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Issue Number One
Obama Campaigns in Michigan; Inflated Food Prices Create Concern for Families; After College Graduation: How to Manage Loans & Bills
Aired May 14, 2008 - 12:00 ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
SEN. BARACK OBAMA (D-IL), PRESIDENTIAL CANDIDATE: I can tell you that instead of opposing job training similar to what's being offered at M-TECH, like John McCain has, we can make sure every American has the skills to compete in the global economy. We don't have to stand idly by while foreign competitors outpace us in making the cars of the future. I'm running for president to make sure that the cars of the future are made where they've always been made -- right here in Michigan.
(APPLAUSE)
Because the fight for American manufacturing is the fight for America's future, and I believe that's a fight that this country will win. And so today I'm announcing a manufacturing agenda that will lift up hardworking families, strengthen innovative companies, and foster our common prosperity.
The first part of this agenda is investing in clean energy, because that isn't just how we get gas prices under control, combat climate change, and free ourselves from the tyranny of oil. It's also how we're going to expand American manufacturing, create quality jobs and grow our economy.
And that's why I'm going to invest $150 billion over 10 years in the green energy sector. This is going to create up to five million new green jobs.
(APPLAUSE)
Those are jobs that pay well and they can't be outsourced. And I'll be a president who finally keeps the promise that's made year after year after year by providing domestic automakers with the funding they need to retool their factories, to make fuel-efficient and alternative fuel cars. In my own state of Illinois, we've got the oldest continually operating Ford assembly plant outside of Michigan, so I understand why it's so important to bring our auto industry into the 21st century.
We are going to make sure that batteries are being made here in the United States that will fuel the kinds of cars that we're going to be driving in the future. We are going to make sure that our auto industry has a partner in Washington. They won't have to wait one year, two years, three years to meet with the president of the United States. They're going to want to meet with me in the first one month that I am in office because I'm going to be a partner with them to make sure that we're rebuilding the American auto industry.
(APPLAUSE)
Here's what else we're going to do. We're going to invest $10 billion a year creating a clean technologies development -- deployment venture capital fund. And that's going to help fill a critical need.
Today, 85 percent of North America's automated research is done right here in Michigan. But too often, breakthrough technologies that are invented in America end up getting built overseas because the costs of getting these new technologies commercialize. This government-backed fund that I'm going to create will help solve this program by creating an initiative right here in Michigan that will accelerate the development and deployment of cutting-edge vehicle technologies.
Just to take an example, this fund will help American companies build batteries for plug-in hybrid vehicle so we don't have to buy them from abroad anymore. That's how we'll make sure American automakers continue to lead the world, that's how we're going to make sure that American manufacturers don't just survive but actually thrive in the 21st century.
ALI VELSHI, CNN ANCHOR: And that is Senator Barack Obama campaigning in Warren, Michigan. That is just outside of Detroit. It's a Detroit suburb which is home to several automobile manufacturing and assembly plants, many of which have suffered layoffs and in some cases closure.
He's talking about putting $150 billion into a green economy, including using Michigan to build batteries for hybrid plug-in cars. It's all part of the number one issue facing Americans, what we're calling issue #1.
GERRI WILLIS, CNN ANCHOR: Paying more at the store. Wall Street may not be worried about the new inflation numbers out today, but they're not the ones buying your groceries.
And...
(BEGIN VIDEO CLIP)
UNIDENTIFIED MALE: I left Cambridge, there was very few jobs. I found out this was here, and I was like, you know, Cambridge finally has something that's worth going back for.
(END VIDEO CLIP)
WILLIS: Small-town opportunities courtesy of ethanol.
And graduation day. Next up, a new job, hopefully. Where is the work and how will the bills get paid?
ISSUE #1 is your economy. ISSUE #1 starts right now.
Welcome to the Wednesday edition of ISSUE #1. I'm Gerri Willis. Up front this hour, can you and your family keep up with the cost of living? You might be asking yourself that in the light of these numbers.
The latest Consumer Price Index out today shows inflation is up nearly 4 percent from April of last year to April of this year. Much of that paced by spiking food prices, up more than 5 percent from 2007 to 2008. And when you look at the most recent jump, March to April was the biggest one-month jump in food prices in the past 18 years -- Ali.
VELSHI: Well, here's the deal, Gerri. You would expect prices to be higher in 2008 than they were, let's say, 1990. That's life. That's inflation.
But consider this -- you are already paying more this month than you were in March or April at the grocery store. Well, it's going to be a tough year to feed your family.
CNN Senior Correspondent Allan Chernoff follows inflation very closely. He's here with some details about this.
Gerri was talking about the fact that food prices, or inflation, as the government measures it, is up about 4 percent -- 3.9 percent compared to last year. But when you look at the jump from March to April, I think the number was .2 percent.
It doesn't sound serious.
ALLAN CHERNOFF, CNN SR. CORRESPONDENT: That's right. That's the overall inflation number. That's the seasonally adjusted number, and it certainly does not tell us what we all know is happening right now in the grocery store. Let's just take a few examples.
Bananas, they were up 6 percent during the last month alone. That's a huge one-month increase. Bread up 1.5 percent. We've been talking a lot about bread. And coffee up by 4 percent.
Let's have a look now at the annual increases in just these three items. And they're huge.
VELSHI: Wow.
