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Dangerous Political Game; Angry at the Economy; America's Debt Crisis; Fast Checking the Presidential Candidates; Fiscal Conservatives Don't Embrace Romney, But Cain Lacks Foreign Policy Experience
Aired October 16, 2011 - 15:00 ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
ALI VELSHI, HOST: While America may be on the verge of another recession, are our political leaders paying attention to creating jobs or saving their jobs.
I'm Ali Velshi, welcome to YOUR MONEY.
The economies in the United States and Europe are teetering on the edge. It's a time when bipartisanship and cooperation are desperately needed in Washington but instead both sides are accusing each other of playing politics.
Stephen Moore, a good friend of the show is an editorial writer with "The Wall Street Journal."
This week, as expected, Stephen, President Obama's jobs plan failed to pass the Senate with an election in November 2012, just over a year away, are we looking at another major overhaul in Congress and perhaps the White House? Are we looking at a situation when -- where voters might say throw all the bums out?
STEPHEN MOORE, EDITORIAL WRITER, "THE WALL STREET JOURNAL": Yes, we are, Ali. I mean I've been looking at these numbers. You have, too. I've never seen incumbents in Washington so unpopular, even more unpopular remember than in 1994 when we had a big election when we threw the bums out. So this is not a good time to be an incumbent whether you're a Republican or a Democrat.
Some of the political pros I'm talking to are thinking that as maybe as 100 incumbents in the House could lose, which would be a near record.
VELSHI: So if we're conservative like you, for fiscal conservatives like you, what is the best strategic way to achieve your goals given that everybody is mad at everybody right now?
MOORE: Well, look, I do think that it starts with the president and -- and, you know, I don't think that this plan that he put forward is a serious jobs plan. I mean to increase tax rates I think would actually hurt the economy.
And Republicans were never going to go for a big new spending plan. So I don't think the president really put this out there as a -- as something he thought it would pass but rather as kind of a political document.
I -- I do think there's still a chance, Ali, that there might be a smaller package that passes sometime in the next month or six weeks. It might be that payroll tax cut, which is part of what the president wants and maybe some, you know, other infrastructure spending but much scaled back. I don't know if it's going to do enough to stop this real slide in the economy that continues to seem to get worse.
VELSHI: You're optimistic because in the next six weeks they are also going to have to deal with this -- this super committee that's --
MOORE: Let me just say one quick thing.
MOORE: At least, you know, we did have a bipartisan triumph this week. And that was these trade deals passed. I'm a big fan of those. I think they will create jobs and those were three trade deals with countries like Korea and Panama that -- that we had a president that was for it and Republicans and Congress were for it so sometimes bipartisanship have happened.
VELSHI: All right, all right. Stay right there, Stephen.
Chrystia Freeland is the editor of Thomson Reuters Digital.
Chrystia, Republican Speaker of the House John Boehner says he's disappointed in President Obama. Listen.
(BEGIN VIDEO CLIP)
REP. JOHN BOEHNER (R-OH), HOUSE SPEAKER: I can't tell you how dangerous our situation our economy is in and -- and how dangerous the situation in Europe is. And yet the president some 14 months before the election throws in the towel and decides he's going to spend all this time out campaigning.
(END VIDEO CLIP)
VELSHI: If you recall, Chrystia, during the debt ceiling debate, the president was saying the same thing of Congress. I'm here, why don't you come back and deal with this problem? What do you make of this?
CHRYSTIA FREELAND, EDITOR, THOMSON REUTERS DIGITAL: There is a certain pot calling the kettle black here, right? Isn't there, Ali?
I'm disappointed in everyone in Washington right now. I mean, I do think Boehner is right in one thing that now is a moment when America needs very decisive leadership and the world needs it. And I think sometimes, you know, when we look at what's happening, you know, at the fragility of the U.S. economy, at what's happening in Europe, it's easy to throw up your hands and say disaster is inevitable. But actually it's not.
Good policy right now could save the world. And so I share the disappointment but I think Boehner is equally to blame. VELSHI: You make a very good point that our next guest has written about David Gergen, a CNN Senior Political Analyst.
And, David, I'm paraphrasing your words but you have actually said that this isn't like a hurricane; this is a public policy matter. These are things that can be undone. Trust in government. So Chrystia said she is mad at everybody. Trust in government to do the right thing has hit an all time low.
Take a look at these numbers. When are the politicians in Washington, David, going to realize that the same old way of doing business is not what Americans want, they want a change of course and specifically to a point that you've written about, David. The power is in the hands of Americans to change course.
DAVID GERGEN, CNN SENIOR POLITICAL ANALYST: It certainly is, Ali and if you go to a variety of communities in this country you see things actually happening that are encouraging.
I was just in New Orleans a few days ago and that city has turned itself around since Katrina. It had a near death experience, but its politics are better now, the business community is investing and the schools, there's a huge turnaround going on in the schools.
