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Issue Number One
President Bush on the Economy; Tornado Warnings; Voter Issues; Focus on Indianapolis; The Price of Milk; Industry Insider; Stimulus Check Advice
Aired May 02, 2008 - 12:02 ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
ALI VELSHI, CO-HOST: On this Friday, finally some positive news about the economy. The jobless report beats expectations. Wall Street is up. The U.S. dollar is doing better. Gas prices are even down just a teeny bit.
What does it all mean?
We're talking rising food prices and more. Specifically, what you can expect to pay for milk going forward. And why one politician in one state might want to charge you a fast-food sin (ph) tax.
It's a jam-packed Friday edition of ISSUE #1. ISSUE #1 starts right now.
Welcome to ISSUE #1. I'm Ali Velshi. Gerri Willis will be with us in just a moment.
ISSUE #1 for Americans is the economy. And nothing is more important to you than your job. Well, we've got new job numbers out today. And the employment situation is not as grim as some had expected it to be.
The unemployment rate in April dropped to 5 percent. That's down just one-tenth of a percentage point for March.
Why is that important? Because at a national level, jobs are a pretty good indicator of how the economy is doing. Only 20,000 jobs were lost in April, although for those 20,000 people, that's a big deal. That's many times fewer than what analysts were predicting.
But remember, the U.S. economy needs to create 100,000 jobs a month to maintain growth. So, although we may not be out of the woods yet, this is a bit of good news for the nation's economy.
Well, so far this year, we've seen over 250,000 jobs lost. In fact, since the beginning of 2008, more and more jobs were being lost each month. But in April, those appear to have tapered day. Well, we'll see if May breaks that current negative trend and more jobs are actually added to the payroll or not.
Well, there are some positive indications out there. Gas prices don't go up the first time in more than two weeks. They actually came down by one-tenth of a cent, which is a thousandth of a dollar.
The stock market is up. The dollar is doing a little bit better. And now we have to figure out what we make of all of this.
Mark Zandi is with Moody's Economy.com.
Mark, before we get going -- folks, we want to just remind you, there is a lot of severe weather going on out there. You can track the storms in this box in the lower right corner of your screen. And Chad Myers is keeping an eye on everything in the CNN severe weather center. So we will keep you posted on that.
Mark, tell me what you make of all of the stuff that we've got going on in the economy. We've got a stronger stock market, we've got a stronger dollar, we've got oil prices, although well over $100 a barrel, coming down a little bit.
Is this a break or is this a sign of a turning in the trend?
MARK ZANDI, CHIEF ECONOMIST, MOODY'S ECONOMY.COM: Well, I don't know that it's a turning. It's certainly better news than we expected. But it's still not good.
We still lost 20,000 jobs. And as you pointed out, we need to create over 100,000 jobs to keep the unemployment rate from just not rising.
So it's better than we expected. We'll take it. But I don't think this means the job losses are over. I expect further job losses in the spring and summer.
VELSHI: We're in an important time for American consumers, because they are watching what we talk about. Many people have filed their tax returns. They might be getting those refunds. They are certainly getting those rebates that the government has put out for stimulus. And I think a lot of them turn to us or the media generally to get a sense of where things are going and make decisions about their spending.
Where are things going as far as you can tell at this point?
ZANDI: Well, you know, it's still a tough environment. We are losing jobs. I expect unemployment to rise.
As you point out, gasoline prices are a record high and rising. Housing values are down. Stock values are down.
I think it's prudent for everyone to be cautious and to be very careful in their spending, and certainly in their borrowing. You don't want to take on too much debt at this point. So you need to be I think very cautious in this environment.
VELSHI: Mark, let's look at the sectors that have lost jobs in April. No big surprise here. Construction jobs were lost, retail, manufacturing, and temporary employment.
When you look at the sectors that gained jobs, again we're seeing the same trend -- food services, finance, health services, leisure and hospitality. Leisure and hospitality in many parts because the dollar is low and it's attractive for people who trade in other currencies to come to the U.S.
Any surprises in that trend and anything we need no know about it?
ZANDI: Well, it is interesting. Health care, educational services, and that's really demographically-driven. All the baby boomers are aging, need a lot of health care. And they have kids who are in college or approaching college, and they need a lot of educational services. So that's running on its own dynamic independent of what else is going on in the economy.
I think the most surprising thing is leisure and hospitality. You know, this is a sector that usually gets hurt in recession. And it's not. And it may be in part due to what you said.
We're getting a lot of foreign travelers who think it's a bargain time to come to the U.S. But that's a positive thing. It's particularly positive for all those college kids that have come back looking for work in the summer. Many of them work in the leisure and hospitality industry. So if there is one very positive thing, surprising thing, it's there.
VELSHI: Mark, one of the things that this is a good time to remind people to do is check your 401(k), because the stock market, the Dow in particular, reached its highest point since the beginning of the year really. And in fact, while we've been talking about gas prices and inflation, the stock market actually has been edging up in the last several weeks.
What is behind that and should people be thinking about that as investors?
