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Tax Hikes for New Jobs; Making Smarter Energy Investments; Using Unemployment Benefits to Start Businesses; Hurricane Katia Slams U.K.; Obama Pitches Jobs Bill; Mom Dresses Toddler as Hooker
Aired September 13, 2011 - 14:00 ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
RANDI KAYE, CNN ANCHOR: It is 2:00 p.m. in the East, and President Obama is about to take the stage at Fort Hayes Arts and Academic High School in Columbus, Ohio. School renovation is a big part of his back to work plan which Republican leaders promised to carefully consider until they learned how he wants to pay for it, of course. Two words: tax hikes.
The biggest hike by far would be a cap on itemized deductions for higher earners. The White House estimates that would raise $400 billion over 10 years. The bill would also close loopholes enjoyed by oil and gas companies, raising an estimated $40 billion. It would raise taxes on investment funds managers and scale back depreciation rules for corporate jets.
Republicans say they've heard these ideas before and they still don't like them.
(BEGIN VIDEO CLIP)
REP. JOHN BOEHNER (R-OH), SPEAKER OF THE HOUSE: When you look at what we saw in the president's pay-fors yesterday, we see permanent tax increases put into effect in order to pay for temporary spending. I just don't think that's really going to help our economy the way it could.
(END VIDEO CLIP)
(BEGIN VIDEO CLIP)
SEN. MITCH MCCONNELL (R), MINORITY LEADER: The half-a-trillion- dollar tax hike the White House proposed yesterday will not only face a tough road in Congress among Republicans, but from are Democrats, too.
(END VIDEO CLIP)
KAYE: The president is due to speak just minutes from now. And you will hear him live, right here on CNN. That's our live picture coming to us from Columbus, Ohio.
In the meantime, I want to talk about jobs and taxes and politics, all that good stuff, with CNN's Alison Kosik, at the New York Stock Exchange, and John Avlon. He's a CNN contributor and senior political columnist for "Newsweek" and "The Daily Beast."
John, I'm going to start with you here. Between the tax hikes and the GOP resistance to anything that smacks of stimulus, is the American Jobs Act doomed?
JOHN AVLON, CNN CONTRIBUTOR: No. No. But I think President Obama has made its passage a little bit steeper by putting forward a plan to pay for it with either closing loopholes or tax hikes.
Now, I think the best way to understand this is it's probably an opening bid. The president is not negotiating against himself in this case, he's trying to set out an initial bid.
Nobody thinks the bill is going to get passed wholesale anyway, but this is the start of a negotiation. I think some questions Republicans have to ask themselves is, how much -- for example, are they going to consider closing any tax loopholes and tax hikes? I think that's politically sort of untenable, but that's one of the arguments they're having even within their own conference.
So, the president made it a little bit steeper climb by putting forward this plan to pay for it with tax hikes and loophole closures, but the bill is far from dead. This is a negotiation that will be ongoing.
KAYE: What do you think this might mean for the super committee and the job that the super committee has for reducing debt?
AVLON: Well, I'll tell you, one of the big challenges we've got going forward right now is that the super committee is being challenged by both John Boehner and President Obama to go bigger, go bigger than $1.5 trillion they've been mandated to cut. And one way to look at these proposals, it's an opening bid also in a round of tax reform.
The real savings will come, real deficit and debt reduction will come when entitlement reform and tax reform are dealt with. And there is the opportunity to do it in this super committee. So that's another important place to look right now to see what kind of compromises and long-term plans come out of that.
KAYE: Alison, let me turn to you here.
I mean, we've certainly mentioned the cap on deductions, but this plan seems to also assume an income tax rate hike as well. What's that about?
ALISON KOSIK, CNN BUSINESS CORRESPONDENT: Exactly. So this would be those Bush-era tax cuts. They would just expire. So the top earners in this country would be paying higher taxes.
So it would look like this: individuals who make over $174,000. So it would go from 33 percent to 36 percent. And then if you're a top earner after that, it's from 35 percent to 39.6 percent. And you know what? If you ask anybody here on Wall Street, they say you know what this is going to do? It's going to take money even out of the wealthy's hands, out of their hands that they could be spending. So they think that this is actually going to hurt the economy if these Bush-era tax cuts are allowed to expire -- Randi.
