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"The Last Word": Suze Orman

Aired December 13, 2009 - 12:00   ET


KING: I'm John King and this is "State of the Union."


KING (voice over): President Obama outlines a new plan to get Americans back to work.

OBAMA: Because our work is far from done.

KING: But have his prior promises been kept? And can the country afford his ambitious agenda?

I'll ask the president's top economic adviser, Lawrence Summers.

Then, insight from two key senators on the economy, the deficit, and the fragile health care negotiations, Republican John Thune of South Carolina and Democrat Mark Warner of Virginia.

And our "American Dispatch" from Denver, Colorado, an up-close look at the pressures that lead many young doctors to choose a higher- paying specialty over primary care.

ORMAN: Credit cards are no longer a viable option to just get by.

KING: She never holds back. Personal finance expert Suze Orman gets our last word and tells the hard truths about what you and your family should do in these tough, economic times.

This is the "State of the Union" report for Sunday, December 13th.


KING (on camera): We begin this Sunday with a few numbers and with the issue that dominates our national conversation, the economy.

We are 328 days into the Obama presidency, 299 days since the administration's big economic stimulus plan was signed into law. It is often said that consumer spending drives the American economy, and 13 days from Christmas, there are some signs many of you are willing to dig a little deeper this holiday season, but there are plenty of not-so-encouraging numbers as well, record federal deficits, a national unemployment rate of 10 percent.

And while mortgage rates are below 5 percent, many Americans say the banks, even banks that received their taxpayer dollars in bailout funds, are being more than a little Grinch-like when it comes to handing out credit.

The president meets with some of those bankers Monday at the White House, and also wants to dip into some of those Wall Street bailout funds to help create more jobs on Main Street. A perfect moment to touch base with one of the president's top economic advisers on these critical pocketbook issues, the director of the National Economic Council, Lawrence Summers, joins us from Boston. Good morning, Mr. Summers.

SUMMERS: John, good to be with you.

KING: It's good to see you in the greatest city in America, Boston, Massachusetts. Let's begin with the questions so many people are asking. Sunday morning, they get up, they have breakfast with the kids, they have a cup of coffee, maybe pick up the Sunday paper, and they ask themselves for months now, when are the jobs coming back? We are at 10 percent unemployment. When will we see 8 percent, 7 percent, 6 percent?

SUMMERS: Look, John, it will take time. A year ago, the question was would we have a depression? Today everyone agrees that the recession is over. And the questions are around how fast we'll recover.

Experience is that it that these things -- that it takes significant time. First, GDP increases. We have seen that start to happen. Then firms ask the workers who are already with them to work more hours. That's starting to happen. Then, net job creation starts to happen.

We were losing 700,000 jobs a month when President Obama took office. Last month, we lost 11,000. So we are getting there. And most professional forecasters expect job growth by spring, and I think that's a reasonable judgment in an uncertain world.

And then after employment growth, given that when you start to create jobs, more and more people start looking for work because they are encouraged, it takes further time until you reduce unemployment.

But on the key measure, is the economy creating jobs or are jobs still on net being destroyed, most people now think that we are looking to see that by spring. And some forecasters think it will happen a little sooner, some forecasters think it will happen later. But we are a lot closer than where we were a year ago, and the signs that are the first signs that things are turning, the output starting to grow, hours worked starting to increase, we are now seeing progress.

That's not nearly enough, not nearly enough. We have got to do a lot more. There is no more important issue facing the country than job growth, because if we don't create jobs, we have got no prospect at the kind of budget deficits we want. If unemployment stays high, we are not going to have the strength in the world that we want, if unemployment stays high. That's why jobs are the president's critical economic priority going forward. That's why he is working so hard to implement the recovery act. And actually, because it takes time to bring projects online, there are going to be twice as many projects going in the next six months as there were in the last six months. That's why we are working to support the private sector by encouraging credit to small business, by doing as much as we possibly can to promote U.S. exports at a time when we should be very competitive in the global economy.

And that's why the president announced this week a set of principles to guide us going forward, emphasizing the importance of small business, the importance of infrastructure, and the real need for us to start making investments on a much greater scale, and incentives for investment on a much greater scale in energy investment.

There are opportunities for millions of your viewers out there to make investments in their home where they will get a very high rate of return. They will spend $1,000 today and they will save hundreds of dollars each months going forward. And we have got to get the right kinds of partnerships going between the public and the private sector to encourage those kinds of energy efficiency investments.

Just like the cash-for-clunkers program spurred a lot of spending and helped the environment over the summer, we are going to have to do similar kinds of things to support people as they make improvements to their homes to promote energy efficiency.

KING: Let me jump in here -- let me jump in here, because you mentioned partnership. One of the reasons we are in this ditch is because of abuses on Wall Street and big mistakes made by financial institutions. The president will meet with a number of big bankers tomorrow at the White House and he says in a "60 Minutes" interview to air tonight that he is worried many of them still don't get it. What don't they get and what must they do?

