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Issue Number One

McCain Describes Energy Dependence Plan; Families in Hawaii Face Escalating Prices; Rates of Bankruptcy in Retirement on the Rise

Aired June 24, 2008 - 12:00   ET

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


GERRI WILLIS, CO-HOST: Obama versus McCain. The presidential candidates take on the future of your energy as we are minutes away from an event with Senator John McCain and California Governor Arnold Schwarzenegger.
Why some victims of the Midwest floods were told they didn't need flood insurance.

And more folks than ever going bankrupt in retirement. How to avoid becoming one of them.

Issue #1 is your economy. ISSUE #1 starts right now.

Hello, everyone, and welcome to ISSUE #1. I'm Gerri Willis. Ali Velshi is on assignment.

We have so much going on today.

We're all concerned about high gas prices. Now the two presidential candidates are firming up their own energy plans. We're going to break that down for you.

So many victims of the Midwest floods were told they didn't need flood insurance. Now people are asking questions. And they want answers from FEMA.

And more and more folks in retirement, they're running out of money. But that doesn't have to be you or someone you know. Important information ahead.

From the ISSUE #1 headquarters to the CNNMoney.com newsroom, we are all over the stories that matter to you. And one of the big stories today, figuring out how to provide affordable energy for this country in the years to come.

We start on the campaign trail.

John McCain is talking energy efficiency today. He'll be appearing in California with Governor Arnold Schwarzenegger in just a few minutes.

CNN's Dana Bash is following the event and she joins us now from Washington -- Dana.

DANA BASH, CNN CONGRESSIONAL CORRESPONDENT: Well, Gerri, you know we've talked about this several times on this show, that politically, one of the ways that John McCain has been trying to separate himself from President Bush is on the issue of climate change. And in the speech that Senator McCain will start to give in just a short while, he's going to talk about the fact that he believes that climate change is a real, real issue. That, of course, is a swipe at President Bush, who for a long time his administration denied that it's a real issue.

And the other thing he is going to do is propose that the federal government lead by example with regard to fuel and energy efficiency. He's going to talk about the fact that federal office space and automobiles purchased by the federal government -- he says about 60,000 automobiles are purchased every year by the federal government -- that they should be flex fuel capable, plug-in, or hybrid.

So those are some of the things that Senator McCain is going to talk about today. As a matter of fact, pretty much every day this week and last week, he's trying to put a new idea in the pipeline because he is well aware of how critical this issue is to his campaign.

But one thing that is going to be noteworthy is that he is going to be joined by Governor Arnold Schwarzenegger. And this is noteworthy because the two of them now disagree on another big issue, and that's drilling for oil offshore.

You remember, of course, Senator McCain last week said that he thinks the federal moratorium should be lifted. Governor Schwarzenegger does not agree with him on that. In fact, I'm told that the governor, even sitting side by side with Senator McCain, will make it clear that he doesn't agree with Senator McCain. And that's a problem for the senator, because it has dogged him since he has been in the state of California.

Obviously, Gerri, you know California is a very green state. And they are not happy about this idea of oil drilling.

In fact, Senator McCain was even asked at a private fund-raiser by a donor about his change of heart on oil drilling. So it just gives you a sense of how it's not really necessarily playing very well in the state of California even as Senator McCain is talking big time about the environment today.

WILLIS: Well, fascinating stuff, Dana Bash. We'll be going live to that event, that speech by John McCain, when it happens.

Dana Bash, part of the best political team in television.

Thank you for that.

BASH: Thank you.

WILLIS: Presidential candidate Barack Obama treats the business community with what he calls tough love, but he also needs their vote. We (ph) also got to win over small business owners and their employees. So how does he plan to do that?

Joining us now, Steve Koepp. He is an executive editor of "Fortune" magazine.

Steve, good to see you.

STEVE KOEPP, EXEC. EDITOR, "FORTUNE": Hi, Gerri.

WILLIS: All right, let's start by just talking some brass tacks about Obama. I think people are worried about how he would treat businesses in this country.

What is the core of his plan for business and small business, specifically?

KOEPP: His main plan would be to bolster the middle class economy. He feels like those are the people who got a bad deal during the Bush administration. So he would look for ways to give them tax breaks, to boost the economy in ways that that part of the economy can really drive it.

His contention would be that the top one percent of earners, those people can't support an economy on their backs. And the other aspect would be to invest.

WILLIS: All right. So clearly, he's worried about the middle class here. Lots of folks share that concern, I think. But what does that mean for his policy, for his business policy?

KOEPP: Well, one thing he would do is put more of the burden on the wealthy, shift more of the burden that way. Also make corporate America share more of the burden too. And then invest, give the middle class a tax break, but also boost investment. I mean, what a lot of people call tax and spending, he would describe as investment in things like education, alternative energy, research for science, things that would make the U.S. more competitive.

WILLIS: All right. So, you know, obviously, big plans, wide- ranging plans. What's interesting, though, I think about Obama is the read generally on him is that he's not favorable to business. Of course, President Clinton was quite the opposite. He was considered very warm to the business community.

Does Obama need to move in that direction in order to get elected?

KOEPP: I think so. I think he looks even more to the left than he might actually be because he had to run against Hillary Clinton. He ran to the left of Hillary on many issues. He did things like bashing free trade and high CEO salaries and things like that. And that was seen as a necessary thing to do.

