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Anti-Terror Funds are Cut from New York and Washington D.C.; Henry Paulson Nominated as Treasury Secretary; Should CEO Salaries be Published

Aired June 03, 2006 - 13:00   ET


FREDRICKA WHITFIELD, CNN CORRESPONDENT: On terrorism charges. They are accused of plotting to carry out a series of bombings in southern Ontario. The suspects include a dozen adults and five young people.
The prime suspect in a killing spree in Indianapolis is still on the loose. Dozens of police officers are searching for Desmond Turner. He's accused of killing seven members of a family two days ago. Three of the victims were children.

An apparent suicide attack on a crowded Basra market kills at least ten Iraqis today, 30 people were hurt. The explosion happened during the market's busiest time of the day. It mangled several cars and a motorcycle as well.

President Bush taking aim at same-sex marriage this weekend. He's urging the senate to ban the practice, with a constitutional amendment. Mr. Bush says it would protect marriage from being redefined by activist courts. Senators are expected to debate the issue this coming week.

And we'll update your top stories at the bottom of the hour. Now it's time for IN THE MONEY.

ANNOUNCER: From New York City, America's financial capital. This is IN THE MONEY.

JACK CAFFERTY, CNN ANCHOR, IN THE MONEY: Welcome to the program. I'm Jack Cafferty. Coming on today's edition of IN THE MONEY scared stupid. Washington's cutting anti-terrorist funding to some major U.S. cities. See if a place like Omaha really needs the cash more than New York City or Washington, D.C.

Plus, let them eat peanuts. Airline passengers are in for big crowds, high fares and long waits this summer. Find out how the airlines got into this mess.

And earning like a rock star. If you want to get workers riled up, tell them how much the boss is making in the corner office. Check out an argument against publicizing CEO compensation.

Joining me today a couple of IN THE MONEY veterans, "Headline News" correspondent, Jennifer Westhoven, managing editor Allen Wastler. A big jobs report out on Friday, came in much lower than expected. The whisper number was around 175,000 new jobs and we got only 75,000 new jobs and that's seen as perhaps good news for those that thing the Fed ought to stop raising interest rates. What do you think?

ALLEN WASTLER, MANAGING EDITOR, CNNMONEY.COM: I think it's good news. It slows a slowing economy. If you've got a slowing economy, you don't raise the interest rates because that throws water on it. You want to nurse it back and get it rolling again. I thought it was basically a good jobs report for Wall Street.

JENNIFER WESTHOVEN, CORRESPONDENT, "HEADLINE NEWS:" The one economist note I read this morning said that the new Fed chief, Ben Bernanke, he's got to be happy about this, it's just the kind of anti- inflationary signal that he needs and certainly the market has been so freaked out about lately.

CAFFERTY: You know somebody said he's had little, if no, honeymoon and it's not unusual for the Fed chairman not to get much of a break, but there are signs that the economy may be slowing and there are signs there's inflation in the pipeline. Lots of luck on figuring out the proper solution to that. We'll have to see. There's more data to come in the next Fed meetings at the end of June.

U.S. cities found out this week how much counter terrorism money they'll be getting from the Department of Homeland Security. New York and Washington D.C. are being cut by tens of millions of dollars from last year. New York is losing 40 percent or more than $80 million in federal funding. Check out some of the places that get the biggest increases, Louisville, Kentucky, Charlotte, North Carolina and Omaha, Nebraska. Maybe we're missing something around here, we never thought Omaha was as big a terrorist target as perhaps New York. David Heyman is going to tell us what's going on. He's the director of the Homeland Security Program at the Center for Strategic and International Studies. David nice to have you with us. Welcome.

DAVID HEYMAN, CSIS: Nice to be here. Thanks.

CAFFERTY: New York politicians went nuts they cut $83 million in counter terrorism funding from ground zero. What's going on?

HEYMAN: Well, there are two things going on. One is smart, one is stupid. The smart side of the equation is that the Department of Homeland Security is going to a risk-based security. Which means they say, look we've got a limited amount of resources and we can't have absolute security everywhere, we got to apportion it based upon risk. And that's smart, we need to go that way, otherwise we'll spend ourselves to death.

The stupid side of the equation is there were problems in the process of applying for the grants both with New York and with D.C. Rather than going back to them and saying there's glitches in the problems and the process, they cut the funds and in fact, you know, that doesn't make a lot of sense.

WESTHOVEN: What do you make about the whole communication around this application process? One of the things that, you know, of course the New York media's been going wild this, New York got shown as having no national monuments, the Brooklyn Bridge, the Empire State Building, all these things are nothing apparently.

CAFFERTY: The statute of liberty.

WESTHOVEN: The New York senators are now mailing in pictures of these things to Homeland Security, saying, hello, this is one our monuments. Shouldn't there have been better communication about this? If we didn't know how to fill it out, that's one thing.

