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IN THE MONEY
Turning War Spending Elsewhere; Spending Green; Overspending, Underearning
Aired July 14, 2007 - 13:00 ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
CHRISTINE ROMANS, CNN CORRESPONDENT, YOUR MONEY: Plus things you can do this year right now to get a better pay check next year.
ALI VELSHI, CNN CORRESPONDENT, YOUR MONEY: And when did we all start handing over our hard earned cash for something we could get for free.
ROMANS: All that and a lot more after a quick check of the headlines.
FREDRICKA WHITFIELD, CNN CORRESPONDENT: Now in the news, two more doctors charged today in connection with the failed terror attacks in Britain two weeks ago. One of them 26-year-old Sabeel Ahmed of Liverpool, England he is the brother of the man who allegedly drove a jeep loaded with explosives into the front of Glasgow Airport.
The other suspect charged today was a second cousin of Ahmed living in Australia, Dr. Mohammed Haneef, who made a brief court appearance in Brisbane. And he is accused of helping the conspirators. Ahmed and Haneef are the second and third suspects to be charged.
A powerful typhoon is blowing across southern Japan with gusts up to 90 miles an hour. Police say an 11-year-old boy died after being swept into a rushing river. The storm could brush Tokyo tomorrow.
We'll update the top stories at the bottom of the hour, YOUR MONEY right now.
VELSHI: Welcome to YOUR MONEY, I'm Ali Velshi.
ROMANS: I'm Christine Romans. This is the show that tells you what the news of the week means for your wallet and your money.
VELSHI: Well coming up on today's program, are you a big spender or are you a spending addict? We'll tell you how to tell the difference and how to kick the habit.
ROMANS: Also ahead, what you could be doing today to bring home a fatter paycheck next year.
VELSHI: Plus how much of your hard earned green should you be spending on greening the environment.
ROMANS: But first, the Iraq war is costing this country $10 billion a month.
VELSHI: Tom Foreman joins us now with a look at where that money could otherwise be going. (BEGIN VIDEO CLIP)
TOM FOREMAN, CNN CORRESPONDENT (voice over): Well, Ali, as you mentioned, this is a whopper of a bill. This is an expensive battle, no matter how you slice it. The cost of America's international war on terror is a whopper. You are spending $10 billion a month in Iraq alone. It goes up another $2 billion, to $12 billion a month if you add in Afghanistan and all the other international anti-terror efforts. The total tab for all of that so far is $758 billion and counting. The Democrats say it's getting out of control.
SEN. HARRY REID, (D) SENATE MAJORITY LEADER: The surge is not working. No matter how many different ways you explain it, it hasn't worked. Six months, 600 dead Americans, $60 billion.
FOREMAN: That $60 billion is money Congress gave the president for the surge. As for the president, he says, get used to it.
GEORGE W. BUSH, PRESIDENT OF THE UNITED STATES: We just started. You got all the troops there a couple of weeks ago. He asked for 20,000 some troops. I said, if that's what you need, commander, that's what you got. And they just showed up. And they're now beginning operations in full.
FOREMAN: Translation, as long as the generals say they need the troops, the surge in spending will continue. The Congressional Research Service report is the most comprehensive accounting to date of what has been an accountant's nightmare. It tracks costs from the start of the Iraq war right through today. So we decided to look at how else we might use that $10 billion a month. A state-of-the-art high school like this one being built in Seattle, Washington, can start $75 million; $10 billion would buy 133 of them.
Let's say a local public hospital isn't keeping up with growth. A major expansion and upgrade can cost over $100 million, 10 billion would get you 100 of those. Or take the new prescription drug benefit for the nation's elderly, estimated to cost $70 billion a year. Getting that passed into law was a huge fight, with $10 billion a month, we could almost double that benefit.
And where does the money come from? The short answer is, we're borrowing it. The national debt is now creeping on $9 trillion. Some say it's a war we can't afford to fight, and others say it's a war we can't afford to lose.
(END VIDEO CLIP)
FOREMAN: And of course, for all that financial measurement, we can't even begin to put a price on the immeasurable loss of young lives in this conflict.
ROMANS: Tom, that's absolutely right. Let's talk about the $10 billion or the $12 billion a month. In accounting, they call if an off-balance sheet transaction or they call it -- in a way we can't say if we weren't spending it in the war in Iraq, we would be spending it on all the things you outlined. FOREMAN: That's absolutely true. We don't know that. But when you add it you will add up, the money does have to come from somewhere. Even he and even worse, something to keep in mind about all this, purely in financial terms, there are some who say that when the war stops, just bringing the things back, the people back, rebuilding all the damaged equipment, recruiting all the people that you have to, to rebuild the military may cost as much as the entire war has cost so far. So there's still a big bill out there, even if we stopped fighting today.
