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Politicians From Both Parties Discuss Economic Inequality

Aired January 11, 2014 - 14:00   ET

THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.

CHRISTINE ROMANS, CNN ANCHOR: The economy is taking flight, but 50 years later we're still fighting a war on poverty. I'm Christine Romans and this is YOUR MONEY.

(BEGIN VIDEO CLIP)

ROMANS: Good-bye polar vortex. No, I'm not talking about the weather. I'm talking about the economy. The deep freeze is over.

BARACK OBAMA, (D) PRESIDENT OF THE UNITED STATES: 2014 could be a breakthrough year for America.

ROMANS: Economic growth above four percent, rising home prices, more than 2 million jobs created last year, and a record-breaking performance for the stock market. But wait. Only half the country is invested in stocks, low-wage jobs replacing those lost in the recession, and the White House admits, the economy is not it strong enough to let emergency unemployment benefits expire.

OBAMA: If this doesn't get fixed it will hurt about 14 million Americans over the course of this year.

ROMANS: And 50 years ago this week, another president drew his battle line.

LYNDON JOHNSON, FORMER U.S. PRESIDENT: This administration today, here and now, declares unconditional war on poverty in America.

(APPLAUSE)

ROMANS: A dramatic expansion of the social safety net pushed down the poverty rate, but it didn't last. Today, 15 percent of Americans live in poverty. Democrats argue now is not the time to cut people off.

UNIDENTIFIED FEMALE: If we lose the middle class and we're not there with a safety net when they fall, we'll lose everything.

ROMANS: But Republicans say Democrats don't know how to cure poverty. They only know how to invest in expensive Band-Aids.

SEN. MARCO RUBIO, (R) FLORIDA: To help people alleviating the symptoms of poverty, the pain caused by poverty, but they don't help people emerge from poverty.

ROMANS: The question, if the Band-Aid comes off, how do we heal the economy's underlying wounds? (END VIDEO CLIP)

ROMANS: John Avlon is a CNN political analyst and executive editor of "The Daily Beast." Former "New York Times" columnist Bob Herbert is a senior fellow at Demos. John, I want you to listen to the president this week.

(BEGIN VIDEO CLIP)

OBAMA: These are not statistics. These are your neighbors, your friends, your family members. It could at some point be any of us. That's why we set up a system of unemployment insurance.

(END VIDEO CLIP)

ROMANS: That caught our attention. Is he being a little bit dishonest here? No one is talking about getting rid of the system of unemployment insurance. They're talking about getting rid of taxpayer paid for emergency aid after you exhaust your unemployment insurance.

JOHN AVLON, "THE DAILY BEAST": That is a fair distinction. However, the point being if we are still in two economies and Wall Street is roaring but main street is still suffering, do you have an obligation to extend that safety net? Obviously Democrats say yes. There was a hopeful moment, I got to say. Dean Heller, Republican from Nevada, he managed to corral five Republicans to at least end cloture, to move forward with the debate on this. So there may be breath left in the compassionate conservatives.

ROMANS: Maybe some breath left. I want to talk about Republican Senator Marco Rubio offering a new map on mobility. He's really focused on mobility for all Americans. He wants to turn federal anti- poverty funding over to the states. He wants to replace the earned income tax credit with an enhanced federal wage, so a job becomes more enticing than collecting jobless benefits. Could that work? He points out if you enhance a wage of an $18,000 a year job, the person gets a little more money every paycheck, not just a tax credit at the end of the year. That's what he'd like to do.

BOB HERBERT, SENIOR FELLOW, DEMOS: If you enhance it, if you have an enhanced federal wage, that's essentially a subsidy to large employers. So the question becomes, do you really want to pay people more money by taxing the rest of us? I mean, if someone's going to make more on their job, you think that that extra money should be paid for by their employers, not by the taxpayers.

ROMANS: What we need to do is we need to raise jobs that are good paying jobs. We talk about all these things around the edge, helping people survive. The message at the White House is going for this year, income inequality, raising the minimum wage, extending unemployment benefits -- does that give Republicans an opening to say you're talking about Band-Aids. You're not talking about how to create good jobs?

AVLON: I think Democrats definitely see this issue as something that is a defining issue of our times, as the president said, and it also resonates with the base historically. We're talking about the 50th anniversary of the war on poverty. The war on poverty was a statistical success but a political failure. There was a backlash. Lyndon Johnson looks better today than he did 25 years ago.

But the fact that Republicans are even beginning to talk about poverty, beginning to talk about inequality, is a step forward. You can disagree with their prescription, and I don't think they've got a huge opening to run through here, but I think it's heartening that they're at least entering the conversation, because it raises the question, if objectively we have an inequality problem, what's the GOP solution? And at least Rubio and Ryan and beginning to talk about it.

