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Glenn Beck

Jesse Jackson Comment Stirs Controversy; How Serious is Threat from Iran?; Former Hostages Open Up

Aired July 10, 2008 - 19:00   ET

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

BEN STEIN, HOST: Hi. It`s Ben Stein. Me in person. Glenn Beck is still on vacation, so they asked me, Mr. Excitement, to fill in. If you like high-octane, in-your-face television about how we`re all doomed, you`re in for a white-knuckled thrill ride, maybe. So buckle up and hold on. I`m about to light this candle. Can you feel the excitement building?
Now, let me tell you before we start and indeed light this candle and blast us all into outer space, that my being on this show is a miracle. Not just because I basically am a big nerd and shouldn`t be on TV at all, but because we`re in the United States of America and have freedom of speech.

And this country is the greatest miracle in the history of mankind. It`s the greatest thing that`s ever happened to the human race. Everything we do here should be an acknowledgment of that fact.

And with gratitude to the men and women who make it possible, not by talking on TV, not by selling stocks on Wall Street, not by passing laws in Congress, but by picking up a gun and risking their lives and their limbs and their family`s peace of mind, we should all be on our hands and knees - - on our knees, in particular, with gratitude for these men and women in the armed forces every single day.

So let`s start with that, and then let`s go to the news at hand. My former boss and friend, Reverend Jesse Jackson knows what it`s like to get caught on tape saying the wrong thing at the wrong time.

In 1994, he called New York City Heimytown, referring to the city`s large Jewish population. He later apologized, saying he made the statement to a reporter in private.

Now, possibly history is repeating itself. During a recent appearance on a FOX News program, he made the following comment during a break when he thought his microphone was off.

(BEGIN VIDEO CLIP)

REV. JESSE JACKSON, RAINBOW/PUSH COALITION: See, Barack been talking down to black people on this faith based. I want to cut his (EXPLETIVE DELETED) off.

(END VIDEO CLIP)

STEIN: Ooh, serious talk.

Now, Jackson has offered an apology, and Senator Obama has accepted it. So is this just an embarrassing YouTube clip, or does it speak to how a certain segment of the African-American community feels about the presumptive Democratic nominee?

And by the way, is it important at all? I mean, why are we even thinking about this subject when we`ve got soaring gas prices, a possible war in the Middle East, collapsing housing market? Why are we thinking about it all?

Joining me now for some perspective is conservative commentator and my friend, Joe Hicks -- Joe.

JOE HICKS, CONSERVATIVE COMMENTATOR: Hi, Ben. How are you?

STEIN: Fine. It`s nice to see you again. Last time we saw each other was in the very same element, but we were in the same room in L.A.

HICKS: That`s right.

STEIN: So why -- why are we concerned about this at all, Joe? I mean, why is this important at all?

HICKS: You know, you`re right. There are a lot of concerns the American people have. But I think there`s something that`s far more important than hearing some vulgar, off-color comments from Jesse Jackson.

I think we`re living through a sea change in American racial politics. Jackson represents the old guard, the people that see everything through the eyes of victimization.

Barack Obama, as bad as his politics are, does at least view things in a far more sort of -- a far -- you know, a very different way than Jesse Jackson does. He often speaks in racially transcendent terms. That clearly indicates, you know -- or we see that Jesse Jackson really disagrees fundamentally with that view of the world.

STEIN: But is Jesse Jackson saying this because he doesn`t want to transcend race? Is he reaching back to the past for the old civil rights- era confrontational tactics? Or why did he say that? It seems like such an odd thing to say. You think he would be very proud of a man being the first African-American Democratic presidential nominee?

HICKS: A lot of it is based on the speech that Barack Obama delivered at a black church on Father`s Day that Jackson basically sees as blaming the victim. Understanding that Barack Obama spoke in almost Bill Cosby- esque kind of terms about the need for personal responsibility, that youthful black fathers were -- had abandoned their responsibilities, and Jackson seemed to characterize that as talking down to black people. It`s a ridiculous, outrageous claim.

STEIN: But I remember vividly when I was helping out Reverend Jackson with a little project. He used to say the very same thing. He used to say that it was a shame there wasn`t more responsibility on the part of young black men in predominantly black areas and fathering children, not taking any responsibility.

Has he changed? I mean, he seemed at the time, and I still believe him to be an extremely responsible person. What`s changed?

HICKS: Well, he will say those things in a moment of candor, but let`s face it. Jesse Jackson`s overall mantra has been racial verbalization. That he sees all the ills of urban America, high rates of criminality, babies making babies, on and on, as being some kind of root cause that`s a by-product of American racism. So he will, in a moment of candor, talk about personal responsibility.

