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What Presidential Candidates' Proposals Mean for Your Money; Mortgage Meltdown a Big Issue; How Candidates Will Fix the Economy; Candidates and Health Care

Aired February 02, 2008 - 09:30   ET

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

BETTY NGUYEN, CNN ANCHOR: How much of a weather profit extraordinary is he?
JOSH LEVS, CNN CORRESPONDENT: One-third of the time. So, I'm going to bring in Reynolds, now. According to the studies, he gets it right about one third of the time. So, Reynolds, help me out here, really quickly, why don't they just tell him the forecast?

REYNOLDS WOLF, CNN METEOROLOGIST: First and foremost, why would anyone trust a creature that's covered with hair, has bad teeth and smells bad? But enough about me. Let's talk Bill of a moment. It's, honestly, it's tough enough for anybody to forecast, even with all the technology that we have. I think we need to give him a break. I mean, he's doing fine. Plus it's kind of hard to work a computer with groundhog paws.

LEVS: Well, he'd better be wrong today. I want Spring.

WOLF: You got it.

NGUYEN: All right just a third of the time, he's right, that's not too bad. But you know who's right a lot of the time? That's Gerri Willis and OPEN HOUSE with personal finance editor, Gerri Willis starts right now.

GERRI WILLIS, CNN HOST: Hello, I'm Gerri Willis and this is a special election edition of OPEN HOUSE. We're taking the campaign trail to your home, what the candidates' proposals mean to your money. From the economy to housing and healthcare, we've got you covered with CNN's "Financial Security Watch."

But first, as the presidential candidates propose their solutions in the mortgage meltdown, families across the country continue to struggle. More than 400,000 households lost their homes to foreclosure last year. That's up 51 percent from a year ago, according the RealtyTrac. California was the hard less hit, with Michigan a close second -- 2007 set a record, but not a good one, new home sales dropping 26 percent. That is the biggest decline in more than two decades.

And it should come as no surprise, homeownership in this country is actually on the decline, now. The Census Bureau, this week, reporting the biggest one-year drop in the fourth quarter since it began homeownership since way back in 1965. The mortgage meltdown is a big issue on the campaign trail, here to break down all of the pre-Super Tuesday issues, we are Roy Sekoff, the founding editor of the HuffingtonPost.com in Los Angeles. Jack Otter is back, he's deputy editor of "Best Life" magazine, and Amy Holmes, Republican strategist and CNN contributor in Washington.

Welcome to all my panelists.

AMY HOLMES, REPUBLICAN STRATEGIST: Thank you, you're welcome.

WILLIS: All right, you know, I want to tell you, I want to start with the Republicans, here. We've been talking about this housing issue for a long time, so many foreclosures, but I really don't hear a lot from the Republicans on the housing issue.

Amy, why aren't they talking about this? Why isn't this job No. 1 for the Republicans to solve this problem?

HOLMES: Well, I think actually you have been hearing Republicans talk about it. Back in August, President Bush asked his HUD secretary, Alfonzo Jackson, to get together with Secretary Paulson, head of the treasury, to try to put together a plan to start addressing this housing crisis. And I think that there was that recognition.

In fact, President Bush says he that blames the Congress, the Democratic controlled Congress, for not giving him a pen for three months. They're finally addressing it. You heard some of the Republican candidates saying that they don't that it's going far enough, actually, in fact. But among conservatives and among Republicans, it's true, there's a debate as to how best deal with this so that we preserve individual responsibility and that we don't overcorrect for the market.

WILLIS: So Roy, I think Amy said something interesting, here: where was Congress? Congress could have done something, here. The Democrats were sort of sleeping at the wheel, too. Do you think they were behind the curve? Do you think the Republicans are behind the curve?

ROY SEKOFF, HUFFINGTONPOST.COM: Gerri, I'm shocked, I mean, President Bush is actually blaming the Democrats? That's stunning to me, very stunning to me. No, come one ...

HOLMES: It is a Democratically controlled Congress.

SEKOFF: Yeah, right. But here's what we're getting, we're getting from the candidates more of the same. It's really kind of shocking. You know, it's the classic definition of insanity, doing the same thing and expecting a different result. What are they going to do? Just more tax cuts, more tax cuts and then I think maybe more tax cuts, that'll solve everything. I'm not hearing really anything from them.