That can happen in some communities and the mystery is why it's not happening in Washington. And so far there's just been a lack of will and I do think that you have to keep throwing the bums out in order to get the message done. I don't see any other way the public can succeed in bringing better government to Washington except to say no.
VELSHI: How do you do that? How do you do that, David, effectively? Because what happened in 2008 is people who were frustrated by what they felt was very big government and attracted to a fiscally conservative campaign run by in many cases tea partiers but other fiscal conservatives elected a Congress that got as little done as the Congress before that.
So, literally, do you just keep throwing the bums out until you get a group that gets something done?
GERGEN: Well, that's the -- I don't see that the public has much -- there are many other opportunities or options available to the public. You could -- some of the givers could do what Howard Schultz, the CEO of Starbucks has done and that is to declare a boycott on giving any more money to the politicians and he's got a bunch of CEOs. He's got over 100 CEOs to agree with him on that. That can also make a difference. Politicians pay attention to that.
But the critical thing, Ali, right now, is that the campaign for 2012 has started way too early. Both sides have done this. Republicans were out there first. You know, there was a time, even as you recall, Mitch McConnell said, our most important objective over the next two years is to bring down this president.
That was a campaign statement early, early, early after the 2010 elections. Now the president has gone on the road almost full time. He's no longer governing. What he needs to do is actually restart negotiations both on jobs, because the republicans have shown, as Stephen just said, that on some issues like trade they were the ones that put the votes out there, you know.
Over 80 percent of the votes against the trade agreements the president pushing for job purposes, over 80 percent of the votes against in the House, came from Democrats. The Republicans won that. Republicans are prepared to sit down with the president on some issues and try to negotiate this out. And certainly, Ali, you know, we've -- we've lost sight of this deficit group. Where are they?
VELSHI: Yes, well, that's a good discussion we're about to discuss, actually. Hold on. There -
VELSHI: -- because there are -- there may be another road and it may involve this anger that we're seeing. The economy has got people angry. It's got people scared. Both parties go out there and say that they feel your pain but which is the side that can turn that anger into votes in November that might be our third road.
We're going to take a look next on YOUR MONEY. All of you stay there.
VELSHI: The Occupy Wall Street movement has the attention of half the country. An ORC International Caravan poll found the country almost directly split on whether they had heard of the protest or not. But what about whether you agree with the movement? Twenty-seven percent said yes, 19 percent said no, 54 percent were not sure. Not surprising since the goals of the Occupy Wall Street movement remain relatively unclear and unfocused.
So David, I want to ask you, Tea Party anger eventually translated into an organized movement capable of getting many candidates elected and directing much of the conversation that we're talking about right now. Is either party, but one would assume particularly the Democrats, looking at this Occupy Wall Street movement as something that they can harness and turn into votes?
GERGEN: Sure. They, as the president has made it clear that he's very sympathetic with many of the sentiments he's hearing out of there, even though the goals themselves are not clear, this could be, you know, a Tea Party of the left, a progressive Tea Party, if you would like.
But it -- and it does bear some similarities to what we saw with the Tea Party springing up from the grassroots. But so far it's inchoate and, you know, it hasn't come together in a way you can say here are the top three things that they believe in and we'll have to wait and see. It could grow but let's have some cold weather here and see how many people are willing to stick it out. We'll have a much better sense --
VELSHI: Right, they've actually pushed back on the idea we should be able to have a list of three things that they stand for and Stephen you've actually written that this could -- this could bite the Democrats?
MOORE: It could. I mean, look, I was out there in New York about a week ago and then I was at the protest at Freedom Park here in Washington this week. And a lot of the messages just don't -- aren't going to be comfortable to kind of mainstream middle class, independent voters.
VELSHI: Which messages do you think? Which -- yes --
MOORE: For example, this chant of, you know, "down with free enterprise." I mean who believes that free enterprise is the problem with America? So I do think that there's a problem that it becomes so radical, and kind of the message is so off target that it could actually turn off voters who are watching this on TV and say, wait a minute, who are these people?
VELSHI: Chrystia, what's your analysis of this? You've -- you've been watching this unfold.
FREELAND: Well, I do agree with David that I think, you know, this has a lot in common with the Tea Party. I think that both movements, which are both I think very important, are tapping into extremely justified populist anger with where the economy is.
I disagree with Stephen. I don't think Occupy Wall Street is at its heart particularly radical. I think it is a sort of a progressive version of the Tea Party. But what I think is missing there is a clear notion.
So I think there's a shared anger, a view that this economy isn't working. But the strength of the Tea Party was they immediately had a view on how do you fix it, make government smaller, get government out of the way.
The Occupy Wall Street guys have almost exactly the same complaints and there is a similar sort of anti-elitist vibe in both movements. But the Occupy Wall Street group doesn't really know what the magic bullet is. And I do think that that makes it harder for Democrats to harness and -- and harder for the movement to have such a direct political impact.
