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CNN IN THE MONEY
Evaluation of Bush's presidency; Discussion of New Orleans and Houston evacuations; Gas gouging at the pump; Controversy of tasers; A discussion of suburban sprawl
Aired October 1, 2005 - 13:00 ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
GERRI WILLIS, CNN ANCHOR: Here are the top stories "Now in the News".
Indonesia says a string of powerful explosions at a tourist resort in Bali appears to be the work of terrorists. At least 19 people are dead, 50 more are wounded.
And just yesterday, the U.S. Embassy issued a high terrorist warning to foreigners in Indonesia. There was an earlier report that al Qaeda might be planning a series of October attacks dubbed the Great Ramadan Offensive.
And nearly 1,000 U.S. troops are swarming around and through the town of Sa'da near Iraq's western border with Syria. Operation Iron Fist is pounding out insurgent hideouts in the area. Sa'da is considered an entry point for foreign fighters and a support system for al Qaeda in Iraq.
There's no rest for firefighters near Los Angeles. Higher humidity and calmer winds are helping contain a 24,000-acre blaze raging north of the city. About 40 percent of that one is under control, but now another fire has broken out in the hills above Burbank. Some canyon residents there have evacuated their homes.
Former NFL running back Timmy Smith has been arrested on drug charges in Denver. Smith, who played for the Washington Redskins, and is seen here wearing the number 36, was arrested after he allegedly sold half a kilogram of cocaine to an undercover federal drug agent.
We'll have more news at the bottom of the hour. IN THE MONEY begins right now.
ANNOUNCER: From New York City America's financial capital, this is IN THE MONEY.
JACK CAFFERTY, CNN ANCHOR: Welcome to the program. I'm Jack Cafferty.
Coming up on today's edition of IN THE MONEY, riding the no-way highway. Houston and New Orleans made America take a second hard look at evacuation plans. We'll look at what it would take to create a system that works.
Plus, the United States of suburbia. In a lot of this country, driving is the only way to get around. As gasoline prices rise, we'll take a look at the consequences.
And more health and less filler. The new highway bill is packed with cash that could go to hurricane relief. See how cutting out the pork would mean smarter spending.
Joining me today, a couple of veterans, CNN correspondent Susan Lisovicz and "Fortune" magazine Editor- at-large Andy Serwer.
You know I can't help but think it's got to be tough for President Bush to keep getting up and going to the office every day. He has had run of luck that you wouldn't wish on your worst enemy. Karl Rove -- let's start with Iraq where mission is not accomplished. We've got Katrina and Rita, which caused some problems. Karl Rove has been implicated in the outing of that CIA agent's name. We'll see what happens with that. Bill Frist is under formal investigation now for the sale of HCA stock. Tom DeLay the leader of the majority party in the House of Representatives facing a criminal indictment.
If I was the president, I might be heading to Crawford, just say you know what, it's time for another vacation.
SUSAN LISOVICZ, CNN CORRESPONDENT: Well he has been there.
ANDY SERWER, FORTUNE MAGAZINE EDITOR-AT-LARGE: Well that is right. He's been flying all around the place. But you know what these things go in cycles. I mean you look at Bill Clinton in his first term. It looked like he was done, dead, remember after health care and all that stuff he tried to do.
The real thing is coming up, 2006 election, and the midterms. What does this mean? Things can turn around very, very quickly. I wouldn't write him off yet. People have been writing this guy off his whole career.
LISOVICZ: Yes, and to their detriment, certainly with the president. But on the other hand, he's really had problems before some of his closest allies got into trouble themselves. Social Security, where's that going? The next Supreme Court justice, the battle you're going to see on Capitol Hill.
CAFFERTY: That's going to be the big fight.
SERWER: They don't have much ammunition.
LISOVICZ: Maybe not, but the point is that I think that he is really going to be facing some big challenges for the foreseeable future.
CAFFERTY: The other things, the point you make is a good one, in terms of the fact that terrorists are still out there. Another terrorist attack someplace in a big American city, and the landscape changes in a heartbeat. We'll keep watching.
One of the big lessons in the last few weeks is when trouble comes to town, you better get going while the getting's good. Here is the other big lesson in an emergency the getting's isn't so good. If New Orleans and Houston showed us the average U.S. evacuation plan in action, then maybe it's time for a second look.
For a look at it would take and some of the big ticket items involved, we are joined now by John Copenhaver who is the president and CEO of The Disaster Recovery Institute and former regional director for FEMA, John nice to have to with us. Thanks for joining us.
