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Issue Number One
Tropical Storm Fay Moves Toward Florida; Military Fundraising; Foreclosures & West Nile; Teaching College Bound Kids to be Money Savvy
Aired August 18, 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: Seven days to go until the first convention, and the two candidates are hitting the campaign trail hard. We're on VP watch as one announcement is likely this week.
Tropical Storm Fay moves towards Florida. We're tracking the storm.
And a possible change for the Democrats in the offshore drilling debate.
How to make sure your kids go off to college money savvy.
Issue #1 is your economy. ISSUE #1 starts right now.
From the ISSUE #1 headquarters to the CNNMoney.com newsroom, we are all over the stories that matter to you.
Hello, everyone. I'm Gerri Willis. Ali Velshi is off today.
Fay might be just a tropical storm right now, but it is and will likely continue be a dangerous storm. We'll check in with the folks in south Florida and with CNN's hurricane headquarters for the very latest.
There's a new danger when it comes to abandoned foreclosed homes, and it has to do with a virus. What you need to know and what you can do about it.
And why chocolate and cookies are not immune to the tough times in this economy.
But Christine Romans, the big story today has to be that race for the White House.
CHRISTINE ROMANS, CO-HOST: It sure is. That's right, Gerri.
And earlier today we heard from Senator John McCain. And we're standing by for Senator Barack Obama, about to speak at an event in Albuquerque any minute now. We'll bring it to you live.
The topic is issue #1, the economy. Both McCain and Obama are very busy today.
Let's go to CNN's Jessica Yellin in Washington for the very latest. Hi, Jessica.
JESSICA YELLIN, CNN CONGRESSIONAL CORRESPONDENT: Hi, Christine.
That's right, both Barack Obama and John McCain will be talking about issue #1 today. And McCain talking business at a roundtable later, and Barack Obama will be focusing, that event in Albuquerque, on equal pay for women and other legislation like fair pay leave, medical leave, that he would support as president.
But, you know, as these things go, sometimes the best laid plans get overtaken by news, and today both men are also talking about foreign affairs, and particularly about which man is ready to be commander in chief.
John McCain went after Barack Obama on this point pretty aggressively in his event.
Let's listen to what he had to say.
(BEGIN VIDEO CLIP)
SEN. JOHN MCCAIN (R-AZ), PRESIDENTIAL CANDIDATE: With less than three months to go before the election, a lot of people are just still trying to square Senator Obama's varying positions on the surge in Iraq. First he opposed the surge and confidently predicted that it would fail. Then he tried to prevent funding for the troops who carried out the surge. Not content to merely predict failure in Iraq, my opponent tried to legislate failure.
(END VIDEO CLIP)
YELLIN: Well, Barack Obama's campaign did not miss a beat. They released a statement. Obama is yet to speak, so we don't have a sound bite from him, but I will read to you what their campaign is saying in response to that.
"It is hard to understand how Senator McCain" -- this is again from the Obama campaign -- "how Senator McCain can at once proclaim his support for the sovereign government of Iraq, and then stubbornly defy their expressed support for a timeline to remove our troops from their country. The difference in this race is that John McCain is intent on spending $10 billion a month on an open-ended war, while Barack Obama thinks we should bring this war to a responsible end and invest in our pressing needs here at home."
That is from Obama campaign spokesperson Bill Burton.
So they are going to be going at it back and forth very intensely. You're seeing the barbs fly quite rapidly as we approach the first convention next week, an incredibly increasingly intense campaign on the trail -- Christine.
ROMANS: All right, Jessica. And we'll be monitoring that Obama event and bring that to you live if news warrants.
Thanks, Jessica.
WILLIS: Well, let the guessing games begin. It's a favorite topic of conversation at barbecues and cocktail parties, but in the end, all that really matters is who ends up on both tickets.
Eamon Javers is with Politico.
Eamon, great to see you.
EAMON JAVERS, POLITICO: Hey. How are you?
WILLIS: All right. Well, we're going to bring some live pictures in this hour, most likely, from Albuquerque, New Mexico, where it's likely that Senator Barack Obama will be speaking with Bill Richardson. What are we to make of that? Is he going to be the VP candidate?
JAVERS: Well, it's one tea leaf to look at. Bill Richardson was certainly popular earlier in the year. And clearly, Obama is spending some time with him today. But he's going to be spending time with some folks in Virginia later on in the week, and there we've got a couple of candidates as well as possible vice presidential picks.
So it's really tough to tell right now. There's so many moving parts. Will Obama announce before the convention? Will he announce during the election? And what about John McCain? When is he going to make his pick?
They're all trying to jostle for position here. It's very hard to tell from the outside looking in.
WILLIS: All right. Well, give us a little context, if you would, Eamon.
JAVERS: Sure.
WILLIS: You know, let's talk about timing. When does this announcement typically happen and just how important is it? I mean, after all, it's the vice presidential role. It's not the leader of the free world, right?
JAVERS: Well, it could be, and that's why the vice presidency is so important. You always talk about the vice president being a heartbeat away from the Oval Office. And that's what's going on here.
You know, as far as timing goes, we're pretty much right in the wheel house here a week before the first convention. Typically, you see these picks made before the convention. In past years, we have seen them made at the convention. I don't think that's likely this time around.
