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Volcano Erupts in Iceland; A Shift in Space: Obama to Talk to Space Workers about New Plan; Tax Day Tea Parties: Where Does Movement Go from Here?
Aired April 15, 2010 - 13:00 ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
TONY HARRIS, CNN ANCHOR: Here we go. Top of the hour now. CNN NEWSROOM continues with Ali Velshi.
ALI VELSHI, CNN ANCHOR: Thank you my good friend, Tony.
I'm Ali Velshi, as Tony said, and I'm going to be with you for the next two hours today and every weekday. I'm going to try and break things down for you, give you a level of detail about all of the major stories we cover. Today it's going to be about your world, your taxes, and the things that are going on around the country and around the world, including this major volcano. Some remarkable pictures coming in.
Let me tell you a little bit about it. I've got this on the run down. What on earth does a volcano in Iceland have to do with travel, air travel across Europe and the whole world? A whole lot. Tens of thousands of people are stranded. Even they don't know when it might be safe to fly again. Chad Myers and Richard Quest joining me right now. They're all over this story. I've got to show you these pictures; they're amazing.
Plus, it's tax day today. Tax day and Tea Parties. Seems you can't have one without the other. But I want to go beyond tax returns and rhetoric. Frankly, if you haven't filed your tax return yet, I can't help you.
I want to know how you can cut taxes and spending at the same time. I'm going to ask a Tea Party leader, and I'm going to ask the White House directly. Is our tax code designed the right way? Does it need some changing.
Also on our rundown, President Obama unveils his sweeping space plan in under two hours from now. His major push is putting the business of space travel in private hands. I'll explore the issue with a man on the cutting edge of space research. He's the founder of the X Prize.
But let's get to that big story I was just telling you about: this volcanic ash, this volcano that has erupted in Iceland. First of all, we have just seen remarkable, remarkable pictures. Chad's with me. Richard Quest, I believe, is with me, as well. Let's talk about the volcano first, and then we'll talk about the effect that it's having. CHAD MYERS, AMS METEOROLOGIST: OK. It is in Iceland, which is in northern Europe, north of Europe, right? The problem is the Jet Stream has made this big turn to the south over Iceland and then down over the British Isles. So right over the U.K., all the way through there. Then it's going to take its way out over into the Atlantic for a while.
VELSHI: Yes.
MYERS: So flights aren't going to be able to go this way for a couple of days. And then it's going to turn back and go over the Med and then all the way in, possibly as far as Turkey. This is all really a nightmare scenario that this ash is going to be hanging around for so long.
VELSHI: Let's take a look. Let's show people what we're talking about when we see ash. Can we just bring those pictures up of this volcano? This -- this is not a little smoke. This is a volcanic eruption. And you told me the other day the danger of volcanic ash and what it does to engines.
MYERS: Well, here's what it looks like when it falls out of the sky, in somebody's hand. So it just looks kind of like powder, which -- kind of like talcum powder. The talcum powder, if you zoom in to it, that's what it looks like. Look at these edges. Look what's going to happen if this flies through an engine. Look, I mean, you can't put that even into a regular car engine.
The deal is also that this right here, melts when it gets into the jet.
VELSHI: Yes.
MYERS: And then it -- it reforms and coagulates and collects itself on the back of the jet, literally making the entire engine fail.
VELSHI: OK. Let's bring in Richard Quest. He's in New York. He is the host of "QUEST MEANS BUSINESS" on CNN International. He's also an expert on the airlines.
Richard, this is -- you know, Chad told us the other day this is going to have some affect on flying. It has had a remarkable affect on flying. Cancellations across Europe.
RICHARD QUEST, CNN HOST, "QUEST MEANS BUSINESS": It's had the biggest affect on flying since World War II, I'm told. And one of those wonderful statistics that no one can prove or disprove.
But I can tell you hour after hour on my BlackBerry here I am getting e-mails from various airlines. Ryanair has just sent me -- that's a major, largest low-cost carrier in Europe, saying that it has canceled more than 600 flights. It says, "Ryanair will not operate any flights from Belgium, Denmark, Finland, Ireland, Sweden, or the U.K." Now if you're to extrapolate that to the fact that all U.K. airspace is closed until at least tomorrow morning, you start to see and get an idea of how wide spread.
And it's knock-on effects to this side of the Atlantic, Ali. Quite obviously, if planes don't leave Europe today.
VELSHI: You can't get through.
QUEST: You can't get here. And you can't get home tonight, whether it's from Los Angeles...
