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Bush Honors Veterans; Bombings in Baghdad; A Look at the Economic Climate

Aired November 12, 2006 - 15:00   ET


JACK CAFFERTY, CNN ANCHOR, IN THE MONEY: The Democrats have Capitol Hill. But look closely. A lot of them are not your daddy's Democrats. They've got a plan for their first 100 hours. We're just looking for one good idea about Iraq.

How about a trade, one used defense secretary for enough armor to protect our soldiers for starters. The faces are changing, but it's still Washington, and it's still busted.


Welcome to the program. Joining me today, a couple of IN THE MONEY veterans. Andy Serwer and Christine Romans. I am glad this week is in the books. It was a week to remember, but I guess forget too.


CAFFERTY: What happened this week? A lot happened. The tsunami went through Washington, D.C.

ROMANS: I think a big message was heard around -- you look at the ballot initiatives, you look at who won and who lost. You look at the president the next day saying, thumping, got a thumping. And we got a thumping.

CAFFERTY: And he's also saying Nancy Pelosi and I are going to get along. They just can't stop lying, can they?

ANDY SERWER, EDITOR AT LARGE, "FORTUNE" MAGAZINE: It started already. The Democratic Party, rumors of its death were greatly exaggerated. And two things can happen there. One the party can swing the pendulum about where they are in terms of their political backbone. And two the other things that could happen is the electorate changes. I think we saw a bit of both.

ROMANS: Don't we know in that second term of a president, though, there's usually this snapback against the party in power. Was it that much of a surprise that this was going to happen?

CAFFERTY: I don't know if it was that much a surprise that you get some. I think the degree to which we saw was absolutely surprising. There were no Democratic incumbents voted out anywhere in the country. They won all the seats that they needed to to take the Senate, and even Vegas said that was a real long shot. The interesting thing to me was if you look at Montana and Virginia, two of the firewall states for the Republicans, the total number of votes that tipped the balance of power in this country, fewer than 10,000.

SERWER: It's been close. The presidential elections my goodness, I mean it's just been neck and neck and this country seems to be pretty evenly divided. A little bit goes a long way and it just really changed the political landscape.

ROMANS: I like to look at what some of these folks look like. You look at Montana and you look at Virginia and these are not your typical Democrats. These were not the people that are saying the liberals are coming to town.

CAFFERTY: The fellow in Montana, he look like he just got out of the Camp Pendleton Boot Camp for the marine corp.

ROMANS: What is the 110th Congress going to look like? What are they going to do with this message that America has given to them. We know, Jack, that Congress has disappointed the American people time and time again.

CAFFERTY: How about every time.

SERWER: Jack knows that, right?

CAFFERTY: The good news is the Democrats; you know if you are a Democrat, the good news is the Democrats won. The bad news is, all right, now you've got the job. Let's see what you can do.

Candidates weren't t0he only thing on Tuesday's ballots; there were a ton of initiatives and issues all around the country that voters had to make a decision on. Christine has been checking into that and has a closer look.

ROMANS: That is right middle class voters sending a strong message at the polls about the issues that affect them the most. A resounding victory for a higher minimum wage and undeniable support for property rights.


ROMANS (voice over): What voters did here will make a big difference here. The message doesn't get louder or clearer than this. Six more states raised the minimum wage. A clear majority of states declaring the federal wage of $5.15 an hour is simply not enough for working families.

HENRY AARON, THE BROOKINGS INSTITUTION: The minimum wage has eroded to the lowest level adjusted for average wages in about a half a century.

ROMANS: The business community has long opposed higher minimum wages, preferring instead low taxes and less regulation.

BILL BEACH, HERITAGE FOUNDATION: When you increase the minimum wage, you increase the cost of doing business. And that is kind of tough.

ROMANS: Voters overwhelmingly disagreed. And in 10 states this fall, they offered a sharp rebuke of last year's unpopular Supreme Court decision, which allowed personal homes to be razed for commercial development.

JENNIE BOWSER, NATL. CONF. OF STATE LEGISLATURES: They basically say that the government can't take property for economic developments, so they can't take your house and turn it over to a developer to build a strip mall.

ROMANS: Arizona's measure went even further, requiring compensation for property owners if land use regulations lower their property values.