Let`s face it. That often gets buried in his script, and it`s not a major presentation part of his approach.

STEIN: I agree with you entirely about the fact that Barack Obama is a break-through in racial politics, but I just have the feeling this was an unfortunate moment for Reverend Jackson.

HICKS: Oh, yes.

STEIN: That he`s not going to repeat it, and it`s not his real self talking.

Anyway, thank you so much, Joe. I look forward to seeing you back in the CNN center in Los Angeles. Thank you very much.

Now one person that Barack Obama is getting along with very well is former rival, the lovely Hillary Clinton. The two had breakfast this morning, and considering Hillary`s debt, I hope that Barack picked up the check. And they talked -- I don`t know what about, frankly.

But also, the hotly-contested FISA bill made its way to the president`s desk, and he signed it. And it made its way to the president`s desk thanks, in part, to Senator Obama`s surprise yes vote. He had said he was not going to vote for it under any circumstances. We`ve got somebody who really knows his stuff in politics. That`s putting it very mildly.

CNN senior political analyst, Dave Gergen, my boss long ago when I worked at the White House. He was the best boss I ever had. He was just a wonderful, kind-hearted boss, and he gave me a television so I could watch the "Young and the Restless" at lunch time.

You remember that, Dave?

DAVE GERGEN, CNN CONTRIBUTOR: I do. You wanted two things when you came to the White House. You wanted a couch that you could lie down on during the lunch hour and you wanted to make sure that nobody would bother you or question you watching the soap opera.

STEIN: Right.

GERGEN: And you thought that was the way to tap into the American psyche. And it worked.

STEIN: I thought it worked.

GERGEN: It worked for Richard Nixon. It helped with his speeches. But it also worked for you because you became a real -- you became an expert on soap operas. You went off to -- I think you went off to write reviews of the soap operas for the "Wall Street Journal."

STEIN: And then I went off to work in Hollywood its own bad self.

GERGEN: That`s right. That`s right. And you`re still trying to reform it.

STEIN: I`m still trying to reform it. And it`s very much an uphill battle. But Dave you`re a fabulous, super boss. People see you on TV and think of you as just this giant braino guy, but you`re an incredibly kind guy.

GERGEN: I have great affection for the days we had together, and I -- and I hope your family is well.

STEIN: Well, you`re very kind. Thank you. Very well. And yours, too.

Now let`s talk about this business with Senator Obama. Why did he change his mind on the FISA bill? What was that all about?

GERGEN: Well, I think that the bill changes. You know, it`s fascinating to me, Ben, that Mort Halperin (ph), you remember him...

STEIN: Yes.

GERGEN: ... from the Nixon days, too, and how -- you remember how he was wire-tapped by Richard Nixon over national security issues along with Bill Safire and some others. And they were outraged about it, and Mark Halperin (ph) has gone on to head up something called an open society group. And he has fought very hard for a strong FISA bill.

But he concluded and wrote a piece in the "New York Times" a couple weeks ago that this compromise bill that emerged, even though he didn`t like it, he would support it. And this is from a man who has been, you know, for 40 years, 30 years, has been absolutely outspoken on the question of privacy and antigovernment wire tapping, but he concluded that this was the best compromise Congress would come up with. He didn`t like it very much, but he would vote for it.

I think it was in that spirit that Barack Obama decided he would vote for it.

I would also point you to a Gail Collins piece today in the "New York Times" which I thought was an interesting column and right on point. And that is, listen, Barack Obama did not run just as a man of the left. He has run as someone who can bring everybody together.

He has to at times be willing to support compromises that are worked out by people like Jane Harman, whom you know from Southern California. Staunch but strong and very good, very defense-minded Democrat.

STEIN: Well, I actually know her best because of the fine stereo speakers her husband makes.

But anyway, let`s go back to Senator Obama and him being a man of the center, a man not entirely of the left. His campaign, as he always says, is about change. Change, change, change.

GERGEN: Right.

STEIN: What kind of change is there going to be in terms of getting America enough energy? What kind of change is there going to be in terms of allowing us to drill in places where we need to drill to get more energy? What kind of changes are there going to be so we`re not going to be so dependent?

You know, when I worked for you, when I was a young guy with a full head of black hair, we were -- I wrote the first draft and you edited a speech about making us energy-independent by 1983 or 1984.

GERGEN: Right.

STEIN: That didn`t happen.

GERGEN: We were very successful.

STEIN: Yes, very successful. What`s going to happen now? What are they going do now in Washington that`s going to make it any different? Why are we not just going to keep heading towards the cliff and then go over the cliff?

GERGEN: Well, I think, Ben, you and I would both agree that Barack Obama does not go far enough in some of his changes on energy. For example, I believe, and I would imagine you do, that we need to rely more heavily on nuclear power as a way to get there.