HEYMAN: That's right. In fact I think that is one of the things going forward is the iterative process rather than getting your check in the mail and showing your citizens are no longer going to be protected at the level they should be, the risk is high, but the effectiveness program that the New Yorkers and the New York government and the D.C. government put in place was not sufficient. They got average, above average in their feedback from the Department of Homeland Security.

What happened in New York with the buildings and the Brooklyn Bridge, they were filled out as, you know, Empire State Building is a building, Brooklyn Bridge is a bridge, rather than saying this is a national asset, a national historic asset, New York went forward with these sort of, generic infrastructure and the basic consequence of that, their ratings were probably a little bit lower.

WESTHOVEN: David if you are a jaded, cynical type, like some of us around here, you would notice that a lot of the cities that, you know, didn't get the funding that you would think they would get, tend to be Democratic strongholds whereas the Republican administration that's doling out the money is, you know, the other side of the aisle. Did politics play into this at all?

HEYMAN: I don't know if politics played into this. We would hope not. They've gone to a risk-based formula. There were 47 to 100 people who reviewed the process and they thought it was fair. So let's give the benefit of the doubt to the administration on this. There may be some politics between New York and Washington, you know, when the -- when the alert went up that there might be a possible attack in the subways in New York a few months back, there was a disconnect between the White House and Washington and New York, and some animosity may still be in the bloodstream there.

CAFFERTY: Let me ask you this, the Department of Homeland Security, criticized the New York City police department counter terrorism --

HEYMAN: Right.

CAFFERTY: -- people. Called them ineffective. Now, I was in New York on September 11th, and I saw the way our people here responded to the -- to the World Trade Center coming down. I also worked here at CNN and watched the Department of Homeland Security and FEMA handle hurricane Katrina in New Orleans. What's going on here?

HEYMAN: Again, I think Secretary Chernoff is going the right direction in risk-based security, but let's go to particular counter terrorism in New York. New York and a couple of other cities are looking at developing their own counter terrorism units, bringing in their own intelligence from abroad, having agents across the seas and that's traditionally a federal government function and so you're now coming up against competition with what the federal government should be doing and I don't think Washington's happy about that.

CAFFERTY: Well if I lived in New Orleans, I'd suggest that they maybe do a little bit of hurricane preparation on their own given the way the federal government mishandled that catastrophe. We're not getting any help from the federal government, so it's, I guess, not surprising that some of these local areas think maybe we should start watching out for ourselves.

HEYMAN: Here's the big story here. One of the reasons that these cities were cut, the funds were cut is because we had a $600 million cut in appropriations and funding to cities and states for these kinds of protection that will be put in place, $600 million. This is a substantial amount of money, and there's no way that the -- any of these cities were going to get the amount of moneys they were getting last year. Even if they do risk-based security, they were going to get cut.

WESTHOVEN: I think -- when you look at the people in Ft. Lauderdale, each person getting $67 for protection compared to New York where each person gets $16 of this money, I think that there a lot of people, not just New York and D.C., who agree that maybe this money didn't get reallocated correctly. Do you think there's any chance with a lot of this criticism coming out that the Homeland Security Department might say, hey, all right, let's redo the numbers, let's take a look at this again? Is there any chance that they are going to acknowledge the kind of criticism?

Because so far, I think somebody went to the spokesperson there and said, you know, people are really upset and he said something like, well, we have to look out for the whole country, not just one city. That sounds a little tone deaf.

HEYMAN: Well, I think there is some -- some missing the point here. When the D.C., District of Columbia, our nation's capital is rated in the bottom 25 percent for risk of a terrorist attack, if that's the case, I think, you know, we do need to redo the process. Everybody across the country, everyone around the world, and the terrorists knows that D.C. and New York City are the prime targets. And, so, that's a problem. We will have to redo the process, I think.

But it's not -- Americans should be, you know, at least heartened by the fact that we're going to risk-based security. It's the right way to go. The implementation was wrong in defending parts of it that weren't right doesn't make sense and is probably, you know, going to lose some credibility by the department.

CAFFERTY: So it was a good idea, but when it comes to the execution, when it's put in the hands of the government, forget about it.

HEYMAN: We need to -- CAFFERTY: That's crude but --

HEYMAN: Not fair, not fair. But, no, they are going to get this right. I mean they did a far better job this year than they did last year. They've got about 100 times more data points coming and local law enforcement is increasing their efforts to the threat analysis and they'll do a better job next year, but they got it wrong for D.C. and New York this year.

CAFFERTY: All right. David, thank you. Good to have you with us.

HEYMAN: Thank you.

CAFFERTY: David Heyman is the director of Homeland Security Program for the Center for Stragic and International Studies.

