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Republican Convention Convenes Tomorrow; New Book Strongly Criticizes Corporate Strategy; New Book Helps Stay-At-Home Moms Go Back To Work

Aired August 30, 2004 - 15:00   ET

THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.

THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.


(BEGIN VIDEOTAPE)
ANNOUNCER: From New York City, America's financial capitol, this is IN THE MONEY.

(END VIDEOTAPE)

JACK CAFFERTY, HOST: Welcome to the program. I'm Jack Cafferty. Coming up on today's edition of IN THE MONEY:

The elephant in your living room: The Republican convention's what we're talking about, here. It's about to go live. We're going to take look at the strong and weak points of the Bush administration as the president tries to be elected to a second term.

Plus, commercials that bite back: The candidates have been letting attack ads make their case. See if they make you smarter about the candidates or just get you all worked up.

Also ahead, crazy for you: A new documentary puts the corporation on the couch and discovers a psychopath. Find out if there's a shark behind the smiling face of American business.

Joining me today, a couple of the IN THE MONEY veterans, CNN correspondent, Suzanne Lisovicz, "Fortune" magazine editor-at-large, Andy Serwer.

And on the eve of the republican convention, big questions about what security's going to cost this city, whether people are going to stay away from the city because of the congestion, the fear of terrorism, the protesters, the yaddah, yaddah. There was a time when cities clamored to get these things because it meant big bucks. Big question mark on whether there's going to be any profits made this year.

ANDY SERWER, "FORTUNE" MAGAZINE: Oh come on. I mean this is going to cost the city a bloody fortune. I have some ideas on some other things they can do...

SUSAN LISOVICZ, CNN CORRESPONDENT: No brainer.

SERWER: They can build a new football stadium, they can have the Olympics here, make the subway free, give cab drivers $5 to everyone who rides. I mean it's going to cost the city a lot -- a lot of money because security and also, lost business, because I think the city's going to clear out. Don't you?

LISOVICZ: About the only -- yeah, absolutely. The only good thing that you can say is August typically very slow month for New York City, but it's going to be deadly slow, after -- you know, outside of the parameters of Madison Square Garden. A few hit Broadway shows and some popular restaurants, the city's going to hit economically.

CAFFERTY: It's kind of sad, actually. The security cost, the fact that people might stay away from the city, people don't come to work, all of that stuff tends to indicate to me that the terrorists are making their point and that's a damn shame.

SERWER: But it's also the anarchists. I mean, what where do they shop? Because, you know, I mean if the anarchists are coming here and the protesters, there's...

LISOVICZ: Well some of them are staying at the Plaza Hotel where they unfurled that with that...

SERWER: Well, don't get Jack going about that. He doesn't like to talk about this.

CAFFERTY: On to other things. The Republican National Convention almost underway, as we mentioned, here in the city. What does President Bush have to do during this week and more importantly, what does he say in that acceptance speech that will give him the boost he's looking for an eventual trip to the oval office for a second term? Kelly Wallace has a look at that, to midtown Manhattan.

A lot of pressure on President Bush this week.

KELLY WALLACE, CNN CORRESPONDENT: A lot of pressure indeed, Jack. Stakes are definitely high. What the president particularly has to do is convinced the small number of undecided who will decide this election that he should be hired for another four years more. And while the latest polls show the president doing better in particular, improving, pulling ahead of John Kerry in some key battleground states, there are some areas of concern for the White House, in particular, a recent "Los Angeles Times" poll.

When people asked is the country better off with the president's policies, 43 percent said yes, 54 percent saying the country needs a new direction. One republican strategist telling me he can have 54 percent feeling this way and then get 50 or more than 50 percent of the votes to ensure your re-election in November.

Bush/Cheney campaign advisers saying the president primarily, in the speech, be focusing on the future, what he would do in a second Bush administration. But, republican's strategists saying other speakers likely be focusing a bit on the past a bit, in particular, talking a bit about the 20-year senate record of democrat, John Kerry -- Jack.

CAFFERTY: Kelly Wallace, reporting from Midtown, thanks Kelly.

WALLACE: Sure.

CAFFERTY: For President Bush this convention is not just about what happens during the next four days in New York City, it's about what happens afterward, maybe for the next four years of his life. Could be the president's best chance to make his case for a second term. For a look on where the president his coming on strong and where he's hurting, Carlos Watson's joining us now, CNN political analyst from Mountain View, California.

Carlos, nice to see you.

CARLOS WATSON, CNN POLITICAL ANALYST: Good morning.

CAFFERTY: The heat is on the president. He's had some positive news in a couple of the battleground states, as far as the polls are concerned in the last week or so. Give me an update on what you're seeing here in terms of movement and then tell me what you think the biggest challenge the president has at the convention is.

