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ISSUE NUMBER ONE

The Financial Cost of the Iraq War; A Major Housing Stimulus Bill: If Passed, How Could it Affect You?; Spring Housing Market; Calculating the CPI; Going Green Could Save You Cash

Aired April 8, 2008 - 12:01   ET

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


GERRI WILLIS, CNN HOST: Top military officials answering questions on the war in Iraq, the financial costs of the war called into question.
And a major housing bill up for a vote. What it means to you.

And why going green can save you a whole lot of cash.

This is ISSUE #1 -- your house, your job, your savings, your debt.

ISSUE #1 starts right now.

It's been five years since the Iraq invasion. And today, General David Petraeus and Ambassador to Iraq Ryan Crocker are on Capitol Hill answering some very tough questions on what's been accomplished.

Now, while you can't put a price tag on the lives lost, the money spent, it does add up. And some say it affects you right here at home.

CNN Pentagon Correspondent Barbara Starr joins me now live from the Pentagon to put it all in perspective.

Barbara, good to see you.

BARBARA STARR, CNN PENTAGON CORRESPONDENT: Hello to you, Gerri.

Of course, the one thing everyone does agree on, this war is costing America's blood and treasure, but how much treasure? So far, the war in Iraq, $400 billion and counting.

So, with the housing crisis and with the dramatic rise in fuel and gasoline prices, we wondered if people were beginning to ask themselves how much the war was costing them in their communities. And we found a Web site that begins to address this very issue called nationalpriorities.org.

This is a private research organization that looks how federal tax dollars impact various communities around the country. So, Gerri, we looked at your home state of North Carolina to see how the war is really costing the people of North Carolina money.

According to this Web site, already the war has cost North Carolinians some $14 billion since it began. And what we looked a little bit further, just in the last year or so, about $4.2 billion in Boone, North Carolina, of course, a place you know very well, where you grew up in the North Carolina mountains. About 13,000 people there, according to the Web site, $3.7 million.

So, what is it really costing the people of North Carolina by way of example when you look at the president's proposed budget cuts in the last budget, some of the cuts being made to help pay for the war? We went back to the Web site, and what we found is they calculated a number of cuts and programs for North Carolina.

In community development grants, for example, more than $18 million cut. Low-income home energy aid, about $6 million. In social services grants, about $15.8 million.

And if anybody is interested in looking at what the war is costing in dollars and cents in their communities, they can go to nationalpriorities.org, log on to some of the maps, click until they find their own state and their own community, and get some pretty interesting information about the impact of the war in their hometown -- Gerri.

WILLIS: Barbara, it really does hit people in the wallet. And the people of Carolina end up paying the price just like we all are.

Thank you so much for that.

STARR: Sure.

ALI VELSHI, CNN HOST: And Gerri, let's continue this conversation.

There are some people who believe the Iraq War will end up costing upwards of $3 trillion.

Linda Bilmes is the author of a book called "The $3 Trillion War." She joins us from Cambridge, Massachusetts, from Harvard University.

Linda, thank you for being with us.

Tell me how you come to this number of $3 trillion. We've reported it before. What is that? Is that the amount of money that is spent on the war? Is it the amount of money the government is spending? Is it the economic loss?

Where does this come from?

LINDA BILMES, AUTHOR, "THE $3 TRILLION WAR": Hi, Ali.

The $3 trillion war is simply the cost of the war if you include all of the money that we have already spent and that we still have to spend on taking care of veterans, replacing all the military equipment that's been used up, resetting the military forces, paying interest on all the money that we borrowed for the war, and some of the economic costs to our economy. Some of the costs that the families and the veterans are paying that the federal government doesn't pay. If you add all that up, you very quickly reach the $3 trillion number.

VELSHI: Now, you've been criticized by the administration for this number, but what is the disparity? What is the argument with it? What does the other side say about the fact that this number seems inflated?

BILMES: You know, this administration has no credibility whatsoever on the cost of the war. They said it would cost $50 billion. And their own economic adviser, Larry Lindsey, who said it would cost $200 billion, was fired.

They then denied that it would cost $1 trillion. Now, by the account of the Congressional Budget Office, the Congressional Research Service, the projections are that it will cost about $2 trillion.

The administration is basically in denial about the cost of the war. And what is interesting right now is that there are hearings in Washington with General Petraeus about the military conduct of the war, but nobody is asking, how are we going to pay for this war?

No one is asking about the fact that we've already borrowed all the money to go to war so far. And no one is asking the American taxpayer whether every household in America wants to pay another $2,000 in a tax increase this year in order to keep the war going.

VELSHI: What is the cost to the average taxpayer? Barbara Starr was just talking to Gerri about, you know, what North Carolina has paid. And we've got these tools on a Web site that can show you what your state's paid.

What does your calculation show as to what Americans have paid financially for this war, which, of course, isn't -- isn't the description of the rest of the price that we've paid for this. But what is that money amount?

BILMES: Well, every American household is paying right now this year about $100 a month in direct cash costs to support the war. And if you add in the long-term costs that everyone agrees we have to pay, such as taking care of our veterans in the future, you can double that. So, essentially, every American household is paying $200 a month to support the war effort.