VELSHI: Ten billion a month, $758 billion that total you gave us. Like Christine was saying, you can't say you'd spend it somewhere else. Is there some sense, though, how much we might not be paying or would we not pay as much in taxes? Would we see tax rebates? What would happen even if we didn't build the schools and didn't put it in healthcare but we weren't spending it?
FOREMAN: Well the question is, this money is something that reaches throughout the entire economy. You know this. Wars have always touched every sector of the economy. They're often very good for the economy in terms of making money turn over. It is impossible to factor out what would have happened if we weren't fighting this war but the fact is everything we're living and touching today is being affected by the cost of this war and probably will for quite some time.
ROMANS: And Tom, those numbers of course grabbed by politicians, they become political as well. There's nothing more pure than the numbers. But I'm sure the politicians have been looking at this as well.
FOREMAN: Yeah, they've been looking at the numbers on this and they don't like it, the Democrats of course. The Republicans are aware of this but coloring all of this really is, I go back to this very serious consideration. The cost in American lives cannot be added up, and many people here in Washington are even hesitant to say let's talk about the money because they're saying the money matters, but let's make our decisions on the best future of this war and of young Americans and the world and deal with the money issues later.
ROMANS: Tom, what's coming up on "This Week at War?"
FOREMAN: "This Week at War," we're going to look at this entire situation in Iraq right now. It's very hard to get your finger on it, but we're going to go over exactly what is being accomplished on the ground, how that's being received in Washington. And just as importantly, whether or not Iraqi politicians are really doing anything to take advantage of the American lives that are being lost to stabilize their government?
VELSHI: All right, Tom. We'll be tuned in. Thanks very much for joining us. Tom Foreman in Washington.
ROMANS: When we come back, kicking the debt habit like giving up drinking or drugs.
And later, message in a bottle. Why in the world are you paying for water when you can just get it for free from the tap?
ROMANS: This next story is not about gambling or drinking or drugs but about another secret, another problem that can be just as devastating to families.
VELSHI: And it's something that millions of Americans suffer from. Deborah Feyerick has a look at this unique problem.
(BEGIN VIDEO CLIP)
DEBORAH FEYERICK, CNN CORRESPONDENT (voice over): It is perhaps the one secret few people talk about. How many of you felt some shame that you had let yourselves get into this situation?
UNIDENTIFIED MALE: It's huge.
FEYERICK: A secret people keep even from those closest to them.
UNIDENTIFIED MALE: If anyone knew this, they wouldn't think of me as an adult anymore, as a responsible person and it might hurt my business standing, my image, and my reputation.
FEYERICK: In an age when sex is spoken about openly and few subjects are off limits, this one remains taboo.
UNIDENTIFIED FEMALE: I felt like a thief.
FEYERICK: Which is why these people agreed to speak with us on condition we not show their faces.
UNIDENTIFIED MALE: My name is Jonathan. I'm a debtor.
UNIDENTIFIED FEMALE: Hi, Jonathan.
FEYERICK: That's right, the secret is debt. Americans owe a record $880 billion on credit cards alone.
UNIDENTIFIED MALE: I remember one time walking into the BMW dealer to buy a pair of gloves. So I walked out with the gloves and a new BMW.
FEYERICK: Jonathan owed $225,000 when he attended his first Debtors Anonymous meeting and discovered he was not alone.
UNIDENTIFIED MALE: Like, you'll have the anxiety about the money and then you'll manage the anxiety by going and using the credit card and debting more and then it just builds and builds.
FEYERICK: April Lane Benson is the author of the book "I Shop, Therefore I Am." Is compulsion buying a kin to an addiction like alcohol or drugs?
APRIL KANE BENSON, AUTHOR, "I SHOP, THEREFORE I AM:" Very much so. You have to buy more and more to get the same kind of a high. And it gets out of control.
FEYERICK: Benson, a psychologist, who treats compulsive shoppers, says there are an estimated 15 million nationwide. More people, she says, than who suffer eating disorders. So, for example, this outfit, I will look so perfect that my whole life will come together, like, in an instant?
FEYERICK: And they think that way on some levels. Are they filling a need in themselves, emptiness perhaps?
FEYERICK: Maybe an anger.
BENSON: It can it be age, it can be boredom.
LEE ANN FRALEY, SAVELEIGHANN.BLOGSPOT.COM: I would shop to make myself feel better. I would shop every day. I'd have to buy something.
FEYERICK: Lee Ann Fraley knew she had lost control, from the stacks of unopened credit card bills to the binge shopping, buying and returning.
FRANLEY: Every time I'd make more money, I would just buy more expensive things. I was never where I'd actually pay it down. I was still living paycheck to paycheck because the minute you make more money, they'll send you more credit cards, you know.
