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Parker Spitzer
Goldman Sachs First in Line for Fed Profits; Stein on How to Fix Deficit; Jindal Blast Obama; Royal Wedding Announced; Robert Reich on How to Solve the Economic Crisis; Royal Distraction: Will Wedding Boost Economy?; Vampires in Capitol Hill
Aired November 16, 2010 - 20:00 ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
KATHLEEN PARKER, CNN HOST: Good evening, I'm Kathleen Parker.
ELIOT SPITZER, CNN HOST: And I'm Eliot Spitzer. Welcome to the program.
PARKER: We've got a great show tonight, Eliot. We've got --
SPITZER: Always do.
PARKER: Always do.
Louisiana Governor Bobby Jindal is here, and he has declared war on the White House in a new book.
SPITZER: It's like Louisiana succeeding also?
PARKER: Yes, West Texas. No, we're talking about how President Obama handled the BP oil spill. And we're also going to be talking about the great new wedding of the 21st century.
Prince William and Kate Middleton are officially engaged.
SPITZER: Thank goodness.
PARKER: I know you're excited.
SPITZER: I tell you, thank goodness the Brits keep giving us these big social events to cheer us up, right, when things are looking really gloomy in the world.
But you know what, all is not bad. We realized today who is going to make out potentially like bandits from QE2. You know this quantitative easing. You know, who's going to win? The banks, like Goldman Sachs.
PARKER: Of course, they are.
SPITZER: They always win no matter what we do. They're going to get more of our tax money. Just what they need. And here's how it's going to work. The fed is going to print a lot of money to buy back treasury bonds to drive down interest rates which drives up the price of bonds. You get all that? You get a PhD in economics. But the banks knew this ahead of time, because the Fed was telling everybody. So the banks went out, bought a lot of bonds, cheap to sell them back to the Fed at a higher price. So they're going to make money. It's not going to help the economy, but it's going to help the banks.
PARKER: Pardon me if I'm not stunned. But honest to goodness, I don't remember a life -- I don't know what life was like before quantitative easing.
SPITZER: That's right.
PARKER: It has become my icebreaker, you know, when I meet people.
SPITZER: Let's talk about QE2.
PARKER: Yes, exactly, QE2. But I tell you this week, and I was watching, I saw a cartoon that was post on --
SPITZER: You're watching cartoons, too? It makes me feel better. That's good.
PARKER: It was on the "Huffington Post." And it's the best explanation I've seen yet on what the QE2 is and does.
Let's take a look.
(BEGIN VIDEO CLIP)
UNIDENTIFIED FEMALE: How does the fed execute the quantitative easing?
UNIDENTIFIED MALE: They print the money and then they buy the treasury bonds.
UNIDENTIFIED FEMALE: Do they buy the treasury bonds from the Treasury Department?
UNIDENTIFIED MALE: No. They buy the treasury bonds from the Goldman Sachs.
UNIDENTIFIED FEMALE: You must be (EXPLETIVE DELETED).
UNIDENTIFIED MALE: No.
UNIDENTIFIED FEMALE: So let me get this straight. If I want to buy the treasury bonds with my money, I can buy them directly from the Treasury.
UNIDENTIFIED MALE: Yes.
UNIDENTIFIED FEMALE: And if you want to buy the treasury bonds with your money, you can buy them from the Treasury.
UNIDENTIFIED MALE: Right.
UNIDENTIFIED FEMALE: But if the Ben Bernanke wants to buy the treasury bonds using the American people's money, he does not buy them from the Treasury, he buys them from the Goldman Sachs? UNIDENTIFIED MALE: Exactly.
UNIDENTIFIED FEMALE: And does the Goldman Sachs give him a good price?
UNIDENTIFIED MALE: Of course not. They are the Goldman Sachs. They make their living ripping off the American people.
UNIDENTIFIED FEMALE: But how is the Goldman Sachs able to do this?
UNIDENTIFIED MALE: The Fed announces what it's going to buy and when it is going to buy before it does the trade.
UNIDENTIFIED FEMALE: So the Goldman Sachs can front run the Fed and give them the worst possible price on the treasury bonds?
UNIDENTIFIED MALE: Yes. Exactly.
UNIDENTIFIED FEMALE: And the Fed is OK with this blatant theft from the American people?
UNIDENTIFIED MALE: Of course, otherwise, the Fed would just buy the treasury bonds directly from the Treasury Department.
UNIDENTIFIED FEMALE: Who inside the Fed is responsible for the buying of the treasury bonds?
UNIDENTIFIED MALE: The buying of the treasury bonds is conducted by the New York branch of the Federal Reserve.
UNIDENTIFIED FEMALE: And who is in charge of the New York branch?
UNIDENTIFIED MALE: The head of the New York branch is the William Dudley.
UNIDENTIFIED FEMALE: And what did the William Dudley do before running the New York Fed?
UNIDENTIFIED MALE: Before running the New York Fed, the William Dudley was a partner at the Goldman Sachs.
UNIDENTIFIED FEMALE: So the guy in charge of the American people's money when dealing with the Goldman Sachs used to be a partner at the Goldman Sachs?
UNIDENTIFIED MALE: Yes.
UNIDENTIFIED FEMALE: And nobody has a problem with this?
UNIDENTIFIED MALE: Apparently not.
UNIDENTIFIED FEMALE: Is this an episode of the Twilight Zone?
UNIDENTIFIED MALE: I don't think so.
UNIDENTIFIED FEMALE: Are you sure? UNIDENTIFIED MALE: Pretty sure.
