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ISSUE NUMBER ONE
Fight For Pennsylvania Continues; Economy & the Election; Getting the Youth Vote
Aired March 31, 2008 - 12:00 ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
TONY HARRIS, CNN ANCHOR: Hello, everyone. I'm Tony Harris in the CNN Center in Atlanta.
Time for a check on the stories we're working on in the NEWSROOM.
Dangerous weather threatening the Midwest today. Meteorologist Jacqui Jeras in the severe weather center tracking it all for us. Quite a story developing in the Midwest -- Jacqui?
JACQUI JERAS, AMS METEOROLOGIST: Yes absolutely. In fact, we've been tracking the tornado for ten miles now here. You can see the town of Willard. It started over here in Miller and has been tracking east-northeast since that time and has a history of producing damage. In addition to that, we saw a funnel cloud by a storm spotter reported here near the town of Willard.
A very dangerous situation in Greene County, Missouri. To the west of there, over into the state of Kansas, we've got a tornado warning there as well. This is in Crawford County. Here's a town of Garrard, possible tornado reported there. From Oklahoma City, all the way up into north central parts of Missouri, tornadoes will be possible throughout the afternoon -- Tony.
HARRIS: OK. Jacqui, appreciate it. Thank you.
U.S. airline discovers faulty wiring in the landing gear of some of its planes a short time ago. United Airlines said it has found faulty wiring in three planes, all were airbus A-320s, airline and government officials believe the faulty wiring caused a pair of runway accidents. There were a couple of minor injuries in those incidents. News update at the bottom of the hour.
Now, "ISSUE #1" with Ali Velshi and Gerri Willis.
ALI VELSHI, CNN ANCHOR: A new proposal, the biggest of the overhaul of financial regulations in 75 years. But what does it mean to you? We're putting the presidential candidates through the ISSUE #1 fact check. Why the youth vote is making a huge difference in the race for the White House. ISSUE #1 is the economy. ISSUE #1 starts right now!
Welcome to ISSUE #1. I'm Ali Velshi. Gerri Willis will be along in a minute.
It is being called the biggest overhaul of the financial regulatory system since the great depression. The Bush administration announcing a major plan that it hopes will cool off the mortgage meltdown and ease the credit crunch.
Let's get right to the White House. CNN White House correspondent, Ed Henry, has been working on this story since it broke Friday night.
Ed, what's the story?
ED HENRY, CNN WHITE HOUSE CORRESPONDENT: Ali, I heard you note earlier today that this is like after 9/11 when the government realized it had intelligence agencies but they could not detect or stop a terror attack so they decided to restructure a few years ago. Right now you've got an alphabet soup of economic watchdogs within the government, the S.E.C., the FDIC but yet they could not stop the current financial crisis. They're trying to streamline it.
The Treasury Secretary Henry Paulson worked on the proposal for a year, long before the current crisis. He say he wants to streamline things mostly by giving the Fed chairman Ben Bernanke more power, make the Federal Reserve sort of a supercop but this is not just about moving credit boxes around. It's about trying to restore confidence in the markets.
(BEGIN VIDEO CLIP)
HENRY PAULSON, U.S. TREASURY SECRETARY: Our markets work, people throw whole economy benefit, Americans seeking to buy a car or buy a home, families borrowing to pay for college, innovators on the strength of a good idea for a new product or technology. And businesses financing investments to create new jobs. And when our financial system is under stress, millions of working Americans bear the consequences.
HENRY: But a little bit of a reality check. Treasury officials are telling me, up front, they do not think that this massive plan is going to pass this year. So it's not going to get done before Mr. Bush leaves office. You have to look at it with a grain of salt.
Instead, what Secretary Paulson is trying to do here is get the ball rolling, get small things done but stake out some ground to maybe shape the debate for next year, another problem this White House is leaving for the next administration, Ali.
VELSHI: All right, Ed. That's a major announcement out of Washington. But there's another big announcement, the resignation of the housing secretary. Is that connected to this?
HENRY: It's not directly connected to this. But the question is, how will this affect the White House's approach, dealing with the housing crisis. It's had an impact in two ways.
First of all, critics of this administration particularly Democrats on the Hill have been saying that their signature program to help people who are underwater in their mortgages right now, the Hope Now Alliance has not helped enough people. They say that's because Secretary Al Jackson has been distracted by ethics allegations swirling around him. Secondly, now that he's stepping down, the administration has to find someone new. That's going to take some time it could take weeks or months because you have a Democratic Senate that might set up a confirmation battle. The longer they spend on the confirmation battle, the less time they have to focus on the housing crisis.
VELSHI: That's All right. Busy day for you Ed at the White House. Ed Henry, thank you.
HENRY: Thank you.
GERRI WILLIS, CNN ANCHOR: Let's put aside the political speech for a minute or two and address the issues. What is this plan missing? What does it mean for you?
CNN senior correspondent, Allan Chernoff, is here with more.
Hi, Allan. You know let's start with real people here. If I'm in trouble with my mortgage, if I'm at the brink of foreclosure, if I am under water on my loan, will this plan help?