CHERNOFF: Bananas, 20 percent; bread, 14 percent. Coffee up 9 percent.
VELSHI: And these are not things that the typical family thinks of as luxury items. Going out to buy a coffee at Starbucks might be a luxury, but buying it in a bag at home, or buying bananas for your kids doesn't seem like you're splurging.
CHERNOFF: Basic stuff. The bottom line is food inflation is very bad. So let's get back to that question, right?
VELSHI: Well, why does it still seem so low when you just told me these numbers? CHERNOFF: Exactly. The fact is these basic items that we buy every day, they don't account for all that much of the Consumer Price Index. Food at home is only about 8 percent of the CPI. In fact, all food, including what we buy at restaurants, drinks, alcoholic beverages, it all adds up to less than 15 percent of the CPI, Ali.
VELSHI: As the government measures it.
CHERNOFF: Yes.
VELSHI: Meaning your family may spend more than that on food, more than that percentage of your budget on food, but as the government measures it, that's the percentage that it makes up.
CHERNOFF: Good point. A bigger percentage is housing, home furnishings, appliances, all of that.
VELSHI: Right. Which we don't buy every day.
CHERNOFF: We don't buy every day and we don't feel it every day. But those areas generally are declining. That's why the CPI appears to be pretty moderate.
VELSHI: All right. Well, if you have a bunch of vegan monkeys at home, you're in big trouble with the bananas and the bread.
All right. Let's talk about the picture you put up, the graphics you put up. It said seasonally adjusted. What are we talking about there?
CHERNOFF: Well, let's take another example to really illustrate what seasonal adjustments do.
Gasoline, have a look at this. For the last month, gas prices, according to the CPI seasonally adjusted number, actually declined by 2 percent. Come on.
VELSHI: Except we've seen records all month.
CHERNOFF: Absolutely. In fact, even the Bureau of Labor Statistics, which calculates the CPI, it went out, it counted at many gas stations all over the country, and it did see a big increase of more than 5.5 percent in the price of gasoline. Seasonal adjustments, though, accounted for that decline of 2 percent because what normally happens this time of year is that gas prices usually shoot up before the summer driving season. So those seasonal adjustments are put into place and that moderates the increase. This month, it actually led to a seasonally adjusted decline.
VELSHI: OK. But most of us know that gas prices are up.
CHERNOFF: Right.
VELSHI: Yes.
CHERNOFF: The whole idea here is the government is trying to prevent huge swings month to month in the CPI. That's why they do these seasonal adjustments.
VELSHI: All right. Allan, thanks very much.
Allan Chernoff -- Gerri.
WILLIS: The devil's in the details. The crisis, though, extends far beyond your shopping list or the dinner table. Skyrocketing food prices around the world have ignited recent food riots, and today were the subject of attention of lawmakers on Capitol Hill.
(BEGIN VIDEO CLIP)
SEN. JOE BIDEN (D), DELAWARE: This crisis has caught policymakers unprepared. For 20 years, foreign assistance funding for agriculture development has been declining. This is not a criticism of the Bush administration. It was declining during the Clinton administration and the former Bush administration.
Necessary investments, in my view, have not been made. Donor nations' lack of coherent food security strategy and our response has been, I think, somewhat belated and disjointed.
(END VIDEO CLIP)
WILLIS: Our State Department Correspondent Zain Verjee is following the story from our Washington bureau.
Zain, what impact does this food crisis have on our ability to provide relief from this country to people who are suffering from these tragedies in China and Myanmar?
ZAIN VERJEE, CNN STATE DEPT. CORRESPONDENT: Well, Gerri, obviously it makes it a lot harder. The U.S. is the biggest food aid donor in the world. It provides half the world's food aid.
We're talking about something like $1.5 billion every year. And this means that the food aid dollar just doesn't go as far anymore.
Now, President Bush has said, look, we're going to give an extra emergency aid of $717 million. Congress still has to approve it, but you're talking about millions of people in crisis, on the brink of hunger and starvation. In terms of the cyclone in Myanmar and the quake in China, I mean, it puts a huge strain on U.S. aid agencies here because a lot of the money that can go toward food aid relief is going instead to try and relieve catastrophes that have just occurred.
One thing that the head of USAID, Henrietta Fore, said, Gerri, was that, for example, in Myanmar, they produce a lot of the crop there for the -- the rice for the world food market. And because that's all been destroyed, all 20 percent of it, it's just going to drive prices up. So it's all interconnected.
WILLIS: It's such a tough situation there.
What about security, though, Zain? VERJEE: Well, security is a key issue. I mean, there have been riots going around the world, as close to the United States as Haiti and as far away as places like Somalia and Pakistan.
In the hearing, Senator Lugar said there are 40 countries around the world that could be destabilized because of the food security and food shortage issue. The United States though, Gerri, very concerned about the destabilization of government as a result of this, and it's an indication that the humanitarian crisis has really become a security crisis that affects the U.S.
WILLIS: Zain, thank you for that information. I know you'll keep following it. Thanks.
VELSHI: Well, coming up, we are live at Yankee Stadium today with graduates.
Then we're going to see how the economy is pushing some people to sell their most precious belongings on eBay just to make ends meet.
And if you have got a money question, send us an e-mail, issue1@cnn.com. And we're going to do our best to answer that question for you.