WATSON: The race is still super close, Jack. You know, it's neck and neck in national polls and there still are about 17 or 18 key states in play. The Midwest and southwest being the heart of it. When you dig into the polls more deeply though, you still see a lot of frustration over Iraq and over the economy and the president getting high marks on terrorism. Given all that, I think he's got a couple of things he's got to do at the convention. One, he's got to say, you can't trust Kerry on terrorism to make you safe after 9/11. Two, he's got to say that when it comes to the economy, things have been tough, but they're going to get better, and he's going to talk more about taxes. And three, he's got to say I've got fresh ideas in other places, as well, whether that's Iraq, or that's education or healthcare, that I'm not just a one-term guy. I've an eight-year agenda.

LISOVICZ: OK Carlos, let's take tip No. 2 on the economy, GDP, which is your broadest measure of economic activity coming in slower than first thought, for the second quarter, and considerably slower than the first quarter, then you have a report out, also in the past week, that shows more people entering into poverty, more Americans uninsured, health -- for health insurance. Does this make the president more vulnerable in your view?

WATSON: It does, and not just in my view, but certainly in the polls and one of the things obviously, that we know has been affecting the way voters think about the president on the economy, especially independents who are more pessimistic overall than voters, are gas prices. So, the economy's not helping the president, but he's at least got a neutralize or stabilize his position on that and make sure that terrorism becomes the central deciding factor. You keep hearing him say, Susan, that he's a wartime president, you're probably going to hear that 25, 30 times over the next week president.

SERWER: Hey Carlos, I was looking at one of them there websites that tracks electoral votes, ElectoralVote.com, and it showed that California was not a lock for John Kerry. Obviously, if Kerry loses that, it's game over. You're out there in Cali... WATSON: Yes.

SERWER: Is that true that it's not a lock for the democrats?

WATSON: If it's not a lock, we should all go home, just as you said, it's over. No, that's not true. I mean, last time around, as you know, the president spent $20 million here, republicans were trying to win back California which they hadn't won since 1998 and they ended up losing by some 1.3 million votes and people expect the same this time. They're putting a little bit of money, but don't think about California and New York if you're a republican. And don't think about places like Texas and Wyoming if you're a democrat. The fight is going to be in the Midwest and in the southwest and I think that after this convention, you'll start to see what is the battleground shrink from 17 or 18 state down to about 14 or 15.

CAFFERTY: How do you reconcile these two polls? One of which says there's a significant a majority of the people of this country say the country is on the wrong track, and yet when you ask about Kerry versus Bush, they're almost to a letter just very, very tight. But this idea that the country's not on the right track, there's a lot more people think we're on the wrong track than think we're on the right track. Does that speak to a potential weakness of John Kerry as a candidate, or how do you put those numbers together?

WATSON: Well I think, you mean -- you just put your finger on it. I -- you know, I don't mean to be overly harsh, but I think take the Swift Boat controversy as an example. John Kerry and response to something that he knew he was going to be attacked on, he's been attacked on it every time he's run since 1972. He was slow and frankly wasn't very impressive and so, I think for a lot of people, it comes off, even for democrats who want him to win, I think he's off a little more Alan Alda than he does John Wayne and I think in a post- 9/11 era, people looking for -- you know John Wayne and they're not looking for our nice guy from M.A.S.H. So, I thing that's a real issue for John Kerry and I think ultimately if he does win, a lot of people are going to say the he constantly was a default choice, that he didn't beat Howard Dean, people just didn't want Howard Dean and so they chose him as a safe choice. And they'll say he didn't beat George Bush, that he was just a safer, reliable choice, he was kind of the good guy who your mom would be happy with.

LISOVICZ: Hey Carlos, you want to talk about a John Wayne character, let's talk about Rudy Giuliani who was a hero in New York and many parts of the country and he's one of the primetime players at the GOP convention along with an another moderate republican, the governor of your state, of California, Arnold Schwarzenegger. And that's angered some conservatives, like for instance, Pat Buchanan who's already out with a book bashing the president. How real is the division between conservatives, which had been considered the core of the president's following and moderate republicans?

WATSON: Right now, it's not as real. It's certainly real 70 days from now if the president loses and you will hear griping that we should have stuck to our guns, what have you, but you always hear that on both sides. You certainly heard a lot of that in '96. Remember, the left was upset about Bill Clinton, the welfare reform and other issues like that and saying he was trying to be too moderate and wasn't showing a more, quote/unquote, "progressive base." So, you're going to hear griping, but in the end, they want to win and the last thing that anyone who supports the president on the right wants see it devolve into a kind of a 1992 splitting of the party.

CAFFERTY: Carlos Watson, CNN political analyst joining us from Mountain View, California. I assume you'll be back in Big Apple in time for the start of that convention.

WATSON: Before you know it.

CAFFERTY: All right, look forward to seeing you in the big town. Thanks Carlos.

WATSON: Take care, good to see you guys.

CAFFERTY: All right, time for a break. When we get back, from kid glove to boxing gloves: Political ads traded gentility for hostility. We'll look at whether that's a good way to pick a president?

Also ahead, java jitters: See how Starbucks is performing on Wall Street after surprising news from the company.