VELSHI: There's a somewhat -- it's a bit cynical, but there is an old, you know, impression that sometimes wars are good for economies, immediately or afterwards. Your research doesn't seem to show that there's -- in fact, you seem to be indicating there is a net loss to what our economy would have been doing as a result of the war rather than a gain.

BILMES: That's right, Ali, because the money that we have spent in this war has not stimulated the economy. A lot of the money, if you look at where the $12 billion a month that we spend in Iraq actually goes, it goes to Iraq to pay for contractors from the Philippines and Nepal, and other places to perform functions such as cooking and laundry and driving around, and fuel costs, where we pay world market prices even though there is fuel available in Iraq. And none of that is money that stimulates the U.S. So, apart from a few defense contractors and oil companies, the U.S. has been a big loser economically from this war.

VELSHI: Linda Bilmes, thanks for joining us.

Linda Bilmes is the author of "The $3 Trillion War," joining us from Harvard University -- Gerri.

BILMES: Thank you, Ali.

WILLIS: Coming up, a major housing bill up for a vote in the Senate. What it could mean for you.

And it's time for you to weigh in on today's "Quick Vote" question, which is, should Congress step in and help struggling homeowners refinance their mortgages?

Log on to cnnmoney.com and cast your vote. We'll bring you the results a little later in the show.

(COMMERCIAL BREAK)

VELSHI: All right. You're watching ISSUE #1.

A major housing stimulus bill in the Senate could be up for a vote today. It's expected to pass. And some parts of the bill are likely to affect you.

CNN's Kate Bolduan is live on Capitol Hill with more on the story.

Hi, Kate.

KATE BOLDUAN, CNN CORRESPONDENT: Hi there, Ali.

Well, the Senate is expected to pass this housing stimulus package sometime tomorrow. There is a procedural vote scheduled for today. It's billed as a relief and stimulus legislation to prop up the struggling housing market and struggling American families hit so hard by the housing crisis.

Now, some of the highlights of this Senate bill include $4 billion in community grants for state and local governments to rehabilitate foreclosed properties and surrounding neighborhoods. There's also $100 million for foreclosure counseling services. Then there's property tax deductions of up to $1,000 for homeowners who don't itemize deductions and a $7,000 tax credit for people who purchase foreclosed properties. And then finally, there's $6 billion in tax breaks for homebuilders and other businesses hit hard by the housing crisis.

But there has been some criticism of this legislation, Ali. Namely, those last two aspects of the bill that I just mentioned, the $7,000 tax credit and the tax breaks for businesses.

What critics are saying is that those -- that tax credit could actually make it more attractive for banks to foreclose on properties because it would make the hassle of the foreclosure process less costly and there would simply be less of a hassle. But they also criticize those tax breaks for businesses, saying that it's helping more of the homebuilders and the banks rather than the struggling American family.

Now, on the opposite side of Congress, there is another -- the House is working on its own version of a housing bill. And Speaker Nancy Pelosi said their version will be more targeted toward relief for homeowners, but it's not likely for there to be a vote on that version until some time at the end of the month -- Ali.

VELSHI: All right. So criticism on both sides, but at least there seems to be some movement in Congress about getting some relief out of those housing prices.

Kate Bolduan, thanks very much for staying on top of that for us.

WILLIS: Celia Chen is with moodys.com in Westchester, Pennsylvania. She's joining us now.

Have a little conversation about the spring housing market. I want to start with these National Association of Realtor numbers.

This is a pending home sales index, and this really looks forward. And the beauty of this index is that it doesn't tell what you happened in the past. These are deals that haven't even closed yet.

What do you make of these number? February was the lowest on record. What does it say about the housing market right now?

CELIA CHEN, DIRECTOR OF HOUSING ECONOMICS, MOODYS.COM: Well, the pending home sales index did come in very low for the month of February, which would indicate that the housing market probably still has a bit further down to go before we really hit a bottom. The index has been sort of stabilizing over the past few months, until this month, which kind of gave hope that we were at a bottom, at least in terms of demand for homes.

WILLIS: But not so much according to these numbers, Celia.

Let's talk about, is there any ray of hope out there? Are there any cities, areas where we are starting to see the rebound occur? Any area that's coming out of this down cycle?

CHEN: Well, in terms of housing activity, in terms of home prices, there are some areas where we are starting to see a little bit of firming. That would be in the northeast, in New England, the Boston metropolitan area. Parts of Connecticut are also starting to come out.

Philadelphia actually is not doing too badly in terms of home price appreciation. And San Francisco is also performing better than -- much better than average. A few southern metro areas, particularly in Tennessee, Alabama are also doing better than average. WILLIS: Well, that's great news. I love to hear good news.

Now, we are at the very start of the spring housing market. This is a time of year more than any other where people sell their homes. Now, some folks out there saying that it is the worst spring outlook in 10 years. What do you say? Where is the spring market going?