ALLAN CHERNOFF, CNN SENIOR CORRESPONDENT: It certainly could if it's implemented in the right way. The whole idea here is to have financial stability. If you have financial stability, people can hold on to their jobs, companies can keep on growing and investors don't lose a pile of money if they're not being too risky. So stability, Gerri is very good for the economy and the average American, if they can achieve it.
WILLIS: But there's no direct money going to anybody in trouble right now. This is more about the regulations. What do the regulations say to investors, 401(k) holders? Will they help those people?
CHERNOFF: That's right. In this case, the treasury secretary is talking about perhaps merging the CFTC with the S.E.C., the Commodity Futures Trading Commission with the Securities and Exchange Commission. The S.E.C. has had a rules-based approach. They've been generally pretty vigorous in forces for investors. They've protects investors. Has the CFTC done as much? No way, not at all. And --
WILLIS: S.E.C. getting --
CHERNOFF: If the CFTC role here of principle-based regulation takes hold, investors will have less protection. This would not protect you and your money if that's how it turns out.
WILLIS: Who does get helped?
CHERNOFF: Mortgage origination, we're going to have more oversight, again, consider that this is all a blueprint, but if this were to go into effect, there would be much more oversight over mortgages being issued, exactly how our lenders doing this, are their financials stable? You would have the federal government look at finances and the practices of some of these mortgage originators.
That certainly could help. But it wouldn't necessarily, Gerri prevent the meltdown we've seen over the past few months.
WILLIS: Thank you for that. Allan Chernoff.
VELSHI: That's Larry Summers served as the treasury secretary for the last year and a half of the Clinton administration and joins us Washington.
Mr. Summers, thanks for joining us. Larry Summers is an economist at Harvard.
I've been sort of collecting information about this blueprint that Henry Paulson announced. I think your comment, one of your comments was the most entertaining. It's like reorganizing the fire department in the middle of the fire. Tell me a little bit more about what you think of this blueprint.
LAWRENCE SUMMERS, ECONOMIST: Look, I think the secretary's to be congratulated for initiating a broad debate on financial regulation. Frankly, for the near term, our priorities should be doing something to reduce the million foreclosures that people are looking ahead to, to address the stresses that communities, that students are feeling as financial markets dry up.
You know, it's an exaggeration. To some extent we've had the financial equivalent of hurricane Katrina here. Right priority isn't talking about the organization of regulations at this moment. But that time will come. And the secretary's to be congratulated for putting all of the issues out there on the table. There's some things that I think are good in this plan.
VELSHI: Such as?
SUMMERS: I think the idea that we're going to centralize consumer regulation and consumer protection in finance and we're going to do it in an agency that has, as its mission, consumers, not as -- not its main mission, working with financial institutions in the way that the Fed does. I think that emphasis on consumers is good.
You know, we have had a major sea change in the way our financial system operates in last three weeks. As we've established the principle that now the Federal Reserve's going to be in the business of loaning money not just to banks but loaning money to investment banks and other financial institutions as well. I'm not sure this proposal goes far enough in terms of regulatory protection.
SUMMERS: At a time when you've got that involvement.
VELSHI: That's part of the problem. I see what you're saying. It's probably necessary to overhaul the financial regulatory system. We know that needs to happen. Henry Paulson was clear about the fact that this is not about the current mortgage crisis or credit crisis that we're in right now.
Is this going to prevent one of nose downturns in the future? Is there something our viewers can take away and say, here's the necessary and the good in what's going on right now, as it connects to the economy today?
SUMMERS: I don't -- I don't think that this -- I think this kind of rearrangement is -- and streamlining is appropriate to think about it has good elements and elements that I wouldn't favor. I don't think it's realistic to think that this is going to prevent future financial -- future financial crises.
I'm not sure the governments have the capacity to prevent financial crises. I think what we can try to do is have more flexible tools, have tools that prevent consumers from being defrauded, that enable a more rapid response than we've had this time, as the problems started to mount.
I think we have got to be very careful. You know one of the problems is that when things go down in the name of prudence, there's a lot of pressure put on people to -- people and institutions to sell assets and that makes them go down further.
So what economists call the procipricality (ph) of regulation is something that's very fundamental and I'm not sure that this kind of rearrangement of the regulators quite gets it that core issue of procipricality.
VELSHI: Larry Summers, good to talk with you. Thank you for being with us. Larry Summers, former treasury secretary of the United States, now at Harvard University.
Now, all of this talk about a grand plan means nothing as Larry Summers says. If it doesn't work if it doesn't get to the nut of what it's trying to solve.
Peter Morici is at the University of Maryland Business School. He is a good friend of ours here.
Peter, you look at this plan that's being put out, is it a red herring, is it necessary, and will it work?
PETER MORICI, ECONOMICS, PROF., UNIV. OF MARYLAND: Well, it's certainly necessary. We have a hodgepodge of regulatory bodies, institutions that do the same thing, report to different regulatory bodies and we need to get that all consolidated, rationalized, straightened out. This would do that.
It puts a lot of new regulation on the mortgage rider, people that deal with consumers, that's a good thing. But it's awfully light on the activities of the investment banks, securities companies and banks in New York that bear a lot of culpability about the mess we're in right now. They lack credibility with fixed income investors and can't securitize loans into bonds so they don't have enough money to lend.
