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Unemployment May Be Linked to Extension of Unemployment Benefits

Aired March 11, 2010 - 14:00   ET



ALI VELSHI, CNN ANCHOR: All right, it's a new hour, a new rundown. Here is is what I have got on it; are you unemployed? Well, you might just be lazy, and those jobless benefits are what's keeping you from getting a job. Wait a minute, before you yell at your TV, I'm not the one saying that. That is the words from a growing number of conservatives and one professor, who says folks are staying home instead of working because they get free money from the government. I'm going to ask that professor some questions.

Plus, it was a terrifying night and a grueling day for people in Arkansas. First they heard roaring, then their homes were ripped apart. We will show you the aftermath of nature's fury.

Her name Steven. Now it is Susan. After decades of waking up a man but wanting to be a woman, Steven Stanton finally went through with it. We will show you some of his and her story this hour.

All right, I want to talk to you about unemployment. This is one of the major issues we have been talking about for a couple of years. But let me bring you up to speed with what is going on in this country with respect to unemployment. The unemployment rate is 9.7 percent. That translates to about 15.2 Million people unemployed; 10.26 million people are receiving unemployment benefits. These are state and federal unemployment benefits.

Now, an increasing number of people, including on this show, have made the point that they feel that this extending of unemployment benefits is what is causing at least some people not to go out to get a job. The implication is that people like the tiny bit of money they get on unemployment benefits; and to get it without working means that they are not out there trying to get a job.

A professor of economics from the University of Chicago, which is a very well respected economics department, gentleman named Robert Shimer, has been quoted as saying he reckons that "the current level of benefits probably accounts for one to 1.5 percentage points of the 9.7 percent national unemployment rate."

So substantially more than 10 percent of those people receiving unemployment benefits, far more than a million people in this country, according to Professor Shimer, may not be getting a job because they've got unemployment benefits. Let me show you what that translates into. The numbers are right here. It's 1.5 to 2.3 million people, depending upon how you do the math. He is saying those people stayed unemployed longer because they received benefits. The average time that somebody stays unemployed is around six months right now.

Let me bring Professor Shimer in. He is joining me now from Chicago. Professor, thank you for joining us.


VELSHI: You are the first person I have seen who is actually putting some numbers to this. Tell me how you came about this estimate that 1.5 to 2.3 million people may not be working or may not have gone to work.

SHIMER: Sure. I just want to correct within thing. I don't think that I ever said that people aren't getting jobs because they are lazy. But there is a lot of academic research which has looked over --

VELSHI: Well, hold on. Why would they not be getting jobs because of benefits if they are not lazy? What other reason would benefits stop them from getting a job?

SHIMER: Well, the question is the trade-offs that the individuals have between accepting a worse job today, or holding out the possibility of getting a better job in the future. For a lot of people -- first of all, this is unquestionably the most difficult labor market that anyone has confronted since World War II. For a lot of people, the job they had before is almost certainly not coming back. It is sectors of the economy that have gone into decline, in part because of the recession, in part it's an acceleration of trends coming from technological change, trends that are coming from international.

For a lot of people, those jobs aren't coming back. Or at least there's not that much hope of them coming back. But by staying unemployed, people are holding on to the hope that they can get those jobs back.

VELSHI: You are saying that something around -- somewhere around 1.5 to 2.3 million people might have jobs available to them, but they are not the jobs that they would otherwise want to have; so they are staying on the benefits longer, in the hopes that the jobs they want to have will come back? Am I representing that properly?

SHIMER: Yes. I think that the way to think about that number is the question of a counter-factual; how much of -- how much would the unemployment rate have increased if we wouldn't have extended the benefits. That is all that number is saying.

VELSHI: OK. So now let's look at solutions here. Let's talk about what the underlying problem is -- there are some people -- and I don't mean to group you into those -- there are some people that make a remarkable nonsensical argument that does implies that -- lazy is my word -- but that people are choosing to take the minuscule benefits that are offered on unemployment, and not having health care -- because most people can't afford to buy Cobra on their unemployment benefits -- instead of working.

