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Uncertain Economy of the United States; Marketing America; Deadline for Debt Deal; Unemployed In America; Occupy Wall Street; Black Friday Backlash

Aired November 20, 2011 - 15:00   ET


CHRISTINE ROMANS, CNN ANCHOR: Less than one year until the presidential election, where is the U.S. economy headed? I am Christine Romans. Welcome to Your Money. Ali Velshi is off this week. Less than half of Americans now believe things will be going well in this country one year from today. Even that faint hope appears to be on the decline. The number of Americans thinking things will get better has been steadily dropping over the last two years, no surprise as unemployment remains high, housing prices are not recovering and of course, there is a fear of another global recession. Harvard Professor, Ken Rogoff is the former Chief Economist at the IMF. Alexis Glick, has experienced both on Wall Street and covering it and now she is the CEO of the Gen YOUth Foundation and Will Cain is a CNN contributor. Ken, still cloudy with a chance of rain has been your forecast, anything that will part the clouds?

KEN ROGOFF, PROFESSOR, HARVARD UNIVERSITY: I do not think anything is going to part the clouds until Europe clears up, which might be a while. We are probably in for stable slow growth but there is more risk to the downside than the upside.

ROMANS: Let's talk about Europe because just this week, it became more difficult and expensive for Spain to borrow money. We are looking at these bond yields and we are saying this is telling us that there is -- there is potentially a funding problem in Europe. Explain why that is so important?

ROGOFF: Well, Europe is a quarter of the global economy. The European banks are interlocked with our banks and confidents. So we want them to fix this. But I wonder, they might need a new constitution before this is over and do they have the political wherewithal to get a new constitution, for all of Europe?

ROMANS: You could -- even we had political problems on debt in this country.

ROGOFF: At least we have a constitution that is pretty darn good and they do not.

ROMANS: Alexis, Europe is a big -- big driving force here.

ALEXIS GLICK, CEO, GEN YOUTH FOUNDATION: It is a huge driving force and -- and more head winds in an already challenging economy is going to make 2012 as unpredictable as possible and that is dangerous right now. If you look at the United States, 11 million homes upside down, they owe more on the mortgage. Unemployment, look at unemployment, I mean 14 million people out of work, that is not getting any better and there is nothing to show us in terms of the road map going forward to signal that that is going to get any better. How about the 17.5 million children in this country who do not know where they are going to get their next meal?


GLICK: I mean you stack this up with what is going on in the global economy and things look pretty ugly.

ROMANS: I want to -- Will, I want to show you two CNN ORC polls right now. The first shows that just 35% of Americans approve of the way President Obama is handling the economy. It is pretty obvious the economy will be the president's biggest hurdle next November. Perhaps that is the reason that for the first time in CNN polling Republican Mitt Romney now tops President Obama in a head to head match up among registered voters. Will, as a Conservative, are you ready to pop the Champaign?

WILL CAIN, CNN CONTRIBUTOR: Well, certainly an ugly economy like the one that Ken and Alexis just described is bad for an incoming president but should Mitt Romney become the President of the United States? I think the big question is so what? You know, too much when we talk about our economy we focus on that is the second thing Alexis talked about, which was unemployment. And we do not focus enough on debt. Everything from the American homeowners to the American economy to the world economy is overleveraged on debt and we are going through a deleveraging process. Now, listen, you have to grow out of debt. One of the ways to do that is through tax reform, getting rid of loopholes and exemptions, simplifying the tax code. Interestingly, the one Republican candidate who has voiced no interest in that is Mitt Romney.

ROMANS: Simplifying the tax code. Well, we do not really have a very simple political process at the moment right now. I mean, how realistic is it simplifying the tax code and starting to fix -- fix our debt problems and our tax problems that way?

ROGOFF: We can pray. I mean, what Will said is just absolutely right. That is the ticket. We need more revenue but we need to grow. We need incentives for people to produce and grow, that is the only way to square the circle but they are politically paralyzed.

ROMANS: Can we have a debt conversation and a deficit reduction conversation and a growth conversation at the same time? Because what I hear is people having one or the other?

GLICK: I think you need to have that conversation at the same time but you know, to your point, I think when you look at the deleveraging process and you look at past recessions, the savings rate in this country has gone to double digits, some of what we are experiencing right now, deleveraging and household debt, savings rate increasing, that is crucial. We cannot sit here and say that going forward this economy is going to be 100% dependent on two-thirds of the economy consistently spending, spending, spending. ROMANS: I know.

GLICK: It is just not the future.

ROMANS: Have you been watching TV, Alexis? They are already trying to get you to spend money again.

GLICK: I know

ROMANS: And the retail machine is out there trying to get Americans to spend money again.

GLICK: And every tax incentive that we are talking about is how to put more money in your paycheck so you can go out and spend. We saw it during the Bush era. These are not the solutions that is going to turn the cycle around.

ROMANS: These are the structural imbalances we have been talking about for years and Ken, these are the structural imbalances that led to the crisis and when you look at China, Europe and the U.S. we are all still in the same position we were in the same totally unbalanced world.

ROGOFF: We are. I mean the U.S. is still borrowing a ton of money from China. The United states consumers saving a little more but there is still, you know, tons of debt, the government is in tons of debt. And I think looking forward, absolutely, we have to do something about that. But that is where it comes to (inaudible). You have got to do something. You cannot just live the way you are living. And if you want, it can just get worse. If you do not want it to get worse, you have got to do something about it.