JOHN COPENHAVER, DISASTER RECOVERY INSTITUTE: Thank you, Jack.
CAFFERTY: There are people, who claim to know a lot more about this stuff than I do, who suggest the rapid evacuation on short notice of a large American city is simply not doable. Looking at what happened in both Houston and New Orleans, how much do they have on their side of the argument?
COPENHAVER: Well, obviously, the examples that you picked, both New Orleans and Houston, would not lend themselves to supporting the fact that it is doable, but I don't know that we can say that it's just not doable. I can probably tell you that at this point in time, I'm not sure that we know how to do it yet and that's where we're going to have to focus our efforts.
LISOVICZ: I don't understand that response, though, John. For instance, we knew that a hurricane was coming days in advance. And there was a road going north that was gridlocked for days, cars are overheating, running out of gas. Why didn't you just open up the other highway? These are just, you know, very elementary kinds of things. One would think would have been in place pre-9/11.
COPENHAVER: Well, they're not quite as elementary as they look. It takes law enforcement making certain that if you do use what's called contra flow, that -- where you one-way an interstate, that you have to close off the entrance ramps and exit ramps and make sure that cars can't get on going the wrong direction.
But I would agree with you. I have no explanation for the fact that it took so long and it was so painful in both situations, both in New Orleans and Houston. Clearly, it's something we're going to have to go back to the drawing board and figure out.
SERWER: John what is your assessment? Was it a bad plan, in terms of both cities, Houston and New Orleans, bad plan or bad execution?
COPENHAVER: Well, it was -- it could have been both, in all honesty. I haven't seen the plans for Houston or for New Orleans. But I'd have to say that we start with looking, is it, you know, was the plan doable even by the very best of people under the best of circumstances? And then, the next question is, if we think it was a reasonably good plan, was it poorly executed? I don't even think that we know. I think we're going to have to look at both possibilities and very realistically. It's a possibility that it was both, an undoable plan and poor execution.
CAFFERTY: In the wake of 9/11, there was a lot of focus on the idea that a chemical attack, a nuclear attack, in any one of America's large cities, could create the kind of pandemonium and chaos that might even be quite a bit larger than what we saw because of these two hurricanes. Here we are four years later, we actually get some on-the- job training, if you will, in the form of these hurricanes, and it doesn't seem like we've done very well. You know about this stuff. You used to be a regional director for FEMA.
CAFFERTY: Why are we sitting here even having this discussion four years after 9/11?
COPENHAVER: Honestly, I don't know. I know that there have been difficulties with FEMA, with putting FEMA under the Department of Homeland Security, the cuts to the budget -- all the kinds of things that we've heard over the past few weeks. I don't know how much that's contributed to the problem we had, but we've had on-the-job training with regard to New Orleans and Houston.
But don't forget, we had some on-the-job training with regard Hurricane Floyd back in 1999, if you'll recall, the massive traffic jams that we saw evacuating in advance of Hurricane Floyd particularly on the east-west interstates in Georgia, South Carolina, particularly.
So I don't have an answer for you as to why we're back having this conversation. But I do know, if this isn't the time to try to figure out how to fix this, I don't know what will be.
SERWER: What are some things you can do? We talked about the highways. Do you do odd-even license plates? The odd plates go out on Monday; the even plates go out on Tuesday? What are some things you can actually do here?
COPENHAVER: Well it's not going to be that simple because you're dealing with people. And any time that you try to tell people, well, this segment evacuate and this segment not, you're going to have people that are going to evacuate no matter what. Once they get a little frightened, once they hear bad news, once they feel like the roads are going to start to fill up, many people will evacuate anyway and I don't have an answer easy answer for you.
From a private sector standpoint I think businesses need to work with their employees to make sure employees know when to evacuate, who to listen to, those kinds of things. But the overall issue of evacuating an entire geographic area -- in this case a major metropolitan area --, is so complex and it involves so much of a study of human nature, and human psychology in terms of reaction to a threat, that it's -- we have to go back to the drawing board, in my opinion.
CAFFERTY: Well on that optimistic note, John we're going to have to say good-bye to you. I thank you for appearing on the program. It sounds like you're speaking from a point of some honesty and I do appreciate that, but it doesn't seem to me where we stand is reason to be very optimistic.
John Copenhaver, is the president and CEO of Disaster Recovery Institute, former FEMA regional director, thank you for joining us. COPENHAVER: Thank you.
CAFFERTY: All right. When we come back on IN THE MONEY, sending crude oil to finishing school. Now there is a line. Talking refineries here. Some people say a U.S. refinery crunch is driving up the price of gasoline. We'll look at that and other myths about what's behind the squeeze.