When we come back, the bull whisperer. Treasury secretary nominee Henry Paulson is facing a huge budget deficit. See if he's got what it takes to keep Wall Street from being spooked.

And flying off the handle, the forecast for air travel this summer calls for bigger crowds, longer delays, and higher prices. And find out why it's so hard to get where you're going and not as much fun as it use to be.

Plus code warriors; see why Best Buy could score big from letting another company try out its Geek Squad. Allen will translate that for me later.


WESTHOVEN: The national debt has soared to more than $8 trillion. What does that really mean for the average American? This week, President Bush tapped Goldman Sachs chief Henry Paulson to be the new secretary of the treasury. If he's confirmed by Congress, will he be able to succeed in leading the administration to cut deficits without increasing taxes? Joining us now is Maya MacGuineas, she's at the New American Foundation, and she's the president for the Committee for a Responsible Federal Budget. You got your work cut out for you, huh?

MAYA MACGUINEAS, NEW AMERICA FOUNDATION: Yes, it's not an organization that is going to get its task accomplished anytime soon.

WESTHOVEN: Welcome to the program. My first question is Hank Paulson, this is a guy who is widely respected by the business community, by Wall Street, really seen as somebody whose an expert on China, with foreign currency exchange issues there, knows the leadership there. Is this somebody who is going to be able to have any influence with the president?

MACGUINEAS: Well, that's the real question. It's a solid choice, and an exciting choice in many ways, but it's a very difficult position for him to walk into, I think. And I don't think he would have taken the position had he not assumed he'd be able to impact the economic agenda. But what we've seen in the past with the secretaries of the treasuries is that they've not been particularly influential. The question is whether it will be more of the same here of whether this is kind of a signal that the secretary is going to have more impact and be able to push on some of the issues facing the country.

WESTHOVEN: Maya this year is an election year, does that mean that he's -- the first year is already a loss? You pointed out the previous treasury secretaries they didn't have much traction to begin with. Now an election year, doing things like raising taxes or going after entitlement programs, that's going to be a dicey situation. Is he dead from the start here?

MACGUINEAS: Well, realistically, it is not going to be a year where we'll going to see a lot of steps forward on the kinds of things we have to do. Like you talked about the really unappealing from a political perspective choices of raising taxes and cutting spending, but the things we do have to grapple with.

There are some opportunities, I suppose for him. The president in the State of the Union had brought up possibly creating another entitlements commission. This might be something that could started. So it might be a year for discussion of these topics, but certainly we are not going to see any concrete action until after the election.

CAFFERTY: Would you translate that, create another entitlements commission? What the hell does that mean?

MACGUINEAS: Well, in some ways it means punt on the issue instead of making real choices about what specifics we're going to do. Put that -- put that in the hands of commissioners, or outside experts who might make some of the choices. But in some ways and in this instance, I actually think it would be useful. The whole issue of entitlements Social Security and Medicare, which we've barely discuss as a country but we have to, became extremely politicized in the past couple years, and you have both Republicans and Democrats really warring at each other over these programs and no productive discussion about the kinds of changes we need to make.

So a commission could help kind of diffuse the politization of the issues and help us talk about the real choices of taxes or raising the retirement age, things we should be talking about. But what you need is congressional buy-in. You need Congress in the end to be willing to take the work of the commission and say, OK, we will take these kinds of suggestions and we'll run with them and if we don't like them we'll make alternatives.

CAFFERTY: But the part I get hung up is why we need a commission to tell us what to do with entitlement programs that are growing broke. I can figure that out, and I'm not a member of Congress. We have a president that hasn't vetoed a single spending bill in five years, and he's running the biggest deficits of any president in history, and they want to name a commission to study the fact that we are spending more money than we are taking in. This ain't rocket science.

MACGUINEAS: Let me agree with you completely. What we really need here is leadership. We need leadership from the president and we need congressional leadership on these issues and, sadly, we have seen so little of it in the past years that very few people are willing to step up to the plate and say, specifically, I'm going to tell the American people that the kinds of choices we should make are the opposites of the ones that we're hearing. If you think about what we hear from all politicians these days, it's still more tax cuts and more increases in spending. There is a void of leadership.

And, so, yes, what we would like to do is have our leaders be the one whose are coming up with these ideas and there are tons of ideas out there for people to grab about what we should do. But so far, neither the president or the Senate or the house is really moving aggressively as aggressively on these issues as we have to to tackle them.

WESTHOVEN: Do you think there's any chance that Paulson could fill that kind of a void? I mean Goldman Sachs as a company, not him, has said that the deficit is out of control? Can he do it, and is he somebody, who maybe like Greenspan, could end up being liked by Democrats eventually, too?