And then in terms of importance though, I would say that you're looking at a really important pick for both Barack Obama and John McCain this time. For McCain, it's because of his age, and he's got some health problems that we all know about as well. So people are going to want to see a very reassuring pick there, somebody as the backup quarterback on the sidelines who could step in if needed in a McCain White House.
And then for Obama it's the opposite reason. It's important because of his youth. People are going to be wanting to see somebody comforting, somebody, again, who could step in if needed, somebody who would be trusted hand to rely on there at the right hand of the president.
WILLIS: OK. All right. Well, let's dig down a little bit and take a look at these contenders starting with the Democrats: Evan Bayh from Indiana; Joe Biden; Tim Kaine.
Which of these are most likely to get this job?
JAVERS: Well, Biden has got the big buzz right now. He's the senator from Delaware. He made a good impression during the primaries earlier in the year.
Of course, he's got a long history in Washington, and people know him very well in Washington, which might say that Obama, who is going as a change candidate, somebody outside of Washington, might not pick him. But right now he's got the buzz in Washington, I would say.
WILLIS: Anybody you drop out here from the Democratic list? Because obviously we have got a lot of names there. I didn't read them all.
JAVERS: Right. Well, one of the things that goes on here with these lists that people circulate, a lot of this is being circulated quietly by the Obama campaign. And they sometimes put people on the list just as payback for people who have been helpful to them during the course of the campaign.
It's not a serious name, it's not a serious possibility, but they mention them as sort of flattery to pay them back for being so helpful this year. You've got to sort the wheat from the chaff here a little bit.
WILLIS: OK. Well, I'll read between the lines then.
You said this is going to be an important choice for John McCain. Let's look at some of the names that are floating out there as his partner in this race.
Charlie Crist, who we just heard from this morning about Fay and the storm in Florida.
JAVERS: Right.
WILLIS: Mitt Romney, who also ran for the office of president.
JAVERS: Right.
WILLIS: Tom Ridge, who we are mostly familiar with as a former governor.
JAVERS: Right. WILLIS: Tell us which -- you know, and the list here of course is longer. Tell us which of these candidates might be most likely or the best match for John McCain?
JAVERS: Sure. Well, Crist is an interesting one because he's from Florida, and as we all remember, Florida is extremely important in presidential politics. So that could be an interesting bet for McCain.
But I would look at Mitt Romney also. He comported himself very well during the primaries. Romney and McCain had some tussling between the two camps earlier on in the year. I'm told that that's been pretty much put aside by now. And you might look at Romney as a strong pick.
He's been vetted. He campaigns well. He could step in very easily for the remaining months of this campaign. And he's good on the economy. And that, as we know, has been a very key issue here in this campaign going into November.
So keep your eye on Mitt Romney, but I'm not going to make any predictions.
WILLIS: No predictions, all right.
Tell me candidate by candidate -- and lets start with Barack Obama -- what are the qualities that you think will be top of mind for both of these contenders? Start with Obama and then, of course, the Republican contender, John McCain.
JAVERS: Sure. Well, I think for both of them you're really looking at that question of somebody who is reassuring. Both of them have sort of some aspects to their own candidacy that unsettle voters -- John McCain's age, Barack Obama's inexperience. So, in both cases, you're going to be looking for somebody who is a steady hand at the tiller, if you will.
And in past years we've made a lot out of the geographical mix. You know, if you're from the Northeast, maybe you want somebody from the Southwest to balance the ticket. But I think that will play less of a role now because you look at a pick like Joe Biden for Barack Obama, he comes from Delaware, which is almost meaningless in terms of presidential electoral college votes, but he could get that reassuring candidacy going that Barack Obama might feel he needs, and which might be more important than a geographical breakdown or a big powerhouse electoral college state.
WILLIS: Fascinating stuff. Eamon Javers, thank you for that.
JAVERS: Hey. Thank you.
ROMANS: All right, Gerri. Gerri, that brings us to our "Quick Vote," where you get the chance to weigh in.
CNNMoney.com's Poppy Harlow is here with today's question.
Hi, Poppy.
POPPY HARLOW, CNNMONEY.COM: Hi, Christine.
Well, whether it's Obama or whether it's McCain, we all know the next president will have a hefty dose of economic issues to deal with as soon as he takes office. So what should be at the top of that list? We want you to weigh in. Here is our "Quick Vote" question today.
What issue #1 topic should be the priority of the new president: health care, high gas prices, the mortgage meltdown, or unemployment/ Let us know what you think on CNNMoney.com. We'll bring you the results a little later -- Christine.
ROMANS: All right. A very long list of things to tackle for the folks.
HARLOW: Yes.
ROMANS: OK. Tropical Storm Fay is working her way toward south Florida. We'll have the latest on the folks in Florida, the latest forecast, and whether oil rigs are in the path of that storm.
Plus, a development in the political debate over offshore drilling.
And can you imagine finding natural gas in your own backyard? It's happening to some homeowners out there.
We're all over issue #1 right here on CNN.
(COMMERCIAL BREAK)
WILLIS: Tropical Storm Fay is expected to hit the Florida Keys tonight. Florida officials have urged residents and tourists to evacuate, but that's bad news for some business owners there.
