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Tracking Tropical Storm Lee; Unemployed in America; America's Uncertain Economy; Fixing Unemployment; President Obama's Impending Jobs Speech Is in Focus
Aired September 03, 2011 - 13:00 ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
(COMMERCIAL BREAK)
ALINA CHO, CNN ANCHOR: Our top story now, parts of the central gulf coast are on alert for flash flooding from Tropical Storm Lee. Louisiana and Mississippi both under a state of emergency, some places could get up to 20 inches of rain.
Do you know what to do to recession-proof your family budget? That's at 2:00 p.m. Eastern. And at 3:00, we'll talk to General Russell Honore about the tropical storm in the gulf. He's in News Orleans and manage the military effort after Katrina.
Plus Fredricka's interview with Tiger Woods. I'm Alina Cho. See you in one hour. YOUR MONEY starts right now.
ALI VELSHI, CNN ANCHOR: I'm Ali Velshi. No economic issue is more important to Americans than jobs. Here is the latest. We had a jobs report come out for the month of August. No new jobs were created in America in American in August.
The unemployment rate, which was 9.1 percent before we got into this, remains at 9.1 percent, stubbornly high. The number of unemployed people in America officially is 14 million people. The situation is getting dire.
But I want to give you a bigger perspective. It's hard to live in the moment and make decisions. So let's go back to the beginning of 2009. That's when President Obama first took office. We were losing in excess of 700,000 jobs in the month that he first took office.
Through 2009, things looked to get substantially better. According to experts, the recession ended in 2009. In 2010, boy, we were building in the beginning of the year and then started to lose jobs again.
And then we started to get the shaky job creation record at the end of 2010 and into 2011. Look at August. There's supposed to be a bar, either a yellow one that says we've created jobs or a red one that says we've lost jobs.
But there's nothing there because we had zero jobs created. Harvard Professor Ken Rogoff is the former chief economist for the IMF, for the International Monetary Fund.
Ken, give me your sense of what this means. Have we stagnated?
KEN ROGOFF, PROFESSOR, HARVARD UNIVERSITY: Well, clearly we're stagnating. I mean, the employment numbers have been getting weaker and weaker for a while. I think what it really underscores is that the recession never ended. We have not got back to where we started on output. We're not close on employment. We're still very much crawling our way out of the recession. And right now, nothing.
VELSHI: All right, Gloria Borger is our chief political analyst. Gloria, we're going to get in a moment to find out about whether we are still in a recession or whether we're in danger of getting into another one.
But a CNN ORC poll shows that just 37 percent of Americans approve of how President Obama is handling unemployment, or the employment situation.
On Thursday night, the president gives his jobs speech. Politically, what could he possibly say to convince Americans that his administration at least has some idea or answer to fixing this chronic, dire unemployment situation?
GLORIA BORGER, CNN CHIEF POLITICAL ANALYST: Well, he's got to go out there and tell the American people that he's got proposals to try and fix this unemployment problem.
So you're probably going to hear some things from him, Ali, that people will like, such as payroll tax cut extension for employees, maybe even for employers, tax credits for employers who hire new employees, those kinds of things that he believes that Republicans will sign on to.
The question is, how big is this package going to be? Because if it's too big, you know Republicans will not go for it. So he's got a decision he's got to make and he's got to get something passed.
But he also has an election coming up, right? So he's got to say, I tried to get us in the right direction and if they didn't follow me, they're pushing us in the wrong direction.
VELSHI: All right, so that's the political prescription. Lakshman Achuthan is a managing director of the Economic Cycle of Research Institute. You predict these economic cycles and sometimes you say it's not about what government does, it is an economic cycle. Let me ask you this, first of all, are we in a recession?
LAKSHMAN ACHUTHAN, MANAGING DIRECTOR, ECONOMIC CYCLE RESEARCH INSTITUTE: No. The recession did end. I would respectfully disagree. The recession ended in the summer of '09.
And since then, we've had cycles in the growth rate so we've been growing. The economy's been growing, but we've had speed-ups and slowdowns. So we had a speed-up coming out of the recession.
We had a slowdown in 2010. We're in a new slowdown now. Every time you slow down, the risk of a new recession goes up, by definition, because you're going in the wrong direction. And here and now, I think we're skating on very thin ice.
The chance of a new recession in front of us I think is quite high. But when you get into what could we do, what could have been done or what should we do now, I think there's a presumption that you can do something like you're saying. That we can do something and it will change the contours of the business cycle and it won't.
VELSHI: You don't think so?
ACHUTHAN: It won't. In fact, prior to this recession, the '07 and '09 great recession, prior to that, we were already seeing a decades- long pattern of weaker and weaker expansions including jobs growth that was very, very evident. It had been happening since the mid '70s. So the expectation that we should have a vigorous expansion completely flies in the face of it.