MACGUINEAS: Well again, I think that he only took the position, is my guess, that he only took the position because he thinks he will be able to have impact. This is a very successful person who didn't need to take this job, and I believe that he took it because he'll be able to speak his mind and hopefully have a real impact on the economic agenda. There's also the new chief of staff, Josh Bolten, who I believe cares about these issues, too, and I think that the choice of Paulson may be a signal that they're going to move more aggressively on some of these issues.

I don't want to be overly optimistic. So far, we have not seen any of the kinds of things we would want to talk about, in order to move on the budget deficit or the long-term fiscal challenges and Social Security, Medicare. Taxes will have to be on the table. This administration has said they are not. That means Democrats don't want to come to the table and work out the difference. Solving this all through spending reductions while possible is quite challenging to do.

CAFFERTY: All right.

MACGUINEAS: So I think you're going to need somebody who is politically smart and diplomatic and does reach out to Democrats and both can talk to people who are, involved with the financial markets and also to normal people, normal voters.

CAFFERTY: We got do leave it there. Maya Macguineas is the president of the Committee for Responsible Federal Budget at the New American Foundation. Maya nice to have you with us. Thank you.

MACGUINEAS: Thank you so much.

CAFFERTY: Coming up after the break on IN THE MONEY the bright side. A lot of people in top jobs started out at Goldman Sachs and see if the brokerage has been slipping something in the water cooler over there.

Plus air pressure, traveling with the airlines expected to be hard going this summer. And find out why your airplane feel more like a sardine can? And clearly defined goals, HDTV putting a new spin on an old world cup soccer dispute. We'll tell you about that in our "Brainstorm" segment. Lots of good stuff coming up.


WESTHOVEN: Let's take a look at this week's top stories in our "Money Minute." Retailers had a better time of it last month. JC Penney led the way, a healthy 11 percent increase; clothing sales especially strong at most chain stores. Analysts say it proves most shoppers are staying interested despite high gas prices but Wal-Mart said some of its shoppers are having a hard time.

But May sales were down at the two biggest U.S. automakers and at GM they were really down. GM saw a 16 percent drop in vehicle sales. Non-truck sales were down 19 percent. Now, Ford sales were down just by 2 percent. Toyota and Honda, strong sales gain again there.

Nothing succeeds like failure. The two most efficient assembly plants in North America, they are a Ford plant in Atlanta and a GM plant in Ontario, and both of them are going to close. GM and Ford say their decisions to close the plants didn't have anything to do with productivity.

WASTLER: As we mentioned earlier, Wall Street powerhouse Goldman Sachs was in the spotlight this week after President Bush nominated current Goldman CEO Henry Paulson to be the next treasury secretary. Paulson has been very popular at the firm, so the question is can Goldman keep its momentum now that he's likely to leave?

Taking a look at Goldman's stock chart, you can see its shares are up almost 50 percent in the last year. Goldman Sachs is our "Stock of the Week." And this one has always been a darling on Wall Street. They just love it. It's been one of the premier banks and in the last quarter had a 42 percent growth in earnings.


WASTLER: Whoa. Whoa, you got to love it. Three main lines of business, it does investment, underwriting for m-and-a type stuff and it does asset management and also a lot of trading like commodities, fixed income bonds and stuff like that. And, yes, you say, commodities are unwinding and we're hearing about, hey, if they are trading either up or down --

CAFFERTY: These guys are making money on both ends.

The other thing that happens with them is there's a long line of executives that March out of they're right into Washington, D.C. and that speaks to the credibility of the place as an investment house, as a major investment bank.

WASTLER: It's a big think tank right there, and you got Robert Reuben was there, and Josh Bolten and Josh Corzine of New Jersey. It's a powerhouse.

WESTHOVEN: My disclosure is I owned this stock up until this morning.

CAFFERTY: Did you sell it for this program?

WESTHOVEN: Yes, I'm not going to go on and own a stock, right? But if you're looking at the company, you got to look at the new guy, who is Lloyd Blankfein and he's a boy from the Bronx and made good. But this is a real change at Goldman. Because Paulson came from investment banking and one of the lines said his blood is Goldman blue. This new guy, not like that at all. He comes from the trading desks. That's a whole new breed of people on Wall Street.

WASTLER: And traders are always wheeling and dealing.

WESTHOVEN: And really complicated bets here, so it is going to be interesting. And I understand that he lost 50 pounds and shaved his beard to be more presidential.

WASTLER: Right now short interest, betting against the stock is at an all-time low. So there you go.

Any way, coming up on IN THE MONEY, paycheck envy. Publicizing CEO's salaries just cranks up the back stabbing in Corporate America. Stick around for a guy who says it might be smarter to keep it quiet.

Plus airline passengers are expected to get less room and more delays this summer. We'll hear about what's causing that.

And, put your hands together for our "Fun Site of the Week." It will show you one way to liven up those boring meetings at work.

CAFFERTY: Oh, lovely.