ZANDI: Yes, you know, that is a good point. The stock market looks forward. So this is probably a good sign.
We're in a recession, or we're struggling now, but the stock market seems to be saying, well, six, nine months down the road we should be in a better place. And I think that's fair. And it does suggest that the stock market, if you are looking for a place to put your money long run, this is still a good place to invest in.
VELSHI: Mark, we've had some sense that with the Fed -- you know, they cut rates again this week, but there seems to be some sign that they might not keep on cutting rates. And there have been people who told us because of that you'll see strengthening in the U.S. dollar, which we've seen a little bit. We'll see weakening in the price of oil, which we've seen a little bit. And we might see some pullback on those commodity prices.
Is there a real connection there?
ZANDI: Yes, there is. When the economy is struggling, when the Federal Reserve is lowering interest rates, of course foreign investors are much more interested in higher-yielding assets overseas. It puts pressure on the dollar. Because oil and other commodities are traded in dollars, the dollar price has to rise. So, it's very good that the economy is settling down, that the Fed stops lowering interest rates, and we get some improvement in the value of the dollar. Because that is going to bring down oil prices and commodity prices. And hopefully -- won't be next week, it won't be next month -- but hopefully by the later in the summer/fall we get some relief with respect to those gasoline prices.
VELSHI: Well, we sure hope so, Mark.
Mark, thanks for joining us.
Mark Zandi is with Moody's Economy.com.
GERRI WILLIS, CO-HOST: I'd love to have some relief, too.
One of the states though having one of the toughest times is one of the biggest states in the country. That's California.
CNN's Chris Lawrence has the story.
(BEGIN VIDEOTAPE)
CHRIS LAWRENCE, CNN CORRESPONDENT (voice over): California once lured Americans to a land of opportunity, but the Golden State has lost some of its glow.
BETTY LARKIN, HOME FORECLOSED: It's just awful.
LAWRENCE: Betty Larkin is just one of more than 100,000 homeowners foreclosed on in the last few months alone.
LARKIN: People are saying something about a recession might come. To me, we are in one.
LAWRENCE: The mortgage collapse has eliminated 10 percent of California's construction jobs.
(on camera): We just saw the worst March for homebuilding here in California since the 1970s.
UNIDENTIFIED MALE: That is the primary story here. Housing prices down 25 percent, building activity essentially wiped out. That's slowing (ph) through the consumer confidence and taxes.
LAWRENCE (voice over): Lower property taxes have contributed to a projected $20 billion budget deficit, forcing the state to send pink slips to tens of thousands of teachers.
GINNY ZEPPA, TEACHER: It's really sad, because it's not like I will be able to find a job anywhere else either. California -- cuts are everywhere.
LAWRENCE: And the open road offers no escape, with gas prices soaring past every other state in the country.
(END VIDEOTAPE) WILLIS: OK. While California is facing tough economic times, the state of Wyoming seems to be bucking a downward trend. So, what is Wyoming doing right?
CNN's Ed Lavandera takes a look.
(BEGIN VIDEOTAPE)
ED LAVANDERA, CNN CORRESPONDENT (voice over): I'm Ed Lavandera in Cheyenne, Wyoming, where a state that's used to a yo-yo economy is enjoying an upswing.
JOE MEYER, WYOMING STATE TREASURER: Once every 19 years we get rich. The next 10 years we're broke.
LAVANDERA: The state is profiting from the taxes on high energy prices. Coal mining and natural gas are the state's economic backbone. Unemployment is below the national averages, and companies can't find enough workers.
MARION LOOMIS, WYOMING MINING ASSOCIATION: We have been going all over the country looking for qualified people to work in the mines. Mechanics, electricians, welders are in huge demand.
LAVANDERA: But to minimize the yo-yo effect, Wyoming now invests some energy tax revenue in stocks and fixed-income funds. The interest from that money now pays for about 25 percent of the state's budget.
(on camera): The Wyoming stay budget is $163 million ahead of where state officials expected it to be by this time of year. So while state lawmakers across the country are slashing budgets, here in Cheyenne they are writing checks.
(voice over): Schools are being built and remodeled. Highways are being upgraded. State treasurer Joe Meyer is smiling.
MEYER: Right now, it's kind of fun to be here. You can go hunting, fishing, too.
LAVANDERA: Just don't let these guys hear you say that.
Ed Lavandera, CNN, Cheyenne, Wyoming.
(END VIDEOTAPE)
WILLIS: It's nice to hear some good news.
And it's time now for you to get involved in ISSUE #1 and weigh in on today's "Quick Vote."
The question today, do you believe your state is in recession? Log on to CNNMoney.com and cast your vote. We'll bring you the results a little later in the show.
VELSHI: And a countdown to North Carolina and Indianapolis. We'll take a look at the issues that each candidate hopes will help to win the race, at least on Tuesday in those two states. Those are where the Democratic primaries are.
Plus, hear first hand from a former mortgage broker who says he was trained in deceptive practices.