SUMMERS: Here is what I think they don't get. It was irresponsible risk taking that brought the economy to the brink of collapse. It was their irresponsible risk taking in many cases that brought the economy to collapse. And frankly, after the Asian financial crisis, after the S&L debacle, after the 1987 stock market crash, after other things that happened, it wasn't the first time.

And they don't get in some cases that they wouldn't be where they are today, and they certainly would not be paying the bonuses they are paying today, if their government hadn't taken extraordinary actions. Extraordinary actions not, frankly, with the motivation of helping them, but with the motivation of helping the economy, but of which they were nonetheless the beneficiary.

And for them to be complaining about serious regulation directed at making sure this never happens again is wrong. For $300 million to be spent on lobbyists trying to gut serious efforts at financial reform is not how this country should be operating. For firms that have benefited from taxpayer support to be complaining about the government burdening them is, frankly, a bit rich. KING: Let me talk to you about a challenge, a critical juncture here in Washington. And I want to play out something for our viewers to see.

Congress is about to pass an increase in the federal debt celling, the amount that government is allowed to borrow and run up into debt.

Here's where you served in the Clinton administration, back in 1993, and you look at it; it goes from $4.37 trillion up to $12.1 trillion, the government now authorized to borrow. And Congress is going to raise that up a bit even more; $1.4 trillion, record budget deficit last year.

And yet, Larry Summers, even as families around the country have to cut their budgets or make concessions, Congress is going to vote today on a spending bill that will give some Cabinet agencies, a dozen Cabinet agencies, sometimes nine, sometimes 10, and some departments, as much as a 12 percent spending increase.

This administration says next year will be the focus and discipline on debt reduction. Why not draw a line now and say now we need to start, and that's too much spending?

SUMMERS: A couple points, John. First, if people study your graph slowly, carefully, they'll see that the debt was actually going down in the late years of the Clinton administration.

Frankly, when a new administration took place in 2001, all the innovations came off; we spent; we did, for example, a whole new prescription drug program, paying for none of it, and at the same time we launched massive tax cuts.

And that's why the 10-year deficit projection that President Obama inherited was $8 trillion. That's what happened. And President Obama recognizes that we've got an obligation to fix it.

Frankly, for the next year or two, priority number one -- certainly this year, priority number one has to be job creation. That's why we're putting people directly to work.

But then the priority has to be getting the country's finances under control. That's going to be very clear in the rigorous budget that the president proposes. That's clear in how the president, with the very strong support of Secretary Geithner, has administered the -- the TARP program.

Just this week we were able to announce that more than $200 billion improvement in the projection on that program. We're starting to collect the funds back with interest and dividends on a substantial scale.

The Bank of America, for example, paid back some $45 billion that's now available for taxpayers.

We're very focused. The president has said that, on health care, we are not going to put into place -- he is not going to sign any legislation that increases the deficit at all. And in fact, the legislation provides a framework that will enable significant budget cuts.

KING: When we come back, we'll talk more about that, the tough choices the president and the Congress will face if you do try to get the deficit down, and also, a bit of a score card on the stimulus plan so far. Much more to talk about with the president's top economic adviser, Lawrence Summers. Stay with us.


KING: We're back with Lawrence Summers, the director of the National Economic Council.

And, Mr. Summers, you were mentioning before the break, the president's willing to sit down with the members of Congress or anyone else to try to work on getting the deficit down.

As you know, one of the leading proposals in Congress is a commission. Kent Conrad, the chairman of the Budget Committee, a Democrat; Judd Gregg, a Republican, the ranking Republican, from the state of New Hampshire -- they say, let's form a commission; the president gets a couple of appointments; most of them come from the Congress; they come up with a plan, and Congress has to vote up or down, yes or no. Tough choices, probably, spending cuts in there; might be tax increases in there, but you have to vote up or down, make the tough choices.

We'll talk about some of the potential choices, but just on the basic premise, would the president say, "Yes, I'll support that plan?"

SUMMERS: President Obama -- the president wants to see the problem solved. He's open to a wide range of approaches. But, of course, it depends on where all the congressional leadership are. And anything that will bring together the House of Representatives and the Senate Democrats...

KING: Let me -- let me jump in. Because a lot of the...


SUMMERS: ... the president will be very open to.

KING: A lot of people that control the money don't want that commission. They think it takes away their power to appropriate, their power to raise or decrease taxes.

And other people in this town -- and again, you were here; you rightly so said you were paying down the debt when you left the Clinton administration; we had a balanced budget. There are other people who say, if we're going to make those tough choices, that's the way to do it, to take, as much as you can, the politics out of it.

Why won't the White House say yes, or say no, and make them find something else? SUMMERS: The president will be happy -- the president wants to see the problem solved. He's prepared to accommodate others on the way -- on the way that will work to do it. What's important is that the problem be solved.