WESTHOVEN: I thought that was normal sounding.


WHITFIELD: Hello, I'm Fredricka Whitfield at the CNN Center in Atlanta. IN THE MONEY continues in a moment, but first these headlines.

In Iraq, 33 people are dead and 55 injured in a bombing at a crowded market in Basra. The explosion happened during the market's busiest time of the day. We'll have more on this story at the top of the hour.

Police in Toronto question 17 terror suspects. They describe the group as inspired by Al Qaeda. Police say the suspects planned to attack Canadian targets with a fertilizer bomb. They say it would have been like the one used in Oklahoma City in 1995 only much bigger. The FBI is looking into a possible link between the Canadian's and terror suspects arrested recently in Georgia.

Police raid a house in Indianapolis today. Even lobbed tear gas in their urgent search for this man, 28-year-old Desmond Turner was not in the house. Police called Turner their chief suspect in the deaths of seven family members on Thursday. His alleged accomplice is in custody. We'll have a live report from Indianapolis at the top of the hour.

Coming up, next hour, our Jeff Koinage questions the president of Congo about allegations of child rape in his country. It's a story you will only see on CNN. Now back to more of IN THE MONEY.

CAFFERTY: Earlier we were talking about Henry Paulson a guy who was plucked from the corner office at Goldman Sachs and tapped to be the next secretary of the treasury. He's one of the highest paid CEOs on Wall Street. Those guys make a ton of bucks. We tell you what he's making and our next guest says we're better off not knowing these things.

Jeffrey Pfeffer says keeping those numbers private might curb out of control the CEO compensation. He's the Thomas Deed second professor of Organizational Behavior in the Graduate School of Business at Stanford University. His business card measures two feet by three feet. Nice to have you with us Jeffrey. Welcome.

JEFFREY PFEFFER, STANFORD UNIVERSITY: Thank you, it's nice to be here.

CAFFERTY: So if I'm a stockholder, why shouldn't I know what the guy in the corner office is taking home?

PFEFFER: Well, you can know what they are taking home. I'm not really calling for complete nondisclosure. But the more we talk about these things and the more public and more public attention there is, the higher the salaries are going to go, and that's because people compare themselves to other people. And, you know, people, everybody wants to believe that they are above average and that they are, you know, doing as good a job as the next person, so the more I know about what you're making, the more I want to make at least as much as you do or more.

WESTHOVEN: I'm going to take a line from Warren Buffet, who said that CEO pay is ridiculously out of line with performance. So, help me out here, because right now, I am not buying your premise. I'm feeling like you think if we all stick our heads in the sand like ostriches, the problem will just go away. Will it?

PFEFFER: Well, I don't think the problem is going to go away. Let me respond in two ways. First of all, if you recall about ten years ago, there was more disclosure about the size of option grants. Because the theory was if people knew how much executives were getting from stock options, those option grants would go down and the evidence is that has had no effect. If anything, this setoff an arms race in option grants and now we're about to set off an arms race with respect to retirement benefits and deferred compensation. So there's no evidence that making this public is going to have any effect on holding this stuff down.

Now, by the way, on the CEO pay for performance thing, if you want to get rid of these rocketing CEO salaries, we should stop treating CEOs like rock stars. In every market in which there's been a free agency, and that goes from baseball players to investment bankers, what the free-agency system has done is just pushed the entire level of salaries up. And that's what you've seen with CEOs.

Take for instance, Bob Nardelli when he left GE, there was all the frenzy about where he was he going to go and who would be able to attract him, now Home Depot is unhappy, or at least some of the shareholders are unhappy.

WASTLER: Professor I would be willing to bet that Ken Lay and Dennis Kawalaski (ph) really wished that people didn't know as much about their compensation as people ended up doing. It seems to me that when you shine a light on these things, and especially in their case, which they are going to be held up as an example for the rest of Corporate America, it makes sense to look at how much they are being paid, what their motivations are and basically whether or not they are working in the interests of shareholders.

And, you know, when you say well the last ten years proves nothing, that last ten years is when they've been backdating stock-option grants, when they've been getting the gross payments. It's a limited data set that you're talking about here. Please, disabuse me of my prejudice here.

PFEFFER: Well, let me try one more thing. None of this seems to be working, but I'll try one more. If you compare -- so let's ask the following question. What salaries tend to be relatively secret in the U.S? And that, of course, is salaries paid to rank-and-file people. There are some people, including TV producer who I know who says that when they went to work in their organization, they actually had to sign something that said that they couldn't even talk about their salaries to their co-workers. So salaries for rank-and-file are generally secret. At Stanford University my salary is not known to anybody, and in fact, in general, if you disclose everybody's salaries, it would cause a riot.

