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Issue Number One
McCain Addresses Sluggish Economy; Food and Gas Prices March Skyward; Meals on Wheels Struggles with New Expenses
Aired May 19, 2008 - 12:00 ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
ALI VELSHI, CNN ANCHOR: Food and fuel, a growing crisis in America. Two staples of everyday life, milk and gas. Believe it or not, they now cost the same.
And high gas prices and hunger.
(BEGIN VIDEO CLIP)
UNIDENTIFIED MALE: The notion of me having to decide who gets to eat today because we have volunteers on one route versus another is quite disconcerting.
(END VIDEO CLIP)
VELSHI: Charities like Meals on Wheels try to roll on, despite rising costs.
And could the answer to the nation's energy woes be blowing in the wind? Billionaire oil man T. Boone Pickens says yes. Here his plan to cut our oil independence.
ISSUE #1 is your economy. ISSUE #1 starts right now.
Welcome. Thanks for joining us. I'm Ali Velshi. Gerri Willis will join me in just a moment.
But first, it's the eve of two more Democratic primary battles, and Hillary Clinton is showing no sign of throwing in the towel. She is on the stump in Kentucky, where she's favored to come out on top tomorrow, thanks to blue collar workers there. And Barack Obama has been drawing huge crowds in Oregon, site of tomorrow's other primary which he's expected to win.
John McCain, the likely Republican presidential nominee, is talking about issue No. 1 today, the sluggish economy. A short while ago in Chicago, McCain laid out his plans for boosting the economy. One issue he zeroed in on were farm subsidies. He says that while American workers and taxpayers struggle to make ends meet, Congress gives billions of dollars in subsidies to some of the biggest and richest corporate farms in the country.
GERRI WILLIS, CNN ANCHOR: President Bush and his treasury secretary just wrapped up a meeting at the White House. It's the president's first report on domestic business since he returned from the Middle East last night. And Treasury Secretary Henry Paulson delivered an upbeat message. Kathleen Koch joins us now from the White House with more.
KATHLEEN KOCH, CNN CORRESPONDENT: Gerri, as the president, after a week of focusing on international issues and legacy building, this morning really plunged both feet first back into domestic issues. And for most Americans, issue No. 1 is the economy.
Now, the president met for about 20 minutes in the Oval Office with the treasury secretary, and Treasury Secretary Paulson gave the president an update on the economy, which Paulson told business leaders here in Washington in a Friday speech as "closer to the end of the market turmoil than the beginning," that markets are considerably calmer now than they were just two months ago.
Now, both men, the president said, also talked about those economic stimulus checks now going out to Americans around the country.
(BEGIN VIDEO CLIP)
GEORGE W. BUSH, PRESIDENT OF THE UNITED STATES: We're working through tough times, and I appreciate the leadership you're providing.
He did assure me that the refund checks are heading out. People are getting that money. And that's good. It should help our economy. And more importantly, help people pay their bills and, you know, we hope people use that money and take care of their families and child (ph).
(END VIDEO CLIP)
KOCH: Now, the president also praised the Hope Now program that was started by the administration back in the fall to help address the mortgage crisis. The president said it has now helped some 1.4 million struggling Americans stay in their home, 500,000 in the first quarter of this year alone -- Gerri.
WILLIS: Well, there was news on Friday that the U.S. will halt deposits to the Strategic Oil Reserve this summer. What does the White House have to say about that decision?
KOCH: Gerri, the president is having to do some serious backtracking on this. This is something that he has opposed very adamantly, saying that the 70,000 barrels a day that the U.S. puts into the reserve represents just -- it's less than one-tenth of one percent of global demand. But the president has said he's not going to stand in the way of this.
His spokesman, Deputy Press Secretary Scott Stanzel, saying, well, that basically -- you know, that this vote was too overwhelming. Nearly unanimous, 97-1 in the Senate, 285-25 in the House. That's a veto-proof majority.
So the president is not going to stand in its way. But Stanzel says that he hopes it doesn't distract lawmakers from looking at steps that the president thinks will really work, such as increasing domestic oil production and investing more in alternative fuels -- Gerri.
WILLIS: A continuing debate. Kathleen, thanks for that.
KOCH: Quite so. You bet.
WILLIS: Ali.
VELSHI: Let's talk a little bit more about that Strategic Petroleum Reserve. They are four locations in Texas and Louisiana where the Strategic Petroleum Reserve is located. Those are the four locations. The fifth one, on the right of your screen, is in Mississippi. That is a proposed site for the fifth reserve.
This is the world's largest emergency supply of oil. Those four locations in Texas and Louisiana can hold 727 million barrels of oil. Right now, they are 96 percent full. The refilling of 76,000 barrels a day would have continued for another year to bring it to 100 percent, but that is now being stopped.
The Strategic Petroleum Reserve first opened in 1977. About 400,000 barrels were in there at the time. It was first used in an emergency for Desert Storm.
In 1995, the government suspended the filling of those reserves, but resumed right after September 11, 2001.
The reserve was once again used during Hurricane Katrina, when pipelines were damaged, so that refineries could continue to get oil. That fifth site is going to be established in Mississippi, but for the first time ever in 2008, the Strategic Petroleum Reserve exceeded 700 million barrels of storage.
