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Issue Number One
Clinton on the Economy; Hardest Hit by Gas Prices; Courthouse Auction; Jobs for Military Vets; The Buck Stops Here
Aired March 27, 2008 - 12:00 ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
SENATOR HILLARY CLINTON (D) PRESIDENTIAL CANDIDATE: Second, we'll help create and keep good jobs right here in North Carolina and across America. We're going to fight for every single job and create millions of new high-paying jobs that can't be outsourced. People ask me all the time, how will we create these new jobs?
We'll start using our ingenuity again. We'll start being innovative again. I believe we can create at least 5 million new jobs from clean, renewable energy. And other countries are ahead of us and working much harder than we are toward that kind of goal. We will work and achieve universal health care and provide - we're going to provide small businesses with tax incentives so they can insure their employees. They won't be required to, but the plan will enable everyone to go into the same kind of health care options that members of Congress and Federal employees have today. You already pay 75 percent of that.
We'll end the huge tax breaks and giveaways to the drug companies, the insurance companies, to help pay for that kind of universal health care. This is not only the morally imperative step to take. I, for one, who has worked on trying to get health care to people, not only those who are uninsured, but people with insurance who have no way of getting the insurance company to pay for their doctor, their hospital visits, that they or their family needs. I could stand here all day and tell you stories about family members who called me and said what have I done wrong, senator? I've always paid my premiums. I've never had any problems. I have the same policy through my employer that I've had for years. We've never need it. We've been a healthy family and now my son needs a serious operation and the insurance company says they won't pay for it. I hear that so often and it's not something that we should be hearing in America.
Everyone should be insured. And the decisions about what you need for health care should come from doctors and nurses, not insurance companies. And we're going to change this. But it's not only the morally right thing to do. It is economically smart thing to do. Because too many of our businesses are burdened, particularly our manufacturing sector, by having to pay for health care. Many of them try to continue but a lot of them have had to cut back. I think universal health care will help us keep manufacturing jobs and other jobs here in America and help small businesses actually grow and hire more workers.
I'll work to end the massive budget-busting tax breaks for big oil. It's extraordinary that in 2005, in what I think is rightly called Dick Cheney's energy bill, we gave billions more in tax breaks to oil companies. I voted against that for many reasons. Well, we have to take those back. The oil companies don't need your money to make these huge profits. Last year ExxonMobil reported the largest profits in history of any U.S. company, more than $40 billion. Meanwhile, North Carolina has experienced the highest gas prices in history. I think it's time that these companies paid their fair share for our clean energy future and I want to commend North Carolina for recently launching a green building fund. That's an important step.
But you deserve a partner in the White House. That's why I have proposed a $50 billion strategic energy fund. We'll pay for it by eliminating the $7.5 billion a year in tax breaks that oil companies get and by giving the oil companies a choice. They will either invest in clean energy and become part of the solution or we will tax their windfall profits and put those to work for a clean energy future. And you know what I love about this, is that it does so much for our country. It begins to end our addiction to foreign oil, which is important for our security. It gives us the opportunity to begin taking seriously global warming and other environmental challenges and it helps to create jobs that are going to stay right here in the United States.
Among those, more than 5 million jobs that I think we can create, there would be jobs retrofitting public buildings to be more energy efficient, jobs weatherizing homes to save more money on heating and cooling bills, jobs to reopen shuttered factories to build the clean energy technologies of the future. You've heard of white-collar jobs and blue-collar jobs. How about creating tens of thousands of green- collar jobs right here in North Carolina?
I was one of the authors of legislation to train workers for these new jobs. There is so much potential in this for North Carolina. Biofuels, for example. Here at Wake Tech, students are studying sustainability. Bud Burton whom I met, an instructor at Wake Tech, an architect in landscape architecture is here today. He's working with his students on green building design. All new buildings right here will be lead (ph) certified. That means they'll get the highest marks as being environmentally efficient and therefore cutting the amount of greenhouse gas emissions that they send into the atmosphere. The new northern Wake campus is among the first in the nation to meet the lead standard campus wide. So congratulations Wake Tech!
BETTY NGUYEN, CNN ANCHOR, NEWSROOM: You've been listening to Senator Clinton speak today, many issues on the economy. She spoke specifically about a number of them. We've been listening not only to her speech on the economy, but also Barack Obama's speech on the economy today. Of course, it is issue number one in fact. We have much more on that issue, the economy, folks. That's coming your way in about 30 seconds from now.
TONY HARRIS, CNN ANCHOR, NEWSROOM: I'm Tony Harris, along with Betty Nguyen. Issue number one, the economy, is next with Gerri Willis and Ali Velshi. We'll see you tomorrow.
(COMMERCIAL BREAK) GERRI WILLIS, CNN ANCHOR, NEWSROOM: Welcome to issue number one. I'm Gerri Willis. Ali Velshi will be along in just a moment. Two dueling speeches today from the Democratic candidates in the race for the White House. Senator Barack Obama is back on the campaign trail after a quick vacation break and he wasted no time getting back to issue number one. That's the economy. Suzanne Malveaux, part of the best political team on television, is here with more. Hi there Suzanne.
