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Campbell Brown
Stock Markets Plummet; Obama Holds Fiscal Summit
Aired February 23, 2009 - 20:00 ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
CAMPBELL BROWN, CNN ANCHOR: Hi there, everybody.
An extraordinary day today in Washington and on Wall Street, and, yes, all of it affects your money.
We begin with the urgent news. Once again today, the Dow plunges, drops off a cliff, frankly, is more like it. This was after today's 250-point plummet. The industrial average is at the lowest level in 12 years.
But, just after the market closed, something pretty remarkable happened in Washington. And that's bullet point number two: a new week and a number of sweeping new proposals from the Obama administration, beginning with your government as you have never seen it. It was a most unusual moment on live TV.
It looks like the president is holding a press conference, but look closely. The audience is members of Congress and experts from across the economic spectrum. The president had them stand up one by one. Some asked tough questions about the economy or health care. Others made some pointed comments.
The first person the president called, his former rival for the Oval Office, Senator John McCain, who pulled no punches. Listen to a bit of the exchange when McCain points out that the president's new helicopter will cost taxpayers as much as Air Force One.
(BEGIN VIDEO CLIP)
SEN. JOHN MCCAIN (R), ARIZONA: I don't think that there's any more graphic demonstration of how good ideas have -- have cost taxpayers an enormous amount of money.
BARACK OBAMA, PRESIDENT OF THE UNITED STATES: I have already talked to Gates about a thorough review of the helicopter situation. The helicopter I have now seems perfectly adequate to me.
(LAUGHTER)
(END VIDEO CLIP)
BROWN: We're going to have much more on the candid give-and-take between the president and Congress and on the president's plans later in the week for the deficit, health care, and getting the country back on track.
But bullet point number three: our NO BIAS, NO BULL live call-in, your questions about money. As you just heard, Congress has questions, but we know you have got a lot, too. So, tonight, the best money team on TV is going to take your calls live right here. Your mortgage, your job, your retirement, we have got the answers.
Call us now at 1-877-NO-BULL-0.
And bullet point number four tonight: the first lady Michelle Obama's red carpet moment. Sure, most of the bling may have been in Hollywood for the Oscars last night, but the first lady made quite a splash at her first formal White House dinner. We are going to show you that, take you behind the scenes in the White House kitchen.
But let's get right to tonight's most urgent story, Wall Street's continuing meltdown and the Dow's big drop today. Is there anything the president can do to spark a turnaround?
Chief business correspondent Ali Velshi is here to explain what is behind the Dow's plunge and what investors are looking for.
ALI VELSHI, CNN CHIEF BUSINESS CORRESPONDENT: That's a big, that's a tall order, Campbell. Take a look at what happened today on the market.
It was a plunge of more than 3 percent on the Dow and on the S&P 500. But it wasn't -- we have seen more extreme plunges. The issue here is where it ended up, 7115. That's the lowest point we have seen since some point in 1997 on the Dow and on the much broader S&P 500.
Now, what we think is going on here, Campbell, is that we have seen a few legs of this bill. We have seen a stimulus program, which you can agree with or not, but it's out there for criticizing. We have seen a housing program that is out there. But there's still a lot of mystery, Campbell, surrounding what is happening on the banking side of things.
We have heard discussions about something that the government is going to do that will convert it into a very big shareholder in Citibank. And that's got some people talking about nationalization and all of the fears that that conjures up in some of our viewers' minds or some investors' minds. Some of those might not be true.
But the bottom line is there's still uncertainty about the banking sector. And as we have discussed, all of this comes back to the credit system. And if the banking system is not healthy, then we're not getting loans properly or businesses are not getting loans. And that's what's keeping this market uncertain.
So, this is a mark of uncertainty. If we can get some answers on the banking side, Campbell, we might start to see this market recover.
BROWN: All right, Ali Velshi for us tonight.
Ali is going to stick around and talk to us a little bit later as well.
But we want to turn to the scene in Washington right now, where the president's entire day focused on the economy. But when he appeared on camera this afternoon, it was a moment we have all been talking about, because we have never seen anything quite like it, frankly, a live Q&A with members of Congress pressing the president on live television.
Senior White House correspondent Ed Henry has details for us.
And, Ed, I want to play you one exchange from today's event. This was between the president and Congressman Joe Barton, Republican of Texas. Let's listen.
(BEGIN VIDEO CLIP)
SEN. JOHN MCCAIN (R), ARIZONA: I don't think that there's any more graphic demonstration of how good ideas have -- have cost taxpayers an enormous amount of money.
BARACK OBAMA, PRESIDENT OF THE UNITED STATES: I have already talked to Gates about a thorough review of the helicopter situation. The helicopter I have now seems perfectly adequate to me.
(LAUGHTER)
OBAMA: Of course, I have never had a helicopter before.
(LAUGHTER)
(END VIDEO CLIP)
BROWN: OK, clearly, Ed, that was not the sound bite we had anticipated. But hopefully we have got it cued up now. Let's try again. Can we play the bite?
