Return to Transcripts main page

CNN Newsroom

President Obama Visits Ohio Family; Why Are Banks Holding Money From Small Businesses?; The Graduation Gap: Schools Failing Black Males

Aired August 18, 2010 - 11:44   ET

THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.

TONY HARRIS, CNN ANCHOR: Backyard politics for President Obama. He visits Ohio natives Rhonda and Joe Whiteman at their home in Columbus.

The visit started with the president at their kitchen table -- I think we have some video of this, there we go -- along with the young children. And then you heard the president broaden the conversation out back with some of the neighbors. His focus, the economy.

Let's see if we can bring in our White House correspondent, Suzanne Malveaux. Suzanne, you there with me?

OK, not yet. So we will talk to Suzanne in a couple of minutes.

Getting help for small businesses is one of the points that President Obama stressed in his backyard session. Have a listen.

(BEGIN VIDEO CLIP)

OBAMA: Making sure that small businesses are getting help because small businesses, like Joe's architectural firm, are really the key to our economy. They create two out of every three jobs.

And so we want to make sure that they're getting financing. We want to make sure that we are cutting their taxes in certain key areas. One of the things that we've done, for example, is propose that we eliminate capital gains taxes on small businesses so that when they're starting up and they don't have a lot of cash flow, that's exactly the time when they should get a break and they should get some help.

(END VIDEO CLIP)

HARRIS: Let's bring in our business news correspondent, Stephanie Elam at the New York Stock Exchange.

Stephanie, look, the Whiteman family gets money from the government when the case could be made the family should be getting that money from a bank at a decent rate.

Corporations, as you know, and banks are sitting on -- one of the numbers out there is $1.8 trillion of cash. Some are suggesting that these corporations and banks are hoarding cash. Why aren't we seeing more money in the system where it could do good?

STEPHANIE ELAM, CNN BUSINESS CORRESPONDENT: And this is the problem, Tony, that everybody is talking about. There's money out there somewhere, so what's the issue?

The issue here, it's really two parts. It's the issue where the banks feel there's a lack of collateral because they would have borrowed against their homes, but home values dropped so they don't have that same collateral anymore.

And then the banks have this aversion to risk. So they're afraid to take on more debt with these people they don't know, so therefore they're not giving out the loans like they used to.

And just to prove a point of what's happening here, the kind of loan that people would need and like this family would need are probably a small business loan, but instead what has happened is this move to credit cards. And so a lot of small businesses are finding that it's easier for them to get a credit card and a lot harder for them to get a loan.

In fact, if you take a look at the screen here, for 2009, credit card approval rate 80 percent, but trying to get a bank loan approval rate just 50 percent. So it shows you that there's a huge problem because it's easier for a bank to give a loan through a credit cards and it's easy for them to pull the rug out from under these people and say, you know what, we're taking that credit card away from you. There's not that same sort of safety.

So because of that, this is giving a lot of these small business owners who, by the way, I should point out, employ half of America's workers, that's why it's important for small business to get up and running here. If they don't feel safe, then they are not going to hire more people, they're not going to spend more money on their infrastructure and all of these things. That's a huge, huge problem that we have here.

HARRIS: What they are doing, corporations are doing, is apparently just working their employees, the ones who they have, harder and longer.

Did you see this information out of this new survey earlier this week, job dissatisfaction? Two out of five U.S. professionals are considering quitting their jobs as soon as this fall. Top reason cited, lack of communication and involvement by top management and no promotions despite good work results; also, workers citing being overworked.

ELAM: Right, but if that's the case, where are you going to go, though, in this job market? So while a lot of people may like to quit, the reason they're doing nine different jobs is just because there's not a lot of jobs to go to and they have to get by. That's the bad situation that all of these people are in.

HARRIS: Yes, but it just seems that there is cash there, there are people who are overworked, there are people like the Whiteman family that, you know, it's an architectural firm that perhaps could be doing more work, but "Tony Harris, Incorporated" can't get the loan from the bank to do the buildout on my Dodge dealership to respond to the demand for more service.

ELAM: That's the problem because the fact of the matter is that the banks are making sure that they're protecting themselves. Granted, they took a hit here, but not as much as some of these people are taking. They are protecting themselves making sure they have their money, their cash there, but the problem is that the products that they're putting out for small business owners is tailored to help the banks, it's not tailored to help out these small business companies.

