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YOUR BOTTOM LINE
The Rich Vs. The Rest; Asteroid Threat, Budget Realities
Aired March 23, 2013 - 09:30 ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
CHRISTINE ROMANS, HOST: One America, but two economies. You may have heard me say this before, but the evidence is mounting -- stocks, jobs, housing, recent data show all three are improving big time, but not everyone is feeling it.
Three new polls out this week show one growing divide. The Dow keeps breaking records, but CNN/ORC poll finds 55 percent of Americans think buying stocks right now is a bad idea, 43 percent say it's a good idea.
How do you feel about the economy? Sixty-nine percent describe the economy as poor or very poor. Only a third say the economy is in good or very good shape.
And, finally, retirement, are you prepared?
A survey from the Employee Benefit Research Institute asks Americans 25 and older and only 13 percent feel very confident they'll have enough money to retire comfortably. It was more than twice that percentage before the recession, nearly half, 49 percent those two slices on the left of your screen, they said they were not too or not at all confident. That's the highest percentage that group has ever recorded.
Will Cain is a CNN contributor and good friend of the show.
Another good friend, Marc Lamont Hill. He's the host for "HuffPost Live" and an associate professor at Columbia.
Marc, housing is improving. Stocks are up 7 percent to 10 percent this year. In the post-crisis world, do the rich get rich, and everyone else just runs in place?
MARC LAMONT HILL, COLUMBIA UNIVERSITY: Yes, because the rich are accessing good information and they know now is a great time, for example, to invest. The problem is everyday Americans are still buying into the dominant narrative, which is the sky is still falling, the economy is terrible, we shouldn't invest our money, we should hide it in our mattress.
HILL: Because there's a dominant right wing narrative tells us all times are bad as long as there's a Democratic administration. They want us to believe it. It's kind of like the health care thing, right, where everyone loves the individual items but don't like universal health care because they bought to the narrative.
ROMANS: I want to go -- so, the right wing has written a narrative that is keeping everyone else from enjoying success and housing in the stock market.
HILL: Yes, because we buy into it and the left doesn't push back effectively enough. So, everyone walks around saying the economy is bad, we shouldn't invest, we can't trust the market when that's not true.
ROMANS: I don't know. I've been talking about stocks and housing -- I'm going to let Will take this here.
WILL CAIN, CNN CONTRIBUTOR: I mean, there's a new study out that suggests that retirees right now couldn't come $2,000 liquid next month if they had to if the situation arose.
If 57 percent of Americans don't have $25,000 saved, I'm not sure if the right wing or reality wrote that narrative but it exists.
So, what are you suggesting that we're in a good economy, the right wing has just painted a false picture?
HILL: No, I'm saying it's more complex than simply saying the economy stinks, because we bought into the idea the economy is bad and now is not a good time to invest in the marketplace --
ROMANS: But you agree, Marc, that there are two Americas here.
HILL: Of course.
ROMANS: You have two Americas here. You do have people who have capital, who are deploying their capital who are making money. You have people who aren't underwater on their home or who can pay cash who are making money in real estate.
But when I talk about a housing market success and when I talk about stock market success, the response I get from viewers is we don't feel it. It doesn't matter to us.
HILL: And there's some truth to that, that's always been a problem of America, two distinct Americas economically speaking. We already know that.
But the question today to me is how can people who are middle class who have access, who have resources actually engage in some kind of social mobility? Three years ago, I would say don't invest in the market, there's no good reason to. Three years ago, I would say the housing market is bottoming out, stay still.
Right now, there's opportunity to make investment and people still aren't doing it.
ROMANS: And that's a right wing conspiracy.
HILL: I'm not saying it's a conspiracy. But I'm saying we have matter of factually accepted the idea the economy is bad on all fronts and there's no room for --
CAIN: The bottom line it's a joke we're sitting here telling half the country or the middle class that they should have been investing in the stock market or housing the last couple years. Warren Buffett once said you never know who is swimming naked until the tide goes out.
CAIN: Well, the tide went out and, the fact is, a lot of us were swimming naked. That means we have a lot of debt, a lot of credit problems, and we spent the last several years trying to work it off. We're not done.