SUZANNE MALVEAUX, CNN CORRESPONDENT: How are you doing?
WILLIS: Good to see you. Fascinating conversation this morning, billed as major policy addresses. What did you make of it?
MALVEAUX: It was politics all around. We've heard some of this before, some of it was new. We heard from Hillary Clinton just moments ago. She talked about specifically the housing crisis, that 90-day moratorium on foreclosures. We also heard the figure of $30 billion to essentially bail folks out of this problem.
Earlier today Barack Obama essentially agreeing with her on a number of points, one of them is that is -- they both say this is George Bush's fault here, the Iraq war costing billions of dollars and also the fact that the wealthiest Americans are getting those tax breaks. So what did he talk about? He talked about this $1,000 tax credit for working families. He talked about retirees essentially getting tax breaks as well and then he also dealt with this housing crisis. A couple of things that he talked about, essentially bankruptcy reform which was a big thing and then also increased regulation. I want you to take a listen to what he said earlier.
(BEGIN VIDEO CLIP)
SEN. BARACK OBAMA (D) PRESIDENTIAL CANDIDATE: The American economy does not stand still and neither should the rules that govern it. The evolution of industries often warrants regulatory reform to foster competition. Lower prices are (ph) replaced outdated oversight structures. Old institutions cannot adequately oversee new practices. Old rules may not fit the roads where our economy is leading.
(END VIDEO CLIP)
WILLIS: All right. So fascinating conversation here. Obama really talking about regulation obviously. But I have to tell you, listening to both these speeches it really sounds like they're stump speeches. Are they breaking new ground here?
MALVEAUX: They are breaking new ground only in the sense that they are calling for specifics. He talked about a greater role when it comes to the Federal Housing Administration and refinancing, but both of them, their plans are very, very similar. It is about the role of government. They are talking about more money. They are talking about investing. We heard from McCain, John McCain, who simply said he is open to all proposals but they are talking about accountability and they don't necessarily believe that raising taxes or even throwing more money at this is necessarily going to solve the problem. They say that really they have to hold those lenders, those irresponsible lenders, accountable and responsible for bad behavior. We'll see what really happens and what really works here. Ultimately they don't have a lot of power to do anything right now. They're just bringing out these proposals and seeing which one sticks.
WILLIS: Suzanne, thank you for that. We appreciate your expertise. Ali, over to you.
ALI VELSHI, CNN ANCHOR, NEWSROOM: Thanks Gerri, a short time ago Senator Hillary Clinton took to the stage to lay out her own thoughts on the economy. CNN's Dan Lothian is live right now with the CNN election express in Philadelphia and he's been following that speech. Hi, Dan.
DAN LOTHIAN, CNN CORRESPONDENT: Hello, Ali. Indeed, she was trying to lay out the case that the economy is certainly bad and so much needs to be done in order to turn the economy around. And she was very critical of the oil companies pointing out they have made billions of dollars but yet continue to get tax breaks. She says that's money that can be redirected into really shoring up and creating a sound energy policy. She also criticized tax loopholes that she believes sends jobs overseas and she says that money can instead be redirected to creating more jobs here domestically.
One other point too she's been talking about is helping workers who have lost their jobs. She's talking about this proposal of $12.5 billion over five years to help workers who have been displaced. And finally, something that has worked for her in the past, that 3:00 a.m. call commercial that was so successful in her campaign earlier, rolling it out again today talking about how sometimes when that 3:00 a.m. call comes to the White House, it is an economic crisis and she points out that she is the best candidate to deal with that crisis. Ali?
VELSHI: Dan Lothian, thanks so much. Dan Lothian is with the CNN election express in Philadelphia.
It's time now to break it down and find out if the candidates are on the right track when it comes to issue number one. But first I want to show you something that our CNN contributor Roland Martin said yesterday just as we were ending issue number one. Listen to this.
(BEGIN VIDEO CLIP)
ROLAND MARTIN, CNN CONTRIBUTOR: You know what Ali, here's the challenge to Senator John McCain, Senator Clinton and Obama. Why don't you stop giving speeches and the three of you go before your members and say pass the FHA overhaul bill.
(END VIDEO CLIP)
VELSHI: They didn't take the first piece of that advice. Roland Martin is with me again from Chicago, CNN contributor. Roland, let's talk a little bit about this FHA because you think this is a big deal. The FHA, the Federal Housing Administration, it acts as an insurance so that when you get a loan from a private lender, if something were to go wrong, you paid a little bit of a premium to the FHA and the FHA will make sure that the bank gets paid. It basically allows people who are a little more at risk to get those loans that they otherwise might not have been getting.
MARTIN: Yeah. But what it also does, right now the FHA has a default rate of about 2 percent compared to the sub-prime market 5 percent. Also the FHA right now is limited to loans about $360,000, whereas you have other folks able to give above that. So people who live in California and other places where housing numbers are real high, they can't get those loans. Another critical thing Ali, people who get an FHA loan, they must put some money down. Many of the problems with these sub-prime loans, it was no money down. People thought, hey, this is a great deal. They are able to say, no. If you're able to afford a home, put some money down. Now we can help with you.
