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To Cut Or Spend to Save Our Economy?; Creating Jobs; Venus Williams: A Business Woman
Aired July 10, 2010 - 13:00 ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
CHRISTINE ROMANS, CNN HOST: Welcome to YOUR MONEY. I'm Christine Romans. My friend Ali Velshi is off today.
The question to cut or spend to save our economy. So many of you out there feel we must get control of our deficits. But what are you willing to give up to get there? How about those Bush tax cuts? They expire in just six months.
Chrystia Freeland is global editor at large, Reuters. CNN chief political correspondent Candy Crowley is host of "STATE OF THE UNION" here on CNN. She talks about the head of the State of the Union.
But let's start with Stephen Moore, editorial writer for the "Wall Street Journal." Will President Obama turn the Bush tax cuts Stephen into the Obama tax cuts?
STEPHEN MOORE, EDITORIAL WRITER, "WALL STREET JOURNAL:" Well I would like to see that. I'd like to see some tax cuts from this administration. But the big issue right now is what's going to happen on January 1st of 2011which is that all of the Bush tax cuts are scheduled to expire the middle class tax cuts and the investment tax cuts.
And my own feeling is that it's really in this kind of environment where we have such a risk of a double dip recession, I think it's just economic poison to be talking about raising tax rates on investments and businesses at this time when we've got such high unemployment all over the country.
ROMANS: Chrystia they're expensive. Those -- that tax structure is expensive, isn't it?
CHRYSTIA FREELAND, GLOBAL EDITOR AT LARGE, REUTERS: The tax cuts for sure. I would actually like to come back to Stephen if I may with a question. Does your concern about a double dip recession mean you're in favor of stimulus now?
MOORE: No, look, I think the lesson we've learned over the last ...
FREELAND: So we don't tax, but we also don't stimulate, it's like that classic Bush philosophy of don't tax but don't do anything on the spending side and have big deficits going into a financial crisis which has positioned the U.S. so well? MOORE: I guess my view is we've just had this experiment in spending stimulus. The biggest experiment in American history with $800 billion spent. And it was that we all now know that it has been a failure. It didn't create jobs.
FREELAND: That's completely untrue. We don't know that at all. It didn't create -- it wasn't big enough to -- it wasn't big enough to end the recession, but we don't know the -- imagine had we not had that stimulus, don't you think the economy would have been even worse?
MOORE: No I think we'd be much better off today if we hadn't done the spending. All we've got in exchange ...
MOORE: Yes, the spending just created a much larger gap and it's basically I think made businesses in a hungered down environment. We know what works. If you look at the book that I wrote, the history of the last 40 years shows that when we cut tax rates that's when the economy grows. It grew in the 1960s when Kennedy cut taxes and ...
FREELAND: It grew during the Clinton era, as well.
MOORE: Don't forget that Bill Clinton cut the capital gains tax rate. Barack Obama is talking about raising it.
ROMANS: Candy lets bring it back to you because we're having a very ideological discussion here. This is what you'll be hearing when we come back this fall. We should be spend, spend, spending to keep the economy going. This is not the time to be taking our foot off the gas, no, no. We need to be spending the Bush tax cuts and cutting taxes so we can keep this money flowing that way.
Candy how is this going to play politically?
CANDY CROWLEY, CNN CHIEF POLITICAL CORRESPONDENT: Let me just make a prediction, I don't think you'll hear a lot of we need to spend some more money. That is sort of a no-go on Capitol Hill. It's not something they want to talk about. Perhaps they will prime the pump some more, but I don't see that as a selling point in terms of the election.
What is more of a selling point really what Chrystia sort of got to, which is the way that the president is going about it is you'd have been so much worse off if we hadn't done that stimulus.
So it's more going that way. I also don't expect you're going to hear a lot of talk about rolling back those tax cuts. I think in the end they'll come up with some formulation which will basically be don't worry, middle class American will be able to retain their tax cuts and I think that gets to Stephen's point which is they probably will roll back on the wealthy.
ROMANS: And people who make $250,000 or maybe some have even lower that had number to maybe $200,000 and more will lose their tax cuts. I want to look at projected federal revenue spending by the year 2020.
Because this is why we're talking about there is no appetite to spend more money because when you look at Medicare, Social Security, the interest on the money we've already borrowed and spent but haven't paid for, you're talking about 93 cents of every incoming federal dollar by the year 2020 will already be spoken for by those things.