Now you can see him already moving more to the center because he's going to be dueling with McCain who is, of course, more to the center. And so you'll see that reflecting in his policies. He's already talking a softer line on things like NAFTA, for example.

WILLIS: McCain obviously made the famous quote about, you know, how much he was interested in the economy early on, how adept he was with economic issues, sort of set the tone on how he was regarded with economic issues. Is this an opportunity for Obama?

KOEPP: Certainly. I think so. He is focused on it.

When we asked him, like, "What is the number one issue of concern for you with the economy?" He said energy supplies, and that gets right to the heart of I think most people's concerns. And he's saying we can't just drill our way out of this problem, so he has a comprehensive plan, he would argue, to invest in alternative energies, conservation, all kinds of different things to get us out of this situation.

WILLIS: Well, you know, many, many topics, obviously -- taxes, energy, the environment. Is there anywhere else that Senator Obama really stands out when it comes to policies that will impact business and business owners?

KOEPP: Well, one thing is capital gains. He would increase the capital gains tax.

He feels that that's not going to discourage investment. It would go from 15 percent to, his people told us, probably 25 percent. That's going to have an affect on business.

Another area is regulation. He feels Wall Street and business in general, but especially Wall Street, needs to be more supervised. More regulation, more transparency in terms of derivatives and other issues that he says got us into this financial situation we're in.

So there would be certainly more scrutiny. He would say that that's going to be good for the market because it would create more confidence. And...

WILLIS: I bet people disagree.

KOEPP: ... stability.

WILLIS: There are some people out there who disagree with it, probably.

KOEPP: Right. Yes. Yes.

WILLIS: All right. Well, thank you for your help today. We appreciate it.

KOEPP: You're welcome.

WILLIS: And of course we'll be following this issue, talking about Senator McCain's plans for business and the economy tomorrow.

And to remind you in case you forgot, this is ISSUE #1, and the show is all about you. And it's time for you to weigh in on our "Quick Vote."

CNNMoney's Poppy Harlow here today with our "Quick Vote" question.

Hi there, Poppy.

POPPY HARLOW, CNNMONEY.COM: Hi there, Gerri. Thanks so much.

You know, folks, times are stuff. More expensive gas, food and utility bills means less money for your piggybank. So how are you doing at saving?

Here's our CNNMoney.com "Quick Vote" question today. "I will have enough savings to retire at age 55 or under, 56 to 65, 66 to 75."

Or Gerri, maybe they'll never be able to retire. I hope that's not the case.

WILLIS: I know a lot of people feel that way. But surely there are answers for us out there.

Poppy, thank you for that.

All right. Now, the candidates and their plans on energy. There's a lot of information out there. We're going to break it down for you.

Plus, high gas prices are hitting hard all over the U.S. Wait until you see what the folks in Hawaii are going through.

And make sure you or someone you know doesn't go bankrupt in retirement.

We're all over issue #1 right here on CNN. Stay with us.

(COMMERCIAL BREAK)

WILLIS: All right. You are looking at live pictures from Santa Barbara, where Senator John McCain is expected to speak momentarily about energy and his plan for energy in this country. He is to be joined by the California governor, Arnold Schwarzenegger.

We will bring that to you live when it happens. It looks like it could be a little bit away, anyway.

All right. Facing soaring jet fuel prices, airlines are raising prices and cutting back on service. Now pink slips are going to the people who fly the planes. United says it's cutting 950 pilot jobs beginning next month. The reduction is on top of already announced plans to slash 1,600 positions -- and those are salaried positions. United says the initial cuts will take effect in September and continue into next year.

And it's not just oil and gas that are soaring these days. So are natural gas prices. And for millions of Americans, that means one thing -- higher energy bills.

CNNMoney.com's Poppy Harlow has our "Energy Fix" today in New York.

Hi there, Poppy. HARLOW: Hi, Gerri.

You know, yes, we talk about oil and gas every day, but it's important to talk about natural gas when people are trying to cool their homes in these summer months.

Let's talk about exactly what is going on here, folks.

Oil and gasoline prices have been making the headlines, but about 60 million people rely on natural gas for heating and cooling their homes. It makes -- it's up -- the price, rather, up about 75 percent since the beginning of this year.

One reason, folks, is the weather. A lot meteorologists say it's going to get a lot hotter in the next few weeks, so be prepared for that. They say a lot of states will be above average in terms of temperature over the next few weeks.

Now, a consumer advocacy group says that for many, many people that means higher energy bills. About 15 percent of households get this. A pretty staggering number here are at least 30 days late on their utility bills.

That works out to about 16 million people owing a total of nearly $5 billion as of the end of March. And because of that, a growing number of people are having their utilities disconnected.

That is not a good thing when we're seeing some really high temperatures in some states. The group says about nine percent of those surveyed had their electricities or their natural gas shut off -- Gerri.

WILLIS: Wow. Our heart goes out to them. There are all kinds of programs across the country to make sure that doesn't happen, but times are so tough. And now people are really facing this big time.

So what do you have to say to folks out there who are struggling to pay those bills?

HARLOW: There's some tips that you want to focus on here.

First, folks, when you go to turn your air-conditioner on, turn the temperature up just a little bit. For each degree that you raise the thermostat, you're going to save about 3 to 5 percent on your cooling costs.