You're watching ISSUE #1 on CNN.
(COMMERCIAL BREAK)
VELSHI: Well, think of that transition from those lazy days of college and spring into the workforce. It's a challenge for any college graduate. But with the economy in a downturn, it seems more difficult than ever for some people to make that leap.
Our own Richard Roth is spending the day at Yankee Stadium, where NYU commencement ceremonies are happening now -- Richard.
RICHARD ROTH, CNN SR. U.N. CORRESPONDENT: Well, Ali, maybe it's the sun, maybe it's the setting -- Yankee Stadium. But many of the graduates I talked to are quite optimistic about their future. Some already have jobs lined up.
A lot of them are going to graduate school, and some, even if they don't have anything, they don't seem that concerned.
I talked to several of the graduates at New York University.
(BEGIN VIDEO CLIP)
UNIDENTIFIED FEMALE: I'm worried because I've been trying to go into print journalism. I've been interning at "The Voice," and I'm concerned about finding employment and maintaining a lifestyle in the print journalism industry.
ROTH: Do you have a job?
UNIDENTIFIED MALE: Not at the moment, no. ROTH: Are you worried at all with the economy?
UNIDENTIFIED MALE: A little bit, yes, you know. But I think -- I have hope. It'll be good.
UNIDENTIFIED FEMALE: I believe she's going to make a difference because she's got a passion that's beyond anything I've ever seen her have a passion for. She believes in what she's going to do, and, yes, she's going to make it. She's going to knock some doors down.
(END VIDEO CLIP)
ROTH: Now, she makes it because mom and dad paid a fortune to send her to New York University. For graduates, it could have been $50,000 a year. It's going up 6 percent, Ali, tuition next year.
New York football Giant player Michael Strahan received an honorary degree, and he told them -- and he called them New York University Giant graduates and says, "Who would have ever thought I'd be talking to you here at NYU?" Strahan, a Super Bowl winner this year -- Michael.
Ali.
VELSHI: Let me tell you, Richard, what was your sense of these students? On one side they seemed -- as you said, some of them seemed relatively optimistic about it, where it's going to go, and yet they hear that there's concern.
What was your overall sense? Do they think it's going to be OK?
ROTH: They think they're going to be OK. And maybe they feel they have a leg up. They're here in New York, a major media center, financial center. They've done internships that's helped out. And, you know, they're hopeful. At least they seem to be playing better at least than the Yankees, who inhabit the stadium they're graduating in.
(LAUGHTER)
VELSHI: All right, Richard. Thanks a million. See if you can take in a game while you're there.
Richard Roth at Yankee Stadium -- Gerri.
WILLIS: Well, you know, graduation is exciting, but it also means you're a step closer to paying back those thousands of dollars in student loan debt. So how do you start chipping away at the balance and still get ahead financially as a new college grad?
Janet Bodnar is with Kiplinger's and she's joining us now from Washington, D.C.
Janet, treat to see you again.
JANET BODNAR, DEPUTY EDITOR, KIPLINGER"S PERSONAL FINANCE: Oh, my pleasure, Gerri. WILLIS: All right. You know, the good news here is that if you're graduating today, you don't have to start paying tomorrow. Right?
BODNAR: Right, exactly. You've got a six-month grace period before those student loans start to kick in.
WILLIS: So, there's a little time, a little breathing room there.
BODNAR: Yes.
WILLIS: But, you know, come on, how much should mom and dad get involved? I'm listening to that mother talk about how her daughter is going to kick the doors in and how good she's going to do, and I'm thinking, you're going to help her with those loans, aren't you?
Should you do that?
BODNAR: No, I don't think you should help with the loans unless you can really afford to part with the money. These are student loans. They are an investment in the kids' future and the kids' education.
I do -- I share the kids' optimism that they will certainly eventually be able to get jobs. But just to start paying back the loans on the best terms possible gets them off on the right foot as far as the credit rating is concerned and, you know, just getting into the discipline of repaying what you owe. If mom and dad can afford to help you out, so much the better, but don't depend on that.
WILLIS: Don't depend on it. And, of course, normally you depend on mom and dad for some health insurance. You can keep that for at least a little while, until you're about 24 or so for most folks. But what should kids be thinking about now if they don't have that advantage?
BODNAR: If they don't have health insurance, kids and parents should know that it is pretty -- very often very easy to get. It is possible, for example, for parents to continue the kids on a workplace plan for up to 36 months, or kids can go into the independent insurance market and buy their own policies. And sometimes it's very inexpensive, maybe between $50 and $150 a month, until they might pick up insurance through a job.
WILLIS: I love that answer. So, cheaper, cheaper, cheaper.
OK. Establishing credit.
BODNAR: Right.
WILLIS: If you're a grad, this is critical because you want to start doing that right away. What's the best way?
BODNAR: Well, I think a lot of kids already have credit cards that they've got in college. If they do, the most important thing is pay your bills on time, pay off the balances if you've got them left over from old pizzas that you ate in college, and keep those balances low going forward.
If you don't already have a credit card, perhaps the easiest way to get one is to apply for a secured credit card where you make a deposit that's equal to your credit line. You get interest on that.
WILLIS: Well, I think most kids out there get those credit cards early and they spend a lot on them. But what about mom and dad? Should they be tying their credit to their child's? Is that a good idea?