Adopting an approach that some people favor and that other people will block, that won't -- that won't work, if they have the capacity -- if they have the capacity to block it.

So the president is consulting widely with the congressional leadership in both parties, in both -- on both houses of the Congress, looking to craft an approach that -- that works.

KING: Let's quickly take a year-end report card, if you will, on the stimulus plan. Because, as you know, it was very important to the president and it's become controversial politically.

He signed it into law 299 days ago. And let's begin by letting the president himself lay out what he called the test for this program.


OBAMA: My administration has begun implementing the American Recovery and Reinvestment Act, which will create or save 3.5 million jobs, and 90 percent of those will be in the private sector.


KING: And now, Mr. Summers, let's look, using your own numbers. Now, some people dispute these numbers, but these are the administration's own numbers, total jobs created or saved.

The prediction was 3,675,000. So far, says 640,329 jobs created.

As you noted earlier, a lot of the spending is still to come into the pipeline next year. Will you make that 3.6 million? Will you create or save 3 million jobs next year or does the administration need to revise that figure?

SUMMERS: You know well that you're comparing apples and oranges. The 3.5 million jobs figure was a two-year figure for the total impact of the program. The 600-and-some-thousand jobs took no account of the tax cuts and the extra spending that resulted from them, took no account of the fact that, when you put people -- put someone to work, they then spend money and there's a multiplier effect that puts other people to work.

The Congressional Budget Office, which isn't our administration, and certainly has been a thorn in the sign of administrations for a very long time, estimated last week that the program had already created up to 1.6 million jobs.

The number of projects under the program, according to the projections, and it's on schedule, is going to be about twice as great over the next six months as it was over the last six months. So I don't think there's any question that the Recovery Act is serving its intended function. Look, look at the economic debate today. People are talking about how much job creation there will be; they'll be talking about the pace of the recovery from recession.

We're not where we'd like to be as a country, but, gosh, it's different from where it was when the Recovery Act was passed, when the question was whether we'd have another great depression; when the question was whether the financial system would collapse.

We've got a long way to go, but we're starting to see the basic mechanism of recovery.

KING: Larry Summers is the director of the National Economic Council at the White House. We thank you for your time this morning.

SUMMERS: Thank you.

KING: Take care.

And coming up, two key senators weigh in on jobs and the push for health care reform. Stay with us.


KING: You just heard from the White House. Now let's get perspective from the other side, the other end of Pennsylvania Avenue.

Joining us is the Democratic Senator Mark Warner of Virginia and Republican Senator John Thune of South Dakota.

KING: Gentlemen, good morning.

Let's start with the spending bill you are going to have to vote on today. And I will start with the Democrats, since you guys are in charge up there. These Cabinet agencies -- now, we need to fund the government -- but these Cabinet agencies, some of them are getting 9 percent, 10 percent, in one or two cases some of the agencies are getting 12 percent spending increases. Everybody out there watching this morning, I doubt we can find people saying yes, the family budget is going to grow by 9 or 10 percent next year. Why?

WARNER: Some of these areas, like law enforcement, I think they need that kind of support. But on a longer term, I actually believe this process has totally gotten out of control.

I am a new senator. I came from being a governor, where we actually had to balance our books each year. And I frankly think that the only way we are going to get spending long term under control is to get this kind of bipartisan commission, Democrats and Republicans come together, go ahead and put revenues and spending both out there, and then come back and vote it up, straight up and down, similar to the Brock (ph) commission. I don't see how this process where everybody kind of lards on is going to actually ever come to an end unless we finally have the discipline to do a straight up or down vote across the board on revenues and spending cuts. KING: So a former governor and a Democrat endorses the commission approach. I tried to get the president's economic adviser, he says he wants to do something about it, but he would not be specific. He would not say yes or no to this idea of a commission. Would the Republicans support that even if in the end you have to vote up or down on a package that could conceivably -- if we go back to the Bush model, the Camp David meeting, George H.W. Bush, could have some tax increases in it?

THUNE: Most would support the commission process. It doesn't mean the Republicans would vote for what the commission recommends. But I do think we have got to have a mechanism whereby we start getting control of spending.

In this case, however, I think the problem is, John, it's like closing the barn door after the horse is out. We have already borrowed $1 trillion to pay for a stimulus bill. We've got a $2.5 trillion expansion of health care that's pending before the Senate right now, and as you mention, these appropriations bills that are coming in, year over year at 12 percent. The consumer price index this last year is a negative 0.2 percent. That's what normally these things are pegged to.

And so you are increasing spending at the federal level by 12 percent year over year, at a time when most Americans, as you mentioned, are having to tighten their belts. That is why we have been trying to stop this bill this weekend from being voted upon and send it back to the committee and come back with a reasonable proposal.