WILLIS: All right. You know, Jack, I know Hillary has a very aggressive foreclosure plan. Senator Clinton has come out and said, boy, she wants to take big steps on this, freezing interest rates for five years, dramatic stuff. Is it enough?

JACK OTTER, DPTY EDITOR, BEST LIFE MAGAZINE: Well, I think the question is, is it too much? Never say, in this particular case, that you can't tell the difference between Republicans and Democrats. On the one hand you have got Hillary, this is massive government intervention, freezing mortgage rates. On the other hand, as we have just heard, the Republicans aren't offering that much, they're saying let the free market do its thing.

I can't tell exactly what Hillary is talking about, here. Maybe Roy knows. If she is simply saying, look, to subprime borrowers who have primary residents, not speculators, and we're going to take only the ones that have these adjustable rate mortgages and we're going to prevent them from resetting for five years, that's still very strong medicine, it could probably screw up other areas of the mortgage market, but at least it's contain it to the problem.

WILLIS: Well, I got to tell you the lenders are not going to like that, absolutely. I think you make a good point, there. But, I want to get to one other issue on the housing and I want Amy and Roy to weigh in on this. Amy, you first. You know, minorities, in particular, got a lot of these so called toxic loans, is the government doing enough to help folks that are in some of these loans? Could the government be doing more? Amy, you first.

HOLMES: I think the government could be doing more to go after those predatory lenders and that includes, you know, those paycheck cashing operations in a lot of inner-city communities. I think the government could be doing a lot more in terms of educating consumers about these types of loans.

There were some crazy loans that were being offered where you can't have to prove how much money you were making, you might be making $30,000 and getting a loan for a $300,000 house. It was absurd, and as you know, Gerri, it was also part of the banking industry, that they were putting together high risk loans with low risk loans and I think that the government could be doing a lot more oversight.

WILLIS: Let Roy get in here for just for a second. You know, what do you say about this issue of minorities getting so many of these toxic loans?

SEKOFF: I mean, obviously it's a huge issue and I think the problem is that there's been very little oversight of the lending industry, I mean, and that's been the signature of the Bush administration. I will say, though, during the debate, earlier this week, John McCain said something they liked, he said that a mortgage shouldn't be more than one page. It should be a simple thing, it should be a simple document, big things at the bottom, you know, making sure, do you understand this?

WILLIS: And in English, right, Roy, in English?

SEKOFF: Well, no, no, no. I'm not going to go that far and McCain wouldn't go that far, don't forget he was one of the authors of the administration bill.

WILLIS: No, I mean in simple languages is what I mean, simple language because they're really hard to understand, lots of legalese.

SEKOFF: Simple language, indeed.

HOLMES: But, Gerri, on the political side of this. Republicans versus Democrats, when we say it's a Democratically controlled Congress, that means they're in charge of those committees that should be doing oversight. The president proposes, the Congress disposes. So, I think the responsibility has to be shared between Republicans and Democrats in terms of trying to address this issue.

WILLIS: Amy, Jack, Roy, stay with us, we have a lot more to talk about.

As the economy is bracing itself for recession, many families are already struggling to make ends meet. You know, we've been talking about debt a lot on this program and we're going to do more on the topic. We'll be speaking with families from across the country, telling their stories, helping them to find solutions to this growing epidemic. But we need your help. If you're in debt and you want to share your story, send us an e-mail at openhouse.com. We want to hear from you.

Coming up on OPEN HOUSE, your economy, your health, your future, and what the candidates are proposing to doing about it. We'll break it down for you when "Financial Security Watch" continues.

(COMMERCIAL BREAK)

WILLIS: The economy, it's been touted as the No. 1 issue among voters and with recession looming, we want to take a look at where the candidates stand when it comes to your money and your taxes. Back to our panel now, Roy Sekoff, Jack Otter and Amy Holmes.

Amy, let's start with you, again. I want to talk about this idea that Hillary wants to take us back to the original Clinton presidency and a great big roaring economy. Is that possible?

HOLMES: Well, it's not possible because part of what was sustaining that was the Internet boom and unfortunately we went through the Internet bust, as we all know, and President Bush inherited a recession.

But going to the issue of healthcare, it looks like she wants to go back to a more coercive system. Even Barack Obama has rapped her on this even that she would consider garnishing wages without lowering health care costs. I don't think this return to the '90 is going to work and I don't think it's going to work when it comes to healthcare, either.

