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Flash Forward to 2016; Who is Ayn Rand?

Aired October 14, 2012 - 15:00   ET


ALI VELSHI, CNN ANCHOR: The presidential election is less than one month away and America is headed toward a fork in the road.

Welcome to YOUR MONEY. I'm Ali Velshi.

On November 6th, you will choose one of these two roads, the country will follow one of them. And today I want to take you into the future, a look at 2016 under a President Romney or a second term of President Obama.

But first, here's where we are today. The U.S.'s largest trading partners are struggling and that isn't -- that's strengthening the economic storm that's headed over from Europe to the United States shores. This week, the International Monetary Fund cut its forecast for global growth for both this year and next year. That's the world economy and the U.S. economy.

The IMF cited two reasons things could get worse, first, if European leaders fail to support their ailing economies and second if leaders here in the United States let us plunge over the fiscal cliff. The IMF sister organization, the World Bank, citing the same two factors, cut its growth forecast for Asia this week as well.

Now that's for the next couple of years. Where are we going to be in 2016, four years from now, when we're discussing the next U.S. election? Well, that depends on which of these two roads America takes on Election Day.

I'm going to take you down both paths on this show starting with what 2016 will look like under a President Mitt Romney.

Start with jobs. He says 12 million jobs will be created in the next four years. As I keep telling you, that claim is ridiculous, considering the sluggish growth that we're seeing right now and the new downward revisions. But for the purposes of this exercise, I'm going to take him at his word and presume an historic surge in jobs lies ahead.

Let's talk about taxes next. I'm going to let Governor Romney explain this for himself.


MITT ROMNEY (R), PRESIDENTIAL NOMINEE: Well, I've made it pretty clear that my principles are, number one, simplify the code, number two, create incentives for small businesses and large businesses to grow. Number three, don't reduce the burden on high-income taxpayers. And number four -- remove the burden somewhat from middle income people.


VELSHI: Now if you can get all that done in four years we'll have a brand new tax code by 2016. Again it's bold. Everybody talks about doing it but nobody has done it really since Reagan.

And finally let's take a look at the deficit. Romney is planning to cut a lot more than funding to Big Bird and PBS. His plans include repealing Obamacare, reducing foreign aide and one of the biggest cuts privatizing Amtrak. Now you may not think that that's that big of a deal. I use Amtrak all the time. Romney says privatizing it will save $1.3 billion.

But remember the budget is made up of a lot of small things. Now however he does it, his goal is to reduce government spending to 20 percent of GDP. GDP is the biggest measure of everything we produce in society. And he wants to do that by the end of his first term. Right now government spending is at 25 percent of GDP.

Let's shed some more light on what Romney's America would look like.

Kevin Hassett is an economic adviser for Mitt Romney. He is also a senior fellow and director of Economic Policies Studies at the American Enterprise Institute.

Stephen Moore is an editorial writer for "The Wall Street Journal."

My good friend, Christine Romans, is the host of "YOUR BOTTOM LINE" right here on CNN.

OK, folks, no party or ideological spin today, no using the name Obama or the term Democrat. Just paint me a picture of what the world looks like under Romney four years from now using specifics. So you can't say things like it will be better, we'll be safer, everyone will be richer.

Tell me exactly what happens, the good and the bad.

Kevin, you're responsible for writing some of the policy, you go first.

KEVIN HASSETT, SENIOR FELLOW AND THE DIR. OF ECONOMIC POLICY STUDIES, AEI: Yes, thanks, Ali. And I have to say that I agree with your setup exactly. And I commend your show for really being one of the only places that's talking about the storm in Europe.

The fact is that the world economy is flowing. The U.S. economy is slowing. We're growing probably around 1 percent in the second half. And the fact going forward is that if the world economy is going to turn around then the U.S., you know, is going to have to be the leader. We can't count on Europe to start booming and buying all of our stuff and drive growth. And so I think that the U.S. can be a leader regardless of who's president if we do a couple of things. We need what we call a fiscal consolidation. We need to get our deficit in order, but to do it kind of by making changes to entitlements in the long run so that we're not, you know, harming people today but are making those things sustainable and making, you know, the bond raters think that the U.S. is actually not going to look like Greece.

And the second thing we need is a tax reform that gets the corporate rate down so that we're at least about the average of our trading partners and small businesses don't see the big tax hike that -- that President Obama has proposed. I'm not doing the partisan thing. I was just saying.

VELSHI: You said President Obama.



VELSHI: But you did a pretty good job.

HASSETT: Yes, I --

VELSHI: You did a pretty good job.


VELSHI: All right. Stephen --

HASSETT: OK. But I think that if we do that then we'll have growth.

VELSHI: Well, OK, Stephen, Governor Romney is a smart, successful businessman. That part is not in dispute. It appears like his plan is to treat the country like a struggling business, fixing what's broken.


VELSHI: Cutting costs and coming out more profitable by 2016.