Make sure you send us an e-mail with your questions. The address: issue1@cnn.com. We'll try and get to them.
You're watching ISSUE #1, right here at CNN.
(COMMERCIAL BREAK)
VELSHI: Well, happening now, you are looking at pictures of President Bush in St. Louis, Missouri. He is speaking to a crowd of people at the headquarters of Worldwide Technologies. He's talking about the economy, and he -- well, he might even take questions from those folks out there.
Let's listen in.
GEORGE W. BUSH, PRESIDENT OF THE UNITED STATES: I'm proud you're here. Thank you for taking time out of your schedule.
The governor and I discussed the recent storms that have hit parts of Missouri. I assured him that we will stay in touch with his office and the emergency teams to make sure that if there needs to be a federal response, we will be ready to give one.
And obviously, for those who lost their property today, we send our heartfelt condolences. And just want you to know that, you know, when natural disaster strikes, if the disaster merits it, there will be an ample and robust government response.
So thanks for coming, Governor.
I am also proud to be here with the United States Senator Kit Bond from Missouri.
(APPLAUSE)
Needless to say, he used his time on Air Force One to make sure I understood the issues that were facing the state of Missouri. We spent a little time talking about the Missouri River.
And Todd Akin is with us, too.
Congressman, I'm proud you're here. Thanks for coming.
(APPLAUSE)
So we're get economic news. There is a lot of data beginning to move.
On Wednesdays, we talked about the fact that the economy in the first quarter grew at .6 percent. That's the same as it grew in the quarter of last year. That's not good enough for America. It's positive growth, but we can do better than that.
Today there was another report out that showed that we lost 20,000 jobs last month even though the unemployment rate dropped to 5 percent. In other words, the unemployment rate went down. And again, that's a sign that this economy is not as robust as any of us would like it.
The good news is, is that we anticipated this. You know, last fall we started to get indications that the economy was going to slow down. And so believe it or not, you can actually work with Congress sometimes, with people on both sides of the aisle, which is what we did. These two members were incredibly constructive to pass a stimulus package, a pro-growth package.
Now, there's two aspects to that package I want to spend some time talking about. One of them is, is that you are going to get some money. It turns out it's your own money, but you are going to get it back.
(APPLAUSE)
It's $600 per person, $1,200 per couple, $300 per child. A family of four will be getting a $1,800 check.
And the reason why -- and by the way, it's going to affect 130 million families. And the reason why that is good policy, first of all, it's a temporary tax relief, recognizing that we are going to recover. And this is to help stimulate that recovery.
Secondly, we wanted to make sure that people were encouraged to be consumers. We want there to be consumption in our society. And no better way to stimulate consumption than to let you have some of your own money back.
Thirdly, it turns out that this money is going to be very helpful in helping people deal with high energy prices and food prices. I'm going to spend a little time on energy here in a minute.
And fourthly, it's big enough. In other words, we didn't want to make a political statement. We wanted to make a statement that will affect this economy.
When you are affecting 130 million households with over $150 billion, a pro-growth package, it's going to affect us positively. The experts say, you know, that toward the end of this quarter and the beginning of next quarter, we should see some positive signs as a result of the pro-growth economic package.
Now, some of you are saying, do you think I'm ever going to see my money? We've heard the check is in the mail deal before. Well, it's coming.
They started hitting last Monday. And Secretary of the Treasury Paulson is on top of this. And so you'll start seeing it. If you didn't get your money electronically, you're going to start seeing it coming in a check form. And for those people in Missouri and around the nation that do not file income taxes, you need to contact the local IRS office, because you are likely to be eligible. And therefore, you've got to make sure you sign up for the program in order to get the money. We want you to get the money. And so if you are involved in a church group that's worried about helping people, then make sure that parishioners, or make sure people in the community centers, understand that if you're not a filer, you are still eligible to get a check.
Now, the other aspect of the program was to stimulate investment in companies like Worldwide. In other words, there's a -- you can affect the tax code that provides incentives for the CEOs to say, I think we ought to buy some equipment. And that's important for a couple of reasons.
One, it makes you more productive. It makes you more competitive. It gives the employees a better chance to keep this company on a cutting edge.
Secondly, somebody has to make that which you purchase. So if the tax code says it's in your interest to buy a piece of equipment or to buy software or to buy something to make this company a better company, then somewhere in the economy somebody is going to make it for you, and that also creates jobs. It's a ripple effect for using the tax code to stimulate investment.
I was talking to Dave and Jim, and they were telling me that the incentives built in the pro-growth plan for businesses are causing them to make new investments for you that they may have put off for later years. And the effects of this aspect of the pro-growth plan are beginning to kick in as well.
In other words, it's just starting. They passed the deal in February. And the point I'm trying to tell you is that we worked well with Congress, and that the effects of a robust attempt to inject life hasn't really kicked in yet.
And, you know, if you believe these economists, you know, if they had three hands they would say, on the one hand, on the other hand, and then on the third hand, you know. But we've got some smart folks around that are analyzing what this means. And they feel confident about it.