Also, it's a common misconception -- it's something I thought -- if you turn the air-conditioner to a lower temperature, it will cool the room faster. That is simply not true.

And another energy fix, insulate your attic.

Gerri, that'll keep the cool air in, in the summer, it will keep the warm air in, in the winter.

We have a lot more "Energy Fix" tips right on our Web site. WILLIS: And insulating that attic, you can do it yourself. It's a great project.

HARLOW: Can you?

WILLIS: Yes, absolutely. And it's cheap.

Thank you for that.

HARLOW: Sure.

WILLIS: All right. The presidential candidates are planning to solve the energy problem (INAUDIBLE) all the candidates plans. He's a financial correspondent for Politico and joins us now from Washington.

Good to see you.

EAMON JAVERS, FINANCIAL CORRESPONDENT, POLITICO: Hey. How are you?

WILLIS: I'm great.

You know, OK, let's break this down, 101. It's so confusing with folks out there.

Let's start with Senator Barack Obama. What does he have to say on the score of the energy problem, how we solve it?

JAVERS: Look, Barack Obama wants sort of a John F. Kennedy style government initiative to do more research into solar and wind energy and other kinds of alternative energy sources. And he also wants to take a look at this oil speculation on the commodity futures market.

The question there is whether or not traders are artificially bidding up the price of oil way beyond what real supply and demand dynamics would suggest. So he wants to investigate that. And if there was something that can be done to lower prices there to do that, because those prices that trade on Wall Street do trickle down to the price at the pump. So, Obama wants to have sort of a government initiative in both cases.

WILLIS: Eamon, it's so controversial. I know folks out there are completely freaked out by the fact that traders could be impacting their bill at home. But, in fact, Senator John McCain looks at this quite differently. How does he feel about the issue of speculators?

JAVERS: Well, it's interesting, because McCain's come out with a couple of proposals that would do different things to incentivize the private sector without having sort of a government program like Obama would propose on the issue of solar and wind and the other things. McCain's got an interesting proposal for a $300 million prize, basically, for inventors who tackle the issue of inventing a car battery that would sort of transform car battery standards right now and get us to those electric cars that we've been hearing about for years and see in "The Jetsons" and whatever, but never seem to really make it to reality. McCain would throw that prize out there as an incentive for inventors to go out and build something, build a better mousetrap basically. So it's a way to incentivize the private sector without having government do the work.

WILLIS: Right, exactly. No big bureaucracy there.

JAVERS: Right.

WILLIS: He's also got a clean car initiative. Tell us about that.

JAVERS: Yes. There, he's -- it's a very similar kind of concept, because what he wants to do there is have a $5,000 tax credit going toward companies that develop these low emissions or zero emissions vehicles. So what he'd like to do is again use this tax incentive to dangle it out there for the private sector to solve the problem and build more of these zero emissions vehicles.

WILLIS: All right. Well, we've talked about both of the candidates. But is there one -- I'm not going to ask you to choose one and say which plan is better.

JAVERS: Thanks.

WILLIS: But is there one that's politically more realistic than the other?

JAVERS: Well, both of them. I mean, look, the dirty little secret of this debate that everyone needs to understand is there is no magic dial in the Oval Office where presidents can sort of just turn down the price of gas automatically. They don't have a lot that they can do, and the things they can do as president are really long term.

I mean, new research, new drilling, for example, as McCain proposes. All of these things might have some impact possibly in out years. But there's really nothing they can do to lower gas prices immediately, or not much they can do to lower gas prices immediately.

So, the first thing people need to understand is relief isn't coming right away. And also, the macroeconomic impact here of supply and demand around the world, the rise of China and India and their insatiable demand for gasoline...

WILLIS: Right.

JAVERS: ... might drive prices up no matter what the presidents want to do.

WILLIS: Well, Eamon Javers, if anybody can find that magic dial, it's you. And if you do, I'm sure you'll tell us first, right?

JAVERS: Thank you. I'll be looking for it.

WILLIS: Appreciate your help today.

JAVERS: Absolutely.

WILLIS: Well, life in Honolulu, Hawaii, may look picture perfect, but $6.50 for a gallon of milk, $5.50 for a loaf of bread? If prices don't stop going up, some families find themselves priced right out of paradise.

CNN's Chris Lawrence has that story.

(BEGIN VIDEOTAPE)

CHRIS LAWRENCE, CNN CORRESPONDENT (voice over): Sun. Surf. Sand. Hawaii is blessed with a natural beauty, but there's a price for this paradise -- $7.19.

That's what it costs to buy a half gallon of orange juice here. Or it'll get you one pack of American cheese slices. You'll need almost eight bucks for a box of cereal. And well over that for a jar of peanut butter.

SUSAN OHAMADA, HAWAII RESIDENT: I just spent for a half gallon of milk $4.29.

LAWRENCE: Susan Ohamada is going broke shopping for a family of four.

OHAMADA: Kleenex. I bought Kleenex for $2.99 cents today, $3 for our Kleenex. And that was the sales price.

LAWRENCE: Most of Hawaii's food is shipped in from the mainland, so it's generally more expensive. But the high cost of fuel has forced shippers to tack on huge surcharges which are passed along to the grocery store.

(on camera): What can Hawaiians do to have affordable food?

