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President Obama, 'Things Are Better, but the Hard Times are Not Over'; Glimmers of Hope: An America Teeming With Industry, Commerce, New Energy and Discoveries; Marijuana & Mexican Violence
Aired April 14, 2009 - 12:00 ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
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BARACK OBAMA, PRESIDENT OF THE UNITED STATES: And, by the way, will allow us to restructure inappropriate bonus contracts, without creating a perception the government can just change compensation rules on a whim.
And this is also why we're moving aggressively to unfreeze markets and jumpstart lending outside the banking system, where more then half of all lending in America actually takes place.
To do this, we've started a program that will increase guarantees for small-business loans and unlock the market for auto loans and student loans and to stabilize the housing market we've launched a plan that will save up to -- up to 4 million responsible homeowners from foreclosure and help many millions more to refinance their homes.
In a few weeks, we will also reassess the state of Chrysler and General Motors, two companies with an important place in our history and a large footprint in our economy, but two car companies that have also fallen on hard times.
Late last year, the companies were given transitional loans by the previous administration to tide them over as they worked to develop viable business plans. Unfortunately, the plans they developed fell short, so we've given them some additional time to work these complex issues through.
And by the way, we owed that not to the executives whose bad bets contributed to the weakening of their companies, but to the hundreds of thousands of workers whose livelihoods hang in the balance. Entire towns, entire communities, entire states are profoundly impacted by what happens in the auto industry.
Now, it is our firming hope that in the coming weeks Chrysler will find a viable partner, GM will develop a business plan that will put it on a path to profitability without endless support from American taxpayers.
In the meantime, we're taking steps to spur demand for American cars and provide relief for autoworkers and their communities. And we will continue to reaffirm this nation's commitment to a 21st-century American auto industry that creates new jobs and builds the fuel-efficient cars and trucks that will carry us toward a clean energy future. Finally, to coordinate a global response to this global recession, I went to the meeting of the G-20 nations in London the other week. Each nation has undertaken significant stimulus to spur demand. All agreed to pursue tougher regulatory reforms.
We also agreed to triple the lending capacity of the International Monetary Fund -- which, as many of you know, is an international financial institution supported by all the major economies -- so that they can provide direct assistance to developing nations and vulnerable populations.
That's not just charity. Because America's success depends on whether other nations have the ability to buy what we sell, it's important that we pay attention to these emerging markets.
We pledged to avoid the trade barriers and protectionism that hurts us all in the end. And we decided to meet again in the fall to gauge our progress and take additional steps if necessary.
So that's where we've been. That's what we've done in the last three months.
All these actions -- the Recovery Act, the bank capitalization program, the housing plan, the strengthening of the non-bank credit market, the auto plan, and our work at the G-20 -- all have been necessary pieces of the recovery puzzle.
They've been designed to increase aggregate demand, to get credit flowing again to families and businesses, and to help families and businesses ride out the storm.
And taken together, these actions are starting to generate signs of economic progress.
Because of our recovery plan, schools and police departments have canceled planned layoffs, clean energy companies and construction companies are rehiring workers to build everything from energy- efficient windows to new roads and highways.
Our housing plans helped lead to a spike in the number of homeowners who are taking advantage of historically low mortgage rates by refinancing, which is like putting a $2,000 tax cut in your pocket.
Our program to support the market for auto loans and student loans has started to unfreeze this market and securitize more of this lending in the last few weeks.
And small businesses are seeing a jump in loan activity for the first time in months.
This is all welcome and encouraging news.
It does not mean that hard times are over. 2009 will continue to be a difficult year for America's economy, and, obviously, most difficult for those who've lost their jobs.
The severity of this recession will cause more job loss, more foreclosures, and more pain before it ends. The market will continue to rise and fall. Credit is still not flowing nearly as easily as it should. The process for restructuring AIG and the auto companies will involve difficult and sometimes unpopular choices. We are not finished yet on that front.
And all of this means that there's much more work to be done.
But all this also means that you can continue to expect an unrelenting, unyielding, day-by-day effort from this administration to fight for economic recovery on all fronts.
But, even as we continue to clear away the wreckage and address the immediate crisis, it is my firm belief that our next task, beginning now, is to make sure such a crisis never happens again.
Even as...
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Even as we clean up balance sheets and get credit flowing again, even as people start spending and businesses start hiring -- all that's going to happen -- we have to realize that we cannot go back to the bubble-and-bust economy that led us to this point.
It is simply not sustainable to have a 21st-century financial system that is governed by 20th-century rules and regulations that allowed the recklessness of a few to threaten the entire economy.
It is not sustainable to have an economy where in one year 40 percent of our corporate profits came from a financial sector that was based on inflated home prices, maxed-out credit cards, overleveraged banks and overvalued assets.
It's not sustainable to have an economy where the incomes of the top 1 percent have skyrocketed while the typical working household has seen their incomes decline by nearly $2,000.