OK. Never mind. We don't have it, Ed. But I will give the gist of it, which was the president pushing back a little bit, making a point about how partisan games were not going to be a part of this equation here. Tell us what he said.
ED HENRY, CNN WHITE HOUSE CORRESPONDENT: What was interesting is that Republican Joe Barton basically said, look, unless you invite more Republicans to the table, you're not going to get a lot of progress on some of these big-ticket budget items, health care, et cetera. Take a listen exactly. I think we have it now. Take a listen to exactly how he put it.
(BEGIN VIDEO CLIP)
REP. JOE BARTON (R), TEXAS: This is a good first step. But if this is all we do, it's a sterile step.
On the other hand, if you really follow up and include everybody in the process, you're more than likely to get a solution that everybody signs off on.
And I have set or stood behind every president since Reagan in this room at bill-signing ceremonies that were the result of consensus. So I commend you for this.
OBAMA: On the one hand, the majority has to be inclusive. On the other hand, the minority has to be constructive.
And so to the -- to the extent that on many of these issues we are able to break out of sort of the rigid, day-to-day politics and think long term, then what you should see, I think, is the majority saying, "What are you ideas?" The minority's got to then come up with those ideas and not just want to blow the thing up.
(END VIDEO CLIP)
HENRY: Now, here is why that exchange really matters.
This was the most optimistic elsewhere in this event that I have ever seen this president on the possibility of health care reform. And, tomorrow night, he is going to be going for the first time before a joint session of Congress, and he's going to promise he's going to have the budget deficit; the $1.3 trillion deficit, he's going to cut it in half during his first four years, this term.
What he has to do get that done is stop the exploding costs of health care. Everyone agrees, from a substantive standpoint, that's one of the biggest-ticket items of all. And what you heard him there saying was, look, I understand that the Democrats have to bring the Republicans to the table, but you know what?
You guys actually have to bring ideas and participate as well. You just can't say no.
And what top White House aides here say is, that's a taste of the Barack Obama we're going to see in the weeks ahead, not like the stimulus fight, where he put a lot more premium on bipartisanship. Now he's going to say, look, I will have you at the table, but you have got to participate as well. The onus is on Republicans, not just Democrats -- Campbell.
BROWN: Ed Henry for us tonight from the White House -- Ed, thanks.
Now, for President Obama, the pressure does not let up. Tomorrow, he heads to Capitol Hill tomorrow for a prime-time state of the nation speech to Congress.
The best political team is here to look ahead at what's at stake for the president and what we're going to hear tomorrow night.
We have also got a look behind the scenes in the White House kitchen. Check it out.
(BEGIN VIDEO CLIP)
MICHELLE OBAMA, WIFE OF SENATOR BARACK OBAMA: I think they have another test, because they're feeding kids. And sometimes kids are like, it's green. And that bright green color is horrible-looking. So, they have some interesting challenges just meeting the taste issues of a 7- and a 10-year-old and making food that's healthy and delicious.
(END VIDEO CLIP)
BROWN: Michelle Obama on the feeding of the first family, that coming up.
And, tonight, the best money team on television standing by to answer your questions. Call us right now, 1-877-NO-BULL-0. That is 1-877-662-8550.
We will be back in a sec.
(COMMERCIAL BREAK)
BROWN: President Obama's public question-and-answer session this afternoon was pretty amazing, and almost unprecedented, experts and elected officials from both parties publicly holding his feet to the fire. As the president saw it, this was long overdue.
(BEGIN VIDEO CLIP)
OBAMA: My sense is that, despite partisan differences, despite regional differences and different priorities, everybody is concerned about the legacy we're leaving to our children.
And the hope was is that, if we had a forum like this to start talking about these issues, that it would turn out that there are real opportunities for progress, there are going to be some areas where we can't make progress, but that we have more in common than we expect.
(END VIDEO CLIP)
BROWN: So, the president brings in both sides, so they can take their concerns right to the top. Is that progress? Will it help?
We have got a lot to talk about with our political panel tonight, senior political analyst Gloria Borger, our national political correspondent, Jessica Yellin, and CNN political analyst Roland Martin, here with me in New York.
Welcome, guys.
ROLAND MARTIN, CNN CONTRIBUTOR: Glad to be here.
GLORIA BORGER, CNN SENIOR POLITICAL ANALYST: Hi.
BROWN: Gloria, what we saw today, the United States president at the lectern taking question after question from lawmakers, what does that tell you about his approach?
BORGER: I know.
Well, first of all, it kind of reminded me of the prime minister in parliament in Britain, who answers questions all the time from both the opposition and his own party. So, it was kind of refreshing.
First thing it shows you, Campbell, is that this is a president who likes live events, unscripted live events, who goes to town halls and lets anybody speak, and who lets anybody ask him many questions they want. It was tame, but he was happy to take them.
Secondly, it's an administration that's intent on lifting the veil on all the complexities we face in government, particularly in this economic crisis. So, there he was talking about the dangers of defense procurement, how difficult it is, how difficult it is to reform health care. And he was kind of wonkish. We haven't seen a wonk in the White House like this since Bill Clinton.
BROWN: A fair point.