I've been -- since I've been your president, I want to remind you we have been through a recession, we have been through a terrorist attack, we have been at war, we have had corporate scandals, we have had major natural disasters, and yet this economy always recovers. We are a resilient economy, because we've got good, capable, smart, hard- working people in America.
And I know it's tough times, and I know you are having to pay more at the fuel pump than you want. But this economy is going to come on. I'm confident it will. And I want to thank folks at Worldwide for being part of the leading edge of optimism here in America and the leading edge in making sure that people can find good, hard -- paying jobs. Let me talk about energy very quickly.
I am fully aware that people are paying, you know, paying dearly at the pump. The other day at a press conference, I said it's like a tax. It's a tax on you. The more that gasoline goes up, the more you are paying. You know, the more you are paying at the pump, the less money you have in your pocket to spend for your family.
I will tell you, it's taken us a while to get in this fix, and therefore it's going to take us a while to get out of the fix. But I want to remind you that an energy policy that basically prohibits America from finding oil in our own land is an energy policy that has led to high gasoline prices.
When I first got to the Congress I suggested that we have a comprehensive energy policy. One that recognizes the short-term effects of being reliant upon foreign oil. One that says we can use new technologies that will enable us to power our automobiles in different kinds of ways, using ethanol, for example, or battery technology. And one ultimately that will allow hydrogen to power the car.
So we worked well with Congress on the interim step. As you know, ethanol is beginning to take off. And I'm convinced we are going to be able to make ethanol out of something other than corn here relatively quickly, like wood chips or grasses grown in the desert, which will be very exciting for the American people.
Hydrogen, we are doing a lot of research on your behalf to have hydrogen-powered automobiles, which means you're running on hydrogen, the waste product of which is water. But in the meantime, in the short run, we didn't allow expiration for oil and gas in places like Alaska or Outer Continental Shelf.
And guess what happened? World demand exceeded supply, and now you are paying for it.
If Congress truly is interested in helping relieve the price of gasoline, they would do two things. They would recognize that we can drill for oil and gas in environmentally-friendly ways here in the United States where there is good reserves. And they would build refineries. They would encourage the construction of refineries.
Did you know that there hadn't been a new refinery built in America since 1976? No wonder there's constricted supplies. If you want more of something, in this case you've got to build additional manufacturing capability.
And so our gasoline supplies are restricted as well. My attitude is, I understand the pain. But I also understand if we don't allow us to explore in environmentally-friendly ways for oil and gas reserves in the United States of America, we'll remain dependent in the short term on foreign oil, and that's not good for us.
We'll talk about housing very quickly. The key to the housing market is for the market to adjust. You know, we built too many houses. And you've just got to work through the system.
But there are things government should and can do that is responsible. Mainly, is to help creditworthy people stay in their home. That's the best thing we can do, is to help somebody who is capable of paying the mortgage, and if they just need a little help to be able to stay in the home, to help provide that help.
But here's the dilemma. If you bought yourself a mortgage, in the old days when the originator of your mortgage, like the savings and loan, was somebody that you could go and talk in the office and say, listen, I've got a problem. I'm in a bind. I need a little help on my interest payment, or can you extend my note out a little bit?
And the originator of the mortgage, the guy that loaned you the money, still owned the paper. This day and age, the person that loans you the money for the mortgage may not own the mortgage anymore.
And so we came together, the Treasury Department, and groups that help people understand the mortgage market, and refinancing experts, and put together what's called the Hope Now Alliance, which enables people to go and renegotiate loans. That's what we want to do. We want people to stay in their homes.
The market is going to correct. And what we want to do is just say here is a way for to you stay in your home.
Go to these lenders, big lenders, and say, look, just help them out a little bit. Delay interest or renegotiate the interest rates or extend the payments.
We've helped about 1,400,000 homeowners stay in their homes. I know there's all kinds of proposals coming out of Congress. I mean, one such proposal was, why don't you use your money to buy empty houses?
Well, that doesn't help the person who no longer is in the house. That may help the lender. That may help the speculator. I'm interested in helping the homeowner. And so we'll work with Congress on legislation, but in my judgment, the best kind of legislation focuses on the person that actually owns the home.
Now, look, some people were in there speculating that, I don't think government ought to help speculators. And government -- you know, the truth of the matter is, some folks probably shouldn't have tried to buy a home in the first place. But there's a lot of good creditworthy people. They just need relief to stay in the home.
The other thing I'm worried about is these reset mortgages. What I'm very concerned about is somebody went out and got them a mortgage. And the person that sold them the mortgage said, boy, this is good, low interest rate for you.
They forgot to tell them the second half, that in a couple of years it's going to bump up. These resets, as you know, you buy a low interest rate and you get on the paper, and then about a couple of years later, all of a sudden the interest rate booms up.
And what I'm really concerned about is fraudulent tactics that didn't tell people that didn't really quite understand what was going on the full story. And it's a federal responsibility to make sure if that stuff goes on, people are held to account. We don't want people being cheated in America.