ROMANS: Well, we live this way always until the next election and then when you get close to the next election and you cannot do anything about it until you are past the next election and it just goes on forever.

CAIN: You know, tax reform might be an impossible ticket in Washington but the reason that I am focusing on it is because of the things Alexis just said, those metrics of increased savings rate, those are good things. But you say, how can we grow in an environment that is deleveraging and saving more money? You know what, the government has limited tools but tax reform is one of the things they could actually do to encourage growth. Will they? You're being a realist Christine, and -- and the answer is probably no.

GLICK: But don't you think we have had multiple opportunities this year, particularly what we're facing down here with this deadline and this super committee, we could show the rest of the world that we're not Republicans and Democrats, standing for just entitlements or standing for just no to raising taxes, are we not Americans at the end of the day? I mean this whole process infuriates me because we have an opportunity to lead the way, to show a little leadership and to right the ship and yet in both cases we're down to the drop dead last second to do something about it. ROMANS: All right. Let's say that I want to talk more about the super committee when we come back and I also want to talk about something the president said this week. President Obama used the words Americans and lazy in the same sentence. What did he mean by that? We are going to get into that next too on "your money."


ROMANS: President Obama says when it comes to selling America, we have gotten lazy.


BARACK OBAMA, PRESIDENT OF THE UNITED STATES: A lot of things that make foreign investors see the U.S. as a great opportunity, our stability, our openness, our innovative free market culture but you know, we have been a little bit lazy, I think, over the last couple of decades. We have kind of taken for granted, well, people will want to come here. We are not out there hungry selling America.


ROMANS: Ken, what do you think the president meant by that.

ROGOFF: Well, instead of talking to the Asian countries and they are hungry, like, we may feel we are hungry but they are hungry and there is no question they work longer hours, they are very driven, they have been very successful and I think he is acknowledging that. I mean, clearly, America has a pretty dynamic economy and they are trying to be like us but he is just acknowledging the facts on the ground there.

ROMANS: Well, they are taking the rules that we invented, the world we invented and they are doing it their own way and in some cases they are doing it better.

ROGOFF: Absolutely, I mean you think in America immigrants work harder in their life, you know, in some places the nation of immigrants are striving to do better and they are growing like crazy compared to us.

ROMANS: I think it was Mitt Romney on the campaign told us that what the president says that Americans are lazy, come on - I think this is -- you know, I mean this is kind of (inaudible).

CAIN: Let's be realistic about what this is. It is not the "aha" moment that this president is un-American but it is also not a comment that should be dismissed. I do think it is a little revealing about his view of America. The operative word there is "we". Who is he talking about when he says we? If he says the government has been lazy, well then I think he has a misguided view about what the government's role is in the economy. It is not cheer leader in chief. It is set policy and step out of the way. If he is talking about the American business and entrepreneurs and indicting them as lazy, I would be careful, President Obama, that is the one characteristic that has made America exceptional.

GLICK: You know, I am tore on this like you. I think it is okay that it has been said but I think when you look at -- when you're -- when you see the development that is going on across the globe, infrastructure development, our roads are crumbling. Look at what is happening here in the United States. We have done nothing to upgrade our own infrastructure. So you see the evolution and the changes that started herein the United States happening abroad. The thing here that I worry about is particularly when you look at unemployment insurance and extending claims, extending claims, extending claims, I understand why we are doing it. But are we incentivizing folks to get out there and aggressively pursue, or is that making us sort of step back because we can expect that the entitlements will be there to protect us.

ROMANS: I see (inaudible) and we are going to talk a little bit more about this later in the program but I want to ask you, the economy's on that very topic. I mean, in normal bad times, that is a real worry but these aren't normal bad times, are they, Ken?

ROGOFF: They are not. I mean I am pretty sympathetic extending the unemployment in terms of temporarily because the --

ROMANS: You do not think this is causing people not to go out and invent something because they are getting a jobless check for 250 bucks a week?

ROGOFF: It makes a difference. I think Alexis is right. I think a lot of people, you know, use up their benefits if you change it from 26 weeks to 52 weeks. They go longer; there is no doubt about it. On the other hand it's very very tough right now and the economy is not very fair in a lot of ways. I think we would have a revolution if they do not do something like that so that we need to do that but on the other hand, that is not going to get us out of this.

ROMANS: You say revolution I am wondering, do you think (inaudible) get by Wall Street is some sort of -- is that revolution, some sort of a revolution like that?

ROGOFF: If I could figure out what it stood for. I mean --

GLICK: Yes, I was going to say well, how do you know what it stands for:

ROMANS: I think they want to be with the revolution that stands for the 99% but I am not sure that the message is all that clear. I know you and I have gone back and forth on this.

CAIN: Yes, I think (inaudible) Wall Street is either about corruption and inequality as a result of crime and corruption in which case we can all agree or it is about inequality as a broader standard. If it's about inequality, are we seeing a revolution about inequality? Well, let's put it this way, if that happens, I think it's the first time it would have ever happened in americratic society on the history of earth.

ROMANS: I want to -- I want to look at -- I just want to talk about a super committee because I can't have you guys here and not talk about what is supposed to be fixing a debt crisis and preventing a debt crisis. The latest hopes depend on this, you know, so-called super committee of -- of six Democrats and six Republicans and according to Democrat Peter Defazio, who is not on that committee, the Republicans are the big problem here.