If we put this plan into place tomorrow wouldn't fix it at all. The Fed's not given enough enforcement authority with regard to institutions in the new plan. And that needs to be added.
So my feeling is that this is a beginning point for discussion, like Mr. Summers, I think the treasury deserves high marks for taking this initiative. But this does not preempt its other efforts. They are making efforts. The Democrats might like to do more. But you know you can have this paper and this discussion alongside that, it's not either/or.
VELSHI: Peter, so if someone has been following this and say it's great the federal government is taking steps to protect us from what's going on right now? Is that the federal government taking steps to protect the average Americans from the mayhem they've seen in the last year?
MORICI: No, it's not. The federal government is taking some steps with regard to mortgage riders, that's the good thing. As far as the nonsense, shenanigans and arcane behavior on Wall Street, this is financial regulation through the eyes of an investment banker. This gives the bankers what they want, fewer agencies to deal with clarification of the rules but not really new rules that again, that are going to constrain their behavior.
We're going to get structured investment vehicles. Credit defaults swaps that are impossible to understand and all of rest that got us into trouble. This doesn't fix that.
VELSHI: Thank you very much. Peter Morici at the University of Maryland.
WILLIS: It's your turn to weigh in on today's quick vote question. For that let's head over to Poppy Harlow on the CNNMoney.com set.
Hi there, Poppy.
POPPY HARLOW, CNN CORRESPONDENT: Hi, Gerri.
Well as you've been hearing for the show, Treasury Secretary Henry Paulson says because our current system was developed after the great depression to react to market stress it doesn't have capability to address modern, complex financial system we have today. We want you to weigh. We want to know, do you buy his argument?
Here's our Quick Vote question today: Should the Federal Reserve be given more power to regulate mortgages and the stock market?
Yes or no? Log on to CNNMoney.com to vote. We'll be back later in the show with answers.
While you're on our site, you can check out our in-depth analysis of the Bush administration's plan. Gerri, back to you.
WILLIS: Poppy, thank you for that.
Up next, checking in on the candidates and fact checking their plans for you. VELSHI: Plus, you get to send us an e-mail at email@example.com. Don't forget to include your name and state. We're going to answer what's on your mind coming up.
You're watching ISSUE #1.
VELSHI: A busy day on the campaign trail. Senator John McCain is on a five-state tour. In the words of his campaign, to reintroduce himself to voters. He's in Mississippi right now for several events today. This morning he spoke at Mississippi State University in Meridian, playing up his military heritage, noting that both his father and his grandfather were admirals.
On the latest round of the Democratic fight for the nomination, both Hillary Clinton and Barack Obama are in Pennsylvania site of next month's key primary. Obama held a town hall meeting in Lancaster this morning. Among other things, he says the Bush administration's proposal for overhauling the financial system doesn't go far enough. Clinton is holding two events this afternoon in Harrisburg and in Bucks County.
WILLIS: As the candidates talk about the various issues, especially the economy, you want to see if they're on the mark. That's why we have people like Bill Adair, editor of politicalfact.com.
Welcome Bill. Good to see you.
BILL ADAIR, EDITOR, POLITICALFACT.COM: Thanks.
WILLIS: OK. On your Web site you say a Cheney mill has been circulating that both Obama and Clinton's plans would increase taxes especially for all income brackets. Is that really the case?
ADAIR: No, it's not. And it's -- we gave it a false on our truth-o-meter. This chain e-mail has gone to lots of people. We got it from many of our readers.
I'm sure many of your viewers have seen it. It makes some claims that the Obama and Clinton plans would significantly increase the tax burden on people earning more than $30,000, but that's just not true. And it uses numbers that are wrong. Even though it looks very reputable, the analysis is wrong. So we gave that a false.
WILLIS: Thanks for bringing that to light.
OK. McCain has been criticized for his voting on Bush's tax cuts. Recently, the group Campaign to Defend America said Senators McCain and President Bush are, quote, millionaires for tax cuts for millionaires, end quote, true, not true?
ADAIR: We gave that a mostly true. This is an ad by an independent group, this is one of the other things we try to check out it puts things out there that voters are wondering. It's true, McCain is a millionaire, as is Bush. Just found that it was vague. It's correct, however, that McCain does support the Bush tax cuts, which have disproportionately helped the wealthy. We gave it a mostly true.
WILLIS: All right. OK. McCain's flip-flopped on tax issues, too. Breaking it down for the average person, let's go over tax plans for the candidates.
ADAIR: There's really a very different kind of approach between the Democrats and Senator McCain. They very much reflect the party philosophies, the McCain approach relies more on keeping the Bush tax cuts, he's in favor now, though as you noted he has flip-flopped. He originally voted against the Bush tax cuts. But he said he wants to extend them, to do otherwise would be tantamount to a tax increase.
WILLIS: Repealing AMT, that's no small thing.
ADAIR: And wants to repeal alternative minimum tax and that's a key point. By contrast, the Democrats are doing things to encourage retirement savings, not just by the usual way of providing tax incentives but by matching the initial contributions to the savings by middle and low income earners, and they also, in contrast to what McCain wants to do they want to let the Bush tax cuts expire for the wealthiest Americans. So there is a different philosophy there and it's important to pay attention to the details of those.