That leaves that little sliver on the right to do everything else with the entire United States government. By 2030, I think interest on your debt alone is something like 8 percent which is the largest single expenditure in the government.
So Candy, just bringing it back to you again, this is the difficulty for the president. People -- he needs to spend money now, his supporters say, to keep things going, but with an eye to a number like that so that you're not burdening your grandchild. It's a very difficult line to walk.
CROWLEY: Exactly and certainly that's pretty much what you're getting is you will hear him talk about we need more jobs bill so-to- spend more money, basically teachers, firemen getting laid off, and we need that money, but we've got to be careful, we have to watch the deficit.
So he tries to do due diligence to both, but in the whole political scheme of things, Republicans are betting take that looming deficit is something that Americans totally get. It's like unemployment.
The minute you say the unemployment figure people understand what that means. They also understand the word deficit. So you can talk about first quarters and second quarters and GDP and the trade balance, but if you say we're spending x amount of dollars over what we're taking in, people sort of intrinsically know that's a bad thing. And that's what Republicans are banking on.
FREELAND: I would like to agree with Candy on the politics of deficit, but I just want to cast a little bit of doubt on those forward projections that Christine was talking about at the beginning. And I think Stephen is actually going agree with me on this one, that it's incredibly hard to know how debt and deficit looks 10, 20 years into the future because it all depends on the size of the economy.
So really the central question, we're talking about sort of stimulus versus deficits, do you want to tax more, do you want to spend more. The real center issue is how do you get the economy to grow. And a half a percent or an extra percent a year of economic growth solves a heck of a lot of problems. And that really I think needs to be the central question of the debate.
ROMANS: But not all of them. You can have the economy growing robustly, Stephen, and then suddenly you turn that whole situation upside down. No matter what, don't you have to have either cutting spending or raising taxes or some combination of both, can the economy on its own fix this problem? MOORE: Well first of all, I agree entirely that the first thing we have to do is get this economy growing. And that's why I just think it really is such economic insanity to be talking about raising tax rates on capital investment. What we need in this country is investment in the country from foreigners around the world.
They're not going to invest here if our tax rates are going up when the rest of the worlds are going down. If you put an extra percentage point on growth over the next ten years, it's like adding a Germany to the U.S. economy. That's how big the economy grows. And you solve a lot of problems that way.
ROMANS: It is the biggest most dynamic economy in the world. Something to remember and we have counted out economic growth being a help or a tail wind before and if the '90s, for example. And it did come running back.
MOORE: That's right.
ROMANS: Everyone sit tight. One Nobel Prize winning economist saying we're on a familiar road. One that leads to the dreaded d word, a harsh reality check, some of the scary language of the week next.
ROMANS: You can't blame Americans if they're filled with terror and dread judging by these recent headlines. Vice President Biden said there's no possibility to restore 8 million jobs lost in the great recession. He told that to a fund-raiser in Wisconsin.
Paul Krugman a Nobel Prize winning economist in his "New York Times" column, no one can stop talking about this column. He said we are now I fear in the early stages of a third depression. And House minority leader John Boehner on the stimulus and jobs creation, this isn't the picture of the recovery. It's the epitome of failure. Even President Obama is conceding the tremendous pressure this economy is under.
(BEGIN VIDEO CLIP)
BARACK OBAMA, PRESIDENT OF THE UNITED STATES: This has been a difficult time for America right now. Two years of brutal recession, a decade of economic insecurity. And there are going to be some hard days ahead.
(END VIDEO CLIP)
ROMANS: Hard days ahead indeed especially for the 46 percent of unemployed who have been out of work six months or longer. Now the president succumbs a brighter future. But Candy how does this drive into the midterm elections, a brighter future, but the right now is really tough for a lot of voters.
CROWLEY: It's a tough sell. I think you can just start with 9.5 percent unemployment. It's just tough to say, hey, things have gotten better, which is why the Democrats are going after the if you have to hold on you heard the president there, we are moving in the right direction.
But if you ask the country right track/wrong track, most think wrong track. So he really is in a dilemma. And the question honestly this election year is not will the Democrats lose seats. They will. The question is it going to be catastrophic or pretty normal for a midterm.