I am not lumping you into that crowd. So I want to be clear on that. There is an argument that I want get your take on, that we are structurally creating an environment that provides less incentive to go out there and take work that is not suitable or you don't think is fitting for you to take. What do you think of that argument?

SHIMER: I think there is a serious concern. The longer people stay unemployed, it is also true, the harder it is for them to get back into jobs. And the longer you're putting off the day to reckoning, when people have to accept that they are not going to get the job back like what they were previous earning.

And I hope we can get back at some point to the talk about the numbers and where these types of numbers come from. Because there is a lot of academic research on it. You look at, for example, individuals -- one very powerful study has looked at individuals in Germany; 42-year-olds are eligible for 18 months of unemployment benefits, and 41-year-olds only are able to collect benefits for 12 months. So people have looked at how much longer do people stay unemployed as they approach and pass their 42nd birthday.

You see for 41 year olds, throughout that year, they tend to stay unemployed for 6.5 months. And then there's a jump up to about eight months upon hitting their 42nd birthday. That is the type of evidence that people responded to.

VELSHI: OK, that's a good point. Hold on. Stay right there, because I'm going to take a quick break, and then we can come back and talk a little about the research that you have seen. People can watch this and see how it relates to us. Stay with us and we will continue this discussion in just a second.

Robert Shimer has been studying the effect of unemployment benefits on people and their behavior. And he will be with us to continue this discussion right after the break.


VELSHI: Hey, complicated, complicated question that is at the root of our recovery as a nation; it is about jobs. The average person on unemployment is on it for about six months. You can get up to 99 weeks of unemployment benefits, with the certain extensions that we have passed these days. But the average person is on for about six months.

The question here is are long-term jobless benefits actually leading people to stay unemployed longer? I have somebody here who has actually crunched a few numbers for us. Robert Shimer is a professor of economics at the University of Chicago, and inadvertently has gotten himself piled in with a bunch of unsavories who say -- who like to make the argument that people are choosing not to get jobs. And Robert, you have heard it said. This is the US Chamber -- not the US Chamber of Commerce. I'm sorry, the Club for Growth has said it on this show that it is causing people -- that it's a disincentive for people to go back to work because of unemployment benefits, which I think is a little bit insulting to the millions of people on unemployment. Your argument is it a little bit more nuanced than that.

SHIMER: Well, there is strong words involved in things like disincentive and lazy and so on. I don't know that we have evidence of why these facts are facts. But there are, as I said before, a lot of studies that have looked at actually what happens when you give workers longer unemployment benefits. They also look at what happens to workers when they reach the end of their unemployment benefits. A lot of people do find a job in the last week or the week after the last week that -- when their benefits lapse.

Now whether that says anything about laziness or not, it does say, as a positive statement, that if we didn't have extended unemployment benefits, we would expect to see fewer unemployed workers.

VELSHI: OK. So let's actually talk about what the alternative is to extending jobless benefits. I just want to show you -- Christina, let's put up the information about the Senate jobs bill that has now passed, 140 to 150 billion dollar price tag. It pushes back the deadline to file for extended unemployment benefits until the year end. It does other things. But this is what the -- Part of this is what Jim Bunning is carrying on about, and did sort of come across as a bit of a heartless throw the unemployed to the wolves.

But -- so let's get past that for a second, Professor Shimer, and say, what is the alternative to extending benefits when this many people don't have jobs, and when there are 5.5 applicants for every job? What do you do instead?

SHIMER: Well, just in terms of the number of applicants for every job, we also should recognize that people are getting jobs. Even in 2009 -- the labor market is obviously better now than it was last year. Even in 2009, about four million -- 4.1 million people found a new job in an average month. So it is not that there are no jobs out there.

VELSHI: Right, a job loss number is a net. In other words, we are losing more jobs than we are getting. I think that's a fair point. There are definitely people getting jobs. But there are more people losing them.