CNN's John Zarrella is in Key West with more.
It looks mighty wet there, John.
JOHN ZARRELLA, CNN CORRESPONDENT: Hey, Gerri. Well, not terribly bad. We had a squall line move through here about an hour or so ago, and we had our wind meter out and registered a gust of 28 miles an hour. Still, 11 miles less than tropical storm force, but we do expect tropical-storm-force winds and heavy rain to start impact impacting this area within the next hour or so.
And of course, you know, Key West residents wait until the last minute to get ready down here. We were out this morning and noticed a lot of folks at the last minute putting up their aluminum shutters and their plywood on their wall, on their windows. Businesses and homes getting ready now what is a 60-mile-an-hour tropical storm.
Also, a lot of folks were at the grocery stores today buying supplies, picking up the water, the canned goods, the flashlight batteries, the things that you need just in case, you know, the power should go out, although at this point that's not expected, but it certainly could happen. And, you know, also some hotels sandbagging in low-lying areas where the water could come up if we have any kind of a storm surge.
Now, you mentioned the hotels. They ordered a mandatory evacuation of tourists out of the Florida Keys yesterday, and, of course, that meant that the hotels were closing down. And a lot of the workers from the hotels -- we talked to one man in Marathon who owns a place called The Sea Dell (ph) up there, and a lot of his workers had to go home. And he is saying that it's really the workers who are being adversely affected throughout the Keys by that mandatory evacuation.
(BEGIN VIDEO CLIP)
HARRY CAPLAN, FLORIDA KEYS HOTEL OWNER: It clears out all the hotel rooms, and for all of the staff, the housekeepers, the waiters, the waitresses, and all the people whose livelihood depends upon tourism, collect no paychecks for three to five days unnecessarily.
ZARRELLA: Why do you say it's unnecessary?
CAPLAN: Because the evacuation was premature. .
(END VIDEO CLIP)
ZARRELLA: Now, we spoke with Florida Keys officials who told us, listen, we stand by our evacuation order of the tourists and nonresidents, and they said they would not jeopardize the safety of a single tourist for the sake of a dollar. And quite frankly, they said by Sunday afternoon, most of the people are leaving the Keys anyway and heading northbound. And they do say that they expect that they will reopen the Keys to tourists by Wednesday, certainly Thursday at the latest.
Again, right now, Gerri, just a little bit of rain and wind coming and going. The squall is moving in, but we do expect that we will be seeing tropical-storm-force wind and a lot heavier rain as the day wears on here in Key West. And certainly all across south Florida, heavy rain from Fort Lauderdale, Miami, into South Dade and into the Upper Keys. Lots and lots of heavy rain falling, probably some localized flooding later today in a lot of these low-lying areas -- Gerri.
WILLIS: Well, as that flooding comes, I hope you seek shelter. Take care of yourself, John. Thanks for that report.
ZARRELLA: Will do, yes.
(WEATHER REPORT)
(BUSINESS REPORT)
ROMANS: All right. We're going to take a look at how the oil companies are preparing for Tropical Storm Fay and whether oil drilling platforms might be affected.
Plus, why Democrats might be changing course on the topic of offshore drilling.
You're watching ISSUE #1.
(COMMERCIAL BREAK)
ROMANS: House Speaker Nancy Pelosi is shifting gears on her opposition to offshore drilling. Over the weekend, Pelosi said she's amenable to opening portions of the Outer Continental Shelf for drilling. She said it will be part of energy legislation that House Democrats will put forward in coming weeks.
Just a few weeks ago, Pelosi appeared dead set against allowing any more offshore drilling. At present, new oil drilling is only allowed in federal waters in the western Gulf of Mexico and off Alaska.
WILLIS: There are plenty of oil rigs in the Gulf of Mexico, and there's always a concern when a storm like Fay rolls into the region.
CNNMoney.com's Poppy Harlow is back with your "Energy Fix."
Hi, Poppy.
HARLOW: Hi, Gerri.
Well, of course concern over what does this mean for oil prices. Everyone out there wants to know this.
As Stephanie Elam just told us in the previous block, you know, the price of oil is holding pretty steady right now, but things could turn around quickly, especially if Tropical Storm Fay picks up speed and does head towards the oil-rich Gulf of Mexico, like the National Hurricane Center has previously said it expects to happen. Of course, this flip-flops, and it's a pretty fickle storm, as Jacqui Jeras did call it.
But you know what? What Shell has done, that company Royal Dutch Shell, evacuating more than 400 people from its facilities in the Gulf of Mexico. But the company does say at this point there won't be any more evacuations. So it's very much a precautionary measure -- Gerri.
WILLIS: Well, wouldn't you expect that oil prices here might spike and spike hard, instead of really flat-lining, which is what they've done today?
HARLOW: Yes. We would expect that, but what really is at play here is, have there been any supply disruptions? That's what oil traders are focusing on, and up until now there have not been.