Ali, I had Alphonso Jackson, the secretary of HUD on my radio show in January but also June of last year. He said he supports this, but Congress hasn't moved on it just yet.
VELSHI: Why not? Why hasn't Congress moved on what seems to be a good idea, making more loans available backed up by a government agency?
MARTIN: Well, because of course you have the banking industry. They've been lobbying intensively saying we don't want the Federal government involved. That's because they're able to get more of these loans. Again, because the FHA -- not 10 years ago the FHA contributed 19 percent in terms of the market share for single family homes. Today it's around 4 percent. So those lenders, they don't want the FHA involved. They want to remain private. So many of their supporters in Congress are saying, oh no, we don't want the government involved. But guess what's happening right now Ali? People are losing their homes. They're causing the market to be depressed. If I own a house on a block and I got eight, 10 houses that are being foreclosed on, guess what, my property values have gone down. Now people go into their homes, crime may go up. And so now we're going to do it anyway, so do it on the front end versus the back end.
VELSHI: And the front end is the FHA. It's a government agency. It's financed entirely by its premiums. It doesn't take taxpayer money, but in order to expand the FHA, Roland, won't we have to get taxpayer money involved?
MARTIN: Obviously we're going to have to do that. We got taxpayer money involved to guarantee what happened with Bear Stearns. We have to do something right now when it comes to the existing bankruptcies. The bottom line is we can't deny reality and the federal government is involved in so many different things. I got student loans when I was in college. Those are backed up by the Federal government. So it is a reality that we have the Federal government stepping in on society. Again the HUD Secretary Alphonso Jackson says he supports it. Many members of Congress, Democrats, they support it. The question is, will Congress move on this? If they had moved on it when it was introduced in June 2006, we might not have some of the problems we have right now. VELSHI: Roland, I hope the candidates are listening to you. I'm glad we got you back to clear this up a little bit and talk about an important issue, the FHA loans. Roland Martin, thank you.
WILLIS: As we remind you every single day, this show is all about you and we want you to weigh in. CNNmoney.com's Poppy Harlow is live at the cnnmoney.com set with today's quick vote. Hi there Poppy.
POPPY HARLOW, CNN CORRESPONDENT: Hi Gerri. Well, it's really no surprise that the top candidates for the White House are talking about issue number one across America, the economy. They've all laid out their plans for what they think will turn around America's $14 trillion economy. But an interesting note, none of the top three candidates have ever balanced a state budget or run a business. So do you like their plan? We want you to weigh in here. Our quick vote question today, which presidential candidate has the best plan to fix the economy, Senator Clinton, Senator Obama or Senator McCain. Log on to cnnmoney.com to vote. We'll be back a little later Gerri with the answers. While you're on the site, you can also check out the candidates' plans if you don't know what their plans for the economy are. We've got a lot of reports on our site Gerri, that people can use to figure out who they think has the best plan right now.
WILLIS: Poppy, thank you for that.
VELSHI: The middle class is feeling the heat of the economic problems in this country. So up next, where are some families turning for help.
Plus we're going to take you on the road to see how high gas prices are really hurting small town America. You're watching "Issue #1." Stay with us. We're coming right back.
(COMMERCIAL BREAK)
WILLIS: Welcome back to "issue #1." New figures released today by the U.S. Labor Department show a drop in filings for unemployment last week. According to the report, 366,000 people applied for first-time unemployment benefits. That's 9,000 less than the previous week and better than what many economists were forecasting.
VELSHI: Having to ask for help can be a shot against your pride, but for more and more Americans, they're having to put that pride aside just to help their families. CNN's Thelma Gutierrez is live in Riverside, California with more on that story. Thelma, what is it?
THELMA GUTIERREZ, CNN CORRESPONDENT: Ali, I'm standing in a food bank. This is the Second Harvest food bank and it's a 32,000-square foot warehouse that feeds about a quarter of a million people each and every month within Riverside and San Bernardino Counties. And the people here say that they've noticed an increase in need and an increase in the number of families who are coming to them for help. The majority are now middle class families.
(BEGIN VIDEOTAPE) GUTIERREZ (voice-over): A tree line street in the foot hills of Alstina (ph), California, one of the last places you might expect to find a middle class family struggling to feed themselves. But it's where they found homeowners Patricia Guerrero, a former loan processor, recently laid off from her $70,000 a year job.
PATRICIA GUERRERO, FOOD BANK RECIPIENT: It just happened so fast. It happened in a matter of two months.
GUTIERREZ: Less than 90 days is all it took for Guerrero and her husband to lose their middle class lives.
GUERRERO: We both had good jobs, both really stable, 401ks, looking forward to the future.
GUTIERREZ: Then her husband left. Now she's barely hanging on to her home. Her mortgage payments continue to go up.
GUERRERO: My mortgage right now is $2,500.
GUTIERREZ: That's only interest.
GUERRERO: Only interest.
GUTIERREZ: She began drawing unemployment. She rented out her mother's house and her mother Isabelle moved in to help her with the mortgage. She says she's lived off her tax refund for a month. That's gone, too.