(END VIDEO CLIP)
SPITZER: You know, Kathleen, when I first saw this I started laughing so hard, I started -- tears coming out of my eyes. Then I was crying because it's true. I mean, think about this, Goldman got TARP money. Goldman got $12.9 billion from that whole AIG mess that was completely insane. Should never have happen. Goldman was turned into a bank holding company overnight. Never happened before. So they can make more money. They get money interest-free from the government. It's a scam. It's a rip-off. What's going on here?
PARKER: The banks are supposed to make a profit. Now let's face it, Eliot. You can't fault them for trying to take advantage of a good deal, right?
SPITZER: Well, I don't have any problem with their making money, but there is fundamentally a problem with our policy that has given so much money to the banks over the last couple years. It has not brought the economy back to where it should be. The banks are giving themselves huge bonuses out of taxpayer money. It is wrong ethically. It should have been wrong legally. The government didn't know how to negotiate with them, and that is the source of a lot of anger, and a legitimate anger I believe.
PARKER: Well, whether it's legal or not, I don't know, but it sure doesn't feel ethical.
SPITZER: That's right. Well, anyway, to discuss how to get our economy moving again, time for a headliner -- Ben Stein.
PARKER: Ben is possibly the most famous economics teacher in history judging by the number of people who have seen in that role in "Ferris Buehler's Day Off." But it really, really does right about economics and finance. And his new book, it's called "The Little Book of Bullet Proof Investing." And tonight we'll talk to him about some tough economic issues.
Welcome, Ben.
BEN STEIN, AUTHOR, "THE LITTLE BOOK OF BULLET PROOF INVESTING": An honor to be here. I assure you.
SPITZER: Well, thank you for joining us. Let's talk about the QE2 that the Fed is putting in place.
First, let me ask you this question, will it work?
STEIN: Well, we don't know if it will work. I question whether it will work. There is a chart you can get from the government if you want to really put yourself to sleep of how much money the Fed has put into the banking system in the last three years. They have raised reserves on about $2 billion to $1 trillion in roughly 36 months. That's a very, very big increase. And we still don't have a robust recovery. SPITZER: You saw the conversation about Goldman front running.
STEIN: Right. Right.
That's not really front running. Front running is when you buy a stock or a bond because you know some piece of information that other people don't know about it, such as that there's going to be a big order placed for it, that usual kind of front running.
SPITZER: There is a real question that you are raising before, it's a brilliant question which is, why when we found out Goldman Sachs to be doing so many questionable things, are they allowed to be a primary dealer. That's a really good question.
PARKER: Well, you know, just to play devil's advocate -- I mean, the idea --
STEIN: Well, if you're going to be defending Goldman Sachs, you really are playing devil's advocate.
PARKER: Yes, well I know it certainly at this table. But it's not to defend them, but isn't that their job to make profits? And if it's legal, why shouldn't they be --
STEIN: Well, that was Al Capone's job, too. Most of what they do, the overwhelming majority of what they do is perfectly legal and totally within the law. And it is what the other investment banks do, too. But the question is, why does there need to be an intermediary between the Fed and the banks or any other person who are buying bonds? Or selling bonds, rather. Why do we need that?
That's a kind of archaic system. It can be done directly by computer as fractions or if it is not done directly, the fractions of a sale could be so tiny, they can be barely measured.
It's an incredible subsidy, and it is not the only subsidy the Fed is giving to the banks. The Fed is allowing banks to borrow at virtually zero as you mentioned, and then re-lend them, the federal government 3.5 percent or 3 percent. That's a subsidy involving tens, hundreds of billions of dollars.
PARKER: Let's just be clear, I'm not defending the Goldman Sachs, OK? Just asking a question --
STEIN: They do plenty of things that are great and meritorious. But this is a questionable one.
PARKER: Yes.
SPITZER: I'm just thrilled to hear somebody as eminent as you saying precisely what I and many others are trying to say.
(CROSSTALK)
STEIN: Well, you and I, we've been doing this for a long time. When I was writing my column in The New York Times, we agreed on this. SPITZER: That's right.
STEIN: The investment bankers have their hooks into the American citizenry, into American policy and taxpayers in an astonishing way that nobody else does.
PARKER: We've established that they're operating within legal bounds.
STEIN: No, some of it was legal bounds.
PARKER: But certainly a question of ethics. So why isn't anyone calling them out on it beside us at this table? Why isn't there an outrage from people?
STEIN: The power of Goldman Sachs is phenomenal. When I used to write about them negatively in The New York Times, I would get barraged, just bombarded by their very, very skillful publicity arm who would talk to me, talk to my superiors, just generally make my life miserable.
They are very, very powerful. I don't think there has ever existed a private entity quite as powerful as Goldman Sachs in this country. I mean, so many people from their entity are within the government and high reaches. They have so many publicists, so many lawyers, so many friends. It's amazing what they can do.
SPITZER: I can give you one other private entity, but we'll go there some other time.
Let me change the topic for a moment.
PARKER: But you can't tease us like that.
SPITZER: Sure I can. Sure I can.
(CROSSTALK)
STEIN: I want to know who it is, too. But that was a Goldman deal.
(CROSSTALK)
SPITZER: What?
PARKER: Oh, you read his mind. Unfair.
STEIN: They rescued AIG so the AIG could pay the money to Goldman Sachs.
SPITZER: I do think that AIG was more powerful than Goldman a couple of years back, then it flipped flopped.
Anyway, let's have this conversation. We have been asking people coming to our show, given the enormity of the budget deficit, how do you deal with this longer term? We just have the bullets --
(CROSSTALK) STEIN: They have the means test social security.
SPITZER: Explain whatever that means.
STEIN: It means that well-to-do people would get either little or no social security. It is ridiculous for well-to-do, wealthy people to get social security just because they've paid into it. We are in an economic emergency. They shouldn't be able to get it. I think some Medicare should be means tested, wealthy people should make --
(CROSSTALK)
SPITZER: Can I jump in for one second? What you're suggesting is essentially a radical transformation of the contract that was made between the government and the public about these programs. I'm not disagreeing with you on this.