But if you think back to 2005, Hurricane Katrina, Hurricane Rita, they both temporarily shut a quarter of U.S. oil and fuel production. That sent prices to then record highs. So anything could happen, but so far, Shell says this has not affected production whatsoever. And despite six named Atlantic storms this year, we haven't seen any significant damage to oil platforms. So instead of oil prices rising, crude is pretty much holding steady, actually falling $30 in the past month or so. But much of that drop, of course, as we all know, is due to a stronger U.S. dollar and less demand around the world.
But for those of you who are in the path of this storm, we really want to hear from you. Please send us your pictures and your stories to ireport.com/energyfix. But, of course, do not put yourself in harm's way -- Gerri.
WILLIS: Well, I guess we can knock wood and hope that those prices don't spike again.
HARLOW: Yes.
WILLIS: But this storm is not (ph) strong.
Poppy, thank you for that.
HARLOW: You're welcome.
ROMANS: All right, guys. Here's a good story.
Remember Uncle Jed from "The Beverly Hillbillies?" He became a millionaire overnight when he found oil on his property. It's not just a Hollywood story. The same thing is happening to people in a Fort Worth suburb, but it's with natural gas.
CNN's Ed Lavandera takes a look.
(BEGIN VIDEOTAPE)
ED LAVANDERA, CNN CORRESPONDENT (voice-over): Bishop Kenneth Spears always thought gifts from God came from above. He never really imagined he'd find one under his pulpit.
BISHOP KENNETH SPEARS, FIRST SAINT JOHN BAPTIST CHURCH: I want to believe that if I prayed over that ground, if I walked over that ground, something good was going to come from it.
LAVANDERA (on camera): And then you find out you're sitting on a bunch of natural gas?
SPEARS: I found out was sitting on a bunch of natural gas. I said, well, what a God we serve.
LAVANDERA (voice-over): The First Saint John Missionary Baptist Church in Fort Worth, Texas, sits on one of the largest natural gas fields in the country. There are now more than 7,000 gas wells all over Fort Worth. Never before has such a massive residential area been the epicenter of an urban drilling bonanza. Even actor Tommy Lee Jones has touted the drilling effort.
JULIE WILSON, CHESAPEAKE ENERGY: You know, we're making a lot of millionaires up here in the Barnett Shale Area.
LAVANDERA: Bishop Spears' church signed a drilling lease and got a $32,000 bonus. And as the congregation worships, natural gas is pulled out of the ground below them. That brings in between $3,000 and $10,000 a month in royalties.
(on camera): Energy companies are literally going door to door negotiating for access to drill under people's homes in exchange for those checks. And thousands of people have already signed on.
DON YOUNG, COMMUNITY ACTIVIST: A few people can get rich.
LAVANDERA (voice-over): But opponents like Don Young say the promises of people getting rich aren't true.
YOUNG: The divide and conquer strategy by going around and giving everybody enough money to keep them quiet, so to speak. Hush money, is what I've call it.
UNIDENTIFIED FEMALE: The pipeline, they told me, would be here right under my trees.
LAVANDERA: Jerry Horton says she rejected a $12,000 offer from Chesapeake Energy to bury a pipeline through her front yard. Now the company is suing her, claiming eminent domain. Her 100-year-old oak trees would be chopped down. And she worries the pipelines are a safety hazard.
JERRY HORTON, DRILLING OPPONENT: We don't need to destroy our homes, all of our trees, and blow ourselves up. Who's going to be here to enjoy the gas then?
LAVANDERA: Chesapeake Energy insists the pipelines are necessary, without which no one would profit. Bishop Kenneth Spears' church will use their profits to help pay for a new sanctuary. And they pray the gas keeps flowing from below.
Ed Lavandera, CNN, Forth Worth.
(END VIDEOTAPE)
WILLIS: McCain and Obama speaking out on what they'll do to fix the economy. What they're saying, next.
And houses foreclosed on and abandoned. What could be lurking inside those houses that you should be worried about.
You're watching the home of issue #1, the economy, on CNN.
(COMMERCIAL BREAK)
ROMANS: Just into CNN, Tropical Storm Fay is causing all sorts of air travel headaches, but now CNN has confirmed that the following airlines are waiving fees for a one-time ticket change for customers flying to and from Florida. They include: Air-Tran, American, Continental, JetBlue, United and Southwest. Delta will waive the change fees in Georgia as well, and US Airways will waive the fees for the Bahamas.
Check with your airline for more information. And make sure you stay with CNN hurricane headquarters for the very latest on this storm -- Gerri.
WILLIS: Well, we are standing by for a Barack Obama event on the economy live in Albuquerque, New Mexico, and we're going to bring it to you as soon as it happens.
Every day we're bringing you what the presidential candidates are saying on issue #1, the economy, so first, let's hear from Barack Obama, campaigning in Reno, Nevada, just yesterday. Obama is comparing his tax plan with John McCain's.
(BEGIN VIDEO CLIP)
SEN. BARACK OBAMA, (D) PRESIDENTIAL CANDIDATE: John McCain and I fundamentally disagree in terms of how we are going to move this country forward. He ran a negative ad, which is most of the ads he runs. He ran a negative ad that claimed that all my economic plan was, was higher taxes and that it would lead to economic disaster. This is what he said, that my plan would lead to economic disaster.