Jessica, I know your sources tell you that this whole summit was sort of designed to build momentum for what he hopes is going to be his signature issue, health care.
JESSICA YELLIN, CNN CONGRESSIONAL CORRESPONDENT: That's right, Campbell.
My sources inside the White House say that the president believes that he has to get the health care done not just in his first term, but this year, because it's an essential first step, they think, to getting the rest of the agenda accomplished. And there's not a whole lot of agreement on that necessarily, because other people want to do Social Security reform first or tax reform.
BROWN: Right.
YELLIN: And this was a way for them to frame health care reform as the way to kick-start a new fiscal responsibility to get the budget under control. And we're going to see another summit just like this one on health care coming up.
So, it's really the C-SPAN presidency we're looking at.
(LAUGHTER)
BROWN: And, Roland, tomorrow, he's going to give essentially a State of the Union address. Talk to me about what is at stake for him and how important the tone he takes tomorrow night is going to be.
MARTIN: He has to spell out successes.
Although he's been in office a month and we have heard all these different programs and initiatives, the American people still need to know that we're making progress. We can sit here and keep talking about how the economy is failing, we're losing jobs and the stock market just keeps going down, but the people at some point have to see that there's progress.
And so he has to spell that out. And so, even today, what you heard today, he's sort of laying the markers down in terms of how he's going to be judged, and he has to meet that. Cutting the deficit? He has to prove he can actually do it. A stimulus is going to work? Has to prove it.
(CROSSTALK)
BORGER: Campbell, what the people want to see in this speech and also in their new president is action. And he has shown them that he is able to act.
And in order to keep their confidence, though, he has to take them into the future and say, OK, we have done the stimulus package. Here's my economic blueprint. And, by the way, we're going to end President Bush's tax cuts for the wealthy. We're going to tax corporations.
But he's going to say, I'm told, that we're going to earmark some of those tax cuts for the priority that Jessica was talking about, health care. That's very, very important to these people.
BROWN: Well, to Gloria's point, Jessica, tough choices are going to be a theme. He's going to have to be very honest and very realistic in terms of what those are going to be. What do you think we will hear on that front?
YELLIN: He will talk about some cuts that he has to make, some trimming of different deficits -- look, of different budgets. The Defense Department is going to get less money than they're used to having.
There will be even be some trims in his budget coming up when it comes to some of the spending for Medicare, Medicaid. But, tomorrow night, he's going to do a lot of what Roland talked about. My sources are saying he's going the lay out not only what his plans are, but what he's just accomplished in the stimulus, for example.
There's a number of provisions in the stimulus that are pieces of his future agenda, so some improvements to the health care system that will lead to health care reform, some changes that will lead to climate change reform and energy reform. So, he will both talking about what he's already done and where he hopes it will take him.
(CROSSTALK)
MARTIN: And, Campbell, a lot of us have -- we have gotten caught up in this whole notion that somehow you're going to have these huge initiatives in terms of health care and energy.
What the president has constantly said is, we can use executive orders, we can use existing bills to still achieve what we want to in these areas.
(CROSSTALK)
BROWN: In a more incremental way.
MARTIN: Right. Some might call it piecemeal, but he's saying, this is what we're already in control of. Maximize those opportunities. BORGER: And also he's -- his advisers say he's never going to forget the middle class. He's going to remind you what he came to the office of the presidency for, which is to protect the middle class. And so that is going to be one of the subthemes of the speech as well.
BROWN: All right, guys, we have got to end it there. Gloria, Jessica, and Roland, many thanks, as always.
MARTIN: Thanks a bunch.
BROWN: Think about it: hundreds of billions of dollars in the stimulus package, so much it would seem an easy target for fraud and abuse. And that's why President Obama asked a former Secret Service agent to be the watchdog.
We're going to talk about that in "Cutting Through The Bull" tonight.
Plus, behind the scenes in the kitchen with Michelle Obama before she hosts her first formal dinner at the White House.
And the best money team on TV answering questions, answering your questions. There's the number, 1-877-NO-BULL-0, 1-877-662-8550. Give us a call.
(COMMERCIAL BREAK)
BROWN: "Cutting Through The Bull" tonight.
As we mentioned earlier, today, President Obama announced he's appointing a former Secret Service agent and top government investigator to be a kind of watchdog over the stimulus money. Earl Devaney's official title? Chairman of the new Recovery Act Transparency and Accountability Board.
His appointment is in part meant to quiet all the yelling and screaming about pork and wasteful spending in the stimulus package and to make it clear to anyone thinking about abusing this record-setting financial package that the president will, in his words, call them out on it.
(BEGIN VIDEO CLIP)
OBAMA: We are addressing the greatest economic crisis we have seen in decades by investing unprecedented amounts of the American people's hard-earned money.
With that comes an unprecedented obligation to do so wisely, free from politics and personal agendas. And, on this, I will not compromise or tolerate short cuts. The American people are looking to us for leadership. And it falls on us now to reward their faith and build a better future for our country. And I have every confidence that we can all do this.
(END VIDEO CLIP)
BROWN: Now, we have heard a lot of talk about transparency from the president and from this White House.