WILLIS: It is important to pay attention to details. Bill Adair, thank you for that.
VELSHI: Coming up next, which candidate has the right financial plan for you and the U.S. economy? We'll hash that out and get ready to rock the vote. Why young voters are making more of a difference than ever before.
You're watching ISSUE #1.
VELSHI: All right. Here's the deal. It is not debatable. The economy is issue number one according to all of you out there. What is debatable is which candidate for the White House has the right plan to fix the economy. Pat Reginer of Money Magazine, Mark Halperin of Time and CNNMoney.com senior writer Jeanne Sahadi join me now to get through some of these issues.
You've all been following it very closely.
Mark, let's start with you. Anybody hitting it out of the park on the economy right now?
MARK HALPERIN, SENIOR POLITICAL ANALYST, "TIME": I don't think so right now. Look, McCain, Bush and Clinton and Obama all recognize this is issue one. They'll all be talking about it the whole year. In terms of policy, people are still sifting through proposals.
In terms of the politics of it, Clinton and Obama are focused on Pennsylvania, right now, Indiana, North Carolina. The economy's bad in those states, not the worst in the country but bad. They're all trying to figure out how to deal with those short term issues.
McCain, I think, is under the most pressure, he's the weakest in talking about the economy. You saw in "The New York Times" this morning Bill Crystal, a conservative, said McCain's got to talk about the economy and do it with fidelity to his free market principles when people are talking about more government intervention. That's a challenge for anybody, particularly for him.
VELSHI: Exactly, Part. That's part of the problem. Things that people -- that sound like answers to people are about regulation or dealing with something coming down hard on this mortgage crisis. That's where McCain has been criticized. How does he deal with that?
PAT REGINER, SENIOR EDITOR, "MONEY MAGAZINE": Well I think one problem that he has is that if you want to talk about big solutions, if you want to be bold, you have to admit the size and scale of the problem. That's tough if you're coming from the incumbent party.
An important part of the McCain message is the system that we have in place basically works low taxes, basically works, low regulation basically works and we have to handle this blip of a crisis right now which makes tougher for him to sound like the most proactive guy on the stage.
VELSHI: If you're in the middle of the crisis, particularly the housing crisis, it doesn't feel like that much of a blip. Let's bring it back to specifically the housing issue, Jean. What do those proposals look like? Who is getting traction on that?
JEANNE SAHADI, SENIOR WRITER, CNNMONEY.COM: Well, Clinton and Obama both support a proposal getting traction in congress. Specifically it's a proposal that would empower the FHA to ensure troubled loans assuming lenders will voluntarily write them down to an affordable level and that is to say the appraised level of a valued home. That has a lot of Democratic support.
McCain also favors lenders voluntarily doing things but he doesn't favor government stepping in. Taxpayers really would be on the hook if anything went south but there are a lot or protections. It's a Barney Frank bill, soon a Chris Dodd bill, coming out that who ensure the loans would not go south because they'd be written down to manageable levels.
VELSHI: Now housing is a major issue in our polling. Very close to that is health care. Now that's interesting place because if you want to look at either voting Democrat or Republican, that's one area where you can make clear choices. McCain's health care still along that same idea, let the market handle it.
REGINER: Yes. I actually think it goes even farther from the status quo than either Obama or Clinton's plans do. If you actually sort of imagine the world that McCain is trying to get to, he sees more of us getting our health insurance from someone other than our employer, more of us frankly having a little less health insurance than we currently have. He's looking to sort of have more people in kind of bare bone plans that they buy themselves so they'll be the consumer putting pressure on costs. That may be a hard message to sell to people when they sort of realize what's up. But it's -- it does get high marks for boldness.
VELSHI: Mark what do they do now? This is kind of a turning point because we are -- everybody's kind of in this discussion at this point. What do they need to do to capture the imagination? Because we're in April. They've got a long way to go.
HALPERIN: Look, the election is a long way off but the White House maybe in the discussion but their explicit position is this probably won't happen under George Bush. This is teeing things off.
It's going to be interesting to see the congressional Democrats and the presidential candidates. Do they say we want action now? Do they try to move piecemeal action, the whole package, or say we're going to have a Democratic president, in their view, a Democratic congress, let's wait? If that's their judgment, can the country afford to wait? And can be politically seen as saying you know what, February, March, April.
VELSHI: I suspect we'll see the country not willing to wait on that.
Mark, thank you very much. Mark Halperin is a senior political analyst at Time.
Jeanne Sahadi is senior writer at CNNMoney and Pat Reginer is a Money Magazine writer.
Thank you very much for being with us. For all of you being with us.
Up next on ISSUE #1, Gerri's going to tell us -- Gerri.
WILLIS: Hey, Ali. Why young voters might make more of a difference in this election than ever before.
Plus, building a budget. It may seem easy but we'll show you how to do it the right way and make it work for you.
Stay with us.
DON LEMON, CNN ANCHOR: Hello, everyone. I'm Don Lemon, live at the CNN World Headquarters here in Atlanta.
We're going to check on some stories making headlines right now.