That's just not a sustainable model for long-term prosperity.
For even as too many were out there chasing ever-bigger bonuses and short-term profits over the last decade, we continued to neglect the long-term threats to our prosperity: the crushing burden that the rising cost of health care is placing on families and businesses, the failure of our education system to prepare our workers for a new age, the progress that other nations are making on clean-energy industries and technologies while we -- we remain addicted to foreign oil, the growing debt that we're passing on to our children.
Even after we emerge from the current recession, these challenges will still represent major obstacles that stand in the way of our success in the 21st century. So we've got a lot of work to do.
Now, there's a parable at the end of the Sermon on the Mount that tells the story of two men.
The first built his house on a pile of sand, and it was soon destroyed when a storm hit. But the second is known as the wise man, for when "the rain descended, and the floods came, and the winds blew, and beat upon that house, it fell not: for it was founded upon a rock." "It was founded upon a rock."
We cannot rebuild this economy on the same pile of sand. We must build our house upon a rock. We must lay a new foundation for growth and prosperity: a foundation that will move us from an era of borrow and spend to one where we save and invest; where we consume less at home and send more exports abroad.
It's a foundation built upon five pillars that will grow our economy and make this new century another American century.
Number one, new rules for Wall Street that will reward drive and innovation, not reckless risk-taking.
Number two...
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Number two, new investments in education that will make our workforce more skilled and competitive.
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Number three, new investments in renewable energy and technology that will create new jobs and new industries.
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Number four, new investments in health care that will cut costs for families and businesses.
And, number five, new savings in our federal budget that will bring down the debt for future generations.
Now, that...
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... that's the new foundation we must build. That's our house built upon a rock. That must be our future -- and my administration's policies are designed to achieve that future.
Let me talk about each of these steps in turn.
The first step we will take to build this foundation is to reform the outdated rules and regulations that allowed this crisis to happen in the first place. It is time to lay down tough new rules of the road for Wall Street to ensure that we never find ourselves here again.
Just as after the Great Depression new rules were designed for banks to avoid the kind of reckless speculation that helped to create the Depression, so we've got to make adaptations to our current set of rules, create rules that punish shortcuts and abuse, rules that tie someone's pay to their actual job performance -- a novel concept...
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... rules that protect typical American families when they buy a home and get a credit card or invest in a 401(k).
So we've already begun to work with Congress to shape this comprehensive new regulatory framework, and I expect a bill to arrive on my desk for my signature before the year is out.
The second pillar of this new foundation is an education system that finally prepares our workers for a 21st-century economy.
You know, in the 20th century, the G.I. Bill helped send a generation to college. For decades, we led the world in educational attainment, and as a consequence we led the world in economic growth.
But in this new economy, we've come to trail the world's leaders in graduation rates, in educational achievement, in the production of scientists and engineers.
That's why we have set a goal that will greatly enhance our ability to compete for the high-wage, high-tech jobs of the 21st century.
By 2020, America will once again have the highest proportion of college graduates in the world. That is the goal that we have set and we intend to meet.
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Now, to meet that goal, we have to start early. So we've already dramatically expanded early childhood education. We are...
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We are investing in innovative programs that have proven to help schools meet high standards and close achievement gaps.
We're creating new rewards that tie teachers' performance and new pathways for advancement.
And I've asked every American to commit to at least one year or more of higher education or career training. And we've provided tax credits to make a college education more affordable for every single American; even those who attend Georgetown.
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And, by the way, one of the changes that I would like to see and I'm going to be talking about in weeks to come is once again seeing our best and our brightest commit themselves to making things.
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Engineers, scientists, innovators.
For so long, we have placed at the top of our pinnacle folks who can manipulate numbers and engage in complex financial calculations. And that's good. We need some of that.
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But you know what we can really use is some more scientists and some more engineers who are building and making things that we can export to other countries.
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Now, the third pillar of this new foundation is to harness the renewable energy that can create millions of new jobs and new industries.
We all know that the country that harnesses this new energy source will lead the 21st century. Yet we've allowed other countries to outpace us on this race to the future.
I don't know about you, but I do not accept a future where the jobs and industries of tomorrow take root beyond our borders. I think it's time for America to lead again.
So the investments we made in the Recovery Act will double this nation's supply of renewable energy in the next three years. And we are...
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And we are putting Americans to work, making our homes and buildings more efficient so that we can save billions on our energy bills and grow our economy at the same time.
Now, the only way, though, that we can truly spark the transformation that's needed is through a gradual, market-based cap on carbon pollution...
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... so that clean energy is a profitable kind of energy.
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There are those who have argued that we shouldn't attempt, we shouldn't even be thinking, we shouldn't even be talking about such a transition until the economy recovers. And they are right that we have to take into account the costs of transition.
