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Issue Number One
Russia-Georgia Conflict; Lado Gurgenidze Interview; Candidates and the Economy; To Drill or Not to Drill
Aired August 13, 2008 - 12:00 ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
CHRISTINE ROMANS, CO-HOST: Hello and welcome to ISSUE #1. I'm Christine Romans.
Breaking news now on the cease-fire in the conflict between Russia and its neighbor Georgia. The situation seems to be changing every hour, with the president of Georgia challenging the very fact that there's a cease-fire at all.
We'll speak with Georgia's prime minister, Lado Gurgenidze, live in just a minute.
But first, strong words this morning from President Bush on reports that Russian forces are moving deeper into Georgia.
CNN Correspondent Kate Bolduan is live right now at the White House with the very latest.
Kate, the president says at this hour he is deeply concerned about developments there.
KATE BOLDUAN, CNN CORRESPONDENT: Deeply concerned. And you said it, Christine, the president, just moments ago, offering another round of very strong words directed straight at Russian leaders.
The president said in his statement in the Rose Garden that he had spoken with the Georgian president, Saakashvili, as well as French President Sarkozy, today to get an update on where things stand with the developing situation in Georgia. And then just moments ago in his statement in the Rose Garden, the president laid out what he is calling steps to demonstrate U.S. solidarity with Georgia.
Now, these steps include sending Secretary of State Condoleezza Rice to France to confer with the president of France, who is leading in the cease-fire negotiations, and then sending her to Georgia, to Tbilisi, in order to show U.S. support for the Georgian government. And the president also said he'll be sending Secretary of Defense Robert Gates to Georgia with a humanitarian effort which will include military vessels in order to show U.S. presence there.
Now, the president, throughout his statement, had a very -- the tone really was a thinly-veiled warning to Russia. Listen here.
(BEGIN VIDEO CLIP)
GEORGE W. BUSH, PRESIDENT OF THE UNITED STATES: Russia decided to integrate into the diplomatic, political, economic and security structures of the 21st century. The United States has supported those efforts.
Now Russia's putting its aspirations at risk by taking actions in Georgia that are inconsistent with the principles of those institutions. To begin to repair the damage to its relations with the United States, Europe and other nations, and to begin restoring its place in the world, Russia must keep its word and act to end this crisis.
(END VIDEO CLIP)
BOLDUAN: Now, to that point, senior administration officials have told CNN in the past day that the U.S., as well as other world leaders, are now kind of working together and discussing how to lay out a punishment, basically, to Russia for its actions in Georgia. And that could include, as it has been discussed, dropping Russia from the group of eight, this club of industrialized nations. But at least we hear right here, Christine, just moments ago, that the president is definitely trying to show that the U.S. is stepping up involvement in this conflict.
ROMANS: Kate Bolduan at the White House.
Thank you, Kate.
ALI VELSHI, CO-HOST: Well, we're joined now by Georgia's prime minister, Lado Gurgenidze, in the presidential palace in the Georgian capital of Tbilisi.
Prime Minister, thank you for joining us.
Tell us, first, what the situation is as you know it on the ground in Georgia.
LADO GURGENIDZE, GEORGIAN PRIME MINISTER: Well, the situation is very difficult. Today's been a very, very difficult day.
Just to give you one measure of how things are developing here, yesterday afternoon, I had given my first estimate, preliminary estimate of the direct economic damage. I have given it to our American and European friends. And as of yesterday afternoon, that number, that figure, stood at about $300 million.
As of right now, I fear that figure is at least twice as much, and probably beyond that. So you can see the rate at which our civilian infrastructure is being damaged by the situation that we have here. But, of course, apart from the infrastructure, what is truly tragic is the unfolding humanitarian disaster. And I have no other words to describe what's happening in many parts of the country. In the ports, including...
VELSHI: Tell me what you know about where the Russian forces are right now. At some point earlier today, after thinking that we had a cease-fire, there were then reports that Russian troops were moving in, the columns had moved in. And then we heard they had turned around, they had redirected and stopped.
What is the situation on the ground? Is there active fighting going on right now?
GURGENIDZE: Well, that particular column has never reached the capital. So, in that case, indeed, they have routed themselves somewhere else. We've heard the report that the Russian forces have left the town of Zugdidi, the main town in the western province of Samegrelo.
At the same time, in and around Gori, and the areas surrounding Gori, we're talking about quite a large part of the country -- well, relatively speaking, of course -- with the local population of perhaps a couple hundred thousand. Basically, that area remains blocked in terms of access.
While we have plentiful supplies elsewhere in the country, those regions, by virtue of being blocked, are beginning to feel that -- I've seen reports of gasoline and fuel already being in short supply or running out in some areas inside that region. The food situation is inevitably going to become more and more difficult for those parts in the middle of the country, and quite far beyond the administrative border of the South Ossetian province.
(CROSSTALK)
VELSHI: Let me ask you about the oil pipelines that were shut down. BP is the lead partner in that consortium. They protectively shut down two pipelines yesterday. One of them was already shut down because of activity in Turkey last week.
Are those pipelines safe? And have they been -- are the Russians anywhere near the territory where those pipelines are?
