BEGIN VIDEO CLIP)
WAYNE LAPIERRE, EXECUTIVE VICE PRESIDENT, NRA: The only thing that stops a bad guy with a gun is a good guy with a gun.
(END VIDEO CLIP)
ROMANS: We're talking here about the business of guns, right? So, of course, arming schools would mean even more gun sales. There are more than 130,000 public and private schools in this country.
We invited a number of gun manufacturers and gun retailers, as well as some publications and trade magazine editors to appear on the show, all of whom -- all of whom declined or did not respond.
Some teachers in this country were shocked to discover they had invested in the very weapon used to perpetrate the school shooting -- teachers. Do you know what's in your portfolio? A look at socially responsible investing -- that's next.
ROMANS: When a private equity company whose soul goal is the pursuit of profit decides to get out of the gun business, something has changed. This week, Cerberus Capital Management announced it would sell Freedom Group. That's a group 10 companies that including Bushmaster and other ammo and accessory makers. A Bushmaster semiautomatic rifle was used to kill those teachers and children in Connecticut.
In a statement, Cerberus said, quote, "It is apparent that Sandy Hook tragedy was a watershed event that has raised the national debate on gun control to an unprecedented level. It is not our role to take positions or attempt to shape our influence the gun control policy debate. There are, however, actions that we as a firm can take."
And in a horrible irony, it turns out that teachers in California are investors in Bushmaster. The California State Teachers Retirement System invested $60 million in Cerberus. That's a private equity firm. That means the teachers retirement fund owns 2.4 percent of the Freedom Group, the parent of Bushmaster. It's now reviewing that investment and other potential holdings in gun companies.
Chris Ailman is the chief investment officer at the California State Teachers Retirement System.
And thanks so much for talking to us and walking us through this, this morning. Clearly, you must have heard from teachers over the past week.
CHRIS AILMAN, CHIEF INVESTMENT OFFICER, CALSTRS: Yes, we have, through e-mail, through phone calls and through social media.
ROMANS: What are they telling you?
AILMAN: Well, obviously, they're very distraught, as we were. And, you know, I was devastated when we realized that we had this investment in our portfolio. It's extremely small. And that's why we hadn't focused in on it, in particular. And their reaction, obviously, is of great concern.
ROMANS: I should point out there are a lot of retired California teachers. You are one of the biggest sort of investors in the country. So, you do have a very big, broad portfolio. You have to balance a fiduciary responsibility against the optics of teachers investing in weapons that perpetrated a mass murder.
Are you going to get out of investments like that now?
AILMAN: Well, it's not a matter of optics. It's a matter of being responsible investors, and we want to meet the needs of our members. And you're right -- we have 850,000 active and retired teachers in California that we cover.
And so, we are definitely taking a lock at gun manufacturers. It's on our investment committee's going to evaluate particularly guns that are banned in California and identify any exposure we might have in our portfolio. And then evaluate whether we should own these companies or not.
ROMANS: Did you talk to Cerberus before they made this decision to sell their Freedom Group?
AILMAN: We did. We engaged with them Monday of the week once we realized the company was in their portfolio.
We have to point out that the company is less than 1 percent of their overall private equity portfolio. So, it's a fairly small investment for them as well.
But we had several conversations with them, and we applaud the decision that they made.
ROMANS: So you were working with them before they made that decision to sell the company. And you say it's a small part of the portfolio. But I will tell you, it's a profitable business.
Chris Ailman, thank you so much. We'll have you back on after January when your investment committee decides what to do with investments in gun manufacturers. Thank you.
AILMAN: Thank you.
Henry Blodget is CEO and editor-in-chief of "Business Insider."
And, Henry, when you invest, are you giving money to a company because you think, (a), they're going to be profitable -- you're going to get a return on that investment. But that money you give them is used to build and develop and operate a company.
HENRY BLODGET, CEO, BUSINESS INSIDER: That's right. And sometimes you're not investing directly, an IPO you're giving the company money in the free stock market. You're simply buying shares from somebody else. But you are supporting the company and you are supporting the stock price.
And socially responsible investing, a lot of people have been looking at this over the last ten years saying, look, do we really want to help cigarette companies and gun companies and other companies that are oil companies that may be operating in regions of the world and doing it in a way that we don't like.
And there's a whole school of investing that's come up saying, you know what? We don't.
ROMANS: And no, we don't. But here's the thing -- I mean, if you're investing, are you investing in morals or are you investing because you want to try to make money?
BLODGET: Well, I think that the -- I think it's very much a personal decision. If you talk to people on Wall Street now, they will say that, no, they just have a fiduciary duty. All they are concerned with is the profits and the return to shareholders. And it's somebody else's business to figure out whether the business a company is in or the way they're doing business is appropriate.