FEYERICK: Lee Ann found her road to recovery online with a blog. Writing down every penny she spent and sharing intimate details of her money problems with total strangers.
FRANLEY: They're like close, close friends, you know. And because we associate, we found something that we all had in common, you know, that we were in debt.
FEYERICK: Her site, Saveleigh Ann, started anonymously. Now she's out in the open.
FRANLEY: I did it every day for a year and got the money paid off in one year and two months.
FEYERICK: Her $20,000 debt is now $3,000 in savings. As for the debtors we met earlier, some paid everything off. Others are still working on it. And all meet regularly to prevent a relapse.
Deborah Feyerick, CNN, New York.
(END VIDEO CLIP)
ROMANS: Wow, those are some extreme examples.
VELSHI: Wow, went in to buy a glove and came out with a BMW. ROMANS: Many of us aren't dealing with tens of thousands of dollars worth of credit card debts. Even those of us with much smaller debt loads could be in risk of loosing control on some level.
VELSHI: How do you know you're in too deep and if you are, who do you dig yourself out? Susan C. Keating is the president and chief executive officer of the National Foundation for Credit Counseling.
Susan I'm trying to get a handle on this. I certainly overspend. Is it habit, or from what Deborah said, it looked like a sickness.
SUSAN C. KEATING, NAT. FOUNDATION FOR CREDIT COUNSELING: It's a little bit of everything. There's no question about the fact that so many consumers are, you know, just buying more. Many are out of control. And we at the National Foundation for Credit Counseling see this as a very serious and growing issue in this country.
ROMANS: Susan, it's interesting, it's almost a snapshot of a certain kind of time and place in the American economy that this can happen, that you have the access to leverage yourself, to buy so many things, and that it's socially acceptable to be a big consumer. How do you break that? How do you tell yourself, listen, this is not good for me or my family?
KEATING: Well, let me first say, I mean, we are a country of consumers. And we are certainly in an economy and in a position that our grandparents would have just absolutely -- they just couldn't have envisioned. So we -- there -- we're in a much better place than we were many, many years ago. And yet at the same time, many consumers don't have the fundamental understanding, the education, and the discipline to ensure that they don't go too far and really end up in serious trouble and in serious debt.
VELSHI: How do you know that? Like what's serious debt? What's too much? We know we don't save much money, if at all as Americans. But so much of that is mortgage and home equity loans, it may not be the worst kind of debt to have. Now we're seeing increasing numbers of people running up credit cards. I think the average credit card balance right now is about 13.5 percent. What's right and what's wrong? How do you know whether you've got a problem or you just spend a lot like Americans do?
KEATING: What's right and wrong is actually very relative to the individual. It really comes back to what someone can responsibly pay back over time. And, in fact, many individuals don't sort of acknowledge that when they spend money and they incur debt, particularly on credit cards, that these are loans. And ultimately, these loans have to be paid back. So I would say a rule of thumb is that if someone is using credit cards and they are carrying balances, they really shouldn't carry a balance any more than they can reasonably pay off within several months' time or up to six months. But within a reasonable time frame.
ROMANS: Just one last point I want to put out here. You did a study -- I mean, number one thing people can do is just keep track of their finances. KEATING: That's correct.
ROMANS: A lot of people don't.
KEATING: Well, that is correct. And, in fact, we found that very few Americans really understand and keep thorough track and real control over what they're spending. In fact, 20 percent of those that were surveyed through this Princeton Survey had no idea how they were spending their money at all. And you add that to the fact that four in ten Americans are carrying credit card debt or don't have the ability to repay even the minimum payment each month. That's a pretty serious concern and something that we all need to be addressing right now.
ROMANS: All right, Susan Keating, president and chief executive officer of the National Foundation for Credit Counseling.
KEATING: Thank you.
ROMANS: Thank you so much.
VELSHI: If I had to guess based on everything else about us, you're probably the more responsible spender in this TV family.
ROMANS: Let me ask you. Do you know how much is in your bank account?
ROMANS: I do.
VELSHI: Coming up after the break, we have a sneak preview at the size of your salary next year, something else I couldn't he don't know along with what's in my bank account. Stay with us you don't want to miss it.
VELSHI: All right. The biggest thing other than spending money and getting into debt is how much more money you can make to get out of that debt. How much more money you can make next year maybe.
ROMANS: Yes and that is some important stuff. A new survey shows how much that salary could grow next year. Hint, it's not going to grow as much as some of your expenses.
VELSHI: Bearer of bad news Jeanne Sahadi senior writer for Money.com joining us now with the lowdown on salaries next year. Hi, sunshine.
JEANNE SAHADI, SENIOR WRITER, CNNMONEY.COM: I'm not going to respond to that.
