Return to Transcripts main page

Open House

Democrats Taking Over Has Major Impact On Issues Including Taxes; Eminent Domain Played Prominent Role In This Year's Midterm Elections; Tips On Faux Finish Painting

Aired November 11, 2006 - 09:31   ET

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

GERRI WILLIS, CNN ANCHOR: The election is over. The people have spoken. And the House is changing. But not just the House in Washington. Your house, too. And your taxes, they're going to change big time.
OPEN HOUSE starts right now.

OK. Change is in the air across the country. The Democrats are taking over the House and the Senate, and that will have a major impact on many issues, including ones close to your hearts and your wallets.

I'm talking about taxes. It's an ugly word, but one that will get a lot of attention as Washington takes a turn to the left.

Pete Sepp is with the National Taxpayers Union in Washington.

Pete, good to see you.

PETE SEPP, NATIONAL TAXPAYERS UNION: Same here.

WILLIS: Well, those people fighting property taxes, they've got a pretty good batting average.

SEPP: Yes, indeed. If 2006 was the year that the GOP lost the House and Senate, well, it was also the year of the homeowner. We saw proposals to limit taxes, reduce taxes, provide new property tax exemptions.

All of these property tax measures succeeded except one. And there was a big increase in property taxes on the ballot in California that was absolutely thrashed at the polls.

So homeowners are angry about this issue. They've been angry about it for five years, far longer probably than they have against President Bush.

WILLIS: Well, and they've taken it to the streets, obviously. I think what's interesting here is over the last four years property taxes have gone up some 35 percent.

SEPP: Yes.

WILLIS: And now people are saying enough is enough, right? SEPP: Absolutely. The thing with property taxes to remember is that they don't necessarily follow an economic pattern. You know, in a recession, for example, income tax collections and sales taxes go down because people are making less and they're spending less.

WILLIS: Right.

SEPP: Not so with property taxes. The assessment cycles can mean that your tax bills are going up at a time when you can least afford it. That's why people are so upset.

WILLIS: I think a lot -- a lot of people out there on fixed income definitely feel that pain.

SEPP: Yes, absolutely.

WILLIS: But, you know, what happened the other day across the country isn't just going to affect property taxes. Income taxes now on the table, too.

SEPP: Yes.

WILLIS: And I want to know what you think will happen to the Bush income tax cuts.

SEPP: Well, if I were a millionaire, and goodness knows I'm not, I would get on the phone to my accountant right away. That would be a major problem.

WILLIS: They're most at risk, right?

SEPP: Yes, absolutely. You can forget about repealing the estate tax for good. In fact, it's scheduled to be repealed for all of one year in 2010. The Democrats may say, forget it, we're going to just maybe increase the exemption, and that will be it for the estate tax.

WILLIS: But the income tax...

SEPP: Yes.

WILLIS: ... position that Bush had, where he was cutting the taxes -- and of course that sunsets -- what are the Democrats going to do with that?

SEPP: Well, it's interesting. I think they will act before the year 2010 to do something.

We've heard various statements from Congresswoman Pelosi. She's saying, well, maybe we'll just raise the rates on millionaires, maybe the top one percent, the top two percent. Maybe we'll raise the top two tax brackets.

Each one of those statements means something very different. And if they go for the last option I described...

WILLIS: Right?

SEPP: ... raising the top two brackets, a lot of upper middle class families living around cities could be heavily affected.

WILLIS: Pete Sepp, thanks for joining us today. We appreciate it.

SEPP: My pleasure.

WILLIS: You were asked to vote on many important issues this year. Here are a few we've been following.

Measure 42 allowed voters in the state to prevent insurance companies from using credit scores to set rates or to deny coverage. Now, it failed by a 2-1 margin. Insurance companies spent millions in advertising dollars to fight this measure. That's how strongly they felt about it.

And six states voted to boost the minimum wage above the federal level of $5.15. Nevada, Montana, Arizona, Colorado, Missouri and Ohio raised the wage, with Colorado and Ohio raising it the highest to $6.85.

And the state of Florida elected Republican Charlie Crist as their next governor. Crist has repeatedly pledged to stop the cherry- picking by insurance companies.