GURGENIDZE: I have seen no reports whatsoever of the Russian ground troops being anywhere in the proximity of those pipelines. But again, I must stress, as of now -- now, those pipelines do pass along the southern sort of border, southern part of the country. So as far away from the South Ossetian province, as you can imagine, on the north-south access. So, in that sense, fair enough.
However, we do remember that during the phase of the active hostilities, the pipeline was bombed twice. Unsuccessfully, fortunately, but nonetheless, also you'll recall my statements from yesterday about the negligence in terms of the intended air strike very close to the oil port, oil terminal on the Black Sea...
VELSHI: On the Black Sea.
GURGENIDZE: ... called Hulevi (ph), which is correct.
VELSHI: I want to ask you one more thing.
GURGENIDZE: Basically there's...
VELSHI: I'm sorry, Mr. Prime Minister.
GURGENIDZE: Sure. VELSHI: I want to ask you about -- there's definitely a degree of outrage that's growing in parts of the western world about the picture that's been drawn of Russia going into an autonomous region and then going into an independent country, now being in Georgia. What some people are asking though is, did we sort of, because this happened so quickly, skip over the outrage that we might have at Georgia for also going into an autonomous region?
What is Georgia doing to deal with the aspirations of independence of those people in South Ossetia and Abkhazia?
GURGENIDZE: Well, at this point in time, Georgia, the state of Georgia, is preoccupied with preserving the supply lines throughout the country open, mitigating as best we can the unfolding humanitarian catastrophe in some parts of our country. And in that sense, and in many other senses, President Bush's statement as of an hour ago was extremely welcomed and received here with huge relief, and we truly appreciate all the support we've been getting from our American and European friends. And we do appreciate that the level of that support is mounting -- well, more or less proportionately with the damage that we've been incurring on the ground here as a result of the Russian actions.
So, believe me, even though in the capital and many other parts of the country where the Russian troops have not gone to, life is calm, normal. The economy is more or less in its usual state. But there are areas of the country where we're dealing with humanitarian catastrophes.
VELSHI: But Mr. Prime minister, in the end, the tinderbox where these two regions that are semiautonomous or somewhat autonomous, are we going to get to the bottom of that? Because there are people in those places who may want to be part of Russia, and they may want to be part of Georgia, and they may want to be part of neither of you. In the end, we're going to have to address that in order to conclude this tension and this fighting.
GURGENIDZE: Achieving the durable and complete resolution of this crisis obviously will take some time. And it is a process.
What is the most important thing right now is to ensure that the cease fire agreement is being adhered to and to ensure that the Russian troops pull out of Georgia as soon as possible before the humanitarian disaster becomes truly all encompassing, and before most of our infrastructure is degraded. That must be the priority, that is our priority right now. And I very much encouraged and urge the international community to focus on that task right now.
Every hour prolongs and multiplies the human suffering and degrades the economy of Georgia, this fight, the rather amazing resilience that his shown in the past week or so.
VELSHI: Prime Minister, thank you for joining us.
Prime Minister Lado Gurgenidze of Georgia, thanks for keeping us up to date. We of course will stay on top of this story. ROMANS: Ali, there's a fear that conflict in that region could have ultimately consequences for oil and gas prices here in the United States.
Susan Lisovicz is live at the New York Stock Exchange watching every one of these headlines, I'm sure. Our traders for energy contracts, as well as stocks -- Susan.
SUSAN LISOVICZ, CNN FINANCIAL CORRESPONDENT: Yes. Christine, we often say that geopolitical concerns can really drive prices, oil prices, higher. We saw the mere threat of an Israeli/Iranian conflict in June sent oil prices up $10 in one day. But the market so far has really been ignoring this conflict between Georgia and Russia.
Yesterday, crude prices actually fell. But oil is up nearly -- it's up $3 right now, and it's a supply/demand issue, Christine.
The weekly inventory report showed oil and gas supplies down much worse than expected. Also down -- and this is a good thing -- gas prices for the 27th day in a row. AAA says the national average for a gallon of regular is now $3.79. Compare that to last month's record high, $4.11 -- Christine.
ROMANS: All right. Susan Lisovicz at the Big Board.
Thanks, Susan.
LISOVICZ: You're welcome.
VELSHI: Well, coming up next, the heated debate over drilling in the Arctic National Wildlife Refuge. We'll hear from both sides of the Capitol Hill aisle live on that.
And 12 days until the start of the Democratic convention. We are on the road to Denver to hear what matters to you this election year.
Stay with us. You're watching ISSUE #1.
(COMMERCIAL BREAK)
ROMANS: The countdown is on. Twelve days to Denver. Final preparations being made for the Democratic convention, the first of the two. New details emerge every day on the primary speakers.
CNN Deputy Political Director Paul Steinhauser is live in Washington with more -- Paul.
PAUL STEINHAUSER, CNN DEPUTY POLITICAL DIRECTOR: Yes, a big announcement this morning from the Obama campaign, and that is Mark Warner, he will be the keynote speaker for the Democrats at the convention in Denver. Mark Warner, the former governor of Virginia, now he's a candidate for Senate in that state. He's also somebody who thought about running for the White House himself before deciding against it.