Plus come back time: Stay-at-home-moms can run into roadblocks when they try to go back to work. We'll have tips on what to do about that potential program. You're watching IN THE MONEY and my, aren't you fortunate.

(COMMERCIAL BREAK)

(BEGIN VIDEO CLIP)

GEORGE W. BUSH, PRESIDENT OF THE UNITED STATES: I don't think we ought to have 527s. I can't be more plain about it. I wish -- I hope my opponent joins me in saying -- condemning these activities of the 527s. It's the -- I think they're bad for the system.

(END VIDEO CLIP)

CAFFERTY: President Bush responding to those Swift Boat ads among others by condemning all 527 political ads, but the controversy reminds us that no matter how often the parties promise to play nice, well, they don't. There's a lot at stake and the campaigns inevitably get nasty. Part of the reason is that the nasty ads seem to work better than the nice ones, that's according to our next guest. Joining us today is John Geer, he's a political science professor at Vanderbilt University.

Professor, it's nice to have you with us.

JOHN GEER, VANDERBILT UNIVERSITY: Thank you.

CAFFERTY: My question is this, if these ads, this time around, are working, what are these campaigns going to look like in 20 years? I mean it's just getting awful.

GEER: Well, it's -- this is certainly a nasty exchange, there's no debate about that. However, I point out that American politics is littered with lots of these kinds of exchanges and the country continues to move forward. We need to know about the weaknesses of the other side and I guarantee you that George Bush won't tell the American public his weaknesses and nor will John Kerry, it falls to the opposition to do so.

SERWER: Yeah John, I mean, that's it. Who's doing all the whining here? Well, what are we -- why is everyone so concerned about this? I mean -- you know, we got crazy movies, crazy TV shows, we have -- you know, reality television, negative ads have been around for a long time, I mean, get over it. Right? I mean, they're there, they work, they're not going away. Why is there a debate at all about this?

GEER: Well, because they're fascinating. I mean, it's like gossip. We're interested in gossip and we want to hear about this, but there's also an important reason to discuss them and to have them aired, if needed. John Kerry, for example, made an important point of his Vietnam service and so having that veted by these 527 groups or George Bush himself is important and so far, it looks like Kerry's telling the truth or as best as best as people can tell, but the bottom line is people are raising doubts and that's legislate. Just like people should raise doubts about George Bush's policies in regards to Iraq or in regards to the economy. We get stronger once we discuss ideas and evaluate them and, in fact, criticize them.

LISOVICZ: Yeah, you know, it's amazing to me that we see all of these ads focused on Vietnam, you know, tit for tat, and I -- you know, is it that strategists think that Americans just can't handle something complex in a 30, 45-second or 60-second commercial? I mean you could do something on jobs, jobs going overseas. Right? I mean, that hits home and perhaps even -- you know, more sensitivity with the overall population.

GEER: Well, there is going to be more and more discussion about issues and more and more attacks on issues. I guarantee you that the Swift Boat controversy right now will fade into the backdrop as we talk more about the economy and Iraq and just increased poverty, for example that came out. These kinds of statistics will drive the debate, to some degree, just like jobs numbers that come out Friday after George Bush's acceptance speech. Those will play a big role. So this has certainly been an enduring controversy, but it's -- we have a long campaign and there's going to be lots of discussion.

CAFFERTY: John, the consensus is the country is perhaps more sharply divided than it's been in a long, long time going into this election. What do you hear from the kids? You teach political science at Vanderbilt. Are they aware of the division? Are they reacting to it, responding to it? What -- anything difference about classroom this time around?

GEER: Oh, I see it in the classroom. It's really interesting. The students are really engaged and there's more strong partisanship on both sides and I try to encourage them to remember that -- you know, we may have our differences and they may be growing, but the bottom line is that there's things to agree on and you don't want to see that kind of conflict. But, you know, they're engaged and I have to say that the Vanderbilt students are just more interested in this election. I mean, I'm teaching a course on elections; just the presidential election and congressional elections and we have 250 students with a huge, huge waiting list and at Vanderbilt that's very, very unusual. It's a testimony to the interest of the election.

SERWER: More attendance there probably than at a Commodore football game, wouldn't you say, John?

(LAUGHTER)

GEER: Ah, yes. But don't -- don't underestimate the Commodore.

SERWER: All right, we'll leave that aside. Little SEC football, there. Anyway, I want to talk -- aren't the calls to ban 527s specious? I mean, isn't this tantamount to saying that you can't have an ad? I mean, anybody can take out an ad and buy an ad. Why shouldn't special interest groups be able to buy ads? You know, sure they're attack dogs for the candidates, they're smoke screens, etcetera, etcetera. But, you know, how do you ban them?

GEER: Well, that's the problem, the first amendment rights and we really do believe in the first amendment, freedom of speech, and people have the right to air these ads. And the key thing is that the candidates need to respond and show them why there's false. You know, there's been lots of controversy about the Swift Boat ads, but of course the Bush people would point out that they've been attacked by lots of group through their 527s and it's part of an exchange. Politics is rough and tumble, and people have to understand that and I think this is going along with it. If we banned it, it'd probably be worse because, as you just suggested, we'd be taking people's first amendment rights away and that's not what this country's about.