GUERRERO: The rental and my unemployment are the only thing that cover my mortgage. Other than that, there's no money left. Zero.
GUTIERREZ: No money for food.
GUERRERO: No money for food.
GUTIERREZ: Utilities.
GUERRERO: No. Nothing.
GUTIERREZ: Patricia applied for food stamps but she says because she owns her own home, she was denied and says she found herself in a middle class no-man's land.
GUERRERO: I never used the system. I've been working since I was 15 1/2 years old. I need it now and it turned me down.
GUTIERREZ: She says she had no choice but to turn to her local food bank. She says it was one of the hardest things she has had to do.
GUERRERO: I just remember you take off the Tiffany bracelet and you take off -- you don't take in your Coach purse because it is not worth anything anyways. You don't got a dime in your pocket. When I walked in there I was very surprised on how they were and how wonderful this woman was that helped me and everything, and then she offered to pay my utility bill that month. I was like, wow. And it brought tears to my eyes. I sat there and I cried. I was like, this is really where I'm at? I go, no way. You know. This is true. This is reality. This is the stuff you see on TV. You know? And it was hard. It was very hard. But don't get me wrong, I was grateful. I was very grateful.
GUTIERREZ: Patricia Guerrero is eager to go back to work, to hang on to her home until the market turns. But for the single mom, every day it becomes harder to hang on.
GUTIERREZ: It's just depressing for me. I just don't want to get out of bad, but I have to. I have to.
(END VIDEOTAPE)
GUTIERREZ: Now Guerrero and some of the other families say what's really scary is that there is really not a safety net for middle class families. They're not eligible for a lot of government services because they have assets like a home. And Daryl Brock is the executive director of the food bank here. Darryl, you say you've noticed an increase in middle class families who are turning to you for help.
DARYL BROCK, EXEC. DIR, SECOND HARVEST FOOD BANK: Yes. We've noticed that our agencies are reporting approximately a 20 percent increase in request for food assistance in a variety of different programs because the people can't get assistance at other locations.
GUTIERREZ: How do you know they're middle class?
BROCK: Most of the agencies are telling us that they are seeing a different picture of people coming to their doors. They may be driving more newer cars. They may be a little bit better dressed than most people have been who come to their doors for assistance. The overall picture is that someone is a little bit financially better off but still in need because they cannot afford to pay for everything they need to.
GUTIERREZ: Right and Daryl, they don't qualify for anything else. Thank you very much. And Teresa Jackson is one of those middle class families. Teresa, you've worked full time, you work at a school. You also work within the time share business but you say when that took a hit, so did you. How did you find yourself coming to a food bank?
TERESA JACKSON, FOOD BANK RECIPIENT: Well, I actually the real estate business went down, took a hit really hard and that affected one of my checks really bad. So I mean I was finding myself not able to make ends meet. Just not knowing on a day to day basis how the family was going to make out and I needed assistance. Through one of my bosses I was able to find the food bank and very happy that they were able to help me.
GUTIERREZ: Teresa, thank you very much. Ali, most of these people are saying they'd never expected that they would find themselves at a food bank. I mean these are people who went on vacations, as Teresa told me earlier. She would go shopping every month, spend lots of money on shoes and clothing, many different luxuries she can no longer afford. Back to you.
VELSHI: Thelma, every month we see the numbers of the towns that have the greatest number of foreclosures. And Riverside, San Bernardino do tend to end up at the top of that list. So even people with homes, that don't have the option that you might think they have with just selling that home and moving into something else, perhaps they're under water or they just won't recoup the amount that they paid on that house. So that's another concern for these people, I suppose. Thelma, thanks very much.
WILLIS: And small town America is feeling the pain of rising gas prices. We'll show you firsthand the struggles of small business and we'll take you to the steps of one courthouse where, for some, their homes are being given away.
And send us your e-mails. issue1@cnn.com. Don't forget to include your name and state. Answers to your questions are coming right up.
(COMMERCIAL BREAK)
DON LEMON, CNN CORRESPONDENT: Hello, I'm Don Lemon live at the CNN world headquarters here in Atlanta with a check of the stories making headlines right now. Fast-moving developments coming out of Iraq today. A civilian spokesman for the Baghdad security plant was kidnapped from his home by gunmen. Three of his guards were killed. His house was burned down.
In Baghdad, thousands of demonstrators are taking to the streets. They're protesting the Iraqi offensive in Basra. The government is targeting what it calls outlaws in and around the oil port city. Fighting continues to rage in Basra for the third straight day. Iraq's prime minister has given militants an ultimatum to surrender their weapons by tomorrow.
Despite today's developments, President Bush points to progress in the Iraq war. Speaking last hour in Ohio, the president said there have been gains in security as well as economic and political strides. He says the U.S. troop buildup in Iraq is working.