ROMANS: And that one passed. Historically less than half of ballot initiatives are passed by voters. But this time around voters sending a very clear signal on these issues that matter to them.


CAFFERTY: All right. Thanks Christine.

Well if there's one big lesson we can take away from these mid term elections it might be this. The Democrats are the new Republicans. Forget the Volvo driving, tree hugging group. The incoming guys are the biggest bunch of gun toting god-fearing politicians since the outgoing guys. That's just the way some crafty Democrats wanted it. Karen Tumulty is the national political correspondent for "Time" Magazine. Karen nice to have you back with us. Some people have suggested there are no Democrats and Republicans. They are all kind of the same. Is there anything to that based on this incoming crop that kind of mopped up the Republicans in the midterms?

KAREN TUMULTY, "TIME" MAGAZINE: Well Jack one of the smartest things that the two generals in this campaign, Chuck Schumer in the Senate and Rahm Emanuel in the House did, is they went out and looked for candidates who looked like the districts in which they were running who really represented the values of those districts much more so than they did the national Democratic profile. That's why you did have people like Heath Shuler in North Carolina, former Redskins quarterback running. Brad Ellsworth in Indiana a county sheriff running.

And this made it a lot, you know these people a lot more appealing back in the districts. But it could make their lives a little more difficult when they get to Washington because they are such an unusual fit with the national party. And don't forget, they are coming in, but all the other Democrats are still here. You look at this crowd of committee chairman who are coming in in the House for instance and this is -- it's an elderly and very liberal bunch.

CAFFERTY: Like a dinosaur museum. SERWER: Well could be some strange bedfellows. Hey Karen let me ask you a question. Is this cynical stuff by the Democrats or just good politics? They finally have taken a page out of the Republican' play book?

TUMULTY: You know I think its very good politics. One thing they're going to have to do once these guys get here is protect them. These will be the most vulnerable incumbents for the next election. So they are not only going to have to listen to them and not make them vote against the principles of their district. But they're going to have to give them some pretty good committee assignments too. I think you are going to see some of these guys showing up on the appropriations committee, on the ways and means committee. Places where they can bring things home to their districts that their districts really need and appreciate.

ROMANS: So, Karen, it sounds like Emanuel and Schumer using all politics is local to get some of these people elected. But also, in the end, wasn't it kind of a national message that was being sent about the direction of this country, the direction of Iraq and George Bush?

TUMULTY: That's right. But they understood that, you know if you run some guy who looks like a space alien in the district, nobody is going to listen to his message. So what they really did was sort of get past the first hurdle so that people would listen to these guys on the national election. Because in fact it was a very nationalized election. With something like two-thirds of voters saying that the war in Iraq was one of the major considerations they had in casting their votes.

CAFFERTY: Wasn't there also a loud voice of repudiation for extremist politics on either side of the spectrum? In other words, somebody in the Democratic Party understood that they've got to move toward the center in order to have a viable voice. There was a rejection of the extreme right wing politics of the Republican Party over the last six years. Lincoln Chafee who said he used to caucus with the Republicans and talk about the need to move toward the center said he felt like he was a lone voice in the Republican Party. Don't these elections kind of prove that old adage that the great middle class in this country is ultimately the voice that has to be listened to?

TUMULTY: I think they do. Don't forget Karl Rove's electoral strategy was basically to just build your base, build your base, and go find your own voters. He used to carry around this little wallet card showing basically that in his view, the middle had entirely disappeared. There was no point in catering to the middle. That, I think is something that now can be tossed in the ashbin thanks to this election.

And I think another thing is that people are tired of this kind of my way or the highway politics. Because the Republicans would not only put bills out, you know if they could get a majority of votes in the House to get to the floor under Denny Hastert. This bill had to have a majority of votes among Republicans. And I think that, if Nancy Pelosi is smart, she's not going to do things that way.

SERWER: Let's talk about some legislation, spin this forward then, Karen. What about minimum wage legislation? It seems like that's going to be coming down from these new Democrats if you will. What will the President do and you anticipate this as something that is going to be on the docket right away?

TUMULTY: It's going to be on the docket in the House in the first 100 hours. I think it could be one of the very first bills that get to the President's desk and it is going to be a no-brainer for him to sign it.