While we worry about our economy here in the U.S., people around the world are starving, especially in disaster areas like Myanmar. U.N. Secretary-General Ban Ki-moon will visit Myanmar this week. He'll talk with leaders there about allowing food and relief workers into the country.
Meanwhile, the U.S. military is starting to think about what its role should be in future crises, especially as high prices for food and fuel threaten global stability.
CNN's Barbara Starr joins us now from the Pentagon with more on that.
Hi, Barbara.
BARBARA STARR, CNN PENTAGON CORRESPONDENT: Hi, Ali.
Well, you know, the name is very simple, the Food and Fuel Task Force. But that just about says it all.
The Pentagon has now established that organization, established by Admiral Mike Mullen, the chairman of the Joint Chiefs of Staff, for high-level military officials to take a look at this global crisis and how interconnected the problem is across the world, what it could mean for everybody. The Food and Fuel Task Force is really focusing on the key question, what is the tipping point into conflict, into the possibility of war breaking out somewhere over the question of food and fuel?
The military's not looking for any more invasions, they tell us, but they need to be ready, they need to think about this if a humanitarian crisis emerges even worse than the ones we're seeing. So they are looking at things like what are the triggers, what are events in food and fuel problems around the world that might be so drastic the U.S. military has to step in and get involved? And fundamentally, are issues like Myanmar, that you mentioned, what we're seeing right now, where the government there won't let anybody help and is possibly leading to thousands and thousands of people dying, could that lead to a situation in a food and fuel crisis of forcible relief, that the U.S. military might be called upon to go to a country and provide relief to the people even if the government there doesn't want it?
And closer to home, what if a crisis broke out, perhaps, in Mexico or Haiti or Central America, and you saw a drastic refugee flow that could risk U.S. borders, or even if there was a crisis here in the United States? Now, Ali, again, what military officials tell us who are very familiar with this task force that's just been set up, they're not looking, they don't want anybody to think they're planning an invasion, that they're planning military action, but they say it is now at the point where the issue is so serious they have to give it some very deep thought -- Ali.
VELSHI: Well, Barbara, it just goes to show how interconnected we all are when it comes to things like food.
Thanks, Barbara Starr.
WILLIS: Coming up, two staples of everyday life, milk and gas. Believe it or not, now they cost about the same.
We'll take a closer look at America's food and fuel crisis and what it means to you. That's next on ISSUE #1.
(COMMERCIAL BREAK)
VELSHI: Well, could the answer to the nation's energy woes be blowing in the wind? Legendary oil man T. Boone Pickens hopes so. I spoke to the billionaire oil man earlier about the plan to build the world's biggest wind farm and what he thinks is needed to fix our oil prices.
(BEGIN VIDEOTAPE)
VELSHI: Are you looking at wind as the future for energy in the United States?
T. BOONE PICKENS, FOUNDER, BP CAPITAL: It's got to be part of it because we don't have much oil.
VELSHI: What can we do about it? PICKENS: Well, first, the Saudis are producing all the oil they can produce. So going to them and asking them to open the spigot, the spigot is open. There's no more.
There's 85 million barrels of oil every day available in the United States. And that's all there is. So, trying to get somebody to produce more, they can't.
So, we have a demand of about 86 million or 87 million barrels a day, and 85 won't cover 86 or 87. So we have to figure out something in this in country, because we are now spending $600 billion a year for oil -- $600 billion a year. That is four times the cost of the Iraqi war, and none of the politicians say anything about it. They don't tell you what's going on.
(END VIDEOTAPE)
VELSHI: Well, Boone's going to tell us what's going on with him. He's still invested in oil, but he is building the world's biggest wind farm in Texas. I'll have the full interview with him later on ISSUE #1 -- Gerri.
WILLIS: Fascinating stuff.
Food and gas prices, though, are marching skyward. Today, a gallon at the pump hit $3.79, another record high which still isn't as much as a gallon of milk. But you know, that's pretty expensive since your family uses both.
CNN senior correspondent Allan Chernoff is here with a price comparison.
Allan, tell us about this.
ALLAN CHERNOFF, CNN SR. CORRESPONDENT: Gerri, this is incredible, and it tells us what's going on with the price of gasoline.
As you just said, $3.79 a gallon. It's actually just a little bit more than a fraction of a penny above $3.79, and that is almost the national average for the price of a gallon of milk, $3.80. So the two are just about equal. It's certainly possible that come tomorrow, gas could become more expensive than milk.
WILLIS: Fascinating stuff. OK. What's behind this price action?
CHERNOFF: Well, this has -- by the way, the BLS, Bureau of Labor and Statistics, indicates that this has never happened before. So it's very momentous.
Now, what's been happening, of course, with gasoline, we all know, is that the price has been jumping dramatically, not so much because of the demand in supply of gas itself in this country, but because of the underlying commodity, crude oil. As we've been reporting, the price of crude has been soaring, not only because of worldwide demand, but also tight supply, and a lot of investment in energy. A lot of speculators have been moving into the oil complex, pushing the price of gas up.
What's been going on with milk? Well, over the past few months, milk prices actually have moderated somewhat. So there has been a pullback in consumption because the price of milk had jumped up so much. Consumers have pulled back, so the price has been pretty moderate recently, relative to what had been happening earlier in the year, when it had been soaring.