Plus, a pistol with a kick. Taser makes stun guns. Now, it's getting a big jolt of its own. Find out if an SEC investigation is shaking up the stock.
And the long run. A lot of America's built so you can't get around without a car. See how it got that way, and how gasoline prices might begin to change things. Stick around.
SERWER: With oil and gas prices soaring lately, a lot of rumors have begun to circulate about the cause and effect. But don't believe everything you hear.
"Fortune's" John Birger has written about some of the misconceptions in the energy patch. We sat down with him the other day and I began by asking him whether gas station owners are the ones who are making the most money when prices rise.
JON BIRGER, "FORTUNE" MAGAZINE: Gas stations are definitely gouging they are just not gouging on gasoline. I mean if you look at their profit and margins, they make a ton of money on the cups of coffee they sell in the convenience stores or the bubble gum and the danishes. But if you look at gasoline, particularly when prices are rising, they're lucky if they're making a few pennies a gallon.
LISOVICZ: Why is that?
BIRGER: Because retail gasoline prices tend to be stickier, so to speak, than wholesale ones, so if you want to look at the times when gas stations actually make the most money, it's when crude oil prices are falling and that's because the retail gasoline prices tend to stay higher longer than the wholesale gasoline prices.
CAFFERTY: At the time that gasoline was $3 a gallon across the country, there were lots of places in this country that were charging $4, $5. In Atlanta, Georgia, they were charging $6 a gallon. Now, certainly, somebody's doing something wrong there.
BIRGER: I'm sure there are isolated cases around the country where gas station owners are doing bad things. My bigger point is that, I think there's a myth out there that your typical metropolitan gas station has a two-week supply of gasoline in their underground tanks.
The reality is that they're lucky if they have a day or maybe even less than a day of supply in their tanks, which means they're buying gasoline wholesale just as frequently as the average driver or the average consumer is buying retail. So they're facing the same kinds of market-ups in prices that consumers are.
SERWER: John, I want to talk to you about oil refineries where crude is turned into gasoline. We've all been hearing that we have no excess capacity, that these factories are running full tilt. Isn't that a huge problem?
BIRGER: It's absolutely a huge problem. But it's not a problem that is unsolvable. Politicians like to talk about how we haven't built a refinery in 30 some-odd years.
And while that's absolutely true, there are two problems with that argument. One, the existing refineries have expanded capacity a lot. Number two, there's nothing stopping other countries from building refineries. And in fact, we have seen refineries built in Latin America, in India and other parts of the country, other parts of the world, excuse me. And we already import some gasoline. There's no reason why we can't continue to import gasoline from countries where it's cheaper and easier to build refineries.
LISOVICZ: John -- but on that subject, I got a note from the Sierra Club. Now I'll consider the source. But it said that a lot -- the industry itself shut down a lot of the refineries in the last decade or so in order to keep the supply and demand more attractive to their bottom line. Is there any truth to that?
BIRGER: It's absolutely true. But not so long ago, 10 years ago, a lot of refineries were running at 75, 80 percent of capacity, so it was legitimately inefficient for some of these places to be operating. So, yes, they did shut them down. But no, there wasn't some grand conspiracy out there to jack up gasoline prices.
CAFFERTY: Is there a difference when it comes to brands of gasoline? Texaco versus Amoco versus Hess versus Exxon versus, say, Costco?
BIRGER: Generally not. But the big difference is state to state, and this is why you'll find gasoline prices are much higher in places like California where the state has required custom blends of gasoline that are more environmentally efficient. And while there's nothing wrong with that, that does require a -- some extra complications in the refining process, and that does jack up the price.
LISOVICZ: What about this myth, about the fact that maybe we're running out of oil? There has to be some truth to that.
BIRGER: Of course. It's a finite resource. So we are running out of it the same way we're all dying all the time. So yes, we're running out of it. The question is, how long before it becomes impossible or impossibly expensive to extract oil from the ground or at least enough oil to meet demand? And there's a lot of disagreement on this subject.
The one thing I can tell you is that we've had a dozen or so oil shocks over the past, I don't know, 50, 60 years. And each time the oil shock has ended with lower prices and greater supplies. So, in my -- the way I see things, the best antidote to high oil prices is in fact high oil prices, because it creates incentive for oil companies to go out there and explore for new oil.
CAFFERTY: You know there are people in Washington and elsewhere that say we ought to, now that oil's gotten to $3 a gallon, slap a 50 cent a gallon tax on it and make sure the price stays at $3 or above. In other words, float the amount of tax so that the price of gasoline is always $3 or higher. Is that a good idea?