VELSHI: So when we say things like we would love to see 250,000 or 300,000 jobs a month mathematically that make sense, but it's not on the horizon.
Ken, let me ask you this. You were the chief economist for the IMF. We would love to think this is all about Washington and that the president can say something and even do something. How much of this has to do with what's going on in the rest of the world?
ROGOFF: I think a lot of it has to do with what's going on in the rest of the world. There's also a lot of weakness in Europe, but I think above all, we never exited what happened in 2007-2008. Sure, a recession, as we thought of them after World War II, ends when you start growing.
But if you've gone way down and you're crawling back up, that's not the usual aftermath. That's why Carmen Ryanhart and I call this a great contraction, calling this a recession, great recession is like saying you have a bad flu when you really have pneumonia.
VELSHI: Wow. Take all this in, Gloria. How do you put into a mix that the president does anything about? At this point, if I were the president, I'd regret that I had a spat with John Boehner about scheduling this speech. Maybe it should never have been scheduled in the first place.
BORGER: You know, first of all, it's very difficult, if not impossible, for the president to go to the American people and say, you know what? There's not really anything I can do about this, right?
He's got to make it seem, even if he can't in the real world -- fix this. He's got to make it seem that he's trying to fix this. So the question out there is, will he do the big plan or the little plan? I think what he's going to do is a jobs package, some kind of stimulus package, although that's become a dirty word, that can get passed through the Congress.
The Republicans will have some things in it that they want that maybe he'll add in. And then in the long term what you're going to see is a larger effort from the president to really throw the long ball on the question of deficit reduction, which is a separate issue.
And he will talk about things like reforming the tax code and tax increases, letting the Bush tax cuts expire for the wealthy, which he's already said he's going to do. So you're going to see sort of a two-pronged approach from the president. And if Congress doesn't cooperate, he's going to run against a do-nothing Congress.
VELSHI: Right, and -- so he's going to put the do nothing ball into their camp. Lakshman, within the confines of Washington, of the presidency, of the White House, the administration and Congress, what can they do that doesn't look like stimulus because either they are going to spend money or they're going to cut taxes? Either of which qualify as stimulus.
ACHUTHAN: Well, exactly. There's going to be a lot of semantics about what they're doing. But at end of the day, if we go into a new recession -- and we have a difference here, every recession is a contraction.
But if we go into a new recession, I don't think it's unlinked from your deficit and your debt debate because every new recession, you have a spike in the unemployment rate and a plunge in tax receipts and a big spike in expenditures automatically.
So all these stuff is very closely tied to each other, but the policy challenge here is the odds of a new recession happening before we're ready are extremely high.
VELSHI: The only problem we've got is that a brand-new CNN ORC poll, I hate how accurate these things are, does say that eight out of 10 Americans think we're in a recession, which may can speak more to the fact that we are in a remarkably bifurcated economy.
There are some people in America for whom 2008 wasn't really a recession and this isn't. And there are some people who, as you say, have not recovered. This is more the sign of a developing economy than one as sophisticated and developed as the United States.
ROGOFF: Well, that's for sure. I think most people are not feeling very good. They've seen their home price go down. Even if they have a job, they're worried about their job. Their pay is not going up very fast. Hours aren't going up or they're going down. And there's a small percentage of Americans who have still done very well. But I think for most people, this is a memorably rough time.
VELSHI: I think we can agree on that. Hang on a second, Gloria. I'm going to come back to you with that thought. This is a good discussion.
We need to try and square the circle to figure out how we take what we know and turn it into something that creates jobs. When it comes to how the president is handling the economy, Americans are particularly tough graders right now. What a low mark in economics could mean for the president's chance at re-election. We'll talk about that when we come back. (COMMERCIAL BREAK)
VELSHI: I'm Ali Velshi. Your back with YOUR MONEY. Boy, it's been an unsatisfying jobs report that's making us all think that this economy is stagnating. Jobs are really the number one issue.
But, again, I want to broaden this out and show you a little bit more about the economy. In fact, the broadest measure we tend to use of an economy is gross domestic product or GDP. Again, I've brought this back out to show you the first quarter, the first three months of 2009, when President Barack Obama took office.
Look at the drop in GDP, 6.7 percent. That's bad news, but look at where we've gone since then. We've seen some improvement and then as Lakshman said we started to see a bit of a slowdown. In the second quarter, those are the latest numbers we have, we had 1 percent growth. That's not particularly strong.
That's one measure. OK, most of you don't care about GDP on a day-to- day basis. You do probably care about your home prices. Let's take a look at home prices over the last little while. Right now, the median price of a single family existing home, the type in which most people live, an existing home is basically a used home. You bought it from someone else is $175,000.