WILLIS: All right. What a world. Tell me, though, is this going to continue or slow down?
CHERNOFF: Right. Well, gasoline can only -- this is good news -- can only keep soaring for so long. OK?
So, as we get to the summertime, odds are that maybe it will be $4, who knows exactly where, but the odds are that this huge increase is going to slow down. Whereas milk, as I said, over the past few months it's been coming down a little bit, milk could actually go up.
Why? Because farmers have actually been cutting back on their production. The cost of grain has been so expensive for them, the cost of energy, of course -- they're using diesel fuel for their farm machinery and everything like that -- so they've been cutting back on production, feeding their cows less. We'll have less milk produced, and that could send the price of milk higher.
WILLIS: Great, Allan. Thank you for that. Great report. We appreciate that -- Ali.
VELSHI: Thanks, Gerri.
Well, when we see pictures of food riots around the globe, it may seem far away, but the truth is, it affects us here at home. And what can we do here? Well, we can have an effect on prices in other countries.
So what has to happen to fix the growing crisis?
Marianne Lavelle is with "U.S. News & World Report." She joins me from Washington. Great -- she's the author of a great story about what we can do.
Marianne, lots of suggestions in your story. One that, you know, caught my attention, obviously, is you speak of what Allan just mentioned, what so many other people talk about, ethanol, the use of corn to make ethanol as being something of a culprit behind these increased prices. Tell us a little bit about that.
MARIANNE LAVELLE, SR. BUSINESS EDITOR, "U.S. NEWS & WORLD REPORT": Right. In our effort to dig ourselves out of this energy crisis, we may have dug ourselves into a food crisis. And we -- there's a lot of controversy on how big a factor ethanol is playing in the price of grain going up all over the world. But it definitely is a factor. Right now, we're devoting about 25 percent of our corn to ethanol, we're on track to devote about a third of it in very short order. So a lot of people are wondering whether we should take a pause on the track that we're going, because right now, we're going to expand ethanol production fourfold in the next 12 years.
VELSHI: Right. And that's using corn or soybeans. That's going to cause those prices to go up.
One of the other things we're talking about is the role that speculation plays in the price of a barrel of oil. Upwards of $125. Some people say it could be 30 percent of that, some say it could be 60 percent of that.
Tell me what you think can actually be done if speculation is a culprit.
LAVELLE: Right. I mean, this is another lesson in unintended consequences. A lot of the policies that the Fed has taken to really deal with our housing crisis and the credit crunch have, no question, weakened the dollar. As the dollar is weakened, more money pours into commodities -- oil, gold and grain. A lot of folks think the only thing that's really going to reverse that trend in a big way is if monetary policy gets tightened, and that would mean higher interest rates.
VELSHI: And that means making it more attractive to invest in other things, not just commodities. But can there be anything done? I mean, the commodities market is like the housing market. It's like saying you can't speculate in housing or the stock market or art or wine.
LAVELLE: Right.
VELSHI: Can anything be done?
LAVELLE: They in need the speculators. It provides liquidity in the market. And the farm industry needs that market to be functioning.
It's very hard to really put a curb on the speculators. What you're going to find is the Federal Reserve taking a close look at inflation as it goes forward...
VELSHI: Right.
LAVELLE: ... as well as the recessionary pressures.
VELSHI: One of the headlines in your story, which I don't know whether you're being tongue in cheek or not, but you're saying eat less meat. I don't know if that's -- whether you meant for people to become vegetarians or realize how much energy goes into meat production.
LAVELLE: Right. That we should keep in mind that for every pound of beef we're eating, about seven pounds of grain have gone into that. And as not only we're eating meat, but more people in China are eating meat, and that is creating a lot of the pressure on the price of grain worldwide. I don't think that we're going to have a policy of eating less meat, but it is something that people are going to look at, especially as the price goes up.
VELSHI: All right. Marianne Lavelle is the author of "Eight Ways to Fix the Global Food Crisis" at "U.S. News & World Report." She's a senior editor there.
Thanks very much for joining us, Marianne.
LAVELLE: Glad to be here.
VELSHI: Gerri.
WILLIS: No more steaks I guess.
Well, it is your turn to weigh in on today's "Quick Vote" question, and that means it's time to check in with Poppy Harlow from money.com.
Hi there, Poppy.
POPPY HARLOW, CNNMONEY.COM: Hey, Gerri.
Well, a 12th straight record high today for gasoline, nearly $3.80 a gallon. That according to AAA. So, if you commute far to work, that means you're paying more and more every single day.
Here's our question today. How far do you commute? More than 50 miles, 20 to 50 miles, less than 20 miles, or zero, I telecommute?
Weigh in on CNNMoney.com. We'll bring you the results later in the show.
Telecommute. That's a great idea.
WILLIS: That's a great question. Maybe we could have bureaus from our homes, Poppy.
HARLOW: Would love that.
WILLIS: Thank you for that.
A vital program, but times are tough.
(BEGIN VIDEO CLIP)
UNIDENTIFIED MALE: Some of these people don't get to see anyone unless you come in contact with them, bring them food and all.