CHEN: I think that the spring market will still be fairly weak. The fundamentals underpinning housing demand are weak with job losses, mounting about 250,000 since the beginning of this year. Also, credit availability for mortgages to buy homes is very, very weak. It's just hard to get a loan right now even if you do want to buy a house.

WILLIS: You know, a lot of conversation in Washington right now, what to do with this housing market. There are stimulus packages in the Senate, the House wants to have its say.

What does this market need to get going? What would get rid of this overhang of inventory which is double levels of the boom? What would help this market?

CHEN: Well, the market definitely does need help, and policymakers are acting. The Fed has cut rates. There have been programs instituted to help homeowners who are in trouble.

But the fundamental problem right now is there is a lot of inventory out there of available homes which is keeping prices down. There's also more inventory to come because of the foreclosures that are occurring.

We expect about two million foreclosures this year and next year, which is an unprecedented numbers of homes that are going to be on the market. In order to prevent this from becoming worse, I think policymakers really do have to get at the root of the problem, which is to help homeowners who are under water stay in their homes.

WILLIS: Right.

Celia, thank you for that. We appreciate your time today.

VELSHI: Thanks, Gerri.

Rising prices have been pinching American pocketbooks. It really is one of the biggest parts of issue #1. Inflation has been rising at an annual rate of 4 percent, and possibly climbing. Now, inflation is generally measured by something called CPI, the Consumer Price Index.

Allan Chernoff, who has pretty much been on our inflation beat, is here to tell us how CPI is actually calculated -- Allan.

ALLAN CHERNOFF, CNN SR. CORRESPONDENT: Ali, you have to go shopping for a living. There are actually people who do that. Would you like to?

VELSHI: That could be fun. CHERNOFF: I don't think I couldn't handle it, but for some people it would be a dream job. And indeed, the federal government employs hundreds of people who do that every day.

They price items to help the government figure out just how much prices are changing. And it's all tallied up in the Consumer Price Index, known as the CPI.

(BEGIN VIDEOTAPE)

CHERNOFF (voice-over): Janet Edwards (ph) is a professional shopper for the U.S. government. She travels from store to store checking prices.

UNIDENTIFIED FEMALE: Exact, $249.99?

UNIDENTIFIED MALE: Yes, exactly.

UNIDENTIFIED FEMALE: OK, because I have to have it down to the -- and that is just your regular selling price?

CHERNOFF: All kinds of consumer goods are on her shopping list, from fruit...

UNIDENTIFIED FEMALE: Are these the only avocados you have?

CHERNOFF: ... to women's undergarments...

UNIDENTIFIED FEMALE: Excuse me, do you know where they moved the strapless?

CHERNOFF: ... to men's suits.

UNIDENTIFIED FEMALE: It's 100 percent wool.

CHERNOFF: But she doesn't buy. Edwards sends the information she collects to Washington, where it's used to price a market basket of goods and services that becomes the Consumer Price Index.

UNIDENTIFIED FEMALE: I actually add the data into the computer. Washington keeps a record of these prices. And that is actually how the Consumer Price Index is actually devised.

CHERNOFF: There are more than 400 price shoppers like Edwards (ph) around the nation.

UNIDENTIFIED FEMALE: We capture whatever is going on in regard to that item that the consumer would come and purchase.

CHERNOFF: What they do is not casual window shopping.

UNIDENTIFIED FEMALE: The weight, 397 grams. That is the same.

CHERNOFF: The shoppers have to be precise, tracking the exact weight and size of each item so it can be compared to the same exact item from the prior month. As precise as the methodology is, economists say sometimes the Consumer Price Index doesn't seem to reflect reality. The latest CPI, for example, in February was unchanged.

ALLEN SINAI, ECONOMIST: As an economist, I have to look at it as a professional and technically, and I will give it very good grades, but I'm like anybody else. I don't believe the numbers that the CPI is telling me on inflation these days.

I'm squeezed like everybody else. I think we are paying a lot for a lot of things. The CPI doesn't tell us that.

(END VIDEOTAPE)

CHERNOFF: Why not? Let's take the example of gasoline. We all know the price has been soaring recently, but the CPI won't fully reflect that increase because it's seasonally adjusted. It takes into account the fact that gas usually rises in the springtime. So, the CPI will show some increase for gas, but not as much pain as we are feeling at the pump right now -- Ali.

VELSHI: And gas is something we use every day. People will feel the increase in gas, milk, eggs, and coffee, by the way, which is something -- a commodity like wheat and everything else that's been...

(CROSSTALK)

CHERNOFF: Daily inflation.

VELSHI: And a little surprise here. Starbucks today is announcing a new roast. I've got some.

This is not how you're going to be able to buy it. This is a little thing they came and delivered. But it's a new roast, and they introduced a new cup. The siren on here is a little more siren-like. The mermaid's a little bit more...

CHERNOFF: It's the sexy Starbucks logo.

VELSHI: The sexy Starbucks logo.

But Starbucks, you know, obviously is a company that is matured. And it's having some growth issues. It slowed down a little bit in its growth. And it's got to be a tough time to be paying a few bucks for a cup of coffee, you know, when inflation is where it is.

