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YOUR MONEY

How Will President-Elect Obama Get the Economy Back on Track?; Looking for Work? Consider a Government Job; How Families Are Locking Tuition Rates Through Their 529 Plans

Aired December 14, 2008 - 15:00   ET

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


CHRISTINE ROMANS, CNN HOST: Welcome to YOUR MONEY. I'm Christine Romans. Ali Velshi is off this week.
President-elect Obama's top priority is the economy and the future of your money. What he does as president could affect the security of your job, your savings and your home. To rescue the economy, Obama wants middle class tax cuts, aid money for state and local government and spending for safety net programs like Medicaid and food stamps. And the most controversial plan, major infrastructure programs. How much will all of this cost? Estimates say the price tag could run as high as $700 billion, but will it be enough to get the economy on track?

We're joined now by Kenneth Rogoff, professor of public policy and economics at Harvard University as well as a former chief economist at the IMS. Diane Brady is a senior writer of "Business Week." And Stephen Leeb he president of Leeb Capital Management, also the author of the soon to be released book, "Game Over" about the financial crises. Welcome, everybody.

I want to start with you, Ken because I'm so interested in your perspective on what the president elect can do to get this economy on track. You told me our economy is having a heart attack. Is he the cardiologist that is going to fix things or he just going to have to try to keep the patient alive?

KENETH ROGOFF, PROFESSOR OF PUBLIC POLICY AND ECONOMICS, HARVARD UNIVERSITY: Well, I mean he's going to perform resuscitation and let's hope. I mean, I think we, they're coming in with big plans. They're looking at the whole picture so I think this is going to be a big boost this moment and we'll hope it's enough.

ROMANS: Will it be enough? We are talking about major, major numbers. The president-elect himself has said, Diane, we can't worry about deficits right now. This is about spending money big right now, at the right time and the right time is to get the economy on track.

DIANE BRADY, SENIOR WRITER, "BUSINESS WEEK:" I think the money is important but you have to also make sure that you disburse it in a way where the job losses actually are. There aren't that many people who can actually work in infrastructure, building a bridge, fixing a bridge, actually takes some skills. We have to make sure that some of that goes toward white collar jobs, service sector jobs where a lot of the jobs right now are being lost. ROMANS: We lost construction and manufacturing jobs there is no doubt. But the job losses we're seeing right now are in banking and NFL, NPR, Dow Chemical, all different kinds of companies this week announcing job cuts.

STEPHEN LEEB, PRESIDENT, LEEB CAPITAL MANAGEMENT: I think the critical thing is to get more money people's pockets and I think the tax cut part of it, Christine, is probably going to be the most important and I think what they've said, not in so many words, is that they will spend whatever it takes to get the economy going. President- elect Obama has used I think words almost exactly like that. My guess right now is the number is higher than $700 billion; they are probably already talking about $1 trillion, maybe even north of that.

I think that they absolutely realize the magnitude of the problem. It's unprecedented. All you have to do is look at key bill yields, they're zero. Money market yields may fall to zero or below, which means you'll be paying these funds to harbor your money. They know this.

Larry Summers is one of the most brilliant economists alive, he knows all this data and he knows how dire the situation is. So I think every time you get a horrible piece of data like yesterday with unemployment insurance claims, the price of the stimulus goes up, and I really think you're talking north of $1 trillion now.

ROMANS: Let's talk about Larry Summers; he is a former colleague of yours, someone that you know. Is Larry Summers going to be able to lead this big infrastructure spending, economic rejuvenation? What do you think is on his mind right now?

ROGOFF: Well, I think he's thinking outside of the box. This is an incendiary problem and you do have to look at the whole picture, I completely agree with Diane, how it's spent and also what else you're doing, putting tax cuts in people's pockets, they have to do something about the financial system, if you leave that bleeding, the way it is, things aren't going to get better. You need to do something about housing. I think that has to be approached on many fronts.

But an infrastructure has the advantage that it has long life. Because this isn't going to be one year. This isn't going to be two years. This is going to have to be a sustained push by the government to get in, and then hopefully get out at the end of it.

ROMANS: That's the trick, is the getting out at the end of it and all of the polls keep showing the American people are concerned about all of this intervention in the financial market, all of this intervention into the economy. They are saying wait a minute if there's suppose to be boom and bust cycles in economics, what are we doing throwing all this money trying to fix this. It's bigger than that. It's not about trying to stop economic cycles. It's trying to stop Armageddon some would say.

ROGOFF: I'm afraid so. Armageddon I don't know, but we're certainly looking at the worst recession we've seen since World War II and there is a material risk that it could be worse than that. We could just see something really incredible if they don't act coherently.

ROMANS: What about spending money to get out of this problem? Can you spend money to fix this problem?