And that is dangerous weather. It is threatening the Midwest today. Meteorologist Bonnie Schneider is in the severe weather center. She's tracking it all for us -- Bonnie.
BONNIE SCHNEIDER, CNN METEOROLOGIST: That's right, Don.
We are watching for a line of thunderstorms and tornado warnings that are passing through areas, including Oklahoma, all the way through Kansas, into Missouri. Take a look at some of the latest warnings for you now and you'll see exactly where they're located as we zoom into the region.
We are looking at tornado warning stretching all the way across Kansas, well into some parts of Missouri. There's a tornado warning right now for Dallas, Green, Polk and Webster County. And as we zoom into the region, you can see a particular cell we've been tracking because this tornado has been confirmed as a tornado and it's been on the ground for over an hour. So the tornado warning continues at least for the next 20 minutes or so.
We've been seeing frequent lightning strikes with these systems. In fact, we have the track of the storms, as you can see, where they're headed. Now we're heading further to the west and we have tornado warnings north of Pittsburgh, Kansas. This one expires 12 p.m. Central Daylight Time, including the city of Crawford. So we're watching for that.
The bigger picture, of course, Don, shows the threat for severe weather will continue straight through the afternoon. A watch box is up until 5:00 today. Back to you.
LEMON: Bonnie, that map looks very active. Thank you very much for that.
A U.S. airline discovers a problem in the landing gear of some of its planes. A short time ago, United Airlines said it has found faulty wiring in three planes. All were Airbus A320s. Airline and government officials believe the faulty wiring caused a pair of runway accidents. There were a couple of minor injuries in those incidents.
More news at the top of the hour or breaking news when it happens. I'm Don Lemon.
Now back to ISSUE #1 with Ali Velshi.
VELSHI: Well, if there's an election about to be held nearby, chances are you'll see fine the CNN Election Express. It's that big motor coach. Right now it's parked in Center City, Philadelphia, as we count down to the Pennsylvania primary.
Now if you go by the bus, you'll see a slimmer, better looking version of me, sort of thing. It's CNN Election Express producer Josh Rubin. He gives us an inside view of the state, its people and its significance this election year.
JOSHUA RUBIN, PRODUCER, CNN'S ELECTION EXPRESS: Welcome to Philadelphia, city of brotherly love. I'm Josh Rubin, producer for CNN's Election Express and Ali Velshi's bald brother. We're wheels down in Philadelphia, Pennsylvania, for the run-up to the presidential primary on April 22.
Over the course of the next four weeks, we're going to be bringing you an insider's view of Philadelphia. CNN sent the Election Express here to serve as our Pennsylvania bureau, to allow us to cover the keystone state primary with unparalleled depth.
Philly is the fifth largest city in America. It's a big town with a lot of history and a lot to offer. But it has a lot of problems.
MAYOR MICHAEL NUTTER, PHILADELPHIA: This is a city, Philadelphia, and many other major cities face the same problem, but we have a 45 percent high school dropout rate. Issues of poverty. Philadelphia has a fairly high poverty rate as a major city in the country. And so what I've been trying to say to the candidates is, you need to address these day-to-day issues and challenges that people face on a regular basis.
I know that health care is critically important. There are many people in Philadelphia who don't have health care. I know the war is on people's minds in a variety of ways.
There are other issues and challenges that these presidential candidates will face if they are elected president of the United States of America.
RUBIN: In Philadelphia, one-fourth of the citizens live below the poverty line. So for the people that live here, the economy is issue number one. This is where America was founded. It was here that our democracy was born. And on April 22, it's possible that the future of our democracy will be decided and CNN's Election Express will be here.
WILLIS: CNN senior political analyst, Bill Schneider, part of the best political team in television, has spent a good deal of time in Philadelphia leading up to the primary.
Bill, what have you heard from voter there?
WILLIAM SCHNEIDER, CNN SENIOR POLITICAL ANALYST: The economy, the economy, the economy. Two-thirds of voters in Pennsylvania, the state as a whole, believe the economy's in recession. It's the big issue in Pennsylvania. But there is a difference between the western and eastern parts of the state.
The western part of the state is the old coal and steel area, as well as the northeastern part of Pennsylvania. Those parts of state have never really recovered from the end of the coal and steel age. They were the center of industrial America back in the late 19th century, but they've gradually declined and that decline has not been really reversed.
The eastern part of the state, including Philadelphia, and particularly the Philadelphia suburbs, that's doing a little better economically. They've move into the technological era. And as one of my informants in Pennsylvania put it, the western part of Pennsylvania is like Ohio and the eastern part of Pennsylvania is like New Jersey. Politically, that's not good news for Barack Obama because Hillary carried both Ohio and New Jersey.
WILLIS: So, Bill, how big of a deal is Pennsylvania in this election?
SCHNEIDER: Very big deal. High stakes for Hillary Clinton. She's been ahead in all the polls by double digits. She's expected to win Pennsylvania. You know, her main competitor in this isn't Barack Obama, it's expected she has to do better than expected in order to win a significant victory and to gain new momentum, which means something close to 20 percent margin over Obama. If she were to unexpectedly lose Pennsylvania, by most people that I've spoken to believe, her campaign would be over.