Simply put, if an insurance company tells one type of insurance, Crist wants to force them to offer property insurance as well. Some folks in Florida and other parts of the country have been dropped by their insurance companies or refused a policy because they live in a high-risk area prone to hurricanes, floods or other natural disasters.

Well, the election may be over, but one major topic remains in the hot seat in New Jersey: property taxes. Homeowners in the Garden State pay more than anywhere else in the country, and state officials are under more pressure than ever to change that right now.

(BEGIN VIDEOTAPE)

WILLIS (voice-over): Welcome to New Jersey, home to the nation's highest property taxes. Folks here paid a median of over $5,000 in property taxes last year. That's nearly 7 percent of their income.

Compare that to nearby states. Pennsylvania, less than $2,000 in property taxes. New Yorkers, $3,000. And in Delaware, less than $1,000.

GREGG EDWARDS, CENTER FOR POLICY RESEARCH OF N.J.: We rely more heavily on the local property tax to fund local government services than almost any other state in the nation.

WILLIS: Those services include the highest per pupil school spending of any state in the country and generous pensions for state employees. But the people here have had enough. BILL DRESSEL, N.J. STATE LEAGUE OF MUNICIPALITIES: Political poll after political poll has quite frankly shown that property taxes is the number one issue. In fact, we would not be discussing this today if there wasn't anger and if the legislature was not aware of the fact that this is a major issue.

WILLIS: But the legislature is listening. It's holding a special session to change property taxes. Their deadline, this Wednesday.

SEN. RICHARD CODEY, PRESIDENT, NEW JERSEY SENATE: On the 15th you'll see some reports that I think will be the most far-reaching ever issued by state government in terms of how do we reduce property taxes in the state of New Jersey?

WILLIS: Solutions range from cutting state employee pensions to merging small town governments to save money. The only thing everyone seems to agree on, change is needed. Dramatic change.

ASSEMBLYMAN JOE MALONE, REP. BUDGET OFFICE, N.J. LEGISLATURE: If we don't do something in the range of $1500 to $5,000 per household, depending on how much you pay in taxes, what are we doing for the people?

CODEY: There's a lot of competing interests here. And you have to be willing to take on those interests. We are willing to take on the special interests to give property tax relief to the citizens of the state of New Jersey.

(END VIDEOTAPE)

WILLIS: As you know, we are committed to covering property issues on this program. And we'll stay on top of that story and let you know how it could impact your taxes.

Coming up on OPEN HOUSE, we'll tell you what a trigger list is and why you should be worried about them.

Plus, how eminent domain fared around the country in Tuesday's election and what to do if the government wants to take your house.

And get ready to pain in "Weekend Project." You'll learn everything you need to know about faux finishes.

Those stories and much more when OPEN HOUSE comes right back.

(COMMERCIAL BREAK)

WILLIS: Eminent domain, that's when the government takes your land to build a park or a road or lots of other things. And it played a prominent role in this year's midterm elections. Twelve states had eminent domain on the ballot and nine voted to restrict or limit the ability of the government to take away land from a homeowner for private use.

CNN Senior Legal Analyst Jeffrey Toobin is going to help us out, sort it all out.

It's a complicated topic. But this really seems like a backlash against the Supreme Court. Is that the way you read it?

JEFFREY TOOBIN, CNN SR. LEGAL ANALYST: Huge. Huge backlash.

This issue wasn't even on the national agenda until 2005, when the now famous Kilo versus New London Case was decided 5-4, where the government said under certain circumstances -- the court said -- a local government could take property from one private land owner and give it to another private land owner for development.

WILLIS: What was it about this case, though, that so captured people's imaginations? Was it the Supreme Court's decision, or was it the people in this case?

TOOBIN: It was primal. A man's home is his castle. And the idea that that could be taken to give to a -- for use by a parking lot or a strip mall, it really offended a lot of people.

WILLIS: Well, let's talk a little bit about the history of this. This isn't a brand-new issue. This happens all the time.

TOOBIN: No. In fact, going back to the '80s, there was a big controversy in Detroit, where the city of Detroit, to keep jobs in the city, took land in a neighborhood called Polltown (ph) and gave it to GM for a factory.

WILLIS: Because GM couldn't get that property on their own?

