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Issue Number One
State of the Economy; Job Cuts; Answering Your Questions; Quick Vote Results; E-Panhandling
Aired April 09, 2008 - 12:01 ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
ALI VELSHI, CO-HOST: The White House says it wants to help more struggling homeowners as the Senate debates a major housing bill.
Gas prices hit yet another record high.
And we will tell you where the jobs are.
ISSUE #1 is the economy. ISSUE #1 starts right now.
And welcome to ISSUE #1. This is the show where we talk about your job, your home, your savings and your debt. And we show you how to save money at the same time.
CNN personal finance editor Gerri Willis will be along in just a moment, but we want to begin with housing in America.
A housing stimulus plan is under debate in the Senate. And the White House is announcing plans to expand a government program that could help some 100,000 struggling homeowners.
CNN's Kate Bolduan is live on Capitol Hill with the very latest -- Kate.
KATE BOLDUAN, CNN CORRESPONDENT: Hi there, Ali.
Well, there is a lot going on Capitol Hill regarding the housing crisis. Today, as you mentioned, the Bush administration now weighing in on how it thinks help should be offered to struggling homeowners. And the announcement came in the Housing Committee earlier this morning.
And what it says is that it's part of an expansion of an existing government program, FHA secure. And the White House says that this program should help up to 500,000 people by the end of this year by allowing more struggling homeowners to refinance their mortgages and reduce their monthly payment.
Now, Dana Perino, the White House press secretary, she acknowledged this morning that this is not a silver bullet to mend the housing crisis that we are in, but she does say it will help. And she adds, "The expansion will allow the program to ensure loans for Americans who may have been late with a couple of payments and are facing interest rate resets, but who are otherwise reliably creditworthy -- verifiable incomes, decent credit histories, and they live in their homes." So, you see, Ali, now the White House is jumping into the mix because there's a lot of housing proposals going through Congress right now.
VELSHI: How do you keep it straight? My head has been spinning, because yesterday we spoke to you and you gave us a fantastic explanation about there's this House proposal, and there's a Senate proposal, and there is this.
What can our viewers know to just sort of understand what this is compared to the others?
BOLDUAN: So important, exactly. Put it in perspective.
This proposal is a more modest -- the White House proposal is a more modest proposal than similar bills that are working through the House and the Senate. And there is a major bill working through the House that's introduced by Democratic Congressman Barney Frank, who said he will offer up to $300 billion to help struggling homeowners do similar to what this White House proposal would do -- refinance their mortgages and avoid foreclosure.
At the same time, as you mentioned, Ali, the Senate today is expected to vote on its version of a housing bill. and that includes community grants and tax breaks.
But what it all comes down to is, for homeowners who are looking for help, that right now the House and the Senate, they need to, you know, reconcile their differences before they square it up with the president before it can come to help the homeowner.
VELSHI: As we closed up with you yesterday, we say again there is a lot of work to be done. This is very complicated, but in the end it should hopefully help out some homeowners.
Kate Bolduan on Capitol Hill.
Thank you.
GERRI WILLIS, CO-HOST: With all these plans`s to help homeowners circulating right now, as Ali said, it can get a little confusing. So we want to take a closer look.
The Senate could vote on its housing stimulus bill today. It provides $4 billion to purchase and rehab foreclosed homes, $6 billion in tax breaks for homebuilders and other companies. Plus, a $7,000 tax credit for people who buy foreclosed homes.
Now, critics say the bill doesn't do enough for homeowners in trouble. The House is also debating its housing bills -- plural -- today. Representative Charlie Rangel introduced a bill Tuesday that addresses parts of the Senate bill Democrats found favorable and does away with sections they didn't like -- namely, tax benefits for the industry.
Now, Representative Barney Frank has a plan on the table, as well. It's been in the works 13 months. It would refinance at-risk borrowers into affordable mortgages.
The price tag is some $300 billion. It works just like this -- the original lender writes down the value of individual mortgage loans to 85 percent of their current, right now market value. An FHA lender -- that's a lender affiliated with the government -- refinances the loan and the borrower gets a new mortgage at 90 percent of the appraised value. The other 10 percent goes to the borrower as equity. Most notable here, lenders choose who gets help, not the government or the borrowers themselves.
Now, as you can see, the House and the Senate have taken quite an interest in housing. But will it make a difference?
Right now let's go over to Poppy with the question of the day -- Poppy.
POPPY HARLOW, CNNMONEY.COM: Hi there, Gerri.
Well, you know, I'm pretty thankful for mass transit right now, because the cost of driving has just gone through the roof. Another record high for gas prices. AAA saying gas now on average, $3.34 across the country, up 20 percent from a year ago.
We want to know, how high is too high for you? Here is our "Quick Vote" question today.
What it would take for you to drive less -- $4 a gallon gas, $5 a gallon gas, you've already cut back, or you say I'll drive at any cost?
Log on to cnnmoney.com to vote. We'll be back just a little bit later in the program with your results -- Gerri.
WILLIS: Poppy, that is a whole lot of money.
Right now, let's go to Congressman Carolina Maloney. She's on the House Financial Service Committee, and she actually came out of the hearing to talk to us about the bills that are being discussed.
