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Deficit: Erasing the Red Ink; After the Earthquake; Where Stimulus Dollars are Going
Aired January 26, 2010 - 12:00 ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
TONY HARRIS, CNN ANCHOR: All right. Time now for your top-of- the-hour reset.
I'm Tony Harris in the CNN NEWSROOM.
It is noon in Washington, where President Obama faces the cold facts of hard economic times. He is expected to call for a freeze on some federal spending.
Two weeks after the catastrophic earthquake in Haiti, survivors finally catch their breath and ask, what now?
And in Marietta, Georgia, a small business that got off the ground during the downturn is thriving now. I asked the owner of Yummy Spoonfuls how she did it.
Let's get started.
Erasing some of the red ink from the massive federal budget deficit, President Obama is calling for spending freeze to help rein in the deficit. But the idea is getting a chilly reception from some in the president's own party.
Details now from White House Correspondent Suzanne Malveaux.
SUZANNE MALVEAUX, CNN WHITE HOUSE CORRESPONDENT: Hey, Tony.
The president is proposing to freeze discretionary spending for three years in the tune of $250 billion of savings. That is what the president believes. It does not include departments like Homeland Security, Defense or Veteran Affairs. It doesn't even include those non-discretionary big entitlement programs like Medicare and Medicaid. But a lot of people very concerned about these cuts, about these freezes.
We've heard from Democrats, as well as Republicans. We've even heard from some economists as well, it's a controversial idea. The former labor secretary under President Clinton, Robert Reich, said now is not the time to freeze spending.
I want you to take a listen.
(BEGIN VIDEO CLIP)
ROBERT REICH, FMR. LABOR SECRETARY: I don't think it makes much sense, Larry, and I'll tell you why. The government, under the circumstances we now face, is the purchaser of last resort.
Consumers are not buying. They're still scared, for good reason. Businesses are not investing very much. They don't want to invest if there are not consumers out there, so government has got to spend. This is something a lot of people have difficulty understanding.
(END VIDEO CLIP)
MALVEAUX: Now, Tony, some Republicans are saying these freezes are not enough. It doesn't deal with Medicare or Medicaid or Social Security, those big entitlement programs, not far enough. Some Democrats are saying, look, they're quite worried about social programs that would be cut, whether it's education or health care, quite worried about that.
And why would this White House be doing this at this time? Well, essentially, it does bring the president closer to the right, if you will, to more align him with those fiscally conservative Democrats, those Independents that he's starting to lose, as well as some Republicans. And the administration needs to get closer to that, because if the president is going to get anything done, he's got to do it in a bipartisan way.
That is what the president acknowledged when he talked about the health care reform failure, the fact that they were not able to get both sides. And here's how he explained it to Diane Sawyer.
(BEGIN VIDEO CLIP)
BARACK OBAMA, PRESIDENT OF THE UNITED STATES: We had to make so many decisions quickly in a very difficult set of circumstances that, after a while, we started worrying more about getting the policy right than getting the process right.
(END VIDEO CLIP)
MALVEAUX: So, not surprisingly, Tony, the president is going to be emphasizing ideas that appeal to both Democrats, as well as Republicans. Really, the thrust of the State of the Union Address for tomorrow is that he is going to be trying to appeal to middle class families, to Americans who are really caught up in this economic crisis -- Tony.
HARRIS: All right, Suzanne. Appreciate it. Thank you.
And tune in to CNN and the best political team on television for President Obama's first State of the Union speech. Our primetime coverage begins at 8:00 Eastern tomorrow night.
And all this week CNN is focusing on the president's biggest economic initiative so far, the $787 billion stimulus plan. The stimulus project digs into how the money is being spent, who it is helping, and who may be abusing the program.
In just a couple of minutes, we will check in with Josh Levs at the Stimulus Desk to find out what they're working on this hour. And you can also find in-depth coverage of this special initiative on our Web site. Just go to CNN.com/stimulusproject for details on how the program is and isn't working.
The Obama administration assigned new posting new rules of the road today for truck and bus drivers. Regulations announced today ban texting while behind the wheel of a big rig or a bus. Fines range up to $2,750. The Department of Transportation is also writing rules to ban the use of computers mounted on dashboards in trucks or buses.
Now, nearly two weeks after the earthquake hit, Haiti's president says he will live in a tent. The quake damaged his palace and House and left about a million other people without shelter. He says 200,000 tents are desperately needed before the rainy season starts.
The international community has pledged more than $2 million to help Haiti rebuild. The country estimates it needs $3 billion.
The death toll also growing. The Haitian government now estimates about 150,000 people were killed. Others say it is closer to 200,000 people dead.
Survivors are making do with what little they have and hoping for better days, but they're not sure when or if those days will come.
CNN's Ivan Watson has that.
(BEGIN VIDEOTAPE)
IVAN WATSON, CNN CORRESPONDENT (voice-over): Armed with a single hammer, Michele Clervil (ph) takes apart what's left of his House. He and his family are lucky to be alive.
(on camera): This is amazing. There were six people in this building and they all made it out alive, without any injuries.