The other thing that the government can do is reform what's called these GSEs. These are big government, you know back lending institutions. And we can reform them and get them focused on their core mission, which is to help the mortgage industry move forward, help people in homes. And finally, another interesting idea is to let state housing authorities issue tax-free bonds which will then provide more money for refinancing.
Finally, I do want to talk about trade. It's an interesting subject here in America.
There are a lot of people who say trade is bad for our country. You know, we shouldn't be a nation that opens up markets. That's what they're saying.
Unless, of course, you are a Missouri farmer who's selling your product in the foreign markets. Unless, of course, you are Worldwide Technologies, which is expanding in a robust way and is looking for new markets.
By the way, it's in your interest if you're working for Worldwide that markets be open. If you're good at what you're doing, and you are, obviously, otherwise you wouldn't be successful, then trade policy ought to make it easier for you to enter foreign markets. All I want is for America to be treated the way we treat other nations. I think that's a reasonable thing to ask.
And so let me talk about the Colombia Free Trade Agreement. You might have been reading about that lately. It's one of these issues that has created consternation, at least in Washington. Most goods from Colombia come into the United States duty-free. That's a result of long-standing congressional policy.
Most of our goods and services are taxed going onto Colombia. Most goods coming here come in duty-free. Most goods produced in the United States, or services like yours, pay a tariff. That means a tax. It's more expensive. It's harder to get into the market because, you know, what you charge is upped by tax.
I think it makes sense to have Congress say, we want Colombia to treat us just the way we treat Colombia. It turns out 9,000 businesses export into Colombia in the United States, 8,000 of which are small and mid-size businesses. Isn't that interesting?
ALI VELSHI, CNN ANCHOR: And we've been listening to President Bush, who is at the headquarters of a company called Worldwide Technologies in St. Louis, Missouri. He's speaking very broadly about the economy and some of the economic updates we've had this week on the economic growth of this country, on unemployment. Speaking about housing. Speaking about the price of oil and gas.
Our Ed Henry, part of the best political team on television, is traveling with the president and has been listening to that speech. Very informal, almost folksy type of setting and that seems to have given the president, who is often been on the defensive, Ed, about the economy, sort of a folksy way of delivering this message today.
ED HENRY, CNN CORRESPONDENT: That's right, Ali. In fact, it's almost like a town hall meeting. We're expecting he may take some questions, after he finishes speaking, from this audience here in St. Louis.
I think the significance, as you said, he's under great political pressure to show he's doing something about this economy. He has consistently said he believes the United States is not in a recession but is in a slowdown and added a little something today, saying that we're in a fix -- he called it a fix -- and said it took a while to get in, it's going to take a while to get out.
So he's trying to do two things to show he's on top of it, that he's taking action. Number one, he's touting those tax stimulus -- those rebate checks that started going out electronically this week. They start going out by snail mail next week. In the end, 130 million families will be getting some form of a tax rebate check. He wants to say, look, I'm doing something about it there.
But, secondly, he's trying to prod Congress. You heard him talking about on oil and gas exploration. The need to open up more refineries in the United States. Open up the Arctic National Wildlife Refuge in Alaska to oil and gas exploration. Something we've heard many times before and has really gone nowhere on Capitol Hill.
And he's also prodding Congress to reform the Federal Housing Administration. So chances are, in this election year, he's not going to get a lot of that done with the Democratic Congress. About all he can hope for right now is that those tax rebate checks have some sort of an impact on the economy.
Ali.
VELSHI: All right. And, Ed, you'll continue there listening in. And if he does start to take questions and something there gets interesting for our viewers, let us know and we'll come back to you.
HENRY: Absolutely.
VELSHI: Ed Henry in St. Louis, Missouri.
GERRI WILLIS, CNN ANCHOR: Lots more of ISSUE NUMBER ONE coming up.
We'll be going to the weather center to hear more about the severe weather threatening this country. More ISSUE NUMBER ONE coming up. (COMMERCIAL BREAK)
VELSHI: You're watching ISSUE NUMBER ONE.
We've got a lot of severe weather across the country. Let's go to the CNN Weather Center. Chad Myers is on top of all of this for us.
Chad, what have we got?
CHAD MYERS, CNN METEOROLOGIST: We have storms, Ali, charging out of Oklahoma and Kansas and moving right into Missouri, Arkansas and even into Louisiana and parts of Texas. The biggest and the greatest threat right now is to the town of Wrightsville in Arkansas.
It is right here in the center of that pink box. That's the tornado warning, which means that the spin of this storm is so significant that we think there's a tornado on the ground. Haven't had any eyeballs on it yet, but I think this tornado is on the ground here.
And you can just begin to see the hook. This is the radar signature that we look for -- right there -- to show you that that storm is a mesocyclone. It is spinning. It has its own low pressure system right there, which is a tornado, and that will be moving right in toward the town of Wrightsville in the next five minutes.