KAYE: And what, Alison, is the reaction? I'm curious about, what's the reaction on Wall Street there to the jobs bill?
KOSIK: You know what? I think there's overall skepticism. Even if this job plan goes through, as far as goes through Congress, it's really not going to be signed off.
I mean, Republicans are definitely going to be against at least three-quarters of what President Obama has offered here. And there's a lot of skepticism from traders here that I talk to on a daily basis about how this plan even sets the table for economic growth. What in this plan really grows jobs?
For instance, they mentioned this $250,000 mark. You know, you think about small business owners, people who own their own businesses, who own these small businesses, their take home pay is near that $250,000 mark. So they're going to be asked to pay more in taxes.
But critics are arguing, you know what? It's those private business owners that are expected to do the bulk of the hiring to get this economy moving. So the question is, how is this going to grow jobs if they are going to be taking a hit as far as paying more taxes?
Randi.
KAYE: All right. Thank you, Alison.
John, let me give you the final word. Quick final word, though.
AVLON: All right. Look, there are opportunities here that will grow jobs -- an infrastructure bank. I can't imagine Wall Street would oppose lowering the corporate income tax rate in exchange for closing some loopholes. So, again, this is ongoing negotiation. There's a lot the Republicans have backed in the past, they should back in the future, looking to spur our economy to further growth.
John Avlon, Alison Kosik, thank you both.
And just a reminder. The president is expected to speak about 10 minutes from now in Columbus, Ohio, and we'll bring it to you live.
(NEWSBREAK)
KAYE: Up next, our weekly edition of "Q&A." Richard Quest and Ali Velshi will tell you how to make smarter energy investments. You might be surprised by some of their advice.
(COMMERCIAL BREAK)
KAYE: Welcome back.
In today's "Q&A," Richard Quest and Ali Velshi tell us about the smartest ways to invest in energy, and if right now is the best time to do it.
ALI VELSHI, CNN CHIEF BUSINESS CORRESPONDENT: "QUEST MEANS BUSINESS," and so do I.
We are here together in the CNN NEWSROOM around the world.
Hello, Richard.
RICHARD QUEST, HOST, "QUEST MEANS BUSINESS": Good day to you, Ali.
We are going to be talking business, travel, innovation. Of course, nothing is off limits. And so, today, as we consider the business of investing in energy.
VELSHI: That's right. It's something we all use. But what's the best way to go about investing in it?
Richard, you have a lot of energy, so I'll let you go first. You've got 60 seconds.
(BELL RINGING)
QUEST: All right.
It's easy to see why you might want to invest in energy. In the past year, crude prices have risen more than 40 percent. Shares like Exxon have seen a one-year yield hit 20 percent. Not bad in a market that's treading water. So, with the sector being so exciting, the key is what to do without drowning.
Don't jump willy-nilly into the commodities market buying barrels of oil. Be careful. You could end up taking up delivery of a tanker of oil.
Instead, think about exchange-traded funds where you can dip your toe in the water without necessarily getting burned. There's plenty of ways you can do that, or buy shares themselves of the oil companies. Even BP is looking at being a bit of a bargain.
There's one thing to remember more than anything else. Energy prices and stocks tend to mirror the economy. Slowdown means less demand, less profits.
So before you shriek, "Black Gold!" make sure you know what you're doing, or you could end up in one big mess.
(BUZZER)
VELSHI: Wow, Richard. This is going to be problematic, because I think we probably agree on this one. Let me give it a go.
(BELL RINGING)
VELSHI: Not being licensed to give anyone specific financial advice, I'll refrain from what you should invest in, in favor of how to do it. I will say, however, that I and the rest of the world continue to consume great gobs of energy, so I suspect it's a good bet at the right price. But that's the trick, isn't it?
You talked about exchange-traded funds, ETFs, baskets of stock in a sector. That's the best way to get direct yet diversified exposure to energy.