(BEGIN VIDEO CLIP)
GEORGE W. BUSH, PRESIDENT OF THE UNITED STATES: General Petreaus and Ambassador Crocker will provide more details about the progress of the surge when they testify before Congress early next month. But this much is clear. The surge is doing what it was designed to do. It's helping the Iraqis reclaim security and restart political and economic life. It is bringing America closer to a key strategic victory in the war against these extremists and radicals.
(END VIDEO CLIP)
LEMON: The president says the progress in Iraq isn't glamorous but it is important. More news at the top of the hour, the breaking news when it happens right here in the NEWSROOM. Now back to issue number one with Gerri Willis and Ali Velshi. VELSHI: This is issue number one. Issue number one is the economy for many Americans. That means inflation and gas prices and many Americans are feeling the pain from rising gas prices. But the folks in one small Alabama town have been particularly hard hit.
ALI VELSHI, CNN ANCHOR: Cnnmoney.com's Steve Hargreaves spent some time in Camden, Alabama. Here's his CNN Money reporter's journal.
(BEGIN VIDEOTAPE)
STEVE HARGREAVES, CNN CORRESPONDENT, (voice over): The town of Camden, Alabama, stands out as a classic slice of rural America. But in this time of record gas prices, it also stands out for a different reason.
You guys in Wilcox County pay a higher percentage of your paycheck for gas than anyone else in the nation.
UNIDENTIFIED MALE: Yes.
HARGREAVES: Does that surprise you?
UNIDENTIFIED MALE: Yes, because this is really a low budget town, you know what I'm saying?
HARGREAVES: Right.
UNIDENTIFIED MALE: There's no good paying jobs around here. The only thing around here is like minimum wage jobs.
HARGREAVES: And you bring home 240-something.
UNIDENTIFIED MALE: Yes.
HARGREAVES: So a $30 increase in gasoline, that's going to hurt, huh?
UNIDENTIFIED MALE: Yes, it hurt. It really did.
HARGREAVES: Have you had to cut anything out, like in terms of your personal budget?
UNIDENTIFIED MALE: Oh, yes. Yes, we've had to cut back.
HARGREAVES: What have you stopped doing?
UNIDENTIFIED MALE: Oh, a lot of times I've even stopped -- with my boat, going fishing.
UNIDENTIFIED FEMALE: A lot of shopping. Cut back on groceries. Doctor bills.
WILLIAM MALONE, WILCOX AREA CHAMBER OF COMMERCE: I'm definitely seeing people making a switch to more fuel-efficient vehicles. They're parking the SUV and they're buying a car that they can run around during the week and put more miles on, trying to save a few dollars in gas.
HARGREAVES: So the residents here, like others around the nation struggling with the high cost of fuel, are cutting back on expenses.
MALONE: In this area, we don't have a lot of shopping. We don't have a lot of -- we don't have the movie theaters and maybe some of the other recreational venues. And people have to drive 40, 50 miles, maybe a little farther, for what they're looking for. And I think they're not doing that as much.
UNIDENTIFIED FEMALE: (INAUDIBLE) bad the last couple of days. I mean one (ph) month it was bad. And then, after that, gas prices, I'm assuming, couldn't get out.
HARGREAVES: As business cools, local governments struggle to make up the lost revenue. In Camden, sales tax receipts fell 5 percent in December, the first drop in seven years. In February, they fell another 2.5 percent. With revenue falling, the city struggles to pay the bills.
MAYOR HENRIETTA BLACKMOS, CAMDEN, ALABAMA: We have police cars, we have trucks, city trucks, we have garbage trucks and we're paying, you know, gas and diesel for that. So that is going to hurt us.
HARGREAVES: A tax hike isn't in the cards yet, but for Camden residents, any tax increase would only add to the burden of high gas prices, an all-too familiar sign of an economy trapped in recession.
(END VIDEOTAPE)
VELSHI: Steve Hargreaves joins me now from CNN Money. The issue here, of course, is that when we're all pay a roughly average price of gas, even though there's a big swing, when you're in a place like that where he was saying they're minimum wage jobs, they're not high-paying jobs, the proportion that people pay is higher than it is let's say somewhere in New Jersey.
HARGREAVES: Right. Definitely. The people down there, I think, were paying about 13 percent of their income goes right to the gas bill. That compares to about less than 2 percent in some wealthy towns around New York City. So the discrepancy is big. And, I mean, you look at the actual numbers, you know, these people down there are paying $60 a week on gas. But when you're only make $220, $240 a week, you know, it's a lot of money. It's a big chunk of your paycheck. And it's really starting to hurt.
VELSHI: And you pointed out where it's coming out. It's coming out of people going to the restaurant or the cafe. It's coming out of the tax base. So it affects everybody all around. They also don't have the same options that we've got up around here in terms of changing to public transport. So they are driving their car many miles a day.
HARGREAVES: Right. Right, they are. That's all part of it. Low-income, far places to go to drive to work. You know, all these things come together.
VELSHI: Good slice of what life in places that are affected by the high price of gas.
Thanks, Steve. Steve Hargreaves.
If you want to see more of that, check in with cnnmoney.com.
Gerri.
GERRI WILLIS, CNN ANCHOR: Up next, imagine losing everything you own -- everything -- on the courthouse steps. More and more it's happening to Americans. We'll take you there.