Wrightsville and Woodson. They're neighbors. Right back and broth. If you are in either one of those two towns, or even close, take cover now. Get out of the outside. Stay away from windows. Don't try to be an I-Reporter. Get inside the lowest level of your house right now.
A little bit farther down to the south, the town of Sheridan is kind of in the way of this storm right here. That's the storm. There's the spin. And there's Sheridan. And that will be at about 11:51 Central Time. So you have about 10 minutes to prepare. But you don't have 10 minutes before hail hits you in Sheridan.
This is going to be a rough day. Gerri, this is going to be a day where we may have 15 or 20 more tornadoes on the ground today. We already had some fatalities this morning. In the morning hours, usually the weather's not as severe as it will be in the afternoon. Wait until the sun heats things up. We could really get going today.
WILLIS: Well, Chad, sounds like a tough time out there. Thanks for that report.
MYERS: You're welcome.
WILLIS: ISSUE NUMBER ONE is all about you, your money, your savings, your debt. And the best part of the show is, you get a chance to weigh in. We have new polls showing just what your top concerns are this election year. Bill Schneider is part of the best political team on television. He's live right now in Washington, D.C.
So, Bill, what do the latest numbers tell us in terms of what the key issues are for voters?
WILLIAM SCHNEIDER, CNN CORRESPONDENT: This show is called ISSUE NUMBER ONE and the economy is becoming more and more issue number one month by month. Our latest poll shows 49 percent of the voters, that is nearly a majority, saying their top concern in this election year is the economy. That's up from 22 percent last October, 35 percent in January now nearly 50 percent.
Iraq and health care are other important issues. The only other ones in double digits. But nothing comes close to the economy when it comes to describing what the voters are worried about.
WILLIS: Interesting numbers.
So breaking down some of the economic issues, what worries Americans most when it comes to their pocketbooks?
SCHNEIDER: Well, let's do it in three stages. The economy is issue number one. What about the economy concerns most Americans? Answer, inflation. More than taxes, more than the mortgage crisis, more than unemployment.
And what in particular about inflation do Americans call their top concern? Answer? Gasoline prices. It's a price they see and pay every single day. Two-thirds of Americans say gas prices are the ones that are of most concern to them.
Food prices also pretty high. Twenty-three percent. But gas prices, you know, they see those prices right in their face every time they ride down the street. So there's no way they can get around that issue.
WILLIS: Well, at $3.62 a gallon, it gets just about everybody's attention.
SCHNEIDER: It certainly does.
WILLIS: Thank you for that, Bill.
WILLIS: Well, all of those issues that Bill and Gerri just talked about, will likely be deciding factors in the Indiana primary next week. And that's where the CNN Election Express is parked right now. I kind of miss it. But Election Express producer Josh Rubin took to the streets of Indianapolis to find out a little more about Indy and its people.
(BEGIN VIDEOTAPE)
MAYOR GREGORY BALLARD, INDIANAPOLIS: Welcome to the greatest month and greatest city in the nation. This is going to be . . .
JOSH RUBIN, CNN CORRESPONDENT, (voice over): As Mayor Ballard rings in the Indy 500, I'd like to welcome to you Indianapolis. State capital of Indiana. The thirteenth largest city in America. And an all-round vibrant, mid western town. Indy's a rust belt city, but its diversified its economy. The health care industry is a major employer here and several stadiums dot the downtown skyline. There's even a new $900 million field for the Colts nearing completion. But it's the motor speedway that sets Indy apart.
BALLARD: There's such great stories about the Indy 500. It wouldn't be possible without the community support we get from Indianapolis.
RUBIN: It's a car culture here. So how are the folks in Indianapolis coping with rising gas prices?
JASON CURTIS, ELECTRICAL CONTRACTOR: Well, I think the gas prices are hurting them. I mean, the energy prices always have an inflationary effect on everything.
UNIDENTIFIED MALE: The food's going up. Everything's going up. So -- and but our wages aren't going up. So everybody's going to struggle.
RUBIN: As the Election Express makes its way around the country, we're finding that increased fuel costs are changing, not just how much people drive, but how they live.
UNIDENTIFIED MALE: My wife, for instance, is a nurse. She quit her job because it was cheaper to stay at home with the kids than to pay for daycare and gas.
LYNN ROGERS< REGISTERED NURSE: I was driving downtown five days a week filling up my car every five days. I just couldn't deal with it anymore. I switched jobs.
EFFRENE SMITH, INDIANAPOLIS RESIDENT: We're growing. You know, we've got a lot of things, exciting things, going on. But if the country doesn't do anything about the gas prices, like I wanted to go on vacation this summer, I'm not going to be able to go. Pretty soon I'm going to have to choose between eating and gas.
RUBIN: Josh Rubin from CNN's Election Express, Indianapolis.
(END VIDEOTAPE)
VELSHI: And just a few days until that primary on Tuesday in Indianapolis, Indiana, and North Carolina. So CNN is going to be on top of this the whole time until we get there. We're going to learn a little bit more about these places and, of course, your home state of North Carolina.