CEO salaries are public. Now, what do we see in we see rank-and-file salaries not going up very much, and we see CEO salaries soaring. So you have to tell me why public disclosure is going to make -- is going to make salaries go up less when, in fact, the evidence is completely the opposite to that.

CAFFERTY: Theoretically, how difficult is it with a publicly traded company to keep this stuff out of the mainstream media and out of the water-cooler chat? If executive "a" is running corporation "b" and their stock goes from 10 to 50, people are going to be wanting to hire this guy, and when he makes a move, the move gets press coverage. I mean, isn't there a bit of a problem in keeping the lid on this stuff?

PFEFFER: There is certainly somewhat of a problem. But if you recall, 30or 40 or 50 years ago, most CEOs were promoted from within their organizations.


PFEFFER: There wasn't the CEO as rock star thing. Every news media organization and every newspaper wasn't running publicity about this, even though salaries were -- and bonuses, at least, were still relatively public, so it's the issue of attention. And part of it is what is salient and what is people talk about becomes what people focus on, so the more we focus on, this the more CEOs are going to say, wow, I'm not making as much as this other person. I am, by the way, worth as much as that.

And, by the way, that goes for boards of directors as well. If you're a member of a board of directors, you cannot say, well, you know, I got a CEO who is in the, you know, bottom 10 percent of all CEOs, so, therefore, I must, you know, pay him in the bottom -- or her in the bottom 10 percent. You're going to say I'm a board member of a great company. I've done a great job; my CEO is at least as good as the median, which is why you get this continually escalating salary.

CAFFERTY: It's the old joke, ours is cuter.

PFEFFER: That's exactly right.

CAFFERTY: Jeffrey it's nice to have you with us. Thank you.

WESTHOVEN: Are you going to let us know just before we let you go, how much you make?


WESTHOVEN: No, OK. I'm not either. Thank you very much.

Lots more to come here on IN THE MONEY.

Up next pay more, get less? Find out why airline travel is projected to be tougher on passengers this summer.

And it's like a DNA test for a soccer goal. See how high-tech TV has delivered a new take on a disputed win from decades ago. British people are up in arms.


WASTLER: Do the math and it looks like a summer of discontent for airline travelers. Fares are up and more people are flying and planes are more crowded than ever. It adds up to serious turbulence. Joining us now is an aviation consultant Darryl Jenkins, he's former director of the Aviation Institute at George Washington University. Darryl welcome.


WASTLER: Would you think that airlines, because all you hear is about, oh, you know, labor costs are too high, we don't have enough traffic or anything, they would be begging for business and doing anything they can to attract travelers and yet we're being warned that this summer is going to be crummy. Can you tell us what's going into the crummy ness and their attitude?

JENKINS: Sure. This is one of the biggest traffic summers we've ever had. Not only is it a big traffic summer but it's also a summer of very high fares. So anytime you have a robust economy, you get a lot of people traveling and you also have the ability to raise your fares quite a bit. The last couple of years the airlines have take an large number of planes out of the fleet, so that means that every time you go on a plane there will be more people on that plane than we've had in previous years.

WESTHOVEN: So this really, you know, stinks if you're a flier. Planes are supposed to be the most crowded since World War II, but it sounds like it's great for the airlines. Are they finally getting smart?

JENKINS: Well certainly reducing capacity in the last two years has been a smart move on their part. The problem right now is the $70 bucks a barrel for oil. So as long as jet fuel remains as high as it is, we're going to see the airlines sputtering along. They'll probably make a little bit of money this year or lose a little bit of money, those who are very well managed like Southwest will continue as always to make money.

CAFFERTY: Are we going to see the demise of any of the big airlines in the near term in your opinion?

JENKINS: Well, certainly there are some of them who are struggling. Delta Airlines in the last five years has showed absolutely, positively no brilliance whatsoever. Worst management I've ever seen at Delta, and Delta during the 1990s was the best-managed airlines that we ever had.

CAFFERTY: What happened to them?

JENKINS: Well I always blame these things on management.

CAFFERTY: No I mean where did they go wrong? Because they used to be the top dogs in the meat house?

JENKINS: They were the top dogs in the meat house. Certainly it was my favorite airline to fly as well. In the last couple of years they lost their way and forgot what their product was, and they were more interested in trying to push Airtran and Jetblue out of business than trying to make money themselves. Everything they did including song lost money. Last month to give them their due, they did make a little bit of money on operations. I hope it's a turning point for them, but certainly long term this is the one I'm most worried about.

WASTLER: Darryl, what else could be happening in the sector? Are we likely to see some mergers or more bankruptcies beyond, you mentioned Delta, but there are some others that are teetering on the edge, too. What kind of shake-up are we going to see? Is it just a sector of just Jetblue and Southwest?