(END VIDEO CLIP)
WILLIS: Those meals aren't reaching every senior who needs them, all because of high gas prices. Then, could the answer to the nation's energy woes be blowing in the wind? Billionaire oil man T. Boone Pickens, well, he certainly hopes so. He's going green with a $2 billion wind farm in Texas.
That's next on ISSUE #1.
(COMMERCIAL BREAK)
VELSHI: All right. Check out this map. Those states in red are the biggest producers of wind power in the country.
Billionaire oil man T. Boone Pickens lives in one of them and he's going green. He is sinking billions of dollars into a new wind farm in Texas. It is likely to become the biggest one in the world, producing enough power for the equivalent of 1.3 million homes.
I spoke to him earlier about this.
(BEGIN VIDEOTAPE)
VELSHI: Tell me about the wind. Now, you are buying, for a start, more than 600 wind turbines from General Electric. You're going to put them on this big track of land in Texas, and you're going to generate a lot of electricity.
What happens to that electricity? Tell me where you think you're going to make your money and how this is going to help the situation in America.
PICKENS: Well, that's the first step to a 4,000-megawatt wind farm. This is 1,000 megawatts.
We start receiving those turbines in mid 2010. We will have the total 4,000 megawatts finished by the end of 2015. That power will go into a transmission line that will tie into the ERCOT system in the state of Texas, and it will be transmitted down state.
VELSHI: What's your view of wind power? It's one of several things that we should be looking at in terms of powering our homes, electrical power? We get most of it from coal and natural gas, and some from nuclear. Are you thinking it's one of the formats of power we should be thinking about, or is this going to be bigger than we all thought?
PICKENS: The Department of Energy came out with a study in April of '07 that said we could generate 20 percent of our electricity from wind. And the wind power is -- you know, it's clean, it's renewable. It's -- you know, it's everything you want. And it's a stable supply of energy.
It will be located in central part of the United States, which will be the best from a safety standpoint to be located. You have a wind corridor that goes from Pampa, Texas, to the Canadian border. And it has -- the wind, it's unbelievable that we have not done more with wind. Look at Germany and Spain. They have developed their wind way beyond what we have, and they don't have as much wind as we do. It's not unlike the French have done with their nuclear. They're 80 percent power generated off of nuclear, we're 20 percent.
VELSHI: Boone, let's talk about this. I was discussing with some of my colleagues today, I'm fascinated by wind power. I love watching -- you know, going by a field of these turbines. And I think they're fascinating.
You don't happen to think they're attractive, and you're not really putting them on your land. You're going to be using other people's land to put these things on.
PICKENS: That's right. And it's very clear, these are my neighbors. And they want them. It generates income for them.
A turbine will generate somewhere around 20,000 a year in royalty income. And on a 640-acre track, you can put five to 10 of these on the track. And you don't have to have them if you don't want them.
VELSHI: And it's quite common that people who maybe have a piece of land, they might be farmers or something like that, this is extra income to them by making a deal with somebody like you who is going put these things up, if they don't mind having them on the land. Do they get the electricity from it or do they just get a royal check?
PICKENS: A royalty check. But look at Sweetwater, Texas. That town was 12,000 people, went down below 10,000. The wind came in, it's above 12,000 in population now. The local economy is booming.
That can be repeated over and over and over again all the way to the Canadian border. Then you have a solar corridor that goes from Sweetwater, Texas, west, to the West coast, and that solar corridor can also can be developed.
But we are going to have to do something different in America. You can't keep paying out $600 billion a year for oil.
VELSHI: T. Boone Pickens, thank you for joining us.
Boone Pickens is building the largest wind farm in the world.
Good to talk to you, sir.
PICKENS: Thank you.
(END VIDEOTAPE)
WILLIS: Well, who's paying most at the pump? You may be surprised where drivers are suffering the most. The priciest places to fill up, next.
(COMMERCIAL BREAK)
WILLIS: Meals On Wheels could be slowing down with the soaring gas prices, but you can help seniors avoid hunger. First, though, let's get a check of the headlines. Let's go down to Don Lemon in Atlanta.
Hi there, Don.
DON LEMON, CNN CORRESPONDENT: Hi there, Gerri, thank you very much for that.
Happening right now, movement today in the Myanmar aid crisis. The country also known as Burma is agreeing this morning to let foreign medical personnel and assessment teams into the cyclone ravaged areas. It's a turnaround from Myanmar, which has been refusing most international help for the last two weeks. The foreign aid workers are expected to arrive Wednesday from neighboring countries in Asia. U.N. Secretary-General Ban Ki-Moon will also visit the area then.
The devastation in Myanmar is still growing. The U.N. now estimates more than 100,000 people were killed, 2.5 million people are affected. And Myanmar's military government puts the official death toll much lower than that.
Talk about a Chicago-based company. It's recalling ground beef. It may be tested with E. coli. The meat was distributed in 11 states in the east and Midwest. The beef under the name Morreale Meat was produced by J.S.M. Meat Holdings. Federal officials say no illnesses have been reported. No illnesses there to report.