CHERNOFF: You know, you say growth issues. I mean, the shareholders of Starbucks would say just the opposite. They've been suffering for two years.

VELSHI: Yes.

CHERNOFF: The stock has been just sinking, sinking. They've got to do something.

And now with the economy a little tight, people are going to be cutting back. They don't want to spend. A lot of people don't want to spend $4 for a grande latte.

VELSHI: Right. It's not the one thing that's going up. As you said, so much is going up. That is a challenge.

Allan, thanks very much. Check out the new cup if you get a chance -- Gerri.

WILLIS: Hey, Ali, save me a cup.

Why going green could actually help you save a great deal of money.

And on the anniversary of the Fair Housing Act, how to make sure you are not discriminated against.

ISSUE #1 will be right back.

(COMMERCIAL BREAK)

VELSHI: You are watching ISSUE #1.

And we are looking at a live shot of my cufflink, which is an old New York City token. They don't actually use these anymore, but it's my contribution to reducing congestion in New York City. And right now, it's the only contribution we've got.

New York City Mayor Michael Bloomberg can't be too happy with the failure of his congestion pricing plan. State lawmakers in New York ditched the proposal last night because so many Democrats opposed it.

Bloomberg issued a blunt statement calling their decision cowardice. In essence, it was an environmentally-friendly traffic toll. It would have charged drivers a hefty fee to come into some of Manhattan's most congested areas, about $8 for cars, up to $20 for trucks. It could have generated millions of dollars for public transportation projects and reduce pollution as it's done in London, but it is dead on arrival -- Gerri.

WILLIS: Well, you know, you hear so much about going green -- buy this, change that, do your part to help the environment. But what if you could go green and save cash at the same time?

David Bach is the author of "Go Green, Live Rich."

I have a copy of the book right here. Hey, this is pretty.

DAVID BACH, AUTHOR, "GO GREEN, LIVE RICH": Thank you.

WILLIS: It's paperback, but it's got colored pictures in it. It's really easy to read. I love it.

BACH: That was really the goal, make it really friendly and accessible.

WILLIS: All right. Well, OK, come on, David, if you go green, you pay more for all those green products, don't you? Don't tell me I'm going to save thousands of dollars a year.

BACH: This is what all my friends have been saying to me for years. As I was telling you at the break, I moved onto a green building, Solare (ph), in Battery Park City. And it changed my whole life.

It improved my health, but one of the first things I noticed aside from feeling better was that my bills were all going down. I was saving money on utilities. I was buying eco-friendly products and saving money.

And then I started noticing, wow, I'm actually saving a lot of money. So, the fact is, you can save thousands of dollars a year by going green.

WILLIS: All right. Well, show me specifics. Enough of these generalities. Let's talk about specifics.

How can I save and how much can I save?

BACH: All right. And these are really good things for the planet, but it's good for your pocketbook.

So this is -- we want to first talk about switching from toilet paper and paper towels that are recycled paper.

WILLIS: How much?

BACH: Why cut down trees? You save $40 a year.

WILLIS: Love that. OK. That's easy.

BACH: Very simple, very easy.

The second thing you can do, let's talk about public transportation. Now look, not everybody wants to take public transportation, but 40 percent of our trips are less than two miles. So, getting a bike, walking -- I walk to work. You can save $215 a year.

WILLIS: I use public transport. It's easier.

BACH: Good for you.

WILLIS: Yes, definitely.

BACH: And better for the planet.

WILLIS: If we rated me, I don't know how I'd do.

What's your next thing?

BACH: This one is my litter factor. We talk about -- you've heard me talk about latte factor. This is a litter factor.

Bottled water is a $16 billion industry right now in North America. If you just cut out one bottle a day, you're saving over $500 a year.

WILLIS: Wow.

BACH: That's really huge. And by the way, 30 million of those bottles are going into dumps every day because they are not recycled.

WILLIS: What else you got?

BACH: So -- that's $500 a year.

Then we've got keeping your car well maintained, $798. A very simple thing.

Inflate the tires properly. Take your car in for maintenance. Pulling all the junk out of your trunk. That is weighing the car down. Very simple things, it can save you $800 a year.

Brown-bagging your lunch, this is huge. We looked at green -- what we call green-bagging.

WILLIS: How does this save you money?

BACH: OK, here's what it does.

WILLIS: Yes.

BACH: If you bring your lunch to work -- and by the way, do it with recyclable containers, don't just use a plastic bag -- you can save $2,250 a year.

WILLIS: Wow. Wow.

BACH: A huge amount of garbage going into waste right now with that.

WILLIS: David, I have got to get you to talk about investments that are green.

BACH: Yes.

WILLIS: Now -- and I'm also wondering, do they perform on par with the market? The problem with a lot of specialty funds is they don't perform very well.

BACH: Yes. Socially responsible investing has been around for at least 20 years. It's a very big category, $2.3 trillion right now. Small compared to the rest of the market, but the next major trend -- and it's too new to really talk about performance -- the next major trend is investing in green eco-friendly companies.