LISOVICZ: You know, these Swift Boat ads, you talk about rough and tumble, nothing compared to the '60s with commercials that depicted the threat of a nuclear attack and perhaps most memorably, and perhaps the real low that we've seen on television so far is the infamous Willie Horton ads that criticized, to say the least, Michael Dukakis. Can you talk about those, please?

GEER: Well, I'll talk about both of them. The Willie Horton ad is most analogues to the 527 ads, the Swift Boat ads that we have seen. The real vicious attack against Dukakis tied to crime and race that was -- took place in the '88 campaign. There's no -- there's no debate that it was similar, but Dukakis failed to respond which made the charges seem true and so that that was really an important issue.

The famous ads of the '60s, and there's one in particular called the "Daisy Spot" with the little girl picking pedals of a flower, then the world is engulfed in a nuclear explosion. That's a fascinating ad because that ad uses what you might call a stiletto where as these current ads are using axes. It was a very subtle, indirect, implicit ad that raised doubts about Goldwater, but only indirectly and so it was a master of subtlety where today, there's not much subtle about the Swift Boat ads.

LISOVICZ: Well, we'll have to talk you after the election for sure to talk about what you think worked an perhaps, tilted the election.

John Geer, political science professor and football fan at Vanderbilt University.

GEER: Absolutely.

LISOVICZ: Thanks for joining us.

GEER: Thank you.

LISOVICZ: Coming up after the break, you call that grande? Find out how investors are treating Starbucks after its latest news.

Plus, doing business with a vengeance: We'll tell you about a new documentary on the shady side of corporate culture.

And it all comes out in the wash or does it? See why a lot of women would rather do the laundry themselves than let some guy handle it.

CAFFERTY: And they're welcome to do it.

(LAUGHTER)

(COMMERCIAL BREAK)

LISOVICZ: Now, let's take a look at the week's top stories in our "Money Minute." Oil prices finally fell, this week. The price slide came despite an attack on some key Iraqi oil pipe lines. That leaves some energy market experts to believe that the previous run-up in oil prices was largely driven by speculators trying to make a fast buck in the commodities markets.

Despite super interest from fans like Jack Cafferty, a "Reuters" report shows the Athens Olympics will end up costing Greece more than $12 billion, that's twice the original estimate. Costs will help push Greece's national debt well beyond limits backed by the European Union.

And, paying the week's salary just to fill up the tank isn't as popular as you might think. GM is cutting orders for the H2 Hummer by as much as five percent because the sales have fallen by 25 percent since January. The H2 has a base price of about $49,000 and has the worst gas mileage of all 326 major makes and models on the road.

SERWER: Starbucks was another company with some relatively bad news this week, but the key word here is "relative." Starbucks disappointed investors when it reported that sales at the shops open for more than one year up "only" eight percent this month. It's the first time in nine months that growth fell below double digits. Starbucks shares took a hit on that news, but they're still well ahead of where they were a year ago and that makes Starbucks, the coffee king, our stock of the week.

I went and crunched the numbers; this stock is doubled over the past two years, tripled over the past five years, and it's up five- fold over the past decade. And they've said here the stock up or the sales are growing eight percent at stores are open a year. McDonald's would kill to have that.

LISOVICZ: And so would Wal-Mart, for that matter.

SERWER: That's right. And you know what this...

LISOVICZ: That's part of the problem.

SERWER: Right. The stocks has taken some hits in '98, '99 and '01, I mean, it's not a straight shot to the moon, but this company, I think, is still going to the moon.

LISOVICZ: Well, it's the slowest growth, I thin, this year.

SERWER: Right.

LISOVICZ: And, but still eight percent is -- them are very solid numbers.

CAFFERTY: Sure. They stock off how much? And the numbers are good. There's nothing wrong with these numbers. Like you said, they're corporations that would kill to have these numbers.

LISOVICZ: Yes, they got hit pretty badly on Thursday, but...

CAFFERTY: You don't suppose, do you, that people are finally figuring out that Starbucks is selling those 30 cent cups of coffee for $3?

(LAUGHTER)

CAFFERTY: I mean, these are the biggest...

LISOVICZ: And the prices are going up this fall.

CAFFERTY: These guys are marketing geniuses.

SERWER:

CAFFERTY: They figured out who get more money for a cup of coffee than...

LISOVICZ: But that kind of raises the question, though, I mean -- you know, is -- is it starting to saturate the U.S.? I know there's hundreds and hundreds of starbucks overseas and the stock, as you said, has done very nicely is it time to -- you know, maybe take a pause? That -- that...

SERWER: Well, I don't -- I don't think so. I mean, I tell you something. There are not enough Starbucks in New York City and there's probably hundreds of them here, because they're not close enough. You can put more Starbucks anywhere. I'm a big Starbucks fan. But, you know, it's interesting because Krispy Kreme doughnuts has faded recently, but this country's very...