PROF. IRA ROHTER, UNIVERSITY OF HAWAII: You grow your own food. You may have noticed we can grow our own food in Hawaii.

LAWRENCE (voice over): Professor Ira Rohter says good land is available on the island, but others say it's expensive. And you can't afford to grow celery and carrots on land that's $80,000 an acre. And since most farmers are on short-term leases, there's no real incentive to invest in technology that improves production. Some shoppers have adapted, only buying what's in season.

CORRINE TANTOG, SHOPPER: I went to a nutrition class. And that kind of helped. They tell you how to buy food when they're growing. It's cheaper.

LAWRENCE: Right now, a head of lettuce is $2 per pound. Tomatoes are more than $6 a pound. A gallon of regular milk is $6.50. And forget the organic kind. It's nearly nine bucks.

DAVE OHAMADA, HAWAII RESIDENT: It's amazing how fuel has influenced everything. The price of everything going up. It's just ridiculous. LAWRENCE (on camera): Even a loaf of bread is $5.50. And not the fancy multi-oat grain either. Old-fashioned white bread. And at this rate, there are going to be some families priced right out of paradise.

Chris Lawrence, CNN, Honolulu.

(END VIDEOTAPE)

WILLIS: $5.50 for a loaf of bread.

Well, can you imagine asking if you need flood insurance and being told no? That's what happened to so many folks in one Midwest town that was devastated by record flooding. We'll take you there.

You're watching ISSUE #1, the most complete coverage of your economy right here on CNN.

Stay with us.

(COMMERCIAL BREAK)

WILLIS: You're looking at live pictures from Santa Barbara's Museum of Natural History, where Senator John McCain is addressing a group of folks and talking about the issue of energy in this country.

Let's listen in.

(JOINED IN PROGRESS)

SEN. JOHN MCCAIN (R-AZ), PRESIDENTIAL CANDIDATE: ... particularly during these warm, balmy days in Phoenix, Arizona. So I thank you for all of the hospitality that you extend to my fellow citizens. And I want to thank our panelists here today.

I appreciate the hospitality of the Santa Barbara Museum of Natural History, and the warm welcome here in California. I'm here to listen about energy issues, as well as to talk.

I've been conducting town hall meetings all over this country. And I've also had the honor of consulting with experts and knowledgeable people, because we need their input, we need their knowledge, and we need to hear the concerns of average citizens, as well as the experts.

So let me just start off things with a few ideas.

We're in the middle of a great debate in this presidential campaign about the energy security of the United States of America. For my part, in recent days I've been laying out a clear agenda to protect our economy from runaway energy costs and to break America's dependence on foreign oil.

This is going to require the best efforts and ideas of our country. And I am confident, I'm very confident, that we're up to the task. At a time when a gallon of gas I used to say is running more than $4 a gallon -- and I drove through Santa Barbara and saw that it's now at $5 a gallon, I'm very sorry to say. But it means that our government needs to shake off years of partisan paralysis that has prevented America from achieving energy security.

Nothing is more urgent now than regaining our energy security. We need to get it done and we need to get it right.

The immediate problems of high gasoline prices and of our strategic dependence of foreign oil are upon us. And in recent days I've been setting forth a plan of action.

When people are hurting and struggling to afford gasoline, food and other necessities, common sense requires that we draw upon America's own vast reserves of oil and natural gas. When nations...

(APPLAUSE)

When nations across Europe and Asia are building nuclear power plants to meet their electricity needs, America too must make more use of this clean, efficient and proven source of power. And we must turn...

(APPLAUSE)

And we must turn all the brilliance and ingenuity of America loose in the search for alternative sources, from cleaner coal and wind power, to biofuels and solar. But even as we address our present economic and strategic troubles, we face a long-term danger we hardly even understood -- when America first learned to associate the word "energy" with "crisis."

We now know that fossil fuel emissions, by retaining heat within the atmosphere, threatens disastrous changes in climate. No challenge of energy is to be taken lightly. And least of all, the need to avoid the consequence of global warming.

Among the compelling evidence of this danger, satellite immanual images reveal shrinking glaciers, Antarctic ice shelves and polar ice sheets. Our scientists have also been (ph) and measured reduced snow pack with earlier runoffs in the Pacific Northwest and elsewhere. We've seen sustained drought in the Southwest and across the world. The governor of California has recently had to announce a drought situation here in this great state of California.

In the frozen wilds of Alaska, the Arctic, the Antarctic and elsewhere, wildlife biologists have noted sudden changes in animal migration patterns, a loss of their habitat, a rise in sea levels. The facts of global warming demand our urgent attention, especially in Washington, D.C. Good stewardship, prudence, and simple common sense demand that we act to meet the challenge, and act quickly.

To dramatically reduce carbon emissions, I have proposed a new system of cap and trade that over time will change the dynamic of our energy economy. Cap emissions, according to specific goals measuring progress by reference to past carbon emissions, by the year 2012, we'll seek a return to 2005 levels of emissions. By 2020, a return to 1990 levels. And so on until we've achieved at least a reduction of 60 percent below 1990 levels by the year 2050.

In this way, we will transition into a low-carbon energy future while staying on a course of economic growth. I emphasize while staying on a course of economic growth. The purpose of this plan is to give American businesses new incentives and rewards to seek instead of just giving new taxes to pay and new orders to follow.