Transitioning to a clean energy economy will not be easy. But we can no longer delay putting a framework for a clean energy economy in place. That needs to be done now.
If businesses...
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If businesses and entrepreneurs know today that we are closing this carbon pollution loophole, they'll start investing in clean energy now. And pretty soon, we'll see more companies constructing solar panels and workers building wind turbines and car companies manufacturing fuel-efficient cars.
Investors will put some money into a new energy technology, and a small business will open to start selling it.
That's how we can grow this economy, enhance our security, and protect our planet at the same time.
Now, the fourth pillar of our new foundation is a 21st-century health care system where families, businesses and government budgets aren't dragged down by skyrocketing insurance premiums.
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One and a half million Americans could lose their homes this year just because of a medical crisis. Major American corporations are struggling to compete with their foreign counterparts. Small businesses are closing their doors.
We can't allow the cost of health care to continue strangling our economy.
And that's why our Recovery Act will invest in electronic health records, with strict privacy standards, that can save money and lives, and reduce medical error. That's why we've made the largest investment ever in preventive care, because that's one of the best ways to keep costs under control.
And included in the budget that just passed Congress is a historic commitment to reform that will finally make quality health care affordable for every American.
So...
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So I'm looking forward in the next few months to working with both parties in Congress to make this reform a reality. We can get this done, and we have to get it done.
And fixing our health care system will require resources. It's not going to be free. But in my budget, we've made a commitment to fully pay for reform without increasing the deficit. And we've identified specific savings that will make the health care system more efficient and reduce costs for us all.
In fact, we have taken an unprecedented effort to find this kind of savings in every corner of the budget, because the final pillar in building our new foundation is restoring fiscal discipline once this economy recovers.
Already, we've identified $2 trillion in deficit reductions over the next decade. We need to do more, but we've already done that.
We've announced procurement reform that will greatly reduce no- bid contracts and save the government $40 billion. We need to do more, but that's an important start.
Secretary Gates recently announced a courageous set of reforms that go right at the hundreds of billions of dollars in waste and cost overruns that have bloated our defense budget without making America safer. We need to do more, but that proposal by Secretary Gates is right on target.
We will end education programs that don't work. We will root out waste and fraud and abuse in our Medicare program.
Altogether, this budget will reduce discretionary spending for domestic programs as a share of the economy by more than 10 percent over the next decade, to the lowest level we've seen since we began keeping records nearly half a century ago.
And as we continue to go through the federal budget line by line, we will be announcing additional savings, secured by eliminating and consolidating programs that we don't need so that we can make room for the things we do need. That's what we're doing now.
Of course I realize that for some, this isn't enough. I know there's a criticism out there that my administration has been spending with reckless abandon, pushing a liberal social agenda while mortgaging our children's future. You've heard the argument.
Well, let me make three points.
First, as I said earlier, the worst thing that we could do in a recession this severe is to try to cut government spending at the same time as families and businesses around the world are cutting back on their spending.
So as serious as our deficit and debt problems are -- and they are very serious -- major efforts to deal with them have to focus on the medium and long-term budget picture, not on the short term, and that's exactly what we've done.
Second, in tackling the deficit issue, we simply cannot sacrifice the long-term investments that we so desperately need to generate long-term prosperity. That's the argument that some have -- some critics have made.
"Well, you're proposing health care reform. You shouldn't be doing that. You're proposing education investments. You shouldn't be doing that. That adds to the deficit."
Look, just as a cash-strapped family may cut back on all kinds of luxuries but will still insist on spending money to get their children through college, will refuse to have their kids drop out of college and go to work in some fast-food place, even though that might bring in some income in the short term, because they're thinking about the long term, so we as a country have to make current choices with an eye to the future.
If we don't...
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If we don't invest now in renewable energy, if we don't invest now in a skilled workforce, if we don't invest now in a more affordable health care system, this economy simply won't grow at the pace it needs to in two or five or 10 years down the road.
If we don't lay this new foundation now, it won't be long before we're right back where we are today. And I can assure you that chronically slow growth will not help our long-term budget situation.
That's the second point.
Third point, the problem with our deficit and debt is not new. It has been building dramatically over the past eight years, largely because big tax cuts, combined with increased spending on two wars and the increased costs of government health care programs had pushed it ever upwards.
This structural gap in our budget -- between the amount of money that's coming in and the amount of money that's going out -- will only get worse as the baby boomers age and will, in fact, lead us down an unsustainable path.
But let's not kid ourselves and suggest that we can solve this problem by trimming a few earmarks or cutting the budget for the National Endowment for the Arts. That's just not true.
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Along with defense and interest on the national debt, the biggest cost drivers in our budget are entitlement programs like Medicare, Medicaid and Social Security, all of which get more and more expensive every year.
So if we want to get serious about fiscal discipline -- and I do -- then we're going to not only have to trim waste out of our discretionary budget -- which we've already begun -- we will also have to get serious about entitlement reform.