MOORE: Well, Chrystia, but also the message is kind of contradictory. On the one hand they say, you know, down with Wall Street, down with businesses, down with profit, down with corporations, and then they say we want jobs. Well, where do they think jobs come from?
FREELAND: Well, I agree but Stephen, these movements -- but these movements are always internally contradictory. I mean you can say the same thing of the Tea Party, that there's that sort of get your government off my Medicare.
FREELAND: So, you know, I think both of the movements are -- I think they are very real. We should not ignore them, we should not have a sort of hoity-toity view of this is populist and so they don't have an absolutely clear philosophy, because they are right. I mean the truth is, you know, the U.S. economy is not working for the American middle class.
MOORE: That's for sure.
FREELAND: And we should listen to people saying that and it's -- I think it's the job of the politicians, actually, to formulate a clear policy.
VELSHI: David --
GERGEN: Yes, I just wanted to add, I do think it has potential and it hasn't yet come together. But the unemployment rate among young people in this country is so high, so much higher than the rest of the country. That if the young people were to come together and just have a demand for jobs, without a particular agenda to go behind it, it could be much like the anti-war movement which, you know, didn't have a timetable for getting out of Vietnam but knew what it wanted and that was to end the war.
And if young people were to come together, I think they could become a potent force and they could turn out in large numbers as they did in 2008 for Barack Obama and made a big difference in the election.
So that's where I think the potential is and it's amazing to me that the political class is not paying more attention to the young and not doing more to create jobs for the young. Because this is a very idealistic generation that could get really turned off and soured on America if we don't respond.
VELSHI: Right. Although the good news, David, is that there are young people involved in this protest who you will often hear are disengaged and not involved in the political process. And however you like how they are doing it, they are getting involved. There is a distinction that is being drawn here, Stephen. They are calling themselves the 99 percent in contrast to the 1 percent who control the wealth in this country. It is really drawing class lines. That -- that could be some cause for alarm.
MOORE: Yes, so what I find to be most dangerous about the movement is this - and by the way, this started with Warren Buffett and President Obama saying, you know, that the rich aren't paying their fair share and we have to raise taxes on the rich.
Look, the -- I'm not here to defend rich people, but I think it is important to understand that those people in the top 1 percent, 5 percent, 10 percent are the preponderance of the employers in this country, the people who write the, you know, the -- sign the front end of the paycheck not the back end of the paycheck.
And I think this idea that somehow we can just steal from the rich and that we're going to make the economy better off, that ain't going to work and it's never worked before. We've got to -- we've got to do as John F. Kennedy and Ronald Reagan said, we have got to create a rising tide that lifts all boats, not -- not try to divide the pie differently.
VELSHI: Stephen Moore thanks so much for joining us. Stephen Moore is an editorial writer with The Wall Street Journal. David Gergen, senior political analyst at CNN and Chrystia Freeland, editor at Thomson Reuters Digital.
Well, the short-term financial future of the United States could be decided in the next month by 12 politicians in Washington. I'll explain when we come back.
VELSHI: The clock is ticking for the super committee. The goal for the six Democrats and six Republicans on the Hill reduce our nation's deficit by at least $1.2 trillion over the next 10 years.
Norm Ornstein is a resident scholar at the American Enterprise Institute.
Norm, good to see you here.
The committee's plan is due in November by about Thanksgiving. Then they've got until Christmas to vote on it. No changes to whatever this committee decides. You think their influence goes far beyond cutting the deficit. You recently wrote that the super committee may have the fate of the world in its hands. You wrote that they have an unprecedented chance to do something remarkable.
Norm, what are you talking about?
NORM ORNSTEIN, RESIDENT SCHOLAR, AEI: Thanks. Well, let's hope they don't produce a turkey by thanksgiving, Ali.
But, you know, the fact is that we've got very few weapons at our disposal to try and jump-start not just our economy but the global economy and we have almost no opportunities left to do the kind of grand bargain that every bipartisan group, the Simpson-Bowles Commission, the Rivilan Demanachee (ph) Commission, the gang of sixes come up with. The $4 trillion deal over 10 years, that's tax reform, revenues, deal with the major health entitlements especially and the rest of spending. And this is our last chance.
I believe that if the super committee is able to do that, it would create a psychological shock wave that could actually have an extraordinarily positive impact on that portion of the economic trouble that is psychological, call it 20 or 30 percent that because nobody expects it to happen.
If they don't do it, I'm very skeptical that they will actually get the $1.2 trillion, which may be even harder and then we're back to everybody believing that we simply can't solve the problems. Nobody will spend, business won't invest.
VELSHI: Right, so you're saying the upside surprise will be nice because we all kind of believe nothing's going to happen. Hold on a second, Norm. The Co-chairman of the super committee Democratic Senator Patty Murray seems to understand what you're talking about.
(BEGIN VIDEO CLIP)
SEN. PATTY MURRAY (D), WASHINGTON: The public is watching us very closely to see if we can show this country that this democracy can work. I carry that weight on my shoulders and so does every member in the committee.