But we also know, given the amount of money involved, it is going to be a real challenge trying to police this effort. My hope is that Mr. Devaney's appointment is about more than just optics, that it's about more than good politics.
But my concern is, he's keeping watch over the money that basically has already been parceled out. It's great that he will be reporting back to Congress and the public when he finds instances of abuse. But when are we going to figure out how to keep track of where taxpayer dollars go and stop waste and abuse of our money before it happens?
Some waste in government is inevitable. And any increase in government oversight and transparency, I'm for. But it's not clear to me that this new board and the new chairman are going to get us any closer to addressing the heart of this problem.
But, for more on that, let's bring in Tom Foreman, who has some additional details for us -- Tom.
TOM FOREMAN, CNN CORRESPONDENT: Campbell, I think you're already turning up the heat on what's going to be a very, very hot seat, indeed.
When you have got a lot of money to keep an eye on, you need a no-nonsense tough guy watching the till. And that's precisely the sort of fellow President Obama has chosen.
Earl Devaney, if we look at his resume here, is from Massachusetts, where he started as a police officer, went on to a long career in the Secret Service, which included leading the fraud division. From there, Devaney joined the Environmental Protection Agency, where he oversaw all of the EPA's criminal investigations. He helped blow the whistle on Jack Abramoff, for example, and those sketchy deals involving gambling on Indian reservations. You may recall that.
He also uncovered a sex-for-drugs scandal. He's widely regarded as one of the country's top experts in white-collar crime. And those are really not bad qualifications to have for the job he's got, because you're right, Campbell. What it really comes down to is, what will he actually do?
Well, the first job that he has got on the table here is a whopper. Fundamentally, he has to keep track on the $787 billion stimulus package, all of that money. That means keeping track of thousands of federal, state, and local agencies, and their wallets, too.
He will have to prepare reports for Congress for all of this, who gets the money, what did they do with it. And he will have to red- flag potential waste, fraud, or abuse if he finds it, as you pointed out.
All of this is aimed at fulfilling the president's promise that the stimulus plan will include a very high level of accountability and transparency. In other words, you, the taxpayer, are supposed to know where all of your tax dollars are going during this process. And Devaney will be the guy with the receipts. And if they don't match up, he will bring in the guys with the handcuffs.
So, you can see, Campbell, he's already keeping an eye on all of us to see where that money goes.
(LAUGHTER)
BROWN: Yes. He's got the look down, if nothing else.
FOREMAN: Yes.
BROWN: All right, Tom Foreman for us tonight.
But, Tom, you're actually not going anywhere, because, in a moment, Tom has an exclusive new snapshot of how Americans are feeling about the economy. Yes, most of you think the country is going down the tubes. But you also think that you are doing pretty well yourself. So, why the disconnect here? We are going to try to make sense of it all when we reveal our very surprising new poll.
Also, a reminder: We have got the best money team on television standing by right now to answer your questions. Call in now. Ask us about your job, your mortgage, your retirement. The number is 1-877- NO-BULL-0. That's 1-877-662-8550.
(COMMERCIAL BREAK)
BROWN: President Obama made a bold pledge on the economy today, one that won't be easy for him to keep. Listen to what he said this morning.
(BEGIN VIDEO CLIP)
OBAMA: We cannot and will not sustain deficits like these without end.
Contrary to the prevailing wisdom in Washington these past few years, we cannot simply spend as we please and defer the consequences to the next budget, the next administration or the next generation.
We are paying the price for these deficits right now. In 2008 alone, we paid $250 billion in interest on our debt: One in every 10 taxpayer dollars. That is more than three times what we spend on education that year, more than seven times what we spent on VA health care.
So if we confront this crisis without also confronting the deficits that helped cause it, we risk sinking into another crisis down the road. As our interest payments rise, our obligations come due, confidence in our economy erodes and our children and our grandchildren are unable to pursue their dreams because their saddled with our debts.
That's why today, I'm pledging to cut the deficit we inherited by half by the end of my first term in office.
(END VIDEO CLIP)
BROWN: Now, the president faces an unprecedented deficit, raging unemployment, a continuing mortgage meltdown. No wonder Americans are so pessimistic on the economy.
But we are also sending some mixed messages.
And Tom Foreman has got the surprising results of a new CNN poll.
It's tonight's ripple effect -- Tom.
TOM FOREMAN, CNN CORRESPONDENT: Well, Campbell, this is something that is rippling through everything.
Over the past few weeks, the Obama administration has sold its stimulus plan with an avalanche of warnings about how the economy is in dire shape, on the verge of collapse, depression, disaster if we don't do something immediately.
Now, I know you have heard all that. Don't change channels. This isn't one of those stories. We have daily reports of massive job losses, sure, the market turmoil, and the seemingly endless parade of requests from banks and auto companies for more money, more money, more money for the bailout.
But our latest poll suggests that the ripple to voters has been taken in a very mixed way. They trust government to fix these problems now. But here's the peculiar part. They don't have faith in some of the actual steps the government is taking.