ROMANS: Well the states have already spoken on this. You have 28 states in and the District of Columbia have already raised their minimum wage. And you have a lot of old hands and economics. A lot of folks teaching economics and economists for a long time who are saying that old conventional wisdom that you raise the minimum wage and it kills jobs. There's enough data now showing that maybe that's not true.

TUMULTY: Don't forget too the Republicans really tried to run on the economy, the strength of the economy. One reason that message didn't get through to average voters is that these big economic numbers are coming against a backdrop in which real wages are not rising.

CAFFERTY: What about the anticipated cooperation of the Bush White House. Howard Dean said in an interview yesterday that as Nancy Pelosi has said in the past, impeachment is off the table. We're not going to go back and delve into all the possible bad things that may have happened over the last five or six years. Is there an implied threat there that, Mr. President, as long as you sign things like the minimum wage bill that comes to your desk and as long as you show some effort to be bipartisan and cooperate with us, we'll play nice with you?

TUMULTY: I think so, Jack. But call me a cynic. But I think this sort of conciliatory rhetoric; I can find you some pretty consolatory statements from Newt Gingrich in October and November of 1994 as well. And don't forget. One tangible thing that the Democrats have gained in this election is subpoena power.

CAFFERTY: Somebody said that the White House is now looking down the father of the bride is holding a shotgun loaded with subpoenas. That's what the president -- Karen, nice to have you with us. Thank you again for joining us. I appreciate it.

TUMULTY: Anytime.

CAFFERTY: Karen Tumulty, national political correspondent for "Time" Magazine.

When we come back on IN THE MONEY, say ah and stick out your plastic. Go to the hospital. You better have your insurance card ready. We'll hear from a guy with a plan for how to cover everyone. Also ahead, how Main Street shook up Wall Street. America voted, the stock market got the message. Find out who is on the rise and who is heading south.

And light infantry. Soldiers in Iraq and Afghanistan have been crying out for heavy armor. See if the Pentagon will now start listening now that Rumsfeld is packing his stuff and leaving the theater.


ROMANS: Thanks to a changing corporate culture and a system rigged against them, middle class families face greater risks than ever before. As safety nets for health care and retirement continue to erode, Americans are deal with frightening economic instability. Our next guest says it's time to fight back. Joining us now, Jacob Hacker, author of "The Great Risk Shift," the assault on American jobs, families, health care and retirement and how you can fight back. I'm guessing the solution here has something to do with insurance. How can Americans fight back?

JACOB HACKER, AUTHOR, "THE GREAT RISK SHIFT:" Well the first thing they need to do is recognize that, as I think most do, that the economy has really changed over the last 30 years and that Americans are now much more on the hook for economic risks than they used to be. Government and corporations have basically pulled back. Especially corporations, which used to provide secure health and retirement benefits to their workers and now are basically shifting those risks on to workers. So we need to wake up to these risks and then I argue that we really need to join together, talk about what the best way to address them is and start to change the conversation in this nation about economic security. Because I argue the economic security is really a cornerstone of economic opportunity. It's really a foundation of reaching the American people.

SERWER: Jacob, I'm sorry to jump in here. Let me ask you very specifically though, I mean, a comprehensive national medical insurance program. We've been talking about this for decades. What specifically do you propose that we do and how could this ever be implemented?

HACKER: Well I argue that we really should build on the best elements of our present system. That is, employment-based health insurance for higher income workers who have secure coverage and a Medicare-like program for the rest of the population. I argue that every person should be able to have secure coverage at their place of work, either through their employer or through a new Medicare-like program.

CAFFERTY: What do you do about the fact that the middle class seems to be in decline in this country? We've got 12 million illegal aliens that are willing to work in many cases for a lot less than the minimum wage. A lot of the middle class manufacturing jobs that used to pay those benefits you were talking about are gone. They are in places like South America and Asia. And we are increasingly a service- based economy, which tends to pay less and does not have the benefits. Are we just going to have to face the fact that we're looking at a declining standard of living in this country?

HACKER: I don't think so because I think our overall economy has been relatively strong. It's just that the middle class, as you say, is really not made out well. It's faced declining economic security and at the same time, it's received little in the way of the overall gains of the economy. And you are right that the shifts in our economy in term of globalization and the shift from services, from manufacturing to services have increased the risk that families face.