Representative, let's start by talking about what the administration had to say today. They have a new proposal out there. Do you think it goes far enough?
REP. CAROLYN MALONEY (D), NEW YORK: I don't think it goes far enough, Gerri, because the FHA secure program has been out there for a while, and it's only helped 3,000 homeowners stay in their homes. By some estimates, 8,000 people are losing their home each day. Some economists estimate anywhere from between two million to five million people will lose their homes.
Last week, Chairman Bernanke testified before the Joint Economic Committee that we had to stabilize the housing market before we can stabilize our economy. He's taken innovative steps to stabilize Wall Street. We now need to stabilize Main Street.
WILLIS: Right. MALONEY: This is a large problem.
WILLIS: It's a great idea. But isn't this plan that the administration put across, isn't it very similar to what Barney Frank has been advocating and what he's gotten a lot of shareholders, stakeholders in this issue to sign on to? How is it different?
MALONEY: Well, basically they differ in the math. The proposal that the Democrats and Chairman Frank have put forward would have a backstop similar to what Wall Street has as a backstop, a loan guaranty of up to $300 billion that would allow FHA to refinance these loans into long-term loans.
Surprisingly, in the hearing today, the chairwoman of the FDIC, Sheila Bair, and Governor Kroszner from the Federal Reserve, both of them testified in support of the concept of the Frank Democratic proposal. There -- much more needs to be done.
WILLIS: Right.
MALONEY: Incentives have to be put in for lenders and servicers. But the math on the administration's proposal just doesn't add up. We need more help now. We need to stabilize our economy, our housing economy.
WILLIS: And along those lines, Nancy Pelosi has said, hey, whatever we come up with, it needs to be more consumer-friendly.
What else needs to be in the ultimate bill that Congress signs off on?
MALONEY: Well, Speaker Pelosi is meeting today with the White House. We are hopeful we can work in a bipartisan way and move forward, but many economists say we need to stabilize this housing market just as we stabilized Bear Stearns and the financial markets. And we need a federal guarantee that's in place that will allow us in a large scale, not in a small scale, but in a large scale, take care of a large-scale challenge.
WILLIS: Representative...
MALONEY: And by taking care of that challenge, Gerri, we stabilize our economy for everyone and start moving forward.
WILLIS: Right. Well, Representative Maloney, let's talk about timetables now, because some people have said if Congress doesn't act and doesn't get a bill to the president by, say, July 4th, that, you know, people aren't going to get helped. People are going to lose their jobs. Already, Congress has been talking about this issue for months, for over a year.
How quickly can the two sides come to a resolution here and get a bill to the president's desk?
MALONEY: We hope to mark this bill up in two weeks and send it to the floor, and get it to the conference committee with the Senate and to the president. We need to work in a bipartisan way.
And we have passed a stimulus package. We've passed many reforms to the GSE and FHA that are over in the Senate now. But I agree, we need to move quickly, we need to stabilize these markets, and we've got to get our economy chugging in a positive way.
WILLIS: Is there any indication that other stakeholders, lenders, the so-called servicers, will also sign on, get active on this? Because it requires their cooperation, as well.
MALONEY: We need to get their cooperation. We need to build incentives in for them. We need to work together. It is certainly in their benefit.
When you have a foreclosure, there are huge costs to servicers and lenders, not only the homeowner. So, we all have a stake in really stabilizing these markets.
One economist wrote a paper that one in three homeowners in America are now seeing loss in the value of their home. That is startling.
WILLIS: That's a very big number.
MALONEY: This is a big problem. And if you have one home in the neighborhood that forecloses, that brings down the property value for the entire neighborhood. We've got to stop it. We've got to plan.
WILLIS: All right. Representative Maloney, thank you so much.
MALONEY: Thank you for your interest.
WILLIS: Great information. Appreciate your time today.
MALONEY: Thank you.
WILLIS: I know it's a busy one for you.
MALONEY: Thank you. Thank you.
VELSHI: All right. This big cloud needs a silver lining. So we're going to come back with some advice. Politics -- see how one Philadelphia high school is teaching its students the ropes of the campaign trail.
And imagine getting a stranger to pay off your credit card debt. It's called e-panhandling. It's on our radar coming up, because you are watching ISSUE #1.
(COMMERCIAL BREAK)
WILLIS: Well, it's less than two weeks now to the Pennsylvania primary, and the race is getting pretty interesting. Voter registration there has increased quite a bit, and it's made for a very close race.
CNN's Dan Lothian has that story.
(BEGIN VIDEOTAPE)
DAN LOTHIAN, CNN CORRESPONDENT (voice over): It's not an earthquake, but the ground appears to be shifting under Senator Hillary Clinton's once solid lead in Pennsylvania. The latest CNN Poll of Polls shows Obama trailing Clinton by only six points, compared to 11 points just last week.
In this competitive race where both candidates are fighting to win over working class voters...
SEN. BARACK OBAMA (D-IL), PRESIDENTIAL CANDIDATE: What we need right now is a president who can work on behalf of ordinary Americans.
LOTHIAN: ... Senator Clinton seems to be relishing the challenge, reminding union members in Washington of what she is fighting for.
