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Issue Number One
Drilling for Answers; Prescription Costs; Cow Power; All in the Family
Aired May 21, 2008 - 12:00 ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
GERRI WILLIS, CO-HOST: Drilling for answers. Oil executives testify on Capitol Hill as crude oil prices hit yet another record. Who's to blame?
Record-high gas prices fuel higher costs for the airline industry. And you're paying for it. Hear the latest surcharge you could be hit with.
And playing to eco-awareness.
(BEGIN VIDEO CLIP)
JOHN STAUBER, PR WATCH: What these companies are doing is called green-washing. They want to look as green and as environmental as possible.
(END VIDEO CLIP)
WILLIS: Real solutions or slick ad campaigns? We're fact- checking.
ISSUE #1 is your economy. ISSUE #1 starts right now.
Welcome to ISSUE #1. I'm Gerri Willis. Ali Velshi will join us in just a minute.
We begin with the issue that's been affecting you for months, soaring oil and gas prices. Once again, crude oil gushed into record territory today, breaking above $132 a barrel for the very first time. Analysts say supply concerns and a weaker dollar continue to push crude futures.
As oil goes, so does gas. AAA says for the 14th straight day, gas prices hit record highs today. The national average per gallon of regular unleaded is now $3.81.
Record high fuel costs continue to take a toll on the airline industry. American Airlines says it will cut domestic capacity by 11 percent to 12 percent in the fourth quarter -- Ali.
ALI VELSHI, CO-HOST: You're not the only one, Gerri, wanting to know why oil and gas prices continue to break records. You're looking at live pictures now of the Senate Judiciary Committee, which has summoned oil executives to Capitol Hill in a bid to get some answers from them.
CNN's Kate Bolduan is on the Hill with the very latest -- Kate.
KATE BOLDUAN, CNN CORRESPONDENT: Hi there, Ali.
Well, you said it. These executives are on the Hill.
Now, today the senators of the Senate Judiciary Committee, they brought these executives in, executives from BP America, Shell Oil, Chevron, ConocoPhillips and ExxonMobil, all to really explain themselves, because these senators say they really just want to get to the bottom of what is going on with oil and gas prices. And what the senators have been asking them, they've been asking them a lot of questions.
They've been asking them, really, about their companies' pursuit of alternative energies. Also asking them about manipulation and speculation of the oil market. And also about what they call the anti-competitive practices of OPEC.
But what they were really grilling them on, at least this morning, is these company's profits, asking them to explain their record profits and what they're using them for. Listen here.
(BEGIN VIDEO CLIP)
J. STEPHEN SIMON, SR. VICE PRESIDENT, EXXONMOBIL: For every dollar paid at the pump, only 1.4 cents of that was attributable to our profitability.
SEN. PATRICK LEAHY (D), VERMONT: So we're still talking about tens of billions of dollars a year in profits. And I assume that among your expenses, your compensation and all the other executives. Is that correct?
SIMON: That's correct.
LEAHY: But last year, what was your compensation, counting all the amounts that you have to list and salary, deferred compensation, so forth?
SIMON: In total, about $12.5 million.
(END VIDEO CLIP)
BOLDUAN: Now, committee chairman Senator Pat Leahy, he put the other executives on the spot as well, really asking them to just simply say, what were your profits? What profits did your company post in the last year? And when one of the executives could not really the number, Senator Leahy even said, "Well, I sure wish I made enough that I didn't need to remember how much I've actually made."
Now, the oil executives, although they are getting a bit of a grilling, they do defend themselves. They say that it's not their profits that are driving oil and gas prices so high. They say that it really is -- and they've said this in the past -- it's simple supply and demand. And they put -- at least partially put some of the blame on the U.S. government for -- for so long depending on foreign oil and refusing to allow for more domestic production of oil and gas, Ali.
And this hearing will continue. But what it really comes down to, which we always try to get to on this show, Ali, is what does it mean for the American consumer? And the experts that I've talked to, the oil industry experts, they say simply not to expect any short-term relief or solutions at the pump for the American consumer. Here at this hearing, they're really talking big picture.
VELSHI: I can probably mention to the last dollar how much I made last year, and I think most persons can, too. I would imagine if I were responsible for a multibillion-dollar company, I would have those figures at hand, especially if Congress were calling me to talk about it.
BOLDUAN: Yes.
VELSHI: Kate, thank you for being on top of this for us. We'll talk to you again.
Kate Bolduan on Capitol Hill -- Gerri.
Well, you know, why don't I just tell you about this. You've probably seen the ads that promote oil companies that are seeking to fight global warming and to develop new sources of alternative energy. But are those slick ad campaigns real or are they full of hot air?
Our Senior Correspondent Allan Chernoff is fact-checking the companies advertising as green global citizens.