(END VIDEO CLIP)
VELSHI: I want to bring Jeanne Sahadi in. She is a senior writer at CNNMoney.
Jeanne, it may be a little more serious than -- than Norm's even putting it because maybe we're not going to get $4 trillion in cuts over 10 years but if we don't get the $1.2 trillion, let's not forget this triggers a series of across the board cuts that could be substantially more dangerous.
JEANNE SAHADI, SENIOR WRITER, CNNMONEY: Well, it's -- it's -- there are across the board cuts that nobody is supposed it like. Half of it would be in defense, half of it being domestic discretionary. So that's something for Republicans and Democrats to hate. But people say that the Congress may, in fact, you know, modify or even repeal the trigger because it may be --
VELSHI: Because it's too dangerous.
SAHADI: It's too dangerous, right. So, well, it's too dangerous and it's too politically unpopular. But the problem is, you know, it's not just the public that's looking at, you know, this committee to see if they can show that Congress can work it's the credit rating agencies as well. This summer after the debt ceiling debate, they all sort of gave us fair warning that said, look, if this process fails, that is going to -- that is going to negatively affect your rating. And as we know, S&P already downgraded us, Moody's put us on a negative outlook.
VELSHI: But isn't that threat sort of empty given that after being downgraded the first time the cost of borrowing in the United States went lower, the cost of the United States borrowing money is still lower because when you look out around the rest of the world it's still a safer bet than Europe.
SAHADI: Of course, yes, that's right and that may continue for a while. But one thing you don't want is to add even more instability to the market. One of the things the downgrade this summer may have done is contribute to the volatility in the market, which nobody likes. So it's just -- it's one more thing that we don't actually need. It may not stop the world if they do downgrade us but it's a negative factor going forward.
VELSHI: Right and Norm, in Roll Call in September you wrote that the failure to act in the strong bold way that you're talking about right now could actually risk a depression. We've already got some people thinking that we're going to double dip or maybe headed for a second part. You think this could -- the failure to act could be substantially more serious than the status quo.
ORNSTEIN: I'm really worried about Europe and I think it goes well beyond Greece. My colleague Desmond Lachman who's been spot on in most of his predictions is pessimistic. You know, there is so many signs that are parallels to what we saw in the early 1930s that it's kind of chilling. So, you know, I'm looking at this super committee as -- Obi-Wan Kenobi, here, our only hope.
VELSHI: Let's hope they take it as seriously. I think they do but let's just hope they do. You know, whether it was the budget fight this year or the debt ceiling, we didn't do anything until we were right up against the deadline, literally the 11th hour and in some cases, beyond the 11th hour. So let's just hope, otherwise, Norm and Jeanne, keep Thanksgiving free because we'll be here talking about it. All right, thanks to both of you, Jeanne Sahadi and Norm Ornstein.
Herman Cain says his 9-9-9 plan can simplify the tax code and still produce enough revenue. Is it true? We're going to put Tom Foreman on the fact checking case next on Your Money.
VELSHI: Hermain Cain says he can simplify the tax code. Mitt Romney says we have to cut government spending. How much of what the two candidates are saying is actually true? CNN's, Tom Foreman now with a fact check.
TOM FOREMAN, CNN CORRESPONDENT: Ali, every politician in Washington is talking about the economy these days and jobs and what they can do about it. And one of the plans getting the most attention right now is Hermain Cain's 9-9-9 plan, which he says will replace all of the revenue that we're currently taking in with a massive revamping of the tax code. Listen --
(BEGIN VIDEO CLIP)
HERMAIN CAIN, REPUBLICAN PRESIDENTIAL CANDIDATE: It will replace the corporate income tax, the personal income tax, the capital gains tax, the death tax and most importantly the payroll tax.
(END VIDEO CLIP)
FOREMAN: But is that true, this idea that his 9-9-9 plan will do all of this? Well, there are some very clear skeptics out there right now among economic analysts.
People who look at this and say this idea of a 9 percent corporate tax, a 9 percent personal tax and a 9 percent sales tax may not add up to what we think it will and in part because it's unclear what exactly will be covered by this sales tax and what exemptions there might be depending on where your spending.
Spending habits may change if you put an additional 9 percent tax on everything we buy. So how do we know how much we're going to be spending then? So how much revenue will we get?
In corporate tax calculations also seem like something that can be very fuzzy under this plan. So we have to give this a ranking of true but incomplete with an emphasis on the incomplete simply because it seems like no one in Washington has yet been able to totally pin down what this plan would mean.
Now, moving on, Mitt Romney also had some interesting things to say about all of this, particularly the idea that as this committee tries to balance the budget and figure out what we should do about reducing our deficit that they should be looking at the idea of less government spending.
(BEGIN VIDEO CLIP)
MITT ROMNEY, REPUBLICAN PRESIDENTIAL CANDIDATE: The American people want to see growth and jobs and they believe that the right way to do it is by cutting back on the scale of government and they're right.