STEIN: Nuclear. Nuclear.

GERGEN: Nuclear, yes right. But we need, you know, peaceful nuclear power in order to get there. It`s the cleanest form of energy. I think you and I would both agree we need to do more exploration. We may disagree on where that might be.

But where I do think Barack Obama represents serious change is -- is in a much greater emphasize upon alternative energy, more incentives for alternative energy. You know, there`s -- there is a -- we have a law right now that is expiring at the end of this year that provides incentives for wind power. You see a lot of wind power out in Southern California.

STEIN: What we see is tremendous incentives in California, yet less than 2 percent -- way less than 2 percent -- of our electricity comes from wind power. So we have tried incentives. We`ve tried incentives. We`ve been trying incentives since the mid-`70s. It doesn`t seem to work. Oil is just an incredibly efficient way to produce power. What`s going to change?

GERGEN: Oil and coal are both good ways to produce power, but they happen to be spoiling the planet, if you believe, you know, most mainstream scientists. And we are -- you know, I remember a long time ago when people started -- the tobacco company said we shouldn`t believe scientists about causing cancer. The science is not complete enough, and it turned out the scientists were right.

You know, it seems to me we ought to be thinking of -- we ought to be paying close attention and be very sympathetic to what the scientists are telling us now.

Having said that, you know, we need additional -- wind power is picking up in various places. I don`t think it`s a final answer, but there are a lot of folks who want to invest in wind power. Those investments are going down right now.

We ought to be -- we ought to be increasing incentives and we ought to be putting pressure on the automobile companies for innovation. These automobile companies -- we have made terrible mistakes in this country by again and again and again delaying efforts to raise the gasoline standards for cars. And our automobile companies right now are in trouble.

STEIN: In terrible trouble. But I`m going to be in terrible trouble if I don`t cut you off and send you back to him now. Thank you very, very much, David. Wonderful to see your shining face. I recommend drilling in Harvard Yard. Anyway, thank you.

GERGEN: I bet you would.

STEIN: Anyway, thank you so much, David.

Coming up, initial reports that Iran test-fired even more missiles today have been proven false. Apparently, those photos are doctored. A lot of Iranian photo doctors out there.

However, the impact of yesterday`s test launches still resonating around the world. Is Iran just making trouble, trying to bullying us, or trying to make a point? Let`s talk about it next.

(COMMERCIAL BREAK)

STEIN: This morning, we awoke to news that Iran test-fired another round of long- and medium-range missiles. Now it turns out that maybe they didn`t really do that, but everybody is still freaked out. In a news conference, U.S. Secretary of State Condoleezza Rice made it clear that America is determined to prevent Tehran from threatening the interests of itself and allies like Israel.

(BEGIN VIDEO CLIP)

CONDOLEEZZA RICE, SECRETARY OF STATE: We take very, very strongly our obligation to help our allies protect themselves, and no one should be confused about that.

(END VIDEO CLIP)

STEIN: Now, it`s not as if Iran doesn`t know how we feel about them. So what`s the end game?

Fareed Zakaria is author of "The Post-American World," editor of "Newsweek International" and host of CNN`s "FAREED ZAKARIA GPS."

Fareed, if I may call you that, were you surprised at this show of force by Iran? What are they doing?

FAREED ZAKARIA, HOST, "FAREED ZAKARIA GPS": Not really. Because you`ve got to remember, this was in response to Israel`s military maneuvers where they moved these jets to demonstrate that they could strike into Iran. Basically, they could strike its nuclear program.

So I think what the Iranians are trying to do is say, well, if Israel has military options, we want to show you that we have military options, too. But there`s a kind of -- a weird comedy here, which is that they are trying to flex their muscles, but you know, they actually fired three missiles, not four.

The Revolutionary Guard PhotoShopped the photograph which shows that four missiles that appear on the front page of every newspaper in the world. So it reminds you that this regime is partly threatening, partly a Keystone Kops operation.

STEIN: Let me ask you this question, though. Aren`t these missiles wildly inaccurate? I mean, supposedly they cannot really hit anything with much precision. They don`t have nuclear warheads. They carry a one-ton conventional warhead. What good does that do them if it can`t hit anything with much precision?

ZAKARIA: Precisely. I mean, this is back to an old problem we`ve always had with our enemies. You know, my theory has always been our enemies are as evil as we think they are, but they`re a whole lot less competent. When you think of the Soviet Union, you think of Saddam. And I think you`ve got to think of Iran in that category.