TOOBIN: Well, they couldn't negotiate with each individual land owner. And, you know, it is urban officials. Mayor Bloomberg is a big supporter of the use of eminent domain. And they have a legitimate argument. They say, look, it's our job to create jobs, to create commerce, not simply to let recalcitrant land owners get in the way of the benefit of the whole city.

WILLIS: But Jeff, I've got to argue with you here. What about those cases where they take the land and they give it to Wal-Mart to open up a store? I mean, some of these uses, they simply turn it over to private developers.

TOOBIN: Well, but they say, you bet we do. You bet we turn it over to private developers, because without private developers this city will die. This city will die without the jobs, without the tax revenue.

Look, I don't know what the answer is in every circumstance, but it's striking to go me that one -- I mean, these initiatives didn't just pass 80 percent of the votes, 70 percent of the votes. They passed overwhelmingly. So that's what the people want.

WILLIS: That brings up an interesting question. So, who trumps here, the Supreme Court or the voters at the polls?

TOOBIN: Well, no, the Supreme Court -- all the Supreme Court said was, if states want to do it they can. The Supreme Court didn't say anybody has to do it -- I mean, in fairness to the justices.

All they said was states -- no one has to do it. So it's not like there's any conflict here. The states have the right to prohibit it, and they're prohibiting it in droves.

WILLIS: And what was interesting about that decision, there was a dissent even within the Supreme Court on it, right?

TOOBIN: Justice O'Connor, who is always -- was -- now she's not on the court anymore -- had such a hand on the pulse of the public. She said, "You're going to regret this." And I think she was right.

What's interesting now is, some of the property rights activists who have won all these initiatives are trying to push it even further to something called regulatory taking, which is even more controversial.

WILLIS: I haven't even heard of that.

TOOBIN: Well, regulatory taking, that's where the government says to you, a land owner, well, you can't build a multi-family structure in your house, zoning. And the property rights activists say, OK, you're taking me the land, you're denying me the value of my land, so I want you to pay me how much I'm losing by your regulation.

That governments are really worried about because they think it could completely cripple zoning. That hasn't passed, but it was one reason why the Idaho initiative lost, because it had the potential to cripple government in that way.

WILLIS: Wow. You think your property taxes are high now.

TOOBIN: Well, there you go. I mean, that's the risk.

WILLIS: Jeff, thanks so much for being with us.

TOOBIN: OK.

WILLIS: Still ahead, how applying for a mortgage could put your identity at risk.

And it's time to take on the walls all on your own. We'll show you how to give a fresh paint -- fresh new look to your house coming up on OPEN HOUSE.

(COMMERCIAL BREAK)

WILLIS: OK. So it's getting cold outside. And it is a good time to add some color to the inside of your home.

Lou Manfredini is from Ace Hardware, and he is here with some tips on faux finish painting. He says you can do it yourself.

LOU MANFREDINI, ACE HARDWARE: And you can, too.

WILLIS: Really? You don't have a lot of faith in yourself.

WILLIS: Well, for goodness sakes, man, do you see the pictures in the brochures? They're gorgeous. And I always look at it and I think, oh, come on.

MANFREDINI: Well, and you're right about that. I think the biggest problem with folks is that they're still afraid of color. They're afraid to try new things. And I really want people to have more confidence in what they're doing.

WILLIS: My questions are, how do you get it on the wall in the first place?

MANFREDINI: OK. I put a -- I put a -- this is a copper finish.

WILLIS: This is really a luxurious color.

MANFREDINI: Yes. And this isn't something -- now, here's a product, here's a color you wouldn't use in a large room. This would be like a powder room, maybe an office or a den. Now, I have already rolled this out.

WILLIS: Good job.

MANFREDINI: And I want you take this -- thank you very much. Take that brush.

WILLIS: And what am I doing?

MANFREDINI: I want you to start at the top. Wait, wait. Stop. You're not like a sign painter.

WILLIS: Oh, OK.

MANFREDINI: This is the thing. You want to start here and drag it consistently down like this. OK?

WILLIS: OK.

MANFREDINI: Now try that. Right next to it. Start at the top...

WILLIS: OK.

MANFREDINI: ... and pull down. Keep going, keep going, keep going, keep going until you stop. You need a little more life into it.