That is relatively inexpensive. We've seen a very big drop since 2006, but here's the key thing. Not only is it a good deal. Look at that mortgage rate. For a 30-year fixed mortgage, if you can put 20 percent down, you have good credit.
In most cases, you can get a mortgage for 4.3 percent. There's a sale on houses and yet people are not going and snapping them up in the way that you'd think they would.
Finally, for those of you who have 401(k)s or IRAs, let's take a look at your investments and how they've done. This is the market for the last year, the last 12 months. The S&P 500, you probably have mutual funds that reflect this.
What a strong year it's been until the end of July, August, this thing came apart at the seams. But the bottom line is the market had done fairly well over the course of the last year.
And still is up 11.5 percent over where it was last year, 11.5 percent is not a bad return in a year on the markets. So I want to go back to Ken Rogoff. Ken, what grade would you, a Harvard economist gives the economy looking at that whole picture?
ROGOFF: Ali, it's hard to give it better than a "D" and that's because I'm holding off "F" in case it gets much worst. This is the worst financial crisis, recession, contraction, whatever you want to call it, since the great depression. And we're not coming out of it quickly. There's a danger it could get even worse. We're in a very rough patch.
VELSHI: Lakshman Achutan of the Economic Cycle Research Institute, I know you track this well and your company's been doing this for decades. Here's what I hear from some people, that it may not be terrible. It is just long and slow to get out of this. How do you look at this economy?
ACHUTAN: I'm very worried right now because we are already slowing, as your graphic was showing, again this year. And every time you are in a slowdown, as we are, the risk of a new recession spikes and given the most recent data, we are on very, very thin ice.
Looking for the forward-looking indicators, they haven't looked up yet. So in terms of grading this economy, I agree with the professor. It gets a very, very low grade.
VELSHI: All right, Professor Borger, I'm going to ask you next. You know, there are only a few ways to feel prosperous in an economy, right? The value of your home is increasing. The values of your investments are increasing or your wage is increasing.
I think you can live without a home. You can rent. You don't have to own one. You can get away for a while without investments, but you can't live without a wage. Let's see what the American people are talking about, how they're rating the economy.
They're actually rating the president, a CNN ORC poll shows that only one-third approve of the way the president is handling the economy. Two-thirds disapprove. Gloria, even White House budget experts announced this week they are less optimistic about economic growth and job creation.
They've said that it will be 2017 before we get down to 5 percent unemployment, which is where we were before the recession started. I hand this to you, Professor Borger.
BORGER: Yes, well, they're trying to lower expectations. I don't know how much lower the expectations can get. This is a terrible problem for the president, not only do people disapprove of the way the economy is going and the way he's handling it, but they are voters are pessimistic about whether things in the country are on the right track or the wrong track.
That's not exactly the kind of environment you want to be heading into an election with. And there was a retreat of senior White House advisers organized by the White House Chief of Staff Bill Daley where they called in a historian.
And they asked him, you know, is there any precedent for a president winning re-election when the economy is really lousy? And the answer was, yes, it doesn't happen very often, but in the last century, FDR and Ronald Reagan both managed to do it.
But in Reagan's case, the unemployment rate was heading down and right now in Barack Obama's case, it looks like it's stabilizing and could potentially head up. And that's a very, very difficult case for a president to make.
What he's got to say is the other guys will make it even worse and I don't know if that has resonance with voters.
VELSHI: Yes, it's a good question. All right, Gloria, thank you for that evaluation. Ken, great to see you as always. Lakshman, sometimes the less we see you the better. The more these bald heads are on TV, the more you got to worry about. Gloria, thank you for breaking the baldness of the whole operation.
The pressure as Gloria said builds on President Obama as he waits to deliver his long-awaited jobs plan in a speech on Thursday. But at least one Republican contender has a plan of his own, which is gaining some steam. We'll take a look when we come back.
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VELSHI: Employers added no jobs in August. The problem is clear even to the most optimistic observers, but what do you do about it? Economist Diane Swonk likes to tell us if there was a silver bullet, someone would have fired it already.
Now this Thursday night, the president will lay out his plan to put millions of Americans back to work. Former "New York Times" columnist Bob Herbert is Demos distinguished senior fellow. Bob, specifically, what would you like to hear from the president on Thursday?
BOB HERBERT, SENIOR FELLOW, DEMOS: Well, the president needs a big program that will inspire the American people. If we're talking about creating millions of jobs, it means it would have to be an enormous infrastructure program.
But I think even that would not be enough. We would need a direct government jobs proposal. This, I think, is necessary in the economy that we've got now, but I don't expect anything on that scale frankly.