And why members of the military are having a really tough time getting a job interview, let alone the job itself.
(COMMERCIAL BREAK)
VELSHI: We've got a CNN Special Investigations Unit special event tomorrow night right here on CNN at 8:00 p.m. Eastern. It is all about the mortgage meltdown and the subprime mess that got us into this whole thing.
Gerri, you were involved in putting this together.
WILLIS: You bet. You know, we heard so many sad stories from families. We saw families losing their homes on the courthouse steps. Check it out.
(BEGIN VIDEOTAPE)
WILLIS, (voice over): Atlanta, Georgia. The first Tuesday of any month sounds like this.
UNIDENTIFIED MALE: Electronic ranch station system.
WILLIS: Today, 4,000-plus homes are about to foreclose on the courthouse steps.
UNIDENTIFIED FEMALE: Are there any further bids?
WILLIS: Georgia is one of only nine states that sells off distressed properties outside the court.
UNIDENTIFIED MALE: The opening bid for this property is $105,068.44.
WILLIS: Homes are sold to the highest bidder.
UNIDENTIFIED MALE: Going once.
WILLIS: And if no one bids . . .
UNIDENTIFIED FEMALE: Sold to Medachi (ph) Financial.
WILLIS: It's the property of the lender.
VICTOR WARREN, INVESTOR: Let me know when you bought something.
WILLIS: Victor Warren and his wife, Robin, have spent Tuesdays on the steps for the last 26 years.
WARREN: So where I was willing to pay three . . .
WILLIS: He buys foreclosed homes and tries to sell them for a handsome profit.
How much are you prepared to spend today?
WARREN: There's over two commas here.
WILLIS: So over a million dollars?
WARREN: That's correct.
WILLIS: Victor has an ear on every crier.
UNIDENTIFIED MALE: 765 Coleman (ph) Street.
WILLIS: The lawyers representing the lenders.
What happens to you that you find your house being foreclosed on in this public fashion?
WARREN: Well, first of all, you would have had to have missed typically one or more payments. Sometimes up to six payments.
WILLIS: That's right. Here in Georgia, miss a few monthly payments, and 30 days later your home could end up here. Homeowners have always ended up here after the loss of a job, a divorce or an unexpected illness. But in the last two years, foreclosures in metro Atlanta have more than doubled. Why? Because of subprime loans.
WARREN: Give me a little time once you find out a bid, if you will.
UNIDENTIFIED MALE: I will.
WILLIS: Loans designed for borrowers who Andy Shuping describes as . . .
ANDY SHUPING, CRIER: People with credit scores demonstrated an inability to pay their debts were buying houses. WILLIS: And here we are today.
SHUPING: Right. The pressure, I think, in society was to get people in houses. This is a segment of society, but there are a lot of people that are just one notch above who are struggling in actually making those payments.
(END VIDEOTAPE)
WILLIS: Make sure you watch Friday, 8:00 p.m. Eastern, CNN Special Investigations Unit, "Busted: Mortgage Meltdown." That's 8:00 p.m. Eastern Time right here on CNN.
VELSHI: All right, that's worth the watch.
Up next, why members of the military are running in a serious road block looking for a job after leaving the service.
And we'll be answering your e-mails. Issue1@cnn.com is the address. Keep them coming. We'll keep on giving you answers.
You're watching ISSUE ONE.
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VELSHI: Reentering the working world from the military has always been a challenge. For starters, 50 percent of young veterans make less than $25,000 a year. And those are the ones who actually get a job. But for many folks back from the Army, Navy, Air Force and Marines, they're leaving the service and having a very tough time finding work, and not for the reasons you may think. CNN's David Mattingly has the story.
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DAVID MATTINGLY, ABC CORRESPONDENT (voice over): After surviving endless months under fire, rescuing the wounded in Iraq, Flight Medic Sergeant Kristen Sketchley thought she was ready for anything.
KRISTEN SKETCHLEY, U.S. ARMY VETERAN: The stress of war is unlike any stress that you've ever felt in your whole entire life. And, you know, I'm sure that anything that the civilian life could throw at me would be a breeze.
MATTINGLY: And at first, civilian life looked pretty good. Sketchley came home to a hero's welcome. She had earned the military's highest non-combat honor, the soldier's medal for bravery.
SKETCHLEY: He said that you were awarded the soldier's medal.
MATTINGLY: That was Sergeant Sketchley four years ago telling her story on CNN. This is her today, wearing a new uniform and delivering pizzas.
SKETCHLEY: I saved lives. I did great things for this country. And now I deliver pizza. And that -- it's not a bad job, I'm thankful to have one, but it's a lot different than, you know, feeling like I'm worth something.
MATTINGLY: A recent report for the Department of Veterans Affairs found nearly one in five, a full 18 percent of recently separated service members, are unemployed. And of those who could find a job, one in four earns less than $22,000 a year. The report, in part, blames employers and negative stereotypes.
WALTER WILLIAMS, COUNSELOR, SWORDS-TO-PLOWSHARES: The war and PTSD and all these negative connotations that are connected to us, and that's what they think. And if they have someone who has the same skill base and doesn't have those issues, why not hire them.