(BEGIN VIDEOTAPE)
NARRATOR: If an oil company can practice and espouse conservation, not corporate tightness, but men and women of vision, people who daily try to find newer ways, cleaner ways to power the world...
ALLAN CHERNOFF, CNN SR. CORRESPONDENT (voice over): It's a message we're hearing more often from some of the biggest companies on the planet -- oil giants which provide the fossil fuels we burn that are, in turn, blamed for global warming. Chevron and BP have been most aggressive in promoting their commitment to alternative energy.
UNIDENTIFIED MALE: We need to really be cautious of what we're putting into our cars, just like we put into our bodies. And we need to make that shift that, well, what we're doing is really messing things up.
CHERNOFF: Media watchdog critics say don't believe the hype.
STAUBER: What these companies are doing is called green-washing. They want to look as green and environmental as possible.
CHERNOFF: BP, which was the first oil giant to acknowledge concern about global warming, plans to spend about $1.5 billion this year on alternative energy projects, including wind, solar and hydrogen-fueled power plants. That's more than 6 percent of the company's capital investment.
Chevron has made a three-year alternative energy commitment of $2.5 billion dollars through next year, which would amount to about 4 percent of the company's investments in energy resources.
It's not enough, say environmentalists, who claim the investments are merely symbolic.
Small, baby steps, which they could be taking giant strides, given the revenue that they're raking in because of these high oil prices.
DERON LOVAAS, NATURAL RESOURCES DEF. COUNCIL: Small baby steps, when they could be taking giant strides given the revenue that they're raking in because of these high prices.
CHERNOFF: Chevron and BP declined to appear on camera, but say their investments are significant and may grow. Chevron told CNN, "It is prudent to take proactive steps to position Chevron for future leadership in important sources of renewable energy."
BP recently told investors, "Alternative energy is expected to be a major part of the global energy mix in the future, and energy is BP's business."
NARRATOR: Fewer wells means less disruption and less waste.
CHERNOFF: In a recent ad, Shell promoted its horizontal oil drilling as environmentally conscious. Shell is boosting investment in wind energy in Texas, though it recently announced plans to pull out of a major wind power plant off the British coast.
(END VIDEOTAPE)
CHERNOFF: The fact is, with oil trading above $130 a barrel, traditional oil production is hugely profitable for the companies. Alternative energy, well, the profit is not quite there yet. In fact, BP's chief executive recently said the company may seek investors to help raise the value of all of its investments in alternative energy -- Ali.
VELSHI: It's an interesting point, because we think of alternative energy because the price of oil is so high. But it was more reasonable to look at alternative energy when oil prices were lower.
What's the implication for alternative energy with these profits -- this price of oil really helping the oil companies?
CHERNOFF: Well, it means the oil companies are most definitely very committed to their traditional ways of drilling production. Oil is incredibly profitable.
But we have high prices partly because of tight supply. That means there is a need for alternative energy. They recognize that. That is more of an incentive for them to move into the business in the future.
VELSHI: Is there some sense from you looking into this that Shell and BP -- I mean, I think there's a whole generation of things BP actually stands, Beyond Petroleum, as it says in their ads.
Are these two companies -- do they seem to be committed to moving into alternative energy?
CHERNOFF: They're putting money in. They're not going to make the environmentalists happy by any means. In fact, some environmentalists are criticizing them for putting money into areas that would not replace gasoline, but would replace electricity.
VELSHI: Right.
CHERNOFF: So they say, oh, that's awful. I mean, look, they're putting money there. They are making the commitment. They're not doing perhaps as much as environmentalists would like.
VELSHI: All right. Interesting.
Allan, thank you very much for that.
Allan Chernoff -- Gerri.
WILLIS: Interesting conversation. And that brings us to today's "Quick Vote."
Poppy Harlow from cnnmoney.com is here with today's question.
Hi there, Poppy.
POPPY HARLOW, CNNMONEY.COM: Of course we're talking about oil. Crude oil futures topping $132 a barrel just a few hours ago, while the government reported a sharp decline in crude supply.
So why do you care? Well, high oil prices mean high gas prices for you at the pump.
We want you to weigh in. Here is our question today. What is to blame for high oil prices? OPEC, big oil companies, supply and demand, or no one, they are unavoidable?
Cast your vote on cnnmoney.com. We'll bring you the results later in the show. And I hope more people vote on this question than on "American Idol" last night.
We'll see.
WILLIS: How many voted last night on "American Idol"? What's our hurdle?
HARLOW: I was working. I didn't watch it.
WILLIS: Millions.
HARLOW: I don't know.
WILLIS: Millions.
OK. All right.
Up next, moving forward in the presidential primary race. We'll check on issue #1, the economy, and the states ahead.
Plus, health care is a big issue in the race. We'll show you how to save a prescription drugs.
And one airline plans to charge you for checking any bag. We'll tell you which one.
You're watching ISSUE #1.