My last count said that there are at least 30 of them. You can buy and sell them like stocks. It gives you exposure to any type of energy you'd care to expose yourself to.
Now, some experts say the prices are good right now. ETFs for all major forms of energy -- oil, natural gas, wind, solar and coal -- are down for the year because of that lower demand. As global economies slow down, energy projects get mothballed. Nuclear is down the most after what happened in Japan. Solar is down heavily, too.
One of the best performers, Richard, is an ETF that hedges your best the most. It's a broad ETF. The ticker is XLE, and it exposes you to all different types of energy. So I'm with you on that.
(BUZZER)
VELSHI: Energy is a good bet, but diversify yourself. Don't go buying commodities.
QUEST: And be careful, otherwise you'll end up with an oil tanker arriving on the doorstep.
VELSHI: Right.
QUEST: The Voice!
THE VOICE: Hello, gentlemen. Time for our game. I hope your energy levels are high today.
The first question: How many energy companies are in the top five of CNNMoney.com's list of most profitable companies? Is it, A, 5; B, 4; C, 3; or, D, 2?
VELSHI: How many companies are in the list in total? Do you know?
THE VOICE: This is out of the top five, Ali. So the top number can be five.
VELSHI: Oh, the top five. How many in the top five?
So five would be tricky, if there were five out of the top five being most profitable, Richard.
(BELL RINGING) THE VOICE: Richard?
QUEST: Two.
VELSHI: Go big. Go big.
(BUZZER)
THE VOICE: All right, Ali. Will you follow your own advice and go big? What's your answer?
VELSHI: Yes. I'm going for five.
(BUZZER)
THE VOICE: Well, you're both wrong. The correct answer is three.
It's Gazprom, ExxonMobil and Royal Dutch Shell are all in the top five. Nestle is number one.
VELSHI: Wow.
THE VOICE: Question number two: According to the U.S. Energy Information Administration, by the year 2035, which of these energy sources will be consumed the most worldwide? Is it, A, coal; B, natural gas; C, renewable energies; or, D, nuclear?
(BELL RINGING)
THE VOICE: Richard?
QUEST: Natural gas.
(BUZZER)
THE VOICE: I'm afraid not.
Ali?
VELSHI: I'll go for nuclear.
(BUZZER)
THE VOICE: Again, wrong. The correct answer is coal. Coal, of course, will still be number two to liquid sources.
All right. So far, nobody has any points, so there's only one chance left.
Question number three: Which of these countries produces the most wind power? Is it, A, China; B, Germany; C, Richard and the United Kingdom; or, D, Ali and the United States?
VELSHI: It's not the U.S.
What do you think, Richard? I'm thinking --
(BELL RINGING)
QUEST: I'm going to say Germany.
(BUZZER)
QUEST: Oh.
THE VOICE: OK, Ali. A final --
VELSHI: I'm going for China, then.
(BUZZER)
VELSHI: No score?
THE VOICE: The United States. No score.
You guys, I don't even know what to say. I give up on both of you.
VELSHI: It's like a soccer game.
QUEST: Whoa. Whoa. This is just embarrassing for both of us.
VELSHI: I don't know what to say, Richard. No score?
QUEST: That will do it for this week.
We are here each week on "QUEST MEANS BUSINESS" at 18:00 G.
VELSHI: And in the CNN NEWSROOM, 2:00 p.m. Eastern.
Keep the topics coming. Make them easier next time.
Our blogs are CNN.com/QMB and CNN.com/Ali. Tell us what you want to talk about and give us some hints as to the answers -- Richard.
QUEST: And I'm just going to go and hang my head in shame.
Goodnight, Ali.
VELSHI: Yes, no kidding. Bye-bye.
(COMMERCIAL BREAK)
KAYE: All right. While we wait for President Obama to speak there live in Columbus, Ohio -- we'll bring that to you as soon as it starts -- let's talk about his $447 billion plan to stimulate employment.
In order for the American Jobs Act to work, taxes will go up. Now, that may sound not very positive, right? But this might -- another aspect of the plan that really hasn't gotten much attention allows the unemployed to use their benefits to start their own businesses.