BODNAR: I do not think that's a good idea. I really think that kids need to do this on their own, and I think they're perfectly capable of doing it on their own if they do some of the things I've told you -- paying back those student loans on time, applying for a secured card if they don't already have credit. And once they have credit, paying off their balances in full.
If they've got high balances, pay down those balances and make those payments on time. And they can establish their own credit records.
WILLIS: Janet, great information. Thanks for joining us.
BODNAR: My pleasure.
WILLIS: And that leads us to today's "Quick Vote" question.
Poppy Harlow is here from money.com.
Good to see you, Poppy.
POPPY HARLOW, CNNMONEY.COM: Hey, Gerri.
You know, college can easily cost more than $200,000 when all is said and done, and if you're pursuing a higher degree, it's going to cost a lot more than that. Taking out a loan is what a lost of student do. Some of those NYU grads likely did that. So here's out question today.
When do you expect to have your student loan paid off? Three to five years, six to 10 years, more than 10 years? Or many you're a lucky one and you don't have any loans at all.
So weigh in on CNNMoney.com. We'll bring you those results a little later in the show -- Gerri
WILLIS: Fascinating stuff, Poppy. Thank you for that.
VELSHI: All right. Coming up next on ISSUE #1, desperate measure to make ends meet. Some people are turning to the Internet to sell their stuff.
Then we're answering your money questions. Just e-mail us, issue1@cnn.com. You're watching ISSUE #1. We'll try and get to those questions.
(COMMERCIAL BREAK)
VELSHI: All right. Right now on CNN Radio and on CNN.com live, our CNN contributor, our friend and yours, Roland Martin, he's hosting a live program on this election year.
There he is.
Roland, welcome. Good to see you. I don't know if you sleep these days during this election cycle.
What are you thinking about?
ROLAND MARTIN, CNN CONTRIBUTOR: I do sleep. I do sleep. You know, we were just playing a song there. That is -- do you remember the Broadway play "Dreamgirls," also a movie?
VELSHI: Yes.
MARTIN: Well, the key song in that was "I'm Telling You I'm Not Going." I think that probably says it best about Senator Hillary Clinton.
She says, I'm not going out of this race. I'm not dropping out. I'm not getting out. I'm staying in this thing.
So, on my radio show today, here at CNN Radio, also WVON, we pretty much dedicated that song to Senator Hillary Clinton. She says, I'm telling you, I'm not going.
VELSHI: Well, she did a nice job last night in West Virginia.
MARTIN: A big win.
VELSHI: And last night -- you know she's been appealing to these blue collar workers with blue collar themes, with working-class themes, and it worked for her.
Is that going to continue to work for her? We're going into Kentucky, a state that has similar demographics. Is this theme going to help her pick up some steam?
MARTIN: You know, Ali, I sound like a broken record, but the reality is that's her core voter. Obama has his core voters.
Here's what's amazing. She was up huge numbers in West Virginia. She racked up huge numbers. She didn't spend much time there, but the bottom line is, she did a great job winning West Virginia.
But guess what? Oregon's next. He's up 20-plus points in Oregon.
This shows you again, we have two even candidates. I keep saying this campaign is like a NASCAR race. You've got two fast cars sitting here trading paint, sitting here going back and forth. One gets ahead, one pulls ahead.
The bottom line is, whoever wins, they're going to win probably by the nose of the car. It's as simple as that. It's just two great candidates. And so I don't buy the notion that somehow one is -- one just can't win these votes and the other can't win these votes.
VELSHI: But listen to this, Roland. You talk to people...
MARTIN: They have two core constituencies.
VELSHI: You hear from people on WVON. You hear from people all the time, and you know that the reason this show is on, "ISSUE #1," is because Americans have said that the economy is issue #1.
MARTIN: That's right.
VELSHI: And it's housing and it's gas and it's issues that these blue collar workers are very concerned about.
Is Hillary Clinton doing a better job, regardless of the number of delegates she's winning, is she doing a better job at targeting those? And why in his speech last night did Barack Obama not speak of those types of issues?
MARTIN: Well, actually -- well, one of the things that he did speak about -- well, first of all, I'll address the first question. And that is, when it comes to the economy, that is perceived to be her strength. And so, look at -- as the polling now that we've taken, she's been stronger in that area.
Obama is beginning to connect with them on the greater issue of change in terms of changing the tone and the direction, what's taking place in Washington, D.C. So that's why you have that.
Now, yesterday was very interesting. He did make the point, and he stressed it in his speech, that, look, government is not going to be able to solve your problems. I was sitting there going, hmm, that sounds like Bill Clinton, who said the era of big government is over.
And so, also, yesterday him being in Missouri, that really wasn't about the economy, Ali. A lot of people think so. I think he was there because he knows that John McCain is weak among Evangelicals.
Missouri is a battleground state. He was trying to say, guess what, I'm going to fight for this state.
If you look at the electoral college map, hey, they might lose West Virginia, but they could win Iowa. Bush only won by 10,000 votes. They could win Missouri, they could lose Ohio.
So, again, the map changes as well. That's why I think he was there.
But you're going to see a different message. He spoke today, talked about manufacturing jobs, creating green jobs. Everybody has to hone in on the economy. And you know what? John McCain, it's not his strong suit. He has to get better.