WILLIS: Everybody loves North Carolina. What a great state.
Up next, got milk? If you do, how much did it cost you? And is the price of milk going up with the rest of the rising food prices? We'll take a look. ISSUE NUMBER ONE rolls on next.
(COMMERCIAL BREAK) VELSHI: Welcome back to ISSUE NUMBER ONE.
We talk a lot on this program about the rising cost of food. At the center of the food group is milk. Our own Allan Chernoff spent a day on a dairy farm to see what is driving the price of milk higher.
(BEGIN VIDEOTAPE)
ALLAN CHERNOFF, CNN CORRESPONDENT, (voice over): To make sense of milk prices in the dairy case, it's best to start here in the barn at feeding time. As farmer Rich Byma dispenses a diet rich in corn and soybeans, it's like watching his 300 cows eat dollar bills. Feed has never been so expensive.
RICHARD BYMA, FARMER: We watch every pound of feed that we give to the cows.
CHERNOFF: The cost of feed has doubled in the past year. So Rich has his cows on a strict diet. But the less he feeds them, the less milk they produce.
Many other farmers are doing the same, says the U.S. Agriculture Department. The less milk farmers produce, the higher milk prices are likely to go.
BYMA: I think we need to be concerned as Americans that food prices are going to get really expensive. There may be some people that don't have enough food.
CHERNOFF: Milk already is expensive. The average price for a gallon of whole milk last year soared nearly a dollar. Consumers responded by cutting back, leaving the price of milk to ease a bit in recent months. But now that the cost of fuel has hit a new record, it's more expensive than ever to operate farm machinery and transport milk. Seventy-five hundred pounds a day from Byma's cows.
BYMA: I have sympathy for the consumer, but they have to understand, if we're going to keep the next generation in business to take over these dairy farms, they need to be profitable.
CHERNOFF: Meaning milk prices may soon be climbing mere $4 a gallon.
(END VIDEOTAPE)
CHERNOFF: Whole milk already is above $4 a gallon in some cities, including Baltimore, New York, Miami and Minneapolis.
Ali.
VELSHI: You're feeding the cows and that's a cornmeal based food that they've got. And then the farm runs on diesel. The transport costs money. The bottom line is, if you're a consumer, what do you do about this?
CHERNOFF: There's not all that much that you can do. If you're drinking the whole milk at home, you can move down to 2 percent. It's a little bit cheaper. The latest numbers, five cents a gallon cheaper according to the Department of Agriculture's survey.
VELSHI: That's about as good as it's going to get for now.
All right. Allan's been on top of the inflation matter for us. He'll continue.
Thanks, Allan.
Gerri.
WILLIS: I feel sorry for those parents out there.
Up next, we'll talk to one mortgage broker who says he was trained in deceptive practices. You're watching ISSUE NUMBER ONE.
(COMMERCIAL BREAK)
WILLIS: We're going straight to Chad Myers in the Weather Center with details on this severe weather hurting Americans.
Chad.
MYERS: Yes, we talked about tornadoes on the ground earlier. Now we have confirmed from law enforcement in the town of Hensley in Arkansas a tornado on the ground there just two minutes ago moving to the northeast at 55 miles per hour. So if you see a storm coming your way, you're not going to have a lot of time to get out of the way with this storm. It was moving toward Wrightsville and Woodson. That's the only confirmation we have, though, on the ground so far is Hensley.
Now we're going to travel down a little bit farther to the south and this storm here, another storm right down there, spinning as well. Into Carthage, Texas. This is a new location. A tornado warning for you. This tornado has popped up. It has already reported damage with it and it is now moving right there just to the south of Beckville and it's going to be into the town of Carthage here in the next 15 minutes at the most.
Take cover if you see a storm coming your way today. Any of these storm, Gerri, could have rotating, could have tornadoes. There's that much potential in the atmosphere today.
Back to you.
WILLIS: Fifty-five miles per hour. Goodness. Chad, that's amazing. Thank you.
MYERS: You can't outrun that. You can't outrun that.
WILLIS: No.
MYERS: You know, you just can't. Even in a car.
WILLIS: Thank you for that, Chad.
MYERS: You're welcome.
WILLIS: There are some who say mortgage brokers were a big part of creating the mess that became the mortgage meltdown. One mortgage broker, Mark Bomchill, says he was trained to sell mortgages in a certain way and he joins me now to talk more about it.
All right, Mark, talk to me a little bit. You know, we've heard about mortgage brokers who inflated salaries of people who were filling out loan applications, who misrepresenting what they were selling. What was going on there? And, tell me, is it still going on in the marketplace?
MARK BOMCHILL, FORMER AMERIQUEST EMPLOYEE: Yes, it is still going on in the marketplace. Mortgage brokers and direct lenders have had a tendency and some continue to put the needs of the customer behind doing the loan. It becomes more important for them to get the loan accomplished than it is if it's putting the customer in the best position.