Here's the thing, Stephen. Americans are not employees of the government, being president is actually very different from being a CEO. I spoke with Bill Daley last week. You know, he's worked in the White House and the public service. And he made a good point. He said a CEO can replace 15 or 30 people even in a big company and change it entirely. The budget is predetermined, the board knows it's coming.

A president just can't do that. So within the constraints of what a president can actually do, really, how is life going to be that different in four years if Mitt Romney is president?

MOORE: Well, Ali, you're right that it's like trying to steer an elephant, trying to change the direction of the -- of the U.S. government. That's part of the problem, isn't it? Now I agree with Kevin. I'm a free enterprise guy. I do believe -- let me put it like this. This tax system we have right now is a Pinto. And what we need is a Porsche. We need something that is engineered for really rapid growth. And I agree with Kevin. You bring those rates down. I like the idea of creating a -- just a standard deduction that everybody gets and get rid of a lot of the pollution in the tax system. I think most people would agree that would be a much more rapid growth type of tax system.

I want to add something to what Kevin said. I'm really high on the energy story, Ali. I think over the next four years -- I know you're skeptical of that 12 million job figure, but I think we could create easily over a million jobs in the energy sector alone with what's going on with the oil and gas boom. We've got so much coal in this country. President Obama has been very skeptical of oil, gas and coal. I think president -- a President Romney would really go after it.

You know the one sector of the economy over the last four years that has created more jobs than any other industry has been the oil and gas industry. And I think we could create a lot more jobs in that industry if we got it right.

VELSHI: You said President Obama, too, but generally speaking that was a pretty good analysis.

MOORE: I know. But --


MOORE: Sorry about that.

VELSHI: Christine, you know the rules.


VELSHI: If Mitt Romney wins in November, he's still got two very major problems, one of them is the gridlock in Washington which has probably as much to do with Congress as the president got more to do with Congress and that economic storm blowing in from Europe. Kevin has said well, we can -- we then have to be in good shape. I'm saying well, that may prevent us from being in as good shape as we'd like to be.

So you argue that under Mitt Romney we are going to start looking at government very differently, very less -- differently less paternalistic. Fewer economic solutions coming from government.

ROMANS: In part, Ali, because of time. Time is passing and time from that emergency of the great recession is passing. And the things that the government has done, the expansion of the government and government spending to make a great recession not become a great depression in four more years, no question, exit strategies are going to be under way to rein in some of those things.

All kinds of different government spending programs and Mitt Romney has said that look, he believes in a safety net and he will repair it as necessary. But the safety net is probably way too big. So under a President Romney, no question, you would see a different way of looking at government and probably a smaller government.

Now, this being said, gentlemen, I would just like to say the one thing that is certain, that is certain under a President Romney by the year 2016 we will all be four years older.


VELSHI: You --

MOORE: And Ali will have more hair.


VELSHI: That's right. Christine wins the -- wins the prediction contest.

All right, all of you stay right there. You mentioned Medicare, Christine. Candidate Romney's Medicare plan is a little foggy to some of the 50 million people who depend on it. What is in store for Medicare if there is a President Mitt Romney in the White House? We will bring you the facts and continue this discussion right after this.

You're watching YOUR MONEY.


VELSHI: You're watching YOUR MONEY. We're looking into the future right now. It's 2016. Safety net programs, entitlements, federal assistance, call them whatever you want for about half the country, at least in 2012, they are reality.

One of biggest questions is Medicare. Christine Romans joins me now. With less than a month to go until the election, there are still some unanswered questions, some clarity lacking about Romney's Medicare plan. Tell me about it.

ROMANS: OK. Governor Romney's Medicare plan is unclear on three issues critical to the almost 50 million people on Medicare, Ali, and the rest of us who may rely on it when we get older. The first point of Romney's plan that's a little unclear to us, the cost to seniors. This only applies to future retirees. VP candidate Paul Ryan said during the debate, Thursday, that's age 54 and other -- his plan -- under.

His plan offers two options. One, a premium support system or a voucher for each senior to buy private insurance from competing providers. The other option, say in traditional Medicare, what we don't know is whether the voucher will be enough to cover the cost of the traditional Medicare option for people who want to stay in it. Now the Romney campaign has not clarified that yet.

Second, the prescription drug plan. Romney says older Americans have nothing to worry about but Obamacare, or the Affordable Care Act, saved seniors more than $600 on average last year as part of the government's prescription drug plan. The president says those savings will disappear under Romney's plan because he has vowed to get rid of Obamacare. No specifics yet on how his plan would deal with that increase.

Finally, Romney hasn't said if he'll put a cap on spending for these plans. Experts say a cap is needed to promote competition and keep cost increases under control. Romney's running mate Paul Ryan's own budget plan that he proposed in Congress, it includes a Medicare spending cap but Romney isn't aligning himself with it. And without a spending cap, the Congressional Budget Office says it can't score it -- Ali.

VELSHI: All right. So that's the tough part. Hard to score, unclear what's going on.