VELSHI: Let me -- let me just show you. You were just saying this. Let me show you what Chad just brought up. Look at this -- look at this chart. London, you said airspace is closed. London Heathrow Airport, Batwick Airport closed. Charles De Gaulle Airport in Paris closed. All U.K. airspace, as Richard just said, closed until 7 a.m. their time Friday morning. Closed. Airspace in Ireland, Sweden, Norway, Belgium, Denmark, Netherlands. This is not a little thing.
Richard, I was just -- I saw two incidents in June of 1982 and December of 1989. In June of '82, a British Airways flight from London to Auckland, after it stopped in Kuala Lumpur, ash got into the engines. All four of them flamed out. They were able to glide that airline for 15 minutes, that plane, and restart.
And then in 1989 a KLM flight from Amsterdam to Tokyo, again, after a stop, on descending to a stop, all four engines failed.
So clearly. this isn't one of those "this kind of happens and we're not sure it's going to affect us." These airlines are taking this very seriously.
QUEST: This is not a might do or could do. This is a will do. If a plane goes through that ash, not only has Chad brilliantly pointed out and showed us graphically the pieces of ash but also think about the airframe being hit by that piece of ash. It will dent it. It will pit it.
And one of the interesting things about that first incident in 1982, once the Captain Moody got the engines started again, he had to literally sit up in his seat when he landed the plane, look out the corner of the windshield, because the entire windshield was pitted, having been hit by that ash for several hours.
So not only will the -- do you seriously risk the engines coming to a stop, which is bad enough, but you could do serious damage to the airframe, to the windshield.
All in all, I promise you, they don't close airspace like this unless they have to. This is a real one. And we're all better off firmly on the ground.
VELSHI: All right. We'll continue on this story with you, with Chad. Thank you again. Remember, this ash looks like dirty clouds, but it's not. It's got something else entirely. We'll follow this story. But airspace across Europe is closed. If you're traveling across the world and you're going to go anywhere near Europe, your flight is probably going to be affected.
OK. That's suborbital flight. Now we're going to talk about orbital flight. We're going to talk about spaceflight. That's about to change, as well. We're going to see some cancellations on space ships. The president is headed to Florida today to try and convince space workers that his five-year plan for NASA is a good thing. Is it or isn't it? We're going to discuss that in detail when we come back.
(COMMERCIAL BREAK)
VELSHI: All right. The future of the space program is one of our big stories today. We're less than two hours away from President Obama talking to space workers about his five-year plan for space exploration. And this is contentious.
Let me give you a little bit of a background on this issue. With the 2011 budget, the space shuttle program is going away. The Constellation program that was slated to take the U.S. back to the moon is also going away. Thousands of jobs are in jeopardy.
Let's talk about what we're getting. In fact, NASA will have a bigger budget. The president says we'll be getting greater investment in innovation, more astronaut time in space, more rockets that launch sooner, and a more sustainable space program.
Basically, he wants to use private companies to ferry astronauts to the space station. He wants basically private companies to provide taxi services and have the -- have NASA focus more on moving from the moon to deep space exploration.
One of the big issues on the table for NASA's budget is this push to privatize the way astronauts get into space. And this is why: the huge cost of sending astronauts up. Right now the cost for one astronaut and one mission from NASA is about $65 million. If we use the Russian Soyuz program, $50 million per astronaut. And according to one private spaceflight company, it can be done for $20 million per astronaut.
One analogy we heard yesterday was why not -- it's like the government needs to get people places all over the world. They don't build their own aircraft to do it. They buy an aircraft or use time on a commercial aircraft. That's one analogy we've heard.
Some people do not like this at all. They say that it's going to make America second rate in terms of space exploration.
I want to bring in Peter Diamandis. He is the CEO -- the chairman and CEO of the X Prize Foundation. He's the CEO of Zero Gravity Corporation and of a company called Space Adventures, which has actually put people into space. But Peter, as you told me, you're a kid that loves space and loves it, and you're all about this. Tell me, when you look at what the president is going to say this afternoon, what do you think about it?
PETER DIAMANDIS, CEO, ZERO GRAVITY CORPORATION: I'm excited. I'm excited about finally getting us going, getting us going as an entrepreneurial nation and going back to the roots of the United States, a capitalist society that does amazing things with entrepreneurs.
If you think about it, we're spending -- we're going to be spending more money with the president's budget, 6 billion more dollars.
VELSHI: Right.
DIAMANDIS: That money is not going any place but at the jobs. But what we're doing is creating the Googles, the Ciscos, the Intels, the Apples of the space program that are really going to create true wealth and true capability.
VELSHI: Peter, let's talk about what Neil Armstrong had to say. The astronaut Neil Armstrong, the great astronaut wrote that he thought this was terrible, it was wrongheaded; it is going to make the U.S. mediocre in space.
There are some people who believe that the idea of getting a man to the moon was one of the greatest efforts that the U.S. ever came together on and that it needs to be a government-backed effort. Is that true?