PETER DEFAZIO, DEMOCRAT, OREGON: We have six people on there that who signed an oath in blood to never raise any revenues. You cannot solve the deficits and debt problems of the United States of America without net revenues. I mean it is impossible to eliminate the entire government except for entitlement programs, you still have a deficit. So, you know, that -- that is just pathetic, if you cannot engage in that discussion, it is pathetic.


ROMANS: Those are two pathetics, Will. Is it time for Republicans to drop their insistence that tax increases do not go along with deficit reduction?

CAIN: The super committee is -- is pathetic. I mean this thing is evolved into the conversation we have had now for like three or four years. It appears that we are diverging and going out separate ways on the extension of the Bush tax cuts. I mean have we not heard that song over and over and we're resorting to accounting trickery. You know, we can go with more tax revenues, but follow the advice that I have made or smarter people than me, Professor Ken Rogoff, get tax reform. You can have increased tax revenues without necessarily increasing tax rates.

ROMANS: But they are like a mini me of congress that could not do it in the first place, Ken. I mean both of you, this is -- this is exactly what we feared, that you would be down to the wire and they are passing notes to each other through -- through intermediaries and not even in the same room anymore.

GLICK: This to me as someone who has spent a decade on Wall Street is absolutely outrageous. The fact that the S&P downgraded our debt, that they were -- we were given so many warning signs, what are we going to do when we wake up next Friday morning and Fitch or Moody's decides to downgrade our debt because we could not get our act together. We signed a $787 billion Stimulus Bill and we cannot agree on reductions of $150 billion a year? I mean, you look at the defense budget; this makes me crazy, I am sorry. I mean the defense budget has doubled over the past decade and we are arguing about what impact this is going to have on the defense budget? It is doubled it is $700 billion. I am sorry, go ahead, Ken.

ROGOFF: No, I mean early on, they did seem very energized and were passing notes among each other and it really seemed they would at least strike a deal among themselves and then if they could not sell it, they could not sell it. But even that seems to be collapsing at this point. You never know last minute but it does not look good.

ROMANS: But the rest of the world is watching us to make sure we are not doing it at the last minute, the bare minimum, right?

ROGOFF: But they will lend us money for nothing right now.

CAIN: They will continue to -

GLICK: That's --

ROMANS: Because we are less bad than everybody else, that is why, as long as we are less bad, then we are still in the best position.

CAIN: That is right.

GLICK: But we set the tone as well though.

ROMANS: Right.

GLICK: We cannot sit here and talk about what's going on in Italy and what's going on in Greece and what's going on in Spain and not be taking care of what's going on in our backyard.

ROMANS: All right, Ken Rogoff, Alexis Glick, Will Cain, nice to see you guys and you're absolutely right. All right, one presidential candidate is calling the super committee the dumbest idea he's ever heard. We'll tell you who that is and tell you what could happen if that super committee doesn't come through with some serious cuts next on "Your Money."


ROMANS: The super committee has until the middle of the week to propose a plan to cut our nations deficit by at least $1.2 trillion or they risk setting off unpopular automatic spending cuts. Republican presidential candidate Newt Gingrich gave his opinion of the super committee this week.


NEWT GINGRICH, REPUBLICAN, PRESIDENTIAL CANDIDATE: The way I characterize it is it is as though somebody walked in and said, you know, I'm under instructions to shoot you in the head unless you let me cut off your leg and that's what this super committee (inaudible), just read the stories of all, if they don't get this done by a certain date, horrible things will happen.


ROMANS: He also said the super committee is the dumbest idea he's seen in a lifetime. Jeanne Sahadi, a Senior Writer for CNNMoney. Jean, any chance the super committee will prove Newt Gingrich wrong? JEANNE SAHADI, SENIOR WRITER, CNNMONEY: Well, he can characterize it as dumb as he wants. I don't think a slew of bad things will happen, at least not in the immediate term if the super committee fails to come up with a plan, people have said, oh, markets will go haywire or oh, we could get downgraded or we're going to have a slew of automatic cuts to the tune of $1.2 trillion. None of those things may happen and here's why. Markets had no expectations that could be considered positive for this committee so they won't be surprised. There may be some volatility in the near term. Ratings agencies like Moodies came out a few weeks ago and said, we're going to wait and see what, you know, you do by 2013 essentially. And in terms of the spending cuts, congress literally has 13 months to reverse its decision or come up with substitutions.

ROMANS: Right. Oh, so they have a little back door -- they've got a little back door in there maybe.

SAHADI: Thirteen months back door.

ROMANS: I know and you know what's interesting is that there's a spray on Wall Street's past performance, there is no guarantee of future results. But Wall Street knows the past performance of Washington and so that's giving them a hint about how things might go. Gloria Borger, CNN Chief Political Analyst, the American public too, clearly pessimistic, Gloria, about the super committee, 78% say it's unlikely that the super committee will agree on a deficit plan by November 23rd. That's according to a recent CNN ORC poll. And when asked who would be responsible if they didn't come up with a plan, 42% blame the Republicans, 32% say they blame Democrats. Gloria, is it an example of President Obama winning with his message that Republicans are I guess, standing in the way of progress in Washington?