(COMMERCIAL BREAK)
WILLIS: Kentucky and Oregon are over. A split night on the Democratic front. Kentucky for Senator Hillary Clinton, Oregon for Senator Barack Obama.
And going forward, the economy, issue number one in the minds of most Americans, will be front and is center.
CNN Chief National Correspondent John King is here with more.
So, John, let's talk about what comes to mind first when you say "economy," are those manufacturing states that are having so much trouble. How are they responding to this at the election booth?
JOHN KING, CNN CHIEF NATIONAL CORRESPONDENT: It is one of the key questions in the campaign, because this is the dilemma for the Democratic Party right now. The economy is number one across the country, but in different regions it means different things.
You're talking about the manufacturing area. Let's pull out right in here into the Midwest area.
You think of the industrial belt as somewhere in here in this country, Pennsylvania, Ohio, Indiana, over towards Illinois, down into Missouri. Well, guess what? People are hurting in these places. And what we're seeing more and more, especially if you come out to a full county view of the how the Democrats have one, Senator Clinton is winning these blue collar voters in these areas, and yet it looks like Barack Obama will be the Democratic nominee.
So the Democrats have an issue. Their likely nominee has to learn to speak better to blue collar people...
WILLIS: Right.
KING: ... in Pennsylvania, in Ohio, a swing state like West Virginia. Here, it is manufacturing. It is trade. It is the jobs that are the big economic issue. And Barack Obama has a lot of work to do, Gerri, to make up, and Senator McCain sees opportunities here. WILLIS: I just want to tell you, I was in Michigan, and I was in Grand Rapids, which is about where?
KING: There you go.
WILLIS: Let's see, right here yesterday. These folks are having a heck of a time. I have to tell you, they're working very hard at economic development, but their big issue is the economy.
KING: Absolutely. And this is the one state -- I'm going to zoom it back down smaller just a little bit -- has a Democratic governor right now.
You know, usually the president gets punished, his party gets punished, when voters feel badly about the economy. So the fundamentals favor the Democrats. But Michigan has been in a recession, as you well know, for years now.
The auto industry, the other industries hurting badly. A Democratic governor. A lot of anger at the Democrats in this state, as well.
This is a state where, especially given Barack Obama's problems with those blue collar workers, John McCain thinks in places like Macomb County, the home of the Reagan Democrats just north of Detroit, and out in Grand Rapids, which is much more conservative, that he might be able to do some business in a traditionally Democratic state.
WILLIS: Let's talk about those states that maybe it's not manufacturing the problem, it's real estate, it's housing prices. It's California, it's Florida, it's Arizona.
Which of those is going to be a true battleground state?
KING: The biggest one would be Florida. California leans Democrat. Arizona is John McCain's home state. If he's in trouble there, forget the election.
So let's look at Florida.
You mentioned real estate much more the issue here. There are other economic issues, but you have huge issues down here, where you have a lot of retirees. And you have the I-4 corridor from Orlando across to Tampa.
Again, the mortgage crisis, the credit crunch, huge effect here on a state that remember Bush v. Gore and remember last time. If John Kerry had won Florida, he would have beat George W. Bush in 2004. It is a huge swing state where the economy issue is much more about real estate and credit than it is about jobs.
WILLIS: And who would be most popular there, do you think? I mean, knowing what you know.
KING: That's another fascinating questions. The Republicans have carried it. John McCain is competitive right now. Hillary Clinton against John McCain is ahead in the polls right here. Barack Obama is much closer. Why? Because he's having trouble with older voters down here, with Jewish voters down here.
This is a state that the Democrats, if they can take this state, the Republican math gets almost impossible. But right now, Barack Obama again is struggling -- the economy. Barack Obama has a long way go.
WILLIS: John King, thank you for that. Fascinating stuff.
KING: Thank you.
VELSHI: Man, he is good with that wall.
ISSUE #1 for the airlines is the rising price of oil. And because it's hurting the airlines, it's forcing you to pay more for air travel.
American Airlines said today -- get this -- it's going to start charging $15 not for the second checked bag, for the first checked bag. It's also going to cut domestic flights and lay off workers.
The fee starts on June 15th. It also plans to raise fees for other circuses -- funny how I said circuses -- other services, like help with reservations and with oversized bags. Prices ranging from $5 to $50 per service.
Pretty soon, actually, you'll get a big cut in rates if you actually fly the plane yourself.
As we told you earlier, the airline is going to slash domestic flight capacity by 11 percent to 12 percent in the last quarter, the last three months of this year. American's parent company, AMR Corporation, says the move will lead to an undisclosed number of job cuts at both American and the commuter service, American Eagle.
We're going to take a break. Up next, we're checking in with Roland Martin live on CNN Radio right now. You never know what Roland's going to say. There he is.
Plus, the new, looser U.S. policy on Cuba.