But my argument is that we, as a rich nation, can actually deal with these risks. The biggest problem today is a failure to recognize the depths of this issue and also a failure to step up to the plate and start thinking about a new social contract for the 21st century. One that's really centered around the economic security of the middle class.

ROMANS: Because the economic security of the middle class, I mean you can argue that everything that's great about this country is built on that economic security. When you hear people say oh retraining and education and all this kind of stuff, it was those middle class factory jobs that allowed people to send their kids to college so they could become part of the next generation of middle class. Some of those things are starting to erode. We could be -- I mean, a lot of people think we're at a very important turning point for the middle class.

HACKER: Absolutely. If we look at this election, one of the messages that hasn't been talked about much is that middle class Americans are very dissatisfied with the economy and with the direction of our government. You know if you look at the exit polls, 82 percent of Americans who voted said that the economy was extremely or very important in their vote. That's higher than Iraq, than terrorism, than immigration, than even values and corruption.

So I think that we should recognize. And those who did vote on the basis of the economy definitely weren't happy with the economy. So I think we are at a turning point. The real question is whether Democrats will step up to the challenge and start to talk about these issues in a way that's really resonates with middle class Americans. And that's going to have to mean more than just raising the minimum wage or fixing the Medicare prescription drug benefit.

SERWER: Hey Jacob just a quick last question here. Is it really true the middle class is being squeezed or is this a lot of belly aching? Some people, even treasury secretary Paulson I think has suggested that because increased numbers of Americans own stock and have a 401(K) is that they maybe aren't as bad off as people would suggest they are.

HACKER: Well, a very small segment of Americans actually have large financial wealth. And most Americans are basically reliant on their earnings and we've seen over the last few years that middle class wages have not kept pace with the cost of living at all. But I don't think the squeeze is the only issue. We are richer as a society. The issue is that we're facing more risk. We don't have a good safety net in this country for dealing with those risks. And so I argue that Americans need to have the security of a good safety net so that they can reach for and achieve the American dream.

CAFFERTY: Fair enough. Jacob Hacker, we're going to leave it there. I thank you for joining us. Nice to have you with us.

HACKER: Thank you so much for having me.

CAFFERTY: Jacob wrote "The Great Risk Shift." The assault on American jobs, families, health care and retirement and how you can fight back.

Time now for this week's look ahead. We got a lot of economic reports coming out next week. Tuesday we get retail sales numbers. Maybe an early indication of how the Christmas shopping season might start shaping up. Thursday, consumer price index comes out, a barometer of inflation. See whether that's back in the gun barrel or not. And on Friday, another look at the real estate picture, which is beginning to decline at the margins. Maybe even beyond the margins. We'll get figures on new home construction. They are expected to be down again. Plus we'll take a look at all these numbers mean for you and me and Andy and Christine and everybody. Next week right here on IN THE MONEY. So make sure you are on time.

Coming up after the break, rocking the box. Find out how the election results jolted the shares of some big box retailers.

Later in the program think of it as back office implant. Check out an organization that gets charities operating like businesses.

And a two for one deal or maybe a one for two deal is the way to say it. Find out how the idea of one bill worth $2 is beginning to catch on.


SERWER: Some people were expecting the markets to sell off sharply when the Democrats took both houses of Congress. But that didn't happen. However, there are some individual sectors that are faring better than others and are expected to continue on that track based on the election results. Susan Liscovicz joins us now for "Street Talk" from the New York Stock Exchange. And, Susan, you know, some of the stuff is obvious. Some of it is not obvious. Whatever it is, it's interesting grist for investors, no?

SUSAN LISCOVICZ, CNN CORRESPONDENT: No question about it. I think you know it was interesting Wednesday the day after this very dramatic election Tuesday that the market actually rallied after Donald Rumsfeld resigned and the president held a press conference. The president said he would work with the new Congress and, of course, this man who is succeeding Secretary Rumsfeld is quite familiar in Washington who has worked with a couple of president -- previous administrations. Has a very long resume. Mr. Robert Gates. But the overall market trend was up but certain sectors suffered.