That's clean technology, that's retailers that do green products. This is huge. When you look at where the smart money is going -- private equity, venture capital money, guys like John Dor (ph)...

WILLIS: All right.

BACH: Where are they putting their money? They're looking at green investments.

WILLIS: Green investments.

All right. David Bach, we're going to be back with you. You're going to be on our help desk.

BACH: Yes.

WILLIS: People need to send in e-mails because you're going to answer their questions.

Thank you so much.

BACH: Gerri, good to see you.

VELSHI: David, big kudos for telling people what a waste for the environment bottled water is.

Minutes away, America's housing and the current state of the mortgage meltdown. What is being done and how you can be sure to protect yourself.

Plus, a balancing act on the campaign trail -- running for president and fulfilling Senate duties at the same time.

And listen, don't forget to e-mail us. The address, issue1@cnn.com.

We'll be right back after a quick check of the headlines.

You are watching ISSUE #1.

(COMMERCIAL BREAK)

VELSHI: All right. We are taking a look at Senator Hillary Clinton, who is speaking at the Senate Armed Services Committee, asking questions of General David Petraeus. He is answering questions of that committee. Later this afternoon, he'll be talking to the Senate Armed Services Committee of which Barack Obama is a member. They are discussing what Hillary Clinton calls the way forward.

Let's listen in.

(JOINED IN PROGRESS)

SEN. HILLARY CLINTON, (D) PRESIDENTIAL CANDIDATE: This is not sufficient political progress. And our current strategy in Iraq has very real costs. We rarely talk about the opportunity costs, the opportunities lost because of the continuation of this strategy. The longer we stay in Iraq, the more we divert resources, not only from Afghanistan, but other international challenges as well.

In fact, Admiral Mullen, last week, said that the military would have already assigned forces to missions elsewhere in the world were it not for what he called the pressure that's on our forces right now. And he admitted that force levels in Iraq right now do not allow us to have the force levels we need in Afghanistan. The vice chief of staff of the Army, General Cody, testified last week that the current demands for forces in Iraq and Afghanistan limits our ability to provide ready forces for other contingencies.

And, finally, the cost to our men and women in uniform is growing. Last week "The New York Times" noted the stress on the mental health of our returning soldiers and Marines from multiple and extended deployments. Among combat troops sent to Iraq for a third or fourth time, more than one in four show signs of anxiety, depression or acute stress, according to an official Army survey of soldiers' mental health.

The administration and supporters of the administration's policy often talk about the cost of leaving Iraq, yet ignore the greater costs of continuing the same failed policy. You know, the lack of political progress over the last six months and the recent conflict in Basra reflect how tenuous the situation in Iraq really is. And for the past five years, we have continually heard from the administration that things are getting better, what we're about to turn a corner, that there is finally a resolution in sight. Yet each time Iraqi leaders fail to deliver.

I think it's time to begin an ordinarily process of withdrawing our troops, start rebuilding our military and focusing on the challenges posed by Afghanistan, the global terrorist groups and other problems that confront America. I understand the very difficult dilemma that any policy with respect to Iraq poses to decision makers. If this were easy or if there were a very clear way forward, we could all perhaps agree on the facts about how to build toward a resolution that is in the best interest of the United States, that would stabilize Iraq and that would meet our other challenges around the world.

With respect to our long-term challenges, Ambassador Crocker, the administration has announced that it will negotiate an agreement with the government of Iraq by the end of July that would provide the legal authorities for U.S. troops to continue to conduct operations in Iraq. Let me ask you, do you anticipate that the Iraqi government would submit such an agreement to the Iraqi parliament for ratification?

RYAN CROCKER, U.S. AMBASSADOR TO IRAQ: The Iraqi government has indicated it will bring the agreement to the council of representatives, at this point is not clear, at least to me, whether that will be for a formal vote or whether they will repeat the process they used in November with the declaration of principles in which it was simply read to the members of the parliament.

CLINTON: Does the administration plan to submit this agreement to our Congress?

CROCKER: At this point, senator, we do not anticipate that the agreements will have within them any elements that would require the advise and consent procedure. They intend to negotiate this as an executive agreement.

CLINTON: Well, Ambassador Crocker, it seems odd, I think, to Americans, who are being asked to commit for an indefinite period of time the lives of our young men and women in uniform, the civilian employees whom you rightly referenced and thanked, as well as billions of dollars of additional taxpayer dollars, if the Iraqi parliament may have a chance to consider this agreement, that the United States Congress would not.

And as you may know, I currently have legislation requiring the Congress to have an opportunity to consider such an agreement before it is signed. And I would urge you to submit such an agreement to the Congress for full consideration.

General Petraeus, you know, I know that in this March 14th interview with "The Washington Post," you stated that no one, and those are your words, no one in the United States and Iraqi government feels there has been sufficient progress by any means in the area of national reconciliation or in the provision of basic public services. Those are exactly the concerns that my colleagues and I raised when you testified before us in September.