WILLIS: OK.

MANFREDINI: You've got to kind of -- you've got to want to do it. OK. There you go.

WILLIS: All right.

MANFREDINI: Now, stop. Step away. Take a look at that. Look closely.

But wait. If you are look closely, if they bring the camera in a little bit, you'll see. See how the light changes? See how the light hits it and you see some accents there?

There's -- there's the striping you did up and down, kind of like you were mad at it. And then you go next door, right here, where you have curves. You can do this.

Now, this is key when any faux finishing happens.

WILLIS: Right?

MANFREDINI: You want to work in sections. You want to step back away when you're doing it...

WILLIS: And look at your work?

MANFREDINI: ... and look at your work.

WILLIS: Yes. Here is my question, because, you know, we might do a fabulous job here, but by later in the afternoon, I could be a little tired and it's going to look totally different. Won't that be...

MANFREDINI: Boy, that is -- that is a great observation. This is key. Don't bite off more than you can chew.

WILLIS: OK.

MANFREDINI: If you have never done this before, you're going to make mistakes. You have to set your expectation.

And so if you're going to do a large room, if you're going to decide, I'm going to do faux finishing in my living room...

WILLIS: OK?

MANFREDINI: ... then plan out your day and say, I'm going to do this wall today. Then I'm going to lunch.

WILLIS: OK. I want to see some of these other textures before we have to go.

MANFREDINI: OK. Take one of those sponges.

WILLIS: OK.

MANFREDINI: OK.

WILLIS: OK. These are wet sponges.

MANFREDINI: You've got to put a little water on it first and then rinse it out. Dab a little bit on there, a little bit. Easy, easy, easy. Boy, you're like a terror.

Now, gently go like this back and forth. Not too much. No, no, no. You're going too -- oh, my gosh.

I know we can teach her.

WILLIS: Like this?

MANFREDINI: OK, look. Nice and light. Watch. You've got to be a little more delicate. OK?

WILLIS: OK.

MANFREDINI: You want to just kind of take it and work it in. OK?

WILLIS: Yours looks so much better.

MANFREDINI: Well, I've done it a little bit more than you.

WILLIS: OK. But tell me, with these, what kind of finish am I going to get? What is this going to look like?

MANFREDINI: Well, this is actually going to be similar to the sponge...

WILLIS: OK.

MANFREDINI: ... because it's more of a -- it's a press and pull application. This you can either do press and pull, but because of the different textures this will almost give you like a leather look on the wall. OK?

WILLIS: Leather? OK.

MANFREDINI: Yes, go ahead. Do that again. Do exactly what you just did. Now lift -- lift as you do that. Lift as you do that.

Pull and lift, pull and lift. Push down and pull.

WILLIS: OK. Well...

MANFREDINI: And you see how it kind of -- well, you need to practice.

WILLIS: I would have to have an entire wall of drywall in my garage.

MANFREDINI: But the practice is the key. And then the other -- one of the -- we were joking about this. There is this system called smushing (ph). Smushing is where you paint the wall. You take a...

WILLIS: Smushing.

MANFREDINI: Smushing.

WILLIS: Not smooching, but smushing.

MANFREDINI: Not smooching. We'll do that later when the cameras are off.

Smushing is...

WILLIS: You're in such trouble.

MANFREDINI: But smushing is when you take a lightweight plastic. Now, once you roll it on, you stick it on the wall all over. You just kind of push on it. Then you pull the plastic away. And it gives you a texture that is inconsistent yet beautiful.

WILLIS: I'm good at inconsistent.

Lou, you have been fabulous. I appreciate you bringing all this stuff.

MANFREDINI: Thank you.

WILLIS: And I promise to practice.

MANFREDINI: Good, good, good.

WILLIS: Thank you, sir.

As always, if you have an idea for a weekend project, send us an e-mail to OpenHouse@CNN.com. And you can watch past weekend projects on our Web site, CNN.com/OpenHouse.

Up next, protecting your identity. How trigger lists can put your personal information at risk.

But first, it's time to go "Trendspotting."

(BEGIN VIDEOTAPE)

WILLIS (voice-over): With cooler temperatures rights around the corner, people in the Northern Hemisphere are starting to think about staying warm this winter. Heated floors are a great option for a new home or a nice addition to an old one.