STEIN: Yes. I think there has to be a contract that has to be renegotiated, because we simply can't afford to pay the contract anymore. And I think also they should be making serious cuts in redundant government agencies and a lot of government agencies to do the same thing that other government agencies. I'll give you a clear example of the FTC's Bureau of Competition and the Justice Department's Antitrust Division. They are quite a number of those.
The one thing I would never cut, not one single cent is Defense. Not one cent. We don't have any friends in this world that we can count on. We're in a very dangerous world. I would not cut one penny from Defense.
PARKER: And you also think we should extend the Bush tax cuts across the board?
STEIN: No, not across the board, but I would say give us 36 months and then raise taxes steeply on the wealthy. I mean, there are a lot of rich people in this country. There are so many rich people, it is insane. And to raise taxes on people with incomes of $2 million, $3 million, $4 million, $5 million a year I think would raise a lot of money and it is needed.
PARKER: But not $250,000.
STEIN: $250,000, that's a joke. That's a joke. I don't know where Mr. Obama came up with that number. It is a joke number.
PARKER: There is a lot of light between $250,000 and $1 billion.
STEIN: You know, I talk to Warren Buffet the other day, and we were having this argument. And he said, well, at least raise the taxes on people with incomes of a billion dollars a year or more. Nothing we can do right now. There aren't a huge number of people like that, but there are quite a few.
SPITZER: Can I make the point that somebody who is viewed by any as being a rather conservative economist, what you're suggesting is a very progressive liberal agenda, because you're making things much more progressive in terms of our tax code and the way benefits are given out.
STEIN: Well, I would have the tax rate run like this, but then when you get to a really high number, have them go up quite a lot.
PARKER: To what percent?
STEIN: I don't know up to what percent. But I mean, if a person has an income of $5 million, $10 million, $20 million, $50 million a year, he can pay a couple million more and still live pretty well.
PARKER: When I make that much, I'll do it. I just want that on the record right here. If I make $10 million, I'll hand a couple over.
STEIN: I think you should. And so should other rich people, and I don't think it will discourage rich people from working.
SPITZER: I don't mean to do this as a quiz that a professor gave, but you remember or have you read, what the marginal tax rates were at the top during the Roosevelt administration.
STEIN: During World War II they were about 90 percent.
SPITZER: That's right.
STEIN: And they were up about 90 percent up into the '50s. And we had the most vivacious growth we've ever had in the economy during World War II and then the post-war period into the '50s, and with very, very high tax rates. So the idea that tax rates discourage prosperity is not proved. But I think to raise tax during a recession is extreme folly. Extreme folly.
SPITZER: You're saying take a pause, and then raise?
STEIN: Right. We're already in a recovery. Let the recovery get to work and then we'll raise them.
SPITZER: Ben Stein, thank you so much for joining us.
STEIN: Glad to be here, sir.
PARKER: Thank you.
SPITZER: Please come visit us again.
STEIN: I would love to.
SPITZER: Coming up next, the Louisiana governor tells Kathleen all about his feud with President Obama.
Don't go away.
(BEGIN VIDEO CLIP)
BOBBY JINDAL (R), LOUISIANA: While he is being angry with me, Rahm Emanuel, his chief-of-staff is cursing out my chief-of-staff several feet away, having the same conversation. And I had to tell them, Mr. President, we didn't criticize you for food stamps. I said, we're frustrated we're not getting the boom we need. We're not getting the skimmers we need. We don't see the plan. And this was symptomatic.
To me, the administration was disconnected from the reality, the facts on the ground.
(END VIDEO CLIP)
(COMMERCIAL BREAK)
PARKER: Governor Bobby Jindal of Louisiana is our person of interest and he certainly had an interesting year. Spearheading the BP oil spill clean-up along the Gulf Coast. He has a new book out. "Leadership in Crisis." And I'm happy that he is joining me today.
Thank you for coming, governor. So good to see you again.
JINDAL: Great to see you again as well. Thank you for having me.
PARKER: I knew you before you were governor.
JINDAL: And I've been a fan of your columns and your writings for many years. It's great to see you on TV. Congratulations on the new show.
PARKER: Thank you, thank you. Good start. A good start.
Starting with your book. You come right out of the gate taking President Obama to the woodshed for his treatment, for the way he handled the BP oil spill. And particularly about what happened when he came to Louisiana that first time. Tell me about that.
JINDAL: You know, it is so symbolic. His first visit to our state, after the explosion, after the oil spill. Air Force One lands. The president gets off the plane. He's coming down the staircase. I'm there to greet him at the tarmac. He pulls me aside. He is clearly agitated. They've actually tip off some Washington reporters, they told them, watch, the president is going to be mad. He's angry with the government.
I understood him being angry. I thought he would be angry at the BP, I thought he would be angry with the oil, angry with the response to date from the bureaucracy. And instead he was angry about a routine letter we had sent the day before about of all things, food stamps.
And he says, you know, he was worried that we were criticizing. He tells me, careful, this will get bad for all of us. While he is being angry with me, Rahm Emanuel, his chief-of-staff is cursing out my chief-of-staff several feet away, having the same conversation. And I had to tell them, Mr. President, we didn't criticize you for food stamps. I said, we're frustrated we're not getting the boom we need. We're not getting the skimmers we need. We don't see the plan. And this was symptomatic.
To me, the administration was disconnected from the reality, the facts on the ground. But by the way, I think that was the same message the voters sent two weeks ago. They've been trying to tell the president, we're worried about the economy and jobs. We don't want you spending all this money. We don't want the expansion of Obama care. We don't want all these things.