ROMANS: But then you hear from some conservative economists that say the official poverty vat 15 percent. But there's misleading statistics around there. It doesn't include food stamps, housing assistance, Medicaid, the earned income tax credit. Maybe the war on poverty has actually been more successful than numbers would suggest, Bob, because we do have this safety net today that we didn't have before.

HERBERT: You can argue about the numbers to any extent that you want. But try to imagine what the situation, what the landscape would look like right now if we hadn't had Medicare, Medicaid, the food stamp program, school lunches, and that sort of thing. So to that extent, the war on poverty really helped a tremendous number of people.

But going forward, I think you've made the essential point. You can't take care of inequality, upward mobility, poverty, any of those things unless you figure out a way to create an awful lot of well-paying jobs.

ROMANS: We'll be talking about it all year. Thanks, have a nice weekend.

Coming up, what would you do for a new job? Give up your Facebook password? Take a drug test? Disclose your credit score? Employers want those things and more. Can you say no? Why companies hold all the power.

(COMMERCIAL BREAK)

ROMANS: The Rocky Mountain High could cost you your job. As of January 1st anyone over 12 in Colorado can walk into a store and buy marijuana. But workers there should be careful. Employees in the centennial state still can be fired for testing positive for pot even though it's legal to smoke it. Ana Cabrera joins us from Colorado where she's been following the story for us. Hi, Ana.

ANA CABRERA, CNN CORRESPONDENT: Hey there, Christine. The green rush here in Colorado certainly continues. Really, the demand outweighing supply. And yet as people are rushing to get their hands on this stuff, they might not be thinking about one thing -- you could be putting your job on the line.

(BEGIN VIDEOTAPE) CABRERA: It turns out Colorado's new Rocky Mountain high comes with a catch. Test positive for THC at work, you could hear the words "you're fired."

BRANDON COATS, FIRED FOR USING POT: I'm not going get bitter anytime soon. I need the marijuana, and I don't want to go the whole rest of my life without having a job.

CABRERA: It happened to Brandon Coats, a quadriplegic fired by Dish Network in 2010. He was working as a telephone customer service representative, had good annual reviews, and was using medical marijuana off duty to control muscle spasms when a company drug test showed THC in his system.

MICHAEL EVANS, COATS' ATTORNEY: That was the first time that Dish ever knew about Brandon's use.

CABRERA: So Coats case went to court. Both the Arapaho County trial court and the state appeals court ruled in Dish Network's favor, saying even though marijuana is legal in Colorado, it is still illegal under federal law. In a statement to CNN, the company defended Coats dismissal, saying, "As a national company, Dish Network is committed to its drug-free workplace policy and compliance with federal law, which does not permit the use of marijuana, even for medicinal purposes."

And that reality appears to be receiving Colorado's marijuana shoppers.

So you're coming here to get some marijuana today. Does that concern you about the possibility you could get fired for this?

BRYAN OTTEN, MARIJUANA USER: I don't use marijuana in the workplace. I think if there's an accident, you should be able to be tested for it.

SHARON MAJERES-TATE, CONCERNED RESIDENT: It alters people mind so that they do make mistakes at work and they don't think clearly.

CABRERA: But it doesn't take an accident or mistake for an employer to have the right to test. And unlike other substances like alcohol, a positive drug test doesn't necessarily mean impairment. THC can still be present hours or even days after use.

Has that thought even crossed your mind?

OTTEN: Absolutely. It's a risk I'm willing to take.

CABRERA: It's a big risk. Bottom line, your career could take a hit from a drug that many consider harmless.

CURTIS GRAVES, MOUNTAIN STATE EMPLOYERS COUNCIL: Really, at this point, you know, all of the rights belong to the employers, and employees just need to know what their employers' policies are so they can abide by them. (END VIDEOTAPE)

CABRERA: Now Brandon Coats case is with the state Supreme Court, and the nation will be watching as a ruling in this case could really set a precedent not only here in Colorado but across the nation during this pivotal point in history with the use of marijuana on the rise. Christine?

ROMANS: Ana Cabrera, thank you so much, Ana, for that story.

So buying and smoking marijuana are legal in Colorado, but workers who light up could risk their jobs, more evidence in this economy employers have all the power. Robin Bond is an employment attorney and author of the book "How to Negotiate a Killer Job Offer." So nice to see you.

Nationally, Robin, the acceptance of marijuana is growing. We've got this poll that shows that 55 percent of Americans think marijuana should be legal. In the '80s, it was just 16 percent. At the same time, companies have been really good about driving down the number of positive drug tests. Quest Diagnostic said that positive drug tests have dropped 74 percent over the past 25 years. For the past half- decade, the rate stated just 3.5 percent. So companies have been working really hard to get smokers off their payrolls and also to make sure that they have fewer people using drugs on duty. How does this change now that it's actually legal in one state to smoke marijuana?