SEN. HILLARY RODHAM CLINTON (D-NY), PRESIDENTIAL CANDIDATE: You know what it's like to be told to go away, to quit. I know what that's like too.
We're fighting for what's right.
LOTHIAN: That "get the job done" attitude is the theme of Clinton's five new TV ads running across the state. She bundles testimonials from popular Pennsylvania Governor Ed Rendell and Philadelphia Mayor Michael Nutter with a trip down memory lane, drawing attention to her father's Pennsylvania roots.
CLINTON (voice over): This is me in Scranton where my father was raised...
LOTHIAN: Pennsylvanians seem to be enjoying their moment in the sun. Voter registration is at near record highs, about 8.3 million. More than 200,000 new voters signed up this year alone -- the biggest jump among Democrats.
PEDRO CORTEZ, PENNSYLVANIA SECRETARY OF STATE: Pennsylvania is going to be relevant in the decision of at least one of the two party nominations for the president. And I think that's what's driving many Pennsylvanians to want to have their voices heard for this election.
LOTHIAN: Since January, more than 160,000 voters switched parties to take part in the upcoming Democratic primary. And in long- time Republican suburbs around Philadelphia, like Bucks and Montgomery counties, Democrats now have the advantage in registered voters for the first time in decades.
AL SCHMIDT, PHILADELPHIA REPUBLICAN PARTY: It's been a gradual shift over time that just accelerated in the last couple of weeks.
LOTHIAN (on camera): Were you surprised by it?
SCHMIDT: I think the numbers were surprising. (END VIDEOTAPE)
WILLIS: Dan Lothian live with the CNN Election Express in Philadelphia.
Hey, Dan, what is behind this surge in voter registration? From your experience, what are the big issues in Pennsylvania for voters?
LOTHIAN: Well, what's behind it obviously is there's a lot of enthusiasm. This race is so competitive, and people really want to take part in this.
As for the issues, people here really do care about the economy. I mean, that is issue #1 for a lot of people here.
Certainly, voters care about the war in Iraq, but here, a lot of manufacturing jobs over the years have gone overseas. And there is this key voting group here, these working class white males. That is who both of the candidates, the Democratic candidates, are trying to go after.
And they are very concerned about some of the jobs, the blue collar jobs that they believe have gone overseas. So, they are looking for the candidate who can lay out the best plan for bringing some of those jobs back home.
WILLIS: Dan Lothian, thank you for that.
VELSHI: From election year politics to everyday politics of one Philadelphia high school, the primary season is getting students at Central High School a chance to experience the election, even though they are not old enough to vote.
CNN Election Express producer Josh Rubin has that story.
(BEGIN VIDEOTAPE)
MIKE HORWITS, TEACHER: If you were a media consultant for Barack Obama...
JOSHUA RUBIN, CNN PRODUCER (voice over): Philadelphia's Central High is educating students about how politicians try to educate voters. They start with the history.
HORWITS: How has advertising changed since 1952 in your mind?
UNIDENTIFIED MALE: Back then, you know, it was a central (ph) cartoon. You showed a cartoon and (INAUDIBLE) because it was amusing. Then that was that. Nowadays, candidates get so deep into it, it's getting to the point where they even put psychology aspects into it.
RUBIN: Making these newest voters media savvy is the goal, and it seems to be working.
UNIDENTIFIED FEMALE: I think that they want to target certain demographics, and with issues... HORWITS: Through hearing themselves in the media and actively researching the issues, they feel they developed a sense of efficacy and feel part and parcel of the discourse that shapes our democracy.
If you were the campaign manager for Obama...
RUBIN (on camera): Through April 22nd, Pennsylvania is the center of the political universe. So these kids are plugged in, because they know that if they want an A in this class, they better know what's going on.
HORWITS: But where does McCain fit? Does he get helped or hurt by this competitive race with the Democrats?
UNIDENTIFIED FEMALE: He gets helped.
HORWITS: How? Why?
UNIDENTIFIED FEMALE: It would be harder for them to beat McCain, because one half of the party is going to be softer (ph).
UNIDENTIFIED MALE: You learn so much stuff about Obama, you learn so much stuff about Hillary that...
HORWITS: The kids focus on the issues. I've never seen a group more connected.
RUBIN (voice over): Josh Rubin, from CNN's Election Express, Philadelphia.
(END VIDEOTAPE)
WILLIS: All right. So, coming up, forget about finding the perfect job out of college. How about just finding any job? It's the tough reality for this year's graduates. And we'll tell you where they might want to look.
Then, how this tough economy is pushing some to ask perfect strangers for help on the Internet.
And don't forget to send us your e-mail. The address is issue1@cnn.com. We'll answer your questions coming up next.
(COMMERCIAL BREAK)
WILLIS: Welcome back to ISSUE #1.
You remember Bill Murray in the movie "Groundhog Day"? You know, the TV weatherman who relives the same day over and over and over again? Well, life does imitate art. We've hit yet another record price for gasoline.