And how to start saying on prescription drugs right now.
Stay with us. You're watching ISSUE #1 right here on CNN.
(COMMERCIAL BREAK)
WILLIS: Welcome back to ISSUE #1.
A sign of a more relaxed stance on Cuba. President Bush says Americans will soon be allowed to send cell phones to Cubans. The president says he's making the move because of recent changes, including the right to own cell phones implemented by the new Cuban president, Raul Castro. He says if Castro is serious about the changes, he will allow Cuban citizens to use the cell phones to reach relatives in the U.S. -- Ali.
VELSHI: Well, Gerri, right now on CNN Radio and CNN.com live, our own Roland Martin is hosting a live program on this election year and other hot topics. Let's make it a trifecta and add CNN into the Roland Martin mix.
Roland, you are on a lot of communication platforms right now, but it's a big topic. You're talking about the primaries that occurred last night and where we are in this Democratic nomination race.
What is going on, Roland?
ROLAND MARTIN, CNN POLITICAL ANALYST: Well, look, Ali, we've talked about it and we'll hit it again. That is very simple.
You have two amazing candidates in Senator Barack Obama, Senator Hillary Clinton. They have strong core supporters, and that's why you see them duking it out until the end.
Neither one was going to go away. I think if the fields were reversed, Obama would say, finish the string out. She is saying the exact same thing. But it is interesting though how you see superdelegates clearly shifting to Obama.
Clinton won West Virginia by 41 points. He picked up 22 delegates, she picked up four.
VELSHI: Roland...
MARTIN: So the big win didn't make that big of a difference.
VELSHI: Yes. And what's -- the problem, of course, is as we've been covering this, there seems to be a real difference in the type of votes and the type of voters Hillary Clinton is getting versus those who Barack Obama is getting. And if Barack is sort of running away with this thing and he's going to become the nominee, is he developing a problem with what we are referring to as white working class voters?
MARTIN: Well, first of all, if we actually roll this whole thing back to the beginning of the campaign, you saw the exact same split. It really bubbled up February 5th, Super Tuesday, where you saw African-Americans, young voters, more educated voters, go for Obama. Older voters, white working class voters, women going for Clinton. We've seen that now for two, three months.
So it's not a shock what Obama has to do -- if he is the nominee, he has to make the effort to bring the party back together to say, OK, you supported Clinton. I got you. That was your candidate. I had any supporters.
But you know what? Right now it has gone from candidates to party. And now it's a question of, if you like Senator Hillary Clinton because of her position when it came to Iraq, when it came to the economy, when it came to Supreme Court justices, when it came to those kind of issues, for the most part, they're basically on the same wave length here.
This is where you go from candidates to party. That's the difference.
VELSHI: Well, let me ask you this, Roland. We've been seeing in these exit polls that those people who overwhelmingly support Barack Obama have said in larger numbers that they would support Hillary Clinton if she were the nominee. A much smaller portion of Hillary Clinton supporters have said they will support Barack Obama if he's the nominee. In fact, many of them have said either they won't vote, but a surprising number have said they will go and vote for John McCain.
Do you believe that to be the case? Or do you believe once there's a nominee people will pull together and vote for the Democratic candidate if they consider themselves Democrats?
MARTIN: I think, Ali, once there's a nominee they will pull together. But there is still work to do.
And so what Obama has to say is, hey, look, Senator Hillary Clinton and I agree on a significant number of issues. We both said the exact same thing. You're going to have to make a decision that if you care about these slate of issues, do you want to see the guy who your candidate was opposing as well get into the White House?
I mean, there has to be a very hard core connection, Ali. And that is looking them in the eye and saying, wait a minute. You know, if you want to save your house from foreclosure, you're going to have to deal with this. We must come together.
Issues matter, not people. That's going to be the message.
VELSHI: All right. Roland Martin, this is a man you cannot get away from, because he is on CNN TV with us, he's on CNN Radio, and he's on CNN.com live if you want to hear...
MARTIN: I'm asking for a raise, Ali.
VELSHI: You should get one, my friend.
MARTIN: Issue #1 -- I'm asking for a raise.
VELSHI: Good to see you, my friend, Roland.
Gerri, he has figured out what issue #1 is.
WILLIS: I'm telling you. We don't want to get away from him.
Up next, search for products online, buy them and get cash back. That's the plan one Internet giant has for you.
We'll explain. Plus, save money right now on prescription drugs. We have a plan for you.
And we'll open up the help desk. Send us an e-mail -- issue1@cnn.com.
ISSUE #1 rolls on next.
(COMMERCIAL BREAK)
(NEWSBREAK)
A heart-breaking story about a couple's search for their missing son in the Chinese earthquake rubble. Ahead in the CNN "Newsroom," NPR reporter Melissa Block. She'll give us the story behind that story and we'll talk to her from Chengdu, China. It's a story you won't believe she witnessed right there in China.