ROMANS: Candy you're going to talk to David Axelrod on your show this weekend. I'm fast needed to know what you want to ask him about the message from this White House, I mean look you had the Vice president office talking about this is recovery summer, stimulus is working, yet on the other hand you had the president issuing a letter a week before that to senior congressional leaders saying we cannot fail right now because we're at an important cross roads and the recovery is fragile.
CROWLEY: Well you know first of all, I think the dual message is where I'd like to go and say you know at some point don't you have to fish or cut bait. You have to go one way or the other. The tax cuts certainly something I want to talk to them about.
And when you're looking at the president's rhetoric as it sort of gets near November, what you're seeing on the one hand is a president who reaches out lets say on financial reform or on immigration reform saying we need Republicans and then goes out and just blows them up on the campaign trail, which doesn't exactly set the atmospheric.
So I think there is that and I think the administration is struggling now because it has been in office for a year and a half, almost two years by the time November rolls around. And at some point, they understand that people look at Barack Obama and say he's the one responsible now and it doesn't feel good.
ROMANS: And the inherited verbiage, every now and then it creeps back in there about what this administration has inherited. And I think a lot of people are looking at long term unemployment and looking at the lack of opportunity and saying this isn't why we elected Democrats or this president. You inherited something that we wanted you fix it.
Chrystia it's not an easy fix though, it is not something that you can wave a magic wand, when we have structural issues, we have long term issues. And there are people like Paul Krugman who are saying you need to spend a heck of a lot more money now and fast.
FREELAND: Well I think your point about the structural issues is incredibly well made. And I think a truism of the connection between politics and the economy is that presidents get both too much blame and too much credit for what's going on in the economy. I think that Barack Obama benefited from the economy in 2008 and I think we can make a strong argument that had you not had the financial meltdown, he might not be president today. So it cuts both ways.
But I think right now it is a dreadful situation particularly because there is no obvious quick fix. And to me the structural point around jobs is the biggest long term dilemma for America today. Joe Biden clearly off message saying those 8 million jobs are not going come back, but as usual, he may be telling the truth.
The inconvenient truth and what I think is particularly worrying is even as those jobs start coming back, I think there is a lot of economic evidence to suggest the great middle class jobs, the ones that we associate with sort of the golden era of the 50s, '60s, when you could support a family, those jobs seem not only to not be coming back, but to be vanishing.
And not just in manufacturing, but also in white collar sectors, partly globalization. But it is also technology, all these great impairing technologies that make companies more productive, guess what they don't have to employ so many people. That is the long term problem.
ROMANS: And Stephen Moore, you know the fastest growing groups of jobs are home health aids and nurse's aids and some of those jobs pay like $19,000 a year and many of them have no benefits and they are not on the books. So that's what we're replacing some of those lost manufacturing jobs with.
Another quick point here is that many people have noted this week that even if you avoid a double dip recession for a lot of people, it still feels like the same way it felt back if 2008. The recession never ended for them Stephen. How do you square that?
MOORE: I think the problem and one of the reasons why I think the Obama administration is in some political trouble now is there's no plan b. We had the big economic stimulus plan. I really do think it was a trillion dollar failure. And now you've got people like Paul Krugman saying let's spend another trillion and the Obama administration says let's spend another $100 billion to try to get us out of this.
I do think by the way, I mean I have to say this; there is a silver bullet here. If we were to adopt a Steve Forbes style flat tax in this country with a 19 percent tax rate, we would see so many jobs in this country; we could cut the unemployment rate in half. But that's going require some political ...
FREELAND: What government programs would you cut to afford that?
MOORE: That's a good question. The single most important thing we have to do is we have to repeal the Obama Care Bill. You know, I'm in Nevada right now where there's 14 percent unemployment where Harry Reid is under a lot of -- in a lot of trouble right now and a lot of people are saying this gap in the overspending, that's what everybody is talking about here in Nevada. No jobs, too much debt, and too much spending.
ROMANS: And we didn't even talk about unemployment benefits which can get everybody all fired up as well, still a very hot topic. Chrystia Freeland, Candy Crowley, Stephen Moore thanks, everybody. Have a great weekend everyone.
MOORE: You too.
ROMANS: Very smart conversation.
Next, millions of American jobs are at stake. They could be lost overseas. So why is the Obama administrations message to just play fair?
ROMANS: To create American jobs, President Obama has pledged to double U.S. exports.
(BEGIN VIDEO CLIP)
OBAMA: This isn't just about where jobs are today. This is where American jobs will be tomorrow.