SHIMER: Right. And in terms of what those numbers have looked like, since April of 2009, I think that the number of job vacancies have increased by about 10, while unemployment has gone up by seven percent. That is actually quite unusual. Usually unemployment and job vacancies move in the opposite direction. They're very strongly negatively related to each other. And this time, we have seen while unemployment has increase, the job vacancies have also increase. That's the type of evidence that suggests there is something unusual going on in this -- let's say the bottom of the recession and the nascent recovery that we are in.

VELSHI: You make an interesting point here. Let's go back to your original numbers, where you say 1.5 to 2.3 million people may have stayed unemployed longer because they receive benefits. So you still believe that the vast majority of the people -- of those 10 some-odd million people who are unemployed right now wouldn't be getting a job. So how do you address how to handle that?

SHIMER: Well, this is really hard. And also there are two separate questions, one which I think I have good answers to, and one which I don't. The one which I think I have a better understanding of is what the effects of the policy are. There is a question of the optimal policy, what we as a society owe to people who lose from recessions, lose international trade and technological progress and so on.

And that is something which I don't think economics really tells you that much about. That is kind of a welfare judgment, about how you think society should be structured.

That said, there are policy proposals that were made before the current recession that It think would have made a big difference had they been enacted. One of them is proposal by Marty Feldstein, Professor Feldstein at Harvard University. He was a member of the Council of Economic Advisers under Reagan. He has been actively involved with policy for a long time.

One thing that he wanted was to have what are called unemployment insurance savings accounts. The idea is that part of the hardship that falls on unemployed workers is that they suddenly lose their income and they have no way to make it up. Private markets really don't let you borrow against the future earnings that you might get when you do get back into a job.

So what he wanted was to let people draw down on an account that was held basically by the government. But the government would keep track of that account. And when you got your job later on, you pay the money back into the account. In fact, we'd always be paying money back into the account. So it would turn unemployment insurance more into something to smooth your consumption over time, instead of being something that is necessarily subsidizing unemployment.

VELSHI: Very interesting conversation.

SHIMER: That policy would have less of a disincentive effect, and the cost would be borne, I would say, more appropriately.

VELSHI: Maybe a very interesting and innovative idea. Tough to do right in the middle of an economic recovery right now that we are stuck with.

SHIMER: I understand that. VELSHI: But I do appreciate the point you made, that economics can explain the effects of it. But you are not saying that that is necessarily the right thing to do. You're just giving us the facts, which we appreciate and why we wanted to bring you on here, because you are bringing us some facts.

Robert Shimer is a professor of economics at the University of Chicago.

I suspect we would like to continue this conversation with you, because we need to learn more about this, so that we don't repeat some of the things we have done already. Robert Shimer, thank you for joining us.

SHIMER: Thank you very much.

VELSHI: Just ahead, all the world is a classroom, where anybody can study calculus, even on YouTube. It is one simple thing that is changing the world. Stay with us.


VELSHI: Well, it's no surprise that a math genius with a top notch education would land a great career. What is surprising, in the case of Salman Khan, is what happened next? CNN's Dan Simon filed this report for our One Simple Thing series.


DAN SIMON, CNN CORRESPONDENT (voice-over): Sal Khan lives in California, outside of San Francisco. Sarah Shadid halfway around the globe in Dubai. Their lives are interconnected but Khan doesn't know it.

This is a story about how one man is helping to educate the world, but has never seen any of his students face-to-face.

(on camera): Where does this passion come from?

SALMAN KHAN, YOUTUBE CALCULUS TEACHER: You know, I think I have always enjoyed teaching.

SIMON (voice-over): It is about a man who gave up a lucrative career in Silicon Valley for what might look like a boring desk job.

KHAN: Right now I am cash flow negative.

SIMON: But it was never about money. And with his drive and education, Khan could have made millions. He was valedictorian of his high school, with a perfect math score on the SAT. And then came MIT, Bill Clinton handing him his diploma. Next Harvard Business School; he was lured into hedge funds and did well.

But Khan, who has a wife and son to support, gave it up.

KHAN: A lot of people thought I was kind of crazy. Obviously, you know, when every waking hour you have, you would sneak into a room and make math videos and put them on YouTube, people kind of questioned what is up.

SIMON: Here is what is up, Khan's YouTube videos.