Now, let's just, first of all, get the facts straight. John McCain has a tax plan and I have a tax plan. My tax plan provides tax cuts to 95 percent of the American people. Tax cuts to 95 percent of the American people. If you're making $150,000 a year or less, you're going to be getting a tax cut under my plan.
Under John McCain's plan, if you make $2.8 million, for example, you'd get a $500,000 tax break. He's given $300 billion in tax breaks to corporations, including oil companies like Exxon Mobil, that have made record profits every quarter for the last three quarters.
(END VIDEO CLIP)
WILLIS: Now we wanted to show you what John McCain is saying about taxes and spending. Here he is speaking at the Faith Forum this weekend.
(BEGIN VIDEO CLIP)
MCCAIN: The point is that we want to keep people's taxes low and increase revenues. And, my friend, it was not taxes that mattered in America in the last several years. It was spending. Spending got completely out of control. We spent money in a way that mortgaged our kids' futures.
My friends, we spent $3 million of your money to study the DNA of bears in Montana. Now, I don't know if that was a paternity issue or a criminal issue, but the point is, it was $3 million of your money. It was your money.
And, you know, we laugh about it, but we cry. And we should cry because the Congress is supposed to be careful stewards of your tax dollars. So what did they just do in the middle of an energy crisis when in California we are paying $4 a gallon in gas? Went on vacation for five weeks. I guarantee you, two things they never miss, a pay raise and a vacation.
And we should stop that and call them back and not raise your taxes. We should not and cannot raise taxes in tough economic times. So it doesn't matter really what my definition of rich is because I don't want to raise anybody's taxes. I really don't. In fact, I want to give working Americans a better shot at having a better life.
(END VIDEO CLIP)
ROMANS: All right. Senator John McCain.
A nonpartisan campaign fund-raising watchdog group has made an interesting discovery. Troops stationed abroad are contributing more money to Barack Obama than John McCain.
CNN's Jim Acosta joins me now with more -- Jim.
JIM ACOSTA, CNN CORRESPONDENT: Well, Christine, we should caution, this is not a public opinion survey, but the numbers are surprising. Troops serving in the armed services overseas have so far donated more money to Barack Obama than John McCain by a big six to one margin.
(BEGIN VIDEOTAPE)
ACOSTA (voice-over): Barack Obama can do more than sink three- pointers with American troops. The Illinois senator is also netting plenty of campaign contributions from military personnel stationed overseas.
MASSIE RITSCH, CENTER FOR RESPONSIVE POLITICS: I don't think anyone saw that an anti-war candidate, a Democrat, would be the favorite among donors who are in the military in 2008.
ACOSTA: According to a study from the nonpartisan Center for Responsive Politics, Obama has raised nearly six times as much money from troops deployed abroad than John McCain. Anti-war Republican Ron Paul actually came in second. The center's Massie Ritsch stresses these donors are small in numbers, but they aren't shy about who they're supporting and why.
RITSCH: They were proud and certainly ready to serve their function and do the mission, but personally they believe that we're on the wrong track in Iraq and that's what this contribution is sending a message for.
ACOSTA: One Army specialist, Jay Navas, is quoted in the center's study as saying, "we all know that Iraq was a big mistake."
Iraq War veteran Brandon Woods says he's heard those sentiments firsthand.
They want to see a change? BRANDON WOODS, IRAQ WAR VETERAN: They want to see a change. They want to see a change in direction and I think they favor some type of strategic disengagement or time table for withdrawing from Iraq.
ACOSTA: McCain gains a little ground when donations are tallied up from all service members, at home and abroad, but he still trails Obama, though by not nearly as much.
UNIDENTIFIED MALE, POLITICAL AD: We changed strategy in Iraq . . .
UNIDENTIFIED MALE, POLITICAL AD: And the surge worked.
UNIDENTIFIED MALE, POLITICAL AD: Now, that's change we can believe in.
ACOSTA: And the numbers don't account for all of those donations to groups like Vets for Freedom, who hope to have a big impact in the general election.
(END VIDEOTAPE)
ACOSTA: And the money from the troops overseas is just a drop in the overall fundraising bucket. It's a far cry from the oil and gas industry's lopsided support for John McCain and nowhere near the amount of money Obama has raised from lawyers -- Christine.
ROMANS: I guess it would suggest that the conventional wisdom, at least this time around in politics, might not hold true. Because typically you think of the military -- members of the military supporting the incumbent party or Republicans. That would be the conventional wisdom. It isn't always right in politics.
ACOSTA: That's right. And the Center for Responsive Politics has looked at this. And as far back as 2000, that was certainly the case.
ROMANS: Really.
ACOSTA: Troops supported Republicans. Supported George W. Bush with their contributions. That trend started to change in 2004 and now they see it moving in the other direction towards Barack Obama now.
ROMANS: But it is a drop in the bucket when you look at that corporate money.
ACOSTA: It is a drop, big drop in the bucket.
ROMANS: Big corporate money.
All right, Jim Acosta. Thanks, Jim.
WILLIS: Foreclosures in America are up and that means the number of abandoned houses in America are up as well, which can lead to problems. You want to hear the threat that you could face in your neighborhood.
And important information to make sure your kids learn about money the right way. Grab a pen and a piece of paper. This is good stuff.