(voice-over): Nearly two weeks after the quake, the question hundreds of thousands of people like Michele (ph) are asking is, now what? So far, he's salvaged a speaker and a couple of plastic buckets.
(on camera): He says he doesn't know what he's going to do tomorrow or the next week. Everything he owned was in this House, and he doesn't see a future for Haiti right now.
(voice-over): Michele (ph) is a 53-year-old realtor who rented out rooms in the House he built 20 years ago to help pay for his kids' college education. Now he has no choice but to live here, in this sprawling camp located on what used to be a golf course.
He gets lost in this maze of shelters trying to find his family. Then he stumbles across his daughter, 17-year-old Saldomia. They take us to their new home, a makeshift tent which houses two families.
MICHELE CLERVIL (ph), RESIDENT: Very hot, you know?
WATSON: The air here is hot, fetid and flush with mosquitoes. The only place to cook is in the corner.
SALDOMIA CLERVIL, 17 YEARS OLD: It's very difficult to see, but to live in here.
WATSON (on camera): Do you get sad here?
S. CLERVIL: What did you say?
WATSON: Sad?
S. CLERVIL: Very, very, sad. Very. Very.
WATSON (voice-over): It's a blow to the pride of a father accustomed to being able to feed his family -- hopeless and confused in a place with no future.
Ivan Watson, CNN, Port-au-Prince.
(END VIDEOTAPE)
HARRIS: Not everyone is relying on stimulus money to climb out of the recession. I am going to get an update from a woman who used her retirement savings, cleaned out her 401(k), to start her own business and is watching it grow.
First, though, our "Random Moment" in 90 seconds.
(COMMERCIAL BREAK)
HARRIS: OK. A Kansas high school basketball coach makes the shot in our "Random Moment of the Day." Here's the catch -- he did it blindfolded. Have a look.
(BEGIN VIDEO CLIP)
UNIDENTIFIED MALE: Shoot.
(END VIDEO CLIP)
HARRIS: Can you believe it? Students told the coach he'd get tickets to the NCAA Final Four if he made the basket. He made the shot and got punk'd. The tickets didn't exist.
Oh, it gets better. When a reporter showed up to do a story on the coach's shot, watch what happened.
(BEGIN VIDEO CLIP)
ROB LOW, REPORTER: What was supposed to be a prank on a teacher instead backfired on the students, a blindfolded half-court shot that is now the talk of campus and beyond.
(END VIDEO CLIP)
HARRIS: Are you kidding me?
There you have it, our "Random Moment of the Day."
Did that really happen?
(COMMERCIAL BREAK)
HARRIS: Ah, the stimulus program is designed to help jump-start the economy, all with your tax dollars. And we're talking about billions of dollars here.
Josh Levs is over at our Stimulus Desk.
First, Josh, let's do this -- let's break down those numbers again for everyone.
JOSH LEVS, CNN CORRESPONDENT: Yes, Tony. I'm calling this part the "Tony Harris Special."
HARRIS: Yes. Tell everyone why.
LEVS: Because you like the numbers. You're like me, you like the numbers. Some people are like, eh, enough with the numbers, I'm not an advocate.
HARRIS: May I here?
LEVS: Yes.
HARRIS: I just think we need to reset -- we need to reset some of the turf we visited already this week and then move forward.
LEVS: Yes. We're going to give you all the big picture on why because there's so many figures out there.
Let's just go to this first graphic you have here, which is the big picture for how much was in that. Now, it was $787 billion. Let's stare at that for a second.
That's what passed last February, the American Recovery and Reinvestment Act, what's called, in General, the stimulus. So that's the big figure, Tony.
But what a lot of people don't realize and we touched on yesterday is that the majority of that is actually not for those projects. That's not what the majority is for. The majority, a lot of it, went to tax breaks and other kinds of benefits.
HARRIS: Yes.
LEVS: Some went to food stamps, some went to Social Security. And what we have over here now is this -- let me open this up for you.
This is how it actually shakes out. All right. Take a look here.
Two hundred and seventy-five billion of it was put aside for projects, those shovel-ready projects we keep hearing about. And of that, this is the key figure, $158 billion have already been funded.
So, Tony, when we hear about all these numbers, that's the key right there. You have $158 billion that has already gone to projects, including those shovel-ready projects we kept hearing about. And that's what we're looking into.
HARRIS: Terrific.
LEVS: So, when we have these massive binders we're looking at this week, we're trying to figure out, $158 billion already doled out, where did it go? How did it get out there? And the total number of projects funded that we're looking at, Tony, is this right here, the 56,986.
Basically, 57,000 projects that have already received funding. So you still have more that will be funded from that same pile.
HARRIS: Right.
LEVS: But, Tony, this is what we're looking at, hence the big picture with the numbers. See?
HARRIS: That is wonderful. And it's worth reminding folks again -- and we'll do that a little later in the hour -- where we were a year ago and where we were in September, when Lehman Brothers collapsed and everyone was -- you couldn't find an economist who said a stimulus package was a bad idea. It was very difficult to find that person.