PARKER: Let me just go back really quickly to the food stamp question.
JINDAL: Sure.
PARKER: Because, as I understand, you called or you wrote a letter requesting emergency food stamps and then you held a press conference to say that you hadn't heard from him. The White House told us last night that you held a press conference the same day you actually asked for them.
JINDAL: They still missed the point. When you read the story in the book, I make the point, I did send the letter the day before. I did not do a press conference on the food stamps. I did a press conference saying here are the dozens of things we've done. I even said to the press, we don't expect an answer until Monday.
The reality, is this a worst-case scenario in case BP doesn't do what they're supposed to do. The thing that they missed is, what was astounding to me was that he was mad about the wrong things. Food stamp is smart, and this wasn't the top of our list, it wasn't our top priority. This wasn't an urgent matter. We hadn't even criticized him about this. And now he was so sensitive that you're criticizing me about food stamps.
I said, Mr. President, with all due respect, I didn't criticize you about food stamps. You go back and look at the press release and the press conference. It was like the last item on dozens of things.
PARKER: Do you think he is a little thin skinned?
JINDAL: Well, we saw that. Absolutely. His second visit to our state at the end of a meeting with parish presidents and local officials, he literally chides me and the parish president. He said, I don't want to see you, guys, on CNN criticizing me. They picked on CNN in particular. I'm just saying now. He didn't say on TV. He said on CNN.
What was amazing to me is one of the thing I write in "Leadership in Crisis," forget about the politics. Let's get the job done. Don't worry about the criticism. Don't worry about the pundits, go get the job done and everything else will take care of itself.
And what was frustrating was, you see it, it wasn't just one or two isolated examples. You would have thought five years after Katrina that we would have learned this lesson. I think what happens is when the federal government gets so big and so expensive, it tries to do too many thing, tries to run car companies, tries to get involve in health care, tries to do all these, it loses its core competency. Now, look, I wasn't shy about criticizing the federal government during Katrina. This isn't a Republican-Democrat issue.
PARKER: Right.
JINDAL: It's a competence issue.
PARKER: All right. Well, let's get a couple of elephants out of the room.
JINDAL: Sure.
PARKER: All right, so you're running for president in 2012?
JINDAL: Absolutely not. You can record that. There's no ifs, ands, or buts. I'm running for re-election next year in Louisiana. We have cut spending, we have cut taxes. PortFolio.com says we have the second best economic performance during a recession. We're the third best at creating jobs. But we still have more work to do.
PARKER: Well, I would say then, I'll take you at your word that you're not running in 2012, but I will bet you're running in 2016, and you'll only be what? 44? I mean, your resume is fairly astonishing. You were a Rhodes Scholar at 24. You're elected to Congress at 33, governor at 36. You've got a little time, right?
JINDAL: Well, I've got three young children that make me feel older and older every day. Well, my -- my hope is do the best job I can for the people of Louisiana. I haven't thought anything -- maybe go back to the private sector after that. But I think this was an important moment. Forget about 2012 or 2016. 2010 is an important moment for our country. I still believe this is the greatest country in the history of the world. And I'm not a pessimist of an American at all.
I think we're right in an inflection point. I think we have to decide. You know, government spending is now 24 percent of GDP. Normally, historically, it's 18 to 20 percent. It is projected to rise to 26 percent. Deficit is at $14 trillion. Projected to rise to $26 trillion.
We need to decide as a country right now. We don't have two years to wait. We don't have four years to wait. Six years to wait. We need to decide right now what is it we're going to leave for our children, because the Chinese won't keep buying our debt. Interest rates, inflation will go up. The value of the dollar is going to go down. Now is the time. And I'm glad to see, you know, Senator McConnell change his mind on earmarks. It is a small, symbolic step, but an important step.
I think if the new Republican majority in the House had gone back, and if the newly elected Senate Republicans had gone back to the voters two weeks later and said it is the same old, same old, we're going back to the way it was before, they would have been thrown out two years now.
PARKER: Right.
JINDAL: But they would have said this is not the change we voted for.
PARKER: Well, let's get rid of the other elephant in the room, which is -- first of all, let me just say I'm glad to see that you're back to the old Bobby Jindal, because the one I met was this wonky, fast- talking intellectual who could spout numbers like you just did. And yet when you gave your response to the state of the union, which was catastrophic, everybody would -- you agree with that.
JINDAL: Absolutely.
PARKER: You mentioned in your book and you said that the teleprompter doesn't like you and you don't like the teleprompter. I think the walk may have killed you there. Let's take a look.
JINDAL: Oh, you're going to replay it. This is awful.
PARKER: Just in case our viewers didn't see it.
(BEGIN VIDEO CLIP)
JINDAL: Good evening and happy Mardi Gras. I'm Bobby Jindal, governor of Louisiana.
(END VIDEO CLIP)
PARKER: All right, Governor Jindal, who told you to do that walk out?
JINDAL: You know, two things. Well, that's the first time since doing the speech I've actually heard it, because I didn't -- I didn't listen to myself speak, obviously. And, look, let me -- I was very clear in the book. Let me take responsibility. It is so easy to blame others, to blame consultants, blame advisers, blame -- I delivered the speech, that's my fault. And clearly it was awful. You know, the delivery was awful. All my life people have been telling me to speak more slowly.
PARKER: I knew that's what happened. I knew. I said someone told Governor Jindal to slow it down so that everyday Americans could follow what he was saying. And I thought, no, go back to being who you really are. So this book is a chance for to you reintroduce yourself in a way and sort of say, this is who I am?