So there's no extra money to be putting in the stock market. The fact is, some people did have extra capital, those who weren't swimming naked.
CAIN: What do you mean?
HILL: I think it's cool that you're saying Americans don't have that. I don't disagree with it. But it's indisputable.
What is disputable I think is this idea that there's nothing that can be done right now. Do you disagree with the idea that right now, there are middle class Americans who could invest in the market, who could take advantage of the gains but don't because they believe the economy is still bad.
CAIN: Here's the deal. I don't know the future of the stock market so I wouldn't advise middle class or rich to put their money in the stock market. We're in unprecedented times. We have unprecedented levels of private debt. We have every central bank across the world printing money.
The bottom line is the future is unknowable. So, I don't know the right thing to do. But I do know that they're working on deleveraging and that's what they need to be doing.
HILL: It's always unknowable.
ROMANS: That's right, but some people are afraid for good reasons because you really, people got hit, they saw what happened five, six years ago. They don't want that to happen again.
Also, you know, middle class families are much more exposed to the value of their house and value of their jobs. You know, they're not able to take the risks of people with a little more, people who make $250,000 or more a year.
So, my question to you is, do we ever bridge this divide before the two or do we accept there are people going to be paycheck to paycheck trying to get ahead forever?
HILL: I hope we would create an intervention economically. ROMANS: So, what is the intervention?
HILL: Well, I think part of it comes with the new taxation. I think part of it comes with investing in small business. I mean, there are things that we can do to engage people in a form of social mobility. That's what I'd like to see. I think another reason why people have it invested in the markets is because they see tons of tax relief, tons of economic support for those who have. They see the big guys getting supported and the little guys aren't getting bailed out.
ROMANS: Another issue, though, it's not just investing in the market. It used to be in this country when the stock market went up, when you had records in stocks, it meant the companies then were flush and companies were spending more money on hiring and on expanding and you haven't seen that. The record amounts of corporate cash in the banks not being spent to expand and that's where the disconnect between stock and middle class comes.
CAIN: Over the short term, over the short term. But over the long- term, this picture that we're painting, Marc has suggested that there's two Americas, it's just simply false and it doesn't matter. It doesn't matter that in the short term, companies are making money, rich people are making money. It doesn't hurt anyone. There's not a fixed piece of income pie that that's taking anyone form.
And over the long-term --
CAIN: Over the long term, as absolute wealth is increasing, then everybody will benefit. This society has proven absolute wealth continuously marches forward.
ROMANS: All right, guys. We're going to talk about this some more. Marc Lamont Hill, Will Cain, thanks, guys.
As Hans Solo, Harrison Ford battled Boba Fett, Jabba the Hutt, remember? Now, he's taking on forced spending cuts? Specifically, the FAA's decision to close more than 200 air traffic control towers.
(BEGIN VIDEO CLIP)
HARRIS FORD, ACTOR: This is not just about general aviation. This is about commercial aviation and passenger safety. And it's a critical issue that's got to be addressed immediately.
(END VIDEO CLIP)
ROMANS: Hollywood hype or a real threat to your security? Next.
ROMANS: We're three weeks now into the forced budget cuts Washington calls the sequester. But most of you say you aren't feeling the effects. Seventeen percent of you say the forced budget cuts are a good thing. That's less than 27 percent who say they're a bad thing, but it's not even close to the 55 percent of you who don't know enough to say one way or the other.
As the debate in Washington focuses on things like ending White House tours and maybe canceling the Easter egg roll, real jobs are getting cut. The nonpartisan Congressional Budget Office estimates the economy will lose 750,000 jobs by the end of this year. Some economists say the number is inflated since government agencies may choose to reduce worker hours rather than lay them off.
But layoffs and furlough notices are already going out to workers across the country, affecting everything from defense to nuclear waste cleanups to parks and recreation.
We want to bring back Marc Lamont Hill and Will Cain.
Marc, you say the budget cuts are designed to make the president look bad. But the White House has pushed back on agencies trying to mitigate the effects of the forced cuts. So, Americans don't seem to have reacted to the cuts overall yet.