KHAN: Let's do a couple more examples and I think you might get it.

KHAN: They have been clicked on more than nine million times from users around the world. The topics range from math to chemistry to economics.

SARA SHADID, CALCULUS STUDENT: From every curriculum, we can use the videos. He is really helpful.

SIMON: One of his users, 19 year old college sophomore Sara Shadid in Dubai. She says that the videos made all of the difference in helping her to conquer calculus.

SHADID: Before each and every exam, I would take two days checking all of his videos, and understanding the small details he explains.

SIMON (on camera): This gigantic virtual school originates from the smallest of places, from a tiny converted closet inside Sal's master bedroom, where he is able to reach an estimated 80,000 knowledge-seeking users a month.

(voice-over): It all started a few years ago when a cousin wanted some online math tutoring. Pretty soon, other relatives started asking for similar help. Suddenly, people he didn't know started watching.

KHAN: People must have put in math terms and suddenly they find you.

Yes, it is right. It is the small subset of people who go to YouTube and do a web search for greatest common deviser.

SIMON: People did it and it caught on. It is now called the Khan Academy. The videos are short and simply produced, only his voice with a simple black background and graphics.

KHAN: There are a lot of people who need help with their math, science, whatever. And I think they find these YouTube videos as kind of the ideal nuggets to fill in the gaps.

SIMON: These mini classes filled in Sara Shadid's gaps, who says she and her friends refer to Khan as the man with the colored fonts. Whatever you call him or his teachings, the success of his site has validated that decision to walk away from hedge funds.

Dan Simon, CNN, San Francisco.

(END VIDEOTAPE) VELSHI: Bring you up to speed on some of the stories we are following here at CNN. It is still too early to call the election in Iraq. Early results show Prime Minister Nouri al Maliki in a very tight race with his challengers. Vote tallies are trickling in today from five Iraqi provinces, and the votes seem split between al Maliki's group and former interim Prime Minister Ayad Alawi's group.

Now, let me ask you who the world's richest man is. You probably are not thinking about who I am going to tell you about. A telecom tycoon from Mexico has unseated Bill Gates in that ranking. "Forbes" came out with its annual ranking today, and Carlos Slim Helu came out on top, with a personal fortune estimated at 53.5 billion dollars. Now, Helu's critics say he greased the wheels to get to the top. They accuse him of exploiting connections to high-ranking Mexican officials who, in turn, ensure a near monopoly for his companies.

Back in the United States, the roads are apparently getting safer. The Transportation Department says highway fatalities plunged last year, down to about 34,000. That is the lowest level since 1954. Still a very high number. The National Highway Traffic Safety Administration says safer roads, safer vehicles, and buckle up campaigns have all helped.

VELSHI: When we come back, we are going to check in with Reynolds Wolf in the aftermath of tornados in the south. More storms are on the way. We will have that when we come back.



UNIDENTIFIED FEMALE: The awfullest roar I ever heard in my life. And my house felt like it was fixing crumble right over me.


VELSHI: That is in Arkansas. This is from tornadoes that touched down last night in Arkansas. They are cleaning up after that. But there is more on the way in some places, parts of the country.


VELSHI: Whenever I come over here, I learn something. And I like to look at the billboards and I like looking at signs. I am totally one of these guys who gets taken by signs. I will stop from advertising.

I've got this great story -- can you imagine walking down the street and you stop in front of the billboard, and there is a camera there that looks at you, identifies who you are, sort of chubby bald guy, what might I actually want to buy. And the ad on the billboard will be something that I specifically want. I am going to show you this when I come back.

(COMMERCIAL BREAK) VELSHI: If you can get by the creepiness of it, imagine walking down the street and having an electronic billboard change the ads to suit your demographic. Some call it big brother and others think it is a technological breakthrough.

Kyung Lah has more from Tokyo.


KYUNG LAH, CNN INTERNATIONAL CORRESPONDENT (voice-over): In the world of advertising, you look at the ads, but soon, they'll be watching you. It is a future imagined in the 2002 movie "Minority Report." Cameras capture and read Tom Cruise's face and customized ads for his character pop up. That future is now. This billboard sees you, scans your face, and then pulls up an ad you will like.