Now, nothing will be more important to this goal then passing health care reform that brings down costs across the system, including in Medicare and Medicaid.
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So make no mistake: Health care reform is entitlement reform.
That's not just my opinion. That was the conclusion of a wide range of participants at the Fiscal Responsibility Summit that we held at the White House in February. And that's one of the reasons why I firmly believe we need to get health care reform done this year. (APPLAUSE)
Now, once we tackle rising health care costs, we must also work to put Social Security on firmer footing. It's time for both parties to come together and find a way to keep the promise of a sound retirement for future generations.
And we should restore a sense of fairness and balance to our tax code, including by shutting down corporate loopholes and ensuring that everyone pays what they owe.
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Now, all of these efforts will require tough choices. All of these efforts will require compromise. But the difficulties can't serve as an excuse for inaction, not anymore.
Which brings me to one final point that I'd like to make today.
I've talked a lot about the fundamental weaknesses in our economy that led us to this day of reckoning, but we also arrived here because of a fundamental weakness in our political system.
For too long too many in Washington put off hard decisions for some other time on some other day. There's been a tendency to spend a lot of time scoring political points instead of rolling up sleeves to solve real problems.
There's also an impatience that characterizes this town, an attention span that has only grown shorter with the 24-hour news cycle, that insists on instant gratification in the form of immediate results or higher poll numbers. When a crisis hits, there is all too often a lurch from shock to trance...
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... with everyone responding to the tempest of the moment until the furor has died down, the media coverage has moved on to something else, instead of confronting the major challenges that will shape our future in a sustained and focused way.
This can't be one of those times: the challenges are too great; the stakes are too high.
I know how difficult it is for members of Congress in both parties to grapple with some of the big decisions we face right now. I'd love if these problems were coming at us one at a time instead of five or six at a time. It's more than most Congresses and most presidents have to deal with in a lifetime.
But we have been called to govern in extraordinary times. And that requires an extraordinary sense of responsibility to ourselves, to the men and women who sent us here, to the many generations whose lives will be affected for good or for ill because of what we do here.
There is no doubt that times are still tough. By no means are we out of the woods just yet.
But from where we stand, for the very first time, we're beginning to see glimmers of hope. And beyond that, way off in the distance, we can see a vision of an America's future that is far different than our troubled economic past.
It's an America teeming with new industry and commerce, humming with new energy and discoveries that light the world once more; a place where anyone from anywhere with a good idea or the will to work can live the dream they've heard so much about.
That is the house upon the rock: proud and sturdy, unwavering in the face of the greatest storms.
And we will not finish it in one year; we will not finish it in many.
But if we use this moment to lay that new foundation, if we come together and begin the hard work of rebuilding, if we persist and persevere against the disappointments and setbacks that will surely lie ahead, then I have no doubt that this house will stand and the dream of our founders will live on in our time.
Thank you.
God bless you. God bless the United States of America.
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Thank you. Thank you.
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TONY HARRIS, CNN ANCHOR: President Obama saying things are getting better but the hard times are not over. The president just wrapping up a speech at Georgetown University. He pointed to encouraging signs the economy is improving, but he also sounded a note of caution.
Boy, a lot of people to talk to on this.
The president, again, trying to strike that balance between highlighting progress on the economy and pointing out the challenges ahead.
For more on the president's speech, let's bring in our White House correspondent, Suzanne Malveaux.
And Suzanne, maybe this is the line -- "We are not out of the woods just yet, but we are seeing glimmers of hope." That statement seemingly representing the balance the president was trying to strike with this speech.
SUZANNE MALVEAUX, CNN WHITE HOUSE CORRESPONDENT: Absolutely, Tony. And one of the things that he's trying to do as well is check in with the American people and tell them he's paying attention to this issue, to this problem, despite the fact that we saw him last week overseas in Europe, that he's going to be off to Mexico and Trinidad in the days to come, this is all linked, and there are some signs that he says that some of these programs that he has been fighting for, that he's been pushing for before he even became president, that they may be turning a corner here in terms of job creation, construction projects, things like that.
I want you to take a listen to a key line that we picked out of the speech that was particularly important.
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OBAMA: There is no doubt that times are still tough. By no means are we out of the woods just yet.
But from where we stand, for the very first time, we're beginning to see glimmers of hope. And beyond that, way off in the distance, we can see a vision of an America's future that is far different than our troubled economic past.
It's an America teeming with new industry and commerce, humming with new energy and discoveries that light the world once more; a place where anyone from anywhere with a good idea or the will to work can live the dream they've heard so much about.
(END VIDEO CLIP)
MALVEAUX: And Tony, the reason why there's such optimism here that he's trying to project is that his agenda, his very ambitious agenda, a lot of it yet to be fulfilled. He's got a lot of time, of course. But a lot on his plate.