VELSHI: Let me ask you one other thing. In the exit polls, we saw that people who voted for Obama said that if Clinton were the nominee, while all of them wouldn't vote for them, more of them would vote for Clinton. Fifty-seven percent of Obama voters would vote for Clinton in November over McCain.
Now, you swap that around and you look at people who voted for Hillary Clinton in West Virginia. Only 38 percent of them would vote for Obama if he were the nominee, although that's more than the number that would vote for McCain. Look at the number -- 25 percent said they won't vote.
What is that about? And is that going to come and hurt Senator Obama as he moves along in this campaign?
MARTIN: You know what? I'm not buying it.
Ali, look. I'm a Texas A&M graduate. OK?
We hate the Texas Longhorns. Hate them! But when they played for the national championship against USC, our governor, Rick Perry, said, look, we're all from Texas, you go for the Texas team.
I think the same -- you know, it was a little bit hard for me, Ali. Trust me, doing "Hook 'em Horns," I just couldn't do it.
I think you're going to see the same thing. Democrats are going to say what matters to us? The war matters, the economy matters, the Supreme Court matters. I think you're going to see that this -- I think this polling data shows the passion of their supporters, but I think they're going to have to say, look, if Senator Clinton and Obama both agree on nearly everything, how can you not support the other person if they win the nomination?
The Democrats will say, winning the White House is most important, not necessarily who your candidate was and who didn't win the nomination.
VELSHI: And having warn the University of Texas Longhorns on TV one day when you were on...
MARTIN: You paid for that.
VELSHI: I paid for that quite a bit.
Well, Roland, good to see you, my friend. Thank you for being with us.
And if you want to continue to listen to Roland, he's on CNN Radio and CNN.com.
MARTIN: There you go.
VELSHI: Roland Martin -- Gerri.
WILLIS: Love that Roland.
Still to come, bankrate.com reports a coding error in Sallie Mae's system hurt credit scores for about 10 percent of Sallie Mae borrowers.
We'll have the details.
Then, how much money is in your budget for cigars? How about pizza? We'll take you to Florida to meet two businesses with creative ways to keep the money coming in.
(COMMERCIAL BREAK)
VELSHI: All right. It's 12:32 Eastern Time.
A check of the ISSUE #1 headlines right now. Foreclosures hit a record high from April. Nearly 243,000 homes got hit with foreclosure filings last month. That's one of every 519 homes nationwide. It's the highest number since foreclosure tracking Web site RealtyTrac starting keeping score in 2005.
Nearly 55,000 homes were actually repossessed in April. The hardest-hit areas continue to be cities in California and Florida as well as Las Vegas. The latest consumer price index shows an annual inflation rate of just under four percent from last April to last month. Much of that paced by spiking food prices. They rose nearly one percent in just the last month alone, and that's the biggest one- month jump in 18 years.
In other news, bankrate.com reports a coding error in Sallie Mae's system hurt credit scores for about 10 percent of Sallie Mae borrowers. Some loan holders who have paid on time for years showed up as being delinquent on payments. Sallie Mae is trying to correct the problem.
WILLIS: There are some 25 million small businesses in the U.S., and they are a driving factor of this economy. But with the economy in a slump, those business owners have had to find new ways to lure consumers.
John Zarrella has the story.
(BEGIN VIDEOTAPE)
JOHN FEDORUK, BUSINESS SLOWING DOWN: OK. The torpedo ...
JOHN ZARELLA, CNN CORRESPONDENT (voice-over): John Fedoruk has watched his business go up in smoke. That's good when you run Three J's Cigar Shop in Davie, Florida.
FEDORUK: Six and seven eights by 48. Give me a couple of those.
ZARRELLA: But now Fedoruk finds himself searching for new ways to bring in business.
FEDORUK: I have to get somebody to go out to the golf courses and hand out a free cigar with my business card.
Thank you very much. Appreciate it.
ZARRELLA: Fedoruk says business is off 10 percent. Smokers say their cigar money now goes into their gas tank.
UNIDENTIFIED MALE: I was smoking about two a day, but in the last month I've cut back to, like, one a day because the gas prices.
UNIDENTIFIED MALE: So, I find myself now trying to smoke a less expensive cigar.
ZARRELLA: The smokers say they're eating out less too. Many restaurants are suffering, but at Anthony's Coal-Fired Pizza, people are loosening their belts, not tightening them.
ANTHONY BRUNO, EXPANDING RESTAURANT CHAIN Can't give up the good food.
ZARRELLA: In tough times, people are still going to eat out, says owner Anthony Bruno.
BRUNO: They'll care about it, they'll still spend it, as long as they know they're getting something and can count on it.
ZARRELLA: Bruno's costs have gone up. Flour has doubled in price, but Bruno says business is up 25 percent at this gourmet pizza, chicken wings and salad restaurant. And the poor economy actually helped the company's expansion plans.
BRUNO: We can get a little better deals, little better locations, a little less money.
ZARRELLA: It's a concept that Bruno says just caught fire, sort of like the pizza.
John Zarrella, CNN, Ft. Lauderdale.
(END VIDEOTAPE)
VELSHI: Well, John was talking about businesses having a tough time. One of the other things that we're looking at is heading home for better times. We're going to be taking a look in a few minutes about a story which involves going back to a town in Nebraska where one of our senior photojournalists is from a town that has started to benefit from ethanol, from the use of corn as an additive to gasoline. We're going to be taking a look at that story in just a moment.