LISOVICZ: Came out the same day, sadly.


Aired August 30, 2004 - 15:00   ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
(BEGIN VIDEOTAPE)
ANNOUNCER: From New York City, America's financial capitol, this is IN THE MONEY.

(END VIDEOTAPE)

JACK CAFFERTY, HOST: Welcome to the program. I'm Jack Cafferty. Coming up on today's edition of IN THE MONEY:

The elephant in your living room: The Republican convention's what we're talking about, here. It's about to go live. We're going to take look at the strong and weak points of the Bush administration as the president tries to be elected to a second term.

Plus, commercials that bite back: The candidates have been letting attack ads make their case. See if they make you smarter about the candidates or just get you all worked up.

Also ahead, crazy for you: A new documentary puts the corporation on the couch and discovers a psychopath. Find out if there's a shark behind the smiling face of American business.

Joining me today, a couple of the IN THE MONEY veterans, CNN correspondent, Suzanne Lisovicz, "Fortune" magazine editor-at-large, Andy Serwer.

And on the eve of the republican convention, big questions about what security's going to cost this city, whether people are going to stay away from the city because of the congestion, the fear of terrorism, the protesters, the yaddah, yaddah. There was a time when cities clamored to get these things because it meant big bucks. Big question mark on whether there's going to be any profits made this year.

ANDY SERWER, "FORTUNE" MAGAZINE: Oh come on. I mean this is going to cost the city a bloody fortune. I have some ideas on some other things they can do...

SUSAN LISOVICZ, CNN CORRESPONDENT: No brainer.

SERWER: They can build a new football stadium, they can have the Olympics here, make the subway free, give cab drivers $5 to everyone who rides. I mean it's going to cost the city a lot -- a lot of money because security and also, lost business, because I think the city's going to clear out. Don't you?

LISOVICZ: About the only -- yeah, absolutely. The only good thing that you can say is August typically very slow month for New York City, but it's going to be deadly slow, after -- you know, outside of the parameters of Madison Square Garden. A few hit Broadway shows and some popular restaurants, the city's going to hit economically.

CAFFERTY: It's kind of sad, actually. The security cost, the fact that people might stay away from the city, people don't come to work, all of that stuff tends to indicate to me that the terrorists are making their point and that's a damn shame.

SERWER: But it's also the anarchists. I mean, what where do they shop? Because, you know, I mean if the anarchists are coming here and the protesters, there's...

LISOVICZ: Well some of them are staying at the Plaza Hotel where they unfurled that with that...

SERWER: Well, don't get Jack going about that. He doesn't like to talk about this.

CAFFERTY: On to other things. The Republican National Convention almost underway, as we mentioned, here in the city. What does President Bush have to do during this week and more importantly, what does he say in that acceptance speech that will give him the boost he's looking for an eventual trip to the oval office for a second term? Kelly Wallace has a look at that, to midtown Manhattan.

A lot of pressure on President Bush this week.

KELLY WALLACE, CNN CORRESPONDENT: A lot of pressure indeed, Jack. Stakes are definitely high. What the president particularly has to do is convinced the small number of undecided who will decide this election that he should be hired for another four years more. And while the latest polls show the president doing better in particular, improving, pulling ahead of John Kerry in some key battleground states, there are some areas of concern for the White House, in particular, a recent "Los Angeles Times" poll.

When people asked is the country better off with the president's policies, 43 percent said yes, 54 percent saying the country needs a new direction. One republican strategist telling me he can have 54 percent feeling this way and then get 50 or more than 50 percent of the votes to ensure your re-election in November.

Bush/Cheney campaign advisers saying the president primarily, in the speech, be focusing on the future, what he would do in a second Bush administration. But, republican's strategists saying other speakers likely be focusing a bit on the past a bit, in particular, talking a bit about the 20-year senate record of democrat, John Kerry -- Jack.

CAFFERTY: Kelly Wallace, reporting from Midtown, thanks Kelly.

WALLACE: Sure.

CAFFERTY: For President Bush this convention is not just about what happens during the next four days in New York City, it's about what happens afterward, maybe for the next four years of his life. Could be the president's best chance to make his case for a second term. For a look on where the president his coming on strong and where he's hurting, Carlos Watson's joining us now, CNN political analyst from Mountain View, California.

Carlos, nice to see you.

CARLOS WATSON, CNN POLITICAL ANALYST: Good morning.

CAFFERTY: The heat is on the president. He's had some positive news in a couple of the battleground states, as far as the polls are concerned in the last week or so. Give me an update on what you're seeing here in terms of movement and then tell me what you think the biggest challenge the president has at the convention is.