JINDAL: Well, this is my chance to share some ideas about energy, health care and other issues I think are important to the country. I think if anybody is watching it, the one take-away lesson they should take is just be yourself. If I do it again, if I could do it again, I would do it without notes. And that's the way I like interacting with people.
PARKER: You are -- you describe yourself as, you were raised a Hindu, you became a Christian, you are a conservative Republican. People have a certain expectation when they meet you that you're going to be a certain way. Tell us a little bit about your story.
JINDAL: Mom and dad came to Baton Rouge so that my mom could study at LSU. She was pregnant with me. They didn't have insurance. I was a preexisting condition. If they have gotten insurance, the insurance wouldn't cover me. What I love about this story is my dad did not know anybody. Picks up a phone book and I describe this in the book, and literally goes through calling company after company until he gets a job. What's amazing about that story -- I think their story is so much more fascinating than mine. My dad's one of nine children. Grew up without electricity, without running water. He was the only person, only one to get past the fifth grade. He's a middle child. His older and his younger siblings, brothers and sisters, nobody gets a formal education and he does.
And I look at that, it is so improbable. And what motivated them was they wanted a better quality of life for their children. And what I love is their optimism. They come to this new country, this new state, they don't know anybody, they're pregnant, doesn't have a job. But they have this confidence that in America if you work hard, you can succeed and you can do well, and they did.
You know, he gets a job. I was born and raised in Baton Rouge. Go through public schools. Went on to Brown University, not a hotbed of Republican ideology.
PARKER: Yes.
JINDAL: Go on Oxford University. I've worked in a private sector in McKenzie briefly after that. Then a series of jobs but the most important thing I'm grateful to my parents for, you know, because my dad always told me, son, we're not wealthy, we're not giving you an inheritance or a famous last name. What they gave me was unconditional love. This idea that -- it was the love of high expectations.
You know, what I loved about this was, in my dad's mind, why can't you do anything? Hey, you could -- you could never come home and give them an excuse. If at all the teacher doesn't like me, or the world is not fair. He would say what does that matter?
PARKER: Governor Jindal, thank you so much for joining us. We'll be keeping an eye on you in 2016 if not '12. Stay with us. We'll be right back.
(BEGIN VIDEO CLIP)
UNIDENTIFIED MALE: Can we have a lavish all singing, all dancing wedding of the next King of England? Probably not. But at the same time you can't scurry off to a registry office and have a civil ceremony and hope for another couple of cold sandwiches.
(COMMERCIAL BREAK)
PARKER: It's time now for a new segment we call "The Chattering Class."
SPITZER: And what better way to kick it off than with the story every gossip song has been waiting for -- the engagement of Prince William and his long-time girlfriend, Kate Middleton. PARKER: Joining us to wade through all the royal traditions and protocols and believe it or not what this may mean for the English economy is CNN international correspondent Richard Quest.
Hi, Richard.
RICHARD QUEST, CNN INTERNATIONAL CORRESPONDENT: Good evening to you both. And my word, what a lot of protocol and trivia there is about this particular betrothment.
PARKER: Well, before we get started on all the details, you know, Prince William and Kate met in 2001 in college and they've been pretty much together ever since. So, is there anything behind this timing? I mean, this isn't an old-fashioned shotgun wedding, is it?
QUEST: Good grief, woman. Hush your mouth immediately. I don't know what you're suggesting. The fact is, they've been living together. They've been living together without benefit of clergy for some time. But the truth is, it has been eight years in the making. They had a short break in 2007. But substantially, what we saw today and I hesitate to say this to you two cynics. But what we saw today was romance, natural romance, albeit in the guise of royalty.
SPITZER: Well, look, we don't know everything about this yet. I'm sure the folks over there, the tabloids are known to, you know, poke and pry and dig as hard as any journalist over here. So what are the rumors? Are any sort of stories going to be coming out soon?
QUEST: No. I think that -- I think that Kate certainly needs to be extremely careful. As one top PR person was saying to me, there will be no shortage of people trying to sell a story. Who did what to whom, where, when, why, and who paid for it. But remember, Kate has now been part of the William scene for seven or eight years. They've taken a much more robust approach when it comes to protecting her freedom, her press freedom.
Of course, now she is the fiancee. She's fair game to a point, but I don't think that there's going to be a sudden onslaught. This woman is going to be the next queen plus one of England. Their marriage will take place next year. And so while you two may be digging in the dirt, at the moment in London --
ELIOT SPITZER, HOST: You know --
KATHLEEN PARKER, HOST: No, no, no, no, no.
SPITZER: We fought a war 200 years ago about this stuff so we're trying to figure out royalty. We don't know quite how to deal with it. We're, you know, taking it one step at a time here.
PARKER: We have no interest in tabloid journalism. So let's just skip right on to the importance of this wedding to the souvenir and tourism industry. I hear everybody is pretty excited about the money.
QUEST: Yes. There's no question. First of all, the wedding itself will be, they're going to have to get the tone right. Britain is in an era of austerity. Jobs have been lost, welfare has been cut, and the government is cutting the budget deficit in a draconian fashion. Now can we have a lavish all-singing, all-dancing wedding of the next king of England? Probably not. But at the same time, you can't scurry off to a registry office and have a civil ceremony and hope another couple of curled up sandwiches.
PARKER: Well, you've had a lot of problems lately with labor and riots and so is this going to be a nice distraction for Britain?
QUEST: Yes. You know, it's funny they often say that royalty is the distraction for the common people. And certainly some truth in that. If you look historically, a royal wedding in '47, or whatever it is, that again and again, a royal event does take people's minds off the misery of drudgery of everyday life. And that will definitely happen next year.
PARKER: Well, it will be interesting to see the details of the wedding revealed in the next several months. Richard, thank you for being with us.