More tests for Senator Ted Kennedy today. Doctors are trying to find out what caused his seizure. Kennedy was taken by helicopter Saturday from Cape Cod to a Boston hospital. Doctors initially thought he may have had a stroke, but revised that later saying he was not in any immediate danger. Kennedy appeared fine on Friday when he attended a ribbon cutting ceremony in New Bedford, Massachusetts. The senator has been watching ball games and movies with family members in his hospital room.
Combat in a war zone. It is a life and death situation that can lead to Post Traumatic Stress Disorder. A recent e-mail sent by a Veterans Affair's staff member raises questions about whether troops are being properly diagnosed with PTSD. The V.A. assistant secretary will join us in the "CNN NEWSROOM" to answer some of those questions. That's in the 2:00 p.m. hour of the "CNN NEWSROOM" -- 2:00 p.m. Eastern.
I'm Don Lemon. Now back to ISSUE #1 and Gerri Willis -- Gerri.
WILLIS: Don, thank you for that.
Let's get a quick check of the ISSUE #1 stories making headlines today.
Treasury Secretary Henry Paulson met with President Bush last hour. On their agenda, the housing crisis. And the president stood firm. He won't support any rescue package that would bail out lenders. Microsoft makes a new pitch to Yahoo! that would involve a smaller piece of the pie, but reports say it's a profitable one that would include search engine advertising. Industry analysts say don't rule out a Microsoft/Yahoo! merger down the road.
And as we've been reporting, the nation's average gas price rose to $3.79 for a gallon of regular unleaded. But in Chicago and Long Island, drivers are already paying above $4 on average. The Lundberg survey says it's the first time in history that two metro areas have hit that mark -- Ali.
VELSHI: Thanks, Gerri.
Well, they provide more free and low-cost meals every day to seniors than any other volunteer organization in the country. But the soaring price of gas could put the breaks on some Meals on Wheels programs.
CNN's Kathleen Koch reports.
(BEGIN VIDEOTAPE)
HARRIET CARTER, MEALS ON WHEELS VOLUNTEER: OK. We're ready to roll.
KOCH (voice-over): Baltimore, Maryland, retirees Tom and Harriet Carter delivering food.
TOM CARTER, MEALS ON WHEELS VOLUNTEER: Meals on wheels.
KOCH: And friendship.
T. CARTER: How you doing today?
Some of these people don't get to see anyone unless you come in contact with them, bring them food and all. And, you know it's just so rewarding.
KOCH: But volunteers have to pay for their own gas. And soaring prices at the pump have forced the Carters to cut back to just one day a week.
T. CARTER: I would be a standby on other days. And I just can't do it all the time now with gasoline continuing to rise on a daily basis almost.
MICHAEL WHITE, MEALS ON WHEELS FOOD SERVICE MANAGER: There are like a thousand things going on right now, sir.
KOCH: Back at the central Maryland headquarters for Meals On Wheels, procurement manager Michael White is haggling over prices.
WHITE: 22.18, is that natural juice?
KOCH: High oil prices have pushed the cost of Styrofoam plates and cups up 25 percent, beef and chicken up 15 cents a pound. Milk, a staple, is constantly on the rise.
WHITE: They're averaging two cents a month increase. And just do the math. It's just killing us.
KOCH: Many of the 5,000 Meals On Wheels programs around the country have had to scale back. Four in 10 now have waiting lists, the largest percentage ever. And the number is growing.
Baltimore, one of the largest programs in the country, may have to reduce services too.
Does that mean people go hungry?
TOM GRAZIO, EXEC. DIR., MEALS ON WHEELS OF CENTRAL MARYLAND: That means people go hungry, yes, ma'am. And the notion of me having to decide who gets to eat today, because we have volunteers on one route versus another, it's quite disconcerting.
KOCH: So Meals On Wheels is asking for donations and trying to recruit more volunteers like the Carters.
T. CARTER: Without volunteers, you have no Meals On Wheels.
H. CARTER: No program. You have no program.
KOCH: Meanwhile the 3,000 elderly and disabled served by the Baltimore program worry about being cut off.
BILL HOWES, MEALS ON WHEELS CLIENT: Very disappointing, it would be, I think anybody that needs them.
H. CARTER: OK. Be careful with that.
KOCH: And so very many do.
Kathleen Koch, CNN, Baltimore.
(END VIDEOTAPE)
VELSHI: Wow, as he said, if they don't have drivers or volunteers, people don't eat.
If you want to help Meals On Wheels where you live, just log on to their national Web site mowaa.org. Again, that's mowaa.org -- Gerri.
WILLIS: They're a great organization.
Taking your car to work, though, is get more and more costly as gas prices rise. In some cities, more so than others. Earlier I sat down with Matt Woolsey from Forbes.com to talk about some of the costliest cities for commuters in the U.S.
(BEGIN VIDEOTAPE)
WILLIS: Matt, welcome. You've come up with this fantastic list of cities that are really feeling pain at the pump. And one of them is Houston. And I'm shocked. Why?
MATT WOOLSEY, STAFF WRITER, FORBES.COM: Right. You wouldn't expect Houston just because gas prices are so low, they have so much refining capacity and they don't tax it very much. But the thing with Houston is that they have very liberal land use policies, not a lot of zoning and so people are driving a very long distance to work.
WILLIS: What's the average commute there? I mean how far are people coming in from the suburbs?