I'm Don Lemon. Now back to ISSUE NUMBER ONE and Mr. Ali Velshi.
Ali, I'm loving the suit today, sir.
ALI VELSHI, CNN ANCHOR: You and I -- I can wear it because you're not wearing it. It takes a couple of days to FedEx it between us.
LEMON: Yes, I know, that and the vests.
VELSHI: I think you got a little soup on the lapel, but, you know, good to see you, Don.
LEMON: OK. Thank you, Ali.
VELSHI: All right. Let's get you up to speed on some of the top ISSUE NUMBER ONE stories.
Time Warner and Time Warner Cable are going their separate ways. The boards of both companies have agreed to split with Time Warner Cable expecting to pay a hefty $10.9 billion one-time dividend to shareholders. That deal is subject to federal approval. Time Warner, of course, is the parent of CNN. But don't worry, I continue to pay higher cable bills just like you do.
Microsoft is going fishing for shoppers from Google and Yahoo!. The lure that they're using is a shopping reward program in its search engine. Microsoft calls it Live Search Cash Back. Products eligible for a rebate will be denoted with a gold coin icon with a U.S. dollar sign in the center.
Gerri.
GERRI WILLIS, CNN ANCHOR: Well, Ali, I think everybody wants to save money. I know I want to save money. And one of the toughest places to do it, prescription drugs. You definitely don't want to compromise your health, but now you don't have to. Tod Marks is with "Consumer Reports." Now, Tod, you looked at -- you talked to 40,000 people in a survey. That's a whole lot of people. And they said they like their independent drugstore best. Why?
TOD MARKS, SENIOR EDITOR, "CONSUMER REPORTS": Independent drug stores, since we started surveying people about their experiences with prescription drugs, have long pleased or satisfied our readers the most. They offer really knowledgeable help at the pharmacy. They don't have to wait on lines that are as long.
They have very compassionate pharmacists who are always accessible, readily available and very knowledgeable. And that's critical. You're not buying a can of soup here. You're buying your prescription medications and you're asking for advice about medicines and over-the-counter remedies. It's critical information.
WILLIS: So they give you great info though. But, you know, a lot of folks out there, I mean, I know that I'm trying to pay higher drug costs and my coverage is paying less. Do you save more money by going online?
MARKS: It's a big problem, you know. But in our survey, we found that almost twice as many people said they're paying -- that insurance is paying for a lot less of their prescription drug costs than just five years ago. So price isn't more of an issue from a lot of people.
But independents have always had this perception that they were kind of costly. And our survey basically boar out that a lot of independents are very expensive. However, we found those that were very inexpensive. But the Web sites, you know, if you go to Web sites like of a Costco or aarp.com, we found that some very good deals do exist there.
WILLIS: All right. So we have independent drugstores. We have the online component. We also have the mass merchants out there. The Wal-Marts and the Costcos. Is that a great place to go?
MARKS: Sure. They really have a lot of customers that are uninsured. So price is a very big vehicle for those folks. So what we found, as places like Wal-Mart and Target and Shopco tend to have lower prescription drug costs and they also tend to offer programs (AUDIO GAP) $4 generics for a 30-day supply, that you won't find at all other drugstores. That's important. We always tell people the biggest, single way to save money on your prescription drug cost is to go generic. You can save 50 percent or more on the cost of your monthly medication.
WILLIS: That's a big step, definitely. But if I have no coverage at all, where should I go?
MARKS: Well, if you have no coverage at all, you need to compare prices. We did a price study and it showed that from the most expensive source to the least expensive source, there was a 26 percent difference on four drugs. It came to over $300 one this one prescription. So people need to shop around. And we say, you know, go online, check your brick and mortar stores. Don't rule out independents. But Costco and AARP offered some very good deals.
WILLIS: Great. That's great information.
Tod, thanks for that.
Hey, saving $300. How do you like that, Ali?
VELSHI: Good deal. I'll take anything they give me these days.
Up next, it's all about cow power. How one company's talking about what normally is bad for the environment and turning it into something echo friendly.
And inside the secrets of the family. How to make a family business successful. We'll bring that to you later on ISSUE NUMBER ONE. You're watching CNN.
(COMMERCIAL BREAK)
WILLIS: You may think planes, trains and automobiles are to blame for most of the greenhouse gases, but you would be wrong. Methane, cow pie, have 21 times the warming potential of CO2 and one farm in California is working to use methane to its advantage.
(BEGIN VIDEOTAPE)
WILLIS, (voice over): These cows produce almost 1 million pounds of milk a day. And almost as much waste. But the waste isn't wasted at this Gallow (ph) Dairy Farm in Atwater, California. The cow manure contains the gas methane, which is used to generate almost six million kilowatt hours of electricity per year here, almost 70 percent of the farm's electric needs.