According to Obama's plan, all 50 states would be able to establish self-employment assistance programs. Now, aspiring entrepreneur would be able to use their unemployment insurance money to fund new businesses for up to 26 weeks. The program would ultimately provide participants with about $10,000.
Does this sound too good to be true, or can this program really work?
Here to explain is the president and founder of the Young Entrepreneur Council, Scott Gerber.
Scott, thank you. Nice to have you on the show.
How exactly would this program work?
SCOTT GERBER, PRESIDENT & FOUNDER, YOUNG ENTREPRENEUR COUNCIL: Well, it's interesting, especially for young entrepreneurs, because all you're basically doing is reallocating the existing use of federal unemployment funds to a new purpose, and that is to turn something that was previously mainly only for job seekers into something that's for job creators. So, you're, in essence, creating a startup capital seed fund for any young person who's been displaced by the workforce, who's been laid off or unemployed, or any other entrepreneur, to basically take that capital, start a business with it, and grow that business to hopefully grow a job for both themselves and for others as well.
KAYE: Now, the way I understand it, a number of states already use a seed program. Has it worked here?
GERBER: Oh, absolutely. I mean, if you look at places as Oregon as an example, that put the plan into action around the year 2000. And of all the businesses that have been created, the ones that were successful created on average about 2.63 jobs each.
In addition to that, if you look at that from a nationalized level, I mean, that could be a major stimulant for jobs, when you pair that especially to entrepreneurs who are actively looking to find the most frugal ways to start a business. That sort of seed capital is powerful and can really put people on the right path to creating their own business.
KAYE: Do you think it would also help to create more jobs?
GERBER: Oh, absolutely. Again, going back to the Oregon stats, if you have 2.63 jobs out of a large percentage of those businesses that are successful, that's a major stimulant to the economy.
If you look at the fact that our overall plan in this country is always small business -- and I 100 percent agree with that, it's about small business being able to hire -- hyper-local level employment is exactly who this sort of program is going to target, especially those that are out there trying to create something actively anyway. So I really do think that programs like this, especially in tandem with other government and private enterprise solutions, can really be major stimulus to the economy.
KAYE: And when you talk about just young people looking for work, how do you think this might benefit them specifically?
GERBER: Well, young people are the best to -- I guess the best candidates to benefit specifically from this plan for a couple of reasons.
One, at the point in life that they're usually in, there's very low chance that they have major financial hurdles other than college loans, which in and of themselves of course are major. But they don't have major living expenses. They can downgrade their lifestyles rather easily.
On top of that, if you pair other programs that the government offers, and private enterprise offers, you allow yourself to really even lower the bar to start entrepreneurship further. An example would be the fact that most young people can stay on their insurance -- I'm sorry, all young people can stay on their parents' insurance until 26.
You also have the fact that young people right now don't really need much. They can go out there, speech on a friend's couch, eat ramen noodles just to make it happen. So they can really take this as a real guaranteed source of income, a guaranteed source of revenue -- I'm sorry, cash flow, and really make something happen out of it, where older generations might have it a bit more difficult.
KAYE: Scott Gerber, I can tell you're excited about this. I think lots of folks will be. We appreciate you coming on the show. Thank you.
GERBER: Thanks, Randi.
KAYE: All right. Coming up, how many more Americans were living in poverty in 2010 versus 2009? We will have the numbers for you in just one minute.
(COMMERCIAL BREAK)
KAYE: Just about half past the hour. Let's get you caught up on some stories that you might have missed today.
President Obama is selling his jobs package in Columbus, Ohio. He should take the stage there any moment now. He's focusing on new construction jobs to modernize public schools.
The president plans to pay for his jobs plan in part by limiting tax deductions for wealthier Americans. That's drawing criticism from Republican leaders in Congress.
In a still struggling economy, more Americans fell below the poverty line last year. New Census data released today indicates that the nation's poverty rate rose to 15.1 percent in 2010. That is its highest level since 1993.
Now, that amounts to about 46.2 million people now considered in poverty. That's 2.6 million more than last year.