VELSHI: I didn't ask you just to say that to get under Stephen Moore's skin, but Stephen Moore is with us. He's an editorial writer with the "Wall Street Journal."
I couldn't have set you up better for that, Stephen. You say you want the president to end job-killing regulations. I can imagine that you're not thinking of a massive stimulus infrastructure program as the answer you want to hear out of the president on Thursday?
STEPHEN MOORE, EDITORIAL WRITER, THE WALL STREET JOURNAL: No. In fact, you know, it's interesting, Ali that, you know, what Bob is saying and sort of my sentiments really reflect the division right now between the two parties in Washington where I think that the Democrats and President Obama will probably come up with something pretty big and in the direction of what Bob wants.
And it's also true, as Bob said, that Republicans are going to say "hell, no" to that, that we've tried it before. That our spending is out of control and that, you know, I think they'll hark back to what Ronald Reagan said back in 1981, which is that government isn't the solution, government is the problem. That's the big difference between the two parties and it may lead to gridlock. VELSHI: We are all desperate for a solution and one Republican presidential candidate, Jon Huntsman, is drawing some praise for the organization you work for, Stephen, "The Wall Street Journal," for his jobs plan.
Let me just run it through here for our viewers. He says he wants to lower taxes on individuals and corporations, bringing corporate taxation down to 25 percent. He wants three tax categories, basically, three levels of taxation.
He wants to eliminate a number of regulations including repealing President Obama's health care reform plan, reducing environmental protection agency rules directed at energy companies. In fact, he specifically cited energy independence, shale gas as part of his plan, getting more oil from the oil sands in Canada.
He also wants to prioritize free trade. You guys over at "The Wall Street Journal" like this plan. Why are you endorsing it?
MOORE: Well, the first question, Ali, is, who the hell is Jon Huntsman? Most people -- you know, he's 1 percent at the polls. And some people say he's probably running in the wrong primary. A lot of my conservative friends think he's too liberal.
But, you know what, for the last three or four months on this show, we've talked about it over and over again. You keep asking me, what do we do to get out of this recession? The next time we get together, I'm going to just hand you that 12-page report because I think there are a lot of very good ideas in that 12-page report.
The idea of cutting the tax rates, I love the idea of getting some of the regulations off business. Just one little example that you mentioned, the shale gas revolution that's going on in this country.
I was just in West Virginia witnessing it firsthand. You want to talk about economic development in places like wheeling, west Virginia, thousands of jobs being created without a penny of government money, let's nurture that industry. We could become the Saudi Arabia of natural gas. It's a really exciting thing and nobody is talking about it.
VELSHI: Well, I'll tell you. There are a lot of things I like about Jon Huntsman. One of them is that when a reporter asked him about how he got support for all this, he didn't suggest this was the ultimate plan.
He suggested this was an opening salvo and he'd like -- I like candidates who can go in with the idea that things can change and evolve. Bob Herbert, is there anything that Republicans are offering right now, say, for Jon Huntsman who as Stephen said is at 1 percent in the polls or roughly there about.
Is there anything that they are offering in terms of job creation that can be worked into part of a viable solution?
HERBERT: I don't think so. You know, I look at the Huntsman plan, for example. It seems to me very similar to the policies that we had under the George W. Bush administration, which sort of got us into this terrible fix or at least was a big component of getting us into this terrible fix in the first place.
But I don't think either party has anything that they've proposed that will get us out of this because I think they're missing the fundamental point. And that is that this economy does not appear to be capable anymore of creating enough jobs to put enough decent jobs.
Especially to put enough Americans back to work to maintain a vast middle class standard of living. We need an interim jobs program to put some people to work and alleviate the suffering while we have a national conversation about what we need to do overall about the economy.
VELSHI: When you say an interim jobs program, you mean a stimulus or something whereby the government puts unemployed workers back to work?
HERBERT: Yes. That would be primarily not to take care of the economic problem in the country, but to bring some relief to the millions of Americans who are suffering as a result of joblessness or underemployment.
VELSHI: Well, Stephen, I'll tell you. I don't take the partisan view on these matters, but I will give a big checkmark for Jon Huntsman for putting something on the table and that we can discuss.
I think by next Thursday, we'll have two things on the table. We'll have one from President Obama and we're expecting one from Mitt Romney as well. So we'll have stuff to discuss.
MOORE: Ali, we said in our piece, maybe Huntsman should give the republican response to the president's jobs program because it's a nice interesting sharp contrast. Look, I agree with you. At least he's putting ideas on the table.
VELSHI: That's right. That's what we need right now. Bob, Stephen, stay right where you are. It's Labor Day weekend. Labor, are unions still relevant? We're going to talk to the most powerful union voice in the country right after this.