So, now here we are, $787 billion down the road, and I know folks have a lot of thoughts about it. And there was a lot of opposition to it.
You wanted to jump in?
LEVS: Yes. Well, let me -- for example, I'm going to you one example of exactly the kind of thing you're talking about.
Now, keep in mind, so much of this money has gone to various types of all different projects out there. So, what we've just been looking at are some examples that might be striking for any given reason.
And one we did take a look at -- you can take this -- involves fish. And you can take a look at the graphic. We have one for you here.
Basically, it's a project in Ohio that involved $63,000. And what happened was, for defraying the cost of fish food -- food -- is my voice changing? Am I 12 again? Of fish food for 15 fish farmers who are saying, you know what? Fish food has gotten really expensive.
They have their own private fish farms, and they got $63,000 of that funding. So we talked about that, just one example where some of this money went. And I now have something new for you on this today, which is a statement from the USDA. Let's take a look at that, what they sent to us specifically about this.
They say in their quote, "Farmers who raise fish as a crop suffered severe losses relating to high-feed input costs in the last couple of years. This aid is keeping these producers at work."
So, Tony, I'm going to go for a work here, but this is the basic idea. What we're talking to you about here are these kinds of projects that are ending up getting some kinds of funding from that giant pile. And a lot of them are in that range, tens of thousands of dollars, somewhere around there.
And if you see over here -- I'm going to end over here -- the big screen, which has the other big number that we're going to be showing you, which is how much of that funding so far CNN is taking a look at.
HARRIS: Yes.
LEVS: So we're doing pretty well here. I mean, take a look. It's only Tuesday -- $1.9 billion, basically, is what we here have reviewed, and we continue to update all this information for you on CNN.com/stimulus.
HARRIS: Awesome. Perfect. Josh, appreciate it. Thank you, sir.
LEVS: I knew you'd like that.
HARRIS: And tomorrow on "AMERICAN MORNING," can a $5.5 million resort town restoration project be a good use of stimulus aid? Find out why woman is grateful the government is spending the money.
And tonight on "CAMPBELL BROWN," at 8:00 p.m. Eastern Time, is the stimulus working for average Americans? An exclusive interview with Earl Devaney. He is the man President Obama picked to oversee the stimulus plan.
And tonight at 10:00, "AC 360" investigates why stimulus money is being wasted on unnecessary road signs.
"The Stimulus Project," all this week, only on CNN and CNN.com/stimulus.
One small businesswoman creating her own form of stimulus. Cameroon immigrant Agatha Achindu is the owner of Yummy Spoonfuls, an organic baby food company. And it is working big-time.
There she is at work. Let's do this...
Agatha, let's begin when we met you about six months ago.
(BEGIN VIDEOTAPE)
HARRIS (voice-over): After years of working as a manager for a software company, she gave up a six-figure job in 2006 to launch Yummy Spoonfuls, an organic baby food company. Three years later, her company, which operates out of this rented commercial kitchen in Marietta, Georgia, was recently rated the number one baby food by readers of the parenting magazine "Cookie."
GEORGES ACHINDU, AGATHA'S HUSBAND: Financially, it was a whole lot of sacrifice. I'm the only one with steady income in the family right now.
AGATHA ACHINDU, OWNER, YUMMY SPOONFULS: I took all our savings, cashed out our 401. Every dime that we had. And I asked him a couple of times, I'm like, "Are you sure? Because this might fail." He's like, "It's not going to fail."
HARRIS: Agatha pays herself a small salary. She does all the shopping. Buying organic produce at a farmers' market three days a week. She has a staff of six, including three women who help her cook the veggies and package the final product.
A. ACHINDU: Last year we weren't breaking even. We were just, you know, still gaining momentum. But now we don't need to dig into personal savings to support the business. The business supports itself.
(END VIDEOTAPE)
HARRIS: Wow.
Agatha, we're on television. You can't be talking yet.
Are you ready?
A. ACHINDU: Yes.
HARRIS: Are you with me?
A. ACHINDU: Yes, I am.
HARRIS: We're on television now.
Agatha's with me now to talk about her successful enterprise.
You're doing well now, aren't you?
A. ACHINDU: Yes, very well. Thank you.
HARRIS: OK. So, talk to me for a second here.
For a while there, look, you raided your finances, right?
A. ACHINDU: Yes.
HARRIS: You raided the 401(k).
A. ACHINDU: Yes.
HARRIS: You drove your husband to work 20 jobs?
A. ACHINDU: Yes.
HARRIS: Right? OK.
A. ACHINDU: Yes.
HARRIS: So you go from a business that is struggling to a business that is able to support itself.
A. ACHINDU: Yes.
HARRIS: And am I to understand you're now actually turning a bit of a profit?
A. ACHINDU: Yes, we are actually making a healthy profit.
HARRIS: You're making a healthy profit.
A. ACHINDU: Yes. Yes. My husband, good to say -- I'm so happy about this -- he doesn't have to work four jobs. He has just one job, which he is doing because he has a passion for it. So we're doing really good.