Taliban fighters attack the American Embassy in Kabul today with rocket-propelled grenades and guns. Four Afghans injured inside the embassy. A fierce firefight has been under way now for several hours. U.S. troops are trying to flush the Taliban out of an abandoned building where the attack was launched. Fewer than 10 Taliban are believed to be involved.
Two Americans could be released from Iran in "a couple days," according to the president. That's if the men's families pay the $1 million bail.
Josh Fattal and Shane Bauer have been in custody since 2009. Iran sentenced them to eight years for spying and illegal entry. The Americans say they were hiking in Iraq and accidentally strayed into Iran.
Now take a look at the Miss Universe footage from last night. Leila Lopes from Angola was crowned Miss Universe 2011 in Sao Paulo, Brazil. Women from 89 countries and territories competed for the title. And for the first time ever, fans were able to vote their favorite contestants into the semifinals of the competition.
All right. Well, we may have escaped Hurricane Katia, but not the other side of the Atlantic. The latest on that and the other storms brewing out there, next.
(COMMERCIAL BREAK)
KAYE: And once again we want to show you we are awaiting a live speech from the president. You're looking at live pictures there in Columbus, Ohio.
He's expected to take the stage really any minute now at Fort Hayes Arts and Academic High School there in Columbus. We will bring that you as soon as he starts to speak.
And we're keeping our eye on the various hurricanes and wildfires burning in Texas. Chad Myers is here now with an update. Chad, the other side of the Atlantic is really feeling the effects of Katia.
CHAD MYERS, AMS METEOROLOGIST: If you can believe it.
KAYE: Yes.
MYERS: It missed the U.S., but stayed together as a low pressure system and slammed Scotland and Ireland with 60-mile-per-hour winds. So that's why you can never give up on these things, even up into Nova Scotia, of course, you know how they can be affecting your area, the Atlantic Canada, New Finland gets smacked tropical storms every once in a while.
There it goes up through Oslo and Stockholm, Sweden right now, but it rolled right over the northern sections of Scotland. I'm afraid gulf balls weren't flying very well there will all that wind. There you go, this is Maria, still a gutter ball for us.
It's going to be very close to Bermuda, but it got ball for the U.S. as it was here going to turn to the right and move north and northeast. That is some good news. Let me show you some other good news too. Some of pictures out of Texas, not so bad today.
The winds have died down and firefighters getting a handle on many of those fires that have been out there for so very long. Now there is still a fire threat, still a little bit of a wind threat for places around Dallas today. But look at those pictures.
That's what people are coming back home to in parts of Bastrop County down into the northern sections north of Houston where this was just to the east of Austin, Texas, as well. Finally getting a little bit of relief, firefighters getting a handle on some of these fires, Randi.
KAYE: All right, Chad, thank you very much. As we said, the president is speaking in Columbus, Ohio. He has just taken the stage. Let's take you there and listen to what the president has to say today.
BARACK OBAMA, PRESIDENT OF THE UNITED STATES OF AMERICA: It is good to be back in the state of Ohio! Just a couple of people I want to make sure you know are here.
First of all, my outstanding Secretary of Education Arne Duncan is in the house, superintendent of Columbus City Schools Dr. Gene T. Harris is here! The principal of Fort Hayes Metropolitan Education Milton Ruffin is here! And the mayor of the great city of Columbus, Michael Coleman is in the house!
It is a great honor to be here at Fort Hayes, one of the best high schools in Ohio. I want to thank Tom for that introduction. He just gave me a quick tour, and let me just say these buildings look great. He did a good job.
I wouldn't mind taking a few classes here. You've got computers in every classroom, got state-of-the-art graphic design and science labs, new media center, music rooms. And when you combine that with outstanding teachers and a challenging curriculum, you've got the foundation for what you need to learn and graduate and compete in this 21st Century economy.
So Fort Hayes, I'm here to talk about exactly that, about the economy. I came to talk about how we can get to a place where we're creating good middle class jobs again, jobs that pay well, jobs that offer economic security, and the renovation of Fort Hayes is a great example of where those jobs can come from, if we can finally get our act together in Washington.