QUEST: Ah, you see, ah, you see, Kathleen, secretly, you along with everybody else, you want to know about the dress. You want to know who's invited. You want to know about the cake. We're all in this together.
PARKER: I confess. I confess.
SPITZER: Yes, right.
PARKER: I want a royal wedding right here.
SPITZER: All right. Count me off that list. I'm for one who said we got rid of the royalty 200 years ago and thank goodness we did.
All right. Don't turn that dial. Coming up, we've got a great guest for "Our Political Party" including a cast member from the blockbuster film "Twilight." We'll be right back.
(BEGIN VIDEO CLIP)
ROBERT REICH, AUTHOR, "AFTERSHOCK": Unfortunately, right now, if you consider sales taxes and also property taxes and all of the other taxes that people pay, our tax system as a whole is very regressive. That is, it takes much more of a percentage from relatively modest incomes than it does from people at the top.
(END VIDEO CLIP)
(COMMERCIAL BREAK)
SPITZER: It's the elusive holy grail in Washington today. How to restore the American dream for the middle class. And as we've said before this issue will make or break President Obama over the next two years.
Joining us in "The Arena" with us on his take on how to solve the crisis, former Labor Secretary Robert Reich, an author of "Aftershock: The Next Economy and America's Future."
Welcome, Mr. Secretary.
ROBERT REICH, AUTHOR, "AFTERSHOCK": Thank you.
SPITZER: You know, when I read this book, I've got to tell you and I mean this as high praise. I said to myself I wish I had written this book. It is powerful. It presents the crisis and presents ideas to solve it. So first tell the public, what is the broken bargain that you refer to in the first portion of this book?
REICH: Well, it's essentially a bargain that we made in the early part of the century. And that was that because workers are consumers, workers need to be paid enough so that they can turn around and buy the goods and service that's we produce. And the trouble is that over the last 30 years, we have broken that bargain. That is as American workers, typical workers, average workers, have been paid less and less as a proportion of the total economy. So, you know, by the time of the housing bust when people could no longer borrow, well, essentially that broken bargain came back to haunt us because American consumers just don't have the money to keep the economy going.
SPITZER: The other part of this bargain was that while the middle class workers were getting less, the wealthy were getting more. A rising disequilibrium and distribution of income as you describe it in the book.
REICH: Yes. In fact, what is so staggering, and so unlike the rest of our history, is that over the last 30 years, wealth and income have concentrate more and more at the very top. The top one percent. I mean, for example, by the late 1970s, the top one percent was taking home around nine percent of total income. Now nine percent of total income is a lot. But then income and wealth continued to concentrate at the top so that by 2007, the top one percent was taking home 23.5 percent of total income.
SPITZER: You have a chart in the book that I'd like to put up on the screen here that shows how wage stagnation is the phrase we're using here. That blue line turns flat right around 1970. And that is where wages for workers leveled off and stopped increasing. Explain why that happened.
REICH: Well, it happened for two reasons. One was globalization. New technologies like containers, container ships, cargo ships, satellite communication technologies. Eventually, the computer and Internet all allowed the production process to be parceled out around the globe to wherever pieces of that production process could be done most efficiently and cheaply. But there was a second technological change that occurred. And it all came to the surface in the late 1970s. And that is automation. Many jobs that had been done here in person start to be automated.
SPITZER: So what is the answer? How do we then push back against this dramatic and terrible convergence of forces?
REICH: What we do have to do is two things. Number one, we've got to have a tax system that was equitable. We've got to make sure that, for example, people in the middle class get wage subsidies so that they have enough money to turn around and buy what needs to be bought. For example, another example, would be to exempt the first $20,000 of income from the payroll tax and subject to incomes over $250,000 of the payroll tax.
SPITZER: Can we stop for one second. Because I think many people may not understand. Right now, the payroll tax applies only up to a certain threshold. You want to raise that threshold so wealthier folks pay more into that system.
REICH: Yes. The payroll tax which essentially, social security tax and some others, ends about $106,000. So every dollar above that is not subjected to the payroll tax. Well, why not exempt the first $20,000 of income from the payroll tax all together. And then take incomes over $250,000 and subject the dollars over $250,000 to the payroll tax.
SPITZER: Parenthetically, if we were to do what you suggested about the payroll tax, that would then make the social security system solvent way into the distant future.
REICH: It would. It would. And you know, when I say to people at the top who accused me of being a class warrior or a redistributionist is look, you will do better. We know historically in the 19, late '40s, '50s, '60s, early '70s, you will be doing better with a smaller percentage of a more rapidly growing economic pie than you will with a high share, as you do right now, of an economy that is growing very painfully slowly, that's anemic because there's not enough demand in it because most people just don't have the money to turn around and buy things.
SPITZER: One of the interesting ideas that you proposed towards the end of the book is a new way to finance education. Explain this to us and what you think it would do in terms of access to education.
REICH: Well, right now, a lot of poor and middle class kids, low and middle class working class kids, can't go to higher education, can't go to college even though college is critical to getting a good job. Why? Because they can't afford it and they can't even afford college loans. Colleges are getting so expensive. Even state universities are increasing their tuition. So here's my idea.
Everybody should get free college tuition at a state university or public university. But then, be required to pay back 10 percent of their incomes for the first 10 years of their full time earnings. That means that people who go into, young people who go into, say, investment banking or high priced lawyering, or any kind of very lucrative profession, they would be paying 10 percent of their earnings and they would be there by subsidizing those young people who want to go into social services or who want to provide legal services, who want to maybe even be journalists, but who want to give back to society in ways that don't necessarily require a lot of high-priced careers.
SPITZER: Look, Mr. Secretary, unfortunately, time is out. Fascinating conversation. Your book is provocative. It is fascinating. It should be read by everybody. It is called "Aftershock." I hope folks go out and do in fact read it.