And because of that, that's where the problem is happening, they're not getting the best solution, therefore they do not feel safe and therefore they are not hiring, therefore "Tony Harris, Incorporated" can't do much better.

HARRIS: Can't do much better. Can't grow it, can't hire folks. I'd like to, can't do it, sorry.

ELAM: Right.

HARRIS: Stephanie, appreciate it, thank you.

Let's gets back to our White House correspondent, Suzanne Malveaux. Suzanne, this setting, meeting with the family at their home and then the sort of a mini-rose garden moment in the backyard there, this is a pretty unique situation, isn't it?

SUZANNE MALVEAUX, CNN WHITE HOUSE CORRESPONDENT: You know, it's only unique at this time, but, Tony, it happened all of the time during the campaign which really says something about where we are with this. Because when President Obama, then a candidate, was getting criticism of being out of touch, now being able to relate to ordinary folk, what did they do? They went out, they had these kind of backyard events, home events, barbecues, the whole thing.

So it's familiar in that sense that, look, he is facing a lot of criticism here, does he get it, and are this economic policies working. That's why you have a lot of stagecraft that is happening here, this economic road trip, this road show, if you will.

The picked this family because, simply because it fits this model, if you will, of the economic policies working for this family. You heard Joe who has this architectural firm, five employees, was going to have to lay off a few folks, and then lo and behold, there's the police station that's next door or nearby that has a construction project that is ready to go, and he gets a chance to work on that. And that police station had the Recovery Act money that was supporting it. So the president could talk about that.

You have the wife, Rhonda, who lost her job, but still gets to keep her health care, her benefits, because of the health care reform. And their young son, who has a preexisting condition, but because of health care reform, is able to still have health care coverage himself, cannot be denied.

These are the kinds of things that obviously the White House researches, it comes together.

Tony, there is another point I want to make here. I had a chance to talk to a White House staffer who said, look, it's not just those parts of it. It's also logistics that this took a long time to put together, because you need a family, quite frankly, that has the backyard that's big enough to go ahead and have a discussion. You've got to have the neighbors you see right across the street that are basically far enough from the house for security issues, security measures.

So all of that goes into deciding and planning this kind of event. A lot of elaborate stage craft so the president can say we're not only talking about kitchen table issues, I'm sitting at the kitchen table with this family, discussing what's important to them.

HARRIS: Quickly here, you mentioned the stagecraft involved in pulling something like this off. Some might hear that and wonder about the neighbors who were there. Were they invited, were they handpicked to be there, or are they just neighbors who were invited to come on and have this conversation with the president?

MALVEAUX: Well, these are neighbors, they're from the area, they've invited to participate, obviously. It's not a big group. I mean, the security around here is pretty tight. It's pretty tough.

As a matter of fact, we're justify really in this roped off little pen area here, this penned off area. And you can see the motorcade, the beast, which is right up at the front door there. He's going to come out and get back into the motorcade.

So it's a very small group here, very controlled environment. Obviously, the president needing to get this message out and get this picture out. Very important.

HARRIS: Suzanne Malveaux for us. Suzanne, great to see you as always. Thank you.

And still to come in the CNN NEWSROOM, not enough African- American males are graduating from high school. We are looking at solutions, that's next.

(COMMERCIAL BREAK)

HARRIS: Drug violence increases in Mexico. Priests and churches are becoming targets of drug traffickers. CNN's Rafael Romo files a report in the next hour of CNN NEWSROOM.

Plus, the jury deadlocks on all but one count in the corruption trial of Rod Blagojevich. One juror refused to budge. A look ahead at what's next for Illinois' former governor.

Now back to a story we covered extensively yesterday. A new report showing fewer than half of black males graduate from high school on time, compared to 78 percent of white males getting their diplomas. The graduation gap is a nationwide problem.

Details now from CNN's Mary Snow.

(BEGIN VIDEOTAPE)

MARY SNOW, CNN CORRESPONDENT: Taking a look inside America's classrooms, a new report finds some of the lowest graduation rates for black males in districts with a large black male student population. Only 28 percent of black males graduate on time in New York City, the same is true in Philadelphia and Detroit.