The AAA Auto Club reports the national average price for a gallon of regular unleaded went up another penny overnight, now up $3.34 a gallon -- ouch -- from $3.33 yesterday morning. And this morning, a congressional hearing focuses on how higher gas prices are really hurting smaller businesses.
All of this as we see a big jump in the price of oil. A barrel now topping $111. Whew.
VELSHI: Well, top military officials, including General David Petraeus, are back on Capitol Hill today. They're answering questions on the war in Iraq from lawmakers.
General Petraeus just responded that if the next president of the United States instructed him to bring troops back from Iraq immediately, he would want to enter in a dialogue about that. He is not sure he would support that immediately.
Well, one question that will likely not come up is the economy in Iraq. There are some people who are wondering if Iraq's economy is strong enough to pay for the rebuilding there.
CNN's Jill Dougherty reports from Baghdad.
(BEGIN VIDEOTAPE)
JILL DOUGHERTY, CNN CORRESPONDENT (voice over): Five years ago, just after the invasion of Iraq, the Bush administration assured Americans that Iraq would be able to pay for its own reconstruction with its oil revenue.
PAUL WOLFOWITZ, FMR. DEPUTY SECRETARY OF DEFENSE: There is a lot of money to pay for this that doesn't have to be U.S. taxpayer money.
DOUGHERTY: But so far, U.S. taxpayers have spent nearly $50 billion to rebuild Iraq. Even as Iraq is earning billions from its oil.
Iraq now is pumping and exporting more oil than at any time in the past five years, with oil at roughly $100 a barrel. This year alone, Iraq could earn nearly $60 billion from oil, according to U.S. government auditors.
Iraq has a budget surplus. The United States has a budget deficit. And that is infuriating some Americans.
SEN. CARL LEVIN (D), MICHIGAN: During my recent trip to Iraq, just before the latest outbreak of violence, a senior U.S. military officer told me that when he asked an Iraqi official, "Why is it that we are using our U.S. dollars to pay your people to clean up your towns, instead of you using your funds?" that the Iraqi replied, "As long as you are willing to pay for the cleanup, why should we do it?"
DOUGHERTY: Levin and other lawmakers want to know why Iraq isn't spending more of its own money to rebuild. Iraqi's deputy prime minister says the answer isn't simple.
BARHAM SALEH, IRAQI DEPUTY PRIME MINISTER: We have inherited a socialist command economy, a huge bureaucracy that cannot take initiative, at the time we were trying to reform and open up the system, when we are faced with the terrible challenge of al Qaeda and terrorism afflicting the society day in and day out. People should not be too judgmental.
DOUGHERTY: One expert who works with the Iraq Study Group says the Iraqi government is spending too much money on bureaucracy and not enough on its own people.
FREDERICK BARTON, IRAQ STUDY GROUP EXPERT: But we are spending way too much time working from the center out, rather than engaging the people. If you want to have a capable government, you have to have a stable people. So you have to work both ways at the same time. And we have missed the last half of the puzzle.
DOUGHERTY: Frederick Barton says the Iraqi government should transfer more oil money directly to the people, giving them a stake in their own recovery.
(END VIDEOTAPE)
VELSHI: Well, Jill Dougherty is live now in Baghdad.
Jill, any prospect of this situation that you've just described is going to change in the near future, some way of figuring out how Iraq can pay for more of its own rebuilding?
DOUGHERTY: Well, you know, we were talking with a government official just yesterday who said they are beginning to see one of the problems is that they did not get money into the hands of people, and that they have to begin building their infrastructure. It's a massive task. But they say they are at least beginning to see that that was the problem.
As you can see, he says we have to build the government first. But that could be backwards, according to that expert.
VELSHI: Jill, is the money that is being injected by the United States, is it very clear that it's fixing the economy, it's rebuilding? That there's some infrastructure that is going to be there that's going to allow the Iraqis to take over themselves in terms of the economy?
DOUGHERTY: Well, it's certainly going for infrastructure. But you would have to say that some of that gets blown up or destroyed because of terrorism.
And then the other question is really the infrastructure and the whole economy was so -- let's say even before the war and certainly after five years of war -- needs so much. It was a central command economy, so getting jobs, building the electricity grid -- I mean, here in Baghdad, every day, practically, the electricity still goes out five years later. So it's really massive, and you almost have to do it from the ground up.
But the question is, when you have Iraq, with the third largest proven oil reserves in the world, will Americans be willing to say, yes, let's pay for reconstruction when you have economic problems back in the United States as well?
VELSHI: And you have oil above $110 a barrel again.
Jill Dougherty in Baghdad.
Thank you so much.
Still to come on ISSUE #1, the state of the economy. Robert Reich will be here to illustrate the big picture -- he used to be secretary of labor -- and what that jobs picture means to you and your family.
And don't forget to email us. The address: issue1@cnn.com. We're going to answer your questions, and we are coming back after a quick check of the headlines.
You're watching ISSUE #1.
(COMMERCIAL BREAK)
DON LEMON, CNN CORRESPONDENT: Hello, everyone. I'm Don Lemon, live here at the CNN world headquarters in Atlanta. More ISSUE NUMBER ONE in just a moment, but first we want to check on some headlines.