(END VIDEO CLIP)
ROMANS: Richard Quest, is host of CNNI "QUEST MEANS BUSINESS." Richard do you expect to see this translate into millions of new manufacturing jobs in the United States?
RICHARD QUEST, CNN INTERNATIONAL HOST, "QUEST MEANS BUSINESS": No, I don't. The best hope in the world is to export your way out of trouble, but there are so many various factors that allow that to take place. The one thing the president did say at the G-20 is that the rest of the world shouldn't look to export their way out of trouble by exporting goods to the United States.
Now, that, of course, is a faint hope, too, because as the American economy does pick up and consumers start spending again, the idea is that eventually they will start sucking in imports from overseas, Germany, Japan, China, and the rest of the world. The truth of the matter is the U.S. does actually export an enormous amount of goods. But to increase that by anything like double fold is simply just wishful thinking.
ROMANS: Let's bring in Scott Paul; execute director for the Alliance for American Manufacturing. You know Scott here's the interesting thing. You can double exports all you want. If you triple imports, you still have the same imbalance that leads you to the problem from lost American jobs in the first place.
SCOTT PAUL, EXECUTIVE DIRECTOR, ALLIANCE FOR AMERICAN MANUFACTURING: Exactly right, it would be one step forward and two steps back. The most important metric for me is if we balance our trade deficit because that means that we will be keeping jobs here, we will be keeping welfare; we will be exporting products overseas at the same time.
ROMANS: Balancing the trade deficit, I mean that would be an incredibly difficult -- just getting it more sustainable I think is what some people would like do. If you look at the trade imbalance over all with China, for example, I mean this is a China story first and foremost. Last year in 2009, $227 billion trade imbalance.
What does that mean? That means the United States bought that much more than it sold to China. You look this year, and you can see we are already on track to surpass the first four months of that this year. This, Scott, is a currency story; this is a fair trade story, what is this?
PAUL: Well I will tell you what, saying that China doesn't manipulate its currency makes about as much sense as saying Libran James doesn't play basketball. Of course China manipulates its currency.
We're never going to boost exports, we are never going to create jobs here unless we're honest about our trade relationship with China and hold them accountable and say you got to play by the rules or you'll lose access to our market that's how Reagan did it in the '80s and that is how Nixon did it in the '70s, that is what Obama needs to do right now.
ROMANS: Do you think Obama is making progress? Timothy Geithner the Treasury secretary and Barack Obama the president has made some progress that we haven't seen in recent years?
PAUL: I'll tell you what; I will be willing to eat a lot of krou if I'm wrong about this. But I think they got played right before the G-20. China said it would revalue its currency. It made a little head fake and I think the administration cut it a little slack. But I think overall China is going to look out for its own interests unless our market access is at stake and so far we haven't been willing to do that.
ROMANS: You know Richard, one of the bottom lines here, and when we hear about global rebalancing and you've mentioned this, that this is an American consumer story. The American consumer has fed those export-led growth machines around the rest of the world and now the U.S. is trying to say we need to balance that, we need to be exporting more, need to be consuming less from other countries. How easy is that to say we are going to rebalance compared with reality?
QUEST: It's very easy to say and exceptionally difficult to do. For as long as I can remember, and I suspect you as well, they have been talking about the rebalancing of the global economy. First it was against Japan as an export monster. Now it's against China. Germany's exports are increasing again. The reality is, and, Scott, what I want to know is where are you suddenly going to do all this increased exporting from?
What is it that you will be exporting? Even allowing for China and perhaps manipulation of the currency. The truth is on the import side until Americans are prepared to pay a little bit more for domestically produced goods and a higher cost economy, then they are going to buy those cheaper imports.
ROMANS: Hey Scott, China has become the manufacturing floor of the world. Can you take it over and provide American goods at the price that they apparently want to pay for them?
PAUL: I'll tell you what, we can be competitive. In fact our manufacturers are super competitive in a lot of areas. But what you can't compete against are subsidies and this 40 percent price advantage that China gets through currency manipulation. I guarantee this. If you give American workers a level playing field, we'll make the best products in the world. We've always been number one in manufacturing and we can regain that title if we have a level playing field.
ROMANS: Richard, ten seconds, my friend.
QUEST: China is a red herring to some extent. Look at the rest of the world. The European Union, look at the other major trading partners. Start asking where will that's no currency