My strategy gives people time to adapt instead of causing a jolt to your electricity bill and widespread shutdowns of traditionally coal-fired plants. For the market to do more, government must do more by opening new paths of invention and ingenuity. So I've proposed a permanent research and development tax credit to open the door to a new generation of environmental entrepreneurs.

I'm committed to investing $2 billion every year for the next 15 years on clean coal technologies to unlock the potential of America's oldest and most abundant resources. We will issue a clean car challenge to automakers in the form of a tax credit to the American people. For every automaker who can sell a zero-emissions or very close to zero-emissions car, we will commit up to a $5,000 tax credit to each and every customer who buys that car.

In the quest for alternatives to oil, our government has thrown around enough money subsidizing special interests and excusing failure. From now on, we will encourage heroic efforts in engineering and we will reward -- we will reward the greatest success.

That's why I propose that we inspire the ingenuity and resolve of the American people by offering a $300 million prize -- that's $1 for every man, woman, and child in America -- for the development of a battery package that has a size, capacity, cost and power to leapfrog the commercially available plug-in hybrids or electric cars. A small price to pay for helping to break the back of our oil dependency and should deliver a power source at 30 percent of the current costs.

Energy efficiency is no longer just a moral luxury or a personal virtue. A smarter use of energy is part of a critical national effort to regain control of our own energy future. And in this effort, practical ideas are worth a lot more than uplifting lectures.

It's not always a matter of making due with less energy, it's a matter of using energy in smarter ways. Business owners who invest in green buildings, as has been done here in Santa Barbara can cut their energy costs by as much as one third. Homeowners can save hundreds or even thousands of dollars with better light bulbs, appliances, windows, and insulation.

Many Californians have understood the benefits of green technology for a while now. And your governor sure understands them. Now we need to bring that smart ethic of environmental care to Washington, D.C. and act and act now.

Our federal government is never shy about instructing the American people in good environmental practice. But energy efficiency like charity should begin at home. So I've proposed to put the purchasing power, the United States government on the side of green technology.

Every year, the federal government buys upwards of 60,000 cars and other vehicles, not including military or law enforcement vehicles. From now on, we're going to make those civilian vehicles flex fuel capable, plug-in hybrid, or cars fuelled by clean, natural gas.

If our great goal is to move American transportation toward lower carbon emissions, then it should start with the federal fleet. Across our country and abroad, there are 3.3 million square feet of federal office space -- 3.3 million square feet.

Add it all up and that makes the federal government the single largest consumer of electricity in the world. This represents another enormous opportunity that my administration will take. By retrofitting where possible and by applying higher efficiency standard to new buildings, leased or purchase, we can save taxpayers billions of dollars in energy costs and move the market in the direction of green technology.

We must also redesign our national electric grid in a smarter, more efficient way. Some cases our national power transmission system has not been built to match supply and demand. And the result is an excess of power where it's not needed and a shortage of power where it's needed.

In the long-term, this will require a serious investment to upgrade our national grid to charge the electric cars that will one day fill the roads and highways of America.

And to save both money and electrical power for our people in businesses, we will also need to deploy smart meter technologies. These new meters give customers a more precise picture of their overall energy consumption and over time will encourage a more cost efficient use of power. These --

WILLIS: You've been watching Senator John McCain describing his plan for curbing the nation's energy dependence. A long list of proposals here, including using our own reserves. Of course, he favors offshore drilling for gas -- or oil, that is.

He also talks a lot about reducing carbon emissions with a cap and trade policy, as well as a multibillion dollar prize going to the first person who develops a battery that would leapfrog other technology for use in cars.

Don't go bankrupt in retirement. More and more people are. How to avoid becoming one of them. And making your home run completely on the sun and save big money at the time. We'll show you how one family is doing just that.

You're watching the home of ISSUE #1, the economy, CNN.

(COMMERCIAL BREAK)

WILLIS: Welcome back to ISSUE #1. These tough economic times can be especially hard on retirees. People living on a fixed income. The AARP reports that the rate of bankruptcy among retirees has increased.

Walter Updergrave joins us now to chat about this phenomena. He's with "Money" magazine.

Great to see you, Walter.

WALTER UPDERGRAVE, SENIOR EDITOR, "MONEY": Good to be here.

WILLIS: All right. Let's talk about what's going on here. Bankruptcy rates four times the general population. Why is that?

UPDERGRAVE: Well, what happens is a lot of people enter retirement. They really haven't prepared for it. And then you run into higher, much higher healthcare costs than they expect. Medicare doesn't really cover everything. And then you have people coming in to retirement with more debt. They have home equity lines of credit that they took out or maybe refinanced.

You add all this together, plus the fact there's a little less wiggle room in retirement. You can't just necessarily go out and grab a job. And so people are running into problems.

WILLIS: People running into problems. And I think it's scary not just to retirees, but also the people who are saving for retirement. What can you do?

UPDERGRAVE: Well, it really comes down to saving and preparing ahead of time for this. I mean, the earlier you get started, the more you put away, the better off you'll be. Now as you're approaching retirement, it's also important to sort of do a little check-up. You know, am I really --

WILLIS: Wow do I do that?

UPDERGRAVE: Well, you can go online. There are some calculators online. We have one on the CNNMoney.com site. There are few others out there. And basically, what you're trying to do is you look at how much you have saved, how much you're still putting away, and what sort of income will that produce? What sort of annual income?