VELSHI: All right.
SAHADI: Yes, not much. In fact, hasn't grown much since 2000 or since 2001. Pretty much 3.8 percent is the average merit increase compensation experts are expecting. They say the real gain is in variable pay. So if you want to bump up your salary and it's not going to be a permanent bump up, you have to go for the bonus and find out from the boss what you have to do to qualify for the bonus.
ROMANS: So if the average Joe is going to see merit-based pay up 3.5 percent, 4 percent next year, arguably, a lot of your expenses are going up faster than that. How do I make sure, managers, that us, the two of us, the three us he of us, have more than 4 percent increase next year?
SAHADI: What I was told by one compensation experts, even the star performers like yourself, you're not going to do that well in terms of merit increase because companies are not very good in apportioning their raises according to performance. He described it as spreading peanut butter across an organization. So what you need to do is you need to be really clear with the manager, what do I need to do between now and the end of the year to qualify for the top bonus, because companies are not very good at communicating their bonus programs. And you have a right to know what's required.
VELSHI: In other words, you get your bonus at the end of the year.
SAHADI: Sometimes they tell you.
VELSHI: It's not like you're working towards this, you got this much because there's not a sense of scale of how you got there.
SAHADI: One of the people I talked to in the survey said a star performer might get 4.2 percent merit raise.
VELSHI: Not much.
SAHADI: Yes exactly, and every employee thinks they're above average, like the Lake Woebegon effect. Managers feel like wimps, they don't want to tell somebody they're not above average. You want to go towards the bonus. He says he's seen bonus' range from 5 percent to as much as 40 percent for upper level management.
ROMANS: This is the summer Doldroms right now but aren't managers making budget decisions for next year starting in the fall? Don't you want to be on the radar and doing your best work so when they are making these decisions, you are at the top of your game?
SAHADI: That is right because they have a very short term memory so if you messed up in the first six months, now is your chance, you have three more months to make it look good and that's more what they will remember.
VELSHI: The doing good is one thing, the getting your performance there. But you do somehow have to draw attention to it. Is that a plan? Is that a conversation with your manager?
SAHADI: You can't be shy about telling them what you accomplished during the year. Also, for people who might have been hired in a down market and they are not being paid equitably relative to other people in their position who were hired more recently, it's a good time to tell your manager, what can we do to get me back up to market because that may be separate from your performance. It may be a market issue. It's good to know what people coming into your position are making now because it may be more than what you were brought in on and more then you are making now.
VELSHI: This is a big topic for Christine. How do you know what other people are making?
SAHADI: Well, there are a lot of -- there's one expensive but good survey out there from the Economic Research Institute but it's like over $200, so I don't recommend --
ROMANS: Buy it and find out what other people make?
SAHADI: It is information that managers, that companies actually buy to do comps with their -- where they worry about equity in pay. You definitely need to maybe chat up some colleagues in other companies.
ROMANS: Having a mentor helps in something like this, too, because when you have a mentor who has been in the business for a long time, whatever your business is, you can talk about these things confidentially. One thing I think is so interesting about Wall Street, these people are paid, their bonuses are unbelievable.
SAHADI: And they are published.
ROMANS: When I was covering the bond market in Chicago, they would get their bonuses, sit down and sit around a table, and everybody would write down on a napkin what the bonus was, put it in a hat and pick it out so everyone could see what everyone else got and all the managers know that they did that. So you can't low-ball somebody on a bonus because everybody will find out. Let's all write down how much money we make.
VELSHI: Get some information; be armed with at least knowing that you're underpaid so you've got something to tell your boss.
SAHADI: I don't recommend and other people don't recommend actually being very direct with your colleagues in a company. It's more the advantage of the company that nobody knows what anybody else makes, but also it can put you in a position of disadvantage if some of your colleagues know.
ROMANS: You have to be tactful. Ali wrote on his, his bonus is goose eggs.
Coming up on YOUR MONEY, see if you can really save a planet in trouble by spending your cash on eco friendly products.
WHITFIELD: Hello. I'm Fredericka Whitfield in Atlanta. This story that we're starting to follow right now, after much back and forth over the years between North Korea, the U.N. and the U.S., the U.S. State Department says that North Korea has announced that it has shut down its nuclear reactor. If confirmed by a U.N. inspection team headed now to Yongbyon, the reactor there, the shutdown would be the north's first step in nearly five years toward denuclearization. And we're continuing to follow that throughout the afternoon. Meantime, two doctors charged today with terrorism offenses linked to the attempted car bombings in Britain. The suspects are cousins, one charged in the UK, the other in Australia. That makes three people charged so far, four others being held without charges, including one whose detention deadline was extended today in London.
