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Apologies and Answers; Olympic City Not Ready; Obama: Wage Gap "Fundamental Threat" to U.S.

Aired February 05, 2014 - 09:30   ET

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

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<09:31:00>

CAROL COSTELLO, CNN ANCHOR: Good morning. I'm Carol Costello. Thank you so much for joining me.

We're looking at a flat open on Wall Street today after a bitterly cold January put a slight freeze on hiring last month. See the opening bell just rang. A new report from payroll processor ADP shows 175,000 private sector jobs were added last month. That's fewer than most economists had estimated. But the one to watch really is the report from the Labor Department. And we'll get a read on that on Friday.

Two U.S. retailers are moments away from a second day of scrutiny on Capitol Hill over massive cyber hack attacks that hit their shoppers at the height of the holiday spending season. Target's Chief Financial Officer John Mulligan and Neiman Marcus's top information officer, Michael Kingston, are set to take more questions about how the hack started and offer solutions to keep such hacks from happening again. Joe Johns has been following that story for us.

Tell us more, Joe.

JOE JOHNS, CNN SENIOR WASHINGTON CORRESPONDENT: Hi, Carol.

Well, these two people were on Capitol Hill just yesterday. They'll be back on Capitol Hill today. More questions. And there's a lot of talk about legislation on The Hill to try to reduce fraud. So, we'll see what comes of it.

Also expecting to hear from the Illinois attorney general, Lisa Madigan, who is one of a number of attorneys general from states around the country who is doing an investigation into the very same thing that the Secret Service is looking into, specifically those reports of fraud using payment cards, Carol.

COSTELLO: The most -- one of the most interesting things that came out of the hearings yesterday was this idea that Target was going to put chips into its credit cards. Tell us more about that and why - and if other retailers might follow.

JOHNS: Right. Chip and PIN technology is a technology that has been around a long time. The idea is to try to keep personal information private or to at least make it a little bit harder for individuals to break in. So, this has been going on in the U.K. for a number of years. And it's just a little bit surprising that the United States is still using magnetic stripe information.

The problem, of course, is that it's so expensive. Target has vowed to try to put this technology in place by sometime next year and it's just going to cost them about $100 million. Estimates range around $5.5 billion for the banks and the retailers to do it here in the United States. And their powerful lobbying interests, so they're sort of fighting each other over who's more culpable and, at the end of the day, who would bear the cost if they go ahead and do it, Carol.

COSTELLO: Interesting. Joe Johns, we'll check back. Thanks so much.

Still to come in the NEWSROOM, the Olympic torch arrives, the games begin tomorrow, but is Sochi really ready, Ivan Watson?

IVAN WATSON, CNN SENIOR INTERNATIONAL CORRESPONDENT: Well, the torch is here, but the journalists have started arriving and many of them are saying the water doesn't work, the toilets don't work, their rooms aren't ready. Our own CNN sports team tried to move in their and their rooms weren't furnished. So, it doesn't look too good. I'll have more after the break.

<09:35:00>

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COSTELLO: Let the games begin. Well, if all the venues are ready. The Olympic torch got to Sochi today. Many journalists had already arrived and their accommodations are, how shall we say, less than ideal. Take a look. Stacy Sinclair (ph) tweeted, "water restored, sort of. On the bright side, I now know what very dangerous face water looks like." The hotel front desk had warned her the water was too dangerous to wash her face. Greg Wishinski (ph) tweeted, "people have asked me what surprised me the most here in Sochi. It's this, without question. It's this. The sign reads, please do not flush toilet paper down the toilet. Put it in the bin provided." Steven Wino (ph) shows us one room where members of the Canadian men's hockey team are staying. Talk about tight quarters. And danger outside. Joann Varna (ph) says, "watch your step. I've noticed on walkway and on sidewalks that not all manholes are always covered." CNN's Ivan Watson joins us from Sochi.

Tell us your experience.

IVAN WATSON, CNN SENIOR INTERNATIONAL CORRESPONDENT: Well, we definitely have seen the scale of the construction here is so big the Russians so proud and excited to show their stuff off, but there are definitely some growing pains and they're certainly not entirely ready at these hotels for the journalists. Let's hope they are more ready for the athletes and the tourists that are spending big bucks to get here.