And then you say, can I really live on this? A lot of people, I think, are going to say -- well, gee, I may not be able to do. It might be a little tight. In which case, you may want to save a little bit more or maybe you want to postpone retirement for a couple of years.

WILLIS: So Walter, is it about income? Or is it about the number? Everybody always talks about the big number you're trying to hit in terms of saving.

UPDERGRAVE: Right. I mean, that's sort of the national fascination these days. What's your number? The new mantra. The thing about that is, it's first of all can be very off putting. You go to one of this calculator and you see you need $2 million to retire.

WILLIS: No kidding. That's really depressing.

UPDERGRAVE: Exactly. And some people just say -- oh, why bother? So that's one reason I don't think you want to obsess too much at this number. The other thing is you really can't tell when you're, you know, 10, 20, 30 years away from retirement. It's hard to really pinpoint it.

So I think the main thing is try to concentrate on how much income you're going to need. And then how close are you getting to that? So think of it in terms that you could really get a handle on, which is the income that you need to produce, not some number that, you know, if somebody says I have $2 million, they don't really know what that translates to into inflation, adjusted income for retirement.

WILLIS: All right. And CNNMoney.com -- if you're looking for that Web site, it has a great calculator there, because, really it's just a simple calculation that you can get help with.

But I know folks out there, particularly, something that's counterintuitive. I find young people are so conservative in their savings that I can't imagine they're going to be ready for retirement.

UPDERGRAVE: Well, a lot of times you have people sign up for their 401(k) plans particularly younger people. And they're not quite sure what to invest in. And so they think -- oh, well, maybe I'll put it some place where I know it's going to be safe.

So they'll go into a money market fund or they go into a stable value fund.

WILLIS: Right.

UPDERGRAVE: And that's fine. It will be safe from the short- term ups and downs of the market, but it's not very safe when you think in terms of what sort of income will it produce? Because it won't be growing much faster than inflation if at all.

So people tend to think of safety as protection from these little ups and downs in the market. But when you're saving for a long-term goal like retirement, you have to take on a little bit of risk, a prudent amount of risk, so you have to invest in some stock funds, a nice mix of stock and bond funds. And if you do that, then at least you have a chance for your money to grow.

WILLIS: A chance for your money to grow. That's all we're looking for. Walter

Updergrave, thank you for your excellent advice.

UPDERGRAVE: My pleasure. WILLIS: All right. More grim news on home prices today. They've plummeted in April. At the passage raise since a closely watched index was started eight years ago, the Standard & Poor's/Case- Shiller Index of 20 cities fell more than 15 percent versus last year. And the narrow where 10 city index plunged by more than 16 percent in April. Prices nationwide are at levels not seen since August of 2004.

Is your surging electric bill giving you a headache? Who doesn't have a headache from high energy prices? One Arlington, Virginia, family says relief may come from the sun.

Here's CNN's Jeanne Meserve.

(BEGIN VIDEOTAPE)

DAN REDMOND, SOLAR ENTHUSIAST: Looks like the corn bread is about ready.

JEANNE MESERVE, CNN HOMELAND SECURITY CORRESPONDENT (voice-over): Dan Redmond cooks lunch in his front yard using the power of the sun.

REDMOND: Tasty?

MESERVE: It's good.

REDMOND: Yes.

MESERVE: A solar oven, just one way Redmond has drastically reduced his electric bill. It used to be about $150 a month.

REDMOND: Our bill this past month was $28.61. About half of which was taxes and the service charge.

MESERVE: But this reduction came at a very high price. The solar panels he installed on his roof cost about $25,000. They generate about half the power his house consumes but will take years to pay for themselves. Redmond tracks their productivity on a monitor inside.

REDMOND: That's the sun working right then instantaneously. Isn't that cool?

MESERVE: When the sun is particularly bright and producing more electricity than the house needs, the electric meter actually runs backwards as the excess is pushed out to the power grid.

REDMOND: We're essentially a power production company here on our street.

MESERVE: The Redmonds have also whittled their bill by curtailing their use of electricity. Power gobbling appliances have been replaced with new energy star models. This year's investment, a more efficient air-conditioning unit. The clothes drier which gobbled electricity year round has been abandoned completely.

(on camera): And how much do you think it saves you? REDMOND: It easily knocked off 15 percent to 20 percent off of our electricity load.

MESERVE: A small solar panel charges small electronics, other appliances are turned off or unplugged when not in use.

REDMOND: Right down in here.

MESERVE: The family is also cutting gasoline consumption by using an electric bike. They hope soon to buy a plug-in electric car. This is about much more than lower energy bills. Redmond says his real goal is a smaller energy footprint.

REDMOND: We don't live a frugal lifestyle. We're not on the edge where we feel like we're not getting all of our needs met. We're just making different decisions about how we live our life and what's important to us.

(END VIDEOTAPE)

MESERVE: It's 12:30 on the East Coast. A very bright sunny day. Though solar panels up on the roof right now are pumping energy on to the power grid, 12:30 also means its lunchtime.

Dan, what's for lunch today in the solar oven?

REDMOND: We are making blueberry bread as a snack. And it's almost done. It needs about another 30 minutes or so.

MESERVE: How hot does it again in that oven?

REDMOND: I can get to 350 degrees on a really warm day.