Here is how this works. When you walk up to the ad, a camera captures your image. The computer figures out if you are a man or a woman and your age. Meanwhile, an age and gender-specific ad rolls. This shows that I'm in my 30s and I like seasonal pop stuff. The computer then determines how interested you are, how long you stay. That data is then recorded for the company.

NEC engineer (INAUDIBLE) says the facial recognition technology is accurate to within 10 years of your actual age and in the next gen system they are testing out is even more age accurate. This is a new- age of advertising says (INAUDIBLE). We can learn something we never knew from marketing. The new ads give real-time reactions to street signs so marketing can be more targeted and more effective.

At this retail event in Tokyo it's capturing worldwide interest. Art Frickus is a consultant visiting from Holland.

ART FRICKUS, HOLLAND CONSULTANT: I believe in more than one publications, and all your messages must be relevant, so that why I believe in this kind of thing, technology.

LAH (on camera): Do you feel a little uneasy though?


LAH (voice-over): Frickus brushes off privacy concerns or fears that this is big brother. NEC, which so far has only tested the digital ads in Japan, says sign warn passersby they are on camera and images are not saved in the database.

In the post 9/11 world, security cameras are everywhere on public streets and malls and facial recognition technology used by governments, even casinos. NEC believes the use of this technology in advertising is just the next step and will soon be common. Within two to three years 10 percent of the ads will be like this.

KOSUKE YAMAUCHI, NEC SPOKESMAN: Thirty percent of the digital (INAUDIBLE) .

LAH: Of video signage will be like this? That is a global prediction. NEC says testing begins in the U.S. this spring, just weeks away to the arrival of the future.

Kyung Lah, CNN, Tokyo.


VELSHI: Hey, if you are following me on Facebook, tell me what you think about that, whether you think that is creepy or you think it's going to be neat that you walk by a billboard and it actually advertises for you? I am probably falling into the second category, because I think it is interesting.

When we come back, we're going to have another sneak preview of this documentary that we are airing this weekend. We don't typically give you big chunks of the documentary, but I think you will want to see this. It is called "Her Name Was Steven" and he didn't even know, Steven, the character in this documentary, the focus of it, didn't even know the word transsexual, but even as a kid, Steve Stanton knew what he was.


VELSHI: All right. This documentary that you just saw a commercial for it, it airs Saturday 8:00 and Sunday at 8:00 Eastern time, repeats at 11:00 on both nights. It was several years in the making and the minute you see it, you will understand why, because it starts out with Steven Stanton, a man who was describing his life and how it sort of started to unravel.

Now last hour, we played an excerpt from this piece and it was people who worked around Steven Stanton who was the city manager in Largo, Florida. People who worked around him describing him as man's man, no one ever suggesting, no one ever thinking that he suggested anything that he was trapped in a woman's body, until of course he came out and said it.

Steven knew early on, he says, very early on that something was wrong. Even as a child, he knew something was wrong. His body didn't match what he was thinking. Listen to it in his words.


STEVEN B. STANTON, "HER NAME WAS STEVEN": I was attracted to dolls and pink things, and all that stuff. I loved digging in the dirt. At that time I was feeling very different from other kids, not knowing what I was feeling. You feel that the outside doesn't match the inside in a very real way that is not easily understood. So, I can't give a real good clinical definition of what a transsexual is, but for me, at a very early age, I just knew that what was inside of this presence, this feeling of being somebody other than what I was on the outside was real and has been something I have struggled with for many years in my life.

I started keeping journals I think when I was about eight or nine. I was writing about feeling a sense of two presence in me, even at a small age and trying to understand how that worked. When I was a kid, I used to equate it to never feeling alone, but never having friends. I got out of my grungy clothes and placed my dirty little body in the soothing hot water. I lathered my legs, arms and chest with a thick coat of white soap. I looked at my body floating in the water and imagined I was a beautiful nurse. My legs looked so pretty and my arms so feminine, but I knew this was wrong. I was a boy and not a girl.