(END VIDEO CLIP)
FOREMAN: So, is this true that Americans, in fact, want less government spending? Yeah, 57 percent of one of our recent polls said we need major cuts to domestic spending.
What Mr. Romney did not mention is that 63 percent said we also need higher taxes on wealthier Americans and businesses. By leaving that out, he also falls into the category of true but incomplete. I'm sure we'll hear a lot more from every camp as the campaign goes on, Ali.
VELSHI: All right. Thanks, Tom. In addition to criticisms of his economic plan, Mitt Romney has had trouble gaining support among the Tea Party. CNN Contributors Dana Loesch and Will Cain are here. Dana is also an organizer with the Tea Party.
Dana, looking at some of your Tweets here, just to get a flavor of where you come from when it comes to Mitt Romney.
"I was against him last election, I'm against him this election, I will be he against him so long as he is an unrepentant rhino, which is a Republican in name only."
That go on. That is sort of the flavor. You are not supporting Mitt Romney.
What's your problem with Mitt Romney who is polling, most days higher than everybody else in the Republican race.
DANA LOESCH, CNN CONTRIBUTOR: Well, he and Herman Cain are neck and neck in a lot of polls. Cain came out on top in the recent poll from South Carolina. But the last primary I was weighing which was worse Romney care or McCain-Feingold. And I figure that McCain-Feingold for the immediacy was worse. But McCain is not a factor this primary. So, Romney his record is what I have a problem with. He's not a conservative. He's simply not a conservative candidate. I really do appreciate the people who try to insist that he is. I mean, look at his record when he was governor of Massachusetts, 47th out of 50 states in terms of job creation. He passed-it's still a socialist health care plan at the state level. Socialism at any level is still socialism. He tries to use federalism as a way excuse it.
VELSHI: Just to stick up for him a little bit, let's bring in Herman Cain's nephew, William Cain.
WILL CAIN, CNN CONTRIBUTOR: That's my uncle and that's my job. I didn't know that.
VELSHI: Will Cain is not, as far as I know, Herman Cain's nephew. But Will Cain is a CNN contributor.
Will, Herman Cain is giving Mitt Romney, at the moment, a bit of a run for his money. But Mitt Romney is still most Republicans choice for the most part.
CAIN: I have to say Dana is not alone in her feelings about Mitt Romney. There's a complete lack of enthusiasm. And it is not just Dana, you can se it in the polls. While Rick Perry and Michele Bachmann have their rise and falls, from 7 percent to 20 percent and back down to 7, virtually none of that support seems to flow over to Mitt Romney.
There's a sense of resignation with Mitt Romney. Support is resigned to go to Mitt Romney at some point. The reason for that is because of a complete failure, a complete lack of viable alternatives.
A failure to find alternatives to Mitt Romney. Rick Perry stinks of crony capitalism. He stinks of pay to play. Michele Bachmann shows a complete ignorance of conservative concepts like federalism, declaring Mitt Romney's health care mandate unconstitutional, or free market saying she can give $2 gasoline. I think what you see with Mitt Romney, there's a sense of inevitability, it will end being him.
VELSHI: Dana, what do you think of Herman Cain's ascendance lately?
LOESCH: I like Herman Cain. My only criticism of Herman Cain has been his lack of foreign policy experience. I've been pretty outright with that from the beginning. I think he needs to be tested a little bit more on that. And if he is the nominee he should pick someone with a very strong foreign policy record.
But I like Herman Cain. He's very good at retail politics, he is good on the economy. I have a little bit of concern about 9-9-9 Plan. Simply because of the national sales tax and the possible foundation for a value added tax like we see in Europe. Other than that, I think that he's better than what, in my opinion, what we have in the White House right now. So I don't think that -- he seems like a good candidate, but we still have a long way to go. And there's still a lot of vetting to be done.
CAIN: Yes, I feel the same way about Herman Cain. He's certainly an attractive candidate. His biography alone is compelling. 9-9-9, I agree has some serious substantive problems. But I have to say, for conservatives like Dana, who so strongly will be opposed Mitt Romney, I say this with all due respect, Dana, at some point you have to ask yourself, are you taking a position of similar to that of Occupy Wall Street. I'm going to complain about Mitt Romney, but what will I do? Will you vote for Obama if Mitt Romney is the candidate? What will you do?
VELSHI: Good question. Dana, what happens if Romney is the candidate?
LOESCH: See, and that-I'm so glad that Will brought that up. I have mondo respect for Will, by the way.
CAIN: Thank you.
LOESCH: I think that winning Congress, winning the House of Representatives and winning the Senate is so underappreciated. Because this is-
CAIN: I agree.
LOESCH: I sort of look at it like this. If we have another president - if we have another term of Obama, if conservatives take over the Senate and maintain control of the House, that's going to pretty much circumvent anything radical that he would try to do. If you have someone like Mitt Romney who gets elected, and you have a strong conservative presence in the Senate and House of Representatives, they are going to do kind of the same thing and circumvent anything Mitt Romney will do.