If we can get folks in that city to stop worrying so much about their jobs and start worrying about your jobs. Now, yesterday, I sent Congress the American Jobs Act. This is it right here, it it's pretty thick. This is a plan that does two things. It puts people back to work and it puts more money in the pockets of working Americans. Everything in the American Jobs Act is the kind of proposal that in the past has been supported by both Republicans and Democrats. Everything in it will be paid for.
And everyone can make it happen by sending a message to Congress that says, pass this bill! Ohio, if you pass this bill, right here in this state tens of thousands of construction workers will have a job again. This is one of the most common sense ideas out there.
All over the country there are roads and bridges and schools just like Fort Hayes in need of repair. Some of the buildings here in Fort Hayes were originally built during the civil war. That's old and when buildings are that old, they start falling apart.
They start leaking and ceiling tiles start to cave in and there's no heat in the winter or air conditioning in the summer. Some of the schools, the ventilation is so poor it can make students sick. How do we expect our kids to do their very best if a situation like that?
The answer is we can't. Every child deserves a great school, and we can give it to them, but we've got to pass this bill. Your outstanding Senator Sherrod Brown has been fighting to make this happen. And those of you here at Fort Hayes have been making it happen.
See, a few years back you decided to renovate this school and you didn't just repair what was broken, you rebuilt this school for the 21st Century with faster internet and cutting-edge technology. That hasn't just created a better, safer learning environment for the students, and it also created good jobs for construction workers.
You just heard Tom say it's created over 250 jobs for masons and concrete workers and carpenters and plumbers and electricians and many of those jobs are filled by the good people of Columbus, Ohio. But here's the thing. There are schools all throughout Ohio that need this kind of renovation.
There's a bridge in Cincinnati that connects Ohio to Kentucky that needs this it kind of renovation. There are construction projects like these all across the country just waiting to get started and there are millions of unemployed construction workers who are looking for a job.
So my question to Congress is, what on earth are we waiting for? I don't know about you, but I don't want any student to study in broken-down schools. I want our kids to study in great schools. I don't want the newest airports and the fastest railroads being built in China.
I want them being built right here in the United States of America. There is work to be done. There are workers ready to do it. So let's tell Congress, pass this bill right away.
Pass this jobs bill, and there will be funding to save the jobs of up to 14,000 Ohio teachers and cops and firefighters. Think about it. There are places like South Korea that are adding teachers to prepare their kids for the global economy.
At the same time we're laying off our teachers left and right. Now, we've got school districts that have eliminated all extracurriculars, art, sports, you name it. You've got situations where -- I just heard a story from Arne Duncan driving over here.
I met this young man yesterday, a music teacher, in Philly. His total budget is $100 for teaching music in a whole bunch of schools. So they're using buckets to do drums because they can't afford actual musical instruments. You see it here in Ohio. Budget cuts are forcing superintendents here in Columbus and all over the state to make layoffs they don't want to make.
It is unfair to our kids. It undermines our future and it has to stop. Tell Congress too to pass the American Jobs Act so we can put our teachers back in the classroom where they belong. Tell them to pass this bill so we can help the people to create most of the new -- we can help the people who create most of the new jobs in this country.
That's America's small business owners. It's all well and good that big corporations have seen their profits roaring back. That's good. We want them to be able to hire people as well. But smaller companies haven't come back.
So this bill cuts taxes for small businesses that hire new employees. It cuts taxes for small businesses that raise salaries for current employees. It cuts small business payroll taxes in half.
So let's tell Congress, instead of just talking about helping America's job creators, let's actually do something to help America's job creators. Let's pass this bill right away!
If Congress passes this jobs bill, companies will get new tax credits for hiring America's veterans. We ask these men and women to leave their careers, leave their families, and risk their lives to make sure we're protected. The last thing they should have to do is fight for a job when with they come home. That's why Congress needs to pass this bill.
It will help hundreds of thousands of veterans all across the country. It will help hundreds of thousands of young people find summer jobs next year. It's also got a $4,000 tax credit for companies that hire anybody who spent more than six months looking for a job.