So he talked about health care reform. He talked about the insecurity of the auto industry. Whether or not they'll need more dollars to actually buffer those industries.
He talked about AIG and the fact that so many of these things, not popular among American taxpayers, not popular among Congress, but that these are the kinds of industries and programs that perhaps will require more money, more legislation, and so that is why the president is saying, look, we believe we're seeing some progress here but we've got a lot, a lot of places to go.
HARRIS: Yes. Yes. Our White House correspondent Suzanne Malveaux for us.
Suzanne, thank you.
Let's get into some of the specifics of the positive signs the president pointed to and the areas of concern he still has about the economy. Christine Romans and Susan Lisovicz, of our CNN Money Team, live from New York.
Ladies, the progress that the president points to -- of thawing in markets for auto sales, student loans, and a spike in mortgage refinancing -- is that progress - and, Susan, let me come to you first -- is that progress supported by the numbers you're following as you punch the time clock every day?
SUSAN LISOVICZ, CNN BUSINESS CORRESPONDENT: Well, Tony, and I found it appropriate that the president said right at the outset that he is three months into the presidency. Well, that is a quarter. It's his first quarter. And we're in quarterly earnings season. And he's giving his report card. And he's saying that he's seeing progress.
Yes, he specifically mentioned the housing sector with the spike in mortgage refinancings and he talked about how credit is starting to free up with student loans and auto loans and small businesses, which are really so important to this economy. But he did talk about the perils that await. And he said, we will see more job loss. We'll see more foreclosures. We will see more pain.
And just to that point, just today, two companies, Hallmark saying it's going to let go of 6 to 8 percent of its workforce. And Deere, which is, of course, in the construction earth moving business, so to speak, says it's going to let go of hundreds more and that is not the first round for Deere. And retail sales also down more than 1 percent in March. Much worse than expected.
HARRIS: Hey, Christine, jump in here where you will here.
CHRISTINE ROMANS, CNN BUSINESS CORRESPONDENT: Sure.
HARRIS: I'll tee it up with this. Do you -- do the people that you speak with, in doing your work every day, give the president's policies any credit for turning things around to the extent that we can describe what we've seen as encouraging signs?
ROMANS: Look, the people that I talk to every day say there's so much money, Tony, that's about ready to be unleashed or has begun to be unleashed in the America economy that it's going to have to start working somewhere. And maybe that's what those glimmers you're seeing.
But the president was very clear here. He said, Tony, this is going to take many, many years. And he talked about a weary public and I think he was speaking directly to a weary public. A public that is really tired of this bad economic situation. But also he mentioned sort of an impatient 24-hour news cycle as well.
Here's the president trying to tell people what I'm trying to do here is going to take many years, but I'm going to be straight with you and tell you that we've got a lot of work to do and we have to seize this moment to do these big picture -- the five pillars, Tony. That was the only part where he got a lot of applause. Did you hear that? The applause for the five pillars.
HARRIS: Yes, I did.
ROMANS: He's taking this economic weakness, as you and I have spoken about many times, and he's talking about new rules for Wall Street, investment in education, in energy, in infrastructure and the like and seizing on this, as people have been calling it, this grace period of a weak economy to make some painful choices for the future.
HARRIS: Yes.
Ladies, thank you.
LISOVICZ: You know what, Tony, can I just add one thing?
HARRIS: You got one more thought? Yes, yes, yes.
LISOVICZ: Yes, I just want to add one thing.
HARRIS: (INAUDIBLE) to you, Susan.
LISOVICZ: Because, you know, Alcoa reported its earnings last week. And it took a half a billion dollars in red ink for the quarter. But here's the sign that this stimulus is starting to work or expectations that it worked. Alcoa make everything, you know, aluminum that's used. Everything for soda cans to airplanes.
HARRIS: Yes.
LISOVICZ: It said, going forward, that it expects demand for aluminum to increase. Why is that? Because of the emphasis on infrastructure in stimulus. So that's the kind of thing Christine was just talking about. Yes, it's not going to happen overnight, but it could take time. And that's one of the things, one of the first companies reporting earnings is talking about. Yes, it expects aluminum demand to increase as a result of the stimulus program.
HARRIS: Ladies, thank you so much. We have a lot of voices to hear from before we get to the top of the hour and CNN NEWSROOM with Kyra Phillips.
Ladies, thank you.
Let's get an opposing point of view. Republican Congressman Ron Paul represents the 14th district in Texas. He sought the GOP nomination last year that eventually went to John McCain. And Congressman Paul is on the beeper line with us.
Congressman, thanks for your time. We appreciate it.
REP. RON PAUL (R), TEXAS, (via telephone): Thank you. Good to be with you.
HARRIS: Hey, congressman, do you give the president's policies credit for thawing markets, for auto sales and student loans? What do you think about what the president said in his speech?