JENKINS: I don't believe that ever. But certainly if the price of jet fuel continues to be up above $70, we're going to see more bankruptcies. Probably even those who have been n bankruptcies already could. I think as soon as we see any level flying whatsoever, you'll probably see a spatter of mergers. There have been some like Glen Tilton at United Airlines who has been talking about this for years, Doug Parker at America West did the merger with U.S. Airways just to make himself more attractive bride for a merger if consolidation does in fact take place.

WESTHOVEN: What do you make of a lot of the airline management blaming what's going on with unions, the high cost of unions for their troubles and a lot of the continued strike we've been seeing there? Is this just part of the continuing decline of unions that we're going to see? Are they going to have to take it or is there any hope for those workers?

JENKINS: Well certainly in the last, since 9/11, the unions have really taken major hits one after another. So I don't think you can blame the cost of labor on their current problems. It's certainly jet fuel. Southwest Airlines, which is making money, also has the highest-paid pilots in the industry right now and they also have the lowest unit costs, so it shows that their management is just more superior over the others.

CAFFERTY: What about this 2 million additional people that are supposed to be flying this summer? Where is that coming from?

JENKINS: Well robust economy is an airlines' best friend, anytime people have money in their pockets, they want to fly. It's one of the facts of life that people do enjoy traveling and when they do have money they will in fact, travel.

WASTLER: Darryl, we only got a few seconds left. But if you are one of the 2 million going to be flying this summer, what should you do, what tips do you have for them?

JENKINS: Get to the airport very early and go with excessive amounts of patience, especially in June when we have the most thunderstorms. We'll have a lot of delays. I think one of the things that may make the delay picture even worst, is the FAA's terrible job in hire new controllers.

We'll see a large number of controllers retiring in the next couple years. Remember, after Patco went on strike, they fired everybody, and they hired a large bunch and those people were all retirement age now and the FAA is not adequately staffed to maintain operations.

WASTLER: Well, Darryl thanks so much for joining us. We appreciate you giving us your thoughts.

JENKINS: My pleasure.

WASTLER: Darryl Jenkins, aviation consultant.

The World Cup begins in Germany this week, and while you may not have your Tivo tied up for the month-long tournament, and many of the other parts of the world, this is a big thing! Take England, for example. Football fans still brag about their 1966 win over West Germany. But the third goal in that victory has been disputed for years. Now, new technology may finally put that controversy to rest. Jim Boulden reports.

(BEGIN VIDEOTAPE) JIM BOULDEN, CNN CORRESPONDENT (voice over): It was English football's finest moment. Winning the 1966 World Cup at home and beating West Germany in the final. The game is still famous for England's controversial third goal in extra time.

UNIDENTIFIED MALE: Jeff Hurst, cool and collected, had the ball in the net.

BOULDEN: Now, thanks to technology, Germany has a legitimate claim to say, "It was the goal that never was."

UNIDENTIFIED MALE: And goal it was.

BOULDEN: These shots of the ball on the goal line were enhanced by high-definition television. A sharply clearer picture is the main selling point for HD technology, which is just hitting the U.K TV markets. So British broadcaster ITN said, why not advertise the advances of HD by investigating England's most controversial World Cup goal? They dug through the vaults at Pinewood Studios to find the original 35-millimeter color film. Then converted it to HD. It may be hard for you to judge watching on a conventional screen.

UNIDENTIFIED MALE: It's pretty clear that the ball hasn't -- certainly hasn't completely crossed the line so.

BOULDEN: But ITN's Chris O'Hearn is convinced.

CHRIS O'HEARN, ITN: The law is that the ball has to have completely crossed the line to be a goal, and what is clear from here is at best it's on the line, and that's not a goal.

BOULDEN: So does that make you a traitor?

O'HEARN: Well, had the result's there, and a lot of people would point out that actually England won 4-2, so, you know, there was another goal.

BOULDEN: Some football fans think it's time for the introduction of technology to second-guess controversial referee's decisions. The game's governing body has experimented with a ball that contains a microchip so show whether a goal has been scored, but rejected the idea for the upcoming World Cup. HD clarity may make it harder for officials to ignore instant replays much longer.

You may not hear many calls for replays in England, though. The English obsess about the 1966 World Cup because, well, it's the only thing they've won before or since. The Germans have raised the trophy three times.

Jim Boulden, CNN, London.


CAFFERTY: Coming up next on IN THE MONEY, the geek for fire. The Best Buy Geek Squad is getting a tryout on another retailer starting this week. We'll take a look at who will benefit most. It's time to hear from you as we read some of your e-mails from the past week, and you can send us e-mail right now if you would like we're at Be kind.


CAFFERTY: The Geek Squad is coming to get you. And we're not talking about CNN tech support. They don't show up at all. I'm just kidding. This is the real Geek Squad made famous by the folks at Best Buy and now another big chain is enlisting their services and Allen Wastler has more on that as well as our "Fun Site of the Week." What is a Geek Squad?