SERWER: Let's roll Sue through some of those that are anticipated to be winners and losers, though, with the next Congress. Let's start with pharmaceuticals and talk about that. Roll through some of them.

LISCOVICZ: Andy, I mean, that's really the story. Democrats have said that they are going to give the government negotiating power over prices for federal health plans. They said that's one of their top priorities. Big pharma has certainly been taking a beating. Three days in a row. You could really see it weigh on the Dow despite the fact that the Dow rallied on Wednesday, hit a record close. It was not a resounding rally. We see stocks like Merck, Pfizer, Johnson & Johnson, all getting hit over concerns that their bottom line is going to be impacted if the government has some sort of pricing power.

On the other hand, within the big health care sector, you see things like some biotech firms that deal with stem cell research. Sitori Therapeuticals had a huge rally on Wednesday and stem cells; its name implies what it does. Another biotech also had double-digit gains on Wednesday. So it was playing out quite differently again over what a new Congress might bring.

SERWER: Also an interesting debate Susan about who wins the consumer or the investor. Say you take a Wal-Mart with the minimum wage being increased. On the one hand, Wal-Mart has to pay its workers more. That's bad. On the other hand, their customers get more money in their pockets. That's good. So you look at retailing. Could be a mixed bag there, don't you think?

LISCOVICZ: No question about it. I mean, as an industry, retailers and restaurants oppose it. Small businesses of course as well. But the Democrats say that's another huge priority that the minimum wage will go up. And if it does, next year will be the first time in a decade. So the bottom line is that these industries, which pay a lot of their workers minimum wage, will also see their profit margins impacted. On the other hand, you have Wal-Mart, which certainly gets a lot of people who earn at the lower end of the spectrum, may actually benefit because they'll have a little more spending power.

But I think that's one of the balances in Washington. When Congress really works, it should weigh these things evenly. That investors, of course, should be expecting good things from their companies. But those consumers have to earn a decent wage as well. Have to be able to care. Have to be able to take care of their basic needs like health care. So those are some of the basic, most basic and most pressing issues you can expect the Democrats to bring to Washington.

SERWER: Right. And a lot of this, of course, we're just going to have to see how this plays out particularly in the first 100 days as the Congress gets its footing. Wall Street will be reacting and we'll be watching. Susan Liscovicz at the New York Stock Exchange.

LISCOVICZ: Before we go, while we talk about changes, I just wanted to talk about the change, the very big change at "Fortune" Magazine. A very wise change, Andy Serwer, managing editor of that great business magazine. We are so proud of you and so glad you are going to continue working with CNN. But congratulations to you.

SERWER: Thank you very much, Susan. You are very kind and look forward to the same.

Coming up cash and change. Now that Donald Rumsfeld is out, see if the U.S. military is going to have to tighten its collective belt.

Plus, game over. Find out how Andre Agassi moved from tennis to a new kind of high stakes game.

And we want to know what you think about the show. You can send us an e-mail right now our address is



CAFFERTY: To date, the wars in Iraq and Afghanistan have cost this country $500 billion. And 3,000 American lives. With the Democratic Congress and a new secretary of defense in our future, our next guest says that there is an opportunity now to stop wasteful spending and begin a phased withdrawal from Iraq. Lawrence Korb joins us he is a senior fellow at the Center for American Progress. He also served as assistant secretary of defense under President Reagan in the early 1980s. Welcome, Lawrence. Nice to have you with us.


CAFFERTY: We'll talk about the troop withdrawal in a moment. Let me focus on the opportunity for some sort of oversight on the wasteful spending that has gone on, particularly in Iraq. I recall a story of spending $75 million American taxpayer dollars to build a police training academy over there that had sewage leaking from the ceiling before its first day of recruits ever walked in the door.

Part of that building will have to be torn down and rebuilt. The lack of oversight, the waste and in some cases the out and out theft of taxpayers money in that arena over there is mind boggling. Why should any of us believe that it's going to suddenly come to an end?

KORB: Well, I think the fact of the matter is we did have an inspector general over there to point out all of the things that you've talked about and what the Republican Congress tried to do was end his job. Hopefully when the Democrats come in that will change that we'll have somebody there to point these things out. But the fact of the matter is there was very little oversight of what was happening over there. Nobody really seemed to be in charge. The Pentagon thought that the State Department would run it. The State Department thought the Pentagon would run it. Remember the head of AID told us we'll be able to reconstruct the whole country for $1.5 billion we'd be able to do it.