My dad was always distant, but he worked very hard and very long. My dad made an OK salary. We were certainly not well off. My mom was a full-time mom. She was a homemaker and I remember sitting down while I had her attention and she was in the kitchen. I asked her, mom, if I had been a girl, what would my name have been, and she said, without delay, it would have been Susan.

When she said that, I can remember as soon as she said it would have been Susan, this explosive sound going off in my mind that, my, gosh, that is what its name is. That's what my name is and that is what I have been feeling for so many years. I just knew it to be true and it was just a powerful sensation that I could feel, even as a small child that it's Susan, it is Susan.


VELSHI: And that debuts this weekend, "HER NAME WAS STEVEN" Saturday and Sunday night at 8:00 p.m. Eastern. Well worth watching.

I'm going to give you a check of the top stories we are following right now at CNN. One, Kansas City, Missouri school district plans to close nearly half of its 61 schools. The drastic cost cutting move designed to avoid bankruptcy. Parents are angry. Teachers are upset, but administrators say they have no choice. The plan will cut 700 jobs and will save the school system $50 million.

Three strong earthquakes struck Chile today just as the country was inaugurating its new president. A 6.9 quake hit and was followed by two slightly smaller earthquakes. They are the strongest quakes to hit Chile since the devastating earthquake that struck on February 27th. Significant damage was reported in at least one city. President Sebastian Pinera was inaugurated as scheduled.

Actor and pro football hall of famer Merlin Olsen has died. He was a part of the LA Rams fearsome foursome defensive line in the 1960. He later starred on "Little House on the Prairie" and his own 1980s TV series "Father Murphy." Merlin Olsen was diagnosed with cancer last year. He was 69 years old.

All right. When we come back, there he is, Ed Henry, our senior White House correspondent with those flags waving behind him.

ED HENRY, CNN SENIOR WHITE HOUSE CORRESPONDENT: It took you a long time to get through these headlines. I don't have all day here.

VELSHI: All right. We got to pay the bills. We got to pay the bills and I got to get a commercial in and then we will get back to Ed Henry, because it is all about him.


VELSHI: Ed Henry, I want to get you in the shot. I don't want to block your ability to see Ed Henry clearly, so I'm just going to stand to the side here. Ed Henry is our senior White House correspondent, every day at this time, usually a couple of minutes earlier when we don't really have as much news to tell you about. We pop in on Ed who gives us a different take on what's going on in the White House than you are otherwise going to get. This is basically Ed Henry unplugged.

Ed, what is going on with you today? The White House thinking they have maybe made some ground on health care?

HENRY: It is interesting. They've got some new polling data that Democrats have sort of put together and they believe it shows that in recent weeks, maybe they are starting to turn the corner. Maybe the president's argument after these many, many long months is starting to break through. Now, Republicans obviously sharply disagree with that, but in comparing notes with Candy Crowley our anchor of "State of the Union," our chief political correspondent, she's been doing a lot of digging here as well, talking to administration officials who feel that perhaps the narrative is going to change. I stress perhaps, that they are on a precipice of a victory on health care they believe and that maybe the jobs picture slowly but surely is turning in their direction. They are not making any grand pronouncements about how this 9.7 unemployment is going to just magically disappear, but they think they are starting to turn the corner on that.

It is amazing what a little victory say on health care can do to sort of change the narrative of an administration, which is right now the stories are a lot about our focus obviously has been fairly or unfairly about how this president has been a bit on the defensive. They feel inside, you know, behind me there inside the White House that maybe they are finally starting to turn the corner. It is crunch time now, because as you know, we are about to head to Indonesia and Australia for a long trip with the president. He wants to get this done before he leaves the country. It's still unclear whether he's going to get it.

VELSHI: Ed, by the way, we talk about ties, you got a Velshi shirt going on there today.