WILLIS: Bill Schneider, thank you for that.
VELSHI: All right, all evidence points to more and more young people showing up at the polls than ever before and that would likely bode well for all of the candidates if they were to pay attention to young voters and their feelings on issue number one, which is the economy. Heather Smith is with Rock the Vote.
Thank you for being with us, Heather. This must be great, particularly for Rock the Vote, in that it's an easier sell than it has been in previous elections. Young people seem to be flocking to this election. Why?
HEATHER SMITH, EXECUTIVE DIRECTOR, ROCK THE VOTE: They are, absolutely. I mean, the 2004 election saw the first major increase in young voters at the polls and they won the right to vote. It continued in '06. And now in '2008, it really 's a huge movement of young people, doubling, tripling, quadrupling their turnout from the last four years even.
VELSHI: Now the economy does tend to be one of the top concerns for young voters as well. In fact, we've shown -- you guys have shown that the economy is one of the big issues. The Iraq War is a smaller issue, but significant. Health care and college affordability. They're all in the same range. They're all double digits. Tell me a little bit about this. What are people -- what are young voters looking for in the candidates in terms of these issues?
SMITH: Well, the -- we do regular polling at Rock the Vote and have for years and we've found that the economy is the top issue for young people. It rose to the top in 2006 and it maintains its status as a top issue for young people today.
And when we dig and say, what does jobs and the economy mean to you? What is this that's really motivating you, that you want to see the next president address? And it really is, it's all pocketbook issues. It's wages. It's finding a job that pays wages enough for them to support their families. It's health care, but it's really about affording health care. It's everyday expenses, like student loan and debt, tuition, child care. And it really is, it's driving people right now to participate in the political process because they are really worried about the economy.
VELSHI: Who benefits from that increased participation? Is there any -- are they going toward all the candidates? Are they going toward particular candidates?
SMITH: Yes, so they have favorable ratings of all three of the major candidates right now in the race. And what we found is that if a candidate goes out and addresses the issues, like the economy, if they talk to young people, if they show up on their college campuses, they knock on their doors, they keep them on their call list, and then young people will respond. So I really believe it's up to any and all the candidates to reach out to them, and they can, in fact, benefit from the youth vote.
VELSHI: How would you rate the candidates right now? Are they doing that? Are they getting the fact that these young people are interested in their campaigns and are they reaching out as effectively as you think they should?
SMITH: Well, there's always room for improvement. But, in fact, for the first time ever, we are seeing the campaigns really dedicate resources to targeting young people as voters and it's having an impact. That's why, you know, another reason you're seeing this huge increase at the polls.
I mean, Obama has a wonderful youth outreach campaign. We've heard a lot about that in the news and the media. The Clinton campaign has the same thing. They're going out to college campuses and to communities. And, in fact, both Barack Obama and Senator McCain won the Rock the Vote Youth Outreach Award in 2005.
So they're all candidates with a proven record of reaching out to young people. And in order to win in November, we know they're all going to need to do that again.
VELSHI: Well, that's only good news. Heather Smith, thank you very much.
SMITH: Thank you.
VELSHI: Heather Smith's the executive director of Rock the Vote.
WILLIS: All right, you've got time, grab a pen and some paper because coming up next, very important information to help you start and maintain a family budget and keep your family free of financial stress. Then we're turning the show over to you. Answers to your e- mails. The address, firstname.lastname@example.org.
VELSHI: All right. Everyone should have a budget. It doesn't take much time to have a budget. It can give you a great deal of peace and mind. But starting one is tough. And it seems like an easy task but the smallest thing can trip you up and make the while process seem like a waste of time.
CNN's senior correspondent Allan Chernoff has the story.
CHERNOFF (voice over): Twenty-three-year-old actor Ryan Watkinson has a couple of things that very few young adults have, a part in a Broadway show, "Xanadu," and an aunt who's a certified financial planner.
ERIKA SAFRAN, CERTIFIED FINANCIAL PLANNER: The objective is for you to be saving at least 10 percent.
CHERNOFF: Aunt Erika Safran worked out a budget with Ryan so he'd have something else few people his age have, saving.
Do you like being on a budget?
RYAN WATKINSON, ACTOR: I enjoy having the freedom to know exactly where my money is going at all times. I walk around knowing exactly how much I have, not wondering, not worried about my financial situation.
CHERNOFF: How do you make a budget? Start with income. Ryan is earning about $7,500 a month. Then identify spending. Fixed expenses, like rent, taxes withheld, phone and utilities, transportation and insurance. Then add variable expenses. Ryan tracked all his spending for a month.
WATKINSON: Whenever I made a purchase, I wrote it down. And at the end of the day, I typed it up on my computer. And at end of that month, I knew exactly where my money went.
CHERNOFF: Food, entertainment, clothing, gifts, all variable expenses.
SAFRAN: Take your income, subtract your expenses and see what happens. Now if you have a deficit, and that's not unlikely, now you want to identify which are the areas that I can improve on.
CHERNOFF: Erika had targeted saving nearly 20 percent of Ryan's salary. It turned out to be too tight of a squeeze on Ryan's wallet, especially with the recent rise in food prices. So Erika and Ryan adjusted the budget. Now Ryan is still saving $640 a month in addition to the 10 percent he automatically contributes to a 401(k) plan.