BIRGER: Well, I mean, a higher gasoline tax certainly would curb demand, at least in theory it would. The question is, whether that's politically viable. And while I'm sure that there are individual politicians out there floating that idea, I sincerely doubt a gasoline tax would garner much interest in Congress.
SERWER: What about other government intervention, John? Shouldn't the government be all over this, getting involved, regulating the business? Is what a great idea that is, right?
BIRGER: Well, I mean, I think there's this myth out there that if you somehow capped costs, that that would have no impact on demand -- that if the government stepped in and mandated that oil prices or gas prices be 15, 20 percent lower, that there would be enough oil to go around. And as you guys all know, there's a tight relationship between supply and demand and price, so if you try to impose price controls on oil, on gasoline, you're going to wind up with shortages.
SERWER: All right. John Birger, my colleague at "Fortune" magazine, thanks very much for coming on the program.
BIRGER: You're very welcome.
SERWER: Coming up after the break, a shock to the system. The SEC is taking a closer look at Taser, the stun gun maker. See if the stock is getting jolted.
Plus, drive time. America was built for cars. And that's tough when the price of gas goes up. See what the squeeze means for the suburbs.
And the Neiman-Marcus products you can't pick up at the mall. We'll tell you about some of the ways upscale -- way upscale Christmas gifts on show in the catalog this year.
LISOVICZ: Now, let's take a look at the week's top stories in our "Money Minute."
Consumer confidence in September fell by the biggest margin in 15 years, thanks mostly to higher gas prices and hurricane damage. The Commerce Department's latest figure on personal spending was also down by a bigger than expected one-half of 1 percent.
You may not think this is a great time to start a new airline, but U.S. Airways and America West debuted their newly joined company this week. The airline is the fifth biggest in the U.S. and is billing itself as America's first discount full-service carrier. And late credit card payments hit a record high from April through June of this year. The card companies say higher gas prices were the biggest culprit but people weren't the only ones having trouble with plastic. The American Bankers Association also says there's been an increase in delinquent payments on personal loans, auto loans and home equity loans.
SERWER: All right, Taser shareholders got a jolt this week when news of more than one government probe sent the stock falling by 13 percent on Wednesday alone. Taser says the SEC is looking into the safety of the stun gun weapons used by many police departments around the world. The commission is also looking into reports of illegal short selling of the company's stock.
This isn't the first time we've heard allegations regarding Taser. About a year ago, former Homeland Security chief nominee and Taser board member Bernie Kerik faced questions about the sale of Taser stock just before a critical report about the weapon was released by Amnesty International. Taser and the heap of intrigue that goes along with it is our "Stock of the Week".
This is a controversial product, obviously, and a controversial company. For me, I just wonder, is it really worth it for these police departments to go out -- you don't want to mess around in Houston, by the way. Houston is the one police department that is really big on stun guns. And you know, whatever happened to pepper spray? You know good old pepper spray that worked pretty well.
CAFFERTY: Old school.
SERWER: Very old school on this particular ...
CAFFERTY: There was the time where that Irish cop on the corner just tapping that thing against his hand would take care of questionable gathering of souls on the street. How does the company stock go from 35 bucks to 6 bucks? That's abnormal behavior for a stock, or is it?
LISOVICZ: Because this is a stock that really benefited in the post 9/11 home security dilemma for many communities. They said, how can we reinforce, make our communities safer? And this was a darling of Wall Street and that's how it happened. It's been a very volatile stock and it's benefited mightily from these fears that we've had all over the nation.
But on the other hand, it's not only these probes which have been devastating enough for the stock, it's also been the fact that Amnesty International, as well as there have been lawsuits, saying that they can kill you. They can not only stun you, they can kill you.
SERWER: People have died, apparently. And it's just the situation that Wall Street gets onto one of these things and it's volatile so they ride it. You got short sellers involved, hedge funds playing games. The thing goes all over the place. And I remember they'd release, put out a press release they would say, we got an order for, you know, another 100,000, which is not much at all, but ... LISOVICZ: But the shares go flying.
SERWER: Shares would go flying because people would think, this company is about to be in a situation where all police forces around the globe are going to adopt these suckers. And I don't think it's going to happen at all. I don't think so.
CAFFERTY: On the subject of the investigations and the allegations of short-selling conspiracies and all, has anybody proved that any -- that there's any wrongdoing legally going on here?