(BEGIN VIDEOTAPE)

PRES. VLADIMIR PUTIN, RUSSIA: Ladies and gentlemen, let me declare (ph), the 126th session of the International Olympic Committee open. Thank you.

WATSON (voice-over): Russia is counting down to the opening of the winter games.

<09:40:00>

And Russia's Olympic city has been rehearsing its fireworks display. But it seems like there's a lot more work to be done. As hoards of journalists arrive to cover the games, many discover their accommodations are not yet ready. That includes members of our own CNN sports team, who also found unfinished construction in Sochi's Olympic Park. Russia's organizing committee insists everything will be completed in time.

ALEXSANDRA KOSTERINA, RUSSIAN ORGANIZING COMMITTEE: We're dealing with it. We're on it. So we apologize again for any inconvenience. Thank you.

WATSON: Mother nature may be harder to deal with. After several days of cold weather, there's a warm front on the way. But as Sochi snow specialist says, he's got enough snow machines to compensate for warm weather.

MIKKO MARTIKAINEN, SNOW CONSULTANT: First of all, don't worry about the snow. Snow will be guaranteed.

WATSON (on camera): Guaranteed?

MARTIKAINES: Yes.

WATSON (voice-over): Some of the Olympic athletes are impressed.

LAURA FORTINO, CANADA WOMEN'S HOCKEY TEAM MEMBER: I'm experiencing my first Olympics. So, for me this is absolutely incredible. Went above and beyond my expectations of what an Olympic village would be.

WATSON: As for the lingering question of security, there's a reason why they call it the ring of steel. Tens of thousands of Russian security forces have been deployed to protect these Olympic games.

(END VIDEOTAPE)

WATSON: And, Carol, you know, it's not just a bunch of complaining, whining reporters whose rooms aren't quite up to speed. Even the residents of this Black Sea Resort say none of them really know how to get around. All the highways, all the trains, all the infrastructure is so new it's been blocked off until the last couple of days, the last couple of weeks, that even people who were born and raised here are having to learn their city all over again.

Carol.

COSTELLO: Well, there's so much controversy coming out of Sochi. One terrible story we've heard about is the way the Russians are doing away with stray dogs in the city. WATSON: Yes. This is pretty uncomfortable. I started getting messages from basically animal rights activists, animal lovers, sounding the alarm over the course of the last week. And I've spoken now probably to a dozen people, Russians here in Sochi, who are accusing their government and a company that was contracted by the city government of basically trying to exterminate the large population of street dogs living on the streets of Sochi, in the suburbs and in the Olympic Parks here. And what's worse is they're saying it's the way that the dogs are also being killed, with poison, and we've seen very disturbing video and photographic evidence that in some cases the dogs, when they eat this poison that's put in food, for example, it forces them into epileptic seizures, pain, they're in shock and it goes on for hours.

COSTELLO: Oh my.

WATSON: Now, the animal rights activists say that this has actually been a practice in Sochi and other cities around Russia for years, but they allege that this has picked up in the final weeks before the opening of the Olympics. Now, this has really put the city officials, the Olympic organizing committee in hot water. They've had to put out a statement this week saying, no, we're sending out professional veterinarians to check the dogs, make sure they're healthy, that they can't hurt visitors or themselves and then we're releasing them.

Just this week, the city government saying they've opened up a new dog shelter. But the activists I'm talking to, these are Russian citizens, they're taking matters into their own hands. Some of them have made their own shelter. They've built it themselves, a kennel, they're feeding the dogs and sterilizing them themselves. Another man we spoke with actually drove more than 1,000 miles from Moscow, picked up a van full of dogs and evacuated them. And that is kind of yet another controversy to an Olympics laden with lots of public relations problems.

Carol.

COSTELLO: Ivan Watson reporting live from Sochi, Russia, this morning. Thanks so much.

Still to come in the NEWSROOM, closing the wage gap. American want the government to do something about the problem of rising income inequality. But what's the solution? We'll have a conversation about that just ahead.

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<09:47:57>

COSTELLO: Dangerous and a threat to the middle class -- that's how President Obama describes income inequality, an issue he has vowed to tackle in his second term.