CARL MORRIS, GENERAL MANAGER, JOSEPH FARMS: How do we collect the manure? It's flushed. The water flushes down the lanes where the cows stand and then it goes into these channels and water flows down to a separator. The water, with the manure in it, is pumped up over the separators and the course solids fall off the front and they're taken away and composted. And the water, with the suspended and dissolved solids, goes through pipelines underground to our digester.
WILLIS: And that's where the bacteria in the water convert the nutrients into biogas, which floats to the top and is collected.
MORRIS: It's taken over to a treatment system. It removes the hydrogen sulphide and the moisture, a refrigerated gas dryer. Then the gas is piped in a low pressure pipeline around the dairy, over to the cheese plant and then it's used to fuel two engines.
WILLIS: Harvesting methane not only reduces a harmful greenhouse gas, it also reduces the amount of fossil fuels burned and thus the amount of carbon dioxide released into the atmosphere. All in all, the project cost close to $3 million. A little more than a third of which was covered by government and utilities subsidies, in this case by PG&E. The farm expects the project for pay for itself in less than five years. (END VIDEOTAPE)
WILLIS: Utility companies are pushing to collect extra energy from methane plants and resell that green energy to consumers across the grid.
So, Ali, it's gas to gas.
VELSHI: That was -- I almost think we shouldn't do the next thing, we should just rerun that. That was fun.
OK. Listen, running a family business is a challenge. Running one in this economy is an even bigger challenge. And if you're running a family business, well, that takes a whole new level of energy. So how do you keep your business and your family running smoothly in tough economic times? Larry and Laura Colin know a few things about this. They're married. They've run a family business and they're authors of the book "Family, Inc."
Larry and Laura, good to see you. Thank you for being with us.
You know, I cannot decide, given everything I've heard from people who are involved in business with their partners, meaning their family partners or their family, whether this is a good idea or a bad idea. What's your thesis on this?
LARRY COLIN, AUTHOR, "FAMILY, INC.": Well, I think it's a great idea to be in business with your family because there are so many advantages. There's trust. There's a mission. There's building a reputation for your family. It's fabulous, Ali. When you get it right, nothing beats it.
LAURA COLIN, AUTHOR, "FAMILY, INC.": But your relationship has to be good. You have to have a good relationship. If you don't, it can be a disaster.
VELSHI: Why, because of all the issues involved or because of the time that you probably spend with your partner or your family?
LAURA COLIN: Well, actually, both of them. But, you know, when you have a good relationship, it can be perfect because you get through the bad times and you enjoy the good times. And it's wonderful.
VELSHI: Now, tell me, people say this to me that whether it's with family or it's with a friend that you start a business, that the one thing you should probably do is spend more time than normal on setting up expectations, maybe some rules about how things are going to work and particularly how things work when things start to get rough. Do you agree with that?
LARRY COLIN: Totally. You don't want the family business to be the job of last resort for other family members. You want to hold the standard, whether it's education, outside experience, something that they can add to the business. LAURA COLIN: Oh, absolutely. And, you know, we say in our book that if you're going to have a family member join you, you really need some rules of engagement. And maybe one of the first rules is have that family member work somewhere else first.
VELSHI: You know, we know that when it comes to relationships, money is one of the biggest struggles. It's one of the biggest things that causes marital conflict. How do you deal with the handling of money and the decisions about money in a family business?
LARRY COLIN: Well, the problem with family business is exactly that. When you mix blood, money and power, you end up with a combustible thing.
VELSHI: Sure.
LARRY COLIN: It's not easy.
LAURA COLIN: But one of the things that we say, first of all, is that, the job that is performed by the family member, you should be paid a market rate like anyone else who would be paid for that job.
VELSHI: So if you have your business. Let's say you have your family business. I have the same kind of business that's not with family. Should the structure be the same?
LAURA COLIN: Oh, absolutely.
LARRY COLIN: Absolutely.
LAURA COLIN: And that's one of the things that family businesses ready need to get right. They need to run it like a business. And that's difficult.
LARRY COLIN: They can't live on love alone.
LAURA COLIN: That's right.
LARRY COLIN: You need agreements, shareholder agreements, non- competes. You need everything and everybody knows there's got to be a sheriff in every business.
VELSHI: What happens when you've got other people involved in the business who are not family members? How do you deal with the fact that someone else -- you know someone might see treatment as favoritism? How do you handle everybody when there's family and not family involved?
LARRY COLIN: I look at it the opposite way. I think being in family business, working in a family culture, is very good and sometimes non-family members are treated like family and they understand. Everybody understands that if you're part of the royal family, you should be treated a bit like the royal family.
LAURA COLIN: But, you know, I was going to say, it's great for someone who's a non-family member. In this culture sometimes you want to feel like you're working in a place where there's more of a nurturing environment.
LARRY COLIN: Right.
LAURA COLIN: And you find that in . . .