MATTINGLY: Walter Williams was also unemployed after leaving the Army until he found work offering job counseling to other vets. He agrees with the report recommendation that the job should do a better job of marketing vets, like Kristen Sketchley, to prospective employers.
So, what is the Department of Veterans Affairs doing?
Keeping them honest, we find that six months after the report was released, the VA says it's still digesting the findings. We were told to go to the Department of Labor for any questions about veterans and unemployment. And surprisingly, Labor tells us the VA report is wrong. That almost half of those out of work vets aren't looking for work at all and shouldn't be counted as unemployed.
Sketchley says she stopped counting how many resumes she's sent out.
You served your country.
SKETCHLEY: Absolutely.
MATTINGLY: Is your country serving you?
SKETCHLEY: At the moment, I don't feel it.
MATTINGLY: Every day she pours over job listings and struggles to make a living. The years of rejection have taken their toll.
SKETCHLEY: It wears on you. It just makes my self-esteem just has -- I just -- I feel like a loser.
MATTINGLY: Sketchley left the ranks of the armed service only to drop in and out of the ranks of the unemployed. A decorated war hero who now feels all but defeated.
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MATTINGLY: Kristen Sketchley, at this point, doesn't know what she'll going to do next about this. But even sadder, Ali, she's sort of fallen off the government's radar. Because she is fighting to stay employed any way she can, she will not show up on labor statistics as "unemployed."
VELSHI: Interesting and very important point on that one, David. Thank you very much. A great story you brought us. David Mattingly.
Gerri.
WILLIS: Coming up, it's time for the help desk. The address, issue1@cnn.com. We're going to answer all your questions.
Plus, why a trip to Europe is starting to be out of the question for many Americans.
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WILLIS: All right. The help desk is open for business and we're answering all of your e-mail questions. Today we're joined by best- selling author Lynnette Khalfani-Cox, Stephanie Auwerter from "Smart Money" magazine and Michael Santoli of "Barron's."
Welcome to you all. Thanks for being here.
So let's get right to the e-mails. The first one is from Mark in Oregon who asks, "how is it that someone like myself, who has perfect credit, can only get a credit score of 825? And, why is it that if I want to cancel a credit card that I no longer use, it will lower my score?" What's going on here? Is there some sort of back room deal between the banks and the credit companies to keep people from canceling their cards?
Lynnette, this is, you know, an interesting question. I thought you could have fun with it.
LYNNETTE KHALFANI-COX, AUTHOR, "YOUR FIRST HOME": Well, first of all, I got four words for you -- don't worry about it. Eight hundred and twenty-five is a phenomenal credit score.
WILLIS: It's very good.
KHALFANI-COX: Your FICO score ranges from 300 to 850 points. So you are in the perfect range. Seven hundred and sixty to 850 is just perfect. I checked my score this week. I had a 788. So, trust me, you're doing well on that.
WILLIS: But, you know, you can just hold on to those credit cards, right? You don't have to cancel them. Because as the companies take this into consideration.
KHALFANI-COX: Right. And in a nutshell, here's the reason why you don't want to cancel those credit card accounts. Fifteen percent of your credit score is based on the length of your credit history. So it sounds counter-initiative. But when you close out those accounts, that's a bad thing.
WILLIS: That's a bad thing?
KHALFANI-COX: Yes.
WILLIS: All right. Let's go on to the next e-mail. Fred asks, "I am planning to retire in two years. We have investments in IRAs. I am not worried about that money growing, but I am concerned about my dollar being worth anything when I retire." What good is a truck load of money if I have to use it all to buy a loaf of bread?
Mike, inflation, it's a killer for seniors.
MICHAEL SANTOLI, "BARRON'S" ONLINE: Yes. Well, and especially in things that are necessities. Food and gasoline are the main things that have been going up a lot in price. I would say to keep in mind that maybe the only good side effect of an economic slowdown or a recession is that it usually cools the inflation pressures. We probably are going to see that now that commodity prices keep going up. But everything else seems like the prices should be moderating. In fact, today's economic report from the fourth quarter showed a little bit of moderation. So we can keep our fingers crossed that it's not going to be a spiral out of control.
WILLIS: Hey, good news. I'm glad to hear it, you know.
Jim in Georgia asks, "I saw the ad on TV for 'reverse mortgages' and am thinking about it to help my daughter go back to college. I own a $150,000 home that is paid for. Are 'reverse mortgages' safe?"
Stephanie, what do you think?
STEPHANIE AUWERTER, SMARTMONEY.COM: Well, question number one is whether he would even qualify. You need to be 62 years old to take out a reverse mortgage. Then there's also this saying in personal finance that there are loans for college but there are no loans for retirement. I understand (ph) in certain scenarios of the reverse mortgage, but it's really for living expenses for yourself, not for things like college bills.
WILLIS: Great ideas there.
All right. Let's go to Dennis in Texas. "Does transferring balance to a zero percent credit card often affect our credit rating?"
Lynnette.