DIAMANDIS: It used to be true, in the very beginning. But it's not true now. You know, the example about, you know, the U.S. government buys its airplanes from Boeing. It flies on Southwest or American. You know, you buy your computers from Apple or Dell. The government doesn't build their own computers.
What we need to do is inspire the next generation of scientists and engineers. And you tell me, would they: would someone in a computer field rather go work for, you know, Google or Apple or for a government-based computer company? The same way they'll want to go and work for these aerospace entrepreneurs who are building the vehicles.
The number you had before of $65 million a seat...
VELSHI: Yes.
DIAMANDIS: ... for a government shuttle, I don't know where you get that. The average cost of a shuttle flight is $1 billion, and there are six or seven people on board. You do the math. It's well over $100 million a person. And the potential...
VELSHI: All right. Let's -- so you can -- you put people into space. Tell me about this. I mean, you know that it can be done for less money.
DIAMANDIS: So I'm a cofounder of Space Adventures with Eric Anderson. And, you know, we've had to contract with the Russian Soyuz. We've taken American businessmen who have made their wealth in the dotcom world and wanted to fly into space. And eight times we have flown to the space station by buying seats on the Soyuz, because you can't buy seats on the shuttle. There is a large market out there.
You know, the companies, orbital scientists, space experts, are building this new generation of vehicles are going to enable, eventually, a brand-new marketplace for all of us to go. And to open untold wealth. Everything we hold of value on earth -- metals, minerals, energy, real estate -- are in infinite quantities in space. We've got to go from a government-based model to one where it's about economics, about business, about competitiveness with the rest of the world.
VELSHI: But when we're talking about astronauts and research, we are always going to be concerned about safety. Is that an issue? When you privatize it, how do we make sure that it stays safe? And does that mean there's government involvement in regulating it? Or tell me how that works.
DIAMANDIS: So safety is No. 1 for any of these companies. One failure and -- with a person on board, and they are likely out of business. So no one is going to be more adamant about safety than they are.
And ultimately, you know, NASA is going to set the safety standards. And the vehicles being built by orbital space (INAUDIBLE) and Lockheed are meeting the same safety standards as the shuttle- derived vehicles that are being proposed.
So I think it's about risk sharing, where it's an economic argument. The private industry is going to come in and risk money, not lives, but risk their investments to make vehicles safer, more economic, and really create a vibrant new industry that will create not a few extra thousand jobs but tens of thousands of new jobs of what could be a multi-billion dollar industry in the future.
VELSHI: Peter, yesterday we looked at a map that showed that NASA's investment, whether it's through suppliers or contractors, is in every state in the United States. Obviously, massive investment in California and in Texas. But every single state has somebody's job connected to NASA.
Under this type of a program, are we going to see fewer jobs? Are we going to see those types of job losses? Or will private industry, like you guys, will you be picking some of that slack up? Or will NASA pick it up with a bigger budget?
DIAMANDIS: So there are two different forces here.
No. 1, of course, job preservation and job creation is critical, especially right now. And, you know, the president's plan has 2,500 new jobs being created in Florida for this.
But ultimately, it's not just about these few jobs. It's about creating a large number of jobs, a large number of wealth. You look at the dotcom companies, the entrepreneurial companies, Googles and Apples, how many millionaires, how many jobs they've created.
You know, look at the aerospace contractors, and these are jobs that don't create that same level of wealth and the same growth.
What we need to do is tie space onto the real capitalist entrepreneurial engine that has made America great, and which can make space, you know, again, a new economic driver for this nation to compete against China and India, which will ultimately eat our lunch if we keep on going the same direction we're going right now.
VELSHI: I wonder if the president has got his people listening to you, because if he's got that kind of passion about it, he might do a good job of selling it this afternoon. He's going to have some critics when he goes out there and tries to sell this program.
DIAMANDIS: This is about America's future, about making us great in space in a sustainable fashion, not just one shot back to the moon that's going to be ended. But something that builds an industry that attracts all of the engineers and scientists who can passionately want to get back into space and open the frontier for all of us. That's what's on the table. And this decision by the president, by the NASA administrator is absolutely the right one for America.
VELSHI: Peter, good to talk to you. Thanks very much for being with us. Peter Diamandis, CEO of the X Prize Foundation, of Zero Gravity Corporation, and Space Adventures, talking to us about our future in space.
We'll have more on that as the afternoon goes on.
But it's tax day today, and that's the perfect time for a party, especially if you are fed up with your taxes. Tea Party activists out in force all over the place. We'll take you live to the nation's capital.
Plus, what if Tea Party protesters got what they wanted? Would their ideas about taxes really solve our nation's budget problems? We're going to talk about it in detail. We're going to get answers for you about taxes and solutions. Stay with us.