GLORIA BORGER, CNN CHIEF POLITICAL ANALYST: Look, I think they all lose, honestly. What -- what shred of credibility they have and don't forget this is a congress with a 9% approval rating. So whatever shred of credibility they have will be lost if they do nothing and people are getting increasingly pessimistic about it. They already kicked the can down the road in the debt ceiling agreement that led to this. And now they could kick the can down the road again or try and do something through a back door as Jeanne points out. And I think overall, what does that do to congress? It says that, you know what, they can't even agree on $1.2 trillion. They are going to have to have automatic cuts that do their jobs for them and oh, by the way, Republicans like John McCain may try and undo some of those Pentagon cuts and so I think it's another big mess and it will be received by the public that way.

ROMANS: Someone who's been warning of a big mess for a long time is David Walker. He is the former U.S. controller general and the CEO of the Comeback America Initiative. You know, David, I want to show you a chart that was in the Washington Post this week that really got our attention about how -- you know how we got here. I want you to look at this. If you look at the top part of this chart, that orange and yellow, those are the -- the yellow is the Bush era tax cuts, that's how much of our national debt, the debt held by the public and the share of our economy is from the tax cuts. And then you can see wars in there, you can see the economic downturn, you can see TARP, Fannie (ph) and Freddie (ph) is the light blue and then that gray is our debt, which was big and bad without all these other things. David, you've seen this coming for years, begging Americans to take deficit reduction seriously long before it was a hot topic. What are these three things telling you about the priorities for the super committee?

DAVID WALKER, FOUNDER & CEO, COMEBACK AMERICA INITIATIVE: Look, I never believed that the super committee was going to go big, although we need for them to because it's not set up for success. Look who's on it. Four people voted against Simpson, Bowles. Nobody voted for it. Two people voted against raising the debt ceiling limit. All six Republicans have signed the Americans for Reform Pledge. I'm still cautiously optimistic that they will reach a deal. And what they need to do is recognize that the big deal, meaning (inaudible) of tax reform that will raise revenues and meaningful social insurance reforms that will significantly reduce spending is not going to come until after the election. So they ought to recommend having a second round of recommendations with no amendments up or down vote in 2013. That's when the big deal will be done. But if they don't reach at least $1.2 trillion on this, then every member of the super committee and every member of leadership should be punished by the American people because they are incompetent.

ROMANS: You know, I'm going to tell you, and I think we all agree that when there's -- these were the 12 people that were supposed to distill down and get this done because the bigger congress couldn't and there was a big concern early on that it would be a mini me and all of the same petty reasons that they couldn't, that took us to the brink before, would be here again. And Gloria, they're a mini me of congress.

BORGER: Yes, sure. And as David points out, and you know, the closer you get to an election, the less chance there is that anything substantive will get done, period. That's the rule of congress. Because people are afraid of taking politically dangerous votes, whether it's on taxes or whether it's on entitlement cuts and so what they'll do is they'll kick it down the road again. And you know, it's just -- we're in this process where there just doesn't seem to be a palatable end for anyone. And by the way, Barack Obama will then go out and run against the do-nothing congress, right? That includes Democrats and Republicans.

ROMANS: Right, I want to show you guys another picture out of the Wall Street Journal because you know I love charts. This chart shows you the Bush tax cuts and how they would add to - well, they would add to the budget going out to 2021 if allowed to stay there. Defense spending, take a look at that. Look at defense spending, both the magnitude and the size of how it adds to our bills. Take a look at Medicare spending. We have a super committee right now that is, you know, deadlocked really on the issue of the Bush tax cuts but we also have entitlement spending and we have defense spending that are also in magnitude growing. So Jeanne, everything has to be addressed.

SAHADI: Everything has to be addressed and you know what, they are going to have to deal with those tax cuts by November of next year, November and December because they expire December 31st. So it could be that the lame duck congress after the presidential election, depending I guess on who wins that election, may be able to make a final decision about the Bush tax cuts in the context of deficit reduction. You know, this is a conversation we're going to be having all next year, even though I agree with Gloria, that, you know, an election year is not the best thing that could be done.

BORGER: And if Barack Obama wins, he's already on the record saying that he would veto any attempt to extend the bush tax cuts.

ROMANS: All right, we're going to ask David Walker about that when we come back in two minutes because, you know, we have bills to pay here too. Don't go away.


ROMANS: All right, as the super committee works on a plan to reduce our nation's debt, all eyes are on the debt crisis in Europe that could threaten the global economy.

David, we got an awful lot to learn from what Europe is going through right now. I mean, quite frankly, I mean I want to show this chart again that we just showed from "The Wall Street Journal" that shows you I guess the tax impact, the budget cost of extending, for example, the Bush tax cuts, the projected future spending on defense and Medicare. The tax cuts are the red. Defense spending right there is the yellow. And Medicare spending is the blue. I mean we've really dug ourselves into a hole.

DAVID WALKER, FOUNDER & CEO, COMEBACK AMERICAN INITIATIVE: We have, Christine. But let's be honest, it's the Bush-Obama tax cuts because President Obama signed an extension. The truth is, if you extend those tax cuts, that makes the deficit worse, not better. If you don't end up cracking down on Medicare spending, that makes it worse, not better. If you extend unemployment benefits, it makes it worse, not better.