WOOLSEY: It's hard to say an average just in terms of time and distance. But in terms of gas prices, the trade-off that's happening in Houston is that people have moved out further, housing is really affordable. So while it costs you a long -- while you're driving a long way and it costs a lot, you're paying a lot less in monthly mortgage premiums than you would say in Los Angeles.
WILLIS: So it was a trade-off, OK.
WOOLSEY: Yes.
WILLIS: Let's talk about Raleigh, North Carolina, the city near and dear to my heart. I'm from Carolina. You say it's a victim of its own success.
WOOLSEY: Right. Raleigh, Durham and the whole research triangle, as you know if you're from there, is one of the fastest growing areas in America. And so as a result, the infrastructure ability for it to handle its commute and its growing population doesn't keep up as fast as people move there. And another thing is that people's habits don't change.
WILLIS: What do you mean?
WOOLSEY: So when, in Los Angeles, for example, where traffic is terrible, about 30 percent of people car pool. But in Raleigh, because people have been for so long accustomed to just getting in their car and driving alone, still 87 percent of people are driving alone, which is . . .
WILLIS: No car pooling there. Everybody's used to driving by themselves.
WOOLSEY: Which is second only to Detroit. Yes.
WILLIS: OK. Here's what I don't understand. How did you put these numbers together? It seems to me it would be pretty complicated because it's not just a factor of what prices are in your area, it's also a factor of how far you have to drive to get to work.
WOOLSEY: Yes. So we looked at how long people are driving and also how much time they're spending in their car. But really an important component of this has to do with traffic and congestion. When you're sitting in traffic, when you're stalled, when you're in gridlock, your car is getting fewer miles to the gallon than it is when you're in open highway driving.
WILLIS: Right.
WOOLSEY: So a city where you can drive for a long distance with no one around you is a much better commute in terms of how much you're paying at the pump for that gas than if you're just sitting on the highway listening to the radio.
WILLIS: Hey, you've got to penalize those bad drivers, too, because that costs a lot of gas as well.
Let's talk about the worst city in the country for pain at the pump. What ranks?
WOOLSEY: The worst city was Riverside, San Bernardino, the inland empire. Gas prices are extremely high in California because the state taxes them and has really high, clean air standards. And the inland empire was set up for cars. People drive long distances to work. It hurts that it's right next to Los Angeles. And so if you want to get anywhere from San Bernardino, you're driving in a long distance, you're paying a lot in gas and you're sitting in traffic a lot.
WILLIS: You know, I would have said it was L.A. I'm shocked that, you know, because people drive to much in Los Angeles. Why don't they rank number one?
WOOLSEY: Well, one thing -- the reason L.A. probably didn't come in first had to do with the fact that we were just looking at commutes. If we had looked at overall driving, L.A.'s a nightmare 24/7 but it's not it's -- when you're talking about San Bernardino versus Los Angeles, for example, 30 percent of people car pool in L.A. And while that doesn't do enough to offset congestion, the price per person falls precipitously when you have two and three people a the car.
WILLIS: Well, Matt, interesting stuff. Thank you for your help today.
WOOLSEY: Thanks for having me.
(END VIDEOTAPE)
WILLIS: What inspires teenagers to bring up their grades?
(BEGIN VIDEO CLIP)
ALEXIS YARGER, JUNIOR, CREEKSIDE HIGH SCHOOL: My math grade was like a 30-something. And now it's 82.
(END VIDEO CLIP)
WILLIS: Cold, hard cash and a controversial program to tutor students who need help hitting the books. (COMMERCIAL BREAK)
VELSHI: A few months back, CNN brought you the story of a controversial program in Georgia that pays students to attend tutoring sessions. Well, the 15-week experiment just ended. Did it work? Our Josh Levs tells us.
(BEGIN VIDEOTAPE)
JOSH LEVS, CNN CORRESPONDENT, (voice-over): A celebration for kids under a national microscope. They've completed a 15-week program created by former House Speaker Newt Gingrich, who sends a video.
NEWT GINGRICH, FORMER HOUSE SPEAKER: You're now part of history.
LEVS: And controversy. A private foundation paid these students in Fairburn, Georgia, near Atlanta, $8 an hour to show up for four hours of tutoring a week in math and science. The program was aimed at low-income families. Some area parents wrote to the "Atlanta- Journal Constitution" condemning the program. One called it "unfair to kids who work hard to begin with." Some experts worry it could make kids less interested in learning if they're not paid.
ALFIE KOHN, AUTHOR, "PUNISHED BY REWARDS": Rewards aren't just ineffective. They're counterproductive. And we've seen this over and over again.
LEVS: The school says the Learn and Earn program brought . . .
GREG FIELDS, ASST. SUPT., CREEKSIDE HIGH SCHOOL: A lot of academic growth.
LEVS: Junior Khamylle Meeks was failing math.
KHAMYLLE MEEKS, JUNIOR, CREEKSIDE HIGH SCHOOL: I came for the money.
LEVS: She says it worked.
MEEKS: And I passed each and every last one of my Georgia high school graduation tests.
LEVS: As for the money, she tells us later.
MEEKS: I used it for my hair. Mostly I used it for my hair, like accessories and all that's stuff. That's about all I could pay for.