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VELSHI: A majority of Americans give labor unions credit for improving wages and conditions for workers, that is according to a new Harris poll. But they also question whether members get their money's worth for the dues they pay, and think that labor unions are too involved in politics. Take a look at that.
Richard Trumka is the president of the AFL-CIO. He's and a member of President Obama's Council on Jobs and Competiveness.
Richard, thanks for being here. Let me ask you this. Some people say the success in getting what unions wanted for their members ended up hurting America's competiveness because we got unions manufacturing workers high workers great benefits and ended up not being as competitive, with outsourcing that work overseas. What's your response to that?
RICHARD TRUMKA, PRESIDENT, AFL-CIO: First of all, that's ridiculous. It was the labor movements that built the middle class; it was the middle class that made America great. We were very, very competitive when the unions were at their heydays. We spread the wealth around to everybody so that the main driver of our economy, consumer spending, people have money in their pockets to spend. We help create jobs. We helped come to the table to create quality products. We retrain our members. Next year we'll train 40,000 new members and retrain 100,000 members in the new crafts of the green economy to make them more competitive.
VELSHI: I hear you, but maybe that's the issue, though. That you did all of those things -- unions did all those things, at a time when we didn't have protections for workers in a lot of other areas. Now it seems to be -- we seem to simplify this into saying we can manufacture a widget overseas for less money than we can in the United States, despite the fact that our workers have better conditions and better standards of living. It is a charge we have to figure out a way to answer.
TRUMKA: Well, Germany's answered that. They have a high-wage economy. They continue to produce things that they can export around the world. What we've done here is we've given up in many instances. We have bad trade laws, we have tax laws that reward people for moving jobs overseas. If we'd focus on manufacturing here and all of us coming together, labor, government and business, and business and labor all working together, we can compete with anybody in the world. Because if you don't compete, if you don't manufacture things, Ali, you can't compete in the global economy.
Remember, where the manufacturing goes, so does the research and development. All the new cutting-edge products will be moved overseas, rather than here, because they haven't focused on manufacturing.
VELSHI: Ultimately-and we've seen that happen. Ultimately, what is it we're likely to manufacture here in the United States that can be made into products that can be sold competitively around the world?
TRUMKA: We can make anything here. We can compete with anybody in the world if you give us a level playing field. Stop China from manipulating its currency. Stop them from not complying with their child labor laws, prison labor laws, and we're more than competitive.
VELSHI: If you did-
TRUMKA: We'd take those markets back from them.
VELSHI: If you did that, with China, you somehow figured out a away that we haven't politically figured out how to do, to get them to have their currency to float, and you got them to deal with child labor laws and all sorts of issues like that, ultimately there are going to be places in the world by virtue of their time and development that can still do things cheaper than America. America may not be able to assemble and build an iPhone as inexpensively as it can be done in Asia, even with rules.
TRUMKA: That that's true. If we have a comparative advantage, they ought to be able to get it. But they shouldn't be able to get the work because they manipulate their currency and cheat on all the rules. And we shouldn't reward them for moving jobs overseas, giving them tax breaks for doing it. There are things we can compete in, around the world in manufacturing. We could put a lot of people back to work and be the leader again if we decide to do it. We haven't decided to do it right now, because the lobby that you're dealing with -- and you actually portended, or you told your listeners that we're competing against China. We really aren't., you are competing against the same companies here, and in China.
VELSHI: Sure.
TRUMKA: They move their factories there and compete against us.
VELSHI: I hear you.
TRUMKA: and they make a big profit.
VELSHI: In this economy, with this jobs situation, which is very important to you as a labor leader, it's hard to convince people that in the short term, insisting on tougher trade deals, and insisting on those places that manufacture the goods we by having higher standards, will end up costing us more for many of the goods we buy, electronics, clothes, all the things that we import.
TRUMKA: Ali, 78 percent of American people agree with me. They think the trade laws we have, have been bad. They haven't benefited this country.
VELSHI: Oh, I'm not disagreeing with you, but you will agree that-
TRUMKA: And we really should change them.
VELSHI: But it will increase costs.
TRUMKA: No, it doesn't have to increase costs. That's nonsense. It doesn't have to increase costs. We can compete with people. If they have a comparative advantage, they ought to be able to send products here that will help us. But if they're sending products here at a cheaper rate because they're cheating, it isn't cheaper. It lays Americans off. Taxpayers have to pay for the people that are laid off. We have to provide benefits for them. It's not cheaper. It's far more expensive. It's cheaper to have an economy that really is humming, producing things and sends products overseas, not jobs.
VELSHI: So normally when I get a good discussion like this, I say to somebody, if you have the ear of the president-except you do have the ear of the president. You are part of this council, the president's council on jobs and competitiveness. Has anything happened with that council?