Ultimately what we're going to have to do is re-impose tough budget controls, reform Social Security and Medicare/Medicaid, reduce defense and other spending and engage in comprehensive tax reform that will generate more revenues. We will have to do all of that. All of that won't be done until after the election and it must be done before the markets cause a debt crisis in the United States. And that could happen here within the next two to three years.

ROMANS: I'm pretty sure the only thing they can really agree on, you just named a whole bunch of things, and I think the only thing they can agree on maybe is the kind of pizza to order if they're talking about the debt committee stuff.

Although, Jeanne Sahadi, I talked to Chris Van Hollen this week. I don't even think they're in the same room together anymore. Maybe now and then, but this is -- this is getting -- it's getting down to the wire and I think they pretend as though they're hopeful there will be a decision, but I don't think they're going to get anything.

JEANNE SAHADI, SENIOR WRITER, CNNMONEY: Well, I'm no not in Washington, but we're not hearing anything out of Washington that suggests that they are going to be close to a deal. And I thought it was interesting you had both Chris Van Hollen and Senator Pat Toomey on "American Morning" on Friday and they didn't show up together, they showed up separately.


SAHADI: So it seems to me that, you know, these guys have to start standing shoulder to shoulder and delivering the message because otherwise you're going to get in party talking points. And what's been frustrating about covering this is that we have nothing to fact check. We have everybody's word. This is what the Democrats propose. This is what the Republicans propose.

ROMANS: Right.

SAHADI: We hear from aides. But I, you know, we don't get all the details. So I don't know who to believe.

GLORIA BORGER, CNN CHIEF POLITICAL ANALYST: What we're seeing though -- and what we're seeing though, and I hope David Walker is right in being optimistic, but what we're seeing though is people already trying to rationalize failure.

ROMANS: Right.

BORGER: Which is the Democrats essentially saying, you know, it's better to have these cuts take effect in a year, in 2013, because they actually -- we protected the poor in the cuts here and defense spending is going to take a big hit. And the Republicans saying, you know what, we can get our national security credibility back by trying to restore some of the defense cuts because we've got to protect our troops, et cetera, et cetera.

So they're already taking their post failure of the commission political position.

ROMANS: But then what's the point of like the guillotine, which is what they're supposed to be sitting there and -- if they can -- if they can undo it for themselves later -- you know --


ROMANS: I mean, Gloria, that drives me crazy.

WALKER: Christine --

BORGER: If my children behaved like this, I would give them a time-out and say, you know what, we cut a deal, guys. You've got to do this. If you don't, you know, if you don't do what you promised you would do, you're going to get punished. And then comes an election.

ROMANS: David.

WALKER: Christine, two things. One, they need to understand that if Congress did nothing, if it takes a 10-year vacation, then we have a deficit of $3.4 trillion over the next 10 years, all right.


WALKER: They've got to have the right benchmark.

Secondly, let me tell you why you're not going to get a big deal now. Because neither Simpson-Bowles, neither Dominici-Rivlin, nor this super committee has done zip outside of Washington's beltway to engage the American people with the facts, the truth and the tough choices and to help them understanding that what's happening in Europe can happen here. This is the future of -- this is America's future. This is the future of our families. This is the future domestic tranquility in our streets. And where's the president? Hawaii.

BORGER: Right.

ROMANS: All right, guys.

WALKER: Unbelievable.

BORGER: He's sitting back because he can blame the Congress, right?

ROMANS: Because it's election (ph).

BORGER: He's not -- he's not getting in the middle of this, right?

WALKER: He's the CEO of the United States of America.

BORGER: I agree.

ROMANS: Jeanne -- last comment, Jeanne.

SAHADI: Well, I think I'm a little less negative than David and Gloria in terms of the prospects. I do think next fall the debate over the Bush tax cuts, maybe the lame duck Congress won't be able to get an agreement to extend them and David's right, we will have a much lower deficit over 10 years. What I'm hearing from (INAUDIBLE) is that the U.S. still has some time relative to Italy and some other countries that are completely under the hammer right now. I'm going to remain mildly optimistic.

ROMANS: Well, I will say that everyone wants us to hold their money, that's for sure, because you look at bond yields. I mean we are still the least terrible place in the world to invest your money. So --

WALKER: That can change very quickly.

ROMANS: You are right. You're right.

Gloria Borger, thanks so much, David Walker and Jeanne Sahadi.

All right, why some say extending unemployment benefits could actually hurt efforts to get Americans back to work. That's next on YOUR MONEY.

(COMMERCIAL BREAK) ROMANS: There is the headline, unemployment crisis, and then there are the brutal numbers that back it up. The unemployed can expect to be without work for nine months, and that's about the average. But a combination of state and federal unemployment benefits are currently available for up to 99 weeks. That's nearly two years. Former "New York Times" columnist Bob Herbert is a Demos distinguished senior fellow now. Casey Mulligan is an economics professor at the University of Chicago.

Casey, on one hand the length of unemployment is hitting a record. On the other hand, the length of unemployment benefits also hitting a record. And you hear a lot of people say there's a reason for that. As long as you keep giving out unemployment checks, people will continue to take them.

CASEY MULLIGAN, ECONOMICS PROFESSOR, UNIVERSITY OF CHICAGO: Yes, some people will continue to take them, that's for sure. Now we've got to remember, there's still about 140 million people working this week. But, yes, that's right, there is several million people who are collecting unemployment checks because they're not working.