Coming up at the top of the hour a mother and her newborn baby cling to the hood of a fast moving car. We will tell you why.
WHITFIELD: Now back to YOUR MONEY.
ROMANS: And welcome back to YOUR MONEY.
VELSHI: We take all that goes on in the world and explain hopefully what it means to your wallet. And one issue that is just huge these days is green.
ROMANS: I guess you could say green is the new black. Buying environmentally friendly products from organic cotton jeans to low water flow showerheads is all the rage. But is it the best way for you to make a difference when it comes to climate change? Jen Rogers takes a look for us.
(BEGIN VIDEO CLIP)
JEN ROGERS, CNN CORRESPONDENT (voice over): Shop and save the planet.
UNIDENTIFIED MALE: Try to buy like recycled toilet paper, recycled printing paper. Just getting into better light bulbs.
ROGERS: Not just for tree huggers and hippies. Eco chic is becoming a bigger part of our consumption culture.
UNIDENTIFIED FEMALE: I try to buy organic.
UNIDENTIFIED FEMALE: Environmentally friendly cleaners for the house, dishwashing liquids.
UNIDENTIFIED FEMALE: GE is starting a credit card that I might get where every purchase will contribute to an environmental cause.
ROGERS: From Wal-Mart to Home Depot, Corporate America is making it easier than ever to go green.
RON JARVIS, HOME DEPOT: Each consumer can make a difference, even if you don't want to save the world and save the environment, you can still save yourself a lot of money.
ROGERS: But all this shopping may be creating lazy environmentalists more interested in spending than sacrifice.
LISA WISE, CENTER FOR THE NEW AMERICAN DREAM: We're asking people to think about whether they need something in the first place.
ROGERS: Lisa Wise with the Center for the New American Dream works to promote environmentally sustainable consumption.
WISE: Sometimes the best choice is not making any purchase at all.
ROGERS: Home Depot and other retailers argue consumers are going to buy anyway, so why not give them greener choices?
JARVIS: With eco options we want to bring options to our consumers that makes it easier to walk down the aisle and pick products that have an impact.
ROGERS: Want to be more environmentally friendly yourself but not ready to retire the credit cards? Conservation advocates say limit shopping to quality goods that will last. Oh, and don't forget to bring your own reusable bags.
Jen Rogers, CNN, New York.
(END VIDEO CLIP)
ROMANS: Consumer sacrifice is easier said than done in this country, especially when it comes to driving. A new report out this week says world demand for oil is even going to grow more quickly next year even despite these high gas prices.
VELSHI: Is this going to be your opportunity to tell me to get rid of my SUV again?
ROMANS: Keep the motorcycle, get rid of the SUV. One person only needs one vehicle.
VELSHI: This is it. If we actually did cut back on gas, what would actually happen to the price of gas? We thought we'd ask our good friend Peter Beutel, who is the president of Cameron Hanover, which is an energy risk management firm. Hey Peter we've been talking for years. I guess you just found out that I keep two vehicles in Manhattan.
PETER BEUTEL, PRESIDENT, CAMERON HANOVER: Well, there's a lot of things that can be done, and it just involves thinking and planning a little bit, really at the heart of it. You know, if you have one of those jobs that's in a service industry where you're working behind a computer, which a lot of people do nowadays, talk to your boss about the idea of maybe telecommuting once or twice a month. If somebody lives in an area similar to yours location-wise, talk about maybe carpooling twice a month. If we were to cut one out of 20 trips, 5 percent, the price of gasoline would drop 50 cents to $1 a gallon.
ROMANS: That's incredible. But, you know, Americans feel -- I don't know, they feel like they shouldn't have to cut back in some cases. There's almost this feeling like it's OK for me to have my three cars or however many cars you have. How do we tell people, get people to do that? We talk about it a lot. But worldwide demand for oil is just going to increase next year.
BEUTEL: Well, you're right. And I certainly have heard anecdotal evidence that people are cutting back, but I don't see it in the aggregate numbers. I think one of the big problems is there has been zero leadership, whether it's at the local level, national level, state level, even from consumer groups. There has been nobody who stood up and tried to educate consumers on this.
VELSHI: Arguably, the best thing for conservation is gas prices. I think we're up above $3 a gallon as a national average. There's some argument -- you know, we always get feedback when I make comments on TV because someone suggests that we're advocating high gas prices, but it does seem to slow people down a little bit.
BEUTEL: Well, it does. And certainly we've gone through this cycle now three times in the last 30 years. Prices get very low. We get a little bit lazy. We buy big cars. We decide to start hauling 100 pound of lead in the middle of winter because it gives us more stability. We run the air conditioner when it's 60 degrees out. There are a lot of things that we do at low prices that don't make any sense. When the price gets very high, it encourages supply and does discourage demand. I honestly believe that Americans have been using their homes as piggy banks to effectively pay for the huge increases that we've seen in the price of energy over the last five or six years.