HARRIS: Now, I'm going to -- look, I'm going to push you on this. So, are you profitable over a couple of quarters? What are you talking about, the fourth quarter of last year, the first quarter so far? I mean, how long have you been profitable here?
A. ACHINDU: I would say for about six months.
HARRIS: You have been profitable for six months?
A. ACHINDU: Since we did CNN, I mean, that was the one thing. CNN gave us nationwide publicity. I couldn't have paid for that. So that was -- it's been healthy, it's been awesome.
HARRIS: Agatha, you didn't -- I wrote this out for you. Thanks to CNN NEWSROOM with Tony Harris -- I wrote it out for you.
So you're profitable now?
A. ACHINDU: Yes, we are.
HARRIS: OK. So how do you build the business now going forward?
And, tell me, are you Web-based? Do you have distribution that's putting you in stores now? Where are you?
A. ACHINDU: We are actually in Whole Foods in Georgia. We -- Dean and Deluca, in New York, picked our products.
We have -- Destiny Organic is our regional distributor. And we actually -- I'm so excited about this -- we actually got into our very first day care center, which is Field (ph) 360. It's the first certified eco-friendly day care in the United States. HARRIS: That's terrific.
A. ACHINDU: Yes. It's actually in Georgia.
HARRIS: That's terrific.
What about your relationship with the banks? Because one of the issues when you started is, will you be able to establish a line of credit to operate your business?
A. ACHINDU: We actually haven't gotten any money from the bank.
HARRIS: Excuse me?
A. ACHINDU: We haven't gotten any money from the bank. And to be quite honest, we haven't gone looking for money from the bank. But I think the bank can make it easier for small businesses to get loans, but we haven't gotten money from the bank.
HARRIS: Well, hang on a second here, Agatha. You're profitable for six months now.
A. ACHINDU: Yes.
HARRIS: OK? I'm not going to get into your business and ask you how much you're making, but you're profitable six months now. So you can make a good business case that you are a company on the come right now, and you're telling me that you don't have a relationship with a bank that will allow you to grow?
A. ACHINDU: Yes, we don't. If there is one thing that every business shares in common, I don't care regardless of size, it's funding.
HARRIS: Yes.
A. ACHINDU: So it's not as easy for small businesses to get some of all the stimulus money that's out there. It's not as user- friendly.
I mean, but we haven't gone. We have investors now just because we are a profitable company. We have investors who want to put their money, but we're also -- I know it's exciting because we have been so lean for so long.
HARRIS: Yes. But if you could get some help from a bank, you're in a position to grow your company?
A. ACHINDU: Oh, yes.
HARRIS: That's the point I want to make.
A. ACHINDU: Oh, yes. Oh, yes.
HARRIS: Congratulations.
A. ACHINDU: Thank you.
HARRIS: All right.
And because of CNN NEWSROOM with Tony Harris...
A. ACHINDU: Tony Harris. I mean, honestly, I really can't thank you enough, because you made all of the difference in my life, Tony Harris. I will say that. I honestly...
(CROSSTALK)
HARRIS: Oh, enough, enough, enough.
Good to see you, and our best to your husband.
A. ACHINDU: Thank you.
HARRIS: It's good to see you.
A. ACHINDU: Thank you. Thank you so much.
HARRIS: And congratulations on all your success. Bootstrapping that thing up.
Agatha, appreciate it.
A. ACHINDU: Thank you.
(NEWSBREAK)
(COMMERCIAL BREAK)
HARRIS: OK. One month after a young Muslim man tried to blow up a U.S.-bound jetliner on Christmas Day, the Obama administration still defending its decision to try the suspect in civilian court.
Here is White House senior adviser David Axelrod on CNN's "STATE OF THE UNION."
(BEGIN VIDEO CLIP)
DAVID AXELROD, WHITE HOUSE SR. ADVISER: Understand that hundreds of terrorists since 9/11 have been prosecuted in civilian or Article III courts. The Bush administration moved to try two as enemy combatants and then moved them back into civilian courts because it is easier and there are less obstacles to getting a conviction and putting them away.
(END VIDEO CLIP)
HARRIS: Let's do this -- let's check the facts here.
CNN executive producer Suzanne Simons is in charge of our new Fact Check Desk, and she joins me now.
Suzanne, is what the senior adviser to the president saying, David Axelrod, is it true here?
SUZANNE SIMONS, CNN EXECUTIVE PRODUCER: Would it surprise you to hear that hundreds have actually gone through trial?
HARRIS: No, not that they've gone through trial.
SIMONS: OK, that it's easier to do it in a civilian trial than a military tribunal?
HARRIS: Yes.
SIMONS: Actually, if you read the numbers alone, it is true. There have been, in fact, 174 convictions in civilian courts. Twenty- four people have been convicted of lesser crimes, not necessarily terrorism-related crimes.
And in the military commissions, guess how many convictions?
HARRIS: How many?
SIMONS: Three.
HARRIS: Three?
SIMONS: Three convictions.