So you really need to get somebody that has cross agency responsibility, somebody like the national security adviser. This should be done by them, but up to date now it has not been done and because of that, we've laced a lot of money and more than that, by not doing it right, we've demoralized the Iraqis. The Iraqis think we're this great powerful nation and the fact that we don't do it right says to them, we really don't care.

ROMANS: I think what the Iraqis didn't know and what most Americans don't know as well is that we lose, misplace or pay the wrong people tens of billions of dollars a year in the defense budget. Something like $50 billion just goes missing. This is the way it works. It's an agency that can't be audited. None of the agencies that are in there can be audited. It's just this huge amount of money that just -- how can the Democrats, how can the Democrats be tough on this spending and the waste, but at the same time not look like they are soft on security?

KORB: Well that's going to be a challenge. The first thing they have to do is take a look at weapons that deal with threats from a bygone era. Cold War type of weapons. Weapons that were started actually when I was in government. Things like the FA22, which was built to deal with the next generation of soviet MIGs, which, of course, never came. You have weapons like a new open ocean destroyer that's to fight naval warfare on the open oceans which there's really no threat with that.

They've got to take a look at weapons systems that haven't simply performed. The V-22, the tilt rotor Osprey has been in development for over 20 years. We don't have any yet and the cost has risen from something like $9 million or $10 million a helicopter to over $100 million. They've got to take a look at that. Something they need to do. And they need -- and they were as guilty as the Republicans, is get rid of all these earmarks in the defense budget last year, there were $11 billion in earmarks. Almost 3,000 separate items that had nothing to do with national defense.

SERWER: Hey, let me change course here a little bit, Lawrence, and ask you a question about Rumsfeld. I don't know if he's a pal of yours or not. Was he a total failure?

KORB: I think he was a total failure. Not only as the deputy commander in chief, which obviously why he was relieved of command, but also as a manager. Just to give you a couple of examples. You take the 40 major weapons systems that are under development. Under his watch, they have grown by 80 percent and part of the problem is he wasn't paying attention. Remember the Boeing issue, the idea of leasing as opposed to buying the planes which what was cheaper. When John McCain blew the whistle on this deal. The inspector general interviewed Rumsfeld and he said he was only vaguely aware of a $30 billion boondoggle. He's collapsed the whole planning, programming budgeting system which was the model for the whole federal government after it was instituted in the Pentagon by bringing it together. And there's basically chaos there now within the budgeting system.

CAFFERTY: Hi is also kind of an unpleasant human being.

KORB: Oh, there's that.

CAFFERTY: Let's talk about getting the troops out of there. What can the troops do realistically, if anything, and maybe that's not the right thing to do. I don't profess to have the answers. That's the big debate. Get the hell out of thereof. It's not working. Get the troops out of there. Where do you see that going?

KORB: Well I think what you are going to see and everybody is talking about the Baker/Hamilton Iraq study group which is going to make recommendations. The Democrats have a plan, which I think makes sense is the Reid/Levin plan. Senator Jack Reid and Carl Levin. And basically what they say is you have to begin a phase withdrawal of the troops because you need to give the Iraqis an incentive to make the political compromises. Even our troops over there now saying, hey, unless you start withdrawing, you're not going to get these guys to do what they are supposed to do. You realize the elections were almost a year ago.


KORB: They have not yet modified the constitutions, not yet disbanded the militias and each month that they've been dithering, we've lost a battalions worth of killed and wounded marines and soldiers.

ROMANS: Let me ask you one quick question. Does Gates make a difference? Rumsfeld out, new, well, you could argue whether it's fresh blood or not coming in.

KORB: Well I think he makes a difference in the sense he's not wetted to the policy, he'll be receptive to changes. Since he was a member of the Baker/Hamilton group, I think that he will be receptive to their changes.

CAFFERTY: You suppose Baker had anything to do with Rumsfeld leaving?

KORB: Oh I'm sure they did I mean because the first President Bush, we call him Bush 41, never thought much of Rumsfeld and according to James Reisen's book, basically what happens is the father called the son and said, stop listening to Rumsfeld and the son hung up on him.