I remember well, you know, your being asked that -- how long would we continue to commit American lives and treasure if the Iraqis fail to make political gains. And in response, you said that if we reach that point in a year, you'd have to think very hard about it and it would be difficult to recommend the continuation of this strategy. And there clearly are limits to the blood and treasure we can expend in an effort.

Well, we're halfway through the year. And as many of us predicted, and as you, yourself, stated, we still do not see sufficient progress. What conditions would have to exist for you to recommend to the president that the current strategy is not working?

And it seems apparent that you have a conditions-based analysis, as you set forth in your testimony, but the conditions are unclear, they certainly lack specificity and the decision points with respect to these conditions are also vague. So how are we to judge, General Petraeus, what the conditions are or should be and the actions that you and the administration would recommend pursuing based on them?

GEN. DAVID PETRAEUS, COMMANDING GEN., MULTINATIONAL FORCES IRAQ: First of all, senator, if I could just comment on the -- that "Washington Post" article. What I said was that no one was satisfied with the progress that had been made, either Iraqi or American. But I then went on and actually ticked off a number of the different areas in which there had been progress and talked about the different laws that Ambassador Crocker has rightly identified in a number of other areas in which, in fact, there's been progress, although not satisfactory progress, as I mentioned, in the eyes of either Iraqis or Americans.

And so, that was the thrust of what I was getting at there, because there has indeed been progress in the political arena and there actually has been progress in a variety of the other arenas as Ambassador Crocker laid out in his opening statement.

With respect to the conditions, senator, what we have is a number of factors that we will consider by area as we look at where we can make recommendations for further reductions beyond the reduction of the surge forces that will be complete in July. These factors are fairly clear. There's obviously an enemy situation factor. There's a friendly situation factor with respect to Iraqi forces, local governance, even economic and political dynamics, all of which are considered as the factors in making recommendations on further reductions.

Having said that, I have to say that, again, it's not a mathematical exercise. There's not an equation in which you have coefficients in front of each of these factor. It's not as mechanical as that. At the end of the day, it really involves commanders sitting down, also with their Iraqi counterparts and leaders in a particular area, and assessing where it is that you can reduce your forces so that you can, again, make a recommendation to make further reductions.

And that's the process. Again, there is this issue and, in a sense, this term of battlefield geometry. And as I mentioned, together with Ambassador Crocker and Iraqi political leaders, there's even sort of a political military calculus that you have to consider, again, in establishing where the conditions are met to make further reductions.

CLINTON: If I could, just one follow-up question, Mr. Chairman.

In response to a question by Senator Levin regarding when you knew of Prime Minister Maliki's plans to go into Basra, you said, and I was struck by it so I wrote it down, that you learned of it in a meeting where you were planning -- where the meeting's purpose was planning to resource operations in Basra on a longer-term basis. And clearly, until relatively recently, southern Iraq has not been within our battlefield geometry.

Southern Iraq was originally the responsibility of the British. They have clearly pulled back. And weren't, so far as I can glean from the press reports, very actively involved in the most recent operations. But what did you mean by the resources you were planning to deploy and over what length of time?

PETRAEUS: Senator, what we had been working on with the Iraqi national security advisor, ministers of defense and interior, was a plan that was being developed by the commander of the Basra operational command, General Mohan (ph), which was a fairly deliberate process of laying out of adding to the resources there on the military side and in other areas. And then there was a phased plan over the course of a number of months during which different actions were going to be pursued.

Prime Minister Maliki assessed that that plan was taking too long. Determined that the threats that had emerged since provincial Iraqi control, in terms of the criminal elements, again connected to the militia and so forth, were such that more immediate action was taken. And again, as a sovereign country's leader, commander in chief of his armed forces, he decided to direct the much more rapid deployment of forces from other locations to Basra. And that is, in fact, what he did. Very much moving up the time table and compressing the different activities that, in fact, we had been planning to resource over time.

CLINTON: Thank you.

UNIDENTIFIED MALE: Thank you, Senator Clinton.

Senator Martinez.

VELSHI: And that was Senator Hillary Clinton asking questions of General David Petraeus and Ambassador Ryan Crocker, ambassador to Iraq, at the Senate Armed Services Committee.

Let's get some sense of what was going on over there. Let's bring in our senior political analyst Bill Schneider, who's been listening to this conversation.

Bill, I kind of have to assume that members of the Senate Armed Committee, senior senators, people who are running for president, have some sense of what Ambassador Crocker and General Petraeus are going to say. So much of what we were hearing there was how Hillary Clinton presented those questions and her statements. What's the most interesting thing you heard about what Hillary Clinton was saying in her questions to these two gentlemen?

WILLIAM SCHNEIDER, CNN SENIOR POLITICAL ANALYST: Well, a lot of her questions had to do with the commitment of resources, which she depicted correctly as becoming quite scarce. Particularly at a time when ordinary Americans are feeling a lot of economic pressure. She said, "I don't think they should get a blank check from the United States any longer," refer to the Iraqi government.

This is costing the United States a great deal of money. The latest estimate I heard, about $12 billion a month. She talked about resources that are being diverted from other, urgent priorities, particularly Afghanistan. She talked about the planned resource commitment to Basra that was overtaken by Prime Minister Maliki's decision to send the Iraqi army there to try and, in the event, failed to subdue the army, the Shiite militia that was fighting there.