Now, of course, when you get into the politics of it and you look at the broader issue, the military tribunals have been hung up. The Supreme Court said you're not legit, we're closing you down. Congress said no, no, it's OK, we're going to reinstate. And there's a political wrangling back and forth.
So there's the little bit of the back story on it. But, in fact, what he said is nearly true, just under 200.
HARRIS: OK. Tell us -- I'm really excited about this desk.
SIMONS: Yes.
HARRIS: You know, we were driving and pushing for this, and I'm glad it's up and running. But tell us about the work you'll be doing, offering us virtually every day.
SIMONS: It's like the coolest job at CNN, if you ask me, because, in fact, what we're doing is we're taking what the newsmakers are saying on the air and we're running the numbers.
HARRIS: Terrific.
SIMONS: You know, we're just saying, OK, we're going to hold you to your word. We're going to see if whether your statement is being a little politicized in your favor to forward your agenda, or whether, in fact, this is what the people need to know.
So we're hoping to come back and provide you with a lot of context on issues. But number one, to first and foremost get out, what do those numbers say? Do you anything to back it up?
HARRIS: Yes. And you're working with terrific people.
SIMONS: Yes.
HARRIS: Terrific people, so we look forward to the content just about daily here. And we'll get involved here.
SIMONS: And you're going to keep us busy, I have a feeling. Right?
HARRIS: Oh, yes. Suzanne, appreciate it. Thank you.
SIMONS: Thank you.
HARRIS: The first visible signs of President Obama's troop surge in Afghanistan are showing up on the ground. We're going to take you to Afghanistan and show you what exactly they're doing.
(COMMERCIAL BREAK)
HARRIS: Some of the first U.S. troops are arriving in Afghanistan as part of the new military strategy, and they're taking on a crucial mission -- training Afghan soldiers so American troops can begin withdrawing next year.
The story now from CNN's Atia Abawi.
(BEGIN VIDEOTAPE)
ATIA ABAWI, CNN CORRESPONDENT (voice-over): U.S. and Afghan troops storming a building, working together, not in battle, but in training.
This is where the first part of President Barack Obama's troop surge begins, training the Afghan National Army. A major challenge after years of lost time and resources as the U.S. focused on Iraq.
COL. GREGORY BREAZILE, U.S. MARINE CORPS: We, by far, under resourced this mission for years, OK? Afghanistan was an economy of force mission, versus Iraq where we had a large surge and it changed the dynamics in Iraq. Because of this economy of force mission, we didn't have enough boots on the ground to really change the dynamics here.
ABAWI: But that will soon change. By the end of January, they hope to have 850 U.S. trainers in 16 different locations throughout the country, including here at the Kabul Military Training Center where they are teaching Afghans hand-to-hand combat, how to monitor checkpoints, and how to handle a rifle among other necessary skills.
(on camera): Prior to the surge, there is only about one American trainee for every 200 Afghan soldiers. The goal is to decrease that ratio to 1 in every 40 in hope of improving the quality of the Afghan National Security forces so in the end they can take the lead role in securing their own land. (voice-over): The Afghans have various reasons to sign up, usually starting with financial. To boost recruitment, salaries have recently been raised, but that's not the only reason people are joining.
"We are serving our country and defending our nation," Abdul says. "By defending our land, we also get a small salary. That's why we do it. We are able to serve our country and serve our parents by sending our salaries to our families."
Abdul Fatah left his wife, parents and two-year-old son in the north. He admits he won't be a lifelong soldier, but for now he will serve in hopes that his son can live in a safer Afghanistan.
(END VIDEOTAPE)
HARRIS: All right, Atia Abawi joining us live now from Kabul.
Atia, great to see you, as always.
There's been a bombing near a U.S. base there in Kabul. What can you tell us?
ABAWI: Well, Tony, eight Afghans and two U.S. service members were injured when a suicide bomber detonated his car bomb outside of Camp Phoenix. Camp Phoenix is a U.S. base located just outside the capital city of Kabul. Luckily, there were no deaths involved in this blast thus far.
We are hearing that the Taliban are claiming responsibility. They told CNN that they killed 25 U.S. soldiers. But it should be noted that when the Taliban do take a claim for a responsibility, they do exaggerate that claim by drastic numbers -- Tony.
HARRIS: OK. And, Atia, let's pivot back to the troop story now. This news strategy calls for 134,000 troops by October. Where are we now?
ABAWI: Well, Tony, right now they say that they have a 102,000 Afghan soldiers within the Afghan National Army at the moment. And when we spoke to the U.S. forces on the ground training those Afghan soldiers, they say that they are looking at quality over quantity at the moment.
And what I was -- I was actually really impressed. These men had been at the training camp for about six weeks.
But saying that, it should also be noted, about a month ago, I went out with the Afghan National Army recruiters here on the streets of Kabul and it really did look to me at that point that it was more about quantity than quality.
But the U.S. forces, again, stating that they will not put quantity over the quality of the Afghan forces, although they do want the U.S. forces to eventually lead Afghanistan and have the Afghan National Army take the lead in protecting their own land. They want to make sure they do it the right way -- Tony.