(COMMERCIAL BREAK)
VELSHI: OK. Tea Parties being held across the nation today. We've counted more than 600 of them. The Tea Party Express 3 wraps up its bus tour, and the last stop on the cross-country caravan is in Washington, D.C.
Here's where it started, in Searchlight, Nevada, the home of Senate Majority Leader Harry Reid, back on March 27. And then Omaha, Nebraska, on April 1. It's made stops in between: April 7 in Milwaukee; April 12 in Buffalo; and now has made its way to Washington.
Hundreds of rallies nationwide all day. We're covering some of them in New York, Atlanta, Chicago, Seattle.
D.C. is the big one, though. Jessica Yellin is there. She's following it.
Jessica, how is it looking over there? What's going on?
JESSICA YELLIN, CNN NATIONAL POLITICAL CORRESPONDENT: Right now, we're listening to the Tea Party rap, Ali. There's been a lot of music here. There was even a bailout song earlier. Not a bad song.
I'll tell you, there are people I've been talking to here, came from as far away as Florida. People drove from Pittsburgh. All different kinds of professions.
And the messages we hear them talking about, of course, are smaller government, stop taxes, close the -- end the Fed, end the IRS. But some new messages, Ali. One that we've heard on this tour but not before is a pushback against the media, saying, "We are not racist. Don't let them marginalize us." That's a big theme today.
And another big theme, Ali, that I always find striking is the overwhelming sense you get from everyone I talk to here that the government, the members of Congress are not listening to the people.
I talked to some teachers from New Jersey who said, "Listen, every meeting I go to, I only talk to people who did not want the health-care bill, but still Congress passed it. So they must not be listening."
And there's an overwhelming sense that this is the point of view that dominates in America and that Congress, by not listening to them, is not listening to anyone in America, and that that's why they want to throw people out of office. Very strong sense of not being heard, Ali.
VELSHI: All right. Very good. And I definitely think the music has changed a little bit since the last time I was at a Tea Party rally. There wasn't a rap last time I was there.
Jessica, good to talk to you.
Jessica will be continuing to follow this.
We want to get some sense of what the Tea Party is -- is wanting to represent and how things are going to change. Mark Skoda is somebody you've seen before on our show. He's the founder of the Memphis Tea Party. He's a frequent spokesperson for the Tea Party movement.
Mark, good to see you. You and I talked about this a lot. So we won't spend much time on it. But obviously, if the Tea Party wants to get the message out that it's not racist, it has to keep on saying to people that -- who are racist that they're not welcome into the fold. You told me last time you don't want birthers in there; you don't want truthers in there; you don't want bigots as part of your fold.
MARK SKODA, FOUNDER, MEMPHIS TEA PARTY: That's right. And Ali, as I've said, thanks again for having me on.
Indeed, as I told you, that's one of the reasons we formed the National Tea Party Federation, was really to bring that common-sense message to the nation and to push back on some of the mainstream media that wants to promote this idea of racism and radicals.
It's very clear that we don't want that fringe in the Tea Party movement. It's not to say that it doesn't exist. Certainly, there are people who have that view. But indeed, I would suggest to you that the mainstream, the bulk, or as the president and several other congressmen have said, the core of the Tea Party movement are good, mainstream Americans who want their voices heard.
VELSHI: All right. You guys -- one of the messages Jessica said that people are espousing is ending the IRS.
Now, if you run candidates and if you run, one day, a presidential candidate, and that presidential candidate wins, or your congressional candidates win, the bottom line is someone is going to have to come face to face with the reality that it takes taxes to run a country. Someone has to collect those taxes. And in fact, in some cases, you may have to collect more taxes than we get today in order to cut this -- this federal deficit.
Let's talk a little about that. Give me your thoughts.
SKODA: You know, it's interesting. I've actually had a number of conversations with folks. And I think the reality is that a lot of people understand we have to pay taxes and, in fact, they feel it's their civic duty.
The problem is today you have 47 percent of the nation paying no federal income tax; 40 percent, in fact, getting tax credit back. And the real problem is that, when people expect government to reduce their total expenditures and then put that money towards retiring the debt, they don't do it. They expand entitlements.
I think the real challenge is that, if government was, in fact, true to its task of reducing the scope and size of government, reducing actually, some of the nonessential issues, I believe people would be more amenable to understanding that our taxes have to pay towards reducing debt and, in fact, supporting that smaller government.
VELSHI: Where -- where -- at what point in this process will you be, as you become more organized -- and I know that's a double-edged sword, being more organized -- but at what point will there be a platform to say, "This is what we'll cut." Because that's going to be hard. You've got people out there rallying, saying cut programs, cut government spending, until it cuts the one that you need and that you count on.