VELSHI: The two of you finish each other's sentences. I can see why you do well in business together.
LARRY COLIN: It's amazing. We've been married almost 20 years.
VELSHI: And how long have you been working together?
LARRY COLIN: Five, six.
LAURA COLIN: Yes, I was going to say.
LARRY COLIN: Five, six. And we never killed each other. We're still here.
VELSHI: Check in with us. We'd like to see how it continues to go. But thank you for bringing some of your own experiences to our viewers.
LAURA COLIN: All right. Sure.
VELSHI: Larry and Laura Colin with Colin Service Systems.
Thanks for being with us.
LAURA COLIN: Thanks.
LARRY COLIN: Thank you.
WILLIS: Coming up, the CNN Money team is manning the Help Desk to get your answers. Send us your questions to issue1@cnn.com.
And we are standing by right now for a live event with Senator Barack Obama. His first day campaigning in the state of Florida. He is in Tampa.
(COMMERCIAL BREAK)
WILLIS: Welcome back to ISSUE NUMBER ONE.
We will be going live to this event in Tampa, Florida, where Senator Barack Obama is expected to speak very soon indeed. As soon as he hits that podium, we will be covering that.
But right now we're going to go to the Help Desk and answer your questions. With me today, we have Stephanie Elam, senior correspondent, Allan Chernoff, Jeanne Sahadi. She's senior writer for cnnmoney.com.
Welcome, guys. Great to see you guys.
Let's get to that first question from Kanisha who asks, "I thought I would be receiving $1,200 for my tax rebate, but I got $900. I have two children and filed single. Do you know why I didn't get more money?"
Jeanne, what do you have to say about this?
JEANNE SAHADI, SENIOR WRITER, CNNMONEY.COM: You know, there are a lot of different reasons. It could be the cast that in her situation in particular, but it could be because her net income tax -- her net tax bill was too low. If it was below $600, she would have only gotten $300 for herself. It could be that her adjusted gross income was to high. She made more than $75,000. Her stimulus payment would be reduced. Or it could be that she owed back taxes or had an unpaid student loan. The IRS is going to pull money from that.
WILLIS: The devil's in the details here. I've got to tell you, I think everybody got less than they expected.
Allan.
ALLAN CHERNOFF, SENIOR CORRESPONDENT: I think it's really a function of income. People heard the number. Oh, 600? I'm going to get 600. Twelve hundred, a couple. I'm going to get 1200. Your incomes really influences what you're going to get. If you make too much, you get nothing.
WILLIS: All right. OK.
SAHADI: There is an IRS hot line, rebate hot line, if you have any questions about why your check is not what you thought it would be. And they also send you a statement explaining the rebate to you.
WILLIS: Irs.gov, a great place to go.
Marion asks, "where is the safest place to sell gold?" This is like a trick question, right? Not to Vinny. Don't sell it to Vinny, right? I don't know how to answer this.
STEPHANIE ELAM, BUSINESS CORRESPONDENT: Well, I think the thing is, find an estate jewelry house. Don't trust anyone who's going to tell you over the phone like, ooh, we'll give you $90 for that ring. They're usually going to want to see it in person, weigh it, take a look at it. And then also, keep in mind that the cash valuable is going to be less than the appraisal. So just when they tell you it's worth $1,000, don't expect to get $1,000 back.
WILLIS: That seems hardly fair.
CHERNOFF: Well, what you want to think about, if you're talking about jewelry, you don't really want to sell jewelry that will be melted down because they only care about the weight of the actual gold. They don't care about any of the artistic value that might be in your ring or your necklace or whatever.
WILLIS: Right.
CHERNOFF: Better to try to sell it just as jewelry. WILLIS: And that's not nothing these days. Gold is very valuable.
Another e-mail. "Why hasn't the interest rate on a 30-year mortgage come down with the Federal Reserve interest cuts?" I think we could all answer this in unison, but, Stephanie, you go ahead.
ELAM: Well, the thing is, I know everyone wants to think that the Fed Funds Rate, the short-term rate, directly affects what we're paying. And that's not it. It's actually tied to the 10-year Treasury yield. And if you take a look at that, bond traders control that. So if the short-term rate come down, then they're going to want to raise their demand for their bonds. That could go up. Inflation's an issue there and then, therefore, your mortgage goes up.
WILLIS: That was like the first year of business school in one, single answer there.
ELAM: I tried to make it very condensed.
WILLIS: That was good. That was good.
All right. We have another question. This one from Ara. "I just graduated with a masters in physical therapy and I owe about $60,000 in student loans. Should I consolidate now or not?"
Jeanne, what do you think?
SAHADI: Well, actually, I'm not as up on student loans as Allan is. The environment is changing a little bit. The rates will probably be coming down by early July. Every year, if you've already had a variable rate loan, the loans are reset in July based on an auction of a bond in May. So according to Mark Kantrowitz at finaid.org, which is a great source for this information, rates are likely to come down. So you might want to ask your lender.