He became a big supporter of Barack Obama. He was one of the reasons maybe Obama won Virginia big-time in the primaries. And Mark Warner is running for the Senate, as I said, and that's a seat the Democrats would really like to take back.
Also, Warner will speak on Tuesday night. That's the same night that Hillary Clinton is going to speak. Remember, it's going to be the 88th anniversary of the right women got to vote. So it's a big night for Hillary Clinton, but she will be sharing the spotlight in prime time because Warner will be the headline -- or the keynote speaker -- Christine.
ROMANS: Paul, with Senator Obama on vacation in Hawaii, McCain certainly has the chance to take the spotlight to himself here. For example, yesterday, he stood up and tried to look presidential talking about the situation in Georgia, trying to showcase his foreign policy credentials. The Obama campaign issued a paper statement about what was going on in Georgia.
STEINHAUSER: And today he'll have the spotlight to himself again, because Obama's still in Hawaii through the rest of the week. He will be in Michigan today.
This is an interesting state. It's voted for the Democrats in the last election, but it's really tight there in the polls. Obama has a slight edge. McCain would really like to win this state and turn it red from blue.
He's going to be talking about corporate tax rates as he tours an aerospace plant. And then later in the day, he's also going to speak out again about the fighting in Georgia. So he's kind of got the whole spotlight to himself right now.
ROMANS: All right. Paul Steinhauser.
Thanks, Paul.
VELSHI: Well, on the road to Denver is where we find our man Tom Foreman. He's even pulled over for us today. And he's joining us now with the very latest from the trail.
Tom, I kind of liked it when you were riding in that bus. I've got a soft spot for it. But you pulled over. What are you and what are you learning?
TOM FOREMAN, CNN CORRESPONDENT: We're in Sturgis, Michigan, the very state where John McCain is going to be campaigning. Talking to a lot of voters here. And I'll tell you something, you must have a lot of fans for your show here, because the simple truth is, you walk up to people in this town of 11,000, to almost any of them, and you say we're here to cover politics, and they start talking about the economy immediately.
Just listen.
(BEGIN VIDEO CLIP)
UNIDENTIFIED MALE: Well, I think a lot of our kids... (END VIDEO CLIP)
FOREMAN: OK. I think we had a little bit of difficulty in hearing that. But the bottom line is, Ali, what we're hearing from people over and over again is concern about gas prices, concern about jobs.
A lot of talk as you travel through these battleground states about NAFTA and the sense that this trading of American jobs or the outsourcing of American jobs is still not to the satisfaction of many voters, Democratic and Republican, being addressed clearly by these candidates. They really want to know what they think of this, what they're going to do about this in the future, because no matter what they're being told about the national economy, in many of the communities we've gone through, people have said, we're living it, and we're seeing the problems with prices, we're seeing the problems with our home ownership, and we're seeing the problems with our jobs.
They want some more concrete answers at this point. With the election bearing down, whichever candidate gets those answers to them, they get a lot of the undecided voters here -- Ali.
VELSHI: Tom, you know, I want to ask you this, because you got a good sense of this when you talk to people. In a typical election, one who is worried about the economy may make a decision because they like one candidate or one party's platform on taxes, and that can be very clear. Or one's platform on health care, and that can be very clear. But in this case, when you're in those battleground states, particularly formerly industrial states, even currently industrial states, whether it's NAFTA or energy prices or gas prices or food prices or health care or taxes, it could seem that the average person could have a real tossup as to which candidate represents them best on those individual issues.
Do people seem confused about that, or do they seem to be leaning in one direction or the other? Are they clear on who they're going to vote for?
FOREMAN: Well, come people are clear, but there are a lot of people who seem squishy in their decision, in that they're willing to reconsider, willing to talk about the other person. And the primary reason you get from people is precisely that they don't feel that they're getting concrete enough answers. They feel like the candidates are positioning themselves to politically say the right thing, but not a strong enough statement of the real thing that they're going to do.
They know that if the candidates make those statements, they will lose some votes and gain some votes, but right now they're saying we have to hear them. It's too important, the direction the country's going. The economy is too important, whether you're talking about health care or gas prices or job security. It's too important to play politics with.
VELSHI: Yes. FOREMAN: So Ali, what they really want is a clear answer from these candidates about what they are going to do, and a sense that once that candidate says it, he will make it actually happen, or at least try really hard.
VELSHI: All right. Keep asking people what they think and we'll keep putting it on TV.
Tom, give my best to the bus and the crew on it. We'll talk to you soon.
Tom Foreman.
ROMANS: All right. Next, drilling in ANWR, could it be the solution to our energy crisis? We're getting sides from both sides of the aisle on Capitol Hill.
And in the quest to find the car of the future, we find our Poppy Harlow in Jersey City -- Poppy.
POPPY HARLOW, CNNMONEY.COM: Could this water be from somewhere as unappetizing as your toilet bowl? You better bet. It's from the tailpipe of this hydrogen-powered BMW. It is safe enough for me to drink right now.
I'm going to tell you why, coming up next on ISSUE #1.