So, she was talking about the terrible strain on American resources and on the American taxpayer of this commitment in Iraq, which General Petraeus reported this morning he wants an open-ended suspension of any further troop withdrawals after this summer.

VELSHI: All right. Bill Schneider, thank you for giving that to us.

Bill Schneider is our senior political analyst and he is part of the best political team on television -- Gerri.

WILLIS: Up next, how to protect your housing right when ISSUE #1 comes right back.

(COMMERCIAL BREAK)

VELSHI: More than 10,000 people filed complaints of housing discrimination last year according to the Department of Housing and Urban Development. With the 40-year anniversary of the Fair Housing Act approaching, it begs the question, is it working? And what are your rights, by the way, if you think you've been discriminated against? Avery Friedman is a civil rights attorney.

Avery, good to see you. We got our time shortened a little bit because of that testimony, but this is such an important issue.

AVERY FRIEDMAN, CIVIL RIGHTS ATTORNEY: It is.

VELSHI: Forty years in, is it fair? Is housing fair? Did it work?

FRIEDMAN: Well, actually, this was a law that was intended to end housing discrimination 40 years ago, Ali, and it hasn't worked. As a matter of fact, there's a federal study out there that talked about 3.7 million of us, Americans who were turned away because of what color they are or where they're from.

VELSHI: How do you even know if that's the case and what do you do about it? When you're looking for a place to live, especially in these economic times, not everybody's looking for a fight and they're not looking for a lawyer, they're just looking for a place to live. What do you even do?

FRIEDMAN: Yes, not very complicated. When people feel that they're turned away for all the wrong reasons, it's nothing more than, for example, on the basis of race, you have a white counterpart call, find out if an apartment is available. If there's a difference in treatment, the law provides immediate access to the federal court and the federal judge will stop the transaction until a hearing is had.

VELSHI: Does it work? Do these systems work? When people do complain, does justice come about?

FRIEDMAN: It's hard to lose a case like this, Ali, because the evidence is so obvious. Most people still think that if someone who's black moves in, it's going to somehow affect property values. There's no data to support that. It's unadulterated prejudice.

So the law works. It works fast. You can either go to the federal court, you can go to the U.S. Department of Housing and Urban Development. They'll accept your complaint, not cost. Or you can go to the local agencies.

VELSHI: Avery, things have changed in this day and age. Certainly in 2008 when we're talking about possible discrimination or tough times, we're often talking about it economically. We're talking about at the bank. We're talking about with mortgages. Does this law apply to that? Because we do know that certain segments of the population have been real adversely affected in this economic downturn with this mortgage mess.

FRIEDMAN: Well, yes, that's right. As a matter of fact, there are a number of studies, Ali, that talked about the disproportionality of what's happened in mortgage foreclosures. Studies out of Baltimore and other major cities show that if you're black, it's more likely that you're going to wind up with a subprime loan, so you're going to be adversely affected. The law, however, does not protect people against economic discrimination. So, you know, it's sort of a catch- 22.

VELSHI: Yes, we've got some way to go on that.

FRIEDMAN: That's for sure.

VELSHI: Avery, good to bring us up to speed on what's going on. Thank you for that. And thank you for telling us about the opportunities that people have to right wrongs that were meant to have been solved a long time ago.

Avery Friedman, a civil rights attorney, joining us now from Cleveland -- Gerri.

WILLIS: Still ahead, we asked for your e-mails and you responded big time. The help desk gets down to business answering your questions next.

(COMMERCIAL BREAK)

WILLIS: Hey, the help desk, it's all about answering your questions. So let's get right down to it. Doug Flynn is a certified financial planner with Flynn Zito Capital Management. And, hey, you just met David Bach, the best selling author. Allan Chernoff is a CNN senior correspondent.

OK, guys, let's get right to the questions.

Samantha in Missouri asks, "We are planning on putting our house up for sale May 1st. Do you think I should start out at a low price or should I price it just a little above what I want to get out of it? How many months should we try to sell it at the price we want before we bring the price down?"

I hate questions like this, David. People just want to play with the price and that's always a bad idea.

BACH: I love questions like this because here's the thing. She needs to hire a professional real estate agent who truly knows her market. What you don't want to do is what I call price and pray. The way you sell a home is, you price it right in the very beginning.

The biggest, single mistake that sellers make -- you know this. You wrote the book on real estate -- is they price the home too high praying someone will take that and then they wait to lower it and that home becomes a dead house. It doesn't move. You've got to price it right in the beginning.

WILLIS: I totally agree. Great advice.

We have an e-mail from Michigan. "I am a college student with three private loans. The interest rate is between 14 percent and 16 percent and I have a large monthly payment that is barely making a dent in the interest. The lender won't consolidate my loans and won't even grant a deferment or forbearance."

What the heck does this person do?