SKODA: You know, it's interesting. I've embraced some ideas I've shared on my radio show. You know, how about just indexing every single federal employee's salary to the private sector so that they make no more than the private sector does? One good idea. We'd see probably a 30-40 percent reduction in total salary expenditures at the federal and state level.
We see that cooks, for instance, make $15,000 a year more than the average private-sector cook.
VELSHI: But you know -- you know, Mark, fixing every cook's salary in the federal government is not going to be nearly as serious as dealing with Social Security, dealing with Medicare, dealing with -- with defense. I mean, those are the big issues that have to be adjusted. Right?
SKODA: Right. You're absolutely right. And I say this in the context of the things that have to be done. We talk about the Commerce Department. We talk about the Department of Energy. We've not built a new nuclear plant in 20 plus years. We talk about the deduction in the Department of Education, the National Endowment for the Arts.
Certainly, we function, and necessarily so, to support both the aspect of our Social Security and Medicare, those entitlements that, quite frankly, need to be managed better. And ultimately, we have to look at what are the nonessential elements of government?
VELSHI: Right.
SKODA: What functions of federal government are enumerated in the Constitution?
VELSHI: All right. Good. Mark, you'll -- you'll stick around. We're going to talk in the next hour again. We're going to get deeper into the "how do we actually fix the system," since the whole country's attentions are on taxes today, because it's tax day.
Mark Skoda is the founder of the Memphis Tea Party. We'll be back with him in a little while.
Look, Mark said, some pay more, some people pay less, and some people don't pay at all. We're going to crunch the numbers straight ahead to show you where you stand in the world of taxes. Stay with us.
(COMMERCIAL BREAK)
VELSHI: Let's -- live pictures of Air Force One, President Obama pulling up at the Kennedy Space Center. Not always does the president actually get right to his destination when he wants to get there. But Kennedy Space Center can handle Air Force One. So there it is.
The president will be speaking sometime in the next hour or so. We'll bring you that live. He's talking about the future of the space program, one of our big stories today.
The other one, of course, is that it's tax day. I want to take you right to New York. Stephanie Elam standing by. She has been breaking down these numbers. There are a bajillion questions everybody has about taxes, assuming, Stephanie, that you filed your tax return. For those who haven't, they're not really worried about the bigger picture.
But you really have taken a good look at taxes, where your money goes. Tell me a bit about it.
STEPHANIE ELAM, CNN BUSINESS CORRESPONDENT: Yes, you're right, Ali. When people hear tax day, you know, that's where they really start thinking about where is this money going? Is it just disappearing off into Neverland, and I'm never going to see it again? So what we figured we'd do is break down some of them this year and break down how much we get taxed, compared to other countries.
If you take a look at taxes as a percentage of gross domestic product for the United States -- taxes, federal, state, local, all of them -- they claimed about 27 percent of U.S. GDP. So that puts a kind of in the middle there. Definitely not at the highest, because you can see the highest would be Denmark there, close to 50 percent. So, that's a big difference there.
The 30 richest countries averaged about 36 percent of GDP. That was a couple of years ago, looking at that. What I can tell you though is that Americans do pay more in individual federal taxes. The income taxes for us is higher. But, Ali, and you know this because you're so global, when you travel around, a lot of other countries pay a lot more in sales taxes. That's one of the big differences there.
VELSHI: Stephanie, one of the things that we've been - obviously people are concerned about the fairness of the tax system. One of them is -- another issue is the process by which we collect taxes. I always happen to think people are more frustrated about the taxes in this country in March and April than they are in November and December.
ELAM: Of course they are. That's when they're thinking about it, right? They're very annoyed about that.
If you take a look at sources of federal income tax, if you take a look at federal tax revenue, where is it coming from. I just want to show this to you, because it explains it well. Forty-five percent of it comes from individual income taxes. That's the biggest bulk of it there. Thirty-six percent is coming from payroll taxes, which also makes sense. And then corporate income tax is 12 percent. This other is four percent. And excise taxes are three percent.
The other major issue you hear so much about, Ali, is the fact that a lot of people say, you know what? The rich people, don't pay their taxes. And they're the ones just out there gallivanting, they're not paying. That's actually not true. According to the Tax Policy Center, 99.7 percent of people who are millionaires, 1 million and up, pay their taxes. I also probably think that's probably because they would be targets if they didn't pay them, obviously.
VELSHI: That's right, yes. They get audited, too. ELAM: They would be the first people you would go after. Also --
VELSHI: Go ahead. Go ahead.
ELAM: I was just going to say that -- just want to wrap this up -- just to say that there are about 45 percent of the people who won't pay any taxes, but half of those people didn't have any income at all. So, that's part of the reason for that number.