HARRIS: OK. CNN's Atia Abawi for us in Kabul, Afghanistan. Atia, appreciate it. Thank you.
And getting out of the recession is no picnic. But what if some of your stimulus dollars were being spent on picnic tables?
(COMMERCIAL BREAK)
HARRIS: All right. At this time we want to draw your attention to cnnmoney.com and the terrific work as always being done by our Money team. If you want the latest financial news and analysis, cnnmoney.com is your one-stop site for the best work by the best financial team on television.
To the New York Stock Exchange now. Three hours into the trading day. And as you can see, we're in positive territory. We're up 62 points. The Nasdaq, the tech-heavy Nasdaq, is up 12 points. Want to get you to the stock exchange now and Susan Lisovicz.
Susan, I'm wondering about these numbers here. Today's consumer confidence numbers are out. Having much of an impact or we're getting some buying going on here?
SUSAN LISOVICZ, CNN BUSINESS CORRESPONDENT: That's right, Tony, and it did. I mean, we had kind of a shaky rally at the open. Consumer confidence came out about 30 minutes later and it rose for the third straight month and the rally gained traction. I mean what we do, how we feel is so vital to the pace of economic recovery.
Consumer confidence now up for the third straight month at the highest level in more than a year, Tony. But let's put it in perspective. The level is still about half of what's considered healthy. And so when you look at that and you think, wow, in the fourth quarter we're actually expecting economic growth when net-net we may see job growth as well. When we see interest rates at these record lows, you have to wonder what's going on, why consumer confidence remains so depressed.
And there are a lot of folks -- and we've talked about it before -- that think the legacy of this recession will live long in the mindset of consumers. That's not entirely a bad thing because, you know, some people spent beyond their means. But the fact is, it will affect the pace of economic recovery. This is no ordinary recession.
HARRIS: Boy, we are going to outline that vividly for everyone in just a couple of minutes. Susan, any market reaction to President Obama's spending freeze proposal, details that come tomorrow in the State of the Union Address?
LISOVICZ: No, we're really not seeing that. And, of course, you know, one reason why is because we'll get the details tomorrow night when the president delivers his first State of the Union Address. And what we are expecting is our folks in Washington tell us that the president will propose a three-year freeze on discretionary spending, which currently stands at $447 billion. So it would stay there. The projected savings would be $250 billion. But, you know, Tony, there's important exemptions like Department of Defense, Homeland Security, Veteran Affairs. And you can expect a ferocious push-back on popular things like education, health care spending and so on. I think you get more details and there may be more talk on Wall Street, but there's a lot of concern about the federal deficit, which is projected to balloon to $1.4 trillion.
HARRIS: Oh, yes. I can't even fathom those numbers. It's unbelievable.
Susan, appreciate it. Good to see you. Thank you.
LISOVICZ: Thanks, Tony.
HARRIS: And now to "The Stimulus Project." Our week-long look at where money from the stimulus plan is going and who it is helping, who may be abusing the program.
First, a lot of you watching are pretty skeptical when it comes to the stimulus. Our CNN/Opinion Research Corporation poll finds 21 percent of Americans think nearly all the stimulus money has been wasted, 24 percent say most of it has been wasted, 29 percent say half, and 25 percent say little to none.
But let's look back a bit. Before the stimulus was even proposed by President Obama, President Bush also had a stimulus plan. Remember those refund checks Americans got in the mail in the summer of 2008? That was a form of stimulus. Problem was, families, by and large, saved them. They didn't go out and stimulate the economy. And as the recession was hitting, most economists agreed the government needed to spend public money to get America out of this hole.
Check out these comments. Harvard economist Martin Feldstein said, quote, "while good tax policy can contribute to ending the recession, the heavy lifting will have to be done by increased government spending."
Chief economist at the IMF, the International Monetary Fund, said, quoting, "in normal times, we would be telling countries, please reduce your debt, but these are not normal times."
And Diane Swonk, the chief economist with Mesirow Financial, said, quote, "we are trying to save capitalism from itself. A completely laissez faire attitude doesn't work."
Comments from the really smart financial people about a year ago. So let's deal with the here and now. How about the current stimulus plan? Who is it helping? Who is abusing it? Our Josh Levs is digging into that with the help of our stimulus desk.
And, Josh, what have you uncovered this time around?
JOSH LEVS, CNN CORRESPONDENT: It's an interesting look back, Tony, just now, it was. HARRIS: Thank you, sir.
LEVS: I know a lot of people were saying and thinking. By the way, these huge binders represent the 57,000 projects that we're looking at. These are filled with information about projects that got funding from the stimulus. From all those hundreds of billions of dollars in the stimulus.
And this is just the tip of what we got here. This is more behind me. There's a team behind me here at the stimulus desk that's investigating all sorts of projects and it's not just here. CNN really is using global resources, our people all over the world, are looking into where that stimulus money has gone.