WILLIS: Roy, is it appropriate for Hillary Clinton to invoke Bill Clinton in her candidacy, here? Is that the right thing to do?

SEKOFF: Is it appropriate, sure, of course, she can say whatever she wants, she can make her case. Is it the right thing to do? I'm not so sure. I mean, I think there is sort of the buzz of the prosperity of the Clinton years, even though it has something to do with the Internet bubble, as Amy called it, and as one who works in the Internet now, let's not say that it went completely bust, we're making our way back up there.

But, the question is how does that play, the advocation of glory days past. I think it works, it cuts both ways for her because I think the real message of he election is change, change, change and I think it's a little hard for her to be out there, you know, singing the next verse of "Glory Days."

OTTER: I think the problem is you got to play the hand you're dealt and in Hillary's case, she is -- her last name is Clinton. Now, Clinton years were very good for the economy.

WILLIS: It doesn't necessarily have to be.

OTTER: He did a good job. But it's really tough for her to say, I'm parting from all of that, especially when your husband is out stumping for you.

WILLIS: Amy, what were you saying, there?

HOLMES: Oh, well, I think also a big problem with Hillary invoking the glory days of Clinton administration is it's cherry picking, she's going to take credit for things that went well under the Clinton administration, she also needs to take responsibility for the things that didn't go so well. So, I think that puts her in a very sort of complicated political position and I think Barack Obama has really capitalized on that.

WILLIS: Go right ahead, Roy.

SEKOFF: No, I thought it was kind of interesting that we're back in a situation where there's a Bush in the White House, the economy is on the downturn and there's a Clinton out there saying, hey, it's the economy stupid. Deja vu all over again.

WILLIS: Sounds familiar, doesn't it?

OTTER: There's an interesting dynamic here which is that Republicans sound more like Clinton Democrats, because they're the ones, especially John McCain, who's talking about the deficit. He keeps on hammering about that. He doesn't say raise taxes, of course, but he says we need to lower spending, we need to bring spending and taxes in alignment. And you don't hear Hillary and Obama saying that too often.

WILLIS: All right, guys, let's talk about those Republicans. Let's start with McCain. You know, he's actually said, the economy is not my favorite thing to deal with. Which I think is really interesting. He might have been joking, but Amy, what do you make of that? Is he the fellow to run the economy?

HOLMES: I thought that was really unfortunate for him to be saying and unfortunately he's living it down. It's not appropriate for him to be saying. He needs to be very much up on the economy. I think that he is. He certainly has heard the message that, you know, if you're a Republican, you should be for cutting taxes, that's what stimulates the economy.

And before Roy jumps all over me, even Barney Frank said, on this very network just a couple of weeks ago when discussing the stimulus package, he was asked: Is this going to involve any increased spending? He said: No, this is a stimulus package. So, even Democrats have tax rebates and trying to, you know, pump up the economy by putting more dollars in the consumers pocket seems to be getting the message.

WILLIS: Well, let's listen to what Romney had to say about this issue.

(BEGIN VIDEO CLIP)

MITT ROMNEY (R), PRESIDENTIAL CANDIDATE: At a time like this, America needs a president in the White House who has actually had a job in the real economy.

(END VIDEO CLIP)

WILLIS: Jack, what do you think about that?

OTTER: Well, you know, it's a very compelling case. This guy has been working in high finance for years, and so, well, he ought to know what he's doing. But, the funny thing is when Florida voters going to the polls, when asked who do you -- Republicans, this is -- who do you trust on the economy? They say John McCain. And let's fact it, if you heard him last night, he doesn't sound real comfortable talking about the economy and we know he commented that he's stronger on security. So, it's very funny, Romney's message is not sticking.

And I have to jump in on the stimulus package. I mean, think politicians have to make it sound like they're doing something, sending us money, hey, everyone likes that, but first of all, it doesn't work. Back when we got our last $300 check, we know that not even 30 percent of people actually went out and spent it in a timely fashion.

And also, if you look at it from a big picture issue, the problem here in this country is that we have been borrowing too much, spending too much, saving too little. So, what's the solution, borrow $150 billion and send it to people. You know, you're giving a drunk another drink. I mean, I know it's painful to go through a recession.

WILLIS: I don't think you're calling the American public drunks, I'm sure.

You know, we've got to wrap this for right now. Amy, Roy and Jack, stick around.