Thank you for joining us today and we hope you will join us down the road.
REICH: Thanks very much.
SPITZER: When we come back, can another royal wedding quiet British anger over budget cuts? Stay with us. We'll answer that provocative question.
(BEGIN VIDEO CLIP)
UNIDENTIFIED MALE: Washington is full of vampires. They suck the life out of people. I really do think that, you know, some people go in there with all these ideals and they want to do change the system and then you go through the politics, the red tape. By the end of the day, you know, they look like they're just so jaded and like used up.
(END VIDEO CLIP)
(COMMERCIAL BREAK)
PARKER: Welcome to "Our Political Party." It's our nightly gathering of our interesting guests when we let them have a little fun with topics.
SPITZER: Tonight, we're joined by our party regular Ari Melber from "The Nation," a liberal magazine, a Republican media strategist, Karen Hanretty, and actor Chaske Spencer from the very popular vampire- themed "Twilight" saga. Chaske is also well known through Be the Shift, a nonprofit that focuses on empowering people to take on issues in their community. And when my daughter knows you are here today, I am in deep trouble. I will just put that out there right now.
Welcome, everyone.
CHASKE SPENCER, ACTOR: Thank you.
PARKER: Wow. OK. Well, the first topic of conversation, of course, is the pending nuptials in Great Britain. Prince William and Kate Middleton are engaged officially. So everybody over there is kind of excited not only because of, you know, the obvious things but because they think this is going to spur the economy and kind of get things moving again. Souvenirs, visitors, tourism, and all that. So let's move to the side of the pond. Who would you like to see marry in order to get our economy rolling again?
(LAUGHTER)
KAREN HANRETTY, REPUBLICAN MEDIA STRATEGIST: Well, I have kind of a variation on that theme. Which is, I'd like to actually see a wife swap with --
PARKER: What? HANRETTY: Yes. Palin --
SPITZER: Wow. Wait, wait.
HANRETTY: Palin goes to San Francisco. Pelosi goes to Wasilla and we turn it into a reality show. I think that would actually garner --
SPITZER: With husbands? With husbands, too?
HANRETTY: Yes. That would garner far more interest I think than any marriage going on in America right now.
PARKER: Wife swapping instead of marriage. That segues is right off.
Ari, would you like to bring it back into a more traditional family values place?
ARI MELBER, "THE NATION": I'm always for -- I'm always for Republicans for wife swapping. I think maybe you just want Nancy Pelosi far away.
HANRETTY: Pelosi living with Todd for a week would just, I think, be fascinating.
PARKER: I bet they would be mutually charmed.
HANRETTY: Maybe.
MELBER: You know, I think in -- in England they have, you know, royalty. And here, unfortunately, we just have reality stars, whether it's Sarah Palin or Kim Kardashian. So, yes, if we're talking about pure economic boost here, Kardashian wedding or anything from those folks who are famous just for being famous. And everyone says they hate them but can't stop watching them. That would at least sell some merchandise.
SPITZER: All right, Chaske, you got it.
PARKER: I don't see the trinket in this for me. I don't see it.
SPENCER: Maybe it should be Snooki and, yes, Palin. Let's see those two if they switch on different TV shows.
(CROSSTALK)
PARKER: You're inviting the wrath of Todd Palin here.
I need to trademark this idea. What about the interview today?
SPITZER: The interview.
PARKER: The interview.
SPITZER: You don't need to say which one. It's just "the interview."
PARKER: It's kind of like the Goldman Sachs. SPITZER: The Goldman Sachs, all right.
PARKER: The interview with the prince and his fiancee. They didn't look quite at ease. Did you all notice --
SPENCER: Yes.
HANRETTY: No.
SPENCER: Why?
HANRETTY: It was beyond not at ease. They had a big pillow in between them. They barely looked at them. But again, they're British. So it's difficult to tell. Are they excited or is this just how --
SPITZER: This is how the Brits do it. This is familiar behavior.
SPENCER: Yes. It looked like something happened like right before the interview. You could see the tension between both of them.
PARKER: Yes.
SPENCER: It's really, yes -- it's like he does not look like he wants to be there.
SPITZER: By the way, invited a few members of the press corps over to tell them we're getting married.
PARKER: Right. Right.
SPENCER: And she looks scared, actually.
PARKER: I think she was nervous. That's natural.
MELBER: It's nerve-wracking and he's more used to this attention although she's been in the mix for a while. But it's a bit like that scene in wedding crashers, when like the bad fiance stands up and says we have an announcement. And she's not in on it yet. And it's sort of, you can see the tension on --
(CROSSTALK)
I think they may have this conflict. But look, I think it's really tough to be under those klieg lights.
HANRETTY: You know, I think Ari --
SPITZER: Now we feel sorry for them.
HANRETTY: Maybe it was the queen mother who announced that they were getting married and no one told them.
SPITZER: What do you think it's like meeting the in-laws when you're marrying into the royal family? A little tougher than normal.
MELBER: Super sized.
SPITZER: Super sized, yes.
PARKER: Yes. We can't avoid it. Vampires. I'm sorry. You know everything about it. But you've got the teeth actually in real life. I'm impressed.
SPENCER: Never thought about it. Not a fair observation.
SPITZER: I'm getting out of here quick, let me tell you. In Washington --
SPENCER: Yes.
SPITZER: -- who is the biggest vampire?
SPENCER: Oh, God, all of them. I would say, oh -- hey, Washington is full of vampires. They suck the life out of people. I really do think that -- you know, some people go in this there with all these ideals and they want to do change the system. And then you go through the politics, the red tape. By the end of the day, you know, they look like they're just so jaded and like used up.
PARKER: They are.