DOUG FLYNN, CERTIFIED FINANCIAL PLANNER, FLYNN ZITO CAPITAL MGMT.: Well, that's an interesting one because it sounds like that the loans that this person has aren't necessarily student loans. If they're private loans at that rate -- if they were student loans, they would be tax deductible and at a much lower rate.

WILLIS: The world would be a better place. People do take out private loans for student debt and they pay higher rates of interest. Do you think it's a good idea to maybe try to find a lower rated interest, maybe refi some of this debt?

FLYNN: It certainly is. We don't know the rest of the story. Was this -- were these debts actually used for college? Were they other debts they're just trying to consolidate? It's hard to get a forbearance or a deferment on loans that aren't student related. But, absolutely, you need to shop around and get the lowest consolidated rate that you could possibly get.

WILLIS: OK. Let's go to the next question. Emmano in New York wants to know, "I want to know why a big corporation like Bear Stearns is able to get bailed out, but not the American people."

Allan, we get questions like this all the time. You know, these are people really venting to us their frustrations. But, you know, it does beg the question, why Bear Stearns? Why not people who were caught in this mortgage mess?

CHERNOFF: A lot of people very frustrated about all of this. What the federal government believes they were doing, especially the Federal Reserve, they're saying, we did this for the American people. Now that sounds counterintuitive. The whole idea, though, is that the Fed chairman, Ben Bernanke, was trying to prevent a domino effect. Trying to prevent a collapse of the financial markets, which would have devastated ...

VELSHI: There was a lot at risk here.

CHERNOFF: It would have devastated the economy and it would have hurt the average American. That's the reason they stepped in to help out Bear Stearns (INAUDIBLE).

WILLIS: And we're still waiting for the congressional response here on what they might do. We can get news just this week.

CHERNOFF: Puts some more pressure on Congress to act.

WILLIS: All right. Let's go to the next e-mail. Leslie asks, "I am 51-years-old. I own my own home, two cars and have a stable job. I do not have a retirement plan. Is it too late for me to start?" -- David.

BACH: Gerri, it's never too late, but 51, honestly, it's time to get going. So what should she do? She has to go open up a retirement account today. Now if she wants to go more specifically, go online. Go to like a company like Vanguard or Fidelity. Just get it done. Open up a target-dated mutual funds for, I'd go out to age 70 because she's realistically going to work another two decades. Get savings $10 a day automatically. Have it pulled right from her paycheck, right into that account, wherever she puts it, but do it today.

WILLIS: Yes, get started.

CHERNOFF: One week left to contribute for an IRA.

FLYNN: And why does she have two cars?

WILLIS: That's a great question, Doug.

Let's take Carol. She asks, "We have student loans from five children. A few years ago, we lost a family business and the loans went unpaid for a while. I have reestablished payments, but interest went from 11 percent to 18 percent. Is there any help?" -- Doug.

FLYNN: Well, that's a tough one. Obviously the financial picture was that they had a family business, they couldn't make the payments. But this gets back to the original planning. Was the plan always to cover five children's student loans in their entirety? Do any of these children have a job that they can help pay during this time? I mean, those are the bigger issues at stake here. But, you know, I don't know that there is a lot you can do when you're paying back those loans.

WILLIS: All right. Some problems are really tough. I want to thank the panel here. Doug, David, Allan, thank you so much for joining us today. Great answers.

VELSHI: Those questions are really excellent. This show is really about getting your response. So let's check in on the results of today's Quick Vote. We asked you the question on there, should Congress step in and help struggling homeowners refinance their mortgages? Nearly 14,000 of you logged on to cnnmoney.com and here's how you voted. Thirty-one percent said Congress should step in. Sixty-nine percent of you said no. Very interesting. We should have a follow-up on that.

OK. Let's talk camels, Gerri.

WILLIS: Camels?

VELSHI: Camels.

WILLIS: Camels?

VELSHI: Nothing to do with your money, but I saw this story, I have to share it with you.

The crowned prince of Dubai has bought a camel for a record $2.72 million.

WILLIS: Holy cow. VELSHI: She was bought at a beauty pageant. Look at that, $2.72 million.

WILLIS: I don't think it's that cute.

VELSHI: It's part of a camel festival in Abu Dhabi that claims to -- that aims to celebrate and preserve the regional cultural heritage. Now up for grabs, prize money totally almost for $10 million. Look at that beauty. Look at that beauty, $2.7 million.

WILLIS: That's so cute. I wouldn't pay that much. Forget about it.

VELSHI: You know what else you can get for $2.7 million?

WILLIS: What?

VELSHI: A little private jet. It's a little faster. You can get a 30-second commercial in the Super Bowl.

WILLIS: Hey, luxury home, the Bay area.

VELSHI: This is stuff -- yes, so, you know, or a camel.

WILLIS: I don't want a camel. What would I do with a camel?

VELSHI: You've have to feed it.

WILLIS: Yes, and take care of it.

All right, issue number one is the economy. CNN is all over it. ISSUE #1 will be back tomorrow, noon Eastern right here on CNN.

VELSHI: Take it over to Don Lemon and Brianna Keilar with the latest in the "NEWSROOM."

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

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