ROMANS: Well, we know that some of the discount retailers from time to time say when there's been a spike in gas prices that they can see in their customers who are clearly living paycheck to paycheck; they're spending less in the stores. There is a knock-on effect even if people keep driving and keep filling up the tank, there's some gives somewhere else.
BEUTEL: Well, that's absolutely true. And we have seen a lot of this high price, I think, cut into what particularly, say the 16 to 25-age bracket has done. I've spoken to younger Americans who have told me that they have to work just so that they can get enough money to drive to work. So, you know, we're seeing people, I think, getting hurt more and more by this.
VELSHI: So, Peter, if you do conserve a little bit or you do what you are suggesting, cut back a little bit -- prices of gasoline goes down again, how do we get out of that circle because then people will start driving again more because they've been saving money on the gasoline. What actually has to be done to change our entire way of thinking about this?
BEUTEL: I think it's got to start with education. I think that our nation's leaders have to explain what the connection is between higher prices and the economy. What the connection between our energy dependence may be with some of the political decisions that are taken in Washington. The two are not unconnected. So I think that maybe we need to start thinking about how our decisions, whether we just drive around aimlessly or whether we could actually consolidate trips, maybe shop for a two-week period instead of a one-week period, how these could have an impact on our economy, on our neighbor being employed or perhaps on some political decisions that would or would not be he need to be taken.
ROMANS: At the very least cutting back 20 percent helps your own wallet if nobody else does it at least it helps your own wallet. Peter Beutel, Cameron Hanover, thank you so much for joining us.
BEUTEL: Thank you.
VELSHI: You know what is interesting is I really do think increasingly this year there are more and more opportunities for people to go to various Websites where you at least get some sense of how much waste you have or what your options are to do that. So maybe we just all learn a little bit more and contribute to cleaning up a little bit.
Coming up next on YOUR MONEY, why buy the cow when you can get the milk for free? We'll take a look at why we buy so much bottled water. And we'll see if we can tell plain, old tap water from the bottled stuff. Stick around for our YOUR MONEY blind taste test.
VELSHI: I'm not much of a bottled water drinker.
ROMANS: I'm not either.
VELSHI: But Americans are. So we have a little taste test here in these glasses in front of us. Neither Christine nor I know what they are. One of them is tap water from here at the CNN, Manhattan tap water, one of them is Avian and one of them is Fiji. Your mission, should you choose which one is tap water? 0
ROMANS: It's not "b."
VELSHI: Mine is definitely "b."
ROMANS: Mine is "a."
VELSHI: I win. "b" is tap water. No reason for you to be spending any money on bottled water.
ROMANS: That's absolutely right. Americans spend $15 billion a year on bottled water.
VELSHI: Unbelievable. More than we spend on movie tickets or even ipods. The tap water, however, is generally perfectly safe.
ROMANS: Tastes pretty good. We couldn't tell the difference. Joining us now is Charles Fishman, editor at large with "Fast Company" Magazine. He is going to tell us why exactly in this country we spend so much money on something we technically don't need. Charles.
CHARLES FISHMAN, EDITOR AT LARGE, "FAST COMPANY:" Hello. Well, we buy bottled water for three or four reasons. One reason we buy it is pure convenience. It's there when we need it; it is easy to drop in a briefcase or a lunch box. The other reason we buy it is people have become suspicious about tap water, in part because bottled water is everywhere. We've raised a whole generation of children now who are accustomed to drinking water out of bottles. And that has made them, for no good reason, simply the presence of the bottled water suspicious of what comes out of the tap.
VELSHI: We completely hear this from people, parents in particular like their kids drinking bottled water. Can we put this to rest? Is it unsafe to drink tap water anywhere in America?
FISHMAN: Here and now today, we can say the tap water that's delivered across America is remarkably safe. Sure, there are periodic moments in specific places where there's a problem with the tap water. It's a remarkable cultural phenomenon in America that we imagine that because something comes sealed in a package, it's safer. In fact, the monitoring standards for municipal water are much more rigorous than the monitoring standards for bottled water. That's not to say that bottled water is unsafe, but it's certainly no safer than what comes out of your tap.
ROMANS: But then there's the angle of petroleum products in the bottle and the hundreds if not thousands of miles sometimes these bottles travel before they get to your refrigerator or to your pocketbook or to the -- stuck under the car seats in the back seat of your car, right? I mean, there are -- there are attendant costs of bottled water?