SHARON MANGINO, WARMUP, INC.: I think that we were a little slow to catch on to it because the costs for electricity in the U.S. have been pretty high. Now that the other utilities are starting to increase, the gas and the oil, there's a -- there's a very fair playing field. In the last couple of years, we have seen a tremendous increase in the interest in electric radiant heat, not just for remodeling but in new construction as well.

WILLIS: While the system can be installed under wood flooring, tile or laminate floors in the kitchen, basement, or even the shower are ready to feel the heat.

That's this week's "Trendspotting."

(END VIDEOTAPE)

(COMMERCIAL BREAK) WILLIS: The mortgage process can be difficult and frightening. But there are some things beyond the loan that you need to keep in mind as you sign on that dotted line. Namely, the trigger lists.

Sound scary? Well, it is.

(BEGIN VIDEOTAPE)

WILLIS (voice-over): When you apply for a mortgage loan, you expect to share intimate financial details with your lender. But what you don't know is that some of the information will likely be sold to other lenders behind your back.

The credit bureaus are selling a new product called a trigger list, and you land on one the minute a lender pulls your credit report. It works like this: when you apply for a loan, your lender pulls your credit report from a credit bureau. Then the credit bureau turns around and sells some of that private data to competing lenders.

The sheer fact that you're in the market for a mortgage is valuable information. It means you're a hot lead.

Now lenders of all sorts swoop in with low-ball offers, filling your mailbox and answering machine within hours. Getting a bunch of competing offers isn't always a bad thing, but you could become the target of a bait and switch.

KEN HARNEY, "WASHINGTON POST": Having received the information that you're in the market, you know, in a 6.5 percent mortgage market I'd just call you up and I'll say, well, we'll give you six percent. But will that actually ever occur? You know, will they come through and deliver that loan? I doubt it.

WILLIS: A bait and switch can cost you time and money, but being on a trigger list opens you up to a much more dangerous scam: identity theft.

ED MIERZWINSKI, U.S. PIRC: Someone working at a company that has a list of names could easily take the information in that list and convert it into identity theft.

WILLIS: Fortunately, there's a quick and easy way to protect yourself. The Fair Credit Reporting Act requires the big three reporting agencies, Equifax, Experian and TransUnion, provide a toll- free opt out number. One call to the credit bureaus and your name is off the list forever. Call 1-888-5-OPT-OUT and they'll walk you through it. You can also do it online.

So do yourself a favor and opt out. A five-minute phone call could save you time and money.

(END VIDEOTAPE)

WILLIS: Trigger lists aren't the only thing to keep an eye on. The National Association of Securities Dealers is warning that a new e-mail stock scam is making the rounds. Here's how it works. The scammer sends you an e-mail that touts a specific stock. Now, at first glance, it seems you received this insider information by mistake. But you believe in good fortune so you invest.

The price goes up, but then the scammer sells the stock at the inflated price. You're left holding the bag. Pretty sneaky, huh?

Well, here's what you need to look out for. Look out for unsolicited e-mails. Look, a stranger is not going to send you a great stock tip.

You'll want to watch out for guarantees of any sense of urgency in these e-mails. The stocks typically don't trade on the New York Stock Exchange or the NASDAQ. And these scams typically follow whatever is in the news. So be weary of any energy, oil or ethanol stocks.

And if you think you've been scammed, forward the e-mail to spam@nasd.com. Or go to the SEC's investor complaint center at SEC.gov.

And if you have any questions or tips you want to share with your fellow OPEN HOUSE viewers, send us an e-mail to OpenHouse@CNN.com.

And you'll find more on today's guests and topics on our Web site, CNN.com/OpenHouse.

As always, we thank you for spending part of your Saturday with us. OPEN HOUSE will be back next week right here on CNN. And you can also catch us on "Headline News" every Saturday and Sunday at 5:30 p.m. Eastern Time.

Don't go anywhere. Your top stories are next in the "CNN NEWSROOM."

Have a great weekend.

TO ORDER A VIDEO OF THIS TRANSCRIPT, PLEASE CALL 800-CNN-NEWS OR USE OUR SECURE ONLINE ORDER FORM LOCATED AT www.voxant.com