HENRY: Yes, it is kind of a Velshi shirt. I kind of wore it in your honor and I hate to kind of dress up, because we got a big celebrity coming today in Tom Hanks. He's got this new thing on HBO, his new documentary the Pacific and he has been doing all these amazing World War II documentaries, movies and what not over the years and I wanted to take you a little behind the scenes here at the White House. I put something together a little earlier about why it is important that Tom Hanks is going to be screening this in the White House here for the president and the first lady, a lot of other VIPs. I was not invited, but I am hoping to run into Tom Hanks. Here is why.

(BEGIN VIDEO CLIP) HENRY: We will take you inside. This is just very simple the break room for the White House press corps, very simple, (INAUDIBLE) newspapers and vending machines. People bring their own lunch but every once in a while we get celebrities coming through here and in 2004, Tom Hanks came in and noticed we didn't really have a good coffee machine. So he actually spent $1,000 and sent this really cool espresso machine over. My friend Bill Plante from CBS is going to demonstrate. This is a little look inside the White House press corp.

BILL PLANTE, CBS: Well, it is easy to make coffee with it. You take a pot, pop that in there, open this over and take one of these cups and put it under there and here comes the coffee.

HENRY: The thing still works after six years.

PLANTE: It still works and makes nice coffee. There is usually a nice cream on this, but I don't see it yet. Of course, there are newer machines that grind the beans and then dispense the coffee and drop the beans inside. It is all automatic.

HENRY: I think the newer machine might be in order for the White House press corps. So Mr. Hanks, if you are watching, it has been six years and we'd like a update.


VELSHI: No sign of him yet?

HENRY: No, no sign of him yet. I think the screening is around 5:00 or 5:30, so I'm hopeful we're going to run into Mr. Tom Hanks, never met him before, but I bet you probably never thought we would have a little cooking segment with Bill Plante here on the Ali Velshi program. But you know, we try to bring this --

VELSHI: We cover a lot of ground here. You've been in a tool shop. You've been in -- we were talking about you in dressing the robes, cooking --

HENRY: And there was the House gym thing that I was not a part of.

VELSHI: That's right and there was Katie Couric who joined us and Bill Plante. This is just media coming together.

HENRY: And if Tom Hanks comes in, we're going to have that for tomorrow's segment.

VELSHI: If any of our fellow Twitter followers, people, you can follow Ed @edhenrycnn. You can follow me @alivelshi and if you follow Tom Hanks, let him know Ed's looking for a new coffee machine.

HENRY: And recently, Styx, the bank Styx came through here for a tour as well and they saw that espresso machine and later they started sending free coffee to the White House press corps, so we sometimes take handouts, not from the taxpayers but Styx, who would have thought that, Styx has been sending us free coffee. VELSHI: They didn't get any money from the government, so that is OK. Ed good to see you my friend, enjoy the coffee. One of these days I'm going to show you the coffee that we drink over here. Ed thank you very much. Rick, come here. Button up your pants before you come in. Put your belt on. My friend Rick Sanchez, he's coming up in 10 minutes for his show I just wanted you to know that, because "RICK'S LIST" is coming up.

RICK SANCHEZ, CNN ANCHOR: I just like it when you put your arm around me like this.

VELSHI: It is excellent. It is only because you need to speak into my mike because your mike's not on, that's why.

SANCHEZ: Thank you Ali.

VELSHI: Rick is coming up in 10 minutes. That is what you call a tease. When we come back after the break, we're going to go to the stimulus desk. I don't know what Josh Levs has on deck for us. I hope it is nothing like Rick just did. He's going to be talking about education when we come back. Stay with us.


VELSHI: Look at that, I am loving that fancy, fancy shot. Apropos of Josh Levs who's staffing our stimulus desk. We have been struggling for six weeks with how to sit when we do this, because this one is a kind of a weird --

JOSH LEVS, CNN CORRESPONDENT: Sitting is better because fewer height issues.

VELSHI: Right. Just stand up for a second.

LEVS: He does not like when we stand up.

VELSHI: Look at that.

LEVS: It feels like (INAUDIBLE) like my kid brother. That is not so bad.

VELSHI: Well, if we sit down, but the problem is because of the lighting and all this kind of stuff, it is kind of weird, because normally when you sit down to talk to somebody, this isn't how you sit.