Look at this. Will the Obama team make the right economic decisions? Seventy-five percent say, yes, they will in our poll. Will the Democrats in Congress make the right decisions? Sixty-six percent say, yes, they will. And when -- will the Republicans make the right decisions? Fifty-three percent say the Republicans will make the right decisions. Yes, yes, yes.
This is very encouraging news for Washington, because the answer has been no, no, no for a long time. But now here comes the paradox. Those very lawmakers that voted, that these voters say they trust, have spent billions to bail out banks.
Will bankers make the right decisions right now? Seventy-two percent say, no, they won't. Congress is sending billions to the auto industry. Will the car companies use it wisely? Seventy-four percent say no. And when you move down here to Wall Street, the question is, will they do the right thing? All of this is to help Wall Street out -- 69 percent say, no, they won't either.
One of the few keystones of Washington's economic plan that a majority of voters support is the business of bailing out troubled homeowners. In other words, Campbell, they trust their neighbor, but not the big business that he works for -- Campbell. BROWN: So, Tom, if voters are this uncertain about Washington's plans, you can't help but wonder how they feel about Washington's warnings. Do they really believe that we're in as much economic trouble as we're being told?
FOREMAN: Yes, they do, Campbell.
But, once again, our poll found an apparent contradiction. After listening to all of these sky-is-falling scenarios over the past few weeks, almost 80 percent say yes, things are going badly in the country. But asked about their personal situation, almost as many, 75 percent say, I'm doing OK. To get his stimulus bill passed, President Obama had to focus on that first part, the fear quotient. And the public shows that that sunk in. They're scared as heck.
But now, to make his plan work, he likely has to energize that second part, the confidence factor so people will spend and make this plan work -- Campbell.
BROWN: All right, Tom Foreman for us tonight. Tom, thanks.
With a money meltdown in full swing, there is hardly a person in this country who is not facing a ripple effect of some kind. We're worried about our mortgages, our jobs, our retirements. We know you have got a lot of questions so we put together the CNN money team to answer them for you. And you can call us now at 1-877-no-bull-0.
Here to take your calls, Donna Rosato, senior writer for "Money" magazine, Ryan Mack, who's president of Optimum Capital Management and, of course, as always, our own Ali Velshi.
So, Donna, let me start with you and just start with the news of the day. The Dow closing at its lowest point since the spring of 1997. I mean, is there something people should wake up tomorrow morning and do like get their money out of the market altogether? What?
DONNA ROSATO, "MONEY" MAGAZINE: Well, know that these are very scary times when you see a day like that in the market, it can give you pause. But for most of us, you're not going to make a decision. You shouldn't make a decision based on one day in the stock market, as scary as it might be.
What you want to think about is your time horizon. The money that you have invested, for most of us, it's our 401(k). That's long- term investment. Unless you need the money sooner than five years, you probably want to leave that money and keep it put.
I will say one bright note, if you're a young investor today and you don't need money for a really long time, stocks are really cheap. When they keep going down like this, that could be a good thing.
BROWN: Well, I was going to say, if you do have a new pot of money right now, be it a severance package or, I don't know, a tax refund, I mean, is that what you should do? You would advise people to put in the market at the moment? ROSATO: Again, it depends. You have to think about what's your goal for that money. Is that long-term money, meaning more than five years? If you need the money sooner than five years, you're probably better off putting it in a CD or in a high-yield savings account in your bank so it's liquid for you. Longer than that, stocks are cheap right now and this might be a good time for long term. It will give you time to ride out these ups and downs.
BROWN: OK, hang on, guys. We want to take a call. This is from Aine in Phoenix, Arizona.
Aine, what's your question?
AINE, ARIZONA: Hi. I have a question regarding the president's housing plan. I just wanted to know when there will be details exactly on where people should go or who they should be talking to, to actually get the help. Will there be a Web site, or should we be talking to our mortgage companies? And just basically, who should we be talking to?
BROWN: Who wants to take that? Ali --
ALI VELSHI, CNN CHIEF BUSINESS CORRESPONDENT: Well, we've got a good amount of detail right now. Basically, it's two plans even though it sounds like one.
There's one for people who can refinance. That's if your mortgage is still not much more than the price of your house. If your mortgage is less than the value of your house or above by about five percent, you can refinance at a fixed rate for 30 years. If you are in more trouble than that, if you're underwater by more than 50 percent, then you can go to your bank and have them modify the loan. You can get loan rates as low as two percent.
What they'll do is over the course of about five years, there'll be a low rate. Then they will gradually move up to the prevailing rates today which are about five percent interest.
Now, between those two plans, the administration thinks it will help about nine million people. You can talk to your bank about this first. More details will come out on March 4th, but we've got that amount of detail right now. So you can at least determine whether you're likely to qualify under these two programs or not.
BROWN: All right. Ryan, listen to this. This is one of our iReporters. This is from Robin in Georgia.
(BEGIN VIDEO CLIP)
ROBIN HAYDEN, ATLANTA, GA: My personal feeling is that the citizens deserve a bailout. It's our money. It is our money that financed Wall Street and they said it was to help Main Street.