ISSUE #1 rolls on next.
(COMMERCIAL BREAK)
WILLIS: The mortgage meltdown has led to record numbers of foreclosures around the country. When banks evict homeowners, it can take time to sell the house. Often to long. Officials in some parts of the country are worried all those empty houses could lead to a public health crisis. CNN's Elizabeth Cohen is live in Atlanta with more.
Elizabeth, what are these officials worried about?
ELIZABETH COHEN, CNN MEDICAL CORRESPONDENT: These officials, Gerri, are worried that an already bad West Nile problem is going to get worse because of foreclosures. Who would have thought that an economic crisis could lead to a public health crisis.
But look at this pool. This is a pool in a foreclosed home in Orange County, California. It is a magnate for mosquitoes. And you know what, there are 1,300 other pools like this in Orange County. And so again, concerns that it's going to make West Nile even worse. The concerns are especially high in southern California where there are so many foreclosures and so many pools, but we're hearing about concerns in other parts of the country as well.
WILLIS: Elizabeth, I was just in Gilbert, Arizona, about a year ago and we saw some of these pools firsthand. What a mess. It's a total eyesore. But you're saying it's also dangerous. I know officials are also worried about having to pick up the tab to clean it up.
COHEN: Right. The Orange County officials that we talked to said taxpayers are picking up the tab. They said these homes have been foreclosed upon and they have a really hard time figuring out what bank owns it. So they just clean it up themselves and then the taxpayers pay for it.
WILLIS: Wow. Well, remind us, now, West Nile. What happens with West Nile Virus? What are the symptoms? What do you get? What happens to you?
COHEN: You know what, most people when they're infected with West Nile are OK. But some people do show symptoms. For example, fever, headaches, those are much more typical. When things get really bad, people can go into convulsion or actually become paralyzed.
WILLIS: Wow. Wow. Very, very worrisome. Trend (ph) worrisome problem. Elizabeth, do you see any end to this or do you think it's going to get worse? The forecast for foreclosures is only higher. COHEN: Right. As foreclosures go up, there's definitely a concern that you're going to see more of these pools, you're going to get more mosquitoes, you're going to see more West Nile. Nobody has actually done a scientific study to say that these pools are making the problem worse, because it's so early on, but that is definitely the worry.
WILLIS: Wow. Elizabeth Cohen, thank you for that report.
COHEN: Thanks.
ROMANS: All right. We're monitoring Albuquerque, New Mexico. A round table discussion. Senator Barack Obama is talking, is calling it about fairness and wages. Right now he's talking about single mothers and the economy for them. We're going to continue to monitor this and bring those to you live in just a moment.
But do you like chocolate? How about cookies? We have news on some popular brands and steps they're taking to survive these tough economic times.
And how to fix the housing foreclosure mess in this country once and for all.
We're all over issue #1 right here on CNN.
(COMMERCIAL BREAK)
WILLIS: Important news for you chocoholics out there. Hershey is raising prices by an average of 11 percent. The Pennsylvania based chocolatier says the move is necessary to stem the immediate increase to offset the rising cost of ingredients like cocoa, sugar, peanuts. Hershey has also trimmed its projections for this year and 2009.
Christine, a bittersweet story.
ROMANS: Oh, Gerri, bittersweet, indeed.
That's a perfect example of how inflation is taking a toll on so many people and businesses. Let's get right down to it and talk about what's in store for the next year. Gary Schatsky is the president of objectiveadvice.com, Hilary Kramer is an AOL Money coach, and Poppy Harlow is with CNNMoney.com.
Gerri had that bittersweet story about the chocolate. There are so many puns that could go in there. But let's talk about how it is continuing, how we know inflation is up, you know, the highest in 17 years. Right now we know the companies have been passing it along. Snack food companies. Many of them have already passed along the price increases and even shrunk the bags of things, as if we didn't notice, right? Does it just keep going from here? Is this a new reality?
GARY SCHATSKY, PRESIDENT, OBJECTIVADVICE.COM: Most people have focused on energy as an increase. You're seeing the commodity increase. I think you can expect inflation to continue to grow. Now whether it's going to be out of control or not is -- most people don't think it's going to be staggeringly high. But you can expect growth in inflation that we haven't seen for quite some period of time.
HILARY KRAMER, AOL MONEY COACH: We have to look at the root problem and the cause. And it's that globally we have a wealthier world and people are demanding more. So as long as the rest of the world wants to eat meats and grains and higher quality foods, we are going to pay more. So it's a good news/bad news situation.
ROMANS: Part of the good news that we've seen, Poppy, is that gas prices are down some 32 days in a row. But the bad news is, there's something lurking in your family budget for winter and that's the heating oil prices. We know they're going to be up 20 percent on average. Worse here in the Northeast.
HARLOW: Because the Northeast is the biggest consumer of home heating oil in the world. So especially for people here in new York and the surrounding states.
I did talk to an oil trader last week, though, on Friday, who gave a bit of a silver lining to all this. He said because we're seeing these falling oil prices, that may mean that what the EIA is forecasting, a 20 percent increase in your home heating bill, that may not be the case if we continue to see oil prices fall. So possibly some good news down the road there. But again, right now, that's being priced in. People are certainly going to pay more. Whether it's thousands more, hundreds more is yet to be determined.