TRUMKA: Not nearly enough. I think it has been timid. It needs to be more assertive. It needs to take positions on what needs to be done rather than what they think can be done. I think it needs to do more. Yesterday we had a very productive session in Dallas, Texas, on infrastructure, where everybody came together. Where business, labor and government all said, infrastructure has to be done, it has to be done at a big scale to make us competitive. And even though everybody agrees, nothing seems to be getting done because of the radical political games that are being played in the House of Representatives right now, by the Republicans.
VELSHI: What's your answer? What do you think President Obama can do next Thursday that will have the greatest effect on creating jobs in America?
TRUMKA: Several things. Large-scale reauthorization of the Surface Transportation Act. That's been a bipartisan issue for 40 years. All of a sudden, the Republicans want to cut 30 percent from the baseline that everybody knows is already half of what it should be. The FAA reauthorize it. Clean Water Act, reauthorize it. Send some aid to state and local governments so they don't continue to lay off people, and we can actually bring things together.
Target communities with high levels of unemployment with work. That would be the African-American communities, the Latino communities and communities around the country where the level of unemployment is real high. And we have to increase the amount -- or to help fill the hole in consumer demand. We have to continue to extend unemployment benefits so that 3 million workers don't stop spending and drag the economy down into the ground.
The last thing I would say is we have to regulate Wall Street to prevent them from going back to the things they did before that brought this economy down to begin with.
VELSHI: Richard Trumka, good to have you on the show, as always. Thanks for joining us.
TRUMKA: Thanks, Ali. Thanks for having me on.
VELSHI: Stephen Moore, Bob Herbert, let's start with you, Bob. Unions, Labor Day, are unions still relevant?
BOB HERBERT, SENIOR FELLOW, DEMOS: Unions are more important and more needed than ever right now. I just believe in the fundamental right that workers have a right to be represented in the workplace to fight for the issues that are important to them, and to give them some leverage when they're confronting their employers.
VELSHI: What do you think, Stephen?
STEPHEN MOORE, EDITORIAL WRITER, "THE WALL STREET JOURNAL": I'm interested in this idea of fundamental right, because I agree with that. Every worker should have the fundamental right to join a union.
But, Bob, every worker should also have a fundamental right not to join a union, not to associate with a union. We have half the states in this country that have forced unionism. That's not fair. That is not pro-choice. But you know what it is interesting, Ali, I listen to Richard Trumka and I agreed with a lot of what he said. If you cut me, I bleed red, white and blue. I do not want to see jobs sent overseas, to China, India, or Europe. We have to do something about competitiveness. I agree with him on the tax system.
You know, let's compare China with the United States. China has about a 20 percent corporate tax rate. We're at 35 percent. That means every American company starts with a 15 percentage point disadvantage. It's not surprising we're outsourcing jobs.
VELSHI: There's something odd in this world where Stephen Moore and Richard Trumka are coming together on the same side.
(LAUGHTER)
MOORE: A little agreement, a little bit.
VELSHI: Listen, we have a lot of work to do, that much we can agree on. Bob, always good to see you. Bob Herbert, senior fellow, Demos, and Stephen Moore, editorial writer at "The Wall Street Journal".
When we come back, we'll tell you the single best way to insulate yourself against unemployment.
(COMMERCIAL BREAK)
VELSHI: Welcome back to YOUR MONEY. Joining me now is Christine Romans, the host of CNN's "YOUR BOTTOM LINE", and Pete Dominick, he is the host of Sirius XM's "Stand Up".
With all this jobs talk we have been getting a lot of feedback from people who say, you know what, education is really expensive these days. Is it really worth it? There are so many people out there who are unemployed who have bachelor's degrees, who have master's degrees, who have professional degrees, even who have Ph.D.s.
So, I brought in the big guns because I need to stamp that argument down. The best insulator against unemployment is a good education, why, Christine?
CHRISTINE ROMANS, CNN ANCHOR, "THE BOTTOM LINE": Because if you have an education, your unemployment rate is half what the rest of the world is. If you have an average unemployment rate right now of 9.1 percent, the unemployment rate for someone with a bachelor's degree is 4.3 percent. You go out and let's take a look at last year's full year numbers, for example. Somebody with a professional degree or Ph.D. their unemployment rate is 1.9 percent. Think of that.
When you look at the earnings of these people, too. Last year, for example, somebody with a bachelor's degree, their earnings, $1,038 a week. How does that compare with someone who went to just some college with no degree? Only $626 a week, think of that. High school diploma, $626, or some college, no degree, $712 a week; I mean, you can see, you're talking about 40 percent, 50 percent increase --
VELSHI: A professional degree gets you almost four times -- three times -- more than three times what not having a high school diploma gets you.