And a new CNN/ORC poll shows a majority of Americans think it's time for Washington to step up; 66 percent say the government should work to substantially reduce the gap between the rich and poor. For younger Americans the challenge is big with sky-high college costs and paychecks that don't go as far as they had for previous generations.

In an op-ed for CNN.com I wrote about that, quote, "An article in the 'New York Times' on September 18th, 1987 reported the average wage for an auto maker was $13.50 an hour. In today's dollars that's $28.47. More than two decades later thanks to the 2008 recession and the erosion of union power, entry-level unionized auto workers were paid between $14 and $17 an hour while veteran workers earned between $28 and $38 an hour. The same as they earned in 1987.

With me to talk about this, Marc Lamont Hill, CNN political commentator and host for HuffPost Live and Stephen Moore a "Wall Street Journal" contributor and chief economist for the Heritage Foundation. Welcome to both of you.

STEPHEN MOORE, CONTRIBUTOR, THE WALL STREET JOURNAL: Good morning.

MARC LAMONT HILL, CNN POLITICAL COMMENTATOR: It's good to be here.

COSTELLO: Good morning.

It kind of irritates me when successful wealthy Americans say they worked hard to get where they are and don't seem to acknowledge they grew up in a much healthier economy. Stephen is this as they're intimating that if you can't make it up the ladder you've got to be lazy.

MOORE: Well you know Carol I did read your excellent piece on CNN.com and I'll say this. I agree with some of it but not all it. One of the points that you made was that there is a lot of luck involved in being successful and that's actually true.

You know I -- I wanted to be a professional basketball player. But I'm only 5'11" and that's not fair right that Kareem Jabbar is 7 feet tall. I mean look my point is there's a lot of luck in life no question about it.

But there's an old saying that is a truism that that luck is where preparation meets hard work. And I think when you look at America today I still believe Carol and I think you do too, the American dream is alive and well.

<09:50:07>

MOORE: That people who do work hard and do the right things and wait to have kids until they are married, stay in school, don't do drugs, you have a high probability of not being in poverty if you do those kinds of things and you may even be really successful and the next Bill Gates.

COSTELLO: So Marc I grew up in the times in the 80s right when college costs were nowhere near as expensive as they are now. And -- and you know my -- my father was able to get a job in the steel mill and make a decent wage. I -- that's -- I was lucky to grow up in that time and I was lucky enough to make it. And that's what I was trying to say, Marc. HILL: No that's exactly right. And that kind of luck, you can't play. You actually have a better chance of making the NBA than being the next Bill Gates in this economic environment. And the large reason is because even if you work hard every day, the months still last longer than your money. And it has nothing to do with work ethics, it has nothing to do with the pure (inaudible) ethics. It has to do with the labor market that simply doesn't afford hard work for everyday people.

If you are at the top of the social tier your hard work is rewarded. Your opportunity is expanded. If you're at the bottom of the social ladder, it's not. We have to reimagine tax policy. We have to reimagine not just the minimum wage but a living wage so that people who the things maybe just talk about will be able to be rewarded in the way the wealthy people are.

COSTELLO: And Stephen a new CNN/ORC poll out shows that most Americans think Republican policy favor the rich a whopping 69 percent that's compared to 30 percent for Democrats and you know I bring this up because, you know, we talk a lot about the minimum wage. Republicans are very against the minimum wage going up.

MOORE: Yes, yes.

COSTELLO: The Democrats are for it.

MOORE: Yes.

COSTELLO: So -- so what's -- what's -- what's going to happen in light of the way most people feel in this country whether they are Democrat or Republican?

MOORE: Well look, I consider myself a Republican most of the time. And I don't feel like the policies that I espouse are to benefit the rich. What I want and I think most Americans want are policies that try to make everyone richer. And I think that the problem with many of the Democrats that I deal with in Washington is they think that the goal is to make the rich poorer, not to make the poor richer.

Now on this issue of minimum wage because we're going to have a big debate on this in the months ahead -- I am very strongly against raising the minimum wage for this reason, Carol. My first job and I'll bet your first job was working for the minimum wage. Back -- and I'll let you know how old I was -- I was earning $2.15 an hour.