BRADY: I think the answer is spending, because one problem with tax cuts right now is you're dealing with a mind-set of a consumer who if you give them an extra $200 they're not going to run out to Target or Wal-Mart to spend it. That has been an assumption we've worked on for many years.

Right now, you have to spend. You have to spend wisely because there are also types of spending like in the green states; you do a lot of R&D. The work goes overseas. The U.S. actually hasn't been that good about doing the types of protectionist economy jobs that you see in other countries and that's what we have to start doing.

LEEB: I would take a little issue with Diane on this one. I think that Americans will spend. This is a 30 or 40-year habit that's well-ingrained and I have a heard about the death of the American consumer for as long as I've been in this business. I don't really think it's true and some recent data, housing, mortgage applications doubled two weeks ago.

ROMANS: And then fell again after that.

LEEB: About seven percent after going up about 110 percent, they fell back 7 percent. Housing -- and that came on the heels of near record housing affordability. I mean, there is the desire to spend and to own homes and to own things in this country but there's a massive amount of fear and that's what you've seen with all of this liquidity locked up.

ROMANS: Let me talk about infrastructure spending again. Because there is a lot of talk about bridges and roads and the like, if you're not going to put the out of work retail employees and that restaurant employees and the hotel employees without some massive retraining out there to build a bridge. You're just not going to --

BRADY: Well --

ROMANS: Well, there's also this concern, you know, I'll bring in Governor Blagojevich story.

BRADY: Yeah, we need to talk about Blagojevich.

ROMANS: To say there is this concern about politics and it's a feeding frenzy in local politics and in state politics frankly for all of this money that could be coming down.

BRADY: Just look at what the mayors came forward with, it was tennis centers, swimming pools, not the sort of thing that you really need for the economic health right now. Yes, these things, but one important initiative, health care, education, if they put equal focus on that, I think you'll see a lot of jobs where we actually need them, jobs that are in the service sector and will be dealing with more white dollar employees. ROMANS: Ken let me ask you, how well has the government done in your view in the past in actually being a good steward of taxpayer money and trying to get intervening in the economy? Have we done it withal in the past?

ROGOFF: If we're talking about the distant past, I mean the results are mixed obviously. One of the reasons we're so successful as an economy usually is that we don't have too big a government and we haven't run by the government. A lot of the rest of the world has been growing from China to Sweden, they've been shrinking their government and here we're blowing it up. That's a concern over the longer term.

Nevertheless I don't quite see what else to do. I think we need to move on both fronts, the tax front and urban spending in part because we don't know what's going to work. It's speculative. We don't see this.

LEEB: Christine, what I heard when I heard president-elect Obama speak, I think he is going to focus more on increasing productivity, putting more technology in the health care sector, which it desperately needs. Put just building up the technology infrastructure, and hopefully that has some productivity after-effects. It will continue.

I think it's going to put less money into bridges for all of the reasons that we're discussing, because he knows that's a recipe for pork. He doesn't want to do that, but if you're trying to hire more tech workers, educate tech workers that's a wonderful thing to do and also we desperately need it if we're going to solve this resource problem. We need massive research into resources.

ROMANS: I think it's interesting, talking about infrastructure and thinking of bridges is very last-century thinking. We could be talking about health care and there is a lot of other things that infrastructure means. Diane, Ken, Stephen, stick around.

Putting people to work sounds great but isn't it just throwing money into a black hole of local politics?

(COMMERCIAL BREAK)

ROMANS: We are back now with Diane Brady, Ken Rogoff, Stephen Leeb, we are talking about what the next president has in store for our economy and your money. Thanks for coming back.

Diane what does he have in store? We know what he has told us. We know that there will be probably big, big plans first up when he comes into office. Can he get it through Congress? Is there a political appetite to get this all going, and do we trust that we can spend the money in the right way to really give the boost the way the economy needs?

BRADY: I think if we think of this almost as a war time economy, let's take Iraq out of the picture but the mentality of this being almost a domestic war I think he will get a lot of this through. At this point people are scared and they are willing to throw money at a lot of different issues.

He said infrastructure but he has also made it very clear that he's hoping to use this to advance his agenda in education and health care and I think that those are going to be very important including the green space, too. Let's not forget that. He wants this to be somewhere, where it will lead us in the next 50 to 100 years to where the U.S. has to be.

ROMANS: Ken he wants to save or create 2.5 million jobs over the last couple of years. Just this last week I counted up tens of thousands of layoff announcements and job losses, those are the ones we know of. Smaller companies don't have to report them in the like, we saw 573,000 people lined up for the very first time for jobless benefits. Is 2.5 million jobs enough?

ROGOFF: Well, I'm afraid unemployment will get worse before it gets better. It's probably going to keep rising for two more years.

ROMANS: Two more years?

ROGOFF: I think two more years. That's normal in this kind of crises really. That would be good if it really abates going into the beyond 2010. It's right to focus on energizing the economy. It's very hard for the government to imagine what the 2.5 million jobs are. This is an economy that creates a million jobs, loses a million jobs every month.