Well, to me, the only way to help Main Street is to give us the money. Give us all of the money. That's how you help Main Street. That is how you're going to help stimulate this economy. (END VIDEO CLIP)
BROWN: And, Ryan, we get a lot of comments like that. People are like, you know what? Just cut us all a check.
RYAN MACK, PRESIDENT, OPTIMUM CAPITAL MGMT.: Right. Well, the consumer rebate tried to do that last year and we saw what happened. There was a small blip in GDP.
Look, we do a lot of work with individuals and unions. And if you look at individuals and unions that we work with earning $30,000 a year, you'll see many of the same fiscal problems as those earning $90,000 a year. You think that three times the income, you should see three times the savings, three times the net worth, but that's just not the case.
More money does not always equate to more savings. We have to educate and make sure that we're doing the things that try to stimulate as opposed to just giving out checks and really, there'll be incentives out in this program.
Let's give out food stamps to make sure that they can actually put the money into food. Let's give out incentives to purchase homes, incentives to purchase cars so when they actually go out and purchase things, they're providing the incentives and that's going to stimulate the economy. And if giving out checks away in over-debt market-filled market, all we really going to do is essentially have them take their money and put them to their credit cards and not stimulate the economy in the long run.
BROWN: Right. All right, guys, stand by. We've got a lot more. A lot more questions coming in as we speak, including just what kind of mortgage you should be shopping for if you are in the market today.
Keep calling us -- the number 1-877-no-bull-0. That's 1-877-662- 8550. We'll be right back.
(COMMERCIAL BREAK)
BROWN: The Obama administration is in talks with banking giant Citigroup to take over up to 40 percent of the struggling bank. And this is according to a report in the "Wall Street Journal." Lots of scary talk these days about nationalizing the banking system. But is the worry justified?
We want to put that question along with many others to the CNN money team, Donna Rosato, Ryan Mack and Ali Velshi.
And, Ali, what does it mean? Because we're talking a lot about it, if my bank is nationalized, and is that even the right word to use, I guess?
VELSHI: I would love it if we have a different word for it because really when we think about nationalization, think about Cuba in 1957. You think about Hugo Chavez taking over the oil companies to control how the companies are run in policy. That's not what we're looking at right now.
This nationalization means that the government can borrow money more inexpensively than anybody else can, and the banks need money. So this is a way to capitalize the banks that they have enough money.
Basically, think about it as a scale. A bank has assets like you do, and it has obligations and debts. And right now, the assets are very low and their obligations are very high. So when the government injects more money into it, or does it a certain way, it gets more into balance. We need our banks to sort of have a balance, otherwise they're at risk.
So I don't think we need to think about nationalization as the government moving in and taking control of these banks. I don't think the government cares to own banks, and we don't really care for the government to be owning the banks. I think it's a short term thing.
BROWN: All right. We want to take another call. We've got Therese from Virginia who's on the phone with us right now.
Therese, what's your question.
THERESE, VIRGINIA: Hi, Campbell. I'm in the process of building a home. And within this time frame that I started in October, I'm afraid that the home value has come down on the house. What do I do to avoid going into this -- going to close on an upside down mortgage?
BROWN: Good question. Donna, why don't you take that one?
ROSATO: Well, first of all, she has to find out, you know, have an appraiser to come in and find out exactly what is the home value. Look at homes that have sold in the area.
This is a home that she's building, so that's going to be a little bit different. You know, is she approved for the mortgage? We need to know a little bit more about what her particular situation is. But has she been approved for a mortgage? Home values changing. Is it significantly, is it just five percent away from the end order or is it more than that? So we need to know a little bit more about her situation.
MACK: And I would like to say that, you know, if she's purchasing a home, hopefully, if this is her first home that she's building, she's not looking at as an investment. This is her home. This is what she's going to hang her head at the end of the day. So hopefully, the appraisal value shouldn't mean as much as it means as it is important to you that this is my home, my sanctuary.
BROWN: Right.
MACK: So, at the end of the day, if you lose a little bit in the short run, if you're going to be living there for 15 to 20 years, that's fine. Ride it out. You'll be fine.
BROWN: Ryan, take a look at these photos. We've got them up on the big wall here as well. This is from an iReporter in Atlanta. A three-hour wait to get in the door at a job fair. I mean 3,000 people never even got in.
If you are looking for a job and there are just too many unemployed people in the area, I mean, what do you do? Is it time to pack up and move?
MACK: I definitely don't think it's time to pack up and move. You know, now is the time to understand what your true value is. You know, and we do a lot of work with individuals helping them to find jobs, individuals who are coming to our financial (inaudible), and their main question is how do I just get a job.
You can -- your local community college is a great place to start at. Go to your local politician to say what sort of not-for-profits do we have in our community that have great free resources, free training, free job training, free placement. All these things are right under your own nose. I mean, then we have to also flood the monster, flood the careerbuilders.com. Do everything possible to go out and get that job.
ROSATO: I'd be really careful about moving to where you think the jobs might be as well, because you want to stay where you know people and you have contacts.
BROWN: Right.