SCHATSKY: Really, you know, the takeaway message is, you better start budgeting for this. You don't want to find yourself with a staggering number that you had no idea was going to come along.
ROMANS: But the government says it could be $1,182 on average to heat your home. That's the average. That means a lot of people it's going to be worse and some people in warmer parts it going to be better.
SCHATSKY: And for the people where it's worse, it's going to be staggeringly worse because they're in the colder parts of the country.
KRAMER: And you combine with that unemployment, wages that aren't rising, along with inflation, and so it's going to be a difficult situation. More than anything, the budgeting issue of it, which is that, because the price of oil has been dropping significantly, we all think the next stop is $50 a barrel. There's nothing to say that the next stop couldn't be $150 a barrel and we couldn't reverse course, especially with a hurricane coming, OPEC meeting and, again, global demand is returning.
ROMANS: It's so insulting that it's going to cost more to heat that house that's losing value quickly. And we're going to have another number this afternoon about home building confidence. And the bad numbers, the higher foreclosures, come over and over and over again. Do we think it's 2009 where it's stabilizes? Do we think it's 2010? Is it impossible to know? HARLOW: I think when you look at the earnings from these big home improvement chains, they can tell a story that's important to hear. Lowe's, profit down 8 percent. But what's key is they warned about the year and the months ahead, saying we don't see any light at the end of the tunnel right now. We're going to guide lower. So they don't expect people to come in. That's the sense that they're feeling.
ROMANS: Because you can't buy a vanity if you have to pay more to put gas in the tank.
KRAMER: No. You also have to look historically. And the way it works in real estate is that the stock market could recover for five years and then real estate finally will start to recover. There's a lag effect because it's so much less liquid. But it also means, over the next few years, people will have an opportunity to buy and buy an home and an investment over the long term. It's not all bad news.
SCHATSKY: On top of it, if you're not going anywhere, it doesn't matter too much.
KRAMER: That's right.
SCHATSKY: It matters about inflation. It matters about earnings and growth and jobs, but not your home.
KRAMER: It matters if you speculated. That's the problem, is if you speculated and then you have to (INAUDIBLE).
ROMANS: But if your family budget is hit by maybe rising taxes, some of these places are going to be raising taxes because they're losing real estate transactions costs, some of the localities. If you've got a house value that's going down, you can't tap the money out of your HELOC like you could before. Maybe you've got a kid who's going to college and you're trying to figure out how to pay for that. I'm going to hate to be, you know, the angel of darkness here, but there's an awful lot of things that aren't going up in your family budget as quickly as the things you can't negotiate around.
SCHATSKY: That's why you've really got to focus on the budgeting. Make sure you have the reserve fund. And, really, cut down -- you know this . . .
ROMANS: How much of a reserve fund? What do you guys recommend?
KRAMER: I always say that you should have 12 months of the basic necessities. Those costs put aside, which would include tuition and anything health-care related. But when it comes to planning, you also have to determine where you are in terms of what kind of job security you really have. And if you don't have job security, how long does it take to get a new job? And there's nothing wrong with, just like you upgraded, to downgrade. But think of it short term. It's very painful. It's a very painful process. Let's say, to sell your home and move into an apartment or rent. But in the long run, if you think of it as an investment . . .
ROMANS: If you can sell it.
KRAMER: Yes. But chances are, if you bought 18 months or earlier, then you'll be able to sell at a profit. And, you know, and you aren't going to lose any money.
SCHATSKY: I think 12 months is, for most people, probably a little more than they need. You really have to look at your job security. And if you have liquid investments, if you have short-term bond funds, CDs, you don't want to keep 12 months sitting around doing close to nothing in money market fund rates. But for some people it might be that high. But for most it will be a little short (ph).
ROMANS: And, meanwhile, take something like Tropical Storm Fay to really bring into sharp contrast the supply/demand situation in the global energy markets because something like that we immediately start looking at all those platforms in the Gulf, trying to figure out if they're going to have to shut off the spigot anywhere.
HARLOW: We think about what happened during Katrina and Rita, where we opened that Strategic Petroleum Reserve. I mean, prices hit a then record high for oil. But right now, so far this storm -- this season in the Atlantic have not caused really any damage. So we've been lucky. But people are preparing for that. But it's not being priced into the cost of oil today at least.
ROMANS: All right, Poppy Harlow, Gary Schatsky, Hilary Kramer, thank you, all three of you, for joining us -- Gerri.
WILLIS: Great conversation.
Well, teaching your kids about money is never easy. We'll show you how to lead them to financial security.
And don't forget to vote. It's your chance to be heard. What issue No. 1 topic do you want the new president to address first? Log on to CNNMoney.com right now to vote.
You're watching ISSUE #1.
(COMMERCIAL BREAK)
ROMANS: What issue No. 1 topic should be the priority of the new president? That's today's Quick Vote question.
CNNMoney.com's Poppy Harlow is back with the results -- Poppy.
HARLOW: Hi, Christine.