WATSON: The race is still super close, Jack. You know, it's neck and neck in national polls and there still are about 17 or 18 key states in play. The Midwest and southwest being the heart of it. When you dig into the polls more deeply though, you still see a lot of frustration over Iraq and over the economy and the president getting high marks on terrorism. Given all that, I think he's got a couple of things he's got to do at the convention. One, he's got to say, you can't trust Kerry on terrorism to make you safe after 9/11. Two, he's got to say that when it comes to the economy, things have been tough, but they're going to get better, and he's going to talk more about taxes. And three, he's got to say I've got fresh ideas in other places, as well, whether that's Iraq, or that's education or healthcare, that I'm not just a one-term guy. I've an eight-year agenda.

LISOVICZ: OK Carlos, let's take tip No. 2 on the economy, GDP, which is your broadest measure of economic activity coming in slower than first thought, for the second quarter, and considerably slower than the first quarter, then you have a report out, also in the past week, that shows more people entering into poverty, more Americans uninsured, health -- for health insurance. Does this make the president more vulnerable in your view?

WATSON: It does, and not just in my view, but certainly in the polls and one of the things obviously, that we know has been affecting the way voters think about the president on the economy, especially independents who are more pessimistic overall than voters, are gas prices. So, the economy's not helping the president, but he's at least got a neutralize or stabilize his position on that and make sure that terrorism becomes the central deciding factor. You keep hearing him say, Susan, that he's a wartime president, you're probably going to hear that 25, 30 times over the next week president.

SERWER: Hey Carlos, I was looking at one of them there websites that tracks electoral votes, ElectoralVote.com, and it showed that California was not a lock for John Kerry. Obviously, if Kerry loses that, it's game over. You're out there in Cali... WATSON: Yes.

SERWER: Is that true that it's not a lock for the democrats?

WATSON: If it's not a lock, we should all go home, just as you said, it's over. No, that's not true. I mean, last time around, as you know, the president spent $20 million here, republicans were trying to win back California which they hadn't won since 1998 and they ended up losing by some 1.3 million votes and people expect the same this time. They're putting a little bit of money, but don't think about California and New York if you're a republican. And don't think about places like Texas and Wyoming if you're a democrat. The fight is going to be in the Midwest and in the southwest and I think that after this convention, you'll start to see what is the battleground shrink from 17 or 18 state down to about 14 or 15.

CAFFERTY: How do you reconcile these two polls? One of which says there's a significant a majority of the people of this country say the country is on the wrong track, and yet when you ask about Kerry versus Bush, they're almost to a letter just very, very tight. But this idea that the country's not on the right track, there's a lot more people think we're on the wrong track than think we're on the right track. Does that speak to a potential weakness of John Kerry as a candidate, or how do you put those numbers together?

WATSON: Well I think, you mean -- you just put your finger on it. I -- you know, I don't mean to be overly harsh, but I think take the Swift Boat controversy as an example. John Kerry and response to something that he knew he was going to be attacked on, he's been attacked on it every time he's run since 1972. He was slow and frankly wasn't very impressive and so, I think for a lot of people, it comes off, even for democrats who want him to win, I think he's off a little more Alan Alda than he does John Wayne and I think in a post- 9/11 era, people looking for -- you know John Wayne and they're not looking for our nice guy from M.A.S.H. So, I thing that's a real issue for John Kerry and I think ultimately if he does win, a lot of people are going to say the he constantly was a default choice, that he didn't beat Howard Dean, people just didn't want Howard Dean and so they chose him as a safe choice. And they'll say he didn't beat George Bush, that he was just a safer, reliable choice, he was kind of the good guy who your mom would be happy with.

LISOVICZ: Hey Carlos, you want to talk about a John Wayne character, let's talk about Rudy Giuliani who was a hero in New York and many parts of the country and he's one of the primetime players at the GOP convention along with an another moderate republican, the governor of your state, of California, Arnold Schwarzenegger. And that's angered some conservatives, like for instance, Pat Buchanan who's already out with a book bashing the president. How real is the division between conservatives, which had been considered the core of the president's following and moderate republicans?

WATSON: Right now, it's not as real. It's certainly real 70 days from now if the president loses and you will hear griping that we should have stuck to our guns, what have you, but you always hear that on both sides. You certainly heard a lot of that in '96. Remember, the left was upset about Bill Clinton, the welfare reform and other issues like that and saying he was trying to be too moderate and wasn't showing a more, quote/unquote, "progressive base." So, you're going to hear griping, but in the end, they want to win and the last thing that anyone who supports the president on the right wants see it devolve into a kind of a 1992 splitting of the party.

CAFFERTY: Carlos Watson, CNN political analyst joining us from Mountain View, California. I assume you'll be back in Big Apple in time for the start of that convention.

WATSON: Before you know it.

CAFFERTY: All right, look forward to seeing you in the big town. Thanks Carlos.

WATSON: Take care, good to see you guys.

CAFFERTY: All right, time for a break. When we get back, from kid glove to boxing gloves: Political ads traded gentility for hostility. We'll look at whether that's a good way to pick a president?

Also ahead, java jitters: See how Starbucks is performing on Wall Street after surprising news from the company.

Plus come back time: Stay-at-home-moms can run into roadblocks when they try to go back to work. We'll have tips on what to do about that potential program. You're watching IN THE MONEY and my, aren't you fortunate.