I don't disagree that we've got to fund government. Mark and I would agree with that. I think what I disagree with is these year- over-year 12 percent increases after having already passed a trillion- dollar stimulus bill, much of which is going to be distributed to the same agencies that will get the funding that will come through this appropriations bill.

KING: And so, again, you say you think some of it's a mistake and you've got to get serious and the sooner the better. Whose fault is it? Whose fault is it?

WARNER: Neither side has clean hands. I mean, I do think we have to recall what -- actually, your previous guest said, Larry Summers, eight years ago, this country had a surplus. We saw over the last eight years, a trillion dollars spent on the wars, off balance sheet, not...

KING: Let me jump in for one second.


KING: Let me jump in for one second. Let's assume...

WARNER: ... off the balance sheet. And I think at some point, we have just got to say time-out here. In short term, we are going to need to keep spending, because we have got to make sure that we get this economy headed back in the right direction. But we've got to have a plan in place which both sides can agree on, Democrats and Republicans, both are going to have to make some hard choices. I did that as a governor. Every governor around the country has to do that year in and year out, and I think we need that same discipline here. And the only way I think we'll get it done is if we say bipartisan, come together, vote it straight up or down, take our lumps, both spending and revenues.

KING: The former governor says that. But here is what Max Baucus, who is the chairman of the Finance Committee, which has a pretty big say in government spending, in federal spending, including the health care bill, which you're looking at right now. The idea of this commission where tough choices, a bunch of members of Congress, a couple people the administration appoints, you get together, you put it together, you have to vote up or down. That's tough. He says this, "This commission and its new fast-track process are truly dangerous. If we were to cede all of our responsibilities to this commission, we were to tie our hands so we could not amend its recommendations, then we would risk setting in motion some truly terrible policy." Why is it that the chairman of your big important committee there, the speaker of the House on the other side, opposes this idea? If this needs to be done -- and forgive me, I am going to skip Senator Thune for a second, you have a Democratic president, you have an 82- seat Democratic majority in the House, and you have 60 Democratic votes or at least 58, not counting the independents, in the United States Senate. I will concede your point for now that let's say the Republican administration for eight years dug most of the ditch. You are in charge.

WARNER: I think what we're seeing is both sides don't have clean hands in this effort. And I think what we're going to need to do, the only way we will get the hard choices made both on the spending side in terms of cuts and potentially on the revenue side is if it's bipartisan.

What I see -- I am a new guy in the Senate. But it seems like everything kind of divides at the door in terms of Democrat/Republican. If there is ever a time to kind of chuck your D hat and R hat, it ought to be now. And on this kind of effort of getting our deficit under control, I think this would be the time for that kind of bipartisan approach.

And frankly, I do think there are some who say don't want to change the system, but this is a moment of crisis. This is a moment -- I think the American people realize it. I think the markets, the international markets are looking at whether we will be willing to take the steps to get this deficit under control over the long haul. It's not going to happen -- you know, we didn't dig this ditch in a year, we're not going to dig out of it in a year. It's going to take some time, but we have got to start down a path that will actually get us to a straight up or down vote.

KING: And do you believe we could start down a path to real deficit reduction without some tax increases? Again, I want to go back to the George H.W. Bush model. Many believe he lost his job as president of the United States because conservatives got mad at him because he broke his "read my lips, no new taxes" promise. But he did put the government on a path that allowed President Clinton, the Democrat, to balance the budget. Can you do it? Can you have real deficit reduction without at least some temporary tax increases?

THUNE: I think you have to start with spending. I mean, think about this, John. Here we are. We are going to be voting today in the United States Senate on an appropriation bill that increases spending 12 percent over last year when the consumer price index was a negative 0.2 percent. You've got to start there.

And what I would say is -- and Mark is right, I mean, Republicans share some of the blame. When we were in charge, we did not control spending well enough either, but we look like pikers compared to what's going on now. I mean, you have a Democrat president, as you said Democrat majority in the House, Democrat majority in the Senate. All of them have their foot on the pedal. I mean, this thing is -- they are driving this thing over the cliff, and somebody has got to put the brakes on. And what we are trying to say is, let's put the brakes on the spending side. Obviously, there is revenue in spending. These components, they interact, but until you start dealing with the spending issue here in Washington, D.C., we are never going to get our fiscal situation under control, and we are never going to be able, I think, to see the kind of economic prosperity that we have seen in the past. We can't continue to borrow and spend at this rate.

KING: I am going to assume that the Democrats have the votes to pass this today, and this bill will pass, the Republicans will complain, and they will move back to the health care debate. And one of the key questions there is health care costs are going up like this, and can you bend it? Can you start to bend that cost curve? As you both know, there was a report this week from an Obama administration, the actuary for the Medicare and the Medicaid program. He raises some questions about this, as to whether the Senate plan or any of the plans as it now stands truly bends that cost curve. Do you believe it does, or does more need to be done?