The problem is though, is the Republican Party selling out its soul. There comes a time when you have to ask yourself when is compromising over and over again too much to the point when the party becomes indistinguishable from the opposing political party.
CAIN: That's a fair philosophical questions, but I think we have to ask ourselves, would you rather have Republican Congress with Obama as president or Republican Congress with Mitt Romney as president? I think the second alternative certainly sounds better.
LOESCH: I would think that-well, any generic Republican candidate, just to echo some of the polling, when they do not even bother naming the Republican candidate, is beating Obama in the polls. I think any Republican candidate would do at this point. I also think I'm not ready to say Mitt Romney is going to be the nominee. I'm still-Rick Perry may do something-
VELSHI: Why is that, Dana, because we're 13 months away from election. You are wise. Everyone else seems to be treating this thing like it's going to be decided in the next month.
LOESCH: Everyone is already ready to crown Mitt Romney. I don't understand the rush to immediately look at him as the nominee for the Republican Party. We are still so far way from that. And in terms of fundraising, too, sure, Rick Perry has problems. I haven't decided on a candidate and I have criticisms of every single one of them. But he out fundraises Mitt Romney, he raises like, I think, $3 to $4 million more than Romney did last quarter.
VELSHI: He did some stuff on Friday to sort of put some new energy into his campaign by putting out an energy policy. Let's see where we go with that. We have lots to go to talk about that.
Dana, always a pleasure to see you. Thanks so much for being with us. You guys should follow Dana on her Twitter. Interesting stuff.
Follow Will. Will what is your-
CAIN: Will Cain, pretty simple.
VELSHI: And Dana?
VELSHI: DLoesch, L-O-E-S-C-H. Follow these two. Good stuff.
VELSHI: Very good.
Make sure to tune in October 18th, Tuesday 8:00 p.m. Eastern for CNN Western Republican presidential debate. It is in Las Vegas. Anderson Cooper will moderate.
I've got a question. If a foreign student gets a degree in the United States, in science or technology, or engineer or math, should they be allowed to stay here and use that education to start a business? Would that actually create jobs here in the United States? Don't answer. Don't answer. Think about it for a second. We're going to take a break, pay the bills, and talk about it on the other side.
VELSHI: Ah, you stayed, which means you are interested in my question.
Welcome back to YOUR MONEY.
The president's Council on Jobs and Competiveness addressed immigration reform. It concluded, quote, "highly skilled immigrants create jobs, they don't take jobs. In a competitive, interdependent 21st century economy we must attract these entrepreneurs to the United States."
It's a long report. That is just a portion of it. With me now, Christine Romans, she is the host of CNN's "YOUR BOTTOM LINE". Richard Quest, host of "QUEST MEANS BUSINESS", and Ron Hira, associate professor of public policy at the Rochester Institute of Technology. He is also the co-author of the book "Outsourcing America." Let's start with you Christine. The very companies advising the president on how to create jobs here at home, in the United States, are venturing into immigration reform. What do companies want?
CHRISTINE ROMANS, CNN HOST, "YOUR BOTTOM LINE": They want to be able, according to this particular report, they are venturing into the very sticky area of immigration reform. In a very thin, thin layer, highly skilled foreign workers. They want them to have more H-1 visas to bring people in from other countries, to do highly skilled jobs in this country. They want to also have automotive work permits from any foreign student who graduates from an American university with a degree of science, technology, engineering and math.
Now all of this is something that has been discussed many, many times. We do have lots of programs in place, including one that anybody wants to invest, an entrepreneur wants to invest $500,000 to $1 million can immediately get a certain kind of permit to come to the country and do that. There are a lot of different kinds of work permits and the like. This comes at a time when you have 14 million unemployed in this country and what, 27 percent underemployment, or something. So it will clearly be a politically charged debate, no question.
VELSHI: All right. Bill Gates seems to think there's a shortage in American STEM workers, science, technology, engineering, mathematics workers. This is what he said before the U.S. House Committee on Science and Technology. This was, I'll remind you, in the spring of 2008 before the recession, but may hold true.
"Although our top universities continue to rank among the world's best, too few American students are pursuing degrees in science and technology."
Ron, you do not agree. You do not think there's a shortage of science, technology, engineering talent in this country. Why not?
RON HIRA, ASST. PROF., PUBLIC POLICY, ROCHESTER INST. OF TECHNOLOGY: Well, we have a lot of evidence to show that we actually have too many science and engineering workers chasing too few jobs. In fact, the unemployment rates for computer occupations, computer professionals and engineers are two to three times the rate we would expect at a normal full employment level for them.