This story. A dramatic rescue moments ago at a burning Michigan nursing home. Fire crews used ladders to help get elderly residents out of an assisted living facility outside of Detroit. A fire reportedly broke out on the top floor of this three-story complex. And we showed you those dramatic rescues earlier. There were no immediate reports of injuries and no word of the cause of that fire. There are those rescues that happened right during our morning hours right here in the CNN "Newsroom." The assistant fire chief says, though, that crews got everyone out of that building safely. We're going to update that one at the top of the hour. An amazing story there.
Meantime, Iraq, then and now. Five years ago today, U.S.-led forces toppled Saddam Hussein's regime. The question now, of course, how much longer will American men and women remain there? Well, today, House lawmakers are demanding answers from the top two U.S. leaders in Iraq. You can see those are those hearings right now going on, on Capitol Hill. General David Petraeus leads the military. Ambassador Ryan Crocker heads up the diplomatic mission. In today's hearing Petraeus was asked to rate the readiness of the Iraqi army. He gave it a b minus, saying a lot of work needs to be done before it can assume control.
There is more travel trouble to tell you about. American Airlines canceling another 850 flights. That makes more than 1,300 since yesterday. American's MD-80 planes are undergoing wiring checks for the second time in two weeks. Airline officials say the inspections focus on cords used to secure bundles of wires in the wheel wells. American says it's working to help passengers whose flights are canceled.
More news at the top of the hour. Right now we want to send you back to ISSUE NUMBER ONE. I'm Don Lemon. I'm see you at 1:00 p.m. Eastern here in the CNN "Newsroom." Ali Velshi and Gerri Willis now. VELSHI: Hey, welcome back to ISSUE NUMBER ONE.
Robert Reich is the former labor secretary in the United States under President Clinton. He's the author of this book called "Super Capitalism: The Transformation of Business, Democracy and Everyday Life." He joins us now from Berkeley, California.
Secretary, thank you for being with us.
You know, the turnaround or the downturn in this economy, in my opinion, got much, much worse at the beginning of this year when we started losing jobs. We lost more than 200,000 jobs just in the first three months of this year. You also agree that this is possibly the biggest problem right now that we're facing.
ROBERT REICH, FORMER U.S. SECRETARY OF LABOR: Ali, I wish I could give you a rosy scenario. It's not just the loss of over 200,000 jobs. It's also wage losses. We've seen over the last six months adjusted for inflation, wages, average wages going down for Americans. The combination is devastating.
VELSHI: Now we talk a lot about inflation. We talk about the increased price of gasoline, but how the increased price of grains and how it's affecting everything Americans buy at the store. That is a separate issue from the fact that those wages have not been growing and, in some cases, they've been going the other direction. What does the government do to fix this? This is serious if we don't get this on track but how do you get back (ph)?
REICH: The government, Ali, has two accelerators to get the economy going. One is monetary policy. That's the Fed. The Fed is going to meet again April 20th. It's going to have to reduce interest rates -- short-term interest rates once again. The second accelerator is fiscal policy. That is a stimulus package that the Congress both passed and also is discussing about another stimulus package, cutting taxes, spending more money. That could also help get the economy going. Those are the only two accelerators.
VELSHI: We're less than a month away from those first stimulus package checks going out to some Americans, if they filed their tax return. Some people get $600 to $1,200. What effect is that going to have? Is that going to really help? Especially we see every day higher gas prices and more job cuts.
REICH: Honestly, I think it's too little. It's probably too late. Most people are so deep in debt they're going to use a big portion of those checks to pay off their debt. Credit card debt. Auto loans. Also mortgage debt. I mean people are not going to turn around necessarily and go to the malls.
VELSHI: We are in a market-driven economy. At this point there are calls from every corner almost for government intervention into this. What's your view? Should the government be intervening more, helping people out in their mortgagees? We have I don't know how many bills before Congress right now and we hear something from the White House on a regular basis. Is that the answer on the fiscal policy, that the government gets involved and solves this problem or will the market take care of it?
REICH: If this were just a normal down draft, I would say let the market take care of it. It is not normal. When you have a lot of houses just empty and people not paying their mortgages and neighborhoods that are increasingly marked and pocked by emptying houses, you've got to have government out there helping people stay in their homes, pay their mortgages.
Now I'm not talking about a massive bailout for people that made bad decisions. I'm talking about a major social problem that this country faces. The same thing with Wall Street. I mean I'm not in favor of Wall Street bailouts, generally speaking, but the Fed has got to be there to stop runs on banks. That means the banks have got to put up enough capital so they don't take these wild risks that they've been taking.
VELSHI: Right now, obviously, housing and jobs are the big issue. But the presidential candidates, to their credit, are talking about things that are a little further out, health care, trade, things like that. In your opinion of the three major candidates remaining in this race, who's got the right plan to go forward with?
REICH: Well, I'm not going to tell you exactly who has the right plan. I think that Hillary Rodham Clinton and Barack Obama have a much better plan than John McCain. A lot of people will say, well that's because you're a Democrat. But, honestly, I don't see much of a plan from John McCain. I mean, you know, it's a kind of, everybody's on their own. You're on your own economy.