SERWER: Not that I'm aware of. I mean, people play hardball on Wall Street. You buy, you sell, you short, you go long. And I think that's what's going on here. And people got hurt in this thing. They're probably buying on a hot tip at a cocktail party, which is not the way you should be investing your money anyway. So, it's rough and tumble out there. And when you think you're getting into a hot product like that, you have to expect this to happen
CAFFERTY: You could be stunned by the information that ultimately comes out.
SERWER: Shocked, jolted.
LISOVICZ: All of the above.
SERWER: Could we stop the puns?
All right. Coming up on IN THE MONEY, getting too far away from it all. When gas prices soar, living where you need a car to get around starts -- stops looking so nice. Find out what the latest prices mean for the suburbs.
Plus, swapping for storm aid. We know about this. See how cutting some of the special projects in the new highway bill could mean more money for hurricane victims.
And maybe we'll just shut up now, right, Jack? Allen Wastler of Money.com on the connection between what we say and what you pay at the pump.
WILLIS: I'm Gerri Willis at the CNN Center in Atlanta. Here are the top stories "Now in the News".
Indonesia's president is warning everyone to be on alert there after a series of explosions killed at least 19 people and wounded 50 others on the tourist island of Bali. He condemned the blast as the work of terrorists. A report issued last month warned al Qaeda might be planning an October assault called the Great Ramadan Offensive.
And a developing story out of Iraq at this hour. A man believed to be the brother of Iraq's interior minister has been kidnapped in eastern Baghdad. A police official says he was pulled from his car by four gunmen and taken away. Earlier today, President Bush warned of escalating insurgent violence ahead of Iraq's October 15 vote on a new constitution.
And you could say American Gregory Olsen is out of this world. Olsen is the world's third space tourist. He's onboard a Russian Soyuz rocket this hour streaking toward the International Space Station. He reportedly paid -- get this -- $20 million for the two-day trek.
I'll have all the day's news at the top of the hour. Now back to IN THE MONEY.
LISOVICZ: Right from the start, America's been about heading out and settling down and in those wide-open spaces. These days, that usually means the suburbs, where getting around means getting into a car. But gas prices are on the move, too. And even President Bush changed course this week calling on Americans to cut back on their driving. All of which makes you wonder if a country built around cars is such a smart idea.
For some thoughts on that, we're joined by Dolores Hayden, professor of Architecture and American Studies at Yale University. She's also the author of "A Field Guide to Sprawl." Welcome, we have plenty to talk about.
First of all, Dolores, I just want to mention that I live in one of those unique communities where you actually do not need a car -- that there's excellent mass transportation, there's an actual community center where there's restaurants and bistros and clothing stores, everything you need. My point is, my town was settled in the 19th century, it was planned in the 19th century, and that's one of the problems, isn't it?
DOLORES HAYDEN, AUTHOR, "FIELD GUIDE TO SPRAWL": Yes, it is. And for most Americans, it's necessary to struggle with some very scattered settlement patterns. In our metro areas, generally the fastest growing parts are at the rural fringes, the outer edges. And we've often allowed our older city centers and older suburbs to decay. Those are the places that frequently do have pedestrian space or public transportation. So we're struggling against this configuration of scatteration (ph) and we've been struggling against it since the 1950s
CAFFERTY: Configuration of scatterization (ph).
HAYDEN: Scatteration means scattered development, real estate development that leapfrogs over intervening bits of land.
CAFFERTY: I just like the phrase. It comes trippingly off your tongue. I didn't do so well with it. President Bush is calling on Americans to drive less, in between the trips on Air Force One to the Gulf Coast, which seems to be happening about every six hours in the last week or 10 days.
Nevertheless, there are a lot of Americans who don't have any choice about driving. If they want to get to work, if they want kids to get to school, the only way they have is to get in the car. Is that a realistic thing to ask the American public to drive less as a way of addressing higher gas prices and energy problems?
HAYDEN: Well, I think many people would prefer to drive less. But many of us are forced into our cars to make those connections between home and work and then to do all the errands, pick up kids at school.
We haven't emphasized building sound neighborhoods, which would combine some residential areas with jobs and other amenities. And that's what this country really needs to provide subsidies for. Most of our subsidies in the past have gone for greenfield growth and real estate development such as malls or office parks way out there on rural land, outside the city center. Or our subsidies have gone for building highways. We have a little nickname, the road gang, for the lobbyists from auto, trucking and paving that lobbied so hard for that interstate highway bill in the middle '50s. And we are still dealing with the legacy of the road gang's influence in every state.