WASTLER: Do you ever go to Best Buy their Jack?


WASTLER: Well if you were to go to Best Buy to fix your iPod.

CAFFERTY: I don't own one, that's why I don't go to those places.

WASTLER: There's a help counter there, and you can go up and bring practically anything to them, computer, an iPod, and all sorts of stuff.

WESTHOVEN: And they are wearing nerdy glasses and black pants.

CAFFERTY: They are the Geek Squad.

WASTLER: They'll fix it for you for a price. It's been very successful for Best Buy, and it's a Best buy franchise and now they are starting a pilot program in ten stores for Office Depot to have Geek Squads setups as well to see if maybe they can't extend the business on another bit farther. This could be the tip of the iceberg for a whole new kind of sector there, estimated at a $30 billion industry.


WASTLER: Because when we talk about, you know, all these people getting more iPods all these people getting more computers and stuff, a lot of people can't make the stuff work. An interesting little side note, rock stars are turning into a big market for these types of people. They have their own personal fix-it assistant, who, you know, hey, man, I can't hear my music, and can you fix it for me? And these people are, oh, sure, I'll fix it for you, Mr. Jagger, and they do it. So it's an emerging market when you talk about business opportunities in America, boom. There you go.

WESTHOVEN: Aside from wealthy people who might need this, I know single mom's whose use this kind of stuff.

CAFFERTY: I know a guy who runs a weekly business show who could use them, too.

What's the "Fun Site of the Week?"

WASTLER: We are looking for ways to amuse ourselves, and this is a good one and a salute to the presidency. We take it very seriously here.

This guy's good.

CAFFERTY: He is good. I wonder how many schools he got kicked out of?

WASTLER: They are looking for ways to cut back on the budget.

CAFFERTY: That's enough. That's enough. Jennifer, save us from this.

WESTHOVEN: Well, all right.

Not everyone lands their dream job like the hand artist. Some people don't get it at age 22, 32, even 42. It took Barbara Waskover until she was 72 to finally make it as a model. Her story is this week's "Life after Work. "


UNIDENTIFIED FEMALE: Too low, good. Right down there, that's nice.

WESTHOVEN (voice over): Barbara Waskover may be turning 73, but she just landed her dream job, modeling.

UNIDENTIFIED FEMALE: That's darling. That's darling. Hang on.

BARBARA WASKOVER, MODEL: I had raised children, worked in the business that was basically for my husband and myself, it wasn't really 100 percent what I wanted and I thought, well, now is a time for me to do what I wanted to do.

WESTHOVEN: She was discovered after appearing in a news segment on baby boomers. Suddenly, agents were knocking. This shoot is for Getty Images. It wants stock photos of people posing as grandmothers and granddaughters. When not modeling, Barbara lifts more weight than women half her age.

WASKOVER: Well I used to lift 130, but I've cut back.

WESTHOVEN: This grandmother is also a grandmaster of the one-armed pushup.

WASKOVER: I just love life. The best thing about modeling is the fun of it all. And the people that I meet and truthfully, when you've been a mother and you've focused on everybody else, the mere fact that everybody focuses on you, hey, that's really good to be the greatest thing. I've never had this. So I never really thought it could be this much fun.


WESTHOVEN: Next week on "Life after Work" we'll introduce you to Tom, the 70-year-old Californian has run more than 150 marathons and he's also out inspiring others in his retirement community to follow his lead. And we'll be right back with more IN THE MONEY. Stay with us.


CAFFERTY: Time now to read your answers to our question about whether you think corporations are acting more ethically in the wake of the Enron scandal and the conviction of those two worms that ran the place.

Tim in Cadillac, Michigan wrote this, "I don't believe it. Too many American corporations operate solely for the benefit of their directors. The rank and file shareholders, employees and customers be dammed. CEO salaries are still going sky high and these guys still think they're gods."

Richard in Alabama, "Everybody buckles up when they approach the car wreck, but once the scene fades the bad habits come back. Corporate America is no different. I suspect they'll go back to bad behavior once the Enron story fades."

And Joe wrote, "The corporations' watchdogs are in the government and the government is also still corrupt. Until we get government reform, we won't get corporate reform."

Here is next weeks email question of the week. Is the threat of terrorism in other parts of the country as great as it is in New York and Washington? Send your thoughts to And we invite you to visit our show page at, which is where you will find the address of our "Fun Site of the Week."

Thanks for joining us for this week's edition of the program. Thanks to "Headline News" correspondent Jennifer Westhoven and my old pal managing editor Allen Wastler. Hope to see you back here next week Serwer returns next week I think. We are on Saturday's at 1:00 and Sunday at 3:00 Eastern Time. Hope to see you then, until then enjoy the rest of your weekend.