I was a little surprised about this. You know, despite 32 straight days of declines for gas prices, that's still the key concern for Americans. Thirty-five percent say that should be issue No. 1 for the next president. Seventeen percent say the mortgage meltdown. Twenty percent say unemployment. And the remainder there, 27 percent, do say it is health care. But gas prices, everyone faces them.
ROMANS: All comfortably jockeying there for position for the most important thing for the next president to address.
HARLOW: Exactly.
ROMANS: So hopefully that they can -- whoever it is -- follow through on some of those things -- Gerri.
WILLIS: Well, Chris, handling your own money is tough enough, but how do you teach your kids to handle their money the right way from the get-go. Grab a pen and paper. We'll show you how to solve all these problems. Janet Bodnar. She's deputy editor of "Kiplinger's Personal Finance" and author of the book "Raising Money Smart Kids." She joins us now from Washington.
Janet, great to see you again.
JANET BODNAR, DEPUTY EDITOR, KIPLINGER'S PERSONAL FINANCE: Oh, my pleasure.
WILLIS: All right. Well, let's get right down to it. Some folks say that it costs $3,000 for the kid through the semester. Others say it's $1,500. What's the right number? I know a lot of parents out there are thinking, how much should I be thinking about for the semester?
BODNAR: Well, I'm thinking, for the year now, I would say somewhere between $2,000 and $3,000 for incidental expenses. So I think that's a good range.
WILLIS: No, wait, wait, wait. Does this include beer and pizza?
BODNAR: Yes, this includes beer and pizza, but not books.
WILLIS: OK. All right. Well, that shows you what's expensive.
BODNAR: Exactly. Yes, I think that's really true. I mean, you know, one way -- you should check with the school because each individual school will have a recommendation. But sometimes, you know, I mean, I have kids who have gone to college. My son was really cheap last year. He got by on $1,500. But he has friends who were in Washington, D.C., here, who spent $4,000 plus and had a part-time job to finance it.
WILLIS: Wow. So it really depends on where you are and the numbers can really vary.
BODNAR: Exactly. Right.
WILLIS: How do you decide, because I know a lot of parents and their kids want to split the costs in some ways.
BODNAR: Right.
WILLIS: I just talked to a girlfriend who said she's going to do that with her son going to Carnage Melon. What's the best way to divide those costs up? BODNAR: It's really important to have this discussion before you leave the kid off, number one, so they know what's what. You know, I think sometimes you can say, look, to the child, we're going to cover your books. We're going to cover your transportation costs back home. But if you want to visit your friend at another school, you have to cover that cost. And, of course, the beer and pizza's on you. We're going to finance the meal plan, the campus meal plan, but beer and pizza, weekend entertainment, that's your dollar.
WILLIS: All right. Well, let's tick tock through some of these big ticket items. You mentioned books. Tell us about what you can expect to pay there.
BODNAR: Right. Well, the average is somewhere between $800 and $1,000 a year if you buy them new. Now there are lots of really good web sites online where you can buy books at a discount. And also, look at each school, too, because they have used book networks. My son actually saved a lot of money last year going that route.
WILLIS: I want to mention a couple web sites where you can do just that. Bigwords.com, cheapesttextbooks.com. A couple places to check out there.
BODNAR: Exactly.
WILLIS: All right. Other big expenses. Obviously, if you go the Greek party life, you're going to be spending more money. If you join a sorority, a fraternity, what are you looking at?
BODNAR: You're looking at maybe at least $1,000, maybe $1,600 or more just to join. This is one of those unexpected things. You send your kid off to school never thinking that they're going to come up with this expense. And then a month or two into the semester, they say, hey, I want to go Greek and it's going to cost me this amount. Well, whose pocket is that going to come out of, yours or theirs? I had a friend, again, who fronted their son the money for his frat dues, but then they took it out of his earnings the following summer. He had to pay them back.
WILLIS: Wow. Wow. That's impressive on the parent's part, right?
BODNAR: Well, you know.
WILLIS: Keeping them to the budget.
We have to talk about credit cards. Such a problem for college students. We know that debt is out of control for so many people. What do you -- how do you decide if the student really -- if your child really needs a credit card?
BODNAR: I feel really strongly about this, Gerri. I do not think students, certainly freshmen, need credit cards. I think that what they should learn how to do first is manage a bank account with real money and a debit card. And once they have proven that they can do that without overdrawing the account, once they can live through a whole year on their summer earnings from the previous summer, then they can go ahead and apply for a credit card when maybe they're seniors in college and they've proven that they can actually manage cash.
WILLIS: Well, I can just hear the kids now, mom, I really want the credit card. How can you live in the real world without a credit card? What would you tell your son or daughter?
BODNAR: Oh, easily. My kids never had credit cards in college because the debit card and the cash account really does just perfectly well. And actually, if you're a parent and you tell your child, we don't want you to have the credit card because it's too much of a temptation, let's see how you do with a bank account, they will listen to you. Believe it or not, parents have power. Yes, they do.
WILLIS: I love that. OK.
Janet Bodnar, thank you for that.
Her book is called "Raising Money Smart Kids."
ROMANS: All right. Good stuff.
Time now to get you up to speed on some other stories making headlines.
"CNN NEWSROOM" with Kyra Phillips starts right now.