CAFFERTY: Oh, wow. With this new plan coming out, Baker and the boys don't want Rumsfeld there to say it's a terrible idea. They want someone there to say this makes sense, lets give it a shot.

KORB: That is right because Rumsfeld because what ever else you think about him is one heck of a skilled bureaucrat. Even Henry Kissinger couldn't keep up with him. Rumsfeld was 40 years old.

CAFFERTY: Well, he was until yesterday. Not anymore. Larry, thank you very much. I appreciate it. We'll get you back here and do more of this as this new approach to things moves forward.

KORB: Thank you for having me.

CAFFERTY: Lawrence Korb, the senior fellow of The Center of American Progress. Lots more to come here on IN THE MONEY.

ROMANS: There sure is. Just ahead Jack we have a whole bunch of new stuff, including helping do-gooders to do better. We will tell you about a service that left non-profits combine tender heart ideas with hardheaded business sense.

And two-buck luck. The unloved $2 bill finally getting some attention. Allen Wastler is going to stop by and tell us what's up with the $2 bill.


SERWER: Now this week's "Mind Over Money." Most charities and non-profits are created to help those in need. But sometimes these organizations need some help of their own.


SERWER (voice over): In the late '90s, Seattle's tech boom created a generation of Microsoft millionaires. And a group of former executives wanted to use the skills that made them successful to help kids in the Pacific northwest.

PAUL SHOEMAKER, EXEC. DRO. SOCIAL VENTURE PARTNERS: They looked around the country for different kinds of models, and what were the needs that were out there. They heard two resonant ideas. One was a desire for non-profits to get not just financial help but human capital and expertise and business skills and expertise and they also heard desire from philantloist. to be more engaged in the work.

SERWER: Social Venture Partners invest in groups with growing pains. Ones with successful programs but lacking the back office infrastructure to keep growing.

SHOEMAKER: We're trying to put the right person in the right place so a CFO will go in and do an accounting project. A management consultant will go in and work with a company on a three-year strategic plan. A developer will go in and help an organization develop its Website.

SERWER: When the Wonderland Development Center applied for aid, they hadn't seen growth in 30 years.

JANA PETITT, WONDERLAND DEVELOPEMENTAL CENTER: At the time SVP came on board we didn't have somebody to put stuff into quick books and track our finances.

LARRY WALLACH, SVP LEAD PARNTER: There were real problems with their infrastructure, with their finances, with their organization. It really lacked a lot. And it was readily apparent I could do a lot to get them on the path to meeting their mission and helping these children.

SERWER: SVP commits funding for five years, but the money comes with strings attached.

PETITT: They require a work plan and they require us to tell them where we are in line with that work plan.

SERWER: More than a dozen SVP partners have volunteered at Wonderland in the last five years. WALLACH: Helping with marketing. Helping with negotiating leases. Helping in setting up the agency for an external audit to make sure its financial systems are honest and accountable. There have been people that have come in and helped delivering services directly to the children. The list goes on and on.

UNIDENTIFIED FEMALE: Shake out your legs.

PETITT: It's been amazing. I think that when they first started with us our budget was something like $250,000. Our budget this year is $650,000. We serve about 30 kids a month. Now we're serving on average 65 children a month and their families.

SERWER: Back at Social Venture Partners, they are discussing plans for the future. And their idea is catching on. Sharing the model of giving both money and skills, 23 SVP affiliates are in business around the world.

WALLACE: There's a set of tools and systems that we can bring to a new city. Just like any business would that has, you know, franchised or grown or expanded. You figure out those things that you can give to the next site that helps it get up to speed faster.


SERWER: To find out how to start a Social Venture Partner group in your community, check out

And next week on "Mind over Money" we'll take a closer look at the Acumen Fund, a group that is bringing venture capital to the developing world with some surprising results.

Coming up on IN THE MONEY net gains. Let Andre Agassi show you how a retired tennis star picks a second career.

And 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 too we are at


CAFFERTY: A lot of people were expecting to see the $2 bill disappear not so long ago. That bill is making a big comeback. CNN Money managing editor Allen Wastler joins us now to explain why in this week's edition of "The Number. "

ALLEN WASTLER, MANAGING EDITOR, CNNMONEY.COM: The number and this week the number is 61 million.