PAUL: Well, I don't think a whole lot of it. I think we had a new deal and a fair deal, but I think this is going to be a bad deal and not help at all.
I don't blame him for the problems. I blame him for the prolongation of this because he was very explicit by saying that government shouldn't cut back on spending. He wants to massively increase this spending and, therefore, he's going to prolong it.
But this was a long time in building. This took 25, 30 years to build the bubble. And he -- everything he talked about is re- inflating the bubble and buying up bad assets and then later on we'll deal with discipline. But he had mentioned that individuals don't want to spend money because they're doing the correct thing. They're pulling back. They're saving. And that's what an individual's supposed to.
But a country shouldn't be any different. When you spend beyond your means and have too much debt and too much borrowing, that's what you have to do. And his statement that if government didn't do this, it would prolong the depression, he's absolutely wrong on that because that is the understanding of the depression. It was prolonged because of the intervention of Hoover and Roosevelt.
HARRIS: OK. Congressman, let me jump in and ask you this. Do you believe the markets would have cleared away the wreckage, to use the president's words here, in our economy without the $787 billion stimulus package?
PAUL: Well, it wouldn't be completely done. But this way it's going to go on for years and years and they're going to destroy the dollar. I've used the analogy about a sound foundation. But the foundation should be on a sound dollar and we don't. He never even mentioned the Federal Reserve.
The only time he talked about money was, you know, if we create $1 and put it in the bank, we're going to get $7 or $8. He's preaching inflation. And that's how you destroy the value of the dollar. That's actually the way you liquidate debt too. Unfortunately, that is a tragic way of liquidating debt because you punish those foolish people who are out saving money and planning toward their future. They want to take care of themselves. So we preach a deliberate policy of ruining the people who act fiscally irresponsible.
HARRIS: Gotcha. Gotcha. So you clearly are suggesting that a different set of policies would have shortened the duration of this downturn. Give me a couple of areas, just two, that's all I have time for, I'm sorry, but give me two policies that you would have pursued differently from the president that might have curtailed the length and depth of this recession.
PAUL: OK. Maybe General Motors went bankrupt in one year ago and somebody bought up the bad assets so they could get their house in order or something. That would have been over and done with and we'd be back buying their cars by now. Because right now we're not going to buy their cars because we don't know what the government's going to do to GM. So the same way with AIG.
HARRIS: Did you suggest that to President Bush? Hey, GM's in trouble, let them go under?
PAUL: No. But that's why I said that Obama isn't to blame for all of this. This has been a long time coming. And that's what we have to understand. It's canzian (ph) interventions, it's economics that we're pursuing. They went awry and now all we're doing is accelerating it. It leads to a business/government partnership which trends toward fascism. It is, in fact (ph), socialism. But when you get in bed together and businesses are owned and regulated and controlled, that's a fascist type of socialism.
HARRIS: Well, can I say something to you. You know what, very few people will remember the context in which you use that word fascism. Is that responsible to toss that word around?
PAUL: Well, that is if you don't understand an economic fascism versus military fascism. And I'm not referring to military fascism. I'm strictly talking economic terms and there is an economic fascism where government and business are partners. And when businesses get into trouble, they love it.
Is it the little guy that's going to have the tax rallies tomorrow? No. It's not the big guys. The big guys are getting all the benefits. The little guys are having the rebellion because they haven't received anything because they're sick of this type of partnership where the big guys get bailed out when times are good they get low taxes and they make billions. But, no, I think you have to understand there's a difference between economic fascism and military fascism.
HARRIS: Gotcha. Well, I wanted to at least give you an opportunity to expand on that statement.
Congressman Paul, thanks for your time. We appreciate it.
PAUL: Thank you.
HARRIS: And new trouble off the coast of Somalia. More ships hijacked by pirates.
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HARRIS: All right. Just received word, breaking news into CNN, that ousted governor -- Illinois Governor Rod Blagojevich has pleaded not guilty to federal corruption charges. As you know, the former governor is charged with trying to auction off the Senate seat of then Senator Barack Obama. He did not make a statement before the plea, but told reporters and spectators when he entered the courthouse.
And these are pictures, correct me if I'm wrong here, of the former governor entering the courthouse where he told people standing by, reporters, obviously, that he is innocent of every single accusation.
All right. So just moments ago, former Illinois Governor Rod Blagojevich entering a not guilty plea to federal corruption charges. We'll continue to follow developments in this story, of course, for you here in the CNN NEWSROOM.
We are not out of the woods yet, but President Obama says we are beginning to see glimmers of hope in the economy in a speech that just wrapped up. He pointed to the recovery plan, a spike in mortgage refinancing and signs the credit markets are starting to thaw.
(BEGIN VIDEO CLIP)
OBAMA: This is all welcome and encouraging news.