(COMMERCIAL BREAK)
ROMANS: With drivers under assault from high gas prices, automakers are trying to find some new technologies to help ease the pain. Could hydrogen be the way of the future?
Poppy Harlow is live in Jersey City with today's "Energy Fix."
Hi, Poppy.
HARLOW: Hi, Christine.
Well, that water you saw me drink before the break came from the tailpipe of a hydrogen-powered internal combustion engine, a hydrogen car. Pretty hard to say, but it's a new technology.
What I'm standing next to is another hydrogen technology. This is a hydrogen fuel cell car, a Chevy Equinox made by General Motors. You can see the engine certainly looks a lot different than your typical vehicle. And it drives a little bit differently too.
We're going to take it for a ride. But how this thing works simply is, hydrogen -- gaseous hydrogen comes into the tanks right underneath your seat here, combined with oxygen from the air outside to create electricity. That electricity powers the car, and when you get inside the car here, start it up as you turn your seat belt on, it's going to -- there we go.
It has to do a few safety checks. Once I see the green light, I'm going to go. Waiting for that green light. There we go.
It is silent. You can't hear a thing when you start it up. It drives just like a typical vehicle.
And you know what? It emits just those water vapors we talked about. And hydrogen, it's the most (INAUDIBLE) from cola, from natural gas, from water, from algae, from so many different things.
So, you know, Christine, a lot of politicians are saying, hey, this might be our energy fix. But of course, there's still a lot of concerns out there.
ROMANS: What about the costs, Poppy? Because I've heard about this before, that it's just -- it's so expensive.
HARLOW: Of course. The question is, how much does it cost to fuel these hydrogen cars? There are a number of estimates.
A few are for lease, prototypes in California. They say you fill them up for about $3 for a gas gallon equivalent. But the people we talked to from the DOT says it all depends on the infrastructure. It could be anywhere from $1 to $20 for gas gallon equivalents to fill these cars up. They just don't know yet -- Christine.
ROMANS: And they're paying for the technology and paying for that infrastructure.
How many of these are on the road right now?
HARLOW: You know, just a few in California. They're testing them out.
This is all part of the road show across America to show people how these work. But they're saying, we're not going to see these actually rolling off the assembly line for the next four to 10 years. So we're still a ways out -- Christine.
ROMANS: All right. Poppy Harlow in Jersey City.
Thank you, Poppy.
VELSHI: Well, the Arctic National Wildlife Refuge in Alaska is part of the Arctic Circle, and it's the site of a heated debate over oil exploration and the potential consequences on the environment.
I recently traveled to Kaktovik, Alaska, to take a look at what drilling in the Arctic would mean for Alaska and the United States.
(BEGIN VIDEOTAPE)
VELSHI (voice-over): Kaktovik is a busy place for the Arctic, but most folks here still lead a traditional life. They hunt caribou and other game, and the village is allowed to catch three whales a year. Some of the locals worry that if the oil drills and pipelines come, the wildlife could go. But long time resident Myrtle Soplu thinks oil drilling in the Arctic National Wildlife Refuge, ANWR, for short, will bring jobs to this part of Alaska.
MYRTLE SOPLU, RESIDENT: Me, I've got three jobs right now to take care of myself. So, if I think if ANWR opens, we can stick to one job for a long time.
VELSHI: She's seen those jobs. They have been drilling for oil in other parts of Alaska for 30 years. Nearby, but never actually in ANWR itself.
(on-camera): This is all part of the North Slope oil field where 700,000 barrels a day are pumped out of here, shipped by pipeline to Valdez, Alaska, where it is then sent to the rest of the United States.
(voice-over): But production here has been declining for 20 years. There is more oil in ANWR, no one knows exactly how much, and it's off limits. And these days talk of drilling in ANWR is growing, along with worldwide demand for oil.
Supporters of the idea point out the Arctic tundra is flat, treeless land. Not the forest and wilderness that many may picture. No one is advocating opening up all of ANWR. The potential drilling area is about the size of the state of Delaware. The amount left untouched? About the size of South Carolina.
But drilling opponents say that's not the point. ANWR was set aside as a refuge for animals in 1960, and they say it should stay that way.
So the question is, how much oil is there in ANWR and what impact would it have on prices? The Department of Energy says the U.S. imports more than 60 percent of the oil it uses.
MICHAEL SCHAAL, ENERGY DEPARTMENT: An increase of production from ANWR would reduce that somewhat, perhaps by two percent, out to 2030. And that really is not enough to significantly alter world oil prices.
VELSHI: While residents' opinion is split, the Kaktovik local government is officially in favor of drilling. Resident Mike Gallagher figures the animals will be OK, but he's not sure that opening ANWR to drilling will give him much of a break at the pump.
MIKE GALLAGHER, RESIDENT: You can open today and you're not going to feel nothing for five to 10 years down the road. How is that going to change that?
(END VIDEOTAPE)
VELSHI: Well, drilling in ANWR, drilling offshore and more places in the United States, exploring renewable alternatives, finding more energy here at home is the focus of the energy bill that Congress has been working on. And we wanted to have a substantive discussion about this with two of the people whoa re involved in making decisions in Washington.