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(BEGIN VIDEO CLIP)

GEORGE W. BUSH, PRESIDENT OF THE UNITED STATES: I don't think we ought to have 527s. I can't be more plain about it. I wish -- I hope my opponent joins me in saying -- condemning these activities of the 527s. It's the -- I think they're bad for the system.

(END VIDEO CLIP)

CAFFERTY: President Bush responding to those Swift Boat ads among others by condemning all 527 political ads, but the controversy reminds us that no matter how often the parties promise to play nice, well, they don't. There's a lot at stake and the campaigns inevitably get nasty. Part of the reason is that the nasty ads seem to work better than the nice ones, that's according to our next guest. Joining us today is John Geer, he's a political science professor at Vanderbilt University.

Professor, it's nice to have you with us.

JOHN GEER, VANDERBILT UNIVERSITY: Thank you.

CAFFERTY: My question is this, if these ads, this time around, are working, what are these campaigns going to look like in 20 years? I mean it's just getting awful.

GEER: Well, it's -- this is certainly a nasty exchange, there's no debate about that. However, I point out that American politics is littered with lots of these kinds of exchanges and the country continues to move forward. We need to know about the weaknesses of the other side and I guarantee you that George Bush won't tell the American public his weaknesses and nor will John Kerry, it falls to the opposition to do so.

SERWER: Yeah John, I mean, that's it. Who's doing all the whining here? Well, what are we -- why is everyone so concerned about this? I mean -- you know, we got crazy movies, crazy TV shows, we have -- you know, reality television, negative ads have been around for a long time, I mean, get over it. Right? I mean, they're there, they work, they're not going away. Why is there a debate at all about this?

GEER: Well, because they're fascinating. I mean, it's like gossip. We're interested in gossip and we want to hear about this, but there's also an important reason to discuss them and to have them aired, if needed. John Kerry, for example, made an important point of his Vietnam service and so having that veted by these 527 groups or George Bush himself is important and so far, it looks like Kerry's telling the truth or as best as best as people can tell, but the bottom line is people are raising doubts and that's legislate. Just like people should raise doubts about George Bush's policies in regards to Iraq or in regards to the economy. We get stronger once we discuss ideas and evaluate them and, in fact, criticize them.

LISOVICZ: Yeah, you know, it's amazing to me that we see all of these ads focused on Vietnam, you know, tit for tat, and I -- you know, is it that strategists think that Americans just can't handle something complex in a 30, 45-second or 60-second commercial? I mean you could do something on jobs, jobs going overseas. Right? I mean, that hits home and perhaps even -- you know, more sensitivity with the overall population.

GEER: Well, there is going to be more and more discussion about issues and more and more attacks on issues. I guarantee you that the Swift Boat controversy right now will fade into the backdrop as we talk more about the economy and Iraq and just increased poverty, for example that came out. These kinds of statistics will drive the debate, to some degree, just like jobs numbers that come out Friday after George Bush's acceptance speech. Those will play a big role. So this has certainly been an enduring controversy, but it's -- we have a long campaign and there's going to be lots of discussion.

CAFFERTY: John, the consensus is the country is perhaps more sharply divided than it's been in a long, long time going into this election. What do you hear from the kids? You teach political science at Vanderbilt. Are they aware of the division? Are they reacting to it, responding to it? What -- anything difference about classroom this time around?

GEER: Oh, I see it in the classroom. It's really interesting. The students are really engaged and there's more strong partisanship on both sides and I try to encourage them to remember that -- you know, we may have our differences and they may be growing, but the bottom line is that there's things to agree on and you don't want to see that kind of conflict. But, you know, they're engaged and I have to say that the Vanderbilt students are just more interested in this election. I mean, I'm teaching a course on elections; just the presidential election and congressional elections and we have 250 students with a huge, huge waiting list and at Vanderbilt that's very, very unusual. It's a testimony to the interest of the election.

SERWER: More attendance there probably than at a Commodore football game, wouldn't you say, John?

(LAUGHTER)

GEER: Ah, yes. But don't -- don't underestimate the Commodore.

SERWER: All right, we'll leave that aside. Little SEC football, there. Anyway, I want to talk -- aren't the calls to ban 527s specious? I mean, isn't this tantamount to saying that you can't have an ad? I mean, anybody can take out an ad and buy an ad. Why shouldn't special interest groups be able to buy ads? You know, sure they're attack dogs for the candidates, they're smoke screens, etcetera, etcetera. But, you know, how do you ban them?

GEER: Well, that's the problem, the first amendment rights and we really do believe in the first amendment, freedom of speech, and people have the right to air these ads. And the key thing is that the candidates need to respond and show them why there's false. You know, there's been lots of controversy about the Swift Boat ads, but of course the Bush people would point out that they've been attacked by lots of group through their 527s and it's part of an exchange. Politics is rough and tumble, and people have to understand that and I think this is going along with it. If we banned it, it'd probably be worse because, as you just suggested, we'd be taking people's first amendment rights away and that's not what this country's about.