In 2010 we had an average of 300,000 engineers and computer professionals who were unemployed seeking jobs. Just to point out Microsoft, they have been in the process of laying off 5,000 workers over the last 18 months. So, it's pretty hard to believe that they have a shortage when they have laid off 5,000 workers. And it is not just them, Cisco has announced layoffs of 6,500. IBM has downsized its American workforce by about 35,000 over the last few years. Hewlett-Packard, 25,000.
VELSHI: All right. So, we have to separate, we have to separate things, though, Ron, because we've been in a recession for the last few years. So that may be separate. Everybody in the country has been laying people off. Richard, let me bring this in, though, from a larger perspective, a global perspective of attracting talent, assuming you're not in a recession. Because companies and governments have to sometimes plan for those days when times are good and we are going to be competing for workers around the world. What's your take on this?
RICHARD QUEST, CNN INT'L. HOST, "QUEST MEANS BUSINESS": That is exactly the point. Lord help me, I'm agreeing with Ali Velshi.
The truth of the matter, you don't make public policy for just one year or two years. For instance, if you look at highly qualified visas, the cap that has been on there for some years. Year after year, after year, industry in the U.S. has butted against that cap and demanded more highly qualified visas. This year they are not going to. They haven't even reached the cap yet. They are OK on this year.
But the STEM visas for education, now that's a really interesting one. The fear here is that with every diploma that you give you hand out an H-1V or some sort of green card visa. If that happens, although the prestigious universities will be doing it in an honest bona fide way, this could be a back doorway to wholesale-I won't say fraud but wholesale blurring of the rules for getting into the United States.
VELSHI: Ron, you brought that point up. If you're going to do something like this, whether you agree with it or not, there has to be safety checks in place, so you don't all of a sudden start give birth to schools that just exist to get people visas.
HIRA: Yes, that's right.
HIRA: That's a very important point. I think another important point is to separate H1B, which is a guest worker, a temporary non immigrant visa, versus a green card. I favor increasing green cards, but I don't think at least the proposals that have been on the table which is stapling green card to every advanced agree in STEM is a good way. I think we should bring highly talented professionals in things like broadcast journalism, as well and offer them green cards.
I think we have to be careful about disentangling temporary guest worker visas versus green card, very different animals. The H1B is a program that has benefitted the offshore outsourcing firms. The major Indian, IT off shores, are the biggest user of the H1B program and literally it has led to the demise of tens if not hundreds of thousands of American jobs.
VELSHI: Richard, why are you getting uncomfortable about there?
QUEST: The theory is perfect, that I'm hearing, but the practice is anything but. Anybody looking outside the United States that is looking to get the H1B that is looking for that sort of diploma, that is looking to go to the United States, frankly, has an eye on the green card. That's what they want ultimately. They are not doing it short-term with a view of a year or two.
VELSHI: Let's leave it there. Lots to talk about. It is an important issue. One we are going to talk about many times in the future. Ron Hira, is the assistant professor of public policy at the Rochester Institute of Technology, and co-author of "Outsourcing America."
Christine and Richard stick around we have more to talk about.
More and more banks hiking fees for things like using your debit cards for purchases. Before you get angry take a step back. Do they have a right to charge you for that service? We'll talk about it next on YOUR MONEY.
VELSHI: Welcome back to YOUR MONEY. Richard Quest and Christine Romans are still with us.
Let's talk about high-frequency trading, sounds like a video game but it's not. It's a critical tool used mostly by bigger financial firms to trade stocks and options. Sometimes they hold onto them for just seconds at a time. More than half of all stock trading in the United States is made this way. It could be partially responsible for huge market swings. It is raising the eyebrows of regulators.
Richard, high frequency trading, should something be done to reign in this type of trading or are we looking for a scapegoat in a down economy?
QUEST: Well, the fact is, you can't put the genie any back in the bottle. All you can do is come up with a series of rules to make the genie behave better. So, you may as well just hope for that.
Look, high frequency trading, if you listen to the market makers, they say it is a great thing. It gives liquidity. It allows the market to function. It exposes weaknesses. But the fact is, of course, it is a menace. It is a nuisance. It has a lot of mischievous sides to it. What needs to happen to it? It needs to be properly regulated.
VELSHI: You have heard about these massive trading operations that move their server farms close to exchanges, or other people's server farms, to save a fraction of a second in being able to get a price advantage in a trade.
Christine, we can't compete with that. Regular people can't compete with that.
ROMANS: No, and you even said, you know, they hold on to trades for just mere seconds. Mere seconds, that is a buy and hold strategy for some of these programs. I'm not kidding. They are selling things like this. And buying them back and doing really complicated, multi- cross platform trades. Where, I mean, if you are just looking at it with the human eye, you might not understand what the computer is trying to tell you. In fact, a lot of people go back and are trying to analyze what kind of choices is the computer making. I mean, it is really interesting stuff.
VELSHI: By the way, it takes this whole concept of buying something for value out of the equation.
QUEST: Ha! Ha!