KHALFANI-COX: Yes, it can because when you open a new credit account, there's an inquiry that's going to go on your credit report and that can lower your FICO credit score, especially if you do it too many times.
WILLIS: All right. Keep that in mind.
And another e-mail from Rick. "With all the talk of the mortgage meltdown and falling home values, one wonders whether we've hit bottom yet. Would we be better off renting for a year rather than buying a home now?"
Mike, what do you say?
SANTOLI: I don't think there are many signs that the true bottom in housing have been hit. I don't think you're really going to be penalizing for waiting a year, except, obviously, you're not building up home equity if you're renting in the interim. It seems to me it's going to take lower prices, plus time, before we really have to worry about prices going up again.
WILLIS: But good interest rates right now.
SANTOLI: Yes.
WILLIS: Let's go to John's e-mail. "Why are we looking to the government to solve every issue we dislike with the marketplace? What happened to capitalism, and is this what our founding fathers intended?"
This is more in the way of a statement, rather than a question. But, Mike, this sound like it's up your ally as well.
SANTOLI: Well, a little bit. Look, nobody wants the government to be back stopping economic activity. But this is actually the reason the Federal Reserve exists is to prevent financial panics from spreading across the economy. That was the concern when we had this little Bear Stearns payoff and all the rest that, in fact, it was going to hurt people who didn't do anything wrong.
WILLIS: Well, Stephanie, Lynnette, Mike, thanks for your help today. We really appreciate it. Great answers.
VELSHI: Gerri, were you were in ,Chicago I was handling those e- mails. You do it way better than I do. I enjoyed that.
Coming up, though, I'm going to take you on a trip to Italy. The land of pasta. Very expensive pasta if you're from the United States. How Americans are handling the decreasing value of the dollar when we go abroad, coming back on ISSUE NUMBER ONE.
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WILLIS: You're looking at today's Quick Vote results. We asked, which candidates is best suited for fixing the economy? More than 40,000 of you logged on to cnnmoney.com to cast your vote. Thirty- eight percent of you said Senator John McCain is best suited. Thirty- two percent said Senator Barack Obama. And 30 percent voted for Senator Hillary Clinton.
Ali.
VELSHI: Hi, Gerri.
If you think driving in the U.S. is expensive, try flying anywhere, especially overseas. Americans are finding out that traveling to Europe is not just expensive, it's a little bit obscene. CNN Rome bureau chief Alessio Vinci has this story.
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ALESSIO VINCI, CNN CORRESPONDENT, (voice over): Nothing will spoil Judy and Jennifer's Roman holiday, but the thought of a weak dollar is difficult to digest. So instead of a sit-down lunch, a quick, cheap sandwich will do for today.
JUDY MAZER, TOURIST FROM CHICAGO: Save a little bit of money so that maybe we can spend a little bit extra on dinner.
VINCI: From food to fashion, American tourists are thinking twice about every dollar and euro they spend. That leather bag you always wanted to buy in Italy. Not this trip. Certain souvenirs will just have to wait.
JENNIFER SUTHERLAND, TOURIST FROM CHICAGO: I made the decision that I wasn't going to change my plans radically, but I am very conscious of additional purchases.
VINCI: This may not be the right time to spend when even a can of soda can cost you more than twice the price back home.
CAROLYN SZEWBOLSKI, TOURIST FROM PITTSBURGH: It's terrible. The American dollar is terrible here. I mean I would certainly buy a lot more if the value of the American dollar was better. Definitely buy more.
VINCI: An estimated 4.5 million American tourists visit Italy each year. Tourism officials say so far they have seen a 5 percent drop in that number. American tourists here in Italy spend an estimated $10 billion each year.
EUGENIO MAGNANI, GENERAL DIRECTOR, ITALIAN TOURISM BOARD: We want them to keep concentrate on Italy as a travel destination. So the Italian autoleers (ph) are very, very sensitive to the American. They will keep an eye on them and they will keep the price very, very firm. No increase on the price.
VINCI: One suggestion to save money, book your vacation with a tour operator in the U.S. and pay for it in dollars before leaving. And if Rome is on your itinerary, here is another suggestion.
Traditionally, if you want to return to Rome, you must throw a coin into the Trady (ph) Fountain. But with the current economic crisis, you want to be careful about how much you toss. For example, this 2 euro coin is the equivalent of more than $3 U.S. So if you do want to come back, keep a quarter handy and start saving now.
Alessio Vinci, CNN, Rome.
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VELSHI: He tells such a great story, but these stories kill me because I'm all about traveling. And this year I've learned all about traveling in the United States, which is fantastic.
WILLIS: You know, you have to take a stay-cation!
VELSHI: That's exactly right.
WILLIS: Where you say home, you can spend a little more money on . . . VELSHI: Don't burn gas and go and eat lovely Italian food in New York. Well, that's what I'm going to do this summer.
WILLIS: All right. ISSUE NUMBER ONE and CNN is all over it.
VELSHI: We'll be back here tomorrow, same time, 12:00 Eastern. Time now for CNN "NEWSROOM" with Don Lemon and Brianna Keilar.
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