It does not mean that hard times are over. 2009 will continue to be a difficult year for America's economy, and, obviously, most difficult for those who've lost their jobs.
The severity of this recession will cause more job loss, more foreclosures, and more pain before it ends. The market will continue to rise and fall.
(END VIDEO CLIP)
HARRIS: All right. Let's bring back our distinguished economists to get their take on the president's speech. Thomas "Danny" Boston is a professor of economics at Georgia Tech, and Rajeev Dhawan is an associate professor and director of the Economic Forecasting Center at Georgia State University.
Gentlemen, thanks again for your time. Thanks for staying with us.
First of all, Danny, to you.
The line seems to be, there are glimmers of hope, but we are not out of the woods yet. What did you think of the president's comments and did he strike the balance that we were talking about would be necessary in this speech?
PROF. THOMAS "DANNY" BOSTON, GEORGIA TECH: Yes, you know, I think he did. I was surprised how (INAUDIBLE) the speech in a couple of way. One is, the comprehensiveness of it, first of all. And then, secondly, the focus on how we got there. And then more also the focus on where we're going in the future, as opposed to what is actually going on.
HARRIS: You didn't think he would be that comprehensive?
BOSTON: Well, I didn't think he would be so comprehensive . . .
HARRIS: Because it didn't feel like a reset. Here's where we've been. Here's what we've done. And here's the rocky road still ahead for us.
BOSTON: Right. Right. Right. And I thought he would spend more time focusing on the actual accomplishments, because here we were an economy that was in free-fall and all of the things that he pointed to, he's actually done. And those things have stabilized.
Now there are some varying signs. We thought that we would turn around when we saw the news that came out in the last day or so. But nonetheless, things are better than they were. And I thought that would be emphasized more.
HARRIS: Professor Dhawan, what do you think? What did you think of the president's speech?
PROF. RAJEEV DHAWAN, GEORGIA STATE UNIVERSITY: I like the first part of the speech. It was like, if I have to give a speech to my students about what caused the program and how we came out of it . . .
HARRIS: You mean a lecture.
DHAWAN: Yes, a lecture speech, whatever. I would use that with some, you know, some minor changes, take out the populism a little bit. But it was really good.
And this tells me that when January and February when I was hearing from him, he was saying, my spending programs can do everything. I don't have to worry that much about the banking side. It was kind of like number two.
But today he came out and he reconfirmed my fears (INAUDIBLE) from 15 years ago, that if you do not clean up the banking system first, you're not going to have the growth (ph). So we are now at the bottom of the canyon. We've fallen off the cliff. And we're going to build a bridge over this river that we've encountered. The material is there.
But the people that's going to build it and hold it together, the glue, is the bankers. We need them. And there's been a fight so far. And we were demonizing them for right or wrong reasons. But now we need their help to build a bridge to cross it before the growth can begin.
So that, to me, was great. I mean I've spent five years and 200 pages writing that thing. He did that very quickly. So it was great to see that.
HARRIS: So, in some respects, he hit it out of the park for you?
DHAWAN: Yes, on the first out (ph).
HARRIS: OK. On the first third of the speech.
All right. Professor Boston, let's come back. You know what I'm interested in asking you. You were here and you gave us your 90 seconds RX for this economy.
We're going to put up a bullet points -- a couple of bullet points from your suggestions as to how to turn this economy around. First of all you said half of this stimulus package should be spent on infrastructure.
First of all, is the president following some of your advice with the stimulus package because clearly where we have to go now is to get the jobs market going again. We're talking about 8.5 unemployment -- 8.5 percent, African-American unemployment at 13.3. Hispanics at 11.4.
BOSTON: Actually you've done a better job than what I recommended. HARRIS: OK. OK.
BOSTON: Yes, I think that the way -- the comprehensiveness of what he's done in terms of the economic stimulus package is good. And it's interesting because Professor Dhawan and I actually disagree. I like the end of the speech better than the first part where he was talking about his vision for the future. And I think that the stimulus package actually positions us to grow more in the future.
But I think he's doing the kinds of things that we need to have done. With this stipulation. One, there are only so many things that can be done.
HARRIS: Yes.
BOSTON: He has mined (ph) the monetary policies as much. He's done as much on the fiscal side. And now it's just a question of having the populist to be patient and allow those things to work through.
HARRIS: On the issue of patience, I know there's a rip roaring debate about whether or not the president is attempting to do too much. Critics suggest that he may be trying to do too much, too soon. But I've got two professors here, so let me turn it this way.
Professor Dhawan, let me start with you.
The president was really talking about the progress made over the first quarter. Three months. So what kind of grade would you give him three months in?
DHAWAN: I would not blame any of the problems to him in the last three months. This thing -- this was a wreck in motion. And he has put forward the agenda of building that bridge and he is realizing he needs some more stuff and he's coming out with that. So give him some time.