FISHMAN: Sure. I mean, that was one of the points of looking into the bottled water industry, which didn't even exist 25 years ago in this country, essentially. Where does the water come from and what does it take to bring it to us? We go through 1 billion bottles of water a week just in the United States, all plastic bottles. And 76 percent of those bottles are not recycled. So we have created a waste stream for our pure convenience that we then throw right in the garbage, right in the landfills. And, actually, all plastic water bottles are 100 percent recyclable. So there is a huge impact from bottled water. Of course, you don't want to single out just bottled water.
We drink twice as much carbonated soda in this country as we drink water and everything you say in terms of environmental impact about water you can also say about soda. The point is that bottled water appears to be a simple product but if you look at it closely it has a much greater impact than you would imagine.
VELSHI: I'm really quite tired of being looked down at restaurants in Manhattan when they ask you whether you'd like bottled or tap water because I always choose the tap and I always get a sneer. You've heard of this trend in many upscale restaurants across North America towards making their own water, giving you a filtered version of non-bottled water. And you do pay for it.
FISHMAN: No, you don't pay for it. In the restaurants that are leading the way, She Pernice (ph) in Berkeley, they have abandoned serving bottled water of all kinds. They serve their own still water in a lovely carafe and actually carbonate their own tap water filtered and serve that in a carafe as well. So in most places, if they're serving tap water, they don't charge you for it. What's interesting is the bottled water trend in this country back in the late '70s got its start by trying to create this upscale image surrounding bottled water by serving it in restaurants. I wouldn't worry about the attitude when you say, no, tap water will be fine. ROMANS: So we are seeing bottled water backlash in some places too, San Francisco for example, some places where they say, we want to be a little more, I guess, eco friendly with our purchases and with our consumption.
FISHMAN: The city of San Francisco just two weeks ago banned the use of city money to purchase bottled water. San Francisco's water comes from inside Yosemite National Park, so the city -- the city officials there decided there was no reason to be buying water from somewhere else, which is fine. I'm not sure I would call it a backlash. I would call it a consciousness rising about bottled water. When is it a worthwhile product and when is it simply an indulgence.
VELSHI: Charles, good conversation. Thank you so much for being with us. Charles Fishman is the editor at large at "Fast Company." You know, these bottles that we were showing during this segment, our interns sort of went around the block.
ROMANS: In one trip, the intrepid interns. I want to be a CNN intern.
VELSHI: Those are the different bottles of water that they got.
We are going to take a break. Coming up next on YOUR MONEY, the adjustable rate mortgage time bomb just one of the stories that clicked on MONEY.com this week.
VELSHI: Allen Wastler joins us now with the stories that were the most popular on CNNMONEY.com this week.
ROMANS: And a big one had to be that huge run-up for stocks on Thursday.
ALLEN WASTLER, CNNMONEY.COM: Who let the bulls out, woo, woo, woo.
ROMANS: Records for the Dow.
WASTLER: Yes, I mean they just charged ahead, it seemed to be retail sales. I mean there were a lot of things in favor of the market going on. Still get low inflation readings but the retail sales came out. The same-store sales, if you're going to be really specific about it. And they showed some surprising, hey, people are buying! I mean, Wal- Mart, too, because Wal-Mart, you know, everybody -- that's the one where it gets most affected by gas prices, gas prices have been up but they came up with a solid 2.4 percent, moving ahead, taking a little bit out of the electronics trade from Best Buy.
VELSHI: They are going to start selling branded electronics.
WASTLER: Dell computer.
VELSHI: Off price, no names electronics there, the DVD or the TV that you never heard about.
WASTLER: That's right. Charging ahead. So the market was big puller on the Website. Everybody interested on the market especially had he it goes up because you're making money.
ROMANS: Despite some headlines like the Armageddon.
WASTLER: That was our other big story of the week. Probably because of a great headline, Armageddon. A.R.M. being adjustable rate mortgages. Up to $1 trillion of those bad boys are going to reset by the end of the year because back in 2004, 2005, the teaser rates, hey, pay 4 percent for a couple of years, then we'll take you up to a market rate. All those babies, they're going to reset right now and you're going to see it, boom, boom, boom. Some people, you know, for a $200,000 mortgage, if you did the 4 percent teaser rate, you've been paying a little over $900 a month. Go to the market rate. You're going to be paying over $1300 a month. That will whack a lot of people, just won't be able to afford it and you'll see a lot of foreclosures.
VELSHI: You know what the answer is, if you've got a kid in the house --
ROMANS: Put him to work.
VELSHI: Send him to college and make him an engineer.
WASTLER: That was our other big puller this week. Regular feature we do, most lucrative college degrees, hey, kids, engineering. Chemical engineer, computer engineer, mechanical engineer, your electrical engineer. They are all the top salaries, all in excess of about 55 grand. Oh, man, but you liberal arts types, don't fret, there's a 5 percent jump in the starting salary for that degree, too. You're still in the low 30s but at least you are going in the right direction.