ROSATO: So you know, that's the best way to do it is use your network. If you move somewhere where you don't know anybody, it could be harder.
BROWN: And starting from scratch.
ROSATO: Yes.
BROWN: OK, stand by, guys. We're going to take one more quick break.
This week, President Obama outlines his plan to rein in government spending, to save Washington a little money. What can you do at home to tighten your belt and live within your means? The money team is going to tackle some of those questions and we'll hear their answers when we come back.
And we still got time, so give us a call, 1-877-662-8550. Again, that's 1-877-no-bull-0. We'll be right back.
(COMMERCIAL BREAK)
BROWN: Times are tough, money's tight. So we are back with the CNN money team. And we want to listen right now to Jean, an iReporter from upstate New York who is 67 years old and in trouble. Let's listen to what she says.
(BEGIN VIDEO CLIP)
JEAN LINDSAY, GENESEO, NY: I have no 401(k). I will have to work until I drop. I have very little money for savings. What the heck can I do?
(END VIDEO CLIP)
BROWN: What can she do, Donna?
ROSATO: Well, the good news is, she's got a job. And the number one thing I would do right now is to make sure she can keep her job. You know, a lot of people are getting laid off. Do what you can. Stand out. Don't complain.
Make sure you hang on to that source of income. Then it's time for some tough decisions. You know, if you have -- she has said that her income doesn't quite cover her expenses, she may need to make some tough decisions, downsizing, selling a home, trying to get those -- attack those big fixed costs.
You know, we're going to live for a long time. And even at 67 years old, it is not too late to continue to start saving and to save more.
MACK: I would like to also say, you know, she's 67. Colonel Sanders started Kentucky Fried Chicken when he was 66.
BROWN: Here you go.
MACK: You know, life starts at 60.
BROWN: All right.
MACK: It does not end at 60.
BROWN: That's a good point.
MACK: So we have to understand when you're a senior, you can still work. You can still contribute, and you have a lot of years left -- a lot of productive years left.
VELSHI: And keeping your job and keeping your health care is particularly important. But, yes, cut down now, tighten your belt now.
BROWN: Well, let me ask you though, when you're in a crisis situation, as it sounded like she may be feeling that way at least, when is it OK if you do have a 401(k) to tap into that 401(k)?
VELSHI: You were talking about this the other day, you don't like when people go in their 401(k).
MACK: I don't like when people go to 401(k)s. I don't like compromising the integrity of the 401(k) for other things outside of retirement. But for the last resort, you know, for last resort, if you think you can handle that penalty, that 10 percent, that last federal, state taxes and all those things, you might be -- you might have to if it's the last resort.
BROWN: All right, guys. Many thanks, Donna, Ryan, Ali, as always, appreciate it. Great panel.
And to all of you who called in, thank you for being part of the discussion. Don't be discouraged if you didn't get on tonight. We are going to be doing a lot more of these in the coming weeks, so please keep those calls coming.
The president's big speech to Congress tomorrow night too, 9:00 Eastern time, we should mention that. CNN will, of course, bring it to you live and be -- or join me right here at 8:00 for a special NO BULL preview. Plus, CNN.com has a full day of special coverage all day tomorrow.
CNN, CNN.com and Facebook take on the state of our nation and our economy. Watch with your Facebook friends at CNN.com live all day Tuesday and Tuesday night for the president's address.
And tonight, we have pictures of a spectacular prison escape we're going to share with you. It's up, up and away for two notorious criminals. We're going to tell you where it happened and who got the blame.
And Michelle Obama gets out the good China for her first formal state dinner on the same night as the Oscars. How did that work out?
(COMMERCIAL BREAK)
BROWN: A big name from basketball in the news tonight and not in a good way. Joe Johns joining us with the briefing -- Joe.
JOE JOHNS, CNN SENIOR CORRESPONDENT: Campbell, Charles Barkley is headed to jail. The former NBA star turned broadcaster pleaded guilty today to DUI charges. Barkley was arrested in Scottsdale, Arizona on New Year's eve. He'll serve five days next month, pay a fine and take an alcohol education class.
The manhunt is on after a dramatic prison break in Greece. Hollywood could not have scripted it any better. On Sunday, two of that country's most notorious convicts climbed rope ladders into a hijacked helicopter hovering above the prison. A gun battle ensued as it flew away. Today, three Greek prison officials resign.
The Vatican filled a major vacancy in the American Catholic church today. Milwaukee Archbishop Timothy Dolan will become the new archbishop of New York. Dolan will replace retiring cardinal, Edward Egan. New York is the second largest archdiocese in the country after Los Angeles.
When you hear "sale of the century," you think bargains, right? At an art auction in Paris, they're calling this the sale of the century, a 1911 painting by Matisse that sold for the equivalent of just over $41 million. No word yet on who the buyers are. But, Campbell, I can tell you there are still people out there with a lot of money.
BROWN: Apparently so. Who knew in this economy? Joe Johns -- Joe, thanks very much. We want to show you right now a live picture of George Clooney at the White House, talking about his latest trip to Darfur. He also has an appointment apparently to be on "LARRY KING LIVE" tonight. What can you tell us, Larry?