SAFRAN: The purpose of the budget is to meet a goal. The purpose of a budget is to create wealth.
CHERNOFF: It also has to be livable, says Safran, or you won't stick by it. Don't you wish that you had an Aunt Erika to help you out? Well, you do have CNNMoney.com.
Think of our Web site as your very own Aunt Erika. On our Web site, under the personal finance tab, you will find a template for creating your own budget -- Ali.
VELSHI: Is my own personal Aunt Erika going to have the same view of what I call discretionary expenses? I mean, that's the issue. The issue is, I don't have a choice as to what I pay for my rent, but there are other things I have choices about. How do I get -- that's what I can't tackle.
CHERNOFF: Right. You have to step back and say, hey, do I really need that huge flat screen television? If you have a home, do you need somebody to mow your lawn? Can you do it yourself? It's all a matter of setting priorities.
VELSHI: All right, the flat screen thing hit a little close to home.
CHERNOFF: You do need that?
VELSHI: I need the flat screen.
Allan Chernoff, thanks very much. Our senior correspondent.
Coming up next, we'll come right back here to the help desk. We've got real answers to your very real issues. Your e-mail response has been tremendous, so we're going to read them live as ISSUE #1 rolls on.
Steroid scandals and winter aside, by the way, baseball is back. We'll tell you why some teams are seeing green this year.
You're watching ISSUE #1.
WILLIS: OK. So the help desk, it is open for business. We asked you to send us e-mail questions. Your response, it's been incredible. And now we're going to get to some of the answers. To help us do just that, Jack Otter from "Best Life" magazine, and CNN senior correspondent Allan Chernoff.
Great to see you guys.
You know how I do this. I want to get right to the e-mails.
First off, Moe asks: "Should I borrow money from my 401(k) to pay off my debt?" -- Jack.
JACK OTTER, DEPUTY EDITOR, "BEST LIFE": You know the answer, Gerri, no.
WILLIS: It's a bad thing.
OTTER: Absolutely. WILLIS: That's just terrible.
OTTER: What people don't know is, that if they should move to a different job, they owe that money back immediately. They can't pay that back over time or else they get hit with a great, big penalty. So don't put your retirement at risk. Figure out another way to pay down your debt. Shrink your expenses. As we talked about earlier, make a budget. And I think that's the best way to do it.
WILLIS: I love that answer.
OK. Let's go to Mike in Oklahoma. He says: "If an FDIC-insured bank account fails, how long does it take to get your money?" -- Allan.
CHERNOFF: That's quick. Actually Jack and I were just talking about -- he referred to a bank that recently failed Friday.
WILLIS: Fremont (ph), yes.
CHERNOFF: And then over the weekend, one day, the money was available. So $100,000, you're OK. Over $100,000, well, that's a different story. So if you're really worried, spread your money around.
WILLIS: All right. We have another e-mail from Charlie in California: "I have a 401(k) that I am thinking about investing in a business or the deflated housing market. I believe that I can make a higher returns in these ventures rather than the depressed stock market. What are your thoughts?"
I want both of you to weigh in on this because it's really an interesting question.
Jack, you first.
OTTER: This is the scariest question of the bunch. What I might do, is if it's a significant amount of money in an old 401(k), roll it over into an IRA and then seek out a fee-only financial planner to help you figure out how to do it.
But, you know, one -- his logic is that real estate is depressed. Well, real estate has actually been on an eight-year tear and the last 18 months or so have been lousy. Stocks have been flat for almost 10 years.
WILLIS: You like stocks better.
OTTER: So if your logic is, I'm looking for deflated assets . . .
WILLIS: All right. You know what I like, though, he's talking about diversification. I'm always a fan of that -- Allan.
CHERNOFF: Well, what I would -- if he has both an IRA and a 401(k), which many people do have, the IRA money, you can do whatever you want with it. It's much simpler to move that around.
The 401(k), if you work at a big company, usually there are restrictions and you have to go with one of the plans at the company. Much simpler if you just maybe take that IRA money and do what you want with it. But, again, keep in mind, this is your retirement money. You do want to be fairly careful.
WILLIS: Exactly. Great advice, guys.
OK. Michelle in Massachusetts asks: "Where is the best place to invest a large amount of cash? I would like to use the capital as my monthly income." She says she has no debt. Her mortgage is paid off. I'm such a fan of her.
Jack, so where would you put money now? What's your favorite investment?
OTTER: She's doing a great job. But if she wants to be conservative, there aren't that many options. And, frankly, I wouldn't reach for yield right now. I looked around on bankrate.com, which I recommend. Capital One is paying 3.78 percent on money market funds right now if you're over $50,000. Municipal bonds are very interesting, if she's in a high tax state. I think it's a good time to dabble in those.
WILLIS: That is an interesting point.
Allan, did you have something?
CHERNOFF: A lot of this depends on how much money she really has set aside. You know, if she's dependent on this income, then, yes, you've got to stay very conservative, money market funds. Maybe if she has a lot of money, municipal money market fund. That will bump up the yield a little.