John Jackson is the president of the Schott Foundation for Public Education, an advocacy group working to level the playing field in education.

JOHN JACKSON, PRESIDENT & CEO, SCHOTT FOUNDATION: So when you look at states with 10, 15, 20, 30 percentage point gaps between the graduation rate for black males and white males, what it says is, we know how to educate our children. We just don't extend those conditions and resources to this certain population.

SNOW; Jackson notes exceptions with Newark, New Jersey at the top of the list after officials more effectively targeted resources. And Newark now has a 76 percent graduation rate among black males, with Ft. Ben, Texas and Baltimore not far behind.

One key to success? Jackson says early education.

JACKSON: If we don't ensure that students, not just black male, but all students are literate by third grade, you will begin to see some of the factors that are really the result of their inability to read come into place, whether they're behavior factors, whether it's having them get behind in other subjects.

SNOW: And there are lessons learned from schools like the Frederick Douglas Academy, a public school in Harlem, where the motto is, "Without Struggle, There Is No Progress." Principal Gregory Hodge says, nearly 75 percent of his students are black. All 225 students in the class of 2010 are going to college.

GREGORY HODGE, PRINCIPAL, FREDRICK DOUGLAS ACADEMY: We have a student that was here accepted to almost every Ivy League in the country.

SNOW: Besides starting college prep in the sixth grade, Hodge says he keeps the school open seven days a week with clubs for everything from sports to robotics.

HODGE: What happens is when you open up the school -- and you know, every child is different, you've got to find something that the child is interested in, so that you can hook them in and keep them off the streets.

SNOW: And while this school and others are considered beacons of light, the Schott Foundation says the problem is, they are exceptions.

(END VIDEOTAPE)

HARRIS: And I took the conversation about the education gap a step further yesterday in an interview with John Jackson, leader of the foundation that conducted the study, and Geoffrey Canada, the president and CEO from the Harlem Children's Zone.

(BEGIN VIDEOTAPE)

HARRIS: The African-American males, here were talking for three or four minutes and we're talking about African-American males.

Geoffrey, what do you say to people who see this report and say, that's not a problem for my child. We are in a performing school district. You know, I have thrown money into the education rabbit hole for years -- good, solid tax dollars -- and here we are again, talking about African-American boys who aren't performing. You know, I feel bad for them over there, but it's not my issue.

GEOFFREY CANADA, PRESIDENT & CEO, HARLEM CHILDREN'S ZONE: Well, this is -- that's a great point. And this is one of the interesting things, in the Schott report, while it focuses on African-American males, you look in general across this country, and you see a real education crisis among white boys, African-American boys.

Remember, this is really just graduating high school. We don't really believe that kids who have a high school diploma are going to be prepared to enter the labor market and be competitive with kids from around the world. So we've got a real challenge.

I think the reason is so important is we know if we improve the education outcomes for this group, we raised them for all children across this country. And right now, I would dare tell you, this is not just a problem with African-American males, as if the girls are doing good or if white students around this country are really being prepared for the new labor market.

We've got a real crisis in our education system, and we need to be taking this seriously. This is the canary in the mine shaft. Hey, guys, this thing is not working. We're not coming up with real solutions. We need to do a better job.

HARRIS: John, do we need longer school days, longer school years?

JACKSON: Absolutely. Rather than closing schools, we need to figure out how we can keep them open longer, how we can recruit and retain highly-effective teachers. And as Geoffrey has outlined, this is a challenge that confronts our entire nation.

The president has indicated that in order to be globally competitive, that we have to be a global leader in post-secondary education by 2020. With 47 percent of black males not graduating, we're not providing them the opportunity to learn, to stay on that trajectory.

HARRIS: Geoffrey, last word to you on this. CANADA: Well, look, this is something -- and I just want to put all my cards on the table on this. We've got to hold our mayors, our governors, we've got to bring the unions, the teachers unions in here. We've got to say to everybody, look, guys, the data is there, it is not working. What are we going to do different?

And we've got to hear who says, "I'm not prepared to change." Those folk, we've got to make sure we get out of this equation, because this is a crisis. The report indicates it's a national crisis, and we really need business not as usual. We need to come up with new innovative plans, and it means all of us have to work on those plans.

(END VIDEOTAPE)

HARRIS: Those two guys rock.