SERWER: Yes. Dolores, I want to pick up on that a little bit. First of all, when Susan was talking about mass transit and the bistros and all that, I thought she was going to say she was going to live in Paris. I guess she's not quite that lucky.
HAYDEN: I thought that might be midtown Manhattan.
SERWER: Well that too, that's a possibility. Speaking of these lobbies, it really is about two big industries, which is the oil business and the car business. That's what these lobbies are connected to and there is no consumer lobby really to speak of -- there's small ones -- and there certainly is no mass transit lobby. So, is this ever going to change?
HAYDEN: Well, there is a mass transit lobby and there are people who really do care about mass transit as well as the pleasure of being pedestrians or biking. It's difficult, though, to persuade people that this is a louder voice than the voice of the auto and trucking people combined or the construction interests and real estate interests that might have promoted that scattered settlement because some of those outlying areas were easier to build.
So, I think we have to figure out how energy policy can be turned around to conservation. That means thinking about designing sound neighborhoods, giving incentives for urban in-fill, using those city center sites that are already connected to other places rather than having more sites that are 50 miles out from the old centers.
LISOVICZ: And Dolores there is a movement, though, the anti- sprawl movement includes people that think that when you do plan a community, you can plan it the way communities are first planned centuries ago, where you actually have a center where you could get, among other things, access to mass transportation.
HAYDEN: Well, of course, when you think about village greens in New England that were planned centuries ago, they were still walking or using the horse. Now, I think when you talk about building sound neighborhoods, you do include ideas of public transportation, either rail or bus or light rail or subways, that will connect urban neighborhoods.
And we could look at a place like Portland, on the West Coast that's emphasized having a growth boundary around the metro area and then public transportation within it. They have put their subsidies down into the heart of the city rather than scattering them around the countryside.
LISOVICZ: Dolores Hayden, author of the "Field Guide to Sprawl" and professor of Architecture and American Studies at Yale University, thanks for joining us.
HAYDEN: Thank you.
LISOVICZ: There is lots more to come here on IN THE MONEY. Up next, help wanted. See how cutting the pork from a fatty new bill could mean more aid for hurricane victims.
And champagne tastes on a champagne budget. We'll tell you about some Christmas gift idea for the private jet set.
CAFFERTY: One of the biggest challenges to rebuilding the Gulf Coast is the cost -- Congress already approving $63 billion for Katrina victims alone. But some have estimated the total tab just for that storm will exceed $200 billion. And then there's Rita. We haven't started to compute the cost of that yet. Oh, and by the way, the deficit this year, well, it ought to run north of about $330 billion.
So, how are we going to pay for all this? Ronald Utt of the Heritage Foundation says cut the pork out of the highway appropriations bill to pay for new bridges and roadways in the Gulf region. We sat down with him recently and asked him how that would work.
RONALD UTT, HERITAGE FOUNDATION: Well, this was done at the same time on the relief effort and it would be mostly targeted toward infrastructure needs. After all, this is a highway bill and money in it has to be spent for something that has something to do with transportation. And so we figured that you could get up to as much as $24 billion, which is a pretty sizable down payment on the needs of the Gulf Coast for both Katrina and, quite likely, as a consequence of the destruction wrought by Rita in the coming days.
Now that is just the beginning, The Heritage Foundation has come up with other proposals. We figure that $40 billion can be obtained simply by delaying one year the Medicare prescription drug benefits. So there's a whole range of offsets that could be cobbled together to get up to very close and probably even more than is need for the two reconstruction bills that are going to confronts the American people shortly.
LISOVICZ: But Ronald, I mean to be fair, much of the pork is located in that $284 billion transportation bill, right?
UTT: Well, that's just the start. There are 13 appropriations bills coming down the line right now, all of which will be signed into law and all those will be larded up with pork as well. So if we can have a pork-free appropriations process this time we're talking about tens of billions of dollars that could be freed up from there.
SERWER: Mr. Utt, can you talk about some of the more ridiculous examples of this porkocity. We know about the bridge to nowhere, which is my personal favorite, in Alaska. What else is out there?
UTT: There are -- it's filled with lots of things that will have nothing to do with highways, roads or transit. There are quite a few hiking trails, streetscapes, flower gardens, museums, and children's museums that are being funded through this.
I took just the other day all the pork barrel projects and earmarks for the state of Virginia because I'm writing up something for a Virginia paper, and I found that at least a third of them wouldn't pass the laugh test -- that the average person could look at that and say, is this what my gas tax money is going toward? And every state's breakdown is exactly like this, some greater than others. Alaska has the biggest and the silliest because Don Young is the chairman and he gets to direct all the money.