Look, this is not a normal economy right now. And I think the Democrats are struggling because we don't -- haven't seen anything like this since the 1930s, maybe the 1950s. The Democrats are struggling to come up with some sensible policies. I applaud them.
VELSHI: Let's talk about that. You haven't seen something like this for so long. Some people say this is very serious. Some people say this will be short term. When the next president is sworn in, in January, will the economy be issue number one? Will this show still be here?
REICH: Well, I think the show will still be here. But, look, the optometrists say, this is going to be over by the end of -- maybe by the end of the summer and we'll go into the fall with a big, big rebound. I think the optometrists are overly optimistic.
I think, more realistically, we're going to go into 2009 with a very serious recession. Hopefully not a depression. I hate to use that word. It scares people. I think there's no more than a 20 percent chance of depression, which is a very, very severe recession. Huge unemployment. I don't think we're going to have that. But it's going to be serious.
I mean, look it, all of the it's almost a perfect storm, Ali. You've got food and energy prices, fuel prices going way, way up. I've got wages stuck. You've got people who are losing their jobs. You've got housing prices going down. I mean, it's pretty bad. VELSHI: Boy, you know a lot about these things. I hope you're wrong. Robert Reich, good to see you. Thank you very much for being with us.
REICH: I hope I'm wrong too.
VELSHI: Robert Reich is former U.S. secretary of labor and the author of "Super Capitalism."
Gerri.
GERRI WILLIS, CNN ANCHOR: Still ahead, e-panhandling. How this term you've probably never even heard of could help alleviate your credit crunch.
And college graduation is just a month away. We'll tell you where to find the jobs of the future.
Then we're answer your questions. Keep those e-mails coming to us at issue1@cnn.com.
(COMMERCIAL BREAK)
WILLIS: Let's take a quick look at today's headlines.
The rich get richer. A new study out today suggests the income gap is widening between the wealthiest and poorest of the Americans. According to an analysis by the Center on Budget and Policy Priorities and the Economic Policy Institute, incomes, on average, dropped 2.5 percent for the bottom fifth of American families. Middle class households saw their incomes inch up just slightly over a percentage point. But the wealthiest of Americans saw their incomes on average spike 9 percent. Now experts say it's indicative of workers' wages not keeping up with inflation.
On that note, another new survey shows greater doubt among American workers being able to save and afford their retirement. According to the Employee Benefit Research Institute, only 18 percent of workers polled were "very competent" at saving enough cash for a comfortable retirement. Now that is down sharply from last year's 27 percent score. And it is the steepest decline in the survey's 18-year history.
Ali.
VELSHI: Gerri, thanks.
Let's go to Malvern, Pennsylvania, where Barack Obama is speaking to a crowd. He's giving a speech and he's talking about issue number one, the economy.
SEN. BARACK OBAMA, (D) PRESIDENTIAL CANDIDATE: But just don't have the money that could help them live out their American dream. It's a story of the American dream slipping away. And I am running for president of the United States because that story of diminishing opportunity starts in Washington. It's not an accident. They're the consequences of a tired and cynical economic policy that has failed the American people because, for over two decades, what we've heard from President Bush has been the so-called ownership society, which really means you're on your own.
If you're a child who is born into poverty, pick yourself up by your bootstraps, you're on your own. You're somebody who lost your job, but also their health care and their pension when the job got shipped overseas, tough luck, you're on your own. If you're a single mom trying to look after your kids, you're on your own.
Let me be clear. The changes to our economy that began in the 1980s were in response to policies that did need to change. We had high taxes and we had outmoded regulations that needed to be reformed for a changing economy and changing times. But instead of responsive . . .
VELSHI: Senator Barack Obama giving the type of speech that we're hearing a lot of from presidential candidates with less than two weeks to go before the Pennsylvania primary because it's the issue that is on everyone's mind. And part of that is jobs and what the future holds. Every year you've got a whole new crop of college graduates who are entering the job market. At the same time, there are folks out there who are trying to re-invent their own careers, particularly in an economy like this.
So we thought we would tell you about jobs and occupations that have openings right now. Our good friend Jennifer Westhoven here with more on that.
Jennifer, I mean, this is not the world we see. We see layoffs, we see jobs lost. You've got openings for us. Tell us.
JENNIFER WESTHOVEN, CNN CORRESPONDENT: Well, I mean, we've got 1.5 million people who just -- they're about to graduate in June. You know, you're throwing your hat, you're full of hope and they're walking out into one of the toughest job markets in years right now. So if you're one of these people, you are going to have to hustle -- that's the bad news -- to make the most of this difficult job market.
College hiring experts say the hiring rate's been cut in half. So many of the big Fortune 500 countries, where students were dreaming to get their foot in the door, they can't hire right now, they're firing people. They're bracing for a possible recession.
Some of the names you know, Dell just cut 8,800 jobs, closed a plant. AMD, Motorola, thousands of jobs there. Home Depot is a name we all know. A lot of the human resources jobs there are going.
And thousands of jobs being let go at drug makers, too. And here we're talking about Schering-Plough and Wyeth. These are both based in New Jersey. That's going to hit that state hard.