But again, some people like Cerberus and certainly California teachers now have started saying, you know what, that's not good enough.
ROMANS: I heard two reactions this week among people who are talking about the stocks of these gun manufacturers, because some are publicly traded stocks. They had a tough start to the week. People either said now, I'm going to try and buy them, the gun demand is never going to go away. Other people said, how do I make sure I don't have these in my portfolio?
It's hard to find if you have them in your 401(k).
BLODGET: It is. It depends what you own, if you invest in individual stocks. It's relatively easy to control. But then you get into the whole debate about, OK, what is this bank doing in its business? Even though I support banking, are they being responsible? You really can go very deep in socially responsible investing.
Then if you own a mutual fund, often it's hundreds of stocks. You've got to look carefully. And that's why there are some funds that say, look, we built our portfolio out of companies that aren't tobacco companies or gun companies or oil companies --
ROMANS: If you can't sleep at night investing in a gun company or giving money to a tobacco company, you can find mutual funds that screen out the so-called vice stocks. The assets managed by the socially responsible funds have nearly doubled -- we have the graphic for you -- doubled in the last two years.
But the performance is mixed. It's a risk. You look at the flip side -- shares of gun, alcohol, gambling companies, all up big this year.
BLODGET: That's right. It's very much period to period. Some of the studies that looked at the, say, socially responsible stocks overall have performed well or at least on parity. But in other periods, they haven't.
It turns out that selling cigarettes is a great business. People are addicted to cigarettes, they buy them. That's why the tobacco companies have been great investments for decades. So it is a tough decision.
ROMANS: Fewer people are using cigarettes in America today.
BLODGET: In America, but not in the world, which is why tobacco companies are still doing incredibly well.
ROMANS: And more people are using guns.
ROMANS: So, the trends are different for those two. It's interesting.
All right. Henry Blodget, thanks. Nice to see you.
BLODGET: Thank you for having me.
ROMANS: "Business Insider."
Forty-seven percent of Americans say they have at least one gun in their home. America, what are we so afraid of? Why do we need these guns? I'm going to rant on that, next.
ROMANS: America, what are we so afraid of? There are more than 300 million guns in this country.
So far this year, there have been 16.8 million applications to buy one. Those background checks, one measure of potential sales. They've doubled in the past 10 years -- doubled. Think about that.
During roughly the same time the economy stagnated, we faced the worst financial crisis since the Great Depression, and median family net worth plummeted. But gun sales have soared and are still soaring.
So, today this is less of a rant and more of a question. America, what are we so afraid of?
In the richest country in the world, a damaged, evil soul can turn himself in to a weapon of mass destruction. He can take a military-style weapon and kill an entire first grade class. That's what we should be afraid of.
I get that we're a gun country. Guns are so mainstream it's part of our vernacular. I get it, I embrace it.
We go ballistic. We pull the trigger on a purchase. We stick to our guns. We watch "Top Shots" on History Channel, "Sons of Guns" on the Discovery Channel.
One of our favorite Christmas movies, "A Christmas Story," is about a little boy and the BB gun he so desperately desires.
(BEGIN VIDEO CLIP)
UNIDENTIFIED MALE: There it is, the holy grail of Christmas gifts. The Red Rider 200 shot range model air rifle.
(END VIDEO CLIP)
ROMANS: That's the gun culture I grew with up. When did something so pure about America, her pioneer roots, her birth in revolution, when did that change?
America, what are we so afraid of that we're armed to the teeth and we're killing our children? We've gone from Red Rider BB guns to military-style semiautomatic rifles that you can buy at the same store where you buy your children's soccer cleats. Does it have to be all or nothing?
The Second Amendment says this, "The right of the people to keep and bear arms shall not be infringed." So, how far do we take it? Bullets designed to stay in the bodies of those children? Military- style rifles designed for very rapid fire? Maybe a missile in your backyard or your own predator drone. Obviously, there are limits.
I don't know. I'm not a lawyer. I'm a mom. And I'm a reporter who covered too many of these mass shootings.
This time feels different but we have been here before. And the moment has passed before.
In Tucson, Congress saw one of its own gunned down and did nothing. In Aurora, Colorado, 12 people were murdered in a movie theater, 58 injured, nothing. Less than two weeks ago, inside an Oregon shopping mall teeming with Christmas shoppers, two people were killed and a third seriously injured.
Maybe this time in Connecticut is different. You're going to see the media slowly and quietly pulling away from Newtown. We're going to let them grieve alone.
But America, what are we so afraid of? For me it's that we let this moment, this gut punch to the national conscience slip away.
I want to know what you think. Find us on Facebook and Twitter, our handle is CNNBottomLine, my handle is @ChristineRomans.
"CNN SATURDAY MORNING" continues now.