WILLIS: Jeanne, thank you for that.
We're going to go live to this Barack Obama event where he is speaking in Tampa, Florida. You see him there right now at the podium. This is the first time Barack Obama has campaigned in Florida this year. So we're eager to hear what he has to say. He's stepping up to the podium right now. Listen in.
SEN. BARACK OBAMA, (D) PRESIDENTIAL CANDIDATE: How's it going, Tampa? How's it going, Tampa?
Oh, it is good to be back in Florida. It's good to be back. I know you guys have been holding down the fort. And it is good to be back.
I've got a couple of special acknowledgments I've got to say.
First of all, you have two of the finest members of Congress that any state has offered. I am so grateful to have their support. They are such great friends. Please give it up for Congresswoman Caster and Representative Robert Wexler. Give it up for them.
They are doing outstanding work each and every day. And they have just been tireless advocates on my behalf. And I'm very grateful to them. I'm very grateful to them.
I also want to thank your great mayor, Pam Iorio, because she endorsed me today and I am so proud of that endorsement. Mayor Iorio is doing outstanding work each and every day here. And we were just talking backstage. And I promised her she would have a partner in an Obama administration to help make Tampa everything that it can be.
To all the other elected officials, all the activists and community leaders and finally I've got to say a special thank you to my volunteers here, the O Train (ph) that has been working so hard ever since we started this campaign.
I love you back.
You know, it has been about 15 months since I first announced that I was running for president of the United States of America. And at the time when I announced, I will tell you, there were some who said, you know, Barack, you're a relatively young man.
By the way, everybody, you guys can sit down. You don't need to stand up the whole time. I just noticed everybody. Rest your feet.
But there were -- thank you. Thank you.
But when I announced that I was running, there were a number of people who said, Barack, you're a relatively young man. Why are you running so soon? You can afford to wait. You can afford to wait. That's what they said.
And I had to explain that I wasn't running because I thought it was something I owed to me. I wasn't running because of some long- held ambition. I was running because of what Doctor King called the fierce urgency of now. The fierce urgency of now.
Because I believe, Florida, that there's such a thing as being to late. And that hour is almost upon us.
We are at a defining moment in our history. Our nation is not only involved in a war that we must win in Afghanistan, but is also involved in a war that I believe should have never been authorized and should have never been waged that has cost us hundreds of billions of dollars and thousands of lives and has not made us more safe.
And then we're struggling here at home. You know it in your own lives. I don't have to tell you.
We just went through an economic expansion before the most recent downturn in which family incomes actually went down on average by $1,000. Think about that. The economy was growing. Corporate profits were up. The stock market was up. But your wages and your incomes, on average, had actually gone down. Now that's Bush economics for you there. Instead of prosperity trickling down, pain trickled up. So it's been harder and harder for people to make ends meet. Your wages are flat, but your costs of every from health care, to college education, to a gallon of milk, to a gallon of gas have all been going up and up and up. And at the end of the month, it's hard to make ends meet.
Meanwhile, you've got a home foreclosure crisis, millions of people at risk of losing their homes because nobody was overseeing the predatory practices of mortgage lenders. Forty-seven million people without health insurance. Children who are still learning at schools that are underfunded, taught by teachers who are under paid. Jobs being shipped overseas. Benefits, pensions being dumped.
In such circumstances we cannot afford to wait, Tampa. We can't wait to fix our schools. We can't wait to fix our health care system. We can't wait to bring good jobs and good wages right here to Tampa. We cannot wait to end this war in Iraq. We cannot wait and that's why I'm running for president of the United States right here and right now.
But it wasn't just because I thought that the challenges we face had out stripped the capacity of a broken politics to solve. It was also because I had confidence in you, the American people. I believe the American people are tired of a politics that's all about tearing each other down. They want a politics that's about lifting the country up.
I believe that the American people didn't want spin and PR from their elected officials. They wanted honesty and straight talk. And most of all, I believe that the American people are tired of being divided. They want to be brought together. All of us, black, white, Hispanic, Asian, Native American, young, old, rich, poor, gay, straight, they want everybody working together. Yes, we can. That's what the American people are looking for. Yes, we can.
And I am here to report that after traveling for 15 months, after campaigning in every state just about, after talking to hundreds of thousands of people and shaking hundreds of thousands of hands and kissing hundreds of babies, I am here to report that my bet has paid off, my faith in the American people has been vindicated because everywhere I go, people are standing up and they are saying, we are ready for change. We want something new. We want to turn the page and write a new chapter in American history. And we are going to do that right here in Florida, right here in Tampa.
CROWD: Yes, we can! Yes, we can! Yes, we can! Yes, we can! Yes, we can! Yes, we can!