But you know that first job was the most -- one of the most important jobs that I ever had. You learn work skills. You learn to show up for work on time, you learn how to run a cash register. And my worry is if you raise the minimum wage and you eliminate some of those starter jobs, then you don't get the second job and third job and fourth job.

By the way, one other quick tip. You want to raise the incomes of people, get rid of Obamacare and CBO just showed yesterday because we are creating a part-time nation.

COSTELLO: All right Marc go ahead.

HILL: Here is the problem. We tend to infantilize poor people. Yes my first job paid $4.15 an hour, I was 14 years old and I worked as hard as I could for a crap job. The problem is there are people who are 28 years old and 35 years old in this labor market who are still taking those first jobs. This isn't some 16-year-old kid in the suburb you know learning the value of hard work. This is a grown person with children trying to make ends meet and they can't because we have these same policies and these same wages for them. We need to raise the minimum wage and living wage so that people can pay their bills.

Now I would agree with many economist and many Republicans quite frankly who say that if we raise it too much, we make it hard to keep small businesses open. We make it hard to support the economy. But there is a sweet spot where we can raise the minimum wage so that people can pay their bills and people will actually reinvest in the economy because they will be spending more but without compromising or crippling the bigger companies. We can find that spot.

But I don't buy the argument that you know we need to keep poor people's wages low so they can learn the value of working hard. I think that's somewhat condescending.

COSTELLO: Yes because the manufacturing jobs don't exist like they did in the past Steve and they don't pay as well. So if you have a high school education, you're kind of stuck.

MOORE: Well you know what --- I disagree with you, Carol. I mean I was just, I wrote a piece in the "Wall Street Journal" this weekend about what's happening in Michigan outside of Detroit where there is a real economic revival going on. And it's being led by manufacturing. You know we have a manufacturing renaissance going on in this country.

Now what's interesting is that it's less and less unionized. I disagreed with your statement that you know unions are what created these industries. I would make the case that in fact in the steel industry and the auto industry and other industries, unions actually destroyed those industries. And now they are coming back nonunionized in states like Tennessee and Texas and Florida.

COSTELLO: Well I'm only saying that and I don't agree with everything the unions did. Because I think some of the things unions did was harmful.

HILL: Right.

COSTELLO: I am saying that unions certainly made wages go up. And Marc I'll pose this question to you. If you're working at a low wage job at a nonunion shop, who is going to fight for you to raise wages? At the present time, nobody, right?

<09:55:00>

HILL: Well that's exactly right. You become more expendable, you become disposable. Your labor is getting de-skilled so that you are less specialized. So they don't have to pay you as much and when you fight or push back, they get rid of you.

And as we see for example big box retailers take over the mom and pop shops, we see that happening. When we see auto industries coming back de-unionized, when we see teaching forces coming back de-unionized, what we see is workers working for longer hours for less money with less safe conditions and less incentive to stay and more incentive to be quiet and continue be exploited.

This is a dangerous environment. Unions aren't perfect. No one is perfect but one thing we know that is supremely imperfect is unregulated, deregulated, unchecked capitalism. When that happens at this moment, we all are compromised.

COSTELLO: Thanks for the great conversation. I sure appreciate it. Stephen Moore, Marc Lamont Hill, thanks so much for being here.

MOORE: Thanks Carol. Take care.

COSTELLO: If you want to read more about this topic, check out my op- ed on CNN.com. It's entitled "Success Takes Hard Work Plus Luck". We're back in a minute.

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COSTELLO: Happening now in the NEWSROOM, a major mess from Missouri all the way to the Atlantic Ocean. As much as a foot of heavy snow expected in some places.

Monday, before his first Olympic event begins, Shaun White says no to slope style. The American snowboarder now changing his Olympic plans but that may not be the only reason he's sitting down.

Also, heroin in America, are we fighting the wrong war on drugs? One congressman wants to move away from pot and focus on heroin. And why does it take a famous actor's death to bring heroin to the forefront anyway?

And big tobacco has a new problem. One of the biggest pharmacies in America says cigarettes will no longer be sold in its stores. CVS is kicking the habit for good.

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NEWSROOM starts now.

Good morning. I'm Carol Costello. Thanks so much for joining me.