MESERVE: And that's by focusing the sun's energy?

REDMOND: You focusing the sun or light inside to this box and this glass keeps the heat from coming back out. It heats up the food.

MESERVE: Isn't it a lot easier just to use the oven?

REDMOND: I guess it could be. What we have found is that we're able to get outside and able to play with the boys on a sunny day. When we use the oven inside, it's big, and many of the things that we make are not big. They're just small pieces of food. So it uses a lot of energy for no reason. Also, it makes the house very hot, which means we then have to air-condition it to cool it back down.

MESERVE: Now, I know one of the goals here was to lower your energy bills, but you also want to consume less energy. But can one family taking these steps really make any difference in the big picture?

REDMOND: I think it can in that -- in learning about the people that I've met with solar energy is that there's a lot of us doing these little small steps. And I think when we add all of these together it will make a difference. MESERVE: Great. Dan Redmond, thanks so much.

Gerri, back to you.

WILLIS: Well, Jeanne, impressive family. And I've never even seen a solar oven. But can you tell me how much energy is this family saving?

MESERVE: Well, a house this size, which has about three bedrooms, four people living inside, usually consumes about 12,000 kilowatt hours of energy every year. The residents say that right now they're consuming about half of that. So a pretty significant dent in their energy consumption -- Gerri.

WILLIS: Wow. Jeanne, I wouldn't sneeze at that. That's great performance. Thank you for that report.

Coming up, what happens when you're told you don't need flood insurance and you're hit by a flood? We'll take a look. It's time to get answers, the help desk is standing by with real solutions to your money questions. We're all over ISSUE #1 right here on CNN.

(COMMERCIAL BREAK)

WILLIS: "Keeping Them Honest" is a big part of what we do here at CNN. . And lately, we've been focused on the recent flooding in the Midwest. Some folks there were told they didn't need flood insurance.

CNN's David Mattingly is on the case.

(BEGIN VIDEOTAPE)

DAVID MATTINGLY, CNN NATIONAL CORRESPONDENT (voice-over): When the levee crumbled and the river came crashing in, the village of Gulfport, Illinois, never had a chance.

RICK GERSTEL, FLOOD VICTIM: It almost looked like a tidal wave coming across the road. Almost like the end of the world is what it's looks like.

MATTINGLY: And for Gulfport it may well be the end. Only 28 people out of this river town of about 200 had federal flood insurance. The rest trusted the levee. Residents like Rick and Gina Gerstel lost everything.

(on camera): Did anyone ever suggest to you that you were taking a risk? Your bank? Any city officials? Any federal officials?

R. GERSTEL: No.

GINA GERSTEL, FLOOD VICTIM: No.

MATTINGLY: Did FEMA ever approach you saying maybe you ought to have flood insurance?

R. GERSTEL: No.

MATTINGLY (voice-over): Gulfport was protected by a levee that wasn't strong enough to hold back the catastrophic 500-year flood that hit. But it was rated to withstand 100-year flood. That was enough that FEMA did not require homeowners to purchase flood insurance.

(on camera): Is that tacitly sending a message to people that they might be safe there?

(voice-over): Keeping them honest, I called FEMA wanting to know if mistakes were made.

TERRY REUSS FELL, FEMA FLOODPLAIN MANAGEMENT: We do our best to advertise the availability of flood insurance and encourage people to purchase it.

MATTINGLY (on camera): I'm looking at the town right now, it's completely under the river. Most of this town may not be able to be salvaged. At what point was this town failed by this system that only 28 people had flood insurance?

FELL: We implement the laws that are given to us. And the laws right now deal with the floodplain management regulations within that 100-year floodplain. And the insurance purchase requirements in that area also.

MATTINGLY (voice-over): But changes may be coming. Senator Chris Dodd of Connecticut wants a law requiring flood insurance for everyone living in levee-protected areas.

SEN. CHRIS DODD (D), CONNECTICUT: I don't know how you define protected, but I don't know how you call that protected when you're telling people they don't have to have this. They don't need it.

MATTINGLY (on camera): As bad as this looks, FEMA says it's risk analysis for Gulfport was accurate. The agency's now working on $1 billion upgrade to outdated maps as well as a reassessment of flood dangers all over the country. Some say that can't be finished soon enough because of climate change.

STEPHEN FLYNN, AUTHOR, "THE EDGE OF DISASTER": Some estimates are by 2050, the 100-year storm will become the 10-year storm.

MATTINGLY (voice-over): This police video from inside Gulfport shows the village hall pushed off its foundation. The flag flying in a swirl of muddy water. This is all that's left of the house the Gerstel's left behind.

(on camera): Will you ever go back to that house?

R. GERSTEL: No, sir. No, sir. I would not go back to the town. I would never live there again.

MATTINGLY (voice-over): David Mattingly, CNN, Gulfport, Illinois.

(END VIDEOTAPE)

WILLIS: Just outrageous. Well, it's almost time for the help desk. Answers to your e-mail questions, the address issueone@cnn.com. And when will you be able to retire?

It's not too late to weigh in on today's "Quick Vote" question. Log on to CNNMoney.com.

You're watching ISSUE #1.

(COMMERCIAL BREAK)

WILLIS: Well, here's a tough question. When will you be able to retire? That's today's "Quick Vote" question. Let's check back in with CNNMoney's Poppy Harlow for the results.