Still ahead on OPEN HOUSE, the time for a checkup, CNN's chief medical correspondent, Dr. Sanjay Gupta examines the candidate's plans for your healthcare.

Then, how a change in the White House might impact you and your bottom line. Our panelists return and weight in, but first, your mortgage numbers.

(COMMERCIAL BREAK)

WILLIS: Another key issue facing our candidates this election year is healthcare. But, just what do their proposals mean to your health and your wallet. CNN's chief medial correspondent, Dr. Sanjay Gupta is joining us now from Los Angeles.

Hi there, Sanjay.

DR SANJAY GUPTA, CNN CHIEF MEDICAL CORRESPONDENT: Hey, good morning, Gerri.

WILLIS: Let's start with the Democrats, are their healthcare plans really that different?

GUPTA: Well, you know, Gerri at first blush they're very similar. One important distinction is universal coverage, that's sort of the buzzword. While senators Hillary Clinton and Barack Obama both promise to provide healthcare to the estimated 47 million Americans without health insurance, only Senator Clinton would require all Americans to have health insurance. And while Obama is embracing much of dropout contender, John Edwards, platform, he has his own ideas about universal healthcare.

For example, his plan guarantees coverage, but does not require it. For all universal coverage does not come cheap, the price tags sort of vary a bit, as you might imagine. Clinton estimates her tax plan will cost $110 billion, Obama says his will cost around $50 billion to $60 billion.

No Gerri, I should give you a little disclaimer, here, as well. I was a White House fellow, which is a non-partisan appointment in Hillary Clinton's office in '97-'98; three to four years after Senator Clinton's healthcare initiative had already been defeated.

WILLIS: OK, now one thing that can really wipe you out financially, of course, is catastrophic illness. Does anything distinguish the leading Democrats here?

GUPTA: Yeah, you're right, in fact paying for healthcare is the No. 1 cause of bankruptcy in the United States, as you already know. Clinton says her plan would insure coverage of catastrophic costs, and would guarantee Insurance premiums would never rise above a certain percentage of income.

Obama's plan is a little different, it would reimburse employer health plans for portion of catastrophic costs above a certain level. But here's the thing, if that money goes toward reducing the cost of worker's premiums. So, a little difference there, Gerri.

WILLIS: OK, well, the leading Republicans, let's talk about them. What do they want in terms of healthcare?

GUPTA: Well, no surprise, Republicans do not want a mandate universal healthcare coverage. Instead they use a little bit of a different approach, tax incentives, for example, to entice people to buy their own insurance, and they would expand health savings accounts. Those are tax free dollars you can put aside to help pay for medical expenses.

Republicans believe the power of the market, free enterprise, if you will, will lower cost. And then the GOP thinking goes the insurance companies will all compete for all those new customers and that will lower premiums, making healthcare insurance more affordable.

Now, one thing I should point out, Gerri, Mitt Romney, the only Republican with a slightly different view. As Massachusetts governor, he signed into law requiring virtually everyone to have health coverage. As a presidential candidate, he emphasizes that it should still be left up to the state, no federal mandates.

WILLIS: As far as catastrophic healthcare?

GUPTA: None of the GOP candidates has a proposal to help families facing those enormous out of pocket medical care expenses. Again, we talked about how often they can lead to bankruptcy. The Republican candidates have not questioned the quality of care Americans receive.

But Republicans like John McCain have focused on access to care. McCain says this, he says the highest quality healthcare is right here in the United States, but we have got to get inflation down, we've got to get the healthcare costs down, as well, make it more accessible.

So, if a Republican wins the White House, Gerri, what you can expect in healthcare, tax breaks for everyone, if you buy your own insurance, and eventually sort of the shift from company-based insurance to self insured. The hope is that with so many people buying health insurance, the cost will come down for everyone.

WILLIS: All right, then. We have great information, Sanjay, thank you so much for that.

And there's more where that came from. Tune in this weekend for Dr. Sanjay Gupta's broken government special, "Healthcare: Critical Condition." You can also catch Sanjay every Saturday and Sunday morning at 8:30 a.m. Eastern on HOUSE CALL. He's a very busy man.

Sanjay, thank you.

And if you want to check out this project savings again, log on to our Web site, cnn.com/openhouse.

Still ahead, could a change in Washington mean a change to your bottom line? From the economy to housing and healthcare, our panelists return with some final thoughts.