This is a place that is, you know, the second-largest oil producer in the world, where they can`t produce -- they can`t refine enough gasoline for themselves. They import gasoline. They have run-away inflation. They`re PhotoShopping their -- their missiles. So don`t expect all this stuff to work.

STEIN: But suppose Israel does bomb them? And my feeling is that if Israel is going to do it, it`s going do it very soon, before the election. Do you agree with that?

ZAKARIA: I agree with that.

STEIN: So it`s months if not weeks before they do it. And then doesn`t Iran have these extremely effective Russian-made shore-to-ship missiles that could interdict shipping in the Straits of Hormuz?

ZAKARIA: I think that`s more likely. I think if the Iranians are smart about this, and I think that, in some ways, they probably are, this is to show, the missiles.

STEIN: You just said they`re...

ZAKARIA: They`re not as great at science, and then -- you know, here`s what they will do. You tell me what this means. They`ll give more money to Hezbollah, to make trouble in Lebanon. They`ll give more money to Shias in Iraq and say make more trouble.

In other words, I don`t think they`re that good at sophisticated engineering. They`re pretty good at thuggery. You know, you pass money around, and with oil at $130 a barrel, there`s a lot of that to go around.

STEIN: If their seriously -- if they mean to cut off shipping in the Straits of Hormuz, do they have enough of these shore-to-ship missiles to do it?

ZAKARIA: Not if the United States decides to prevent that from happening.

STEIN: How could we prevent that from happening?

ZAKARIA: We -- I mean, we could -- an American fleet would destroy anything the Iranians could ever send up. We could fire 100 cruise missiles at the rocket launchers that they were sending out. We will prevail in a military contest over keeping the Straits of Hormuz open.

STEIN: Could we -- isn`t Israel sort of bound at this point to bomb Iran and take out as much as they can of the Iranian missile program? Don`t they have to do it now, and should we not expect a big cataclysm in oil prices, if only for a few weeks?

ZAKARIA: I don`t think so. I think that the Israelis would be foolish to do it. I`ll tell you why. Everything we heard about the Iranian program says it is -- it is a program that cannot be bombed easily from the air. It`s dispersed, it`s hidden, it`s underground.

So the Israelis would be undertaking this huge operation that could cause them enormous international political fall-out, probably cause them enormous trouble on the ground with Hamas, with Hezbollah, cause the Americans huge trouble, for what? For probably delaying the Iranian program by a year or two years. What do you gain by delaying it by a year?

And it`s unified the Iranians around the regime. You`ve unified them around the idea that we now have to do this, because we`ve got to show that we are -- you know, we can`t be bullied.

STEIN: It`s terrifying any way you look at it. Fareed, thank you so very much. We`ve got to go on to the next incredibly important subject. Thank you so very much.

And just an extremely important programming note: Fareed will have an interview with Senator Barack Obama on his show this Sunday at 1 p.m. Eastern. Do not miss it.

Straight ahead, the price at the pump hits another high. As gas keeps costing more, Americans are driving less. And the oil companies still are not to blame, by the way. I`ll crunch the numbers and take a look at what`s ahead, coming right up.

(COMMERCIAL BREAK)

STEIN: It was thrilling and exhilarating news around the world when the hostages held by the Colombian terrorist group, FARC -- not what you think, FARC -- were finally rescued. Headline News`s own Robin Meade got an exclusive interview with the three American contractors who were being held by FARC, and she joins me now -- Robin.

ROBIN MEADE, HEADLINE NEWS ANCHOR: Ben, I`m joining you from San Antonio. This is where -- we`re here at Ft. Sam Houston, where the former hostages are staying at the moment. When we talked to them, they detailed the harsh conditions that they were under.

They said for an eight-month period, they weren`t allowed to talk to each other. Then they weren`t allowed to talk to their captors. So much so, that they lost their voices. They were chained to each other or chained to trees. Just incredible circumstances and conditions that they were able to describe.

You know, when talking about their despair, Marc Gonsalves, one of the former hostages, really detailed how it was very tough for him, especially at the beginning.

(BEGIN VIDEOTAPE)

MEADE: Any of you take me to your darkest day in captivity. What was happening and how did you survive that, that day?

MARC GONSALVES, FORMER HOSTAGE: In the first months of our captivity, we were, at that point, locked in boxes at night. And they would unlock the boxes to let us out. And that night, I dreamt about my daughter, who was my little girl and still is. And I had this dream about her that was so real. She was sitting on my lap, and I was -- she had little braids in her hair. And it was a wonderful dream. With all of my family. But the problem was, I woke up.

And -- and being freshly taken, abducted, it hurt. It was very, very painful. It was very painful. And I couldn`t -- I couldn`t lift my chin. My head got so heavy. And I was just like this.