So joining us now from Minnesota is Republican Congressman Michele Bachmann. And here in studio is Democratic Congressman Frank Pallone from New Jersey.
Welcome to both of you. Thank you for being with us.
Congresswoman Bachmann, I want to talk to you first about this, because those picture that we just showed we took from an airplane above ANWR, and you were with us on that airplane. You went up there to sort of get a sense for yourself about the impact of drilling in ANWR.
What did you come away with? What's your feeling having been there?
REP. MICHELE BACHMANN (R), MINNESOTA: Ali, I came away with the idea that this is the most perfect place on the planet to drill. It is just 70 miles east of the current energy lifeline that comes down through Alaska. It's permanently frozen in total darkness three months out of the year, under ice and snow nine months out of the year, and it's a concentrated area.
Also, it's important for your listeners to know that this area was specifically set aside by President Jimmy Carter for the purpose of drilling. It's the size of a postage stamp on a football field. So a very tiny area. And if there's anything that the North slope of Alaska has proved, it is a 31-year demonstration project of responsible drilling that can coexist very well, environmentally speaking, with habitat and with wildlife.
VELSHI: Representative Pallone, you know the position that Representative Bachmann has. What's your view on drilling in ANWR? It's going to give us some amount of oil, definitely, at a time when we seem to be short of oil. Do you think it's worth it?
REP. FRANK PALLONE (D), NEW JERSEY: It's not necessary. There's an area right next to it called the National Petroleum Reserve, which is much bigger, where drilling is allowed. Democrats posted a bill that would say that you could actually lease more area in the National Petroleum Reserve and build a pipeline from there to the continental United States. And the Republicans opposed that. So this is a false debate because, actually, we'd like to drill in the National Petroleum Reserve, and the Republicans essentially blocked the effort to do more there.
VELSHI: Now, Representative Bachman, we also flew over the National Petroleum Reserve and were talking about that. We saw some oil facilities there. The bottom line is this, many of our views may or may not know, there's a great deal of drilling that goes on in Alaska. We were at the beginning, the head of the Alaska Pipeline. What do you think about that alternative, drilling in that area that is OK to drill in?
REP. MICHELE BACHMAN, (R) MINNESOTA: Well, Ali, the choice isn't drilling one place or another. What we need to do is all of the above. We need to be drilling in ANWR because it's the most convenient, quickest place. It's also the smallest footprint. We could continue to drill in the National Petroleum Reserve, and I would favor that.
The fact is, we would have a larger environmental footprint if we would do that. Whereas we would have a smaller footprint if we would drill in the ANWR area. I believe we should drill in both, as well as offshore. As well as the 2 trillion barrels of oil that are available for oil shell in Colorado, Utah, and Wyoming, let alone the natural gas, let alone the coal, let alone solar, wind and also the new generation of car batteries.
VELSHI: Fortunately, we're talking about all of those things.
BACHMAN: We need to do it all, that's our position.
VELSHI: Oil shale, which is what the president has talked about, is some distance away because of the infrastructure that has to be put on to this. But offshore oil drilling, here's an interesting one because John McCain is definitely getting some traction on the idea of offshore drilling. We're seeing more and more people support the idea. And while Barack Obama has said that could be seven or 10 years, John McCain, I think, has shortened that to 10 to 12 months or something he says people tell him. What's the general opposition, representative, to drilling offshore?
PALLONE: Well, first of all, I should point out that last I heard John McCain was still opposed to drilling in ANWR.
VELSHI: Right. That is correct.
PALLONE: And that's the position he takes.
I think that what the real answer here is, we have to get away from fossil fuels and dependence on oil and natural gas. And we have to encourage renewables. And I would say that, you know, that should be the focus.
Democrats in Congress have put up bills that basically would say that 20 percent of our energy needs for utilities should be through renewables. We've been trying to take the money away, the subsidies away from the oil industry and give it to people, both, you know, homeowners and commercial establishments that would use it for solar power or wind power. We've tried to increase the fuel efficiency of cars and trucks. Unfortunately, on all these other issues, which are much more comprehensive and with less independence on fossil fuel, in most cases President Bush and the Republicans in Congress have opposed us.
And that's the problem. The Republicans keep saying drill, drill, drill. That's not the answer. The answer is to get away from fossil fuel.
VELSHI: This is part of why we brought both of you on because I think you share views on where we need to get more fuel from and what else we need to do. But Representative Bachman and representative Pallone, I think the issue here is that, to the American public, the Democrats and the Republicans are just not coming together on this. And I don't know whether it's that none of you will change your positions or you won't look at it comprehensively.
Representative Bachman, let me start with you. What is it going to actually take to get you all to come up with a solution? Because I don't think there's as much difference in space between you as we may be led to believe.
BACHMAN: I agree. I don't think there's a large space between us either. I think what would get us to come together would be to have the speaker of the House call all members of Congress back to Washington, D.C. I'm going back to Washington, D.C. this week to speak on the floor because I believe we should be in D.C. solving this problem rather than at home on vacation.
What we believe as Republicans in the House of Representatives is all of the above. We don't believe that as members of Congress we should decide which form of energy the American people should use. We think the American people can make that decision in the free marketplace. Let's just legalize energy production. We're the only country in the world that make it illegal to access our own energy.