WARNER: I think more needs to be done. And frankly, earlier this week, a group of freshman senators put together a whole series of amendments that did not get a lot of attention in terms of the headlines, but were all about cost containment, all about more price disparity, all about trying to take programs that work in the private sector and bring them into the health care system in terms of what the government spends, trying to lower administrative fees. And we have got broad base support from it. We've got support from the business community, the Business Roundtable, National Association of Manufacturers, consumer groups. Even some of the hospital groups came forward and said we need more around cost containment.

Because what I have not heard from my Republican colleagues who say let's start over again, which I may be new to Washington, but that means let's just punt the problem for another 10 years -- if we do nothing, the biggest single driver of federal deficit is health care spending. Medicare is going to go bankrupt in eight years if we don't do anything. Average Virginia family, average South Dakota family in a decade will pay 40 percent of their income on health insurance premiums. And I'm a -- I spent 20 years in the business world. If America can't drive down our health care costs, the biggest single I think restraint on American business, no matter how productive our workers are, are our health care costs. We pay twice as much per capita as any other industrial country in the world.

So we have got to make cost containment -- and that has been my statement from the beginning of this debate -- cost containment has to be the driver.

On that actuary report, it did also include the fact that it does expend Medicare's life for nine years, and the actual referee that I think both sides perhaps have problems with at times but has been called the referee for this whole health care debate, the CBO, has said this plan -- and it's got to get rescored now as it's kind of -- as that final package compromise comes together -- this plan will actually lower the deficit $130 billion in the first 10 years, over $500 billion in the second 10. And the CBO has said that close to 90 percent of Americans who get health insurance through private sector will actually see their premiums either decrease or stay the same. Is it perfect? No. But we have got to start moving this one-sixth of our economy spend, which is right now a crazy basis of fee for service, into a more rational approach, and I think the health care bill is headed in that direction.

KING: If this freshman group has some success, is that enough progress for Republicans to say we'll come onboard and try to work with you some more, or is this to the point where the Republican message is that unless you're willing to start over, Mr. President, we're going to try and do everything we can to block this?

THUNE: Well, we hope there are some courageous Democrats -- and maybe Mark Warner will be one of them -- who will step forward and help defeat this really bad idea.

Republicans are not for doing nothing. We have a number of solutions that according to the CBO actually bend the cost curve down. But the ironic thing about this whole debate is, doing nothing would be better than doing what they are proposing to do. Because as Mark said, the whole objective ought to be to bend the cost curve down and to lower costs.

THUNE: You now have the Congressional Budget Office saying, this health care proposal the Senate's considering will increase costs, bend the cost curve up. You now have the CMS actuary saying the very same thing. And you've got the CMS actuary also saying that about 20 percent of your hospitals are going to close, 17 million people are going to lose their employer-based coverage, and that the Medicare cuts that are proposed in the bill are unsustainable over time.

I mean, this was a devastating week in terms of this proposal that's currently before the Congress, and it needs to be defeated. And we do need to start over, and we do need to focus on what Mark just said, and that is cost containment. Unfortunately, this bill does not do that.

KING: Your Democratic colleague from Virginia, Jim Webb, voted with the Republicans on the question of this Medicare savings or cuts -- people have used a different word depending on your perspective on the bill. Again, is that a place where your leadership needs to go back to the drawing board?

WARNER: First of all, I welcome John to help us work on this cost containment package. We've already got a couple of Republican co-sponsors. Again, broadest base of support, business, consumers, even some of the providers makes sense.

The remarkable thing is, on the Medicare savings -- and I think we have to find these Medicare savings. And in effect, what some of my friends on the other side are saying is we can't touch Medicare, we can't touch the rate of increase. Well, if we can't do that, we are simply rearranging the deck chairs on a financial Titanic, in terms of health care costs, going to send our country down, send our country down.

I believe -- and a lot of the savings that have been proposed have actually been proposed by the health care providers themselves that have said that if we actually start to change the way we pay for health care -- I mean, think of the system we have got right now, John.

We basically pay for volume. Hospitals who have high readmission rates get paid more than hospitals who do a better job of keeping you out of the hospital. We have got to make sure that we no longer have this fee for service basis. We have got to make sure that we actually pay providers for the health care outcomes, not simply the volume of tests that you get, the number of drugs you receive, the number of nights you stay in the hospital. And this effort -- this bill, perfect? No. And we are going to have to come back and fix it some more in terms of changing the whole financial incentives.

But this notion -- I may, again, as I said earlier, I may be new to Washington, but I have heard that, you know, let's start over is simply code for let's punt for another 10 years on a problem. That if we punt for another 10 years, you know, it will be a financial disaster.

KING: Let me call a time-out and give the Republican senator the last word here. Address any of that, if you will.

But I also want to ask you, the president is meeting tomorrow with these bankers at the White House. I was in your state earlier this year, and ranchers, small businesses in rural America say, wait a minute, those are our tax dollars that went to bail those guys out, and I can't get a loan when I go to my bank up the street.