And we weren`t allowed to speak to each other, the three of us, at that time. But Keith saw from the other corner of the camp, from his box, that I was in a very hard, difficult moment. And these two guys, they came over, and they put their arms around me. When they did that, I just started bawling. I cried a lot.

But something happened that day. That night, that evening, when -- before the sun went down, again, we came close to each other, the three of us, and we were looking up. And there was a rainbow. This is -- this is a true story. There was a rainbow up there. And the three of us, we had our arms around each other, and we were looking at it.

THOMAS HOWES, FORMER HOSTAGE: (UNINTELLIGIBLE)

GONSALVES: Tom said, "I wonder if it`s a sign." Well, I believe in God. And I looked at that rainbow, and I`ll never forget it. And I held that rainbow. I took it as a sign.

HOWES: I remember that. I remember that.

GONSALVES: As something for me and for us, that we`re going to live and we`re going to go home. No logic told me that. Nothing that I saw happening told me that we were going to live. But something moved my spirit, and I always believed that we were going to live and that we were going to come home one day. I just never knew when.

(END VIDEOTAPE)

MEADE: You have to watch that and be in such awe of their utter faith they would get out of this alive.

Right now, they`re here. They`re going through what`s called a reintegration process where they get back to life in a free society. Such a big change from where they where. Their only thing is their family in bits and pieces because of the intensity, the emotion is so intense, but they`re so happy to be back home -- Ben.

STEIN: That is the most astonishing interview. A story of faith. Robin, thank you.

Catch the full exclusive interview on "MORNING EXPRESS" tomorrow on Headline News at 6 a.m.

(COMMERCIAL BREAK)

STEIN: Hello. No, this is not a James Bond movie rerun. I`m Ben Stein, in for the perpetually vacationing Glenn Beck.

And after many years of alarms and excursions, it`s finally happening. According to a survey commissioned by Discover Financial Services, 62 percent of Americans -- that`s close to two-thirds -- changed their Fourth of July plans because of high gasoline prices, and 15 percent canceled vacations altogether.

This week, gasoline prices hit yet another new high, and the price at the pump has been over $4 a gallon for more than a month. The Energy Information Administration says if gas consumption is down 3.3 percent from last year, more supply, less demand. That could mean lower prices eventually, but what about big-picture solutions?

Congressman John Peterson of Pennsylvania is a big proponent of off- shore drilling.

Congressman, re you there?

REP. JOHN PETERSON (R), PENNSYLVANIA: Yes, sir. I`m here.

STEIN: Let`s talk about this for a minute.

PETERSON: Surely.

STEIN: We`ve got an incredible amount of oil off the shores of the United States in the Outer Continental Shelf. Why aren`t we drilling for it? We need it desperately. It`s not doing the fish any good down there. What is stopping us?

PETERSON: Well, we have had three presidents that have not shown leadership on this issue in a row. We`ve had 14 Congresses that have locked it up. It`s locked up legislatively with a presidential moratorium and a legislative moratorium. And we have been attempting to lift that.

We now have the Pelosi lockdown. She`s trying to prevent any kind of legislation.

We were set up two weeks ago -- three weeks ago to amend the interior bill which would have removed the prohibition from 50 miles to 200 for both gas and oil, and they pulled the bill. So, so far, they`re trying to prevent us from amending the interior bill, so we`re not actually doing anything with appropriations because they`re afraid of our amendment.

STEIN: But I don`t understand. Why? I mean, it can be done environmentally safely, as far as I understand. There hasn`t been a major spill from offshore drilling in a very, very long time. I`m not sure there`s ever been a really major oil spill from offshore drilling.

Why are we not doing it? What are people afraid of that`s keeping us from doing it?

PETERSON: Well, The Wilderness Society, The Sierra Club, Greenpeace, and many more, are in lockstep with the Democratic Party. They have outlined a platform of no drilling. They want no fossil fuels.

Now, here`s the problem. We all want renewables. We all want wind and solar and hydro and geothermal, and all the good stuff, but it`s not ready yet.

And, you know, if we double wind and solar, we`re less than three- quarters of one percent. But they have locked down fossil fuels. They`re going to force us to change.

I think Obama, the candidate, said it well. The problem is, it`s not the price so much, it just went up too fast. They believe it`s a religion, that we should pay much more for energy, like Europe, who taxes it really heavily, and that then we`ll force people not to use energy and to use other fuels.

You can`t force them to use something that`s not ready. We don`t have alternatives that are ready to fill a car, to drive a car or transport a truck. We don`t have alternatives.

STEIN: But Representative, what would be the psychological imperative that would make these people want to slow down or break the United States economy? Why would they want to see their fellow citizens suffer?