And right now, Tony, I've got something interesting for you. One thing that we found involves picnic tables that were purchased. And we have a graphic here to represent that. Basically more than $100,000 was given to this one manufacturing company in Cherokee, Iowa. And what they did was they furnished basically a different Army Corps of Engineers around the country with picnic tables and some other gear for parks, to spruce up some parks -- a few parks around the country. No jobs were created by that program at all.
And now the White House itself is saying they're not happy with how that money is spent. We're going to get more information now from one of our top researchers right here, Steve Brusk, who is a producer for us at the CNN stimulus desk.
So, Steve, talk to me. What is the White House now saying?
STEVE BRUSK, CNN STIMULUS DESK PRODUCER: The White House was pretty aggressive on trying to get the word out that they did not like this project. When Chris Welch (ph), our all platform journalist in the Midwest, was working on this story, he was contacted by the vice president's office that's overseeing the recovery money. And a spokesman, Liz Oxborn (ph) with the vice president's office, told him, and I'm quoting now...
LEVS: I think we have a graphic of this quote too. (INAUDIBLE) while you read it.
BRUSK: We I think we do. "This purchase, however small, was not in line with the high standards the administration has set for the recovery act and the Army Corps had been informed that similar purchases should not be made going forward with recovery money dollars."
LEVS: Really interesting, the White House saying to us, this won't happen again.
BRUSK: Yes, and it was interesting because while we were working on the story, they let it be known they were putting out a statement saying that they had notified the Army Corps not to do projects like this. This was not how they want the money spent. So they were pretty aggressive getting that word out.
LEVS: Yes. Thanks, Steve. Really interesting.
It's one example, Tony, of what we're finding when we look into all these projects that are all around here. And we do have the big board. You can actually see it over my shoulder. Let's zoom in on that.
HARRIS: Yes.
LEVS: This is the billions of dollars that CNN is looking into that have been spent as part of the stimulus. As I showed you earlier, $158 billion have already been awarded for all sorts of projects around the country. This is just another example we're taking a look at right now.
HARRIS: All right, Josh, appreciate it.
LEVS: You got it.
HARRIS: And, boy, the debate continues at our blog page. The stimulus project has you talking and sharing your ideas. Some of the comments from my blog.
Larry starts us off. "In my hometown, the stimulus has saved the job of my daughter's teacher and 44 other teachers. The stimulus is definitely working for me."
Cynthia says, "I am a Republican. What works for me? The "making work pay" credit, the "car buyer tax deduction," the "higher education tax credit," the "energy efficient home tax credit," are great programs designed to help put and keep hard-earned dollars in my pocket. Great work, Mr. President."
Rita adds, "Tony," wow, "you're right to remind us that a year ago, all the experts said we needed some sort of stimulus ASAP. The stimulus plan had an important stabilizing psychological effect at the time."
And this from Jennifer. "Throwing money at a broken system does not fix it, rather it makes the economy worse. Look at history, learn from history and don't repeat it."
Love this debate. All right, keep sending your thoughts. Just log on to cnn.com/tony.
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HARRIS: All right. Let's get you caught up on our top stories now.
President Obama plans to freeze federal discretionary spending. He hopes it will save $250 billion over three years. The president will announce the plan during his State of the Union Address tomorrow night. CNN primetime coverage begins at 8:00 Eastern, 5:00 Pacific.
Senate support for Federal Reserve Chairman Ben Bernanke is said to be growing. His four-year term ends Sunday. Senate Majority Leader Harry Reid says he expects a confirmation vote by the end of the week.
The Taliban is claiming responsibility for a suicide car bombing near a U.S. military base in Kabul. A spokesman for the terrorist group says the strike killed 25 soldiers and damaged three tanks. But Afghan authorities say up to five people were wounded.
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HARRIS: So what should you do if you can't pay your credit card bills? And how can you improve your credit score after filing bankruptcy? Two of the questions for personal finance editor Gerri Willis and her team of experts at "The Help Desk."
GERRI WILLIS, CNN PERSONAL FINANCE EDITOR: Time now for "The Help Desk," where we get you answers to your financial questions. Joining me this hour, Lynnette Khalfani-Cox is a personal finance author. Gary Schatsky is a financial planner and president of objectiveadvice.com.
Thanks guys for joining me. Let's go right to the first question.
Lisa from Florida asks, "my husband and I filed bankruptcy in 2008 and it was charged off at the end of January 2009. Our credit scores are 524 and 564. We have a car loan, a small student loan we are paying off, and one credit card with a $200 limit I got after bankruptcy." Good question here. Everybody asks it. What do we do to improve our credit scores?
GARY SCHATSKY, PRESIDENT, OBJECTIVEADVICE.COM: Well, you know, first of all, obviously, credit scores are quite low. The key is to keep on doing what you're doing, make the payments. Use the $200 line. Pay it off on a regular basis and you'll build it up. Obviously the worst thing you want to do is rack up more debt, but you're kind of limited with a credit score like that.
WILLIS: Yes, you want to aim for 700, 720, 750. A ways to go.