LEVS: Fourteen-year-old Jailyn Brown signed up partly to help his mom pay bills. But he says now . . .
JAILYN BROWN, 8TH GRADER, BEAR CREEK MIDDLE SCHOOL: I would do it if money wasn't involved.
LEVS: His mother, Alanna Taylor, wants him to continue without being paid. ALANNA TAYLOR, JAILYN BROWN'S MOTHER: He's motivated by the learning now.
LEVS: Determining the program's success could prove tricky since some students, like Alexis Yarger, say they never cared about the money and just wanted good tutoring.
ALEXIS YARGER, JUNIOR, CREEKSIDE HIGH SCHOOL: My math grade was like 30-something. Now it's 82.
LEVS: Of the 40 students selects for the program, school officials say 34 stuck with it, one moved away, five quit.
JIM EMSHOFF, "LEARN & EARN" EVALUATOR: And the ones that dropped out, we do know, anecdotally, that the ones that dropped out simply felt like it wasn't enough money for the amount of work they were doing.
LEVS: One teacher says the program is a sign of the times. He says parents are busier than when he was in school and society more materialistic.
DAVID MACKEY, TEACHER, BEAR CREEK MIDDLE SCHOOL: We're looking for alternative measures to try to save the children, just try to invest in the children, just try to give them that extra edge.
LEVS: The school plans to haven't an official report this summer, analyzing how the program affected kids' grades and how important the money was overall. School officials say if the program is declared a big success, they may expand on it and encourage other schools to follow.
Josh Levs, CNN, Atlanta.
(END VIDEOTAPE)
WILLIS: Still ahead, it sounds like the plot for a '60s sitcom. A family strikes oil in their backyard. We'll bring you the details next.
A the Help Desk is standing by to answer your questions. Send us an e-mail to issue1@cnn.com.
(COMMERCIAL BREAK)
VELSHI: Black gold in the backyard. That's what a man in Indiana found and now he's tapping his own oil well, storing the oil in a tank and then sending it to Ohio for sale.
(BEGIN VIDEO CLIP)
GREG LOSH, FOUND OIL IN HIS BACKYARD: I didn't know anything about oil until I got involved with this. So now I got the bug. So it's exciting.
(END VIDEO CLIP) VELSHI: So far, Greg's getting about three barrels of oil a day out of that well. It also produces natural gas that he's using to heat his home and a few others -- Gerri.
WILLIS: A real Jed Clampett there. I like that.
Well, the Help Desk is open for business and that means it's time to get your answers to your money questions. Let's get right down to it. Today's group, Stephen Gandel is the senior writer for "Money," Jack Otter is the deputy editor of "Best Life," and we also have our very own CNN business correspondent Stephanie Elam.
Great to see you guys. Thanks so much for coming.
STEPHEN GANDEL, SENIOR WRITER, "MONEY": Great to be here.
JACK OTTER, DEPUTY EDITOR, "BEST LIFE": Thank you for having us.
WILLIS: All right, the first e-mail, number one here: "I have good credit -- low 700s -- and live in New York City." Ouch, that's expensive. "My car payment, insurance and gas is too much for me now. I don't know if there is a way to give the car back to the bank without hurting my credit score."
Steven, what do you think of this? I think there's a bigger problem here than just the car possibly.
GANDEL: Certainly budgeting is an issue. But the bank's not going to take back your car, unfortunately. You can't just drive it up to the teller window and say, here's my deposit. It's not going to happen.
So what you have to do is you have to sell the car and try to pay off as much of that auto loan as you can. And whatever else you have left from not paying your insurance premium and gas, that should go a long way to paying off whatever is left of your premium and then hopefully you can save enough money to get rid of that loan all together.
WILLIS: You know, the good news here is, that if you live in New York City, particularly if you live in Manhattan, there's public transportation options, which is good news. But I've got to tell you, so many people across the country buy such expensive cars. You know, do you guys find this astounding?
OTTER: Well, and what's worse is that the length of the time they're borrowing the money for is getting longer and longer and longer. Suddenly eight-year car loans and so you end up with the loan being worth a lot more than the car is.
WILLIS: Absolutely.
The next e-mail is from Ron. He asks: "I currently have a HELOC," a home equity line of credit, "with my credit union at 8.5 percent interest, which I have not used. I also have enough money in my savings account to pay for upcoming home repair. Which should I use?" -- Jack.
OTTER: Eenie, meeny, miny, (ph), savings. First of all, this is much to much to be paying for a HELOC. It should be more like 6.5 percent. Even then I would still use savings. And here's how you figure it. That money in the bank is making you, what, 2 percent interest. The loan would cost you 6.5 percent, 7 percent. So you just earned, what, 5 percent by using your savings.
WILLIS: All right.
Let's get to the next e-mail. Steve in Texas asks: "My daughter is a senior in high school and normally seniors pick a major in college that they feel comfortable in and like. I have noticed that my daughter and other seniors are choosing majors based on salaries they will earn once they graduate."
Well, they're thinking ahead, aren't they, Stephanie?
STEPHANIE ELAM, CNN BUSINESS CORRESPONDENT: Steve is the only parent I have heard of who's like, but, honey, you really want to be an actor. Like that just never happens. You never hear the parent complain about this.