SERWER: 61 million.

WASTLER: That's how many of these the government printed up last year. That is more than twice as many that were printed up from 1991 to the year 2000. The $2 bill baby, it's coming up.

ROMANS: The $2 bill. WASTLER: Well, one, basic inflation. One of these, you know, goes a little farther than one of the ones used to go. People are getting more comfortable with them. For one thing, a lot of small business owners, this is a cute little story. They figure if they give the change in like a $2 bill, people will remember where they got the $2 bill from. I got this from the wine shop and everything like that. Also just a little note here. Apparently exotic dancers prefer to get these than the old ones so now those clubs --

SERWER: They prefer 20s.

ROMANS: Market research.

SERWER: They prefer a 20. I am told.

WASTLER: The comfort factor. Also apparently a lot of immigration over the years. People in different countries, they use, you know, a coin for their basic unit and they have $2 bills or --

CAFFERTY: Didn't we try that here and it didn't work? They put out some Susan B. Anthony?

WASTLER: Sacajawea is making, she is beginning to make the rounds now.

CAFFERTY: They were roughly the size of a quarter. If you had a dollar coin in your pocket with two or three quarters you'd make the mistake of putting the dollar coin in the vending machine.

WASTLER: That was the big problem with the Susan B.

SERWER: A lot of vending machines don't take them now.

CAFFERTY: What about the $3 bills? They are all in Washington.

WASTLER: That would be Washington there, Jack.

CAFFERTY: Thank you, Allen.

WASTLER: Sure thing. Christine.

ROMANS: He went from being an eighth grade drop-out to an eight- time grand slam winner. Andre Agassi's legendary tennis career may be over. But now the young retiree plans to show the same determination in his "Life after Work." Larry Smith has the story.


LARRY SMITH, CNN CORRESPONDENT (voice over): Just a few months ago at the U.S. Open, Andre Agassi took his last signature bow and said an emotional farewell to professional tennis. So what does retirement look like at age 36?

ANDRE AGASSI, RETIRED TENNIS PRO: I'm imagining for a long time any time somebody asks me to do something I'm going to go, sure. Why not? Agassi's wife Stefi Graf another tennis legend and their two children are probably glad to have dad around. He's also now more involved with raising funds for the foundation he created to help children. And his real estate development company is expanding. Joining a partnership to build luxury hotels and vacation homes.

AGASSI: Life after tennis is just going to allow me a bigger platform to sort of work your way into the fabric of people's lives and affect it on a much sort of bigger, more, you know, real life way. We started in Tamarak, Idaho, this all-season destination resort. It's a place that is there for families to come and enjoy each other. Focus and care about something and being a part of it. We've not just put our money behind this. We've put our time. We put our heart. We've put ourselves into it.

SMITH: Larry Smith, CNN.


ROMANS: And we'll be right back with more IN THE MONEY.


CAFFERTY: It is time to read your answers to our question of the week about whether you think your vote counted in this past election.

Irv in Maryland wrote this, "No. I live in Maryland. There's no paper trail from the voting machines. As an African-American, I feel obligated to vote because of the sacrifices my ancestor made but the electronic voting machine system is a fiasco."

Tony in Myrtle Beach, South Carolina, "Yes, I know my vote was counted because I voted absentee. I don't trust the Diebold machines because I vote Democratic."

Bill in Texas wrote, "My vote was counted, but it really won't count because President Bush and the lame duck Congress will probably push through a bunch of legislation nobody but they want later this year. If you're counting on Social Security, watch out!"

Here's next week's e-mail question of the week. Should the Democrats in Congress try to make changes in Iraq or stick with domestic issues like minimum wage and prescription drug coverage? Send your answers to You should also visit our show page at which is where you'll find a very attractive still pictures of all of us.

Thank you for joining us for this week's edition of the program. My thanks to "Fortune" Magazine managing editor, he is a big shot now, Andy Serwer. "Lou Dobbs Tonight" correspondent Christine Romans. And managing editor Allen Wastler.

Hope to see you back here next week Saturday at 1:00, Sunday at 3:00 Eastern Standard Time. Until the next time enjoy the rest of your weekend.



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