ROMANS: Spanish and French didn't even get on the list.
WASTLER: History is there.
VELSHI: There's a big difference there. An English major is 32 and change and chemical engineer 59 and change. Why didn't I think about -- I had a fleeting moment where I wanted to be an engineer? It was like a three-month period and I was headed that way and I said forget that, liberal arts.
ROMANS: My dad is an engineer and when I told him I wanted to go into journalism, you should have seen the look on his face.
WASTLER: Engineering, you've got all that math and science and hard stuff. I mean, journalism is a lot more easy. Just cram enough to know what you need to talk about and move on.
VELSHI: Just for a few minutes. The fact is we couldn't cram enough into this segment because there's something really big that we need to talk about. You need to stay.
WASTLER: I'm coming back after the break.
VELSHI: Seriously, this is not the time to take your bathroom break. You need to stick around, because we are going to talk about the final frontier in hands-free living. Seriously, don't go anywhere. Stay right here.
VELSHI: I don't know if you have ever taken a vacation at a national park.
ROMANS: Yeah, sure have.
VELSHI: They are a very popular summer vacation spot. Working at one, not visiting has actually been the lifelong goal for one retiree.
ROMANS: Tony Harris has that story.
(BEGIN VIDEO CLIP)
GERRY ALLEN, CEMETERY ADMINISTRATION: Look around, you see some of these --
TONY HARRIS, CNN CORRESPONDENT (voice over): Gerry Allen feels right at home as a park ranger. But the trail he followed to get here was longer than expected.
ALLEN: This is during the time of Vietnam and I was drafted. By the time I got out of the service, I had a wife and a child and the option of going to the National Park Service was pretty much closed because of the pay that I needed to support my family.
HARRIS: Allen went into the airline industry instead, working for Delta Airlines as an environmental engineer. And after 30 years, retired with enough security to pursue his childhood goal once again.
ALLEN: When I was about 18 years old, we went to Gettysburg National Military Park, and I was entranced by a national park ranger giving a program about the battle at that site. I stayed and listened to him all day long. And ever since that point, I decided I wanted to be a national park ranger.
HARRIS: Today Allen works at the Andersonville National Historic Site in southwest Georgia. Which encompasses a national cemetery and a museum that pays tribute to America's prisoners of war.
ALLEN: I hope when the visitors come and see me, they understand the historical significance of Andersonville National Historic Site and the honor of being buried here, along with other veterans from the Revolutionary War, all the way up to the present time. I try to convey to them how powerful that is.
HARRIS: Tony Harris, CNN.
(END VIDEO CLIP)
VELSHI: All right. Now for the moment the world has been waiting for. I promise you -- I hope you didn't go to the bathroom seriously because you might be missing this as we speak.
ROMANS: Allen Wastler is back with us to show us the invention that will change all of our lives. I'm not sure.
WASTLER: Look at this, from Kimberly Clark, the only thing you need for your bathroom convenience, that's right, an automatic toilet bowl thing-a-ma-bob. Look at this.
ROMANS: But it's programmed not to give that much.
WASTLER: What convenience. What convenience is this? I love this.
VELSHI: You know what the deal is; Americans use twice as much toilet paper as Europeans.
ROMANS: We use twice as much everything as Europeans.
VELSHI: Apparently, I read somewhere that an arm's length is the average pull and that apparently you're only supposed to use five squares.
ROMANS: This is supposed to be great for like corporate situations or restaurants or whatever who just want to regulate how many squares are coming out. You can have a better idea I guess of what your supply is going to be. My beef is everything in a bathroom is automated now and I am not quite convinced --
VELSHI: You get the hand dryer, the soap.
ROMANS: The automatic flusher that sometimes just keeps flushings.
WASTLER: I worry about this thing not working, because you are there and you are doing your business and suddenly like nothing is coming out. Oh baby we are -- at least the ones they have now you can sort of get in there and rip out what you need.
ROMANS: I think it is an interesting idea. Maybe it will help us consume a little bit less. Maybe it will take that you know Americans use twice as much, the arm length whatever, maybe it will cut down on that.
WASTLER: The quote on toilet paper, I don't believe it. Where is this country going to?
VELSHI: Keep it rolling. On that note Allen Wastler.
ROMANS: Now we are officially done with the toilet. Thanks everyone.
VELSHI: Thank you for joining us for this edition of YOUR MONEY. Catch Christine later today at 6:00 pm Eastern on "Lou Dobbs Weekend."
ROMANS: You can see Ali every weekday morning on "American Morning." We will see you back here next week.
VELSHI: Saturday at 1:00 and Sunday at 3:00. Have a good weekend.
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