I mean, we`re all brothers and sisters in this great country. Why would they want us to suffer from a shortage of energy? We would do better when there`s more energy, not when there`s less. Why would they want people to suffer?

Is pure Phariseeism?

PETERSON: Well, they really -- it`s a religion with the environmental community. And they have made the decision that we -- they must force this country off of fossil fuels when we don`t have a replacement.

STEIN: But why? Why do they want do that to their own country? Why would they want to hurt their own country this way?

PETERSON: So they misunderstand this issue. I don`t think they realize the crisis would develop.

I have been predicting this for six years. I thought it was going to hit last year.

We didn`t have a storm in the Gulf. We didn`t -- you know, this has all happened. These high oil prices have happened without a storm in the Gulf, without a country tipping over, a major -- you know, most of the oil- producing countries are not -- they`re dictatorships and they`re unstable governments. And we have got a terrorist attacks on the energy system. Any one of those three will spike energy prices overnight, and one of those are liable to happen.

We`re probably -- we went two years in a row without a storm in the Gulf. We`re probably going to have one this year. That will spike energy prices further.

STEIN: You are talking about people who are doing extremely dangerous things to this country.

PETERSON: That`s correct.

STEIN: And let us hope and pray that they see the light.

Congressman, thank you so much. We do not want to -- we do not want to see this happen.

Ladies and Gentlemen, sometimes breaking a record isn`t necessarily a good thing, and we have got some trading information from the New York Stock Exchange, and that`s enough lately in the last few weeks to make you throw up.

The financial markets are bracing for the fourth straight quarter of bad news from U.S. companies. And earnings are on course for a long losing streak, possibly the longest since the dot-com bubble burst back in 2001.

But let`s not forget also this cheery thought that Fannie Mae and Freddie Mac, government--sponsored mortgage enterprises, are in serious trouble. Some say on the brink of failure -- I certainly hope not -- amidst the worst housing slump since the Great Depression.

Is the government going to let that happen? And when will Wall Street stop taking a bath in red ink?

My very good friend, Ray Lucia, is a certified financial planner and nationally known renowned expert, author and speaker. And an extremely good singer. I have heard him sing and play the guitar, and he is a wizard on that ax.

And he and I often appear on the same platform. He plays the guitar and I sing Bob Dylan songs. And it`s really quite a sight to see.

Ray, we`re in scary shape these days. What`s the individual investor supposed to be doing right now?

RAY LUCIA, CERTIFIED FINANCIAL PLANNER: Well, Ben, you know, you and I have talked about this quite a bit in the past several years, really. And the investor has to have a long-term perspective.

We know that the markets are volatile. But by the way, they have always been volatile.

When we first met, one of the first questions you asked me about my "Buckets of Money" strategy -- you know, that I wrote the book on, that we talk about all around the country?

STEIN: Sure. I remember it very well.

LUCIA: You said, "But Ray, what would have happened back in 1986?" Because, remember, in 1966, the Dow was, like, under 1,000. In 1982, it was still under 1,000. It went 16 years.

Well, the reality is, we could be in a time period where the Dow doesn`t move. But remember, if you are fully diversified and if you are patient, and if you have enough safe money stashed away for the rainy day, you`re going to be OK. We will get through this, Ben, like we have gotten through many other crises before.

STEIN: What should the ordinary investor, a guy who`s got a few thousand bucks, or maybe a few tens of thousands of bucks to invest, what should he or she be investing in now in the event that there is a catastrophic oil shortage?

LUCIA: Well, you know, obviously, you can play the speculation game. Some have said $30, $40, $50, or more is based on speculation in oil.

If a person wants to be a gambler, Ben, they can speculate on commodities. Many of us feel that could be bubblicious right now. And who knows when that bubble bursts. And if people have the appetite for that kind of risk, then perhaps they could buy an energy ETF.

But I think from my perspective, as a certified financial planner and as somebody that`s responsible for over $2 billion and 6,000 retirees, most of whom are getting a check every single month, I am more inclined to be more broadly diversified and take a deep breath and hold on for dear life. You and I -- I`m sorry.

STEIN: What about guaranteed retirement income? What about annuities. Variable annuities and guaranteed annuities often take quite a beating in the financial press, but I kind of like them. They made my parents well-to-do people.

What is your thought?

LUCIA: Well, Ben, there were the old death benefit variable annuities. Those were very pricey and just provided a death benefit delta between what the valley of the account was upon death...

STEIN: No arcane jargon.

LUCIA: OK. Well, here`s the thing.

The old-fashioned variable annuities weren`t good. The new wave variable annuities that provide guaranteed income for life and/or principled protection are actually quite good. And there have been numerous professors, Dr. Moshe Milevsky from York University, many studies have been done from New Zealand to the United States of America, the Carnegie Mellon, Harvard, Yale, the Wharton School...