And another question, this one from Elizabeth who asks, "I can no longer make payments to my credit card companies, who I owe almost $23,000. I've called the banks and they are not willing to work with me, except to let me pay late for just three months. My credit score is still over 700. If I just stop paying versus actually filing bankruptcy, what will happen to me?"
Lynnette, this is a tricky one.
LYNNETTE KHALFANI-COX, PERSONAL FINANCE AUTHOR: Well, to me, it's actually not that tricky. It's pretty straight forward. This person has to kind of make like Howie Mandel and go deal, take the deal. Not no deal, take the deal.
The bank is actually saying, I will work with you. You know, these days it's tough to get any kind of negotiations done. If they're saying, we'll let you pay late for three months, that's a deal on the table. Go ahead and take it. The bankruptcy thing, forget about that. You're not in the position right now, at least not based on what they just said, that you need to file for bankruptcy. Obviously your credit rating has been intact since your FICO credit score is over 700.
Do the interim step. Take the deal right now and hope things will work out in the meantime by doing other things. Maybe you can add second income. Maybe you can, you know, cut your budget in other areas where you save money and can afford to pay those credit card bills. But take the deal that's on the table right now. Don't say no to that.
WILLIS: Great, guys. Thanks for that. Appreciate your help today.
"The Help Desk" is all about get you answers. Send me an e-mail to gerri@cnn.com or log on to cnn.com/helpdesk to see more of our financial solutions. You can also pick up the latest issue of "Money" magazine on newsstands now.
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HARRIS: When wounded soldiers return from Iraq and Afghanistan, they rely on the Department of Veterans Affairs for medical care. Some of them will benefit from government stimulus projects. As CNNMoney.com's Poppy Harlow reports, $1.4 billion was granted to the VA, changing the life of one Marine in an unexpected way.
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POPPY HARLOW, CNNMONEY.COM (voice-over): Richard Bennett loved his old job, serving in Iraq as a Marine.
RICHARD BENNETT, PRESIDENT, FIDELIS DESIGN AND CONSTRUCTION: You make a difference in the lives of thousands every day. Every second of every day.
HARLOW: Bennett would still be in the military, but he was severely injured when his unit came under attack in 2004. He came back to the U.S. and was forced to find a part-time job.
BENNETT: I was a security guard in Philadelphia for University of Pennsylvania.
HARLOW (on camera): And what are you now?
BENNETT: I'm president of a multimillion dollar construction company.
HARLOW: And how does that feel?
BENNETT: Amazing. Almost surreal.
HARLOW (voice-over): And it's thanks to this man, construction entrepreneur Craig Williams. He was looking to partner with a veteran to take advantage of a program that favors vets in bids for government contracts. He read an article about Bennett, and then the two met. In May, they launched Fidelis Design and Construction.
CRAIG WILLIAMS, V.P., FIDELIS DESIGN AND CONSTRUCTION: Even as an injured veteran, he was trying to find an opportunity to go back and join his comrades. That just said everything about his character.
HARLOW: Thanks to money from the Obama administration's stimulus program, Fidelis has had an impressive first year. Despite the weak construction market, the company has won three recovery act contracts, totaling more than $3.5 million. The largest, a $2.3 million pharmacy renovation project at the VA Medical Center in Coatesville, Pennsylvania, built back in the 1930s.
UNIDENTIFIED MALE: Right now we have a facility that's been here for a number of years, and we need to modernize it and centralize it. We see this as a real boon to veterans. It's really a win/win situation in that it stimulates our local economy in creating jobs.
HARLOW: The year-long project will create roughly 40 jobs. For Troy Cooper, they can't come soon enough. Cooper runs an electrical company and the recession forced him to lay off 90 percent of his workforce last year. He's struggling to get out of debt and says nearly all his work these days comes from stimulus spending.
TROY COOPER, FOUNDER, T.M. COOPER ELECTRICAL: What we're doing has some of the incentive money built into it. So, I say, yes, it's definitely going to help. And hopefully, you know, within the next, you know, month or so, I'll be able to start bring people back on from layoff.
HARLOW: Critics, including many Republicans, stay the stimulus money will cripple the nation's finances and leave a legacy of debt. But the VA says this project needed to happen at some point, and Bennett says now is the right time.
BENNETT: If we don't take care of our national (ph) infrastructure and get out of this financial crisis that we're in, when our veterans come home, they'll have nothing to do and they'll be on the streets, which is not a place for them to be.
HARLOW (on camera): Are you ready for this challenge? What makes you equipped to run a big project like this?
BENNETT: I'm a Marine. I'm always ready. This is a challenge and a stepping stone to greatness is how I see it.
HARLOW (voice-over): In Coatesville, Pennsylvania, Poppy Harlow, CNNMoney.com.
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HARRIS: Wow.
OK. The pharmacy renovation project, let's look at these numbers again, at the Coatesville VA Medical Center is costing taxpayers $2.3 million. It is creating approximately 40 jobs through five different subcontractors, all small businesses in the area. The goal of the project is to improve both efficiency and privacy in the hospital pharmacy that serves about 22,000 vets.
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