ROMANS: But there is this feeling, and Bob I want to bring you in on this, because there are a lot of people who are saying that the unemployment check, the actual unemployment check is making people stay home and not go out and get a job. And there are others who say -- you say there aren't enough jobs for everyone.


ROMANS: That that's the problem.

HERBERT: I think there is some research that shows that there is a modest effect on the job search. So there's a small percentage of people who might take a job if they were not on unemployment. But it's very modest from everything that I've read and interviewed about.

The important thing is that the unemployment check is a lifeline to so many individuals and families. It helps people meet the mortgage or pay the rent. In some cases, it's actually necessary to put food on the table. So you have to weigh the cost and the benefits there. And I think I would come down very solidly on the idea of, we have to continue these unemployment benefits. And not just unemployment benefits, but the extended unemployment benefits.

ROMANS: Casey, but you think it's time to just -- that 99 weeks is too much?

MULLIGAN: Ninety-nine weeks is too much. And let's not forget that unemployment benefits are not the only part of the safety net and not the only part of the safety net that has really gotten more generous over time. They have food stamps. You have Medicaid. You have mortgage forgiveness. There's a whole bunch of programs that have led to a much larger safety net than we ever had in 2006 or 2007. I think going back to those good old days, safety net wise, I think would give people -- still give them some support, but also give them a reason to get back to work. ROMANS: Well, you could argue the reason why you have a safety net that's bigger than 2006 is because we have an economy than is in a lot worse shape than in 2006.


ROMANS: I mean without that safety net, you might have people rioting the streets.

MULLIGAN: That's not -- no, that's -- that's -- that's not true.

ROMANS: Although we do have people rioting in the streets, actually. This is New York and that happened this week with Occupy Wall Street.

But I want to read a letter to both of you that I received this week from a viewer who said she's an executive recruiter in San Francisco and she heard me on this very program say something to the effect of, one of reasons why people aren't just going out there and getting a job, instead of going out on Occupy Wall Street, is because I said there aren't enough jobs for people. She wrote to me, quote, and she's an executive recruiter, "people love unemployment checks. And as long as they flow, people will remain out of work." She says, "the media and the left wing people are acting like there are no jobs. What a falsehood. There are jobs."

Bob, what do you say to a recruiter and people like this who are telling us, there's not a jobs crisis in this country?

HERBERT: I've been going all over the country talking to people, doing research for my book on this, who are unemployed and families who are struggling in this economic downturn and I have to tell you, there is no one that I've encountered who is not desperate, who is unemployed who was not desperate for work. I mean they are out there. They're -- it makes people crazy. There's a psychological impact to unemployment. There's the obvious economic impact. Even in our daily lives, the people we know, there are -- there's hardly anyone that you can think of who would prefer to be unemployed rather than to actually have a job.

ROMANS: But, Casey, I want to go back to something you said because you -- we were talking about -- I said the safety net is bigger now because, you know, the economy is a lot worse now than it was in 2006. And you said, no. You were disputing that. Tell me why.

MULLIGAN: Well, if -- I agree that if we had the unemployment systems say that we had in 2006, that that system would be spending more money today because of unemployment. I agree with that. But what's also happened is, we changed the 26 weeks into 70 weeks or 99 weeks. And that's a change in the rules, making it more generous. Not just a program that has to deal with more people, but a program that has expanded its inclusion and included more people. And that's true across the board in safety nets.

ROMANS: But the long-term unemployment issue is at a record. So this time -- this time it is different in that we have more people out of work for so much longer. And even the Fed chief and others have said, all of these folks that are out of work for six months, the game has changed for them, Casey. I mean do you agree that for them, once they've been out of the workforce for six months, it's so much more difficult to get back in? Do they need that cushion?

MULLIGAN: Definitely the cushion is something that's good for them. It's good for them. The question is whether it's good for our economy and good for our taxpayers. And how do you balance those things? And I -- as I said, I'm all in favor of a safety net, I'm just not in favor of one that has gotten so tremendously generous relative to what seemed to work a few years ago.

ROMANS: Last comment to you, Bob.

HERBERT: I think that if we cut back on unemployment benefits, there's going to be an awful lot of additional suffering in this country. And I'm not sure, as a society, that we want to go there.

ROMANS: All right, Bob Herbert and Casey Mulligan. Nice to see both of you. Have a great weekend, guys.

MULLIGAN: Take care.

ROMANS: All right, at the two month mark, have the Occupy Wall Street protests really accomplished anything? That's next.


ROMANS: Occupy Wall Street demonstrators were evicted from camping out in Zuccotti Park this week. But two months in, the movement may be picking up steam with mass rallies across the country, including a number of tense interactions with police. I'm joined by Carmen Wong Ulrich, personal finance expert and author of "The Real Cost of Living," also Poppy Harlow, CNNMONEY anchor, and Pete Dominick, host of Sirius XM "Stand Up."

Pete, two months in, I'm going to tell you, I can remember saying, it's the third day now of protests on Wall Street and that was the longest single protest I've ever seen. Are you surprised how long it lasted?

PETE DOMINICK, HOST, SIRIUS XM "STAND UP": I'm not surprised at all. And I think it's going to transform and I think it's going to become something much more different. But the most important thing that has come out of this, awareness. We're had more a-one front page stories on incoming equality --

ROMANS: Yes, you're right.