I'm just going to be checking in with our control room to see where it is we are going to be going now. OK. We're going to take a quick break on CNN. We'll be back with more ISSUE #1 in just a moment.
(COMMERCIAL BREAK)
VELSHI: Let's take a look at the price of gasoline right there, $3.75 a gallon. There we go. There we go -- $3.76 a gallon is a new national average. It's the eighth record in a row. Gas prices keep going up, and that means we keep talking about alternative fuels. Ethanol is certainly a hot topic, one that we've been talking about a lot.
Let's just ask Cambridge, Nebraska, a town of about a thousand people, where one of our colleagues, CNN senior photojournalist Walter Imperado (ph) spent some of his summers as a kid. He wanted to go back to show us one of the positive effects that corn-based ethanol is having on parts of this country.
(BEGIN VIDEOTAPE)
VELSHI (voice-over): Cambridge, Nebraska, recently partnered with standard ethanol creating a $110 million production facility on the edge of town.
UNIDENTIFIED MALE: One car.
ANDELA TAYLOR, DIR., CAMBRIDGE ECONOMIC DEVELOPMENT: Ethanol is really the first big industry that is a major value added contributor to our economy. So, for the first time in history, our farm products are being utilized right here and turned into very high value-added products.
VELSHI: Michael Houghtelling is one of the 37 new employees hired at the plant. After finishing school, Houghtelling, like many, left Cambridge, moving his family to seek better job opportunities in a larger city.
MICHAEL HOUGHTELLING, STANDARD ETHANOL EMPLOYEE: When I left Cambridge, there were very few jobs. I found out this was here and i was like, you know, Cambridge finally has something that's worth going back for.
VELSHI: During the 18 months that the plant was under construction, the town of Cambridge received an economic shot in the arm.
RICHARD BARNES, RESTAURANTEUR: Here's the cash.
VELSHI: Restaurateur Richard Barnes owns the Town Talk. Barnes took a financial risk expanding his eatery, hoping the ethanol plant would bring business.
BARNES: When I saw the crowds come in and being able to develop a nice place like this, I now am able to draw from about a 50-mile radius. But basically, the ethanol plant development gave me the security to build.
VELSHI: Critics of using corn to create fuel say it's one of the main reasons why food prices are up around the world. At roughly $6 a bushel, they say farmers are choosing to plant more corn and less wheat, knowing that the corn will yield more money in the marketplace. Not true, says Jerry Peterson, a Cambridge farmer for more than 40 years. JERRY PETERSEN, CAMBRIDGE FARMER: Ethanol gets blamed for the price of food going up, but it's really the price of oil that I believe is the main culprit. For every bushel of corn we run through the plant, we get three gallons of ethanol, which will mean three gallons less of foreign oil.
VELSHI: But even in a town overwhelmingly positive about corn ethanol, there are skeptics.
ROBERT THOMPSON, CAMBRIDGE RESIDENT: I don't think it's really been well researched, myself. And I think it's very foolish to be burning corn out of the tailpipe of your car.
VELSHI: Despite sustainability questions, Standard Ethanol's CEO maintains ...
THOMPSON: We're not the solution to energy prices. We're not the cause for the shorter of food. We are truly builders of a more stable, higher quality living in these rural communities that were really on the downhill slide.
VELSHI: For Michael Houghtelling, it's a quality of life unavailable before ethanol.
HOUGHTELLING: I mean, it's just nice being able to move back, you know?
(END VIDEOTAPE)
VELSHI: Interesting story about some parts of the country that are benefiting from the higher price of corn and for ethanol. But times are tough across the country. And some people will do anything for money, including selling some of their prized personal possessions. It used to be only the digital savvy. I've been selling stuff on eBay and craigslist for years, but a lot of sales are listed specifically with the reason that people are selling them to get out of trouble.
Jennifer Westhoven has been looking into this story. What have you found?
JENNIFER WESTHOVEN, CNN CORRESPONDENT: Some of the stories are heartbreaking, people selling heirlooms, just unloading their prized belongings to make ends meet. What stands out is the desperate tone of some of those ads. Now, here is a Florida seller getting rid of a three-pieced furniture set.
Look at the headline: Must sell; Desperate to feed my family. In Cleveland, another says he'd take $100 far piano. He was going into foreclosure. A few years ago, you could tap your credit card and take out a home equity loan. Now Americans are trying to raise cash the hard way to try and pay for these higher prices for gas, food and their mortgages.
Now craigslist in some ways has become an online flea market, the number of items for sale up 70 percent since July. Especially gas guzzlers. There is a site called Auction Pal that is similar. Their listings are up 66 percent. And both say this blows their normal growth curve. This isn't about them.
VELSHI: Not just normal April listings or whatever ...
WESTHOVEN: They say this is a clear trend that people are trying to raise money fast. It's the tone, too, that really tells us something different. Check with this one out. I'm really hurting for money and have bills to pay. It's a San Francisco woman. She's selling her paint ball set but for cheap. There's a lot of ads like these.
VELSHI: I suppose the good side of this story is several years ago this didn't even exist, the ability to sell things on these networks didn't exist. Now, at least, while it may be a last resort and be heartbreaking, it is something for those people who are thinking about trying to make ends meet to at least clear out. I've sold some stuff in the last few weeks just because I was cleaning out my apartment and it was good money sitting there doing nothing.