All right. What are the folks say, Poppy?

HARLOW: Hey, there, Gerri.

Well, some grim news out there. Twelve percent of people say 55 or under, 28 percent say between the age of 56 and 65, 21 percent say between 66 and 75. But Gerri, 39 percent of people say they'll never be able to retire.

So folks, I have a tip for you. Check out Gerri's top tips on how to save on our Web site, CNNMoney.com. It will help you and maybe you can retire then.

WILLIS: Well, I know we all want to do it, sooner rather than later.

Poppy, thank you for that.

HARLOW: Sure.

WILLIS: Well, it's time for the help desk. Answers to your e- mail questions. We're going to get right down to it.

Connie Degroot is a Prudential Real Estate broker. Stephanie Auwerter is with "Smart Money" magazine. And Steve Hargreaves is a writer for CNNMoney.com.

Let's get right down to it, guys. All right, the first question comes from Cindy. She asked, "Oil companies currently hold 30 million acres of land and 30 million acres offshore that they are not drilling on."

How come, basically, Steve? Give us the answer to that one.

STEVE HARGREAVES, WRITER, CNNMONEY.COM: Well, they are looking for oil on that land. It just takes a long time for them to actually find it and build things needed to extract it. But it's also really expensive. And they're waiting back and they're hoping that Congress is going to open up other areas closer to shore in Alaska, may be that might be cheaper. WILLIS: Would it be cheaper?

STEPHANIE AUWERTER, EDITOR, SMARTMONEY.COM: Yes, exactly.

WILLIS: OK. So it's all about the money. Let's get Roger's question from Maryland.

"We are a family of three and our child is 4, ready to go to school. We wanted to put him in a private school, but it's too expensive. Therefore, we are considering buying a house in a different county where public schools are good. We're afraid, however, of jumping into a housing market at the time when we face a recession. The difference between renting and paying for a mortgage would be about 300 bucks and school would be free. What would you recommend? Do we buy? Is it responsible to get into the market?"

How many times you hear this question, Connie?

CONNIE DEGROOT, PRUDENTIAL, REAL STATE: All the time. All the time. Actually, it sounds like a great opportunity for them to buy. I think they should move forward as long as they can afford those monthly payments. We don't need this family to become another statistics.

Also, the market's going to be improving. And by the time the little one is a little older, they're going to probably have enough equity in their home to actually afford to send him to college.

WILLIS: Well, that'd be great news. Yes. So you think it's a good time to get into the real estate market now.

Tiffany in Alabama asks, "I got married in September and moved to a different state because my husband was promoted. Until now, we've been depending solely on his income. Since the economy has become so bad, I'm contemplating returning to work as a teacher, but it will cost $4,000 to become licensed again. Is it worth it to use our savings to do this? Or should we keep the savings in this volatile economy?"

So many people, Stephanie, weighing so many different calculations.

AUWERTER: That's right. But in this case, I think it's a no brainer. She should go for it. Spending savings to increase your education or to improve your job prospects is one of the best things that you can do, especially for teaching, because there's such a strong demand right now for teachers. So I think this one is an easy one. She should definitely spend that money.

WILLIS: All right. I like that answer. All right, Jim in Kentucky asks, "What kind of prices would be offered at the gas pump if the Alaskan refuge were tapped?"

See this is right up here, Ali.

HARGREAVES: Prices wouldn't fall all that much. It would take a long time for that oil to come online. And it's only about 800,000 barrels a day. Worldwide consumption about 85 million. So you're not looking at that much oil.

WILLIS: Drop in the bucket, it sounds like. OK. Brenda in Florida asks "We own two small houses next door to one another on three lots. We live in one house and rent the other. We're waiting for the market to turn around. But when we decide to sell, is it better to sell all three as a buildable parcel?"

All right, this person is, you know, has entrepreneurial dreams, I think, Connie.

DEGROOT: Right. Right. Actually, I would follow what most developers do. They have a big parcel of land. They subdivide it and they sell everything off. It's the best way to have the highest profit. So unless there's large lots around their property, I would definitely develop each lot individually and sell each one off.

WILLIS: So you make more money breaking it up.

DEGROOT: More money. Yes.

WILLIS: Good to know. All right. Mark asked "I recently saved up about $20,000. Unfortunately, I have a little over $14,000 in credit card and medical debt. Eight of the accounts are in collection and three of those are supposed to fall off my credit report by January 2009. Should I take my savings and pay off the collection accounts? Or continue to keep it in the savings account?

I'm befuddled by this, Stephanie.

AUWERTER: Well, for starters, we should congratulate him on saving $20,000. That is really impressive.

WILLIS: But, he's in trouble on not paying other --

AUWERTER: When there are these sort of multiple issues going on, I always recommend doing a multi-prong attack. So keep some savings, because otherwise he may just rack up more debts. But take some of that savings, maybe about half, to pay off those bills.

Look at the ones with the highest interest rates or the ones that are the oldest and really dragging down his credit score. He also should get in touch with these lenders and see what sort of options are available to him. He may find that they are willing to negotiate with him a little bit.

WILLIS: Pay it down, pay it down, pay it down. All right. Thanks to my panel today -- Connie, Steve, and Stephanie, we appreciate your help today.

CNN NEWSROOM with Don Lemon and Kyra Phillips starts right now.