HARRIS: Well, I'm not going to let you dodge the question. I mean, he's three months in and, you know, this is time for a quarterly report. And you're professor and I want a grade. You know, he's instituted a lot of policy and programs.
DHAWAN: I would say give it like a B or B plus at the most.
BOSTON: I'd give him an A.
HARRIS: you'd give him an A?
BOSTON: And here's why. I like -- the line that struck me in his presentation was unrelenting, unyielding, day-to-day focus on managing the economy. AND I think that's what he's done more than anything. And I think that, more than anything, is why we're beginning to see some glimmer of confidence and hope in the kind of elements that are necessary to turn this around.
HARRIS: You guys are so smart. Come back and see us early and often.
Professor Dhawan, thank you.
DHAWAN: Thank you.
HARRIS: Professor Boston, thank you as well.
BOSTON: My pleasure.
HARRIS: All right. The president makes the case that a recovery is flickering to life. Is his scenario too hot, too cold or just right? We will ask ordinary Americans.
(COMMERCIAL BREAK)
HARRIS: Let's get you to our severe weather expert. Chad Myers is in the severe weather center for us.
(WEATHER REPORT)
HARRIS: More CNN NEWSROOM in just a moment.
(COMMERCIAL BREAK)
HARRIS: It is estimated marijuana cost taxpayers $181 billion a year in health care and lost productivity. But could it also be costing lives across the border? CNN's Jeanne Meserve reports.
(BEGIN VIDEOTAPE)
JEANNE MESERVE, CNN HOMELAND SECURITY CORRESPONDENT (voice-over): An estimated 15 million Americans use marijuana every month. It is illegal but an integral part of American culture.
(BEGIN VIDEO CLIP, FROM YOUTUBE COLUMBIA PICTURES)
UNIDENTIFIED MALE: This is like the apex of the vortex of joint engineering.
(END VIDEO CLIP)
MESERVE: Marijuana use is viewed so casually that when the movie "Pineapple Express" introduced a facetious innovation called the cross joint, scores of people thought nothing of posting copycat videos on YouTube. But many do not see the humor in marijuana. They say its sale is underwriting and promoting cartel violence.
JOHN WALTERS, FORMER DIRECTOR, OFFICE OF NATIONAL DRUG CONTROL POLICY: You're funding the same people who are beheading, who are killing innocent women and children, who are threatening the rule of law in Mexico.
MESERVE: The federal government estimates U.S. marijuana sales generate 61 percent of the Mexican cartels' income, $8.5 billion, more than double what they make from cocaine.
PETER REUTER, UNIVERSITY OF MARYLAND: The numbers are incredible.
MESERVE: Economist Peter Reuter insists cocaine is the cartel's cash cow.
REUTER: The argument that marijuana use fuels some terrorism and violence in the rest of the world is pretty strained. Most of the marijuana that's smoked in this country is probably domestically produced.
MESERVE: But some of that is grown by the Mexican drug gangs deep in U.S. national forests to avoid law enforcement. Though this change last month resulted in the interdiction of two tons of marijuana, officials say enforcement actions like this aren't enough to stop the brutality in Mexico.
CLINTON: Obviously, our demand for drugs is what motivates these drug gangs. I mean, if they didn't think they were going to make a bunch of money across the border, they'd go into another line of work.
MESERVE: But will drawing the connection to cartel violence persuade marijuana smokers to stop? Not this one.
JONATHAN, MARIJUANA USER: When I buy gas for my car, I'm supporting horrible regimes, repressive regimes around the world. I don't support those regimes, but I do want gas for my car.
MESERVE (on camera): There is vehement disagreement over whether legalizing or decriminalizing marijuana would have an impact on the cartels and their brutal tactics. But in the meantime, statistics show marijuana use among U.S. teenagers is declining. Experts say it just isn't as fashionable as it once was.
Jeanne Meserve, CNN, Washington.
(END VIDEOTAPE)
HARRIS: We continue our look at addiction with Dr. Sanjay Gupta. Could an addict's brain hold the key to their addiction? That's this Saturday and Sunday night at 8:00 Eastern.
We are pushing forward now with the next hour of CNN NEWSROOM and Kyra Phillips.
KYRA PHILLIPS, CNN ANCHOR: Tony, thanks so much.
Recession, to recovery, to prosperity. That's the plan. This hour, progress cited by the president through the eyes of some economic casualties. People who need jobs.
Pushing forward to tax day. Credits and deductions you may not know about. We go one-on-one with the head tax man.
And if you've downsize your ride, you've upsized your risk. When it comes to vehicle safety, size matters.
Hello, everyone. I'm Kyra Phillips, live from the CNN world headquarters in Atlanta. You're live in the CNN NEWSROOM.
Well, folks, we're on our way, but we're not there yet. You heard it here live, President Obama taking stock of the stimulus, the bailouts, the housing plan, the credit plan, all his plans to put the recession