WESTHOVEN: And they would have had to have a real yard sale, how many can you reach? This way you can get a much wider audience, maybe collector, people who care about it, a better chance of getting a fair price than from a pawnbroker, for example. And if you done care about something being new, new, new and the buy, buy, buy of American culture, you can get some really excellent bargains right now. One analyst says it's driven down the price of second-hand stuff I think it was 15 to 30 percent.
VELSHI: So it might be a bargain hunter's paradise.
Jennifer, thanks so much.
WILLIS: Thank goodness for the Internet. Coming up, the help desk is standing by to answer your money questions. Send us an e-mail to issue1@cnn.com. We'll be right back.
(COMMERCIAL BREAK)
WILLIS: It's time now to get some answers to your money questions. On today's help desk we have Stephanie Auwerter from smartmoney.com, Mike Santoli, he is with Barron's and our own senior correspondent Allan Chernoff. He is back here as well.
Good to see you guys. Let's get right down to it.
First e-mail, the viewer does not want to share their name. They ask: "I have over $60,000 in student loan debt. What is the fastest and most realistic way to get out from under this debt?"
Stephanie, I can't believe how much student loan debt people have. What do you do if you're staring $60,000 in the face?
STEPHANIE AUWERTER, SMARTMONEY.COM: The numbers are growing. I think the thing to do is wait until July 1 and look to consolidate. This is if you have variable interest rates. The rates are going to be very low to consolidate after that deadline. The thing about student loan debt is it generally speaking is cheap debt.
If you have, say, credit card debt, tackle that first before you worry about the student loans. One thing to remember is the industry is going through some turmoil right now, so if you look to consolidate, do it through the government because lenders are backing out right now.
WILLIS: Yes, I think it's really tough for folks out there trying to get out the private loans. They're expensive and nobody wants to make them anymore.
Angie in Wisconsin asks: "I direct deposit $250 a month into my nine-year-old's 529 state college fund. In the first quarter of 2008 it lost $1,800 on a balance of about $20,000. Should I reduce my monthly contribution until the stock market improves or should I continue investing on my current course?"
Mike, what do you think? We get this question in different forms all the time.
MICHAEL SANTOLI, ASSOCIATE EDITOR, "BARRON'S": Sure. People want to know if they ought to try to time the stock market when you're talking about a long-term investment account. The answer is no. It's a nine-year-old, not going to need this money for seven or eight or nine years.
WILLIS: Buying cheap. Stocks are on sale.
SANTOLI: Exactly. One thing people don't want to buy more of when they go down in price. Keep in mind, losing $1,800 on a $20,000 means it performed basically in line with the storm. You've already recovered that, actually, if it was in the same fund.
WILLIS: That's good to know. Allan?
CHERNOFF: It's a good thing. Every month putting money in, keep it up, just stick with the program.
WILLIS: I agree.
Maurice from New Mexico asks: "If I'm looking to stay in my home for life, why should I be concerned about a decreasing in value due to neighborhood foreclosures."
You know, Allan, I think everybody's worried act their home value right now. Foreclosures, no foreclosures in the neighborhood. What do you think?
CHERNOFF: If you're staying in the home, it isn't going to hit you that badly. I don't think you should worry too much.
WILLIS: Maybe.
CHERNOFF: The only concern is if there are foreclosures all over the neighborhood, what about the property taxes in your town? You won't have as many people contributing. That means your taxes could be rising. That's a reason to be concerned.
WILLIS: I think people are also worried they can't get home equity lines of credit, too, in some of these hard-hit neighborhoods. A lot of people use them.
Maryland question: "My husband and I are 38 and always pay our credit cards in full every month. We are going to Disney in June and the credit card is offering one year free financing on all purchases. Will our credit be affected if we pay a little every month until the trip is paid off?"
Stephanie, do you like these offers?
AUWERTER: Not really, because if you are late on your payment, that interest fee zone is going to go into very high interest rates. And also I don't really love for paying for a vacation on a credit card. But it probably won't hurt their credit score too much. The one to look at is something called the credit utilization rate. How much basic untapped credit you have. By charging a balance, it could affect that a little bit, which could hurt your score a little bit, but in general it might not ...
WILLIS: Pay in cash. I hear you, stephanie.
AUWERTER: That's right.
WILLIS: All right, guys.
We have Mike Santoli from "Barron's", Stephanie Auwerter from Smart Money and our very own Allan Chernoff -- Ali.
VELSHI: All right.
Gerri, coming up, there are a lot of noble causes out there that need your money, but donations are just out of the question for a lot of people in this tough economy. We're going to show you how to put your best foot forward.
And we're going to bring you the results of today's quick vote. The question: When do you expect to have your student loans paid off? Not too late to register your vote. Just go to CNNMoney.com. The results are coming up next.
You're watching ISSUE #1 on CNN.
(COMMERCIAL BREAK)
WILLIS: If you're like most people, you want to be charitable and give back to those in need. But it's not always easy when you have to pay bills, your own bills first. Some companies are making it easier to spend and give at the same time. Early I spoke with Blake Mycoskie, the founder of Tom's Shoes.