You get two percent right now before the consideration of the tax benefits. But if you have money that you can play with a little bit more, you could get much higher yields by buying, for example, some utility stocks. ConEdison now six percent yield on that stock. And you do have the potential for capital appreciation.
WILLIS: Inflation protected securities I think would be interesting for her as well.
All right. So we've got to get in another e-mail, OK.
Ann asks: "How do you stop the inquiries on your credit which you have not requested? Especially sense inquiries lower your credit score."
Great question. We get it all the time -- Jack.
OTTER: Well, I've actually got very good news. The inquiries that really hurt your credit score are when you ask for money. When you say, hey, I want a mortgage. I want to buy an auto. When other people are looking, it really doesn't hurt you that much. So she shouldn't worry. But she can get in touch with big rating agencies and just freeze it and they won't release any information. And that actually, apparently, helps you slightly because future lenders realize, well, you're not borrowing if your credit reports are frozen.
CHERNOFF: Yes, as long as you don't need to borrow money.
OTTER: Yes, just go ahead and freeze it.
WILLIS: Well, Allan and Jack, thanks so much for your help today. We really appreciate it.
Get ready for some baseball. Just how much will that trip to the ballpark cost you this year? And will Americans pay the price? We're on it when we come right back.
WILLIS: Time now, the results of the CNN Money Quick Vote. Poppy Harlow is on the CNNMoney.com set.
Hi there, Poppy.
HARLOW: Hey, Gerri.
Well, from Wall Street to Washington, all eyes were on Treasury Secretary Henry Paulson this morning as he outlined the Bush administration's plan for revamping of the Fed. We wanted to know if you buy the argument. Thousands of people logged on to our CNNMoney.com Quick Vote poll. Here is what they had to say.
Fifty-seven percent said yes. Forty-three percent said no when they asked, should the Federal Reserve be given more power to regulate mortgages in the stock market?
Now, Gerri, I want to point out, it is important to note that the Treasury Department says most of these long-term proposals in the plan will not be completed before President Bush leaves office and, of course, Congress still needs to approve and stamp all the changes -- Gerri.
WILLIS: Poppy Harlow, thank you for that.
VELSHI: Well, it's that time of year now. Time for peanuts and popcorn and Cracker Jacks. But just how much will those peanuts and popcorn and Cracker Jacks cost you, not to mention the tickets.
WILLIS: CNN correspondent and big time, I mean big time Yankee fan, Susan Lisovicz is live at the New York Stock Exchange with more.
Hi there, Susan.
SUSAN LISOVICZ, CNN CORRESPONDENT: Hey, Gerri and Ali. And I'm chomping at the bit because the Yankees face off, the New York Yankees face off against the Toronto Blue Jays. They were supposed to face off in about eight minutes but there is a rain delay. It is cold, it is rainy, but Yankee Stadium is packed because it is the last year of New York Yankees Stadium.
And, you know, Ali, I don't know, I think you're a season holder, are you not?
VELSHI: I, in fact, am. I mean I wouldn't think of a baseball game during the working day, but, yes.
LISOVICZ: Of course you wouldn't. But who would you root for, that's the more important question?
VELSHI: Toronto and New York teams, that's a tough game for me because I'm from Toronto and New York's my home city now.
LISOVICZ: And they're supposed to be pretty good this year. But, you know, a lot of people are packing into Yankee Stadium, not only because, you know, it's the last year for Yankee Stadium, but because baseball has made a comeback.
You know we talked a lot about steroids, but -- and scandals within the sport, but the fact is, Major League Baseball has enjoyed a renaissance. And you could see it with ticket prices, which are up an average of about 11 percent.
Check it out. Field of green indeed. The Boston Red Sox, well, they have bragging rights, OK. They won the World Series. But this is the average price, guys. The average price for a ticket. I'm not talking about club seats here. $49 per. Chicago Cubs, they haven't won a title in a century. They're at $42.49.
WILLIS: Not to embarrass them or anything.
LISOVICZ: No. The New York Yankees, they can brag because it's the most successful franchise in sports history. And, you know, and there's a lot of marketing that goes behind it. XM Satellite Radio is going to broadcast every single game. There's, you know, a lot of marking power behind it.
There's a lot of apparel that's, you know, that's setting records as well. So it's just a great time. It's sort of like the oil pits right now. You know, oil prices going up, so is baseball. It's popular right now.
VELSHI: Are you getting to the game?
LISOVICZ: Oh, my gosh, yes. Absolutely.
VELSHI: I mean the floor of the exchange must be emptied out. I mean this is a big deal.
LISOVICZ: Yes, there's meetings going on. Meetings going on right now, I think, in the Bronx. WILLIS: All right. Well, we'll see you there, Susan.
For more ideas, strategies and tips to save you money and protect your house, watch "Open House" Saturday at 9:30 a.m. Eastern right here on CNN.
VELSHI: And for more on how the news of the week affects your wallet, tune in to "Your Money" Saturday at 1:00 p.m. Eastern and Sundays at 3:00 right here on CNN.
Across America, remember issue No. 1 is the economy.
We'll be back same time, same place tomorrow, noon Eastern right here on CNN.
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