ROMANS: So you hear all this belly aching and it is right to be concerned about college debt. How many times have you heard me talk about this? Tuition inflation, that tuition bubble that hasn't popped, but if you're making $400 more a week because you have a bachelor's degree?
VELSHI: Right, over the course of your working life, that's going to be good.
ROMANS: You're going to more than pay for it.
VELSHI: Pete, still hearing from people, though, who say, why then do we have people with professional degrees, engineering degrees, nursing degrees, accounting degrees that don't have work? That is a hard question to answer.
PETE DOMINICK, HOST, SIRIUS XM'S STAND UP: Well, that is true, but things have changed in this new atmosphere, in this new world where we have technology and we have access to being educated on almost every single issue you can imagine and being educated formally and getting an online degree. That has changed. I'm proof that an eighth-grade education, you can do pretty well. I've got an associate's degree, technically. But it doesn't-
VELSHI: You stopped thinking in eighth grade?
DOMINICK: Well, I stopped reading and being distracted by shiny things and attractive women. But it doesn't discount Christine's statistics. The bottom line is the data is correct. It tells the truth. But there's other ways around this.
ROMANS: Yes, agreed.
DOMINICK: A lot of informal ways. So don't give up.
VELSHI: You often make the point that you have seen some studies which indicate there are a lot of state schools where your rates are lower, where the placement rates and the success rates and the salaries are as high as they are at some private --
ROMANS: And "Smart Money" magazine and PayScale, just put out this data showing the best return on your investment is a public college education, because those liberal arts private schools are so expensive. You might earn a little bit more, but you're going to pay a little bit more.
Now there is one other detail that I have to bring in to this.
DOMINICK: I should say that I got a football scholarship to the university of phoenix online.
(LAUGHTER)
DOMINICK: But I don't want to brag. ROMANS: There is one other statistic that's really important for me to talk about here. Because we are talking about the difference between 9.1 percent unemployment rate, and a bachelor's degree, 4.3 percent unemployment rate. The black unemployment rate this month, 16.7 percent, you guys that is the highest it has been since July 1984.
VELSHI: And the male unemployment rate is higher than the female unemployment rate. So, if you're a black male in this country, your chances of being unemployed are substantially higher.
DOMINICK: Nobody misses the irony, under the first black president.
VELSHI: That's right.
ROMANS: Well, you have to go back to Reagan, to see the last time that it was this high of an unemployment rate for African Americans. So the question-well, the statement I will make is in this economy, it's really working for some people. It's really not working for other people.
VELSHI: Let me give you the other argument, Pete. This is not to discount the fact that there are good trades out there that are quite lucrative these days.
DOMINICK: Absolutely.
VELSHI: And the fact that some people still can get by in this economy quite well on the strength of a liberal arts degree, or an associate's degree and in some cases on no degree at all. We're just saying statistically it changes your game.
DOMINICK: Right, but you mentioned one thing very important. You mentioned trades. We could invest right now, if government would get together for infrastructure. There is demand for $2 trillion. I'm just guessing. I'm just guessing that a lot of those jobs would be held by people that have high school degrees, welders, pipefitters, you name it.
ROMANS: Agreed.
VELSHI: But you have to have a plan. Both of you, great, to see you as always. Thanks so much.
Watch Christine Romans, 9:30 a.m., on Saturdays, on your bottom line, of course, every morning with me, on "AMERICAN MORNING". Pete, good to see you as always.
Next, are you brave enough to get in the car with me? Don't worry. It will be fine. I'll take you inside one of the most talked-about new cars of the year up next.
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VELSHI: When Italian automaker Fiat acquired Chrysler, the hope was to bring the almost bankrupt American brand into the 21st century with its European styles, like the Fiat 500. Now, currently Fiat has sold a little over 11,000 cars in the United States this year. That's according to its latest numbers. So is this Fiat 500, it is going to change the face and the buyer of the Chrysler brand and moreover is it worth all the hype?
I went to "Consumer Reports" test track in Connecticut where the review all the latest cars on the market for consumers like you and me. And I put it to the test with David Champion, senior director of the Automotive Test Center.
(BEGIN VIDEOTAPE)
VELSHI: We have seen what this car can do if you want to drive it that way. Most people are probably not going to drive it that way. This is where Dave will hand the car over to me. Let's see what it handles like when we're driving around like regular folk.
DAVID CHAMPION, "CONSUMER REPORTS": Let's go.
VELSHI: I would say it qualifies as easy to drive.
CHAMPION: Yeah.
VELSHI: What is your sense of it? What is your sense of this car?
CHAMPION: It is an OK car.
VELSHI: Right.
CHAMPION: It looks cute. It is fun to drive. But would I want to live with it on a day to day basis? No.