What does the president need to do to fix that in South Dakota and elsewhere, small-town America where small business and farmers are having trouble?

THUNE: Well, I think the main thing the president can do right now and the Democrat leadership in the Congress can do is do no harm. I think the reason that banks aren't lending and that small businesses are not investing is they are -- they see this policy uncertainty over Washington. They see more borrowing, more taxing, more debt, more spending, and in the health care bill, they see their premiums going up.

And I think the banks around the country, small banks and large banks for that matter, are being very cautious.

KING: All right, Senator John Thune of South Dakota, Mark Warner of Virginia. I like when the Senate's in town -- in business on Sunday. You guys can come in again another time, and we'll invite you back as these debates go on.

Up next, a quick check of today's top headlines. Then, there have been some -- some promising signs that the economy is beginning to recover. But what does that mean for you and your personal finances? Suze Orman is standing by and she gets the last word.


KING: I'm John King and this is "State of the Union." Here are stories breaking this Sunday.

An Iraqi government official says 13 suspected insurgents linked to Al Qaida in Iraq are in custody. They're accused of planning last week's deadly bombings in Baghdad. A string of suicide car bombings killed 127 people and wounded nearly 450 others.

The British prime minister, Gordon Brown, is renewing his country's commitment to defeat the Taliban in Afghanistan. He's also trying to smooth some ruffled diplomatic feathers with the Afghan president, Hamid Karzai. Brown has been critical of the government corruption in the war-torn country. Today in Kandahar, Brown promised to send more helicopters, equipment and more British troops.

A shift in political landscape in Texas. Voters elected the city of Houston's first openly gay mayor in a runoff lease. City controller Annise Parker, a lesbian, won last night despite the anti- gay tactics of her opponent's supporters. Parker describes herself as fiscally conservative and favors reductions in government spending.

Those are your top stories here on "State of the Union."

Up next, what can you do to keep your personal finances in check during the holiday season and into 2010? Personal finance expert Suze Orman is right here. You see her right there. She gets the last word, next.


KING: Fourteen newsmakers, analysts and reporters were out on the Sunday morning talk shows, but only one gets the last word. And that honor today goes to personal finance expert Suze Orman, host of CNBC's "The Suze Orman Show."

Thank you for joining us, Suze.

People like you and your show because you give the straight talk. You try to rip away all the fancy, big economic terms and talk to people like they understand it around the kitchen table.

I want your perspective on what some might say is a mixed message today from the administration. Two top administration officials out, both asked the same question, "Is the recession over?"

Let's listen.


ROMER: You're not recovered until all those people that want to work are back to work.

GREGORY: So, in your mind, this recession is not over?

ROMER: Of course not.



SUMMERS: Today everyone agrees that the recession is over. And the questions are around how fast we'll recover.


KING: Now, to be fair, Larry Summers is talking, sort of, technically, the technical definition of recession. Christina Romer was giving the perspective of one of the millions of Americans who don't have a job. But that adds to the confusion, does it not?

ORMAN: It adds to the confusion, but here is the true problem. For some people, obviously, it's going to feel like the recession is over. Maybe they've gotten a job again; maybe they're doing better; maybe they have money invested in the stock market and they saw it increase in value.

But for the majority of people out there, still today, John, they're going to feel like the recession is still in full bloom. Why? They can't find a job; they can't find anybody to help them get out of the problem with the fact that they're underwater in their home; they can't get a loan modification, even though they're supposed to be able to get a loan modification; none of the banks are talking to them; everybody is confused in their message.

And today is a perfect example of one side says this; another side says this, and there's confusion out there. So the bottom line for the everyday person is, they are still confused. They don't know what to do. The credit card companies are increasing their interest rates. The banks aren't loaning to them. They still don't know, and that is the problem today.

KING: Well, tomorrow, the president of the United States is sitting down with some of those very bankers you just criticized there. If Suze Orman were at the table and the president said, "What would you say, Suze," -- go?

ORMAN: I would say, bankers, what in the world is the matter with you? You took taxpayers' dollars in order to survive. You are giving out bonuses now; you are acting like nothing is wrong. Some of your stocks have increased in value from their low. However, you are not serving the people that you should be serving.

In my opinion, bankers, you are serving -- not all bankers, but many of them -- you are serving your own bottom lines, and shame on you. And if you don't get your act together; if you don't start helping those that need loan modifications; if you don't start helping those that need loans in order to do, what, have a small business; if you don't help those that really need you, then we're going to have to do something about it. I don't know if it's a windfall profit tax. I don't know what it is, John.

But these banks -- and it's not all the president's fault. You can pass every law that you want. You can try to do anything in the world; give these institutions money. If they don't help their customers, what are you going to do about it?

So I have to tell you, I think a big part of this problem falls right back to the banks, especially those with credit cards.

KING: Well, let's take a look at some of the numbers because the numbers have given us, sort of, an uneven sense of what's happening in the economy.