Kevin, can you shed light on this? Are you able to give us some sense of exactly those three questions that Christine has? What Medicare is going to look like for people who receive it in 2016 or sometime after President Romney gets elected if he does.

HASSETT: Yes, absolutely. And again it's important to emphasize that this is a -- you know, a change to the program that's going to affect us, the people who are talking on the show but not people who are currently retired. I think the basic belief of Governor Romney and Mr. Ryan is that if we allow competition between firms for your business, that they're going to get really good at providing services to you that you want and they're going to tailor plans to customers in a way that the government just never does and that that will produce superior plans that cost less.

You know, competition tends to do that in society. But if it doesn't, which is, I think, one of the concerns that was just raised, well, then people can choose to stay on the normal plan. You know, and so I think --

ROMANS: But wouldn't all the sick people go into the normal plan? If the sick people go into the normal plan, right, because they want to make sure that they get everything for their dollar and -- doesn't it the create sort of two tiers of Medicare then?

HASSETT: You know I don't think that it would because I think that what would happen would be that you might find that the private plans that people can buy with a voucher, for one thing, you know, Governor Romney is going to have a lot of detailed requirements for people that, you know, they're going to have to have a plan that covers things in a specific way. So that if you take the plan and you're sick then you're going to be covered.

But I think that going forward, we have to remember that we've got a government that really, you know, the OECD, Ali, I know this is probably something that you mentioned because you read their stuff so much, they did a calculation of the fiscal adjustment that every government around the world has to make. And our fiscal adjustment, how big the change has to be so that our debt is just sustainable is 8 percent of GDP. VELSHI: Right.

HASSETT: That's the third largest on earth, right?

MOORE: And you know -- you know --

HASSETT: And so the fact is that what Governor Romney wants to do is defend these programs but if you go down the road, you're exactly right. So for me, what we need to do is create a Medicare when I retire that I can know is going to be there. And the fact is that I'm going to have to pay out of pocket. I'm fortunate enough to be a wealthy person. I'm going to have to pay more out of pocket a lot more than I do under the current system.

MOORE: You know, Kevin, I'd like --

HASSETT: Because as a wealthy person, I can afford to have deductible every year and stuff.

VELSHI: Steve --

HASSETT: And I think that's the crucial thing that's going to change.

VELSHI: Let's break Stephen in.

MOORE: Kevin, Kevin, I like what you're talking about. I'm not working for the campaign. So I can kind of be a little more critical. I think the problem with what Mr. Romney is talking about is it takes too long to save money. I mean this crisis is right around the corner with Medicare. I mean it's going to run out of money within the next 10 years or so unless we make simply some changes.

So, yes, Kevin, I like what you're talking about. I agree entirely. The competition model, I think, makes a lot of sense. But you know I'm not so sure we have enough time. This -- if you look at Medicare, Social Security and Medicaid, by the end of the decade, they're going to take all of our income tax revenues. We're not going to have money left over for anything else we spend money on. I just -- I think neither party --

ROMANS: Unless you raise taxes.

VELSHI: Unless you raise taxes.

MOORE: Right.

ROMANS: Unless you raise taxes.

MOORE: Well, look, we need to have a lot more economic growth, I think. There's no question about it.

VELSHI: Right.

MOORE: You've got more growth, you've got more revenue.

VELSHI: And so much of what you're saying about what a Romney administration will look like is predicated on economic growth.

MOORE: Right. That's right.

VELSHI: And -- but Kevin, what's the -- what's the estimate that you have, that if you enact the things that Romney wants to enact very quickly, adds a half of a percent or 1 percent per year to GDP growth?

HASSETT: Yes, that's right.

VELSHI: Right.

HASSETT: That's right. And I think that, you know, you know that you cover this a lot. Firms are sitting on a lot of cash. There's all this uncertainty over the fiscal cliff.

MOORE: That's right.

HASSETT: And over the big deficits and how that's going to work out. I think that we really could unleash a sigh of relief rally if we could just get ahead of the curve on policies.

VELSHI: All right.

HASSETT: And again that's true for either president.


VELSHI: Let me ask you --

MOORE: Let me -- let me bring up something. You mentioned something earlier I just -- you can't avoid. You mentioned Amtrak. Let's just take that as one example.

VELSHI: You're not going to hate on Amtrak, right? Because I use it a lot.

MOORE: No. But I wanted to say one thing. Look, I think -- you're going to hate me for saying this. I think wealthy people like yourself don't need a government subsidy to take the train. Right? I mean why are taxpayers paying for people that take the train?

We have to -- I guess my point is, we have to start getting serious about what we really need --


MOORE: -- in this country in terms of government benefits.

VELSHI: Yes. Although --

MOORE: And what we don't.

VELSHI: Although guys like you wouldn't --


VELSHI: Guys like you wouldn't want the government involved in a public/private partnership to build a real high-speed rail system.

MOORE: I don't -- well, I don't like --

VELSHI: Which I think would create business.

MOORE: Well, I don't like high-speed rail. Only -- the only point I'd make is we've got to go through every program in this budget --


MOORE: -- and say, is this a real high priority? I mean do we really need to continue to spend money on Elmo? I mean, I like public TV but couldn't the people watching pay for it --


ROMANS: Hold on. You're bringing Elmo into it?

VELSHI: You guys are haters is what you are.

ROMANS: You cannot fix our problems by talking about Elmo.

VELSHI: You guys are haters.

ROMANS: All I've got to say.

VELSHI: All right, guys, we could do a whole show on this. I really like this conversation. Thank you for doing that and thank you for limiting the use of the terms --

MOORE: Thank you

HASSETT: Thanks.

VELSHI: -- Democrat and the name Obama in this one. We're going to talk a lot about that, by the way, in the next couple of segments. Coming up next --

MOORE: I like Elmo, too, by the way. Just want to get that on the record.


VELSHI: Let's reprogram this time machine with alternate coordinates and examine 2016 if President Obama wins a second term.


UNIDENTIFIED MALE: Which dream will we carry into 2016?


VELSHI: It's a documentary. It's called "2016, Obama's America." It argues dire consequences are in store. I'll draw you my own picture, when we come back.


VELSHI: Forget 2012. Just forget about it. We're looking into the future and the year 2016. We just traveled down the road to 2016 under a President Romney. Now we're taking another fork in the road. And in some ways it's less of a leap into the great unknown. After all, President Obama has already been president for four years. He's got a track record from which we can extrapolate.

We know what he's done. Where he's fallen short. But because this would be his second term, he might be thinking about his legacy and that can change the equation.

Here's where we are. Based on normal revisions of past jobs numbers, normal revisions always happen. This is the normal course of business. There's no conspiracy here. The Department of Labor expects that not counting the last jobs report, which will come out just days before the election, President Obama has already gained back all of those jobs that were lost on his watch.

In fact, the Department of Labor says it's about 325,000 more jobs, although the new jobs tend to be of a lower quality than the ones that were lost. That is often typical after a recession.

But what happens if Obama wins again?

OK. That documentary I was telling you about, "2016, Obama's America," it is the second highest grossing political documentary in history. "Fahrenheit 911" by Michael Moore was the highest. This one was co-written and directed by conservative author Dinesh D'Souza and it paints a dire picture.


UNIDENTIFIED MALE: Obama has a dream. A dream from his father. That the sins of colonialism be set right and America be downsized.


VELSHI: Now according to "The Washington Post," here's what the movie tells viewers. If the president is re-elected the world -- well, the world four years from now will be darkened by the clouds of economic collapse, World War III and a terrifyingly ascended new United States of Islam in the Middle East.

Now that view of what Obama would do has been called a deliberate distortion of the president's way of thinking but it did make me think about giving you, perhaps, a less politicized version of the next few years and here are three quick snapshots.

First of all, health care. That's the big one. That's Obama's first- term legacy. By 2016 Obamacare will be fully entrenched, its provisions almost entirely phased in and 30 million more Americans will be covered by health care.

Second, taxes. This is the big difference between these two guys. If you are in the top 2 percent of earners you will pay more under Obama's plan. Marginal tax rates for families making more than $250,000 will go back to Clinton era rates, 39.6 percent versus 35 percent.

Now the rich will also pay higher investment taxes and you know that I think the most important thing is what these two men will do about jobs. They both made the same silly prediction that there will be 12 million new jobs created regardless of who's in office.

The nonpartisan Congressional Budget Office predicts that if no policy changes are made, nothing different happens, we just continue on the same road, the unemployment rate will fall to 6.3 percent by the end of 2016.

So where could it go if President Obama actually got some of his jobs initiatives passed like an infrastructure bank or tax cuts for businesses to hire workers or in-source workers to the United States?

John King is CNN's chief national correspondent.

John, the first term is about getting re-elected. But the second term, if the second term happens, if President Obama wins again, he doesn't have to worry about running again. His second term could be about establishing a legacy. What does that likely mean to Americans looking toward 2016?

JOHN KING, CNN CHIEF NATIONAL CORRESPONDENT: Well, the second-term presidents do look to go big. They look to make the history books. And sometimes they're willing to bend their prior rules to get there. And so would President Obama be more open to that big deal? More open to maybe structural changes in Medicare and Social Security, to get what -- to get what he wants in the tax environment you were just talking about. Yes, he most likely would be. However, Ali, Bill Clinton wanted some big things in his second term. George W. Bush wanted some big things in his second term. Both were hobbled politically. The Lewinsky scandal in Clinton's case, the unpopularity of the Iraq war in President Bush's case.

So there are -- there are things we don't know yet. We know yes, we know he would come to the table looking to go big, looking to build his legacy. What would the Congress look like? Would he still have an evenly divided Congress? Would Republicans still be digging in their heels on the tax question? So the president would be thinking big, the question is, can he get big?

VELSHI: Yes, that's a -- that's a good question.

Rana Foroohar is the assistant managing editor for "TIME" magazine. Good friend of our show.

Rana, what does unemployment look like in 2016 if President Obama wins?

RANA FOROOHAR, ASSISTANT MANAGING EDITOR, TIME: We know, as you just said, it's going to be ticking down no matter what. But I think if he was able to get through some of these big jobs plans that he's been talking about, an infrastructure bank as you mentioned, really focus on manufacturing, really help the resurgence that's -- that has already been happening, I think we could go down to 6 percent or maybe even lower.

But, you know, it's all about bringing Congress together. It's not just about the president as we've seen in the first term. So it's going to be very important if he's re-elected that he helps us get over this fiscal cliff. If he can build consensus and we're already starting to see actually a little give on the Republican side. You have people like Tea Party supporters David Koch talking about possibly moving the entire tax system.

VELSHI: Well, let's look at -- John, what -- I mean, is there something the president can achieve differently in the second term if the make-up of Congress is the same? Because it's been so intractable between Congress and the president. Can that change? Can he become more accommodating? Can he become more schmoozy? What?

KING: He's going to have to become more involved. If that means more schmoozy, maybe, just more involved. Maybe it doesn't have to be schmoozy but it just has to be more consistent. Both sides are to blame here. There's no question the Republicans, especially in this election environment, have dug in their heels. Anything the president is for, they're against.

But it's also true, Ali, anything therefore, the Democrats are against.


KING: The Republicans have pushed forward a lot of their own proposals. And they haven't passed. The Democrats have put forward their proposals, they haven't passed. So you have a childish daycare center in Washington right now.


KING: Where nobody will talk to each other in the election season. The president without a doubt will have to work harder on that in a second term. I think he'll get the infrastructure bank. Republican governors want that money. The bigger question is, though, taxes, entitlements, those are bigger fundamental questions that I think the composition of the Congress and then how all of the alleged grown-ups act, including the president of the United States after the election would have a huge factor in the political dynamic.

Because remember, if Romney loses the -- this election, President Obama gets a second term.


KING: And the Republicans have a civil war on their hands trying to figure out what happens next.

VELSHI: Yes. What happens next. And I hope that infrastructure bank comes to pass. We've talked about it on this show as possibly one of the biggest drivers of the economy if it happens. Mark Zandi is the chief economist at Moody's Analytics.

Mark, let's talk taxes for a minute. President -- the president wants to let the Bush tax cuts extended for the vast majority of Americans. He wants to let them expire for families making more than $250,000 a year.

It's a bit of a red herring because in the vast scheme of things it doesn't actually affect the budget all that much. But he's also pushing for the Buffett rule so people making more than $1 million would pay at least 30 percent of their income in taxes. Is it only the rich who are going to be paying more in 2016 if President Obama wins or is it going to be everyone?

MARK ZANDI, CHIEF ECONOMIST, MOODY'S ANALYTICS: Well, no, I disagree, Ali. I mean this raises a lot of revenue. I mean over a 10-year period, if you follow what the president wants to get done, it's about $800 billion, $850 billion. So that's not inconsequential. That's very significant. And if we're going to achieve what you might call fiscal sustainability, that's future budget deficits that are small enough that are debt-to-GDP ratio stabilizes and come down, we're going to need tax revenue. We're going to need spending cuts but we're also going to need tax revenue and if you look at Simpson-Bowles and other nonpartisan approaches to this, they're saying we need about a trillion to 1.5 trillion in revenue. So $800 billion is a pretty good down payment.

VELSHI: Fair enough.


ZANDI: So I think that's a good --

VELSHI: But it doesn't solve our problem. That revenue that you need, is -- we still got to do something about that which means it's got to come from either remarkable economic growth or taxing other people.

ZANDI: Well, you know, if I were -- being a prudent planner I don't think I'd count on the stronger economic growth from -- from changes in the tax code. Now, you know, maybe we get lucky and we get a stronger economy, and we're all better off for that, but I wouldn't plan for that. But to get that extra revenue that we need to achieve fiscal sustainability, you know, I think we need to look at tax reform. So we do need to think about the kinds of things that Governor Romney is talking about, scaling back some of the deductions, (INAUDIBLE) the code, make the code fairer, make it more equitable, easier to understand and most importantly generate some revenue.

VELSHI: We're going to talk about how we'd get there, discussion just getting started. We'll delve into some of these ideas that President Obama could undertake in the future.

This issue of gridlock in Congress, even with Mark talking about tax reform, gridlock in Congress has blocked many of President Obama's initiatives. Would a second term change that tone and help get some of these things done and speed up the economic recovery? We'll continue on the other side.


VELSHI: Special version of YOUR MONEY, back to the future. We're taking you down the road to the future.

2016, what does America look like if we go down this road, the road of re-electing President Obama, giving him a second term.

The signature achievement of the president's first term was the passage of health reform, you know, Obamacare. It was originally a pejorative term but it's a term the president says he's actually become fond of.

Now in 2016, the Congressional Budget Office estimates that more than 30 million more Americans will be insured through the new law, including 23 million who are insured through the health insurance exchanges that were set up as part of that law and six million Americans will pay penalties because they're not insured.

Let's bring our panel back. Mark Zandi from Moody's.

Mark, how does 2016 look different because of Obamacare? Without it, there will be 56 million uninsured people in America. How does -- how does 30 million fewer unemployed people help the economy?

ZANDI: Well, that's a big number. Thirty million more insured and of course if you keep them out of emergency wards that helps to bring down cost of health care. But there are a lot of different things in Obamacare that have the potential for so-called bending the health care cost curve, that is slowing the rate of growth and health care costs. And this is obviously so key to our economic future and our budget, the cost of Medicare and Medicaid.

You know, things like taxing Cadillac insurance plans. That will kick in before the end of this term. Fee for results, not fee for service, which is the -- a big change. Hopefully that results in some improvement. And also the so-called IPAB. The Independent Payment Advisory Board which has been so controversial in this campaign. You know that -- the intend of that is to focus on things in the system that they -- in the Medicare system that can be changed to reduce wastes and get costs down.


ZANDI: So -- you know, I don't know if these things are going to work --

VELSHI: That's what some people referred to as death panels in the past.

ZANDI: That's right. You know, I don't know if these things are going to work.

VELSHI: Yes. ZANDI: No one really does but there are a lot of different experiments in the Obamacare. Maybe they help. And at the end of the day we bend that health care cost curve. And that would be vital to our long-term economic future.

VELSHI: Rana Foroohar from "TIME" magazine, the president has been criticized other than, by the way, on health care, which was a very long-term big legacy-type project. He's been criticized for having short-term fixes to the economy, lacking a long-term vision.

Would a second term change that? Would we see bigger thinking on taxes, for example, the grand bargain that we keep hearing about?

FOROOHAR: I think we are going to see a change on taxes. And I think we're seeing it already. You can see in a lot of the polls numbers throughout this election season that people are willing to take a tax hike if they feel that that revenue is going to be used for things like education, infrastructure, job creating things.

Also, you can just look across the Atlantic to Europe and see that austerity isn't really working. There are some new International Monetary Funds figures out showing that the country that had been cutting and not investing in their economies are the ones that doing worse. So I think he can use that push his agenda forward.

VELSHI: John, the president has tried to make an effective case that Congress has been obstructionist, that Congress has been a problem, but that's a real divide between Americans who are willing to put a lot of the responsibility for the lack of economic progress out of Washington on Congress. A recent CBS/"New York Times" poll found that Congress has an approval rating of 16 percent.

If the president wins, with his legacy on the line, we talked about this a little bit in the last segment, what honestly can he do? He's tried a lot of things. He's tried different chiefs of staff, he's tried different approaches to Congress. This is really -- what's the special sauce? How does he get back and say, we have to go and we have to change things for America?

KING: There are many ingredients to a special sauce. And some of them are personal. The president will have to do a better job building better relations with Republicans. The Republicans leaders will have to do a better job of accommodating and trying to actually do business with the president.

But welcome to the world of Washington. To get deals done you have to give to get. So the president has got to give some things up to get some deals. If John Boehner is back as the speaker of House and Mitch McConnell, whether he's the Republican leader or the majority leader of the United States Senate, these are guys, Ali, who for years, 20 years, 20 plus years, have been dealmakers.

They've had their own problems internally in their caucuses but they will come to the table looking to do business because they're Americans just like the president is an American. The question is, what's the composition of the Congress? Number one. You know, how closely balanced, how big is the president's win on Election Day?

If he wins with 51 percent of the vote, that's not a great mandate. If he wins with 275 electoral votes, just over the 270 needed to win, that might not be seen as a great mandate. So what happens on election day will be a huge driving factor in his leverage here.

But, look, the president understands, the leaders in Congress understand. You're just talking about that next four years. There are going to be some hiccups in the health care plan. The Republicans didn't like it but as this takes hold some things will prove to be wildly more successful than they thought. Other things will be -- will be problems. Will they have the wherewithal, the bipartisan spirit to go back and fix and then take advantage of the good things?

And, you know, as you mentioned this path to 2016 you know better than I, China's GDP is going to catch up to the U.S. GDP in that period of time right near the second term. The next president is going to have to deal with the China challenge.


KING: As all the other global economic challenges.

VELSHI: Well put, John. Thanks very much for that.

John King is our chief national -- correspondent. Rana Foroohar is the assist managing editor at "TIME." Mark Zandi is the chief economist at Moody's Analytics and the author of "Paying the Price."

Good to see you all. Thank you so much for giving us a peek into the future.

Coming up, did you hear this on Thursday night?


REP. PAUL RYAN (R), VICE PRESIDENTIAL CANDIDATE: A debt crisis is coming. We can't keep spending and borrowing like this. We can't keep spending money we don't have.


VELSHI: Both sides say they're serious about tackling the national debt. So why has neither side put forth a credible plan to do it? That's next on YOUR MONEY.


VELSHI: It's the $16 trillion question, are President Obama or Mitt Romney serious about tackling the national debt? Your taxes pay for about two-thirds of what the government spends each year. The rest comes from borrowing. And that shortfall is called the deficit.

In fiscal year 2012 the Congressional Budget Office says the U.S. government spent $1.1 trillion more than it took in. It's the fourth year in a row that the deficit has topped a trillion dollars. So Christine is back with a fact-check of what the candidates say they would do to reduce that number -- Christine.

ROMANS: That's right, Ali. Both sides claim to have a plan to get the deficit under control. Listen to Paul Ryan speaking about President Obama.


RYAN: When he said, I promise by the end of my first term I'll cut the deficit in half. President Obama has not even put a credible plan on the table in -- any of his four years to deal with this debt crisis. I passed tow budgets to deal with this. Mitt Romney has put ideas on the table.


ROMANS: Now the first part of that statement is true. Just one month after taking office, President Obama vowed to cut the deficit in half. In 2009, the deficit stood at $1.4 trillion. This year, the Congressional Budget Office puts the number at $1.1 trillion. That works out to a 23 percent cut. It is a cut but not the 50 percent the president promised, Ali.

There are two ways, of course, to reduce the deficit, raise more revenue or cut your spending. Experts agree that the only way to put a real dent in the deficit is a combination of the two. In 2010, the president set up the Simpson-Bowles Commission which proposed a bipartisan balanced plan to reduce the deficit.

Paul Ryan was a member of that commission but he voted against its recommendations and President Obama hasn't endorsed them entirely either. But both sides incorporate elements of the report into their own plan. President Obama's plan is to stop deficits from growing faster than the economy. His budget would reduce the deficit to below 3 percent of total economic output after a few years.

He would raise more revenue, about $1.5 trillion worth, with the wealthy taking the biggest hit. The president would also cut from discretionary spending, mandatory spending, and defense. But his plan doesn't address the rising cost of Medicare, Medicaid and Social Security. That means that over the next 10 years deficits would rise by $6.4 trillion. Debt would stabilize at 76 percent of GDP. It's a good first step but budget experts, Ali, say that's still too high.

Mitt Romney meanwhile has focused on the cuts. His economic plan, 59 points of it, call for capping spending at 20 percent of GDP but his plan avoids cutting from defense. Mitt Romney says he would pursue a balanced budge amendment that would require the government to spend only as much as it takes in. And he said he would balance the budget by 2020, the end of his second term.

He would also pursue entitlement reform. But if President Obama's issue was entitlements, Mitt Romney's issue, Ali, is taxes. Romney's tax plan calls for a 20 percent cut to tax rates across the board. He said he would balance that out by closing loopholes and he has said he would protect middle class families.

But the Tax Policy Center studied Mitt Romney's plan and found that it would be mathematically impossible to lower rates without taking in more money from low and middle income families. Overall, the Committee for a Responsible Federal Budget estimates Mitt Romney's plan would leave debt at 85 percent of GDP by the end of the decade.

We've been telling you also about the fiscal cliff. That's a combination of tax hikes and budget cuts that will take effect in the beginning of next year. Unless Congress acts, if the U.S. falls over that fiscal cliff, President Obama or President Romney will need to worry about a recession. But they won't need to worry as much about the deficits. The CBO projects that the deficit would fall from $1.1 trillion this year to 641 billion next year if we fall off that cliff.

As a percentage of total economic output, that would be the biggest single year drop in the deficit since 1969 -- Ali.

VELSHI: That would be a bad way to achieve lower spending.

ROMANS: Yes. Yes. A recession now --

VELSHI: Yes. That's now the way you -- you know what --

ROMANS: Sending millions of people out of work so if you can --


VELSHI: People always say, how can we get gas down to $2 a gallon with a recession?


VELSHI: Yes. OK. Thanks, Christine.

Coming up next, who is John Galt? And why the answer to that 55-year- old question could shed some light on another question, who is Paul Ryan?


VELSHI: One of the most important questions of this election, what is the role of government? Famed author Ayn Rand is increasingly taking the spotlight when it comes to that question, especially since the nomination of Paul Ryan as Mitt Romney's running mate. But just who is Ayn Rand and why is her divisive thinking more relevant today than perhaps ever before in American history?

Poppy Harrow reports.


POPPY HARLOW, CNN BUSINESS CORRESPONDENT (voice-over): They started cropping up three years ago, after the financial crisis, signs about John Galt and "Atlas Shrugged." For some, Ayn Rand's famous novel and its hero offer a roadmap. UNIDENTIFIED MALE: Ayn Rand, especially "Atlas Shrugged," may have the answers for the problems we're having in this country today.

HARLOW: Among those inspired by Rand's writing, vice presidential candidate, Paul Ryan.

RYAN: The reason I got involved in public service, by and large, if I had to credit one thinking and one person, it would be Ayn Rand.

HARLOW: But who was she?

ANNE HELLER, AUTHOR, "AYN RAND AND THE WOLF SHE MADE": Ayn Ran was a Russian-born Jewish intellectual. She was the product of a totalitarian culture who developed fervid sense of individualism and individual rights.

HARLOW: Biographer Anne Heller says Rand was a teenager when the communist army seized her father's pharmacy.

HELLER: The Red soldiers marched in, shuttered the doors, put a red banner across the door, and her father never worked again. And she was there to see that humiliation.

HARLOW: She came to the U.S. in 1926 and soon became fearful of what she saw. The new deal, Social Security, big government getting bigger.

HELLER: She saw American communism begin to blossom or so she thought in the 1930s, and was appalled and horrified.

HARLOW: Her most famous book, "The Fountainhead" and "Atlas Shrugged," paint an ugly picture of big government and celebrate the individual over the collective. She called her philosophy objectivism which values selfishness, rejects altruism and advocates complete free market capitalism. As she told Mike Wallace in a 1959 interview.

AYN RAND, AUTHOR: I'm challenging the moral code of altruism. The precept that man's moral duty is to live for others. I say that man is entitled to his own happiness and that he must achieve it himself.

HARLOW (on camera): In Ayn Rand's eyes, what was the role of government?

HELLER: Very, very, very small. No public schools, no public libraries, no public hospitals. No public roads.

HARLOW: What's the biggest misperception of Ayn Rand?

ONKAR GHATE, AYN RAND INSTITUTE: The biggest misperception is that she's against things, that she's against government.

HARLOW (voice-over): Dr. Onkar Ghate is the senior fellow at the Ayn Rand Institute. He says her philosophy resonates in a particular way today.

GHATE: Because she asks people to rethink what the purpose of government is, as a result of this financial crisis and what the government did in response --

HARLOW (on camera): So she would have hated the bailout of Wall Street, the bailout of the auto industry.

GHATE: Yes, she was opposed to handouts for anybody and everybody including business.

HARLOW (voice-over): Author Gary Weiss thinks Rand's views can be seen most strongly in efforts by some conservatives that cut back on social programs.

GARY WEISS, AUTHOR, "AYN RAND NATION": She made it sort of morally justifiable to be really harsh in your treatment of the poor.

HARLOW (on camera): So what would happen to people in her ideal society that cannot help themselves?

GHATE: Who would take care of them would be friends, families. They'll do it out of a sense of benevolence, out of a sense of generosity.

HARLOW (voice-over): But not out of a sense of religious duty. Rand was an avowed atheist.

HELLER: She thought that Christianity and communism were two sides of the same coin.

HARLOW: Which may be why more recently Paul Ryan has stepped back from what he said in 2005.

RYAN: I grew up reading Ayn Rand and it taught me quite a bit about who I am and what my value systems are and what my beliefs are.

Her philosophy is kind of a ridiculous -- one of opinion of objectivism, I'm a devout Catholic. How can you be -- you know, believe in that stuff?

HARLOW: And Rand may have been equally dismissive of today's politicians.

(On camera): Do you think she would like President Obama?


HARLOW: Would she like Mitt Romney?


HARLOW: Would she like Paul Ryan?



HELLER: Because none of them is a -- a pure capitalist, and none of them agrees wholeheartedly with her. And that was the price of admission with Ayn Rand.

HARLOW (voice-over): Poppy Harlow, CNN, New York.


VELSHI: Inequality is on the rise in the United States. In the last decade, the middle class has been hit hard, seeing their net worth drop some 28 percent. A large part of that, of course, the result of the 2008 financial crisis.

We'll talk protecting main street from Wall Street after the break.


VELSHI: The economy is center stage in this election as it should be. We've laid out what your life could look like in 2016 depending on who is elected president next month. Now regardless of wins our fragile recovery hangs in the balance between gridlock in Washington and in the economic storm that is blowing in from Europe. And on the sidelines of the national conversation is the connection between our economic struggles and the financial crisis that caused them.

We heard few specifics from either candidate about how they would prevent another financial meltdown. Wall Street reform matters and anyone committed to a healthy economy should be committed to a stable, well regulated financial system.

Next week I'll speak with Sheila Bair, the former chair of the FDIC, the Federal Deposit Insurance Corporation. She was the first to warn about the subprime mortgage crisis after the bubble burst. It was her job to keep the banking system and moreover your bank account from meeting disaster.

She's won praise from Democrats and Republicans alike for her success. She'll be with us next week to discuss her new book "Bull by the Horns: Fighting to Save Main Street From Wall Street and Wall Street From Itself."

I want to know what you think about the government's response to the 2008 financial crisis. Do you feel like your money is better protected now? Has this country done enough to rein in the greed and irresponsible behavior that drove our economy into the worst recession it has ever seen?

Find me on Facebook at Tweet me, my handle is @Alivelshi. I read them all.

Thanks for joining the conversation this week on YOUR MONEY. We're here every Saturday at 1:00 p.m. Eastern, Sunday 3:00 p.m. Eastern. Have a great weekend.