HILL: Well, I think many Americans aren't feeling it on the ground yet, and secondly, many Americans are just tired, overwhelmed with these narratives of fiscal doom from debt ceilings to fiscal cliffs. We just keep hearing the sky is falling and they don't see any material change.
ROMANS: What it about trying to make the president look bad, though? You think that Republicans are kind of -- like that this is hanging out there and they think if there's no apocalypse, it's going to make the president look bad?
HILL: I think they miscalculated it a bit, though. I think they thought that the American people would respond a little more aggressively against the sequester than they actually had. I think that was part of the idea, they don't want to kick the can down the road. They want to fight this.
You know, I think, ultimately, they'll come up with some sort of -- some issue that they can hold onto and say, look, we won, we won, we forced the president to his knees.
But until that happens, this is what you'll see. You'll see continuous sequester and a president who is hanging out on a limb.
CAIN: This is a bizarro world.
ROMANS: But what if a $17 trillion economy can absorb these cuts, what does that do to all the people who are so worried about the belt tightening, what it's going to do to the economy.
I mean, is there a risk that the economy absorbs it and you don't have a real lasting effect?
CAIN: There's not a risk. There's an actuality. That is reality that $17 trillion economy can cut back on 1 percent of government funding over a nine-month period. The miscalculation, Marc, wasn't on the behalf of Republicans. It was on behalf of the president, who for weeks demagogued the fact if you cut this tiny percentage of the federal budget, that it's going to send so many people to the soup line that it's going to be the end of the world and guess what? It didn't happen.
HILL: Not yet, that's short term. That's the short term response. Long-term, I think we will see impacts whether it's at airports, government offices, there are all sorts of ways that we see these cuts, even military spending.
CAIN: George Will had the famous line he said a couple of weeks ago, which is, you know, liberals always want to convince us, we're spending on the government right now is the bare minute that keeps us from absolute apocalypse and tragedy. It's a joke to think we couldn't cut this minimal amount from the federal government and be all right.
ROMANS: You know, John Boehner this week, he said, look, you know, we're going to get through this, we're going to -- you know, when you're talking about how much we've pulled back so far. Even in his district, he's got for the low notices and the like ,Republicans seem to think that this was something that the president miscalculated on and the economy will be absorb it.
HILL: I don't think -- I think there's been miscalculations on both sides. I think, ultimately, Republicans miscalculated to the extent that they thought that President Obama would be attacked for this, people would read this as Obama mishandling the economy as opposed to Republicans simply not being reasonable.
I think Democrats, to some extent, miscalculated the short term impact economically. But long-term, we will government cuts. We will see job layoffs and furloughs. We will see --
ROMANS: We're starting to see it this week. I mean, Friday, the Defense Department, the furlough notices went out.
HILL: That's indisputable.
ROMANS: So, it is starting to happen. I mean, and some of these are furloughs. They're not layoffs and there's a difference.
But as I keep saying, if you're furloughed, you're not buying a new truck this summer.
HILL: Right. And if your hours are cut from 40 hours a week to 30 hours a week, which isn't technically a layoff, it still stops from spending. It still will have a long-term impact on the private sector. That's going to be the concern and you'll see that maybe not in three weeks but certainly in three months. That's where you'll begin to see --
CAIN: The question is a matter of when, because I'll tell you this, when creditors come calling, ask Cypriots, ask Greeks, they come calling sooner or later, the question is, do you put your house in order before they make the cuts for you? HILL: You're not really comparing us to Cyprus, are you?
CAIN: I'm telling you the day of reckoning comes for everyone.
ROMANS: I would just like to bring it back to Han Solo for a moment. And when you have Hollywood activist involved in sequester, forced budget cuts, does that mean that it's hype, does that mean that now it's real, people are really taking it seriously?
HILL: It's got real.
CAIN: Is that right?
ROMANS: All right. Marc Lamont Hill and Will Cain -- thanks, guys, have a great weekend.
HILL: You, too.
ROMANS: Coming up, NASA's budget wasn't spared from the sequester a month after a meteor exploded over Russia. NASA's chief says if a big one suddenly heads our way, pray. Is a lack of investment in science in space putting civilization at risk?