And it's rare to see government layoffs. But even NASA is having lay-offs as they fold the shuttle program. Six hundred workers and it looks like as many as 10,000 contractors could lose their jobs.
VELSHI: Are there signs of hope? I mean we do talk to college students and they do have that hope. They feel like their lives are beginning, their careers are beginning and hopefully the recessions are small, short-lived things. What are we hearing in terms of where there might be places for people to go?
WESTHOVEN: There's technology. There's engineering. Those look good. There's government jobs. I don't know that people dream, yes, of going into government jobs. And maybe the (INAUDIBLE) of the economy, but that's the one that gets talked about a lot.
The toughest industry right now, though, is finance. I think for people who dreamed that they were going to go out there and make it big on Wall Street, there were numerous offers last year of strong hiring. They might of had their hopes up. A lot of investment banks, not hiring.
So here's what you can do though. I'm actually not kidding. Get your grades up. That's not just for me. That's from experts. You know, put the beer down. Go to the library carol (ph). Experts say it really could make the difference.
Also, can you do an internship? Will your parents back you? I know it costs a lot.
And also, if you do get an offer, this may not be the year to play too hard to get. You might want to jump on it or just be really cautious. Maybe you're not going to get another one.
VELSHI: I had a conversation with the CEO of Korn/Ferry, you know, the big executive recruitment firm. For the high-end jobs, they said, if you're graduating from college and you want a high-end job in the future that pays hundreds of thousands of dollars, what would you do? And he said, take an internship and go somewhere to another country, learn other cultures. So the internships, boy, it's not great to not get paid, but all right, Jennifer, thank you.
All right, coming up next. You've got questions and we have answers. Our help desk gets down to business answering what is on your mind. It is not to late to send in your e-mail. The e-mail address, issue1@cnn.com. Because you're watching ISSUE NUMBER ONE on CNN.
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WILLIS: Hey, get ready for some help. You sent so many e-mails with so many good questions, now we're going to give you some answers. We're joined by Ryan Mack. He is the founder and president of Optimum Capital Management. And Smart Money 's Stephanie Auwerter.
Welcome to you both. Great to see you.
Let's get right on those questions. Bob asks, "the holder of my mortgage has filed for bankruptcy and I'm unable to refinance my home because I owe more on my home than it is worth. What can I do?" Now, Ryan, a lot of people out there are in this trouble right now. What's the best solution?
RYAN MACK, FOUNDER & PRESIDENT, OPTIMUM CAPITAL MGMT.: Well, first of all, just because a mortgager files for bankruptcy, it's not a free ride. Usually Fannie Mae or Ginnie Mae will come in and say they'll help you transition you loan to a new lender to help you, who's very willing to accept the mortgage payments every month. So we have to understand, you have about 15 days before you get the new address. Get the number down. Start contacting the lender if you think you're going to be delinquent on those payments. And be very aggressive in making sure that if you think you're going to be delinquent in communicating with the lender about them.
WILLIS: This person, of course, they're owing more than the house is worth. They might have to make up that difference.
MACK: Yes.
WILLIS: It's a scary situation.
MACK: It's a scary situation. A lot of individuals are in that very same situation today. Again, the mortgage lenders want you to be up-to-date on these payments. So talk to them if you think you're going to be delinquent, before you're going to be delinquent, early as possible.
WILLIS: Early as possible, talk to your lender.
MACK: Yes.
WILLIS: OK. E-mail number two here from Colin in Connecticut. He asks, "how do you improve your credit score if you are new to the USA? I have a great 25-year credit history overseas, a great job and no debt, yet my credit score is lower than you would think."
You know, this doesn't just apply to overseas folks. Also college students looking to establish that credit history. Trying to get a great credit score. How do you do it, Stephanie?
STEPHANIE AUWERTER, EDITOR, SMARTMONEY.COM: Well, it is very similar in the sense that when you come from another country or if you're very young, you don't have a credit score here in the U.S. So, for starters, you need to make sure that you have a taxpayer ID number or a Social Security Number and then you just need to start taking on credit. You could look at a secured loan. You could look at becoming an authorized user on somebody else's card. And what you want to do is slowly gather together different types of loans. You could do maybe an auto loan and say a credit card and you will slowly build up that score.
WILLIS: I think credit cards are an easy way to get started, right?
AUWERTER: And Lord knows that credit card companies are happy to give college students . . . WILLIS: Get those letters every day.
All right, let's move on to Tom in Missouri. "I have heard that the coming $600 - or $1,200 - stimulus is really an advance on our 2008 tax return. Is that true?"
Ryan.
MACK: No, it's not an advance. It's actually a little bit of money that they're going to give you in addition too. But I think the underlying thing we have to look at, in terms of the economic stimulus package, this is a short-term situation. We've had zero to slightly negative percent savings rates in our country for a few years now. So the most important thing for the long term is, each individual household needs to be more fiscally responsible in making sure that each individual dollar goes more toward something of value.
WILLIS: OK. Well, Ryan, that's a great answer. Yes, save some money.
OK. Bill asks, "with cd rates going down, you are not addressing what seniors should be doing."
Stephanie, the big problem here, of course, is seniors are trying to find return in this marketplace. It's very difficult to do. Where do they go?