WILLIS: All right. And, you know, I have to say here, Mark, you know, we had a statement from Ameriquest, which was the firm, the company, the mortgage company that you worked with. They said that you, "Mr. Bomchill is a disgruntled former employee, who Ameriquest fired. He never raised any of these allegations during the one year he worked for the company. In subsequent jobs, Mr. Bomchill is alleged to have falsified mortgage documents and was accused by an appraiser of pushing property values. He has no credibility."
Fair or unfair, Mr. Bomchill?
BOMCHILL: Well, it's a very ridiculous statement. The person who made that statement obviously didn't read the personnel file, which I have a copy of, which essentially is inviting me to come back while I was on medical leave having surgery and never returned to Ameriquest. So I have a letter in my personnel file from Ameriquest inviting me to come back and work for them. This is pretty consistent with the deception that Ameriquest has done with the customers throughout the country. Yes, I can line up customer after . . .
WILLIS: OK. All right. Mark, I just want to ask you, because you're in a position, I think, to answer this question well. What should people do out there who are looking for somebody who is not a rogue broker or somebody who's going to sell them something that is bad for them? What's your advice to consumers?
BOMCHILL: Well, there's a lot of us out there who are fair, honest, ethical lenders. And they need to get all the information possible prior to getting into a mortgagor or to a refinanced loan. If they have all the information, such as their credit score, such as the value of the property versus what they are borrowing, how much money they make versus their debt, they can then make an educated decision on what the best program is for them.
WILLIS: Educate yourself, educate yourself, educate yourself. Good advice. We appreciate your help today, Mark.
And I want to tell our viewers here, make sure you check out the CNN Special Investigations Unit special "Busted, Mortgage Meltdown" Saturday and Sunday night at 8:00 p.m. Eastern right here on CNN.
VELSHI: Yes, it's worth watching. It gives you a lot of information as to how we got into this mess we're in.
But, boy, what a busy day it's been. Stick around. We've got more for you. You're watching ISSUE NUMBER ONE right here on CNN.
(COMMERCIAL BREAK)
VELSHI: We're back on ISSUE NUMBER ONE on CNN.
The results of today's Quick Vote. Sixty-eight percent of you believe that your state is in a recession.
Gerri.
WILLIS: Wow, amazing results.
OK. It's time for the help desk when we answer your questions. Here to help today, we have a great panel. Terri Cullen from "Wall Street Journal" Online, Jack Otter from "Best Live" magazine, and our old friend, Lynnette Khalfani-Cox, a prolific author.
OK. Today we're going to do something a little different and talk about those new numbers out on the economy. We've got a great jobs report. So should I go out and spend my stimulus check like a drunken sailor?
Terri, what do I do?
TERRI CULLEN, PERSONAL FINANCE COLUMNIST: I think right now a lot of people are just looking at their bills and seeing whether this money has already been spent. Whether they need to pay some debt or whether they need to actually put that money more toward food and gas. So right now people are really looking at their budgets more so than let's go off and have a spending spree.
WILLIS: But, Jack, I mean, come on. I mean, this means that maybe the economy isn't in the bad shape I thought it was. Maybe it's time to start my new business?
JACK OTTER, DEPUTY EDITOR, "BEST LIFE": It may or may not. It depends on what sector you're in. You know, behind those numbers today, construction, manufacturing, still plummeting. It's the service industries, the health care. Those are the only thing keeping these numbers above water.
So if you're in construction, if you're in manufacturing, it's still a long road to hoe. And, frankly, I think the way the global economy is going, now is the time to get retraining. Use that money to get a degree in something that's actually running (ph).
WILLIS: I love that. Well, I don't know if I can buy a whole degree. I might buy half hour with a professor somewhere.
Lynnette, tell me, what's your best advice right here?
LYNNETTE KHALFANI-COX, AUTHOR, "YOUR FIRST HOME": You know, I think that people should be extremely conservative. I mean, you've got some of the best minds, including Warren Buffet, saying, listen, I don't think this is going to be a recession that's short-lived. I think it's going to be shallow -- or not so shallow, but deep and prolonged. I happen to agree with him.
Americans are facing unprecedented financial challenges. Higher gas costs. Higher health care costs. Tremendous amounts of debt for mortgages, cars, student loans, credit cards. So you need to shore up your fiscal positions.
WILLIS: Pile in here. Other ides. I need more help.
OTTER: I've got one little bright bit of news. Wilbur Roth (ph) just bought the subprime mortgage unit of H&R Block. Wilbur Roth is a genius at buying stuff cheap before it goes up.
WILLIS: We've got a lot of great ideas here. We're going to answer your e-mails on Monday. We'll get back to that. We look forward to that.
But in the meantime, thanks to Terri Cullen from "The Wall Street Journal" Online, Jack Otter from "Best Life," and Lynnette Khalfani- Cox, thank you.
Ali.
VELSHI: All right, Gerri.
Thanks for joining us here on ISSUE NUMBER ONE. There's breaking news in the CNN "Newsroom," which starts now.
DON LEMON, CNN ANCHOR: I'm Don Lemon.