LISOVICZ: You know, these Swift Boat ads, you talk about rough and tumble, nothing compared to the '60s with commercials that depicted the threat of a nuclear attack and perhaps most memorably, and perhaps the real low that we've seen on television so far is the infamous Willie Horton ads that criticized, to say the least, Michael Dukakis. Can you talk about those, please?

GEER: Well, I'll talk about both of them. The Willie Horton ad is most analogues to the 527 ads, the Swift Boat ads that we have seen. The real vicious attack against Dukakis tied to crime and race that was -- took place in the '88 campaign. There's no -- there's no debate that it was similar, but Dukakis failed to respond which made the charges seem true and so that that was really an important issue.

The famous ads of the '60s, and there's one in particular called the "Daisy Spot" with the little girl picking pedals of a flower, then the world is engulfed in a nuclear explosion. That's a fascinating ad because that ad uses what you might call a stiletto where as these current ads are using axes. It was a very subtle, indirect, implicit ad that raised doubts about Goldwater, but only indirectly and so it was a master of subtlety where today, there's not much subtle about the Swift Boat ads.

LISOVICZ: Well, we'll have to talk you after the election for sure to talk about what you think worked an perhaps, tilted the election.

John Geer, political science professor and football fan at Vanderbilt University.

GEER: Absolutely.

LISOVICZ: Thanks for joining us.

GEER: Thank you.

LISOVICZ: Coming up after the break, you call that grande? Find out how investors are treating Starbucks after its latest news.

Plus, doing business with a vengeance: We'll tell you about a new documentary on the shady side of corporate culture.

And it all comes out in the wash or does it? See why a lot of women would rather do the laundry themselves than let some guy handle it.

CAFFERTY: And they're welcome to do it.

(LAUGHTER)

(COMMERCIAL BREAK)

LISOVICZ: Now, let's take a look at the week's top stories in our "Money Minute." Oil prices finally fell, this week. The price slide came despite an attack on some key Iraqi oil pipe lines. That leaves some energy market experts to believe that the previous run-up in oil prices was largely driven by speculators trying to make a fast buck in the commodities markets.

Despite super interest from fans like Jack Cafferty, a "Reuters" report shows the Athens Olympics will end up costing Greece more than $12 billion, that's twice the original estimate. Costs will help push Greece's national debt well beyond limits backed by the European Union.

And, paying the week's salary just to fill up the tank isn't as popular as you might think. GM is cutting orders for the H2 Hummer by as much as five percent because the sales have fallen by 25 percent since January. The H2 has a base price of about $49,000 and has the worst gas mileage of all 326 major makes and models on the road.

SERWER: Starbucks was another company with some relatively bad news this week, but the key word here is "relative." Starbucks disappointed investors when it reported that sales at the shops open for more than one year up "only" eight percent this month. It's the first time in nine months that growth fell below double digits. Starbucks shares took a hit on that news, but they're still well ahead of where they were a year ago and that makes Starbucks, the coffee king, our stock of the week.

I went and crunched the numbers; this stock is doubled over the past two years, tripled over the past five years, and it's up five- fold over the past decade. And they've said here the stock up or the sales are growing eight percent at stores are open a year. McDonald's would kill to have that.

LISOVICZ: And so would Wal-Mart, for that matter.

SERWER: That's right. And you know what this...

LISOVICZ: That's part of the problem.

SERWER: Right. The stocks has taken some hits in '98, '99 and '01, I mean, it's not a straight shot to the moon, but this company, I think, is still going to the moon.

LISOVICZ: Well, it's the slowest growth, I thin, this year.

SERWER: Right.

LISOVICZ: And, but still eight percent is -- them are very solid numbers.

CAFFERTY: Sure. They stock off how much? And the numbers are good. There's nothing wrong with these numbers. Like you said, they're corporations that would kill to have these numbers.

LISOVICZ: Yes, they got hit pretty badly on Thursday, but...

CAFFERTY: You don't suppose, do you, that people are finally figuring out that Starbucks is selling those 30 cent cups of coffee for $3?

(LAUGHTER)

CAFFERTY: I mean, these are the biggest...

LISOVICZ: And the prices are going up this fall.

CAFFERTY: These guys are marketing geniuses.

SERWER:

CAFFERTY: They figured out who get more money for a cup of coffee than...

LISOVICZ: But that kind of raises the question, though, I mean -- you know, is -- is it starting to saturate the U.S.? I know there's hundreds and hundreds of starbucks overseas and the stock, as you said, has done very nicely is it time to -- you know, maybe take a pause? That -- that...

SERWER: Well, I don't -- I don't think so. I mean, I tell you something. There are not enough Starbucks in New York City and there's probably hundreds of them here, because they're not close enough. You can put more Starbucks anywhere. I'm a big Starbucks fan. But, you know, it's interesting because Krispy Kreme doughnuts has faded recently, but this country's very...

LISOVICZ: Came out the same day, sadly.