STEIN: OK, Ray.

LUCIA: All of them have said that annuitizing income makes sense in your portfolio, so I think you`re on to something here.

STEIN: Let me ask you this vital question. You`re a retiree. You have been saving up patiently, honestly, conscientiously for your retirement.

Suddenly, you see the market is down 21 or 22 percent. So your financial plan is thrown off kilter very seriously. You`re say, 55 years old, 50 years old.

What do you do now? Do you hunker down? Do you change it all to cash? Do you buy more than ever? What do you do now?

LUCIA: Well, again, if you have your "Buckets of Money" strategy set up properly, you don`t do anything, because remember, if you have a bucket of money that is invested for the long run in stocks, there has never in all of history been a 15-year history where stocks have lost money. And that`s through great depressions and recessions and world wars.

So, if you have other moneys from which to derive an income, a safe bucket, for example, if you have some annuitized income from either annuities, or perhaps non-traded real estate investment trusts that are quite stable, or bonds, that sort of thing can support you while you allow the stock market to come back, because it always does recover.

STEIN: So you would say just hold tight and keep doing what you have been doing? But how much of a bucket of cash should the ordinary investor have? I mean, how much cash should a 55-year-old guy or gal have getting ready for retirement?

LUCIA: Well, I have a general rule of thumb. If you think of three buckets, bucket number one should be about a seven-year bucket full of safe income.

STEIN: Wow. That`s a lot.

LUCIA: And the reason is -- well, the reason is bucket number two is a balanced account. And that money will kick in after seven years.

And the reason for that is there has not been since 1950 a seven-year period where a balanced fund didn`t beat cash. So, if you want to be absolutely bulletproof, you buy seven years of safe money, you buy eight years of balanced money. And then the rest of your money can be put into the stock market.

That usually works out to 40 or 50 percent, depending on how old you are. And then your totally bullet-proof.

Now, if you want to be a little more aggressive, you can put more into the stock market and have less money in cash.

STEIN: No, I want to be bulletproof.

Ray, thank you so much, as always. And by the way, Ray, we want to sing "Shelter From the Storm" at our next performance. Bob Dylan`s greatest unknown recording.

LUCIA: I`ll be all in.

STEIN: Thank you so much, Ray. Thank you so much.

LUCIA: Thank you. Take care, Ben. Bye-bye.

STEIN: Ladies and Gentlemen, coming up, how to ruin America. You probably thought it was already well on its way to ruin, didn`t you? Well, it`s worse than you think.

(COMMERCIAL BREAK)

STEIN: Every once in a while, a book comes out that changes the course of American culture. It informs the very foundation of the way we think, feel and live.

The best of these books are written with a sharp wit and keen insight into the human condition. As luck would have it, I have just co-written such a book myself called, "How to Ruin the United States of America."

Joining me now is my friend and co-author who actually wrote about 99 percent of the book, Phil DeMuth.

Phil, how are you, my boy?

Great to be here, Ben.

STEIN: Thank you, Phil.

Phil, what do we do to ruin the United States of America even more than we have, real quick?

DEMUTH: Well, the idea is that, you know, we reached Hubbert`s Peak with oil in this country, but I think we have also reached what I would call Stein`s Peak, since I got the idea from you, really, that American civilization seems to have peaked somehow in the post-war era. We`re in decline. So I think this book is going to really help forward that process and really push us over the edge.

STEIN: Yes, I think so. All right. How do we do it? Real -- six quick steps, how do we ruin the United States?

DEMUTH: OK. Number one, you know, even though the country was founded on a bedrock of faith in God, I think that`s kind of passe. I mean the...

STEIN: So take God out of America?

(CROSSTALK)

DEMUTH: Yes. Let`s be like one of those communist societies. They don`t need God. They have done extremely well, I think.

STEIN: OK. What`s number two?

DEMUTH: Number two, in our educational system, we need to teach students, first of all, contempt for America, teach them to studies of different kinds, to be victims. We don`t want our students to having to compete on the global stage against very bright young people.

(CROSSTALK)

STEIN: No math, no science, no engineering, no chemistry.

DEMUTH: Oh, no.

STEIN: Let`s teach people about victimization of women and minorities.

DEMUTH: I think a lot of "Grand Theft Auto," is good. MTV, which is really sort of the third point, which is we want to debase American culture as much as culture.

STEIN: Lots of pornography. Do we have enough pornography in America?

DEMUTH: Not yet. No, we need a lot more.

STEIN: Well, we`re working on it.

DEMUTH: We need a trailer park trash kind of culture. That`s what we need to put together here.