DOMINICK: In the past two months than we've had in the past 10 years. OK, Paul Ryan put out a memo. Paul Ryan, the most staunch conservative, the budget chairman, the (INAUDIBLE) --


DOMINICK: Social Darwinist, every man for himself free marketer put out a memorandum this week titled, a deeper look inequality, and used the phrase corporate welfare needs to end. And awareness. And now people are talking about this. We talked about debt and deficit for months. Now people are talking about jobs and the massive wealth gap in this country. And that's more -- that's what this has done.

CARMEN WONG ULRICH, PERSONAL FINANCE EXPERT: Yes, well, here's the thing. The first thing was, the first day of Occupy Wall Street, my first reaction was, what took everybody so long.

ROMANS: Right.

ULRICH: What took so long. It took basically seeing that we are entrenched in this, because this is not a recession that we're going to pop right back out of, like the previous, over the past 20 years. We're entrenched, so changes need to be made.

And the thing is, when I hear the criticism about, well, there's no focus, there's no leaders, there's no demands, that's not the point. There's a statement being made. And like you said, this is the thing, we're talking about a lot of issues that need to be talked about for the general good of everybody because you have a system that's obviously broken.

ROMANS: But it has reached a turning point. And you saw a turning point this week. And it will either energize and move the movement forward, or, in the eyes of some public officials, this thing has changed and there are elements who have gotten in there -- I think in a couple of towns there's a -- camouflaging. You know, criminals camouflage -- and that's hurting it. It hurts it.

POPPY HARLOW, ANCHOR, CNNMONEY: Yes, I mean, look, I've spent a lot of time down at Occupy Wall Street. I was there in the middle of the night in the police raid on Tuesday night and from every person I heard that is part of the movement, that is supporting the movement, it has galvanized the movement. It may be less central now in terms of location, but the constant message was, it's not about a place, it's about an idea, it's about a message, it's about the conversation that it has started.

ROMANS: But what -- but what's next? But what's next for it?

DOMINICK: Well, I just -- Mayor Bloomberg --

ROMANS: There's no platform.

DOMINICK: Mayor Bloomberg made a huge, huge, great move for the movement. Mayor Bloomberg (INAUDIBLE) insane remarks last week about what caused the financial collapse, saying it was Congress. He helped change this -- transformed this movement by kicking them out, because now it is going to become something much more different just in time for the weather, by the way.

HARLOW: I do think that there is a platform and they've created their own platform. We've been reporting on this global revolution TV. They like -- when our cameras, CNN cameras, I could not get past the police barricades for three hours for the whole eviction. They were live streaming it. And there was citizen journalism on the ground. We were on the air with you reporting it on the phone when we couldn't show it, but they could show it on the web. That's their platform.

ROMANS: There was a Republican congressman this week who was saying, come on, most people look at this and they say, what is the drum circle really going to do? And he said, you don't get change through sitting in dirt, you know. So, like, people on the right just completely dismiss it.

ULRICH: And (INAUDIBLE) right. But that's not the point. That's like throwing little firebomb (INAUDIBLE). But look over there. But look over there. Here's the point. People are upset and want something to be done about it. And for every one person who's actually out there on Wall Street, you've got another 10,000, 100,000 people that feel exactly the same way.

ROMANS: But can't afford to be there because they have their jobs.

ULRICH: But can't afford to be there because hopefully they have a job and are working.

DOMINICK: Right. But there's been --

ULRICH: But people -- the voices out there -- this will continue to live online, in social media --


ULRICH: In the media. It's not going to go away. If anything, it's absolutely contagious and its global, so it's going to grow.

DOMINICK: There's going to be marches. There's going to be much more. But I disagree with what you said. The people on the right dismiss this. A lot of people on the right do, but a lot of people on the right share a lot of -- this 99 percent branding is, frankly, brilliant. It's not liberal, it's not conservative. It's the understanding that the financial system has been warped and rigged for the privileged few for far too long.

HARLOW: But I would say that there does need, as you point out, Christine, to be some sort of consistent message. It doesn't have to be only one message, but some sort of consistency.

ROMANS: Very interesting stuff. Don't go away, we've got more to talk about.


ROMANS: Black Friday or Black Thursday or Black Wednesday or we're going to have January 2nd we're going to start shopping for the next Christmas. As early bird shoppers grow in numbers each year, do we really need to be rushing out to spend Thanksgiving at the mall? Oh, my gosh. That's next.


ROMANS: All right. Get ready for Black Friday on Thursday. Wal-Mart will open some stores at 10:00 p.m. on Thanksgiving evening. Toys "r" Us, 9:00 p.m. Macy's, Best Buy and Target, to name a few, will be opening at the stroke of midnight.

Carmen, Poppy, Pete, I want your 30 second take. You know I think it's a retail machine that we're all driven to go. And I also think that, quite frankly, the prices are going to be cheaper again by the end of the year.

Carmen, you're the expert on the price.

ULRICH: Absolutely. And the prices are going to be much cheaper. I'm going to sit in my jamies and shop because that's where it's at. This is just -- this is a sport. This is a cultural phenomenon. It's a sport.

ROMANS: That's right.