VELSHI: Representative Pallone, what do you think of that suggestion?
PALLONE: Well, the fact of the matter is, that it hasn't happened. In other words, when we were in session in June and July, the speaker brought up all these bills, you know, to eliminate speculation in the market, to increase production in the National Petroleum Reserve, to take oil from the Strategic Petroleum Reserve, to increase renewables and take the subsidy away from the oil companies and give it to renewables. And every time, the Republicans oppose this legislation.
We want -- Democrats want a comprehensive approach that also increases drilling, not in these environmentally sensitive areas, but the Republicans have blocked that. So I would hope that when we come back, that we can take this comprehensive approach. But the president has to give in on these other issues, as well. And that is to less reliance on fossil fuel.
VELSHI: Well, you both have a commitment to this. And I think it would be good to take that message back. That the outside observer sort of sees people who are determined to try and make some change here but it's not getting done. So we thank you both for coming and sharing your views with us. And again, I underscore, I don't think there's as much difference between them as we might think.
Representative Bachman, good to see you again. Thank you very much.
Representative Pallone, thank you for being with us.
PALLONE: Thank you.
BACHMAN: Ali, thank you.
ROMANS: Ali, you've heard the buzz out there about the four-day work week, but some folks actually want to work five days a week. We'll tell you why.
And important information about health care in this country. Why one segment of the population gets most of their medical information from TV.
You're watching ISSUE NUMBER ONE, the economy, right here on CNN.
(COMMERCIAL BREAK)
ROMANS: General Motors is pouring big bucks into Thailand. The automaker says it will invest $445 million in a new diesel engine factory near Bangkok and upgrade existing assembly operations. The new plant could produce up to 100,000 engines a year for GM's small pickup truck. Production set to begin in 2010. In June, GM announced plans to cut truck production in the U.S. by 700,000 vehicles. It will also close four plants that make pickups, SUVs and medium-duty trucks over the next couple of years.
Now it's day three of our five-day series on four-day workweeks. You still with me? We've been visiting places across the country that have adopted the shorter workweek. Places like Utah. But as CNN's John Zarrella found out, not everyone's excited about working less.
(BEGIN VIDEOTAPE)
JOHN ZARRELLA, CNN CORRESPONDENT: Utah's state government believes it can save $3 million a year by going to a four-day workweek. But just as important as the savings is how it affects employees. We spent some time with two who have similar issues but very different views.
Carolyn Dennis.
CAROLYN DENNIS, COMMERCE DEPT. EMPLOYEE: OK. Back to this hand.
ZARRELLA: Mylitta Barrett.
MYLITTA BARRETT, STATE BUSINESS ANALYST: And I leave and get to work by seven.
ZARRELLA: Both women work for the state of Utah. Both have children. But the state's new four-day workweek has impacted their lives very differently.
DENNIS: My first instinct was, day care closes at 6:00.
ZARRELLA: Next reaction.
DENNIS: I'm going to have every Friday to spend with my son.
ZARRELLA: Carolyn's workday is longer now. In before seven, out about six, with a half hour lunch. Her son's hours in day care are longer now too, but now just four days a week. Carolyn says their quality of life just got better.
DENNIS: This Friday we're going to the planetarium. Next Friday is the zoo.
ZARRELLA: It is not working out that way for single mom Mylitta Barrett. She has three sons. Joseph is severely disabled. Today she used vacation time to leave work early to pick him up at day care.
BARRETT: Long-term care givers, we have a balance that we have to maintain. And if you change that balance, then it doesn't -- I mean, my reserves are really low already.
ZARRELLA: Mylitta now needs a sitter in the mornings to care for Joseph until his bus comes to pick him up. There's less time for her other boys, as well.
BARRETT: I mean I can't make up the soccer game that I missed on Monday night because I'm having to work and not get home until 7:00 at night.
ZARRELLA: Mylitta knows hers is an extreme situation. Her supervisors are being as flexible as they can, she says. And after 15 years with the state, she can't quit and depends on the medical coverage.
Two women, Mylitta Barrett, Carolyn Dennis, one life harder, one life better.
State officials say that at first blush employees seemed, for the most part, absolutely giddy over the four-day workweek. But they also understand that as much as they may want it to work for everyone, that's simply not realistic.
John Zarrella, CNN, Salt Lake City.
(END VIDEOTAPE)
VELSHI: Well, we've got important information about health care in this country. Why one segment of the population gets most of their medical information from TV. And sagging sales for plastic surgery. How the economy is cutting into the nip-tuck business. You're watching ISSUE NUMBER ONE right here on CNN.
(COMMERCIAL BREAK)
ROMANS: Pushed by those economic stimulus checks and billions in bailout protections for failed banks, the federal budget deficit soared last month. According to the Treasury Department, the deficit for July was more than, get this, $102 billion. That's nearly triple what it was in July of last year. It's also some $5 billion higher than Wall Street expected. The Bush administration is already projecting the budget gap will hit a record $482 billion of red ink next year.
VELSHI: Well, turning the focus to your health care. A new study out just this morning on Hispanics and health care. CNN medical correspondent Elizabeth Cohen joins us now with more from Atlanta.