STEIN: And Hollywood is helping out here.

DEMUTH: Hollywood is doing all it can. It`s just -- it`s wonderful. You just look at the list of best pictures, best songs from 50 years ago, today, and it`s mind-boggling.

STEIN: I know. "Gone With the Wind," (INAUDIBLE) going my way, and now we have stories of violence and mayhem and sadism and blood and rape.

But how else are we going to ruin America?

DEMUTH: Well, here`s another great idea. You know, the United States military historically has been strong and has done us some good things. OK? So we grant at least that much.

STEIN: Yes, we can grant...

(CROSSTALK)

DEMUTH: But now, it`s more of a friendly, friendly world we live in. Fabian sang about this.

So, I think the military should be cut back even more than it has been. They should do more peacekeeping missions like getting kittens out of trees and things like this.

STEIN: No war. Practice war no more.

DEMUTH: War is bad for children and other living things.

STEIN: We need to have a defense force that is not equal to the task of defending America. That`s a good way to ruin America.

DEMUTH: Exactly.

STEIN: Now what else, Phil?

DEMUTH: Well, also, I think it`s good if we could be a country without borders. You know, borders, it`s like nationalism. That`s an old- fashioned idea. Who needs that anymore?

STEIN: Take in everyone who wants to come in?

DEMUTH: And you know, Senator Obama has a good idea. He wants to extend Social Security benefits to all illegal aliens. This is a wonderful idea. We need to just open our arms to anyone who wants to come here, no matter what.

STEIN: Well, isn`t the Social Security system and the Medicare system, aren`t they both just overflowing with money? So we could basically spend all the money we want on Social Security and Medicare, and there won`t be a problem, correct?

DEMUTH: Well, you know, the government controls the printing presses, so really, we have as much money as we need and more. We can just print it the way Zimbabwe does and have a great economy, which is the really thing...

STEIN: Yes?

DEMUTH: ... about having voodoo economics.

STEIN: Supply side economics.

DEMUTH: Supply side economics, getting something for nothing. And then president, or soon to be president, Senator Obama, has another great idea. Let`s tax the profits of the oil companies and successful industries like that, let`s punish them for the work they do, and instead just tax it and redistribute it.

STEIN: Well, now, the oil companies have done a terrible thing. They have supplied us with oil and gasoline and natural gasoline to keep the economy going...

DEMUTH: Who needs it?

STEIN: ... and keep us employed, and keep our homes warmed and cooled. So they`ve got to be punished for keeping us alive. We`re dependent on them, so we have to punish them.

DEMUTH: You know, with windmills and geothermal power being the important forces they are today, we don`t need the oil companies anymore.

STEIN: So the oil companies get cutted -- I think it we have made an awful lot of progress here, Phil, but I think the main thing that we have to be wary is keeping us alive. We`re dependent on them, so we punish them.

With wind mills and geothermal power being the important factors they are today, anymore.

STEIN: I think we`ve made an awful lot of progress here, Phil, but I think the main thing we have to be wary is letting God back into America. That would totally save America and we don`t want to do that.

Phil, thank you so, so very much. Back with more after the break.

(COMMERCIAL BREAK)

STEIN: I spend a lot of time on airplanes, and I often try to go to sleep on the plane. And as I do, one of the things I think about is, who is my best friend?

I have a number of wonderful, close friends, and some of them were on tonight`s show. One very close one, Al Burton (ph), was not on today`s show. But one I really think about who always has and always will make the greatest sacrifice for me, it`s not my friend Phil or my friend Ray. It`s the men and women of our armed services.

They are my best friends. They are the best friend of every American.

We have our freedom because of the man and woman who comes from a small town in Idaho or Mississippi or Virginia, and picks up a gun and goes out and risks his life and his limbs. Risks leaving his children orphans and his wife a widow. Same with women soldiers. They come from small towns and they leave their lives and families, pick up an M-16 and put their lives in danger so I can live free.

My American way of life is the envy of the entire world, and I thank each and every serviceman and servicewoman for it. God bless their souls forever.

We`ve spent the last hour talking about our country`s problem, and they are serious. But as you go to sleep tonight, while wondering what you`re going to have to pay for gas, or if your investments are slipping, remember this: America`s fighting men and women have a whole lot more to lose than money.

They put their lives on the line each and every day and perform the greatest act of bravery just putting on their uniform. Not all of them come home. They fight to preserve this great country and what this great country stands for and you, and you and I wouldn`t be here right now were it not for their commitment and those who came before them.

Best friend tonight, it is me, your humble beneficiary that solutes you.

Glenn will be back on Monday.

I`m Ben Stein from New York.

Good night and God bless America.

END