(COMMERCIAL BREAK) WILLIS: OK, time now for some final thoughts on where the economy stands for the rest of the race for the White House. Back to our panel. Roy Sekoff, Jack Otter, Amy Holmes.

Amy, what do you make of all this talk about healthcare? Are we going to get any change, here?

HOLMES: Well, I think we have to start with getting together on lowering healthcare costs and in fairness to Hillary, this is something that she's focused up quite a bit in the Senate, issues like health IT, making sure that those records are all coordinated, so we can take billions out of those costs. I think that's the place to start to get some bipartisan agreement.

Unfortunately, like MedMal, Republicans want that, Democrats don't. But, if they can kind of get those areas of overlap. You know, the big question, of course, down the road is, do which want to be more like Canada? Obviously, Republicans say no, Democrats say yes.

WILLIS: Bipartisan agreement, that's like, you know, two words that normally don't go together.

HOLMES: It's possible.

WILLIS: Roy, what do you think?

SEKOFF: I think you have to have that in this case because I think this is one of those great issues where we like, in the media, like to separate everything right versus left. But, this isn't a right versus left issue. I mean, getting healthcare, having lower costs, being able to not have to go to the emergency room to get your basic care is not a right versus left issue. And I think we're going to have to see it ...

OTTER: I have to say, though, there is a big right versus left issue in this election. Hillary is talking about moving us closer, as Amy said, to a European-Canadian style healthcare system. That means you're going to help a lot of people at the very bottom of the economic ladder.

I mean, the U.S. has infant mortality rates higher that make us look like a third world country. It's embarrassing. But, we also have the very best healthcare in the world at the top end. If you want a hip replacement, you get it here.

WILLIS: Roy, what do you have to say?

SEKOFF: Well, I was saying, on the other side we have Mitt Romney and one of Mitt Romney's calling cards is that as governor of Massachusetts he got a universal healthcare proposal passed and that's one of his signature achievements. So, in that way, I think it's not so easily divided.

HOLMES: I don't think it's so easily divided. We can talk about putting more transparency into the system, so for example if you're paying for your own health insurance, that you can go on the Internet, you know, put in health insurance and be able to look at plans across the country.

As it stands, states, they regulate and they control that and that, again, it's a way that you're driving up healthcare costs, when if you had more transparency you could be driving it down. The big debate, of course, betweens Republicans and Democrats is Republicans are talking about lowering costs and Democrats are talking about expanding insurance at the expense of the taxpayer.

WILLIS: And obviously, that drives the costs up. I want to give Jack an opportunity to get in here, though.

OTTER: Well, absolutely right. I mean, that's the problem, if we want to give healthcare insurance to everybody, it's going to cost us money. There's just no two ways around it. And also, there is always the danger of pushing incentive away from, say, drug companies developing new drugs, from radiology machines getting better to give us better healthcare. There's some very serious philosophical questions that the electorate is going to be faced with in this election.

HOLMES: But I got to jump in there, Gerri. P.J. Orourke has a great line about this. If you think healthcare is expensive now, wait until it's free.

OTTER: Exactly.

WILLIS: Well, there's that and there's also the expanding healthcare, Medicare and Medicaid and how we pay for that. You know, we often don't talk about those programs. Is there some issue there that should be on the table, here?

(CROSSTALK)

HOLMES: I can jump in.

WILLIS: Jump in, Amy.

HOLMES: I'd like to jump in and say a Republican controlled Congress passed the Medicare prescription drug plan in part because if you can get seniors on those preventative medicines, that will reduce healthcare costs. They're expanding accessibility to those medicines and you're, you know, hopefully helping out the system. There seems to be some evidence of that that's happening.

UNIDENTIFIED MALE: And it's also been a disaster.

(CROSSTALK)

WILLIS: Thank you.

You guys are great, just great panel. I really appreciate your help, today.

You can hear much more about the impact of this week's news on your money on YOUR MONEY with Christine Romans and Ali Velshi, Saturdays at 1:00 p.m. Eastern and Sundays at 3:00, right here on CNN.

And make sure you stay with CNN for the latest on Super Tuesday. The best political team in television going for 40 live, consecutive hours, starting at 6:00 a.m. on Super Tuesday.

And 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 catch us on HEADLINE NEWS every Saturday and Sunday at 3:30 p.m. Eastern Time. Don't go anywhere, your top stories are next in the CNN NEWSROOM. Have a great weekend.

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