VELSHI: You're hearing that number a lot. But you're right, there's a fuller story to that. That is some people don't pay taxes because they don't make money.
Thank you so much, Stephanie. Good to see again. Stephanie is part of the Best Economic Team on Television. For more on the economy and how it affects you, tune in to "YOUR $$$$" with Christine Romans and me. Saturdays at 1 p.m. Eastern and Sundays at 3 p.m. Eastern.
Now, let's talk about the tax system. Is there a way to make it simpler and fairer? More efficient, more effective, more transparent, less painful, less controversial? Well, there are ways to do all of that. We're going to talk about it. We're going to talk about how it is now, how it works. I'm going to be joined -- there he is -- by White House economist Jared Bernstein right on the other side of this break.
(COMMERCIAL BREAK)
VELSHI: My friend Molly sent me an e-mail pointing me to an opinion printed in "The Philadelphia Enquirer," so I dug it up. It's written by a guy named David Hollahan. And if you are David Hollahan and you live in East Hanham (ph), Connecticut, you are excused by this next segment. because David wrote this op-ed piece titled "America's Least Angry Man." He says he's happy to pay his taxes, and that sets him apart from a couple hundred million of his fellow Americans for whom April 15th is an annual day of infamy.
Now, if you are in that group, I've got some insights for you that you're not going to hear this at the Tea Party rallies going on today. It starts with this. "You and I are getting a federal income tax cut this year in the range of $173 billion." That's not because a lot of us are not working. It's actually part of the stimulus bill. That's not going to last. So, enjoy it. On the other hand, state governments which have to balance their budgets have had to raise all sorts of taxes but, combined, we're talking about $30 billion extra in taxes so far.
So you know, federal taxes have gone down, state taxes have gone up for most people. Here's a chart you may not have seen before. Take a look at this. It's America's place in the world, federal income tax-wise. Stephanie showed you a version of this, but you can see in terms of a tax burden by country. The United States is lower than Germany and Denmark. It's lower than Canada's . Unfortunately, they should all start here so you can see that, but you get the picture. It's pretty much on par, America's tax burden, with Britain's and Canada. Now, even David Hollahan, hwo wrote this op-ed, would probably say the U.S. tax code is a monster. You really need a post- graduate degree to get through it.
And there are really simpler ways to fund a government. You probably heard the pitch for the flat tax. Here's the thing. You can try to be simple and have a system that allows you to file your taxes on a postcard. Or you can try to be really fair and tax some people less than others for legitimate reasons. Being simple and being fair? Well, that has stumped even the geniuses who understand the mess we're in right now.
And if that is not a segue to Jared Bernstein, I have never heard of one. He is the chief economic adviser to the vice president. I'm pleased to welcome him back. Jared, good to see you.
JARED BERNSTEIN, CHIEF ECONOMIC ADVISER TO JOE BIDEN: Great introduction.
VELSHI: Well, it's a complicated issue. The is truth is we would all like, particularly on April 15th, to pay fewer taxes. And we would like, generally speaking, government to provide us with programs that we think are necessary.
Here's the conundrum. We have heard the calls to cut spending. In fact, some of them have come from your White House. We have heard the calls for lower taxes. Some of them have come from your White House. In fact, you and the Tax -- Tea Party have a lot in common. Do we, in the future, have a world to cut taxes and cut spending and still fight this deficit?
BERNSTEIN: I think we do. Let me start by saying -- and I really appreciate all the nuances that you've introduced to the conversation. Let me start by saying not only do a lot of people want to pay lower taxes. This year, as you said, especially in the federal case, they are paying lower taxes. And they're paying lower taxes, as you correctly point out, through about $170 billion of tax cuts to families and businesses through the Recovery Act thus far, and there's actually quite a bit more ammunition coming on the tax cut side there.
Now, you're also taking a-- and that's important because, as you know, we are still coming out of a downturn where lots of families are having trouble making ends meet. So, the idea they're paying less taxes this year, that they're getting refunds, that they're getting a first time home buyer credit, a child tax credit that's expanded, et cetera, very important in this economy.
But you're asking a different question. You're saying, how can we do that? How can we do that and bring the budget deficit down? The answer is, in fact, it's in our budget.
The key to long-term fiscal sustainability goes through health care reform. There is no other way to get there. And health care reform lowers the budget deficit about $160 billion in the first ten years and another trillion, that's with a T, in the second ten years. Less spending.
You also cited the president's freeze on discretionary spending. $250 billion less spending in our budget over ten years. No higher taxes on middle class people. Not when you're looking at the kinds of constraints they face, on the spending side, on the health care side, those are some of the very important measures we've taken.