SPENCER: Yes. So maybe it's a big coven. Maybe it's a big coven.
SPITZER: We should have said Christine O'Donnell. It would have been perfect.
HANRETTY: I think Charlie Rangel is not looking to good right now. Here's the former chairman of ways and means. Eleven out of 13 indictments have come down or ethics --
SPITZER: They're not indictments.
HANRETTY: Not indictments, you're right.
OK.
SPITZER: Ethics complaints.
HANRETTY: Ethics charges. And you know, I mean, this is a man who had a very powerful position and refuses to admit he did anything wrong.
SPENCER: Didn't he walk out? He walked out today.
HANRETTY: And he walked out. Yes.
SPENCER: Yes, he walked out today. That does not look good for you, my friend.
SPITZER: What do you think the penalty will be?
MELBER: I think they will have, you know, a slap on the wrist in the form of words. And censure really at the end of the day is words. Right? It's saying here, this person did something.
HANRETTY: And that goes to your point.
PARKER: That's a fair point.
MELBER: I'll tell you, you know, the vampire that I'm more concerned about is the unelected elitist vampire of the Social Security Commission that we have there. Basically, these folks come in and they want you to work longer. Right?
UNIDENTIFIED FEMALE: Yes.
MELBER: Even though you've been paying into a system that you were told had a certain end date. They want to take your money. And it looks like some of them, anyway, part of this initial report we have from the chairs --
PARKER: The debt commission.
MELBER: Yes, the debt commission. They also, you know, want to take your money and give more of it to multimillionaires if you look at the proposal. So that --
(CROSSTALK)
PARKER: We have to cut somewhere though, Ari. Come on, we've got to let bloodlet in this.
HANRETTY: 2050.
SPITZER: Yes.
HANRETTY: 2050.
PARKER: I don't know about you, guys, but I'm not going to be here.
HANRETTY: Forty years from now.
SPITZER: Thirty. Thirty. 2050 would be. Excuse me. No, you're right. Forty.
HANRETTY: No, I am right.
SPITZER: Democratic math. We can't subtract either.
We've got to take a break. We want to hear from you. Check out our blog at CNN.com/parkerspitzer. Follow us on Facebook and Twitter. We'll be right back.
(COMMERCIAL BREAK)
JOE JOHNS, CNN SENIOR CORRESPONDENT: Hello, I'm Joe Johns. More of "PARKER SPITZER" in a moment. First, the latest.
Our Ivan Watson reporting tonight Haiti's northern city of Cape Haitian is under siege from angry mob with little or no police protection as Haitian leaders urge calm in the wake of yesterday's deadly riots. Protesters blame U.N. peacekeepers for the cholera outbreak that's killed more than a thousand people since last month. Today, the U.N. mission claimed the violence was politically motivated.
President Obama has awarded the Medal of Honor to Srmy Staff Sergeant Salvatore Giunta who risked his life to save members of his unit while under attack by the Taliban. But not all survived. Sergeant Giunta is the first living recipient of the medal during an ongoing conflict since 1976.
And tonight on "360," Britain's Prince William has finally popped the question to long-time girlfriend, Kate Middleton. The princess bride- to-be has been seen but never really heard publicly before.
PARKER: Welcome back to "Our Political Party." It's time for one final question. President Obama's new children's book, "Of Thee I Sing" comes out today. So given that all children's books have a teachable moment and given the president's recent shellacking in the midterm elections and his trip to Asia, what would the teachable moment be in whatever book he might pen today? How's that?
MELBER: This is what Obama should tell children across America and everyone in his party. Stand up to bullies or they will hurt other people.
SPITZER: I want to say this. Who are the bullies we're talking about here?
MELBER: The bullies are the Republicans, the talk show hosts, your Rush Limbaughs who get out there and yell and --
No, I don't think either of you as bullying. Never in my conversations here.
SPITZER: Karen? HANRETTY: How about learn how to listen? When people across America are screaming for two years that they don't like what you're doing, how about listen? But more importantly, how about don't write a children's book and focus on the economy.
SPENCER: That's what I was going to say. When do you find time to write a book, a children's book?
HANRETTY: And write a children's book. Come on.
SPITZER: You know, look, first of all, I think I'm not going to say anything out of line but I imagine somebody else actually wrote it for him.
UNIDENTIFIED MALE: I think so.
SPITZER: I'm sure they're going to give away all the profit. But, Kiran, I just have to say I know this is the part you're going to have fun. This president took over an economy losing 800,000 jobs every month. HANRETTY: Right.
SPITZER: We are now adding 151,000 jobs a month. More jobs added under his -- one year than we got in all eight years of George Bush. I wish the Republican Party would start --
HANRETTY: You mean George Bush when we had 4.5 percent unemployment?
SPITZER: The truth about what they did to our economy and how they destroyed it. We are not going to make progress without truth telling.
HANRETTY: But the point is voters across America were yelling, they were shouting and the president wasn't listening. He said, I don't care what you have to say.
SPITZER: No.
HANRETTY: He was condescending to them. Very condescending to them. And you know what? If there's a teachable moment after this kind of shellacking like we've never seen in history, it's listen to the people.
PARKER: Bad news for you guys. You are never going to sell a children's book.
HANRETTY: No.
PARKER: Don't worry. Be happy.
Chaske, how about you?
SPENCER: If he does write another book, I say that you should talk about same old change and how the system has obviously failed.
PARKER: That would get him happy.
SPENCER: Yes, yes. I'll make it like a bedtime story about of how to change the system.
SPITZER: All right. Well, thanks so much for being with us, Ari Melber, Karen Hanretty and Chaske Spencer. Please join us tomorrow.
PARKER: Good night from New York. "LARRY KING LIVE" starts right now.