If you look at just November spending, retail sales were up -- 1.3 percent is modest, but they're up. Motor vehicle sales up, again -- 1.6 percent is modest, but it is up. Those retail sales are, you know, surpassing what the analysts thought.

When you look at numbers like that, people are clearly spending a little more again. What does it tell you about the big picture? ORMAN: The big picture is some people are feeling better. The big picture is they have hope. Now, why do I think that they feel hopeful?

They feel hopeful because they have seen the stock market actually increase almost 60 percent from its March lows. They have seen or they have heard that real estate has essentially bottomed; it's over, you know. We're not going to see any more foreclosures. They've seen foreclosures actually decrease rather than increase. So all of those numbers serve to help people where they feel more hopeful.

However, should they feel more hopeful? I don't think so. It's nice to feel better, but until you see the jobs coming back; until you see foreclosures truly going away -- sure, we've seen 2 million foreclosures. There could be another 13 million. There are many more out there. Until you see things happening for the everyday person, I wouldn't be feeling so great. I wouldn't be spending money I don't have. KING: But let's follow up on that because economics is very technical. Some of it is about mathematics, but some of it is also about psychology.


KING: And I want to bring up for our viewers here, so they can watch this play out, this is a look at consumer sentiment, consumer confidence, essentially.

We go all the way back to January of 2000 and you see the highs and the lows, as it goes. And now -- it was this high in 2004, 91.7 percent. You see it way up, back in January 2000. November, 67 percent, down here.

In terms of the psychology of the American consumer right now -- especially in the holiday season, people want to feel happy. They want to go out and buy a gift for a family member or a friend. Put that into context for us.

ORMAN: Well, they're feeling better. Want to know why I think they're feeling better? It's because it's not a secret anymore. If you have credit card debt; if you're underwater in your home, you're not alone. Now, the word is out. The word is out, everybody has credit card debt; everybody is underwater; everybody is down in their 401(k)s.

So when you feel like you're a part of the masses and you're not in it just by yourself, you actually, kind of, feel better.

So I think there's hope out there, again stemming back to the increase in the stock market. They've seen their 401(k)s, in many cases, actually come back to where they were when they happened to go down dramatically.

So when you feel better, you spend more. So that is how it's always been and it's probably how it's always going to be.

KING: But is there a disconnect?

I travel a lot. I've been in 47 states in the past 47 or so weeks. And you get a lot of sense that, at least in the language, everyday Americans who are struggling don't think their government speaks their language. Is what's happening here in Washington and on Wall Street -- can you connect the dots back to the needs and the concerns of the average Joe?

ORMAN: Yes, actually, I wish we could. But I still don't think the administration, as well as the banks, are speaking the language that the consumer needs to hear.

You know, the administration passed the credit act, the card act, so that, in February of next year, the credit card companies could no longer do a number on the consumer.

What happened? The credit card companies actually went to work, where they increased interest rates -- not all credit card companies, but many of them -- to 29.99 percent. They increased the minimum payment due. They increased fees. They did everything to actually hurt the credit card consumer rather than help them, to get it all in before the legislation passed.

So sometimes Washington takes moves to protect the consumer and, in the long run, it actually hurt them. The credit cards is a prime example of that.

KING: Well, then help me, in closing here -- we're a little bit early, but help somebody out there who is debating how much to spend this holiday season and how much, maybe, to put on their credit cards. Help them with a New Year's resolution.

What do they need to keep in mind about next year, as they finish the final days of this year?

ORMAN: We're actually not too early because we're actually with the right time. It's right here, right now, this day, when we're just a little bit from the holiday season, especially Christmas kicking in. Many people have said, I'm not going to spend; I have credit card debt.

And now they have given in to their guilt, so now they are rushing into the stores. They are buying anything they can see. They're spending money they don't have and, so, therefore, here would be my advice to everybody. If you've made it this far and you haven't spent the money because you knew you didn't have it to spend, don't give in to your guilt.

ORMAN: If you happen to go into a store, can you just go in knowing exactly how much you're going to spend with a list. Write down what you're going to buy because the consumers, oh they are real suckers for all the retail people being able to set things up say here, buy this and buy this. And they go, OK, OK, I need that when, in fact, they don't.

So consumers, if you don't have an eight-month emergency fund, if you still have credit card debt, if you aren't contributing to your retirement plans to the max, you do not have money right now to spend on gifts that most people one year from now will not even remember what you gave them. Think about it yourself. Do you remember what you were given last year for the holiday season? Oh, I didn't think so.

But yet, if you put it on your credit card, oh you will be paying for it especially if you are only paying the minimum for the next 5, 10, 15 years. Don't do it, consumer.

KING: Excellent advice from Suze Orman. We appreciate you joining us today for "The Last Word" and we wish you a happy holiday season if we don't get to talk to you before then.

ORMAN: Thanks, John.