VELSHI: Is this going to be a big part of the comeback strategy for Chrysler? Will it work?
CHAMPION: I think it will bring a young demographic in. I think it will bring somebody that wasn't looking at a Chrysler to actually come into a Chrysler showroom. From that point of view, it is going to be a little hello car, will bring a totally different consumer into Chrysler.
VELSHI: Bouncing a little bit on this road. This doesn't score as well as something else in this price category, other cars in this category. Do you think it is likely to improve or this is the car they're offering?
CHAMPION: No, a lot of the factors that make it score poorly is the rear seat room, the ride that isn't particularly good, and also, you know, the overall fuel economy is not brilliant for its size.
VELSHI: What kind of mileage does this get?
CHAMPION: This gets 34 to the gallon.
VELSHI: OK.
CHAMPION: Which is OK.
VELSHI: What is your evaluation of this from a safety perspective?
CHAMPION: It comes with all the safety features, side air bags, front air bags, electronic stability control. It does well in crash tests we have seen so far. This is a relatively small car and a bigger, heavier car will impact mar of its energy into a smaller car. So I would have certain concerns about the overall safety.
VELSHI: For the price you can pay for this car, what are you competing against?
CHAMPION: The 500 is pretty highly priced, $18,000. You can buy an awful lot more. You can look at the other sort of budget cars which are in this area, such as the Honda Fit, the Mini, Hyundai Accent and Ford Fiesta.
VELSHI: Your overall view of this car?
CHAMPION: It is a cute little car. It might be difficult to live with. It is like a pair of high heels. You look good in them, they're cute, but it is a bit uncomfortable and you wouldn't want to live in those for a day to day basis.
VELSHI: Dave, thanks very much.
CHAMPION: Thank you, Ali.
(END VIDEOTAPE)
VELSHI: A little fun. Back to business.
Now, if Congress and the president insist on waiting until the last minute to accomplish anything, then I say it is time to set a jobs deadline. My "XYZ" is next.
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VELSHI: Time now for the "XYZ" of it.
News that the U.S. economy created no jobs in August has driven home a point that most of you already know. We're stagnating. We're at risk of another recession and the jobs crisis in this country is bigger, more serious, and more authentic than the debt crisis ever was. As you listen to me, President Obama and his team are readying what so many hope will be an assault on this seemingly stubborn un-moveable economy.
So, I'm addressing this week's "XYZ" directly to the president, in the hopes that he is still open to some ideas.
First, Mr. President, put your ideas in. We already know there is a contingent out there that will stand in the way of anything you try to do. I'm beginning to believe cynics who believe there are some who would prefer that the economy not recover soon enough for you to benefit from it, politically. But like those who stood in the way of the debt ceiling increase, they are now playing with fire; with the livelihoods of 10s of millions of out-of-work Americans and with the shapes and contours of the American dream for decades to come.
Congress has not led on jobs, they have ignored them. This situation is now desperate. The weakened patient that is the U.S. economy cannot withstand another blow. What you need to do will fly in the face of those who think government is the problem. Sure, your opponents will embrace the tax incentives that will create jobs that you're likely to announce but we need to go big, finding ways to put the unemployed to work now and ways to really retrain millions of Americans who are trained for the wrong jobs for the future.
Manufacturing in America will not return to its hey day, regardless of how many more trade agreements we sign and how much more we trumpet fair trade laws. Ultimately business does need to create jobs. Until they do, we need to extend the safety net for the millions of long- term unemployed in this country. The 99ers that neither you nor Republicans adequately acknowledge. We need a way to retrain workers for the long-term and whole protecting workers in the short-term.
And finally, go big Mr. President. There are those calling for you to do nothing at all or better yet to undo the very policies which are seen to be interfering with business doing what it does best. Just cite economics 101. Demand drives business in hiring. Americans are not spending money because they're frightened about their economic prospects. At your best moments when we were in the depths of the great recession, you articulated a vision of a strong and vibrant America. That vision seems distant to some Americans as their personal situations mirror those of people who live in far less developed nations than the United States.
Go into that store of inspiration that you have and tell America how it can be great again. Extract yourself from the embarrassing quagmire that Washington has become. America has reason to be proud and hopeful. This is a tall order, but lay out the road map on Thursday, tell us how you think we'll get there, maybe you'll be right, maybe you won't be, but we'll have something to talk about other than politics as usual.
That's it for me. Thanks for joining the conversation this week on YOUR MONEY. We are here every Saturday, 1:00 p.m. Eastern and Sunday at 3:00 p.m. I'll see you bright and early Monday morning starting at 6:00 a.m. on "AMERICAN MORNING". Stay connected 24/7 on Facebook, and on Twitter. My handle is @Alivelshi. Have a great weekend.