(END OF LIVE COVERAGE)
KAYE: All right. We have been listening there to President Obama speaking in Columbus, Ohio, talking jobs, which seems to be his current topic of the moment.
Millions of people looking for jobs, he said. He asked Congress, what are we waiting for? Let's pass this jobs bill, talked about repairing schools. The president said he doesn't want students studying in broken- down schools and again just hammering home that message to Congress to pass the American Jobs Act.
We'll take a break here and we will have much more news for you on the other side.
(COMMERCIAL BREAK)
KAYE: The pageant moms featured in a hit TLC show "Toddlers and Tiaras" are known to push the envelope. Their little girls are seen strutting their stuff in some pretty eye-popping and some would say questionable costumes.
A couple weeks back a mom dressed up her daughter as Dolly Parton with fake butts and breasts padding and there's this from Wednesday night show.
(BEGIN VIDEO CLIP)
UNIDENTIFIED FEMALE: Here comes pretty woman, Paisley!
(END VIDEO CLIP)
KAYE: Paisley is 3 years old. You can see that she is dressed as a hooker. Her mom Wendy Dickey modeled the routine on Julia Roberts' character in "Pretty Woman" the movie.
Remember she starred as a prostitute. So many were disturbed by this that they began calling for TLC to cancel the show and take "Toddlers and Tiaras" off the air. Even other pageant moms were disturbed. They say this goes too far.
(BEGIN VIDEO CLIP)
UNIDENTIFIED FEMALE: Pageant moms already take a huge rap for what we're doing to our little girls. It's outfits like that that gets us a bad rap.
UNIDENTIFIED FEMALE: This is Paisley as Julia Roberts in "Pretty Woman." Good job.
(END VIDEO CLIP)
KAYE: So here is a question. Does this go too far? That it's what we want to talk about today. Melissa Henson from the Parents Television Council is joining us from Washington, D.C., and to talk about her decision, Paisley's mom, Wendy Dickey here with us in studio.
Wendy, let me start with you. How did you come up with this idea to dress your 3-year-old daughter as a hooker?
WENDY DICKEY, MOM OF 3-YEAR-OLD PAISLEY FROM "TODDLERS AND TIARA": Well, when we signed up for the pageant there was going to be an optional outfit of choice that you could do a celebrity wear. I couldn't come up with blondes because Paisley is a brunette.
Everybody I thought of was a blonde. I decided to go with Julia Roberts who is a Georgia icon, my favorite actress. She is well known for the movie "Pretty Woman." So I came up with a routine skit as you would call it where she would go out as Julia Roberts from the beginning of the movie and end up at the end of the movie. But the end of the movie clip never got shown.
KAYE: I think we have a picture of Paisley in the brown dress right there looking a whole lot more conservative than she did from that moment on stage that we did see. But, again, the perception of a 3-year-old being dressed as a hooker, were you surprised by the negative attitude by so many who saw this?
DICKEY: I was very surprised and I'm just blown away that it has gotten this far. But there were no problems at the pageant. Everyone who seen the full skit got it. What I was trying to do -- and it was not about sexualizing my little girl.
She was dressed in a hideous costume, hideous boots. My brother- in-law said her boots looked like trash bags tied around her feet. A fluorescent yellow wig, there was nothing sexual about it. People lost the meaning of the skit because they didn't get to see the end of this.
KAYE: Were with you thinking this would be funny?
DICKEY: It was funny. It was hilarious. You can see the judges in the video. They're cracking up. They're about to fall out of their chairs just laughing so hard. It's hysterical.
KAYE: Let's see what Melissa Henson thinks about this. You heard it here. This was supposed to be a joke, supposed to be funny. The judges were laughing. Did you find this hysterical?
MELISSA HENSON, DIRECTOR OF COMMUNICATIONS AND PUBLIC EDUCATION FOR THE PARENTS TELEVISION COUNCIL: Well, I think as parents sometimes we lose sight of the forest for the trees. And I think even though we see our own children's innocence sometimes we're not able to see how it's going to be perceived by others.