ROMANS: It's something out of a disaster movie, an asteroid capable of wiping out a city hurdling toward Earth. NASA says it's possible.
A meteor exploded over Russia last month. You remember this picture? More than 1,000 people were injured an estimated $33 million in property damage. At a House hearing this week, members of Congress pressed NASA's chief on what would happen if an asteroid were suddenly headed for the United States.
(BEGIN VIDEO CLIP)
CHARLES BOLDEN, NASA ADMINISTRATOR: We all know what we're facing today and we're all sitting here today as the Congress and the administration try to figure out sequestration, something that never should have happened, nobody planned to happen, but we're facing it today. And so the answer to you is, if it's coming in three weeks, pray.
(END VIDEO CLIP)
ROMANS: Pray. You heard right, pray, from a scientist. When a scientist says pray, you know you're in trouble.
Astrophysicist Neil DeGrasse Tyson is director of the Hayden Planetarium. He's also the author of 10 books, including "Space Chronicles: Facing the Ultimate Frontier."
You know, look, forced spending cuts, some $900 million from NASA's budget this year
Is it pay now or pray later? Is it as simple as that?
NEIL DEGRASSE TYSON, DIRECTOR, HAYDEN PLANETARIUM: Yes. I mean, when you have people saying in Congress in a nation that's the most powerful nation that ever was, that has explored the solar system like in other nation has imagined, saying when an asteroid comes, pray, something's wrong. OK?
TYSON: I'm sorry, something's wrong.
We know how to deflect asteroids. You can -- the physics and the engineering of that are straightforward actually. I mean, it takes clever maneuvering, but we can figure that out. So we know how to do it. We've got the reports on how to do it.
There is no funded plan to deflect an asteroid.
ROMANS: How likely is it? I mean, if all of the risk --
TYSON: We just saw -- what do you mean how likely? We saw Russia.
ROMANS: If it's an American metropolis, a lot of things can happen. I mean, if we were to fund every single thing that could happen, we're $16 trillion in national debt already.
TYSON: OK, so go to the residents of Chelyabinsk and ask, could it happen? Yes, it happened.
And so, by the way, we the astrophysics community have been telling the world about the risk of asteroids since the 1980s, since we first figured out that the dinosaurs probably went extinct from an asteroid the size of Mt. Everest that, by the way, hit one side of the world but it affected the climate worldwide, rendering 70 percent of the species extinct.
So, you would think if the human species was at risk of being extinct, you wouldn't have debates about this. You would say let's get on the case here.
ROMANS: Well, we have debates about money and you talk about all of the things that America has done in the past. What is America going to do in the future? Have we lost our ability to dream big because we think about big dollar signs instead?
TYSON: Don't get me started.
ROMANS: Consider yourself started.
TYSON: Look, I wore a special vest today.
ROMANS: Let me see it.
TYSON: I don't know if your camera can catch it. I want to go to all destinations on this vest. This is the universe mixed in with the solar system. So I like to wear the universe with me.
So if we can think of the solar system as our backyard and imagine not just where do we go next, but how much of the solar system do you want to drink in today, then you go to the moon possibly for tourism. You go to asteroids to mine them.
And, by the way, while you're mining them, if you're good at that, you probably know how to deflect them. So, we get those folks to deflect them.
ROMANS: Imagine the natural resources, the minerals. As a business person, it's there, too. I mean, there's an economic benefit on that front.
TYSON: You don't have to imagine. We know, right? There are asteroids out there presorted in ingredients ready for us to reach for.
So asteroids like the sizes of a house that would have more platinum than ever been mined in the history of the world. And the universe has no limit of energy.
And look at the wars we're fighting. We have people saying, let's solve our problems on earth. Space is -- what world is this? What country is this anymore?
ROMANS: Let's talk about fighting for other mining. Mining America's youth and the world's youth and getting them excited about science, math and technology. We all know the rankings. You know, STEM, science, technology, engineering, math. This is the future.
ROMANS: It's the key to better paying jobs. Top paying majors for college grads last year were computer engineering, chemical engineering, computer science, average starting salary in the mid $60,000s. Yes, we're lagging behind. American students, 17th in science, 25th in math, out of 34 OECD countries.