WILLIS: Follow your dream.
ELAM: But think about it. If they're going to work hard and make their money now, most people actually do venture away from their major. I was actually thinking about, I'm one of the few people who's doing what I actually majored in of my group of friends from college. So if they're going to venture away, let them make the money now and then they can go on to do what they like moving forward.
WILLIS: I love that.
OK. Billy in Carolina asks: "I had to file bankruptcy due to medical bills related to a rare brain disease. Do banks look at your situation as to why you filed bankruptcy, or does this (ph) hurt me?"
We've got some not so great news for him, right, Jack?
OTTER: Yes, well we're talking about heartless banks. They don't want your car and, unfortunately, probably do not care. It's not that they don't care, it's that they're all about numbers. And if you're bankrupt, you're bankrupt. I mean the good news is that, for instance, bankruptcy can even hurt you in a job situation. In this case, I would think most employers would have simply. But it's not going to help you on bankruptcy. You know, this is pretty much the number one reason people file is because of illness.
WILLIS: Right. Absolutely right. And I'm sorry, we're going to have to leave it there. We're going to have all of you back. Great answers to some really tough questions out there.
Steve Gandel, Jack Otter, Stephanie Elam, thanks so much for being with us today. We really appreciate it -- Ali.
VELSHI: Thanks, Gerri.
Well, it survived prohibition. So how will one of Kentucky's oldest industries weather this century's biggest economic hurdles?
Also your last chance to weigh in on our "Quick Vote" of the day. Results with CNN "Money's" Poppy Harlow up next.
(COMMERCIAL BREAK)
WILLIS: Welcome back to ISSUE #1.
It is time now to get the results of today's Quick Vote. More than 46,000 of you weighed in and for how you voted let's check back in with Poppy Harlow from CNNMoney.com.
Hey there, Poppy. Lots of folks voting on this one.
HARLOW: I think that's a record for us. We asked, how far is your commute? We wanted to know how much you have to spend on gas. Fifty-two percent of you said you commute less than 20 miles. Thirty- two percent of you said you commute 20 to 50 miles. Nine percent have to commute more than 50 miles. Six percent of you are very lucky and you get to telecommute, which Gerri and I would like to do some day.
WILLIS: Yes, we want to phone it in. That's right. You know, I would have expected it to be a little longer. That's sort of surprising.
HARLOW: It is surprising.
WILLIS: Interesting stuff. Great stuff, Poppy.
HARLOW: Thank you.
VELSHI: All right. Well, this time tomorrow, voters in Oregon and Kentucky will be casting primary ballots. But here's a bit of trivia for you. Did you know that Oregon is the nation's leader in Christmas tree production? It's also home to Nike shoes. And Kentucky's economic profile, because that's where the other primary is, is just as interesting, producing the country's best horses and hooch.
CNN producer Josh Rubin serves up a shot of ISSUE #1 Kentucky style.
(BEGIN VIDEOTAPE)
JOSH RUBIN, CNN PRODUCER, (voice-over): Welcome to Kentucky. Land of history, horses, and hooch. But since the Election Express is in Frankfort, Kentucky, home of Buffalo Trace, built on one of the oldest distillery sites in the country, we're going to talk about hooch.
UNIDENTIFIED MALE: Kentucky is known for its bourbon, no matter where you come from. RUBIN: The company says there's been a working distillery here since 1787. Bourbon's doing pretty well. Every year, Kentucky's distillers sell around $500 million of this quintessentially American liquor. But if your businesses is 235 years old, you're bound to see some tough times. For example, what happened to bourbon during prohibition?
RUSSELL HATTER, KENTUCKY HISTORIAN: The hooch was still available if you knew how to get it.
MARK BROWN, CEO, BUFFALO TRACE We had a license to make whiskey during prohibition. We were only allowed to make whiskey for medicinal purposes. A lot of people were ailing during prohibition because we were doing about a million pint bottles a month.
RUBIN: If your company survives the outlawing of the product you sell, you probably survive anything. So how is the bourbon industry weathering record-high prices for its main ingredient?
BROWN: It's very much the perfect storm. With the pressure on oil and the rising importance of corn to make ethanol with, we're buying millions of bushels of corn a year and we've seen the price double.
RUBIN: Well, that's going to hurt because fermenting corn mash, plus time in a charred oak barrel, is what makes bourbon. So how is this going to affect prices?
BROWN: They typically won't show up in the consumer pricing for a while, because this barrel we put away yesterday won't be sold for six or seven years.
RUBIN: So I guess we're going to have to look for bourbon prices to spike in seven, 15 or 23 years. It depends on your brand.
Josh Rubin, from CNN's Election Express, Frankfort, Kentucky.
(END VIDEOTAPE)
WILLIS: Great story. Tune in for primary results tomorrow night. CNN "Election Center" starts tomorrow night at 7:00 p.m. Eastern.
VELSHI: And "NEWSROOM" p.m. brings you a live Barack Obama campaign stop in Billings, Montana. That's moments away.
Time now to get you up to speed on other stories making headlines.
Don Lemon and Brianna Keilar are in the "NEWSROOM."