ULRICH: And my sister-in-law does this. Beniti (ph), you're crazy. But she goes out -- and she goes out in the middle of the night after Thanksgiving and it's a sport. Retailers know this. Last year the projected numbers were almost half of the actual number of shoppers. Folks are really out to for the bargains.

ROMANS: Really?

ULRICH: They were. Folks are really out for the bargains. This is a sport to see who can be the best extreme shopper.

ROMANS: So the industry wants us to think that everyone's going to be doing this.

ULRICH: Look at that extreme couponing.


DOMINICK: I think what we're missing a little bit is that people like to shop on the weekends. The malls are always packed on the weekends. This is a Friday that a lot of Americans are getting off.


DOMINICK: One of the reasons why it's so packed is because they have that day off to get the shopping done. There's only just so many days to shop, Christine. This is a day off for them to shop.

ROMANS: But what about Thursday? Come on. You cook (ph) your turkey and then you go to get --

HARLOW: I think it's sacred. I think it's sacred. I think it's Thanksgiving holiday. It's about family. Yes, a little football here and there, go Vikings. It's not about -- it's not about how much you can buy.

DOMINICK: Enough of your moralizing. How dare you --

ULRICH: You're assuming everyone wants to be with their family on Thanksgiving.

DOMINICK: Exactly.

ROMANS: That's true.

ULRICH: I'm just saying that not everybody --

ROMANS: Wait -- wait --

ULRICH: Would rather be shopping --

DOMINICK: It's a way to get away.

HARLOW: So in this same time, shouldn't this show us that our economy is way too reliant on consumer spending.

ROMANS: Yes. Yes.

HARLOW: And as one consumer told us from the store, the stores are getting desperate, so they're opening up earlier. That's one person's opinion. But maybe we should think about an economy that's not so reliant on how much we can go spend, spend, spend when we need to save, save, save now.

ULRICH: Oh, really, Poppy, this is just -- this is a dreamland, OK.

HARLOW: I like my dreamland.

ULRICH: Because (INAUDIBLE) Christmas and I'm telling you that right now everybody is about the bargains. If you're not at that top 1 percent here buy all this great stuff at Saks, you are down here going, I'm going to get the best deal if it means no sleep for two days and you're going to stand in line.

ROMANS: But you know that they're going to try to trick you. They're not going to give you something for nothing.

ULRICH: I'm not saying it's a good thing.

ROMANS: Yes, I know. I mean but I think people go out and they think they Re going to get this good deal they're looking for and they spend too much money and they end up with a holiday hangover anyway.

ULRICH: Right.

ROMANS: I mean why can't we break this cycle of purchasing and debt.

DOMINICK: Maybe they've been saving up. Maybe they've been saving all year for these days. I'm surprised that Poppy's admitting on national TV that she hates Christmas. That is really something that I'm surprised by. And loves football and Thanksgiving so much. But what is -- what -- I don't understand what's wrong. I would never do it. I agree, your sister-in-law is crazy. I'm going to be in my jamies shopping online. For a lot of people, this is tradition.

HARLOW: But let's not let people forget, it's about the loss leaders. What companies are willing to mark down that they'll lose money on so you come in and you buy more of the things you don't need.

ULRICH: And you spend more.

ROMANS: You know, I did grow up going with my grandma and my mom and my aunts shopping on the day after Thanksgiving. Full disclosure. But it was a lot different then. It -- nobody was getting trampled at the front door.

ULRICH: Trampled.

ROMANS: There wasn't -- there wasn't this feeling like if you missed out on that doorbuster, that you had somehow failed. It was more like -- I guess it was a family sport for us.

ULRICH: They should -- you know, Christine, they should listen to us and all the tips that we give about shopping online and making sure that you get the best price in reality.

ROMANS: What about pushing it so early though? I mean actually coming in on Thanksgiving? And there was a -- you know, there was a guy who works at a Target who started a petition, 79,000 people said, come on, don't make us come in on Thanksgiving night to get ready for Black Friday.

ULRICH: Yes. But here's the thing about working Thanksgiving. How many of us worked all through high school and college every single Thanksgiving.


DOMINICK: Yes, whaa (ph). I've got to work. You know how many people would love to be working?

ULRICH: And thank goodness that you're working on Thanksgiving. So please don't give me that. I understand that the shopping may not be good, but if you're working, you are working. Good for you.

ROMANS: Shoppers, only buy it if you can afford it and if you need it.

DOMINICK: What don't people need? What are the things they're buying that they don't need?

ROMANS: I know Poppy hates the holidays. She wouldn't know.

DOMINICK: I think we're branding a whole new segment for Poppy.


DOMINICK: A whole new segment --

ULRICH: Poppy's not giving presents this year, everybody.

HARLOW: I was raised that the holidays are about the family and religion. Is this just lame?

DOMINICK: I don't know. I think you -- I think there's some coal in somebody's stocking that somebody wants to admit to.

ULRICH: A bag of coal. A bag of coal, exactly. A bag of coal.

ROMANS: All right, everybody. Thanks so much. Poppy -- you guys are hysterical.

All right, that's -- thanks for joining us this weekend on YOUR MONEY. We're here every Saturday, 1:00 p.m. Eastern, Sunday at 3:00. And make sure to check out my new book with Ali Velshi. It's called "How To Speak Money." Ali and I will guide you through the lingo of housing, jobs, globalization, retirement planning and student debt. Head to right now -- be one of the first to get it.

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