LISOVICZ: And Ronald, one of the reasons why I guess it's not politics as usual is because it's not a typical year. The most expensive natural disaster ever, a war in Iraq that is going to take years and hundreds of billions of dollars, an administration that says tax cuts will be permanent. It just doesn't add up, right?
UTT: It can add up if you go after all this waste. Frankly, I don't want to have my -- I don't want to have my taxes increased or reduce my standard of living so that Don Young can have his dopey bridge or some senator in Virginia can have the High Knob horse trail. And the thousands of other things that fill this up. And I think Americans feel the same.
And I think what the other point that makes you say, why is this different than the past?
Well this is turning into a grassroots movement. We hosted yesterday some people who -- from Alaska who are in walking around, doing interviews talking to members of Congress saying, we don't want the bridge to nowhere and we don't want the other one, either.
SERWER: That's great. What else can people out there who are watching this program do? And do you think Congress will have the fortitude to roll this stuff back?
UTT: Well, they will have the fortitude. It's not so much the fortitude as it is the survival skills. And I think that, you know, you're going into an election in which there's a lot of uncertainty in the country, a lot of unhappiness, a lot of questioning about the leadership skills across the board. And this is a ready-made issue for the -- for challengers because most of these things are not desired by the local populace.
This is not residential, this is not retail politics. This is wholesale politics -- pandering to wealthy contributors, local influential mayors and things like that. And I think that if you end up with a good result -- a good revolt on the part of the population and challengers who are willing to point out the fiscal irresponsibility of the people in charge, a lot of people are going to be pretty nervous.
CAFFERTY: Kind of ironic, isn't it, if you buy into the idea that the most important thing to any politician is getting reelected -- and I happen to buy that idea -- that the way to get reelected used to be was to lard up these pieces of legislation, dump money into the home districts, satisfy the people with special interests, get the big contributors the contracts to build the bridges to nowhere. All of a sudden the exact opposite may be true here.
UTT: And that is because maybe the people are starting to take back their government. Again, this is a grassroots organization by -- and more and more people are beginning to ride it. There are a lot of pro-Democrat, left-of-center Web blogs out there and Web sites that are telling, advising the Democratic congressional delegation to get all over this.
This is a great issue to play against Republicans. And, perhaps, that's what induced House minority leader Nancy Pelosi a couple days ago to say that she'd be willing to give up half of the earmarks that are coming to her district in San Francisco.
CAFFERTY: My goodness, a whole half.
UTT: Well, that's a good start.
CAFFERTY: No, I understand.
UTT: And again, understand that some of these earmarks have value. The one that she kept, which was the largest one, has to do with some earthquake proofing for one of the major bridges there.
CAFFERTY: No, I mean, once in a while, there is a little wisdom that creeps in down there in spite of them. Mr. Utt, thank you, nice to have you with us.
UTT: You are quite welcome.
LISOVICZ: We've got more to come here on IN THE MONEY. Just ahead, loose lips raise rates or do they? Allen Wastler of Money.com will connect the dots between reporting higher gas prices and paying higher gas prices.
And if you want a shoulder to cry on about the cost of filling your tank or you are looking to vent about anything else, drop us a line. The address INTHEMONEY@CNN.com.
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For "Money and Family," I'm Susan Lisovicz.
CAFFERTY: Well, it's one thing to shoot the messenger when he brings the bad news, although we're not in favor of that, either, but it's quite another to shoot him before anything bad really happens. That's sort of what happened recently to Allen Wastler and his cohorts at Money.com. And that story's the subject of Allen's "Inside Outside" segment this week. Are they picking on you again?
ALLEN WASTLER, MONEY.COM EDITOR: Yes, you know this career in journalism is not all it is cracked up to be. Now when Rita was hovering out there in the coast, it built up to a Category 5, everybody was like, ooh, it's big, it's nasty and went to some experts and said, what happens if it goes this way or that way? And they said, with the refineries out from Katrina, if this thing turns and hits refinery row in Texas, that's going to take out so much supply you could see $5 gas. You could see $5 -- we had two guys saying that. And two legitimate experts in the field.
So we went ahead and published that saying, this is the possibility. Oh, we just got deluged. Here's one of the flame (ph) mails we got. I just picked one at random. "You (people)" -- and I had to edit that, OK - "are becoming accessories to higher energy prices by consistently publishing stories of gloom and doom generated by these so-called analysts. You people are so easily manipulated. By publishing these $5 a gallon gasoline prices, you probably bumped up the price up 25 cents yourselves. You idiots."
That was one of the milder ones that we got.