Elizabeth, there were some really surprising findings in this.
ELIZABETH COHEN, CNN CORRESPONDENT: There were some surprising findings, Ali.
The researchers thought that when they looked at Hispanics in health care, that they would find that many of them don't get regular care because they don't have insurance or because there's a language barrier. But that's not what they found. And this is actually good news. What they found is that three out of four Hispanics living in the United States do have a regular health care provider.
And here's something interesting that one out of four that doesn't have a regular health care provider, it wasn't really because they didn't have insurance, it was because, well, they're basically healthy and they often treat themselves at home. Those were the reasons that they gave.
Ali.
VELSHI: Now, Elizabeth, OK, so we think they're going to the doctor regularly. Any particular concerns that the survey showed?
COHEN: Yes. There was a concern about that one out of four that don't have a regular doctor. Hispanics really are much -- the population is relatively young. So maybe they're relatively young, they're healthy now and they don't need a doctor.
Take a look at this. The median age in the Hispanic population in the U.S. is 28. The rest of the population, 37. So for that one out of four that doesn't have a doctor, let's say 28 years old, maybe that's OK. But as they age, that could really become an issue because maybe they're not getting the preventative care that they need right now.
VELSHI: All right. Now when you look at this long-term, what could be the implications for the health care system?
COHEN: Right. The implications long-term for the health care system is, as they age, is this going to be a problem that one out of four does not have a regular health care provider? And there's something very interesting, also, Ali, in these statistics. What they found is that a small number, but a significant number of Hispanics go to spiritual healers instead of regular Mds. And what was really interesting about that is, these weren't folks who were born in Latin America. These were Hispanics, for the most part, who were born in this country. Educated with insurance but choosing folk medicine sometimes over regular medical doctors.
VELSHI: Now that is an interesting trend. I'd love to examine that a little bit more.
Elizabeth, good to see you. Thank you.
COHEN: Thanks. ROMANS: Next, the very latest on the Russia-Georgia conflict and whether it's having impact at all on the price of oil. We're all over issue number one right here on CNN.
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VELSHI: Hey, want to give you a few updates on what's going on in Georgia right now. The first C-17 with humanitarian aid has landed in the Georgian capital of Tbilisi. We are monitoring that situation. We just spoke earlier with the prime minister of Georgia who says, at this point, because the main east-west route in Georgia has been cut off by Soviet troops, according to him, he feels that the humanitarian situation is going to deteriorate very quickly.
We've also heard from Secretary of State Condoleezza Rice announcing that her trip, first to Paris and then to Georgia, will begin tonight. She will leave for Paris this evening. And President Bush, who was on route to his ranch, has delayed that. We don't know until when, but to keep an eye on the situation. So all eyes right now on what could be a deteriorating situation between Russia and the country of Georgia.
Christine.
ROMANS: Thanks, Ali.
And, indeed, monitoring the American response now, as well.
Now, oil prices are up today. Retail sales are down. A major home builder shows huge revenue losses. Let's get right down to it. Stephanie Auwerter is from "Smart Money." Steve Hargreaves is with cnnmoney.com. Stephanie Elam is a CNN business correspondent.
Let's start with oil here. Monitoring the situation that's happening between Russia and its neighbor, Georgia. Interestingly, it's supply and demand that seems to be what's driving oil prices. Oil prices are higher. But it is supply and demand, not necessarily the individual issue happening there, right, Steve?
STEVE HARGREAVES, WRITER, CNNMONEY.COM: Yes, the market didn't really respond to the trouble going on over there in Georgia. People have still been looking at the deteriorating picture, demand picture, demand slowing in the U.S. and the worldwide economy is slowing. So people have been really focusing on that.
ROMANS: A lot of people talking about the fact that BP took some of those pipelines down before this latest sort of flare-up in the conflict. And that means that oil wasn't on the market to be disrupted in the first place. And that's what people in the markets really look for is the oil supply disruption. When you get oil supply disruptions, though, that's when it translates into our bottom line and gas going up. We've seen gas prices, though, going down for some 26 or 27 days.
STEPHANIE ELAM, CNN BUSINESS CORRESPONDENT: Twenty-seven. ROMANS: You look at oil prices overall. It's technically, I guess, a bear market in oil because it's down 20 percent off the peak. It does not feel like a bear market for anybody filling up the tanks.
ELAM: Not at all. I mean I think there's still eight states that are technically above $4. But, still, everyone is paying a lot. And it's funny to say, oh, at $3.87, it's a bargain, you know?
ROMANS: Right.
ELAM: And it's really not. And people are still feeling the pinch. And apparently people are cutting back on how much they're using gasoline as much as they can.
ROMANS: And cutting back on what they're spending in the stores. We saw from July store sales that the retailer is not getting the benefit of those stimulus checks anymore. And we saw from the budget deficit that those stimulus checks are really hitting the bottom line of the American government as well. Do we expect the consumer to really be picky here, Stephanie?