(BEGIN VIDEOTAPE)
WILLIS: Blake, welcome. Good to see you. BLAKE MYCOSKIE, FOUNDER, TOM'S SHOES: Thank you for having me, Gerri.
WILLIS: I just want to show people what you do here. This is Blake's product. And I think you can see it pretty well right here. He's a vendor of these shoes. For every pair of shoes he sells, he gives away another pair to somebody in need. Now, Blake, you've got to tell me, how did you come up with this idea?
MYCOSKIE: Well, actually, about two years ago I was on vacation in Argentina, and i was out in kind of the rural area. And I met some kids that lived near this farm and they didn't have shoes. And the more and more I was in Argentina, I saw all these kids without shoes. I thought there's a lot got to be a way to give them shoes. But I didn't want to give them shoes just once. The only way I could think of is for every pair we sold, we would give one away, and as long as we'd continue selling shoes, we could give these shoes and they'd never have to go without shoes again.
WILLIS: It's such a great idea. I don't think Americans -- it's hard for us to grasp that if you live in a third-world country, guess what, walking is a major form of transportation. You absolutely need shoes. Is that why you focused in on shoes?
MYCOSKIE: Actually, yes. I mean, a lot of people don't realize that so many diseases, bacterias, cuts, scrapes, infections, they come from children not having shoes. A lot of third-world country, children can't go to school, they don't have the proper uniform and shoes. Sometimes shoes are a passport to an education or they have to walk a long way to get fresh water. And it also an easy way for a consumer to feel good about their purchase. We all wear shoes every day, we all buy shoes and you can buy a pair and give someone a pair at the same time.
WILLIS: A lot of viewers might recognize you. You were a contestant on "The Amazing Race." Was there anything from that experience that kind of encouraged you to take this step?
MYCOSKIE: Absolutely. My experience on "the amazing race," the first time I had traveled globally. On that show, we went to South Africa, we went to Argentina, lots of place where is I saw extreme poverty. That's what got me thinking about what can I do to help people around the world less fortunate than we are.
WILLIS: You've gotten great advice, one from Ken Cole, a shoe store of the same name. What did he tell you?
MYCOSKIE: It's amazing. Kenneth Cole has a gigantic shoe company globally, givers away millions of dollars every year to different projects every year. I met him recently and he encouraged me to think about our business is really going to grow fast and get ready for scaling up production and design so that as people start talking more and more about our shoes, we're prepared so we can give away as many shoes as possible.
WILLIS: Where do I buy these shoes and how much do they cost? MYCOSKIE: The shoes cost about $42. They're very inexpensive, you know, canvas slip-on shoe, great for this time of year, for spring and summer. You can buy them at our Web site at tomsshoes.com. You can also by them in stores like Nordstrom's and boutiques around the country. But if you want a list of all the stores near you, go to our Web site and put your zip code in and we'll tell you all the stores that sell Tom's in your neighborhood.
WILLIAS: Truly shoes for the soul. We appreciate you being with us. Thank you, Blake.
MYCOSKIE: Thank you for having me.
(END VIDEOTAPE)
VELSHI: Shoes for the soul. That's got a lovely ring to it.
Well, from the comforts of home to the harsh reality of being homeless, it is a living nightmare for some Americans.
(BEGIN VIDEO CLIP)
UNIDENTIFIED FEMALE: Come on. Scoot over a little bit. There. OK. Hey. My pillow. Go on. There we go. All right.
(END VIDEO CLIP)
VELSHI: An emotional story from CNN's Thelma Gutierrez. We'll show you that tomorrow on ISSUE #1.
Time now to see the results of today's quick vote. To see you have you voted let's check back in with Poppy Harlow of CNNMoney.com.
Hey, Poppy.
HARLOW: Hey there.
We're talking about education. We asked people when do you expect to have your student loans paid off? A majority said they actually don't have any, 59 percent. But right after that, 21 percent said it's going to take more than 10 years to pay off student loans. So a lot of kids graduating right now and a lot of loans to pay back, Ali.
VELSHI: The 59 percent just outgrew their loans, maybe?
WILLIS: Yes. Maybe a little older ...
VELSHI: One advantage of growing older. One day your loans might be paid off.
WILLIS: That's something to look forward to, right?
VELSHI: We have that story we were talking about, how Sallie Mae has somehow coded some people's credit incorrectly and people who have never missed a payment have now been shown to have a bad credit score. WILLIS: Can you imagine this? Adding insult to injury. For goodness' sakes, you don't need any help messing up your credit score. Having Sallie Mae do it for you is not good
VELSHI: Bankrate.com is reporting that story. We will check into it but please make a point of checking your own credit scores.
WILLIS: Check your own credit scores and if you have the problem, e-mail us at ISSUE #1.
All right. For more ideas, strategies and tips to save you money and protect your house, watch OPEN HOUSE at Saturday at 9:30 a.m. Eastern here on CNN. And for more on how the news of the week affects your wallet, tune into YOUR MONEY Saturday's at 1:00 p.m. Eastern and Sunday's at 3:00 right here on CNN.
VELSHI: The economy is ISSUE #1. We here at CNN are committed to covering it for you. ISSUE #1 back here tomorrow same time, 12:00 Eastern. Let's get you up to speed on other stories making headlines.
CNN NEWSROOM with Don Lemon and Melissa Long starts right now.