So you're sort of caught in this damned if you do, damned if you don't situation. If we do start floating it out there, there might be some oil companies or gas stations owners going, if CNN says it is true, it must be true, we can do it. But if you look what happened, Rita went the other way. We're not that powerful, we can't jack up the prices like that.
CAFFERTY: The other thing is there's a difference in the kind of speculation you're talking about. This was based on the -- a Category 5 hurricane that at the time nobody knew the direction of. And some analysts who said, look here's the infrastructure that's vital to the country's consumption of gasoline, the availability of gasoline. That's one kind of speculation.
The other kind of speculation is a bunch of no-nothings sitting around a table like this and just arbitrarily raising the possibility based on --
SERWER: I see $6 a gallon.
CAFFERTY: The kind of thing you're talking about was a realistic possibility. Those refineries could have been hit at the time that you were talking about it.
WASTLER: It could've happened. Fortunately, it didn't work out that way. But it does point out the situation of -- that we often get to. We're expected to report what is the price implications, what could happen to your wallet if something happens, then what could not.
Anyway, just a little bit of my own angst to share with you, Jack.
CAFFERTY: All right.
LISOVICZ: We feel your pain.
WASTLER: Thank you.
CAFFERTY: Well, she does. What's the "Fun Site of the Week?"
WASTLER: Neiman-Marcus came out with ther new holiday catalog. So me and the producing staff, we were going through the Web site deciding what gifts from this fantasy collection would be suitable for you three.
So, Susan -- Susan, for you we opted for this mystery jewelry collection. A corridor -- a courier will show up at your doorstep and give you all the eight pieces of jewelry spanning from the 1800s up to the modern day, different collections, $1.2 million to use, and you are worth every penny.
LISOVICZ: I will accept that.
WASTLER: Andy ...
SERWER: I can hardly wait, Allen.
WASTLER: You're a locomotive type of guy, the train set for you.
SERWER: There's something about a train.
WASTLER: One thousand feet of a train -- picture yourself on this, Andy, just tooling around the homestead -- has a locomotive, gas-fired, a caboose, a banquet car and a few passenger cars for you.
SERWER: Thank you, Allen.
WASTLER: And, Jack, my good friend Jack, how would you like a private concert by Sir Elton John?
WASTLER: "Tiny Dancer," "Rocket Man."
SERWER: Do you have any glasses you could wear, big, pink glasses?
CAFFERTY: Is Merle Haggard available? Can we trade in Elton --
WASTLER: For $1.5 million, which Neiman-Marcus will donate to an AIDS foundation, you can get Sir Elton John singing to you, Jack, and 500 of your closest friends.
CAFFERTY: Is Merle Haggard available?
CAFFERTY: Coming up next on IN THE MONEY, it's time to hear from you as we read some of your e-mails from the past week. You can send us an e-mail right now. We're at INTHEMONEY@CNN.com.
When our producer isn't rooting for his worthless Columbia University football team, Jay Novak (ph) reads your mail and sends you the answers of all of these things contribute to the fact that he's not a well man.
CAFFERTY: It is that time, boys and girls, to read your answers to our "Question of the Week" about whether higher gas tax would me a good way to ease our dependents on oil.
J.G. wrote this: "Yes, I think higher gas prices will get Americans to change their habits. I myself have started to drive less often and I'm even speeding less now that gas is about three bucks a gallon. We've got to break our addiction to oil."
We're all grateful for that that you've slowed down a little. We've got to get a break, he writes, on our addiction to oil.
Bruce wrote: "Great, punish the people with yet another tax. It's not the people to blame for our dependence on oil. It's the crooked politicians who are in the oil companies' pockets. Why not make everyone in Congress pay $10 a gallon for gas? Then we'll see some action.
I think he might have something there.
D.J. wrote: "Oh, that will work. Just like raising the price of cigarettes has convinced million of Americans to stop smoking. Not!"
Here's next week's e-mail "Question of the Week", will the hurricanes have a lasting effect on how our elected officials do their job?
Send your thoughts on that weighty issue to INTHEMONEY@CNN.com. You should also visit our show page, which is Money.com/inthemoney. That is where you will find the address of our "Fun Site of the Week."
Thank you for joining us for this week's edition of the program. We appreciate it. Thanks to CNN correspondent Susan Lisovicz, "Fortune" magazine Editor-at-large Andy Sewer, and Money.com Managing Editor Allen Wastler.
Hope to see you back here again next week, Saturday at 1:00, Sunday at 3:00 Eastern Time. Until then enjoy the rest of your weekend.
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