STEPHANIE AUWERTER, EDITOR, SMARTMONEY.COM: I think, yes, we will continue to see the consumer be very conservative. Those rebate checks were a very short little burst. But I think that we are still seeing a lot of stream (ph), whether you're talking about gasoline prices, falling houses prices, inflation, what we're seeing in the grocery stores. I mean the fact of the matter is, is that we don't really see any reason for that to change right now. So I think the consumer will continue to be pulling back.
ROMANS: I mean we're looking at things like crop reports for any kind of indication there's going to be a lot of corn and wheat and soybean. So that maybe that will help with prices at the -- you know, for your cereal at the grocery store. But bottom line is, even though there's been some improvement across the board in some of these real dangerous signals for the American checkbook, the overall trends are all still there, aren't they?
HARGREAVES: Yes, certainly. The price of everything is going up.
ROMANS: Are we seeing on the campaign trail the response to this? Or are we seeing -- you know, I mean how are we going to see policy makers, I guess, fix it? It's one thing after another. We talk about hydrogen cars. We can talk about a stimulus package. But, you know, what do we do next?
ELAM: Well, you know, you see the commercials that are playing out right now between McCain and Obama and they definitely are talking about energy and, you know, finding new sources of energy. They're definitely talking about it. But I don't know if the everyday American necessarily feels like they're directly talking to them and their everyday concerns.
ROMANS: Right. And we've been talking about energy independence -- and I say this every day -- since Richard Nixon. We've been talking about it, talking about it, talking about it. It seems as though now we're at a tipping point. At least beyond just the political season, perhaps.
HARGREAVES: Yes. And I think, to get back, you know, what the politicians were talking about on the campaign trail, to effect -- help with inflation, you know, they were talking about getting rid of the ethanol mandate. You know, that has -- people have said that that's been responsible for driving up the price of food, as well.
ROMANS: All right. Stephanie Auwerter from Smart Money, thank you, Steve Hargreaves and Stephanie Elam. Welcome back, Stephanie.
ELAM: Thank you.
VELSHI: Well, the economy takes a little nip and tuck out of the plastic surgery industry. Going under the knife is not so recession- proof, apparently. More ISSUE NUMBER ONE right after this.
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ROMANS: All right, you know, for some, it's a luxury. For others, it's, you know, a necessity.
VELSHI: Cosmetic surgery we're talking about. It's the latest industry to feel the full weight of this tough economy. CNN's Kareen Wynter has the story.
(BEGIN VIDEOTAPE)
KAREEN WYNTER, CNN CORRESPONDENT, (voice over): We often think of plastic surgery that's something for only the very rich. Something that's recession-proof. But plastic surgery reality TV shows have helped popularize procedures like lyposuction and tummy tucks with people you won't find splashed over the fashion magazines. Like 53- year-old Pamela Rae Chavez, who had lost 70 pounds and considered going into debt to remove saggy skin.
PAMELA RAE CHAVEZ, PATIENT: My whole idea was to get -- pull some equity out of my home. And I had it all planned. But now I'm so afraid to spend any money right now.
DR. LINDA LI, PLASTIC & RECONSTRUCTIVE SURGEON: People are scared. And they're watching their pennies.
WYNTER: Dr. Linda Lee, a renowned Beverly Hills plastic surgeon and reality TV star, says the mortgage crisis is causing people who weren't afraid to pay through the nose for good looks to take a second look.
LI: People were using their home equity to help refinance and use it for plastic surgery. Now that the housing industry has taken a downturn, they can't pull equity out of their homes.
WYNTER: The American Society for Aesthetic Plastic Surgery says business among its members is down by more than 50 percent. And it's not just the price tag that's giving people pause. DR. ALAN GOLD, PRES., AMERICAN SOC. FOR AESTHETIC PLASTIC SURGERY: They don't find themselves able to take that kind of recovery period that they would have been able to take before from work. Fearful that the job may not be there when they come back.
WYNTER: Pamela Rae Chavez has put her procedure on hold, waiting for the economy to rebound. But in a town where beauty is often skin deep, even a few months can feel like an eternity.
CHAVEZ: I just have to wait and see. Hopefully things look up.
WYNTER: Kareen Wynter, CNN, Hollywood.
(END VIDEOTAPE)
ROMANS: The conventional wisdom is always wrong when you're talking about a recession. You know, men's retail for clothing has been selling great, women's hasn't. Why are men shopping in a recession?
VELSHI: That's a good question. I saw that stat. And that's one of them that I normally can explain my way around something, but I don't.
ROMANS: And they're getting plastic surgery, as well.
VELSHI: Now I know our producer doesn't want to mention this on TV, but I'm beginning to think that my nose might need some work one day.
ROMANS: I think it looks great.
VELSHI: You think it looks all right. Because I'm noticing some times it looks a little boldness.
ROMANS: I think it look nice. We can keep an eye on it.
VELSHI: We will keep an eye on it.
ROMANS: All right. The economy is issue number one and we here are committed to covering it for you.
VELSHI: ISSUE NUMBER ONE will be back here, same time tomorrow, 12:00 Eastern, right here on CNN.
ROMANS: Time now to get you up to speed on some other stories making headlines.
VELSHI: CNN "NEWSROOM" with Don Lemon and Brianna Keilar starts right now.