AUWERTER: Well, it is very difficult, but you don't want to go chasing returns, ratcheting up that risk level because then you really could pay the price later on. So you do need a certain amount of your assets in cash. Hopefully you have, when you are a senior, as much as two years worth of living expenses in cash so you don't have to cash out investments when times are down like they are right now.
WILLIS: You know a great place to go shopping for returns on cds and other savings projects is bankrate.com has a great web site. You can shop by the area that you are in.
AUWERTER: That's a great web site.
WILLIS: You know, guys, great job today. Really appreciate it. Stephanie, Ryan, thanks so much for your great answers.
VELSHI: Well, still ahead, how one New York woman convinced perfect strangers to pay off nearly $20,000 of her credit card debt. It's called e-panhandling. It's on our radar. We're going to tell you about it next.
Plus, results of our cnnmoney.com Quick Vote coming right up on ISSUE NUMBER ONE. Please stay with us.
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WILLIS: Time now to get the results of today's Quick Vote. For that let's go over to Poppy Harlow at the cnnmoney.com set.
Poppy, I've got a question for you. You know, Ali got 15,000, just 15,000 e-mails. How many did you get?
POPPY HARLOW, CNNMONEY.COM: More than 40,000, Gerri. We've got these soaring gas prices. We wanted to know, how much is it going to take for you to drive less? Take a look at these numbers because the results are staggering. Seventy percent of people said they have already cut back on how much they drive. About 9 percent said $4 a gallon. We're approaching that. Nine percent said $5 a gallon. Only 11 percent of people said they'll drive at any cost. And I'd like to know who they are, because gas is just really surging in price. So, yes, more than 40,000 people voted.
Gerri.
WILLIS: All right. Well, that's impressive. We'll work on our skills set here to get more people to write in.
Thank you, Poppy.
HARLOW: Of course.
VELSHI: I begged, I pleaded, I graveled with you all to do a Quick Vote. Fine. Whatever.
We've talked a lot on this show about government assistant programs, non-profit groups, all of them established to help you become debt-free. But have you ever heard of e-panhandling? I hadn't. It's a relatively new and certainly creative way to get rid of your debt. Melissa Long from cnn.com Live joins us now to explain about this.
What is this, Melissa?
MELISSA LONG, CNN.COM LIVE: Well, it is very creative, you're right, Ali. It's a concept where you just maybe don't know where else to turn to, so you turn to the Internet and hope that someone's going to donate to you. And it really started back about six years ago. People credit a woman named Karen. The web site was savekaren.com. I brought it up right here. It's a woman who admits she spent a little too much money buying to many shoes, going out to much in New York City. She created this web site. In a matter of months, her debt had been paid off. And, you know what, in the process, she inked a book deal and she now has a movie in the works.
So, so many people are following in her tracks. Cyberbeg.com has since popped up. A lot of people asking people to maybe pay down their plastic, pay off plastic surgery and pay off student loans.
Here's an example of a woman posting online. "Hi," she writes. "This is totally out of character for me to be begging strangers on the Internet, but I am really in need of help. My name is Laura and I am a mom of five wonderful kids - four daughters and a baby boy who is 17 months old. I became disabled two years ago and pending disability." She goes on to talk about her story in greater detail. Real stories of desperation. Some you may be skeptical of, however. And Cyberbeg does come with this disclaimer. "Cyberbeg.com cannot guarantee that any begger is legitimate and makes no claims that they are."
Ali.
VELSHI: Is everybody asking for money on this or are some people just sharing their stories?
LONG: No, everybody's asking for money. And a lot of other people are asking for money on sites as well. Also trying to trade online as well. Trade up in order to pay down their debts.
VELSHI: Any concern that there is -- I mean how do they make sure that everybody's sort of straight up on this, that it's not fraud or what do you do?
LONG: You don't -- no way to vouch. A lot of people are just really telling their stories when they're creating individual web sites. People are really telling their stories, really detailing their student loans. There's a gentleman out there who says he's not begging for money but he's really just talking about his debt. He's racked up $138,000 in student loans. Paying down his credit cards, as well. So they really pour their hearts out hoping that you'll donate.
VELSHI: All right. Well, that's an interesting story.
Melissa, thank you very much. I didn't know such a thing existed.
Melissa Long from cnn.com Live. Thank you.
What an interesting . . .
WILLIS: Would you do that?
VELSHI: Look, I mean, people are doing things they haven't done in a long time.
WILLIS: Sure.
VELSHI: It's very -- it's creative about where people are going to either get support or, in this case, money. I think it's fascinating.
WILLIS: Or a movie deal. Did you see that? Maybe we could get a movie deal, Ali.
VELSHI: Well, I asked Russell Simmons if he could produce my hip-hop financial literacy song.
WILLIS: You can keep trying.
Issue number one is the economy and we at CNN are all over it for you. ISSUE NUMBER ONE will be back tomorrow, 12 p.m. Eastern, right here on CNN.
VELSHI: Get ready for your latest breaking headlines. Don Lemon and Fredricka Whitfield are in the CNN "Newsroom." It starts right now.
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