LEVS: And it's not really secure, so we're always both afraid it's going to kind of like fall.

VELSHI: There is a big body language issue here right, because if I were having a conversation with somebody, he's sitting like this, they pretty much like I'm not interested in talking to us.

LEVS: When I talk to people, I don't usually go this, third person.

VELSHI: I do like talking to you, and don't read the body language.

LEVS: No it's all good. (INAUDIBLE)

VELSHI: Tell me what you got. We've been talking about education today and you've been making this connection between stimulus money and public school education.

LEVS: We are talking about Kansas City, right, where they made this choice to close a lot of schools and I was telling you yesterday, there's this $4 billion project out there with the stimulus that everybody wants to get their hands on. The schools are clamoring for these billions. Well, guess what, Missouri had tried and they did that not get it.

VELSHI: This is the race to the top.

LEVS: Race to the top, all the schools want this. The Education Department says this is the plan that will totally revolutionize schools in America. Missouri did not get it, so two questions, one if they had gotten some of those stimulus funds, maybe they would not have had to make this call. The other thing is, what if doing this helps convince Washington to give them some stimulus funds. Because the people making those choices are saying you know what, we need to see you are serious. We see to see some major reform steps in your states. If we see those steps, you might get some stimulus funds out of that race to the top pile. It's possible, but that is why we are seeing so much of this action on this national scale.

VELSHI: So in other words, some of the things may have happened, but they are happening now on a faster schedule, because there is a chance you can get this Federal money. You were describing something to me that when you doing things like this, it is like a point system, that you go up on the point system when you take drastic measures.

LEVS: Absolutely. They have very specific things they are looking at for these schools to do. If these schools take major steps, they are saying you are basically gaining more points and next time around, you might some of these billions. It is a little bit ironic though isn't it, because we're looking at schools that are firing teachers. The stimulus is about creating jobs, so if these efforts are indeed part of getting stimulus funds, you got some irony there. But maybe it will pay off.

VELSHI: Thank you for doing that.

This weekend by the way, if you get a chance watch "HER NAME WAS STEVEN." It is on 8:00 Saturday night Eastern and 8:00 Sunday night Eastern as well. When we come back I'm going to tell you about my thoughts about this documentary and about the issue of being trans gendered in America.

Stay with us.


VELSHI: All right. It is time for "The X-Y-Z of It."

I want to get personal for a moment. We all go through struggles every day. Life is harder for some of us than it is for others and some days are harder than others. But imagine waking up every day with one overwhelming thought that you are trapped in a body belonging to the opposite sex? That is what Steven Stanton went through here for nearly 50 years. He was born in upstate New York. He married. He had a son. He became the city manager of Largo, Florida, but he always felt that he was a woman. His wife suspected for some years. She knew for sure for years more, but she supported Steven. His colleagues knew. Some of them stood by, but most of them turned on him, kicking him out of a job he had done and done well for years.

Steven Stanton knew what he had to do and he did it. He is now Susan Stanton after a sex change operation. She still has a loving relationship with her son who still calls her dad. It took her two years to find work. Now you may not know anyone who has experienced this or anyone who has even thought about it. I confess, I don't know anyone who is trans gendered or I don't really know if I do. This weekend we are airing a special about Susan. It's called "Her Name Was Steven" at 8:00 p.m. Eastern on Saturday and Sunday. I have seen it and I learned a lot. Trans gendered don't have the same rights that you and I have in the workplace. They sure don't get treated the same way at work or anywhere else. It is a slice of American life that we don't often see, but the people who live it struggle more than we can ever imagine. We showed you some clips from the special today. Tomorrow, we will introduce you to someone who like Susan has made the transition from man to woman.

Now again, you might be asking, why do I care? I asked that before watching "Her Name Was Steven" but then I realized it is not just about gender identity. It's about being who we truly are. How many times have you said, this is not who I am? This is not how I should be acting. Imagine the courage it takes to be who you are in a world that tries to stereotype you or peg you. That is what this story is about. It's a lesson we can all learn.

Time now for "RICK'S LIST."