VELSHI: OK. So, I want to just take a quick break. Hang on right there. When I come back, I want to talk about everybody else. We talked about the middle class. There are some people, you heard it all over radio, paying no taxes. And there are some people at the top end who are paying much higher. I want to discuss that. You hang on. We'll be right back in a sec. I want to discuss those two issues with you right after this break. Stay with us.
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VELSHI: It's been a touchstone of this administration to try to bring taxes down -- federal income taxes -- for the middle class.
I'm talking with Jared Bernstein, chief economist to Vice President Biden. I know you don't have a screen here. I want to show our viewers, sort of ways to cut the deficit. This is my invention, no one else's. I'll tell you what's on the screen.
Ways to lower the budget -- lower the deficit and balance the budget. Number one, you can raise taxes on the wealthy. Number two, you can raise taxes on the middle class. Number three, you can cut large government programs. This was the conversation I was just having with Mark Skoda. You can't really worry about how many cooks in the government get cut; you have to cut large government programs. Or number four, and this is the outlier, you can hope for a very strong recovery where the problem takes care of itself. Tell me which door you would like to choose.
BERNSTEIN: Well, you know, I was thinking as you were going through that list about the last time this government ran a budget surplus, which was, of course, in the latter '90s when some of the very high-end tax rates were higher than they are today. Whether you're talking about capital gains or whether you're talking about the top marginal rates. You still have the entitlement programs in place.
And yet you had surpluses. One of the reasons was because, as you and I have discussed before, the growth in the economy in terms of income has been very, very unequal. It's flowed largely to the top and it's done an end run around the middle class. For a lot of middle class people, economic growth has been a spectator sport. So, we can't go back to them on the tax side and raise their burden.
We can, however, bring the tax code back to levels that prevailed when the economy was doing great and the budget was in surplus. That's part of the answer.
Now, you mentioned big government programs. Of course, I'm going to go to health care reform because there's no way to achieve fiscal sustainability without the type of reforms this president and Congress put in place. And that's going, that's going to get us -- that's going to get us a whole lot of the way there. Obviously, cause of economic growth is critical. We're going to start seeing GDP growth throwing off the tax revenue as well.
VELSHI: And when you talk about that last term -- Bill Clinton's last term, where we did have that strong economy. Other Western economies did well then, too, because the world was doing well. We had a strong economy.
Let's talk about transfering that burden. I get your argument you can't lay it on the middle class.
BERNSTEIN: Right.
VELSHI: But by putting it on those that are higher earners, fair or not, the reality is at some point do you not push them away? These are people who have to invest in businesses that create jobs, which is what we need. What's the tipping point for how much you tax higher class?
BERNSTEIN: OK. Two points on that. The reason I cited the latter '90s was because we're talking about tax rates that prevailed in a period where the economy was doing great. We're not talking about, by the way, under the Obama administration going any higher than that. In fact, we're talking about going lower than that in terms of rates on unearned income.
So, you can consider that a benchmark. I actually think it's a good one. The economy was flourishing. The wealthy did great, by the way. In fact, the middle class did very well, too, as the budget moved to surplus. So, I think that's a good benchmark.
I do want to comment on this notion that wealthy people are paying more and more of the taxes. You know, if you actually look at what they're paying as a share of their income, it's come down. That is, their before-tax income has grown a lot faster than their tax liability.
And for the bottom 60 percent, 70 percent of families, they pay more in payroll taxes than federal income tax. It's not they're not paying taxes. It's they're not paying federal income taxes. In many cases, because they're struggling. Their incomes have been strapped.
VELSHI: Jared, good to talk to you. Thank you for joining us --
BERNSTEIN: Thank you, Ali.
VELSHI: -- Jared Bernstein, chief economic adviser to the vice president, coming to us from the White House. We'll, of course, continue our discussion on taxes because it's so important to so many of you.
Here's another story. He started as a bartender. Now he's serving life-saving water to thousands of people across the world. That is only the beginning. This is a story you really want to hear. I'm going to bring it to you after this break. (COMMERCIAL BREAK)
VELSHI: Imagine this. You're a bartender, pouring drinks to get your way through college. Then you come up with an idea. Why not turn the wine you're serving into water?
Yes, you heard right. A bartender in North Carolina decided to host wine tasting parties to raise money to get clean water to thousand of people in need across the world. Meet Doc Henley. He's a 2009 top ten CNN hero. But here's his story in his words.
(BEGIN VIDEO CLIP)
DOC HENLEY, 2009 CNN HERO: My name is Doc Henley. I used to be a bartender. Now I provide clean water to people in need.