KING: Suze, take care. Up next, we head to Denver, Colorado, where a medical school puts a heavy emphasis on primary care but many young doctors see more joy or more financial benefit in pursuing a medical specialty.


KING: Here in Washington, the health care debate is often dominated by questions of cost, issues like pre-existing conditions, maybe abortion coverage. But in our travels, we often encounter a different question. Why can't I find a primary care doctor? We want to take a closer look so we went out to Colorado. And look at this, there's 40,000 shortage of family doctors within the next 10 years of the projections. One reason the average medical student has about $140,000 in debt when they leave school so many are choosing specialties. Except we notice, the University of Colorado Denver, 44 percent choose primary care. That is twice the national average of 20 percent. Most medical students are choosing a specialty.

So in our "American Dispatch" this week from Denver, we wanted to look at the closer look at the choice between a specialty that probably pays more and a choice to choose general practice that, to some, provides a greater reward.



KING: Dr. Taghrid Altoos is a first-year resident at an uncertain time.

ALTOOS: I still hear some crackles in your lungs.

KING: Learning her craft while Washington debates major changes to America's health care system.

ALTOOS: I know it will probably affect these specialists more so than the primary care physicians, so it will probably affect me as a radiation oncologist more so than a lot of the primary care physicians.

KING: Radiation oncology will put Altoos in the fight against cancer, not what she envisioned when she came to the University of Colorado Denver.

ALTOOS: Initially when I started medical school, I wanted to go into pediatrics. So I did think about it. I did think about primary care. I know there's a shortage. Primary care physicians are needed, but I think it's also important to know what would be the best fit for you.

DR. JOHN BELANGER, PRIMARY CARE PHYSICIAN: So, Larry, you say your back has been hurting you...

KING: Dr. John Belanger, on the other hand, knew early on he wanted to be a general practitioner and to hang his slate in a rural community where doctors are hard to come by. BELANGER: I enjoy a wide variety of things. So the full breadth of medical practice.

KING: Belanger opened his clinic nine years ago. Before that, it had been 40 years since tiny Paint Lick, Kentucky had a doctor. Many of the patients are poor and lack insurance, but they are welcome.

BELANGER: My salary is a lot less than the average family practitioner. Our average cost is $20 for a visit. And we never turn anyone away because they can't pay.

KING: This is a sign of the times. No new patients, because one doctor can't meet the demand.

BELANGER: We're overwhelmed. We hate that, but at some point, you have to go home.

Well, would you say it's getting better?

KING: Belanger's priority in health care reform is incentives to make entering family practice more attractive and more affordable.

BELANGER: People come out of medical school with huge debts. And so that changes how they approach the rest of their life.

DR. RICHARD KRUGMAN, UNIVERSITY OF COLORADO DENVER: There's another guy in the class of 28...

KING: Dr. Richard Krugman at the University of Colorado Denver agrees that more money is one appeal of choosing a specialty over primary care.

KRUGMAN: If you're leaving medical school, as our students do, with over $150,000 in debt, that is going to impact a career choice.

KING: But Krugman also sees other pressures.

KRUGMAN: Most faculty at schools of medicine and most faculty anywhere are probably looking to make their students into graven images of themselves. That's how you get rewarded. If 40 percent of the class goes into the specialty and you were their teacher, that's pretty rewarding.

UNIDENTIFIED MALE: It's more when I breathe in.

UNIDENTIFIED MALE: When you breathe in?

KING: Yet University of Colorado Denver's med school graduates primary care doctors at twice the national average.

KRUGMAN: They have primary care experience for three years a half day a week from the first month of medical school until the end of the third year. Most other schools stop that at the end of the second. We keep it going.

ALTOOS: It's getting worse. His liver is being shot.

KING: Dr. Altoos gets help with tuition from her father and says passion, not money is at the root of her decision to pursue a specialty. But she acknowledges some friends aren't so lucky.

ALTOOS: A lot of medical students do factor in the financial compensation of their specialties.

KING: She knows Congress is debating major insurance changes, and that some could significantly impact how doctors are paid. But Dr. Altoos says she isn't following the debate all that closely, but not because she isn't interested.

ALTOOS: I did during medical school, not so much as a resident. We don't really talk too much about it.

KING: Too busy?

ALTOOS: Too busy, I think so. They keep us talking about our patients too much.


KING: As you know, one of our goals is to get out of Washington as often as we can. We made it our pledge to travel to all 50 states on STATE OF THE UNION in our first year. So far, now that we have Colorado in the bank, 47 including Colorado, New Jersey and many, many more. That leaves just three, Hawaii, Utah and Wyoming. Check out where you can see what we've learned. And we learned a lot when we visited your community.

We'll be here again next Sunday and every Sunday at 9:00 a.m. Eastern for the first and last word in Sunday talk. Until then, I'm John King in Washington. Please take care. "Fareed Zakaria: GPS" starts right now.