ROMANS: Oh, yeah. I mean, it is meant to find and to exploit inconsistencies or strange spreads in the market, and make money off of that, very, very quickly. One thing about high-frequency trading, is I feel like it can trigger reactions from other computer black box programs that can really exacerbate the volatility in the market.
VELSHI: They may not be as volatile as they seem.
ROMANS: A lot of us try to look at these markets, right? And try to rationalize it the way trading was 20 years ago.
VELSHI: Right. So, when they call us, on TV, and say why is the Dow down 500 points today. And we give what seems like a valid answer, could just be because a bunch of computers decided they were selling stocks.
Hold on for a second.
There was a pretty large reaction when several banks, like Bank of America announced they would start charging customers a monthly fee for using debit cards for purchases. It was all pretty negative. But I have to ask: Christine, the banks, as long as they are up front about it, why do they not have a right to charge a fee for service? Why do I not have the right or obligation to say, I will go somewhere else to keep my money?
ROMANS: You absolutely have the right to go some place else. It is absolutely tone deaf that they are doing this. But they have every right to do it. Because their responsibility is to their shareholders.
Before you all start Tweeting me that I'm an evil lover of capitalisms. Let me just be very clear. There are not for profit credit unions. There are small community banks that are paying you to use their money, or you know, to deposit your money. I don' think, the dirty little secret is, I think the banks know that people don't walk. They don't walk enough, in enough numbers, for the bank to stop this.
VELSHI: Richard, we have no-it's like when we complain about gas here in the United States and we talk to you guys. I have no idea what it is like for you.
QUEST: No. First of all, on Christine's point. She is so spot on. You are more likely to get divorced than to change your bank. The statistic has been around for decades, the decades that number. I have been with the same bank for 30 odd years. Sometimes I loathe it, sometimes I just want to-but, to answer your point. In the UK, you don't get charged for using your debit card as a purchase. The major banks have all pretty much agreed having used to charge each other for cash withdrawals, now, everybody gives free cash withdrawals within the banking system.
Basically, all that has to happen, truth is, all that has to happen is that one has to break ranks and everybody else follows. Paying to get your own money or spend your own money is offensive.
VELSHI: Must be a serious problem. Richard, you have agreed with us on a few things today. Something is very weird in the world.
VELSHI: Richard, always a pleasure to see you. Richard Quest is the host of the tremendous show "QUEST MEANS BUSINESS". Whenever you are traveling outside of the United States, make sure to catch that on CNN daily.
And of course, Christine Romans, my co-anchor on AMERICAN MORNING and the host of "YOUR BOTTOM LINE", Saturday mornings, at 9:30 a.m. Eastern.
ROMANS: Thanks, Ali.
VELSHI: Well, the passing of Steve Jobs had many wondering where innovation in America has gone. I found it. And I will tell you exactly where it is happening, next.
VELSHI: Time now for the "XYZ" of it.
You hear a lot about the demise of American innovation. Well, it turns out in some quarters, it is alive and well. Just ask the gang at Elastic American Marine, an Illinois company.
Earlier this week, they won $1 million, first prize in the latest challenge from the X Prize Foundation, and organization I have talked about before, that motivates innovators through competition to solve real world problems. The challenge they won was funded by Wendy Schmitt, the wife of Google CEO Eric Schmidt.
She, like the rest of us, spent the summer of 2010 frustrated watching the slow cleanup of that oil after the BP spill in the Gulf of Mexico. For almost three months that oil spilled into the Gulf, 4.9 million barrels of it. So Wendy thought there had to be a better way. She teamed up with the X Prize Foundation. Together, they challenged the world innovators to find it.
And 350 teams entered, 10 made it to the finals, and two made the criteria set by the challenge. The winner, Elastic American Marine, developed technology that skims 4,600 gallons of oil a minute from the ocean's service. The previous best tested rate was 1,100 gallons a minute. Thanks to the X Prize, it is now possible to clean up an oil spill nearly four times faster than technology used during the BP disaster.
As you can probably tell I'm a big fan of the X Prize. What's not to like about using old-fashioned competition to spur innovation and make the world a better place. The prize money itself is just the seed. These challenges end up generating a lot more. Seven years ago, the X Prize Foundation helped give birth to the commercial space race by awarding $10 million for the launch of a private spacecraft. Since then, more than $1.5 billion in public and private money has poured into the private space flight industry. It just goes to show a little competition can go a long way.
The challenges are global. Often the winners are American. That goes to show with the right kind of care and watering, American ingenuity isn't going anywhere.
That is it for me. Thanks for joining the conversation this week on YOUR MONEY. We are here every Saturday at 1:00 p.m. Eastern and Sunday at 3:00 p.m. Make sure to check out my new book, with Christine Romans, "How To Speak Money". It is a step-by-step guide to understanding the language of money with everything you need to know. Head to Amazon.com, right now to be one of the first to get the book. Remember to stay connected with us, 24/7 on Twitter. My handle is @alivelshi. The show's handle is @CNNYourMoney.
Have a great weekend.