I got on the ground in Darfur to get my field training. The security issue is not a deterrent for me. I wanted to go where the greatest need was. That's where my heart is. Seeing these live in conflicts and bullets whizzing by their ears, yet their biggest concern was a huge loss of life because of the unclean water. That's when water changed from being my passion to the burden of my life.
Whether we're filtering water or building a well, we want to train and educate people that are already on the ground, enabling locals to fix their own water needs. Doing work like that, you've created ownership. That is going to change lives as well as bringing that clean water.
My joy is the only thing that helps lift the burden. You can be a regular anybody, and you really, really can change the world. I'm walking truth of that.
(END VIDEO CLIP)
VELSHI: What a story. And he's here right now with me. Talking to Doc Henley about his latest efforts in Haiti. We're going to do that after a quick break. Stay with me.
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VELSHI: Okay. This is truly a fascinating story. He went from being a bartender to a lifesaver. Doc Henley joins me now with more on his organization Wine to Water.
Doc, first of all, congratulations to what you do and thank you for what you do. I'm a real believer that if we can solve a lot of water problems, we'll solve a lot of people's problems around the world. These are health problems. When you deal with these communities into which you go, it's not just the access to clean drinking water. That's a big deal, but it's everything about how a society and a community operates.
DOC HENLEY, FOUNDER, WINE TO WATER: Right. It is the basic foundation for absolutely all humanitarian efforts. And what's sad is we forget about that constantly. We go in and start focusing on great things like education and different diseases, we focus on a lot of great things, but we forget about that foundational need of water.
VELSHI: Yes.
HENLEY: And it's like a house. If you build a house on a -- on a shaky foundation, it's going to crumble. And that's, I think, a lot of the problems with our efforts globally.
VELSHI: So, you went into Darfur, you're going into Haiti. What is it you do exactly? What do you do when you go in there?
HENLEY: The whole idea is to bring clean drinking water in a sustainable way, and I think the best way to do that is to make it as simple as possible. So, sometimes there's places that have water already there.
Like in Haiti, some of the people we're working with, there's plenty of water around. It's just absolutely filthy after the earthquake. Instead of going around with the drill rig and drilling all these wells around and bringing thousands of thousands of bottled water in on top of each other, we're going to build a water facility factory in Haiti. And we're going to give the Haitian people in these camps bucket filters that last for over five years.
We have a group down in the Dominican Republic we're partnering -- that we're partnering with, called Filter. Pure filters and then global effect as well. We're getting these bucket filters that last five years. They clean crap street water to the 99.999 to the fifth power clean and last for five years. For $20.
VELSHI: OK. One of the biggest problems here -- I almost want to ban the word sustainable because it means so many different things to a lot of people. But you got to give people things in particularly in poor countries that are sustainable that they can either fix or get fixed.
HENLEY: Right. Of course.
VELSHI: How does that work?
HENLEY: The biggest thing with that is if you allow them to do the work themselves -- in Haiti, we are having them build their own filters and factories and their running that. The same thing in Uganda, we are doing water filters there. It's the local Ugandans running it.
In Cambodia, we drilled 100 wells last year in Cambodia. The Cambodians drill in those wells and local villages. They may know how that filter well works. They know how that well works. If it breaks, they are not waiting for an American to come back and save them again. No, they put that in. They know how to fix it.
VELSHI: You called it ownership.
HENLEY: Exactly. It's creating ownership by getting them involved in the work that they're doing.
VELSHI: All right. Tell, me about this device you've got, the bucket filter. What is it?
HENLEY: It's a ceramic filter. It looks like a flowerpot and basically it's got fine, fine, fine silver embedded in the ceramic. And the way it's fired is that you fire it with sawdust, actually, and then once it's fired, the sawdust burns up. The water slowly trickles through there. It takes about three or four liters an hour, so we tell the families it will last for a family up to ten people.
Tell them before you go to bed at night, you pour the water in there. When you wake up in the next morning, there will be clean water at the bottom, and do it again around lunchtime and, again, hospital-grade water.
The silver is really the big thing, it ionizes the water and the bacteria the viruses. It's absolutely ingenious, our partner Lisa Ballantyne is in the Dominican Republic and is a just genius when it comes to these filters. We like to use people that know great things and not reinvent the wheel. We're using her and her people and have local Haitians do all that work. It's great.
VELSHI: Excellent. Great work. We continue to love what you do. Thank you for taking the time.
HENLEY: No, Ali, thank you for having me. Thanks a lot.
VELSHI: All right. My pleausre. All right. Doc Hadley -- Henley.
All right. Corporate America stages a profit turnaround, but unemployment remains stubbornly high. What's the connection between the two? We'll dig into the new Fortune 500 list with Leigh Gallager. She's standing by. Who's on top? How'd they get there? When we come back.
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