So you see moms posting video clips of their kids dancing to Beyonce's videos and things like that. Not aware they're reinforcing some negative behavior patterns, really communicating a message to their children.
About what's going to get them attention without really communicating that it might not be good attention that they're getting from behaving or dressing that way.
KAYE: We should point out that we did reach out to TLC for a statement. They told us they don't have a comment. But what's interesting -- I'm sure you could hear the result from the judges. They awarded Paisley actually the grand supreme, which is this pretty big award.
DICKEY: The biggest of the day.
KAYE: So Melissa, let me just go back to you for one second. Do you think this is positive reinforcement, which is really negative reinforcement?
HENSON: Yes, in a way. I think it's the same as sometimes you see children at Halloween wearing inappropriate Halloween costumes. Children crave attention, good or bad, you know.
Sometimes children will act out in order to get attention, even if it it's negative attention. So when kids are dressing like this or when they're imitating adult moves or ways of talking, we might laugh at the precociousness of it all, but we're really reinforcing some dangerous and negative behaviors.
KAYE: Wendy, did Paisley understand what she was dressed up as?
DICKEY: She has no clue. When with the show featured her on the "Toddlers and Tiaras" she went as Pebbles Flintstone. She didn't know who Pebbles Flintstone is?
KAYE: Would you do this again? Would you dress her up that way again?
DICKEY: I wouldn't do it in a million years. I just hate people only got to see the clip part of it. Another thing I'd like to ad is the mom in this video is a friend of mine. She was a friend of mine before the pageant.
KAYE: The one who spoke out earlier?
DICKEY: The one who spoke out she would never dress her kid like that. She's a friend of mine, still is today. I love her. I love her daughter. But right before the crowning ceremony she came up to me and said, Paisley was so cute today. I thought she was Lady Gaga.
Then as soon as the crowning ceremony was over, you know, she had a change of tea. They had followed her daughter all week and her daughter had just lost on national television. And Paisley had just won the last -- she won all three pageants that "Toddlers and Tiaras" founded in Georgia this year.
She won the highest title. So I think it was just a time of emotion for her. It was easy for her to take the fact that her child lost and put it on my child who was dressed the wait she was. Out of everybody at the pageant that day -- it was huge -- she was the only one with a complaint.
KAYE: Well, it certainly speaks to the competition we hear so much about that takes place at these pageants. So Wendy Dickey, we certainly appreciate you coming in and sharing your story and your daughter's story with us.
And Melissa Henson for the Parents Television Council, thank you to you as well.
HENSON: Thank you.
KAYE: Coming up next, why one TSA worker is facing the music.
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KAYE: Time now for "Face The Music," the time of day in our show when we call out those behaving badly. And if you've ever waited in a long line at airport security, this is going to make you steam.
According to a "New York Post" reporter, at least one member of the TSA seems to be running quite a scam at Newark Airport. The reporter who was toward the back of the security line writes that he and his family were approached by a woman wearing a TSA uniform and asking if anyone need help.
She was reportedly pushing a wheelchair and made it clear that passengers didn't have to be disabled for her to help them. So to test it, the reporter's cousin sat down and skipped the hour-plus wait at security.
Once up front, the guy in the wheelchair jumped up and walked through, which didn't even raise suspicion. It was clear the reporter says that the screeners, other TSA folks, were familiar with this woman.
The reporter said the TSA worker kept saying, I take care of you, you take care of me. Once through security, she he gave her 5 bucks. What did she do? She reportedly whispered to the passenger that she expected more. Even got borderline angry repeated that they need to take care of her.
So he gave her more money. Now what's unclear is, if this TSA worker was working alone or in cahoots with other security personnel to make a quick buck. And how can this happen at a major international airport.
Certainly appears she was on the take, not on patrol. The post was quick to point out that for less than 10 bucks four of them got through security in a hurry, 10 years after 9/11.
Now, whoever you are that's scamming passengers at Newark Airport, it is time for you to "Face The Music."
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KAYE: Thanks for spending the last couple of hours with me. I will now hand it over to Brooke Baldwin. Hi, Brooke.