LARRY KING, HOST, "LARRY KING LIVE": You got it, Campbell. George is going to be with us tonight. He'll tell us why he was at the White House and why you might want to be paying attention to what he said to Vice President Biden. What we all might be paying attention to.
Plus, T. Boone Pickens is here to answer this question -- is America being held hostage by its dependence on foreign oil?
And the stock markets still on the skids big time. How will President Obama confront the economic crisis in tomorrow's speech? A preview coming up all next on "LARRY KING LIVE," Campbell.
BROWN: All right, Larry. We'll see you in a few.
Many of you were watching one red carpet at the Academy Awards last night. The president and first lady were walking down another one 3,000 miles away. We're going to look at their first fancy White House dinner in our "Political Daily Briefing."
(COMMERCIAL BREAK)
BROWN: One month into the new administration and President Obama still finds himself to be hugely popular. So does his wife, Michelle. More popular at this early stage than any first lady in 30 years, according to a "New York Times"/CBS poll that came out today.
Last night, her first big test as official White House hostess. And that is our "Political Daily Briefing" tonight. Erica Hill is here and it looks like the Oscars weren't the only glamorous gala taking place.
ERICA HILL, CNN CORRESPONDENT: No, they weren't. In Washington --
BROWN: What did we miss?
HILL: We miss a lot because we were both home probably watching the Oscars. But in Washington, the place to be Sunday night was the White House.
The president and first lady hosted the governors' dinner. It is their first official dinner since moving in. And in keeping with tradition, the first lady offered journalists a kitchen and menu tour before the event along with the White House chef. Cristeta Comerford was there, along with the pastry chef and a couple others.
As part of her pledge to open up the White House, Mrs. Obama also invited the top six students from a local culinary school to be part of the festivities. She encouraged them also to ask questions of the staff. One wisely asked if they ever have interns. The answer, they were always accepting resumes. Send it on in.
BROWN: So, very lucky afternoon for them. What was on the menu?
HILL: The menu actually looks pretty good, I have to say. As far as I know, none are Abe Lincoln's favorites, but you know, I could be wrong.
BROWN: Yes.
HILL: Lots of fresh local ingredients here and healthier options, which the first lady stressed during this menu preview tour.
A few highlights from the menu for the main course. Beef and scallops, which the first lady said are actually a favorite of the president. Cream spinach also in the menu but get this, absolutely no cream in the spinach. Mrs. Obama says it's delicious. Huckleberry cobbler with caramel ice cream to round it out for dessert.
The first lady also offered a glimpse of what the White House kitchen handles on a normal day when it is just the first family. Take a listen.
(BEGIN VIDEO CLIP)
MICHELLE OBAMA, FIRST LADY OF THE UNITED STATES: One of the delights of living here is working with everyone here who has just gone above and beyond to make this place feel like a home. Everything from Bill, you know, helping the kids make desserts with friends to, you know, Tommy and the guys making French fries whenever you want.
(END VIDEO CLIP)
HILL: The first lady praised the waffles and grits which have apparently become a breakfast staple, although she says not for her. She also mentioned the soups and salads that she often has for lunch. And as for the president, he is a big fan of the pastry chef, William Yosses, "Bill", as you heard Mrs. Obama refer to him, whom he calls the crust master.
The students actually got to sample from the crust master's dessert here. The first lady jokingly said the availability of so many delicious desserts, Campbell, is a bit of a problem. That, and for media availability, the French fries would be too.
BROWN: I am so hungry. I'm perfectly fine before you did that.
HILL: It's really not fair to do this to you, is it?
BROWN: It was really rather rude of you. OK, but I have to ask, speaking of challenges -- and where -- this has got to be a bit of a security issue, like where does all that food come from?
HILL: I wonder the same thing and I was really happy one of the students asked actually on this tour. And it's a major concern. In fact, it turns out for security reasons, there actually aren't regular deliveries.
Now, the White House does partner with local farmers and distributors who supply much of the food in the White House kitchen. But interestingly, a lot of these folks don't even know that their food is destined for the president's table. So, there you have it.
A little later that night, by the way, it was, of course, the president's turn to do a little bit of hosting. Here you see the first couple arriving in the state dining room. In his toast, he also offered up a healthy portion of bipartisan optimism.
(BEGIN VIDEO CLIP)
BARACK OBAMA, PRESIDENT OF THE UNITED STATES: Let me propose a toast. To the nation's governors, to the United States of America, and to the certain hope that despite our current travails that we will all emerge more prosperous and more unified than we were before.
Cheers.
ALL: Cheers.
(END VIDEO CLIP)
HILL: Earth, Wind and Fire was also on hand to do a little --
BROWN: Earth, Wind and Fire. We should get invited to one of these things.
HILL: I know, right? You got connections.
(CROSSTALK)
BROWN: Right. Erica Hill for us tonight. Erica, thanks.
We'll be back right after this.
(COMMERCIAL BREAK)
BROWN: And that's it for us tonight.
"LARRY KING LIVE" starts right now.