ROMANS: Right.

ROGOFF: So, the government really has to provide a framework in which the private sector can operate. If everybody's out there digging ditches and filling them in with autos or whatever, I mean, it's not something that's sustainable. You have to give people spending power, fix the financial system, and lay out a framework for this to get going. It's really just temporary so it's not there are 2.5 million government jobs. He just hopes things will get better.

ROMANS: Stephen, you like to say there are problems you can fix with money and problems you can't fix with money. And this is a problem you say we can fix with money.

LEEB: I believe so. I believe so, Christine. It's a question of how much and how well-spent the money is. If we spent a ton of this money or allocated a ton of this money to bridges and highways in local areas, it's not going to work but if we're willing to allocate massive amounts to research, let's say for alternative energies, for anything that's productivity enhancing, we will get a tremendous bang for the buck. If we combine that with huge tax cuts, and I think you're going to get that. I think that he's an egalitarian president. He believes there are massive inequalities in this society.

ROMANS: Which brings me to something that he talked about on the campaign trail that I found very interesting. He would talk about his mother and his grandmother and the parody of wages for women and men, and if we're talking about a big infrastructure program, does he risk putting male-dominated industries back to work, construction and manufacturing, and we're seeing places like health care, parts of health care but retail and some service-oriented jobs more predominantly women, is he risking exacerbating the problem?

BRADY: I think he's acutely aware of that. And I think that is why education has been a big part of his platform. Teachers by and large tend to be women so they will benefit if you put more into the schools. Certainly in terms of physical assets you're going to have that benefit men but the reality is that when you benefit men, too, that benefits families.

ROMANS: Right.

BRADY: So I think that he's very conscious of the ripple effect, and I think the extent to which he can invest in the research, get the capital going again that will help everyone.

ROMANS: A quick last thought from both of you, on just a dramatic intervention of the government into our economy, and to, you know, our financial life, and whether this president can get in, as you say, and then get government back out.

ROGOFF: I think the financial sector is the toughest place, because we have this gold plated financial sector, it was the pride and joy of our economy or one of them, and it has imploded, and we need it. It's like our arteries are clogged. There's no credit, and none of the financial institutions can stand on their own now. They need the government behind them, and getting in, marking down assets, forcing firms to reorganize, and then getting it back on its feet, that is the toughest challenge.

BRADY: And I think that; let's not forget in history the government has intervened before it has intervened in war situations, it's intervened with the auto industry before.

ROMANS: Right.

BRADY: That's what government is supposed to do in situations like this. Hopefully they just don't stay there too long.

LEEB: I think it's going to be much more protracted; Christine and I think that we're not going to get out of this without massive government intervention. Not just now but for the next three to five years. After this crises comes another crises unfortunately and that one is going to be led by resources. We've cut back spending on oil, on copper and everything else that this world is going to need if it's going to sustain growth.

ROMANS: All right. We're going to leave it there. Stephen Leeb, Diane Brady, Ken Rogoff. Thanks to all of you for joining us. Have a wonderful weekend.

Do you need a job? We have some for you with decent pay and perks.

(COMMERCIAL BREAK) ROMANS: Jobs in this country are disappearing at a pace not seen in decades. Sony, Dow Chemical, public radio, professional football, all slashed jobs this week. Bank of America will cut 35,000 jobs over the next three years. Looking for work, it might be time to consider a government job.

The U.S. government is the largest employer, employing about 2 percent of this nation's workforce. Dennis Damp wrote the book on getting a government job; literally he is author of "The Book U.S. Government Jobs, where they Are, What Available is and How to get one." Welcome to the program.

DENNIS DAMP, AUTHOR, "THE BOOK OF U.S. GOVERNMENT JOBS:" Thanks for having me, Christine.

ROMANS: We know this is a huge growing, I mean every month when we look at the jobs report you can see that line that says government jobs, it always is showing jobs growth even as most other areas are hemorrhaging jobs here. Is this the place to look? I mean, are you going to get a decent salary and good perks from many of these government jobs?

DAMP: Absolutely. The average salary is around $67,000 to $70,000 a year and one of the biggest factors is half of the federal workforce is now eligible for regular or early retirement and that's over 1 million jobs over the next three to five years, on top of the increased projections that we have currently available, a lot of opportunities, good pay, great benefits.

ROMANS: Like it or not, there are huge government intervention into the economy and into the financial markets. You can hate that trend if you want but if you're looking for a job it's clearly someplace that is growing. Let's take a look at five particular areas that you highlight customs and border patrols. Tell us about hiring there.