ROBIN BOND, EMPLOYMENT ATTORNEY: Well, right. It's very important to understand that once you, you know, once you enter the private sector workforce, you're no longer standing on the bill of rights as a United States citizen exclusively here. What you're doing is you're consenting to go into the blue collar and white collar dictatorship of a private sector workforce where the employer does make the rules.

And to some extent you have the protections of federal law for illegal discrimination and the right to unionize and some extent of political speech. But in terms of off-duty conduct and what you do off-duty, there are very few laws that really protect that. And Colorado and the use of marijuana is an all new chartered territory.

ROMANS: Yes.

BOND: As your reporter said, it's legal in the state, but it's not legal under federal law. So although Brandon Coats had the use of this for a medical purpose, the accommodation of a disability, federal law is used under the Americans with Disability Act to define a disability, not state law. That was the turning point in this case.

ROMANS: Yes, so murky. I think you'll see a lot of legal challenges between employers and employees in Colorado. Meantime, we know it's a tough environment for people looking for a job and we're hearing stories about employer, not all of them, but a small minority of employers asking candidates in a job interview for a Facebook password during the interview before they even extend a job offer. Is that legal, first? And, second, maybe you should still go along with it, if you want the job? BOND: If the information is publicly out there, that information is just not protected. But when you cross the line, the ACLU has brought a case and in many instances, and in many instances organizations have retracted this policy of asking for access for passwords, because, honestly, no one has the right to your passwords.

ROMANS: No one has the right your passwords. But some bosses want to see it. They have a lot of good candidates. They want to make sure you're not a total loser, I guess, or on a booze cruise every night.

OK, here's the other thing I want to ask you about, credit scores. I've covered this story many times. I hear all of these complaints from people that their credit is checked and then they're denied a job. I've been around a long time. There are no laws in ten state restricting this, from using the background check, the credit check, against potential employees. Is it fair for employers to weigh credit scores before they hire somebody?

BOND: It's very important for viewers to know this. People cannot get this information about you unless you sign a consent form giving them permission to get it.

ROMANS: If you want the job you're going to do it. You know? That's the catch 22. You know?

BOND: Yes. Right. Pretty much that's true. But if you have bad information, here's a couple things you can do. Say, yes, I'll sign the waiver, but let me explain to you there's some recent things that have happened that explain why I had some credit problems. And let me also give you some great reference letters about me. You know, proactively explain this, because there's a lot of good reasons why credit goes bad. And if some adverse actions is taken against you, ask for the credit report, because by law you have the right to it, and if adverse action is taken against you because of bankruptcy, that is illegal.

ROMANS: That is a really good point. I think everyone should go to www.annualcreditreport.com and get your free copy you are allowed to have. You should see what's on it so you know what the boss is going see.

BOND: That's right.

ROMANS: Thank you so much. Have a nice weekend. Coming up --

(BEGIN VIDEO CLIP)

UNIDENTIFIED MALE: Simply Sprinkle Sensa on. Eat all the food you love and watch the pounds come off.

(END VIDEO CLIP)

ROMANS: Sounds great. The problem, the Federal Trade Commission says it doesn't work. And it's not the only product the FTC is going after. I'm going to tell you about Operation Failed Resolution right after this. (COMMERCIAL BREAK)

ROMANS: Have you noticed the gym is a little more crowded lately? The start of a new year usually brings New Year's resolutions, but if your resolution is to shed pounds, be careful how you do it. The Federal Trade Commission is cracking down on companies it says are making false claims about their weight-loss products. Our own Brian Todd has been tracking what the FTC calls Operation Failed Resolution. Brian?

BRIAN TODD, CNN CORRESPONDENT: Christine, the Federal Trade Commission says four companies sold weight-loss powders creams and other products that don't work. And the FTC says those companies were shameless and deceptive in their ad campaigns.

(BEGIN VIDEOTAPE)

UNIDENTIFIED MALE: It's called Sensa.

TODD: And it seems enticing for that New Year's resolution you might have made to lose weight. But as they say, if it sounds too good to be true --

UNIDENTIFIED MALE: Without dieting. Simply sprinkle Sensa on. Eat all the foods you love, and watch the pounds come off.

TODD: Sensa markets a powder to enhance the smell and taste of food, which the company says makes you feel full faster. It's $59 for a month's supply.

SEN. CLAIRE MCCASKILL, (D) MISSOURI: I may not have gone to a fancy Ivy League school, but I sure understand that that is good old- fashioned horse manure.