How do we spark that enthusiasm and excitement for science?
TYSON: You got the cart in front of the horse, OK?
The problem with the country is not that kids aren't interested in science. The problem with the country is that we have scientifically illiterate adults.
ROMANS: There you go.
TYSON: That's the problem, OK? When you have scientifically illiterate adults who are in charge of things, who wield resources and money and opportunity and they don't know how to think about that problem.
The kids are not the problem. They are born curious about the natural world. You know spending time with any aged child. They are poking things. They are taking things apart. What's that? What's this?
ROMANS: Dropping everything to see how it works.
TYSON: And what did the parents say? Oh, you're going to break it stop. We spend first two years teaching them how to walk and talk and then the rest of their life telling them to sit down and shut up. That's --
ROMANS: It's so true.
As a mother of a 2-year-old, this is true.
TYSON: Two-year-old, that's like peak, risk of the death, but all of those things they do that might kill them, they are exploring their environment. So you have to give them light. Don't let them give themselves but give them latitude. You probably otherwise would have.
You don't need to create a special program to entice people. The very active exploring the solar system does that. Looking for life, that's biologist and all the frontier of engineering when you are building structures. And the geologist, we're looking at the planetary surfaces --
ROMANS: Think big. We need to think bigger.
TYSON: Think big and then the rest flows behind it. And then, you can create an innovation nation. They should remain NASA the department of innovation.
ROMANS: I like that.
TYSON: Yes, I'm inspired to innovate because the nation is dreaming big.
ROMANS: And the rest of the world comes to see how America innovates, because it's something that they can't quite figure out. What is it about the American economy where things are invented? We have creativity. What is it that drives them?
TYSON: You want to create an atmosphere in which innovation is a natural thing that everyone just does every day.
ROMANS: All right. I'm inspired. Thank you, Neil. Nice to see you.
TYSON: All right. Thank you.
ROMANS: Have a great weekend.
All right. Also inspiring, this crossing guard used to cross up defenders in the NBA. He's even in the hall of fame. I'm going to tell you who he is and why this may be the smartest move he's made since he stepped off the court.
ROMANS: If you're a big NBA fan, you probably Adrian Dantley. He was first round draft pick and the rookie of the year in 1977. He won the scoring title twice and six-time all-star. He also held various coaching positions in the NBA.
And in 2008, he was inducted into the basketball Hall of Fame, but these days he's playing defense against cars.
(BEGIN VIDEO CLIP)
ADRIAN DANTLEY, NBA HALL OF FAMER: I was in the weight room one day and guys were in there talking. They say they like to do some things for some kids. Just -- maybe one hour a day. One guy said, you know what? My wife is a crossing guard.
I said to myself, that would be a good job for me. That way I can stay busy, spend time with the kids. Do something for the community and that's why I'm here.
(END VIDEO CLIP)
ROMANS: He's also making a smart play by taking this job. He qualifies for the county's health insurance benefits. Just one hour a day, five hours a week and he gets the summer off. This year, it's saving him a lot of money he told me.
(BEGIN VIDEO CLIP)
DANTLEY: Well, you know, in the NBA, in the NBA even though you make a lot of money, they don't pay for your health premiums. And me watching the news and business and the premiums goes up every year and I joke with people, I told my wife, you know what? I don't care how much money that people might think I might have, I'm not going to spend $17,000 on health insurance. That's what I spent last year. Now, I'm working.
(END VIDEO CLIP)
ROMANS: So, Adrian is earning those benefits and he's had a couple close calls with drivers not paying attention but he's kept everyone safe despite being a self-proclaimed rookie on this job.
(BEGIN VIDEO CLIP)
DANTLEY: I think it's more dangerous out here than playing one-on-one or me taking a hard foul from the NBA player.
(END VIDEO CLIP)
ROMANS: A role reversal from NBA veteran to rookie crossing guard but he's saying smart about his money no matter what. Smart is the new rich.
Do you feel like you're living in America with two economies? I want to hear from you. I want to hear what you think about the show this week. Find us on Facebook and Twitter. Our handle is @CNNBottomLine. My handle is @ChristineRomans.
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