DAMP: These agents work for the Department of Homeland Security. They protect our borders through 327 points of entry, 6,000 miles of borders and 2,000 miles of coastline around Florida and Puerto Rico. They require a very extensive entrance exam to get hired, pass a drug screening and medical exam, and they also have to be under age 39 or actually under age 40 to apply and they must either know Spanish now or learn Spanish once they are hired. Currently the Department of Homeland Security is hiring roughly 2,000 agents as we speak, and additional 1,500 down the road. Lots of opportunities if you're willing to look for them.

ROMANS: Information technology management is something we've talked about with you before that you can take your skills in certain industry information technology, for example, if you're doing that in finance or you are doing it someplace where there is a contraction of jobs and try to translate it into a place that's growing.

DAMP: Yes, computer specialist NIT, it's a growing field across the board. You can even look at Obama's plan to bring in 45 million new people into the insurance, into health care, for health care insurance. They want to automate. That's one of the efficiency standards they're trying to do. Back in the '90s, my employer would send me home on my Commodore 64 to do reports that we had no computers at work.

Today, we have just the flipside. We can't do anything today without automation and computers. These individuals maintain our mainframes, work stations for the individuals, and right now, there's 68,000 employed in the federal sector and more to come, as we progress through this, just because of the efficiencies you do gain with automation.

ROMANS: What are the health care jobs available in the United States government?

DAMP: You have a broad spectrum. There's over 208,000 first off, Christine, that work in the health care field, including all sectors so there's 208,000 and it's anywhere from entry level position, the positions that make 175,000 a year, plus it's a very growing field and one of the growth factors is the VA, Veteran's Administration is fielding 31 new clinics as we speak that supplement the 754 they already service, plus 153 hospitals with a $41 billion budget that serves 6 million employees. It's not employees, but 6 million veterans and there are a lot of opportunities in health care across that spectrum.

ROMANS: We've got less than a minute for the last two. Legal assistant and also procurement purchasing and contracting. Run us through quickly those.

DAMP: The legal assistants, they work, they assist attorneys, they do all of that to schedule trials and court appearances, and it's a growing field, 5.5 percent. They're growing exponentially and they'll grow even more with the growth in regulatory requirements that the bailout has propagated over this last several months.

ROMANS: All right, Dennis Damp, who wrote "The Book of U.S. Government Jobs." Thanks Dennis.

DAMP: Thanks for having me.

ROMANS: Everyday more companies cut jobs. Allan Chernoff is here with job hunt information you can't afford to miss. Allan.

ALLAN CHERNOFF, CNN SENIOR CORRESPONDENT: The news is not entirely bad in the economy. A lot of bad out there, but even as major corporations are cutting jobs, in some fields, there are actually plenty of opportunities and hiring is actually rising.

(BEGIN VIDEOTAPE)

CHERNOFF, (voice over): Maria Tessinari changed careers to become a nurse knowing that in her new profession she'd be marketable no matter how bad the economy.

MARIA TESSINARI, NURSE: I know that I would graduate and have a job and all my friends who I graduated in nursing school with all have jobs.

CHERNOFF: Even during the worst recession in decades, health care professions added more than 34,000 positions last month while the economy was losing over half a million jobs and an important reason more Americans are following Maria's example.

MARY MUNDINGER, DEAN, COLUMBIA UNIV. SCHOOL OF NURSING: Columbia has a program specifically designed for career changers and we've seen that program become more competitive every year. This year, it was a huge increase. In November, over November applications they were up 50 percent.

CHERNOFF: To meet demand for nursing education, Columbia is hiring instructors. Many other universities are hiring, in spite of the recession, because in tough economic times, many people go back to school to boost their skills. In fact, some for-profit schools are thriving. The stock of education company Apollo Group has climbed 60 percent in the past six months.

While the Dow Industrial average was plummeting. Beyond education, other fields are still seeing job growth. Computer systems design, management and technology consulting, oil and gas drilling, and logging. Accounting and financial analysis also remain in demand.

DAWN FAY, REGIONAL V.P., ROBERT HALF INTERNATIONAL: It will almost create more opportunity in the analysis, budgeting and forecasting area when times are tougher because people are watching every dollar that much more closely. So there's certainly opportunity that does get created.

(END VIDEOTAPE)

CHERNOFF: Recruiter Dawn Faith says job hunters should not be discouraged because the economy is in recession. The fact is many companies are still hiring. The economy being in a recession just makes skill building and networking all the more important. Also, she points out, just because it's the holiday season; don't assume that companies aren't interviewing applicants. This is actually a very good season to be looking for a job, when others are not.

ROMANS: Allan Chernoff, thanks for all of that Allan.

Emergency loans to save the big three failed in the Senate. You will never guess who's riding to Detroit's rescue.

(COMMERCIAL BREAK)

ALINA CHO, CNN ANCHOR: Hi, everybody. I'm Alina Cho. Now in the news, the Bush administration is looking for new ways to rescue the big three automakers, now that Congress has turned down a $14 billion bailout package, officials say they may use money from the $700 billion bailout that was originally meant to save Wall Street.

Defense Secretary Robert Gates says the U.S. mission in-to-Iraq will remain crucial after president-elect Obama takes office. Gates, who will stay on as defense secretary in the Obama administration, arrived in Baghdad today on a surprise visit.

Illinois Governor Rod Blagojevich ignored reporters shouted questions today as he left his home on Chicago's north side but he told our Drew Griffin that he'll have a lot to say at the appropriate time. Fellow Democrats including president-elect Obama are calling on the governor to resign. Among other things Blagojevich is accused of demanding cash and favors in return for an appointment to Obama's Senate seat.

Saying new ideas are needed to fix the nation's housing problems, president-elect announced Shaun Donovan is his pick for Housing and Urban Development secretary. Donovan comes with hands-on experience as New York City's housing commissioner and he has a national reputation for developing affordable housing

And an Illinois congressman fights to clear his name.

(BEGIN VIDEO CLIP)

JESSE JACKSON, JR.: For my character and I'm also fighting for my life.

(END VIDEO CLIP)

CHO: Coming up in the 3:00 a.m. hour of "NEWSROOM" Don Lemon's one on one exclusive interview with Jesse Jackson Jr.

I'm Alina Cho. Much more news in an hour. Now back to YOUR MONEY.

ROMANS: Welcome back to YOUR MONEY. So let's say Detroit gets those loans it needs. Can the automakers make money and will you buy their cars? We're joined by Peter Valdez-Dapena, auto writer for CNNMONREY.com and Peter Morici professor from the University School of Business.

Peter let me talk to you, Peter Morici let me start with you first, two Peters in one interview. Let me ask you first the president, the Treasury Department, Friday making noise about how it would be irresponsible to let the auto industry collapse, and they would consider using money from that bank bailout. Is it the right thing to do?

PETER MORICI, UNIVERSITY SCHOOL OF BUSINESS: It depends how they use that money. My feeling is these guys have to get debtitor position financing now. The existing creditors have a strong stake in helping them along. The factories are worth a lot more if they are still running in Chapter 11 than if we shudder. If the federal government can pitch in a little bit there that might not be the thing.

The president of the UAW had his chance to deal and he walked away from history. He said he simply would not guarantee parody with the Japanese automakers making cars United States. These companies are insolvent without that. If Gettlefinger is not willing to deliver solvency then federal money is in appropriate.

ROMANS: Peter Morici the Senate was right to bail out on this bailout?

MORICI: They didn't bail out. Gettlefinger bailed out. Toyto workers are paid very well, they have outstanding benefits, but that is not good enough for Ron Gettlefinger in the UAW. Instead they want a gold plated package as if they're the British aristocracy. I don't think a waitress making $30,000 a year in Indiana ought to send her tax dollars to Washington to subsidize that nonsense. I would be very disappointed if Paulson makes the AIG mistake and caves in.

ROMANS: The Bush administration's going to step in and do what the Senate couldn't do?

PETER VALDES-DAPENA, WRITER, CNNMONEY.COM: Look, I really hope they do. I really hope they do step in. We had a plan here; the House of Representatives had a plan. If we're talking about restructuring it had a plan that would essentially be light bankruptcy in terms of enabling these automakers to restructure everyone, including the UAW's pay if need be under that plan.

These companies cannot survive in Chapter 11 bankruptcy. Automakers it's not like an airliner, not paying $300 and getting on a plane for three hours. You're paying $25,000 you're going to be driving for years and people don't want to do that from a bankrupt automaker. I don't think that would work. This plan I think has at least a chance of working in the long run.

And frankly, there was a place in there for UAW concessions if need be. There was no reason I could see at all for the Republicans to go to the UAW now and demand something ahead of that on a specific date, it was almost like a maneuver that was just designed to scapegoat the UAW.

ROMANS: Peter Valdes should the White House tap the T.A.R.P. money, so eloquently called, the bank bailout. Can they do better throwing taxpayer money at this problem?

VALDES-DAPENA: Unfortunately, I agree, I don't think just the idea of throwing money at it is particularly helpful. The plan that was in the Congress had some kind of restructuring along with it.

ROMANS: Right.

VALDES-DAPENA: Ideally we would like to see, I would like to see that kind of an idea as well as the companies emerge better and stronger and more competitive from this, rather than just patching the problem. At this point, we're talking about an important industry that affects millions of jobs in this country and I think at this point, look, we've got to do something. If that means just throwing money at it, let's throw money at it.

ROMANS: Peter Morici I'm going to assume you're going to take issue with just throwing money at this industry at this point.

MORICI: Absolutely, this process that was established from the House of Representatives would not compel the UAW or the creditors to deal, instead this was only the threat of throwing it into bankruptcy anyway but after that, the U.S. government would have bought in. I think the Senate was absolutely correct. My feeling is that they're in Chapter 11; people will become quite aware quickly these factories can't shut down simply because they can sell the cars.

The transplants can't provide enough automobiles to meet the needs of the marketplace. Even in depressed marketplace. So these companies are going to be around in one form or another. We can provide third party warranties. This is doable. With the House of Representatives proposing was a fig leaf to cover up the fact that they were basically going to bail out the automobile companies. They are not solvent. They are not profitable, if they're paying more for labor than the Japanese transplants are. That's the bottom line. If the UAW's not willing to go to that place. We're going to be closing these guys down anyway.

ROMANS: Peter Morici, what happens next at this point? What happens next?

MORICI: One of two things happens. Some sort of deal is made with these senators so they come back or we start looking at Chapter 11 and I think in that context, some federal guarantees will be forthcoming as the existing creditors provide debtor and possession financing.

I think it's going to be some kind of hybrid of public/private, but then instead of this mediator, this car czar, with no power, we'll have a bankruptcy judge, and a bankruptcy judge can compel a lot from both sides. It can make both sides be reasonable or abrogate the contract because it's obligated to think in the best interest of the creditors, which would include the United States government.

ROMANS: All right. Peter Morici, Peter Valdes-Dapena, thank you so much both of you for joining us.

The cost of college is higher than ever before. What you can do to lock in tuition rates right now and why it could actually be a risk.

(COMMERCIAL BREAK)

ROMANS: A new report finds college may soon be out of reach for most Americans, the cost too high. More families are choosing to lock in tuition rates in advance through their 529 plans. How exactly does this work? Is it the smartest choice for your money? Joe Hurley, the founder of Savingsforcollege.com and author of "The Best way to Save for College, a Complete Guide to 529 Plans."

Joe, welcome to the program, you know it is a tough time to talking about saving money for college but we know it's critically important for a college education in terms of what you could make in the future in this jobs market. Critically important to be making these saving decisions right now. What is a 529, how can you lock in the tuition in advance? How does that work?

JOE HURLEY, FOUNDER, SAVINGFORCOLLEGE.COM: Well, Christine, if you live in a state that offers a prepaid tuition program, it's going to allow you to put in dollars today, and then the program itself has the obligation of paid tuition in the future for your child or your grandchild, so it's a program that several states have. Unfortunately, only 13 states offer this program. If you live in one of these states, I think you should definitely look into it, but if you live in a state like I do, here in New York, we don't even have a prepaid tuition program available to us.

ROMANS: Interesting. So how can, you know, how much can I prepay, can I prepay for a year, a semester, an entire degree? Can I say I've got a nest egg right now, I want to lock it in so I don't have that uncertainty in 15, 16, 17 years down the road?

HURLEY: Absolutely. If you have the money you can probably prepay up to five years' worth of tuition at the state public university. Most of the programs have varying levels of tuition payments so you can pay in as little as one semester or in some programs, .01 of 1 percent of tuition at that state university.

ROMANS: This isn't right for everybody. This isn't right, right now if you're struggling to pay your bills if you're going to have some sort of expense the next year or two that you know about. This is for somebody who has the option of paying for college and wants to do that.

HURLEY: That's right. You're really setting your money aside for college, you're not going to have access to that, and if you have children or you have the money to help grandchildren, it is a great option for many families.

ROMANS: Grandchildren, that's a good thing to point out, too. What are the risks here? Lay us, you know, walk us through the risks to this, and you know, the pitfalls, so people don't get caught.

HURLEY: Well some people think the major risk is that your child will not go to the state university, but all these programs allow your benefits to be converted for use at private colleges, as well as out of state universities. You may not get the same deal, though. They're really designed for the family that is sending their child to the in- state public university.

Another risk is that your child decides not to go to college, and so you'll go back to the plan and ask for a refund. In most cases you'll get your money back, perhaps with a little bit of interest, but you would have been better off just putting that money into a bank account.

ROMANS: And Joe you're not just talking about this because you've studied it. This is something you've actually done, isn't it?

HURLEY: Yes, we have. For our oldest child, we actually put a little bit of money into Colorado's prepaid program, several years ago. That program has since closed down to new enrollment because they can't afford the tuition any more than many families can, but because we have the money in there, we're actually taking it out this year for her tuition and it's appreciated by about 50 percent, so it's actually been a very good deal for us. ROMANS: All right. Joe Hurley, founder of Savingsforcollege.com, thanks for that excellent advice.

All right. Recession-proof your job, we will tell you how to look for a new job so your current boss doesn't know about it.

(COMMERCIAL BREAK)

ROMANS: We've asked you to send us your questions and concerns about the job market. The response has been simply overwhelming. Robin Bond, employment attorney and Jennifer Merritt, career editor at the "Wall Street Journal" join us now to give you some advice to those questions.

Robin, I want to start with you. Doug wrote to us and he says, "My wife has been trying to sign up for unemployment for a month but can't get through on the phone lines. How should you sign up and what should you expect?

ROBIN BOND, EMPLOYMENT ATTORNEY: You know, this has been a very big problem in many states. It's sort of like, you know, hello, hello, can you hear me? We have two few phone lines and we don't have enough staff, workers staffed. Your choices are you can appear in person. Your best choice is probably to try and do this application process online.

Everything is moving to online today. And if you can't get that done, I do encourage people to at least send an e-mail to your local unemployment compensation office, alerting them that you're having this problem. You can try and preserve in writing your right to get all eligible weeks of employment compensation.

ROMANS: That's very good advice. Jennifer Merritt, this one is for you. Leggy writes, "I'm 24-years-old, I graduated from the University of District of Columbia in May as radiography. I am having trouble finding a job; some employers say I lack experience. How can you get experience before you get the chance to work? That's the conundrum.

JENNIFER MERRITT, CAREER EDITOR, "WALL STREET JOURNAL:" A lot of times if you haven't had the opportunity to have an internship it can be tough but you might offer to take an internship or take a day job doing something else and offer to do a nighttime or afternoon internship to get a little bit of experience.

The other I thing I think this person should do is look outside of the area they live in. There are jobs available for people in radiography all over the country growing like mad. You really just have to spread your net and consider other places and you might have better luck.

ROMANS: Be willing to move. All right. Robin, Steve wants to know, "How should you go about interviewing for a new job when you're already employed? Most companies want to meet during the work day. I cannot take a lunch break and the doctor's appointments excuse is starting to get old." BOND: That's a really tough question, and I don't know that there's one perfect answer for it, but I will tell you this, you know, obviously you say with great respect to the company that you're talking to that you respect the employer that you're currently working for, and if there's any way that you could talk with them, this prospective new employer first thing in the morning, after 6:00 p.m., during your break from your own personal cell phone, never on your current employer's phone, please and never sending e-mails on your current employer's computer.

If a hiring manager is really interested in you, they will be willing to talk with you after-hours. People appreciate this, and they need to probably be flexible, even sometimes agreeing to talk on weekends, if necessary.

ROMANS: That, I think is a good reflection on you as an employee, from that prospective employer, that is saying wow this is somebody who is really serious when they're at work.

OK, Jennifer Joann says, "I've been out of work since July and I've been looking through newspapers and job sites and have been faxing my resume out. I've gotten a few interviews. Is there any other way to get a job?

MERRITT: You know, job ads and online job boards are only a small part of what you need to be doing. The key to getting a job really is networking. So whatever field you're in, you need to join an association, go to their chapter meetings, try to meet with people in the field and get your name out there.

You also might need to consider that there aren't a lot of jobs in your field where you are right now so think about neighboring towns or even neighboring states as an option. But mostly, you need to really get yourself out there and network, hey, and try to find out who the hiring manager actually, is and instead of sending your resume out into that black hole.

ROMANS: Exactly, be targeted. All right. Robin an anonymous viewer sent this one and this one I find really interesting. I've been out of work since August. It's taken two and a half months to get interviews. This week two potential employers asked me what year I graduated from college. Are they trying to determine my age? What's up with this?

BOND: Well, sure sounds like it, or else they are interviewing managers who just don't understand the potential for age discrimination claim if you're asking an older worker about a question that could relate to the date of birth. Here's what I would do with that. Clearly, you don't want to insult the potential hiring manager when you are interviewing. Say it nicely.

I would be more than happy to provide you with a complete college transcript if I am fortunate enough to receive a job offer. I presume you are asking me this question now because you are trying to ascertain my level of experience years. And then launch into some explanation about I have many years of experience or five years of experience in this area or something that you think is relevant to this particular job.

Before they seal the deal on the offer that they make to you, they do have a right -- employers have a right to request a college transcript to ascertain you really are who you say you are. If you do a background check some outside agencies will have access to your date of birth for background information. The key is employers need to keep age information, date of birth away from hiring managers to avoid age discrimination claims.

ROMANS: And it may not be insidious. They had had been burned before because they hired someone who didn't actually graduate from the college they said they did and they were trying to verify all that information. Or something people who are here and watching and something for them to think about as well.

OK. Robin Bond, employment attorney thank you so much. Jennifer Merritt from the career journal thank you both of you.

Americans are not only recession-proofing their jobs, they are recession-proofing their lives. Why a shift in your spending habits made history this week.

But first, Stephanie Elam brings us this week's "Right on Your Money."

(BEGIN VIDEOTAPE)

STEPHANIE ELAM, CNN BUSINESS CORRESPONDENT (voice over): Getting your finances back on track could be a bumpy ride, but debt consolidation may be one solution to smooth your road to financial stability.

SHEIRESA MCRAE: You might want to consider consolidating your debt, if you have several high-interest credit cards and you're having a lot of problems paying down the bill each month.

ELAM: One benefit is you only have one bill coming to your mailbox each month instead of several bills and you get a lower interest rate. But there is a potential down side.

MCRAE: One pitfall is consolidation, it looks like you have more cash every month and as a result you will be more likely to spend that cash and then get into a psych of over spending and then you will be where you started.

ELAM: The state of economy can also be an issue. Consolidating your debt is a loan.

MCRAE: If you feel that you may be losing your job in the future, you should definitely reconsider consolidating your loans. Especially if you're thinking about taking out a loan that uses your home as collateral. Because if you can't keep up with the payments, you can lose your home.

ELAM: And if your finances are too overwhelming, seek help from a credit counselor. And that's this week's "Right on Your Money." (END VIDEOTAPE)

(COMMERCIAL BREAK)

ROMANS: Welcome back. Our CNN Money team joins us now. Jennifer Westhoven, business news correspondent with "Headline News," Susan Lisovicz, CNN business correspondent and Paul La Monica, editor at large with CNNMONEY.com.

An interesting tidbit this week that knocked my socks off. For the first time in recorded history, about 50-some years, American households actually paid down some debt. They did not grow their debt from quarter to quarter, which is so rare. And this is a reflection to the shock to the system Americans had from this credit crises?

SUSAN LISOVICZ, CNN BUSINESS CORRESPONDENT: Yes. It's great that we've gone from a zero savings rate to actually saving some money, but it's really not reflected perhaps on prudence. It's reflected on the fact that --

ROMANS: You can't borrow more money.

LISOVICZ: You can't borrow money and that is one of the problems facing the economy.

ROMANS: Does it last, Paul?

PAUL LA MONICA, EDITOR AT LARGE, CNNMONEY.COM: I think we might see it last a little longer. From people I talked to, obviously the fact that banks have really tightened their lending standards is part of the problem. But I guess a sense from some people that this is a bit of a wake-up call and that obviously consumers and big businesses realize that you can't just live off of debt indefinitely. So this might be a good thing.

JENNIFER WESTHOVEN, CNN HEADLINE NEWS CORRESPONDENT: I also think that when people lose their homes and go into foreclosure, that's $150,000 of debt that's gone. I think these number can be skewed. I think it would be that they are getting their house in order but it could be people aren't in debt because they loss the loans.

ROMANS: We saw that other kinds of debt did rise, I think credit card debt rose just a little bit and auto loans rose just a little bit there. Jennifer let's talk about maybe hope for homeowners. There were some statistics this week that you found heartening.

WESTHOVEN: They weren't even statistics actually. I'm looking so closely for any numbers or any sign for something that could be something good. So much of the news is tough. I could not help but on "The New York Times.com, one of the stories all week was it may be time to think about buying a home. So there are people out there who are waiting, who are so interested they are reading the story. They are just waiting right now.

You don't want to look back and have missed a golden opportunity. It's hard to know, but just that they were looking is heartening and then there was the comment from James Lockhart, who runs the agency that runs Fannie Mae and Freddie Mac that he thinks interest rates could be pushed below 4 percent for mortgages. Below 4 percent.

ROMANS: Mortgage rates have been falling.

Let's talk about the treasury secretary and the Bush White House. A lot of news late in the week they decided to step in there potentially and use the bank bailout money to help the automakers. You say, look, no more money for treasury secretary without strings attached. Why?

LA MONICA: Yeah, because what's interesting is they are going to need to ask for the remaining $350 billion sometime soon because they already allocated the first half for the most part. I think the principle in the idea of helping the financial system was a good idea but it was completely bungled by Henry Paulson. He asked for one thing at first and spread the fear of Dodd, that we have to buy up these toxic assets and a couple of weeks later said actually we're not going to do that. We're going to invest directly in big banks.

And then a lot of these banks got the money and didn't really lend it back out. You saw other banks buying up banks partly with the money being used. So really, there is a credibility problem and the only way Congress is going to let Paulson get more money is if he clearly gives a clear indication of what he's going to use it for and also help some of the very struggling mortgage holders out there, which is what Sheila Bayer has been championing.

ROMANS: I think he has less than $15 billion -- million. $15 billion used to be a lot of money a long time ago. Now it's $15 billion less to spend.

LA MONICA: And Detroit might need $14 billion.

ROMANS: Thank you very much Jennifer Westhoven, Susan Lisovicz, and Paul LaMonica.

We wanted to use this hour to give you the answers you need about your job and your financial security. Send us an e-mail, and our job experts will answer it here on air. Join us every week for YOUR MONEY Saturday at 1:00 p.m. Eastern and Sundays at 3:00 right here on CNN. Ali Velshi is back with me next week. Have a great weekend.

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