TODD: Senator Claire McCaskill is launching an investigation into those ads, asking people to help by flagging potential scams. Sensa is one of four diet supplement makers the FTC charged with deceptive advertising, saying there's no proof those products work. Other targets, HCG Diet Direct, distributors of hormone drops. Place under your tongue, the company says, and you'll lose weight fast. Lean Spa, a company the FTC shut down for using fake websites to market colon cleansing and diet products. And the popular beauty product company L'Occitane for almond scented skin creams which the company claimed could trim more than an inch of fat in just a month.

MCCASKILL: They're honing in on the fact that people want to lose weight and they don't want to have to work at it.

TODD: The FTC is making these companies pay $34 million in settlements, the money refunded to customers. Nutritionist Katherine Tallmadge worries about who these companies are targeting.

KATHERINE TALLMADGE, NUTRITIONIST: A teenage client recently asked me for advice about these drugs that her friends were taking. I was alarmed thinking that teenagers and even children were taking those potentially dangerous supplements. TODD: And with the weight loss industry exploding in America, Senator McCaskill warns going after those four companies is like playing the game whack-a-mole.

MCCASKILL: There are many companies doing this. With one that is found, another one will pop up.

(END VIDEOTAPE)

TODD: The FTC says those companies will each have to conduct at least two legitimate clinical tests for their products to prove they work. Contacted by CNN, L'Occitane said it will make its testing more rigorous to comply with the FTC. Sensa said its product is solid but its ads would be changed. Lean Spa said its product was great but a marketer was to blame. HCG Diet Direct which marketed those hormone drops didn't respond to our calls.

ROMANS: Two things I know, Brian. You can't skinny quick and you can't get rich quick. Two things I know every New Year's. Thanks so much, Brian Todd.

TODD: Sure.

ROMANS: Wait. Stop. Don't text that party photo on Facebook. Too late. What would you pay to make your most embarrassing social media moment disappear forever? The answer, next.

(COMMERCIAL BREAK)

ROMANS: What would you pay to make your most embarrassing social media moment disappear forever? Your answers in a moment. But first a look at the rest of the stories that matter to YOUR MONEY this week. Give me 60 seconds on the clock. It's "Money Time."

(BEGIN VIDEOTAPE)

ROMANS: Check out these curves. Samsung unveiled its new bendable TV at the consumer electronics trade show in Las Vegas. The screen changes shape to enhance viewing.

Game over for China's ban on gaming consuls. Sony, Nintendo, and Microsoft can now tap a huge new market, but they'll have to make them in China. The ban started in 2000. Chinese officials worried about violent content and the potential for moral decay.

Facebook says it cares about your privacy but its CEO sure doesn't talk about it much. A college professor put more than 150 speeches and appearances by Mark Zuckerberg through a word cloud. The words "privacy" and "private" uttered only 68 times in public since 2009. What did he say the most? "People" and "think."

It's the great liquid gold mystery, Velveeta cheese disappearing from some store shelves. Kraft says it's not sure why there's a shortage, but it's just in time for your Super Bowl party.

(END VIDEOTAPE) ROMANS: It you're sharing online, once in a while you might feel a momentary tinge of regret. Even the president of the United States with that recent selfie that doesn't seem too amusing to the first lady. We're connecting online and sharing in a way we never could have imagined even 10 years ago. In this week's "What would you pay?" we ask how much money would you pay to get that embarrassing tweet or that Facebook photo removed from the web forever?

(BEGIN VIDEO CLIP)

UNIDENTIFIED FEMALE: A dollar amount? The most, $500.

UNIDENTIFIED MALE: Whatever it cost me, because I don't want anybody in my business. You know? So -- I mean if it cost me $1,000, then I go in my pocket and pull out $1,000.

UNIDENTIFIED FEMALE: Maybe $10,000.

UNIDENTIFIED FEMALE: Depends on what it was that was being seen.

UNIDENTIFIED MALE: It's going to be in the thousands, for sure.

UNIDENTIFIED FEMALE: I would probably pay -- I don't want to say that, because somebody's going to try and get it out of me. I could see paying, like, maybe five grand to get a photo removed. But that's just me, because I feel we should be able to keep some of our stuff private.

UNIDENTIFIED MALE: Zero, unless it's really, really bad.

UNIDENTIFIED MALE: I don't know, $1,000. Would I? I don't know. I'd probably just let it stay.

UNIDENTIFIED FEMALE: It's all relevant. Depends how incriminating the information is. Would I $1,000? Yes. If it were horrible, I would pay more. But then that goes to blackmail. I would probably not put it on to begin with.

(END VIDEO CLIP)

ROMANS: My officemate Deb, a wise woman. She has nothing incriminating that could ever get there. Thanks, guys.

December was the weakest month for jobs growth in years. So who's getting hired? How are they doing it? Tell us your story @CNNmoney#Igotajob. I'll see you right back here next Saturday, 9:30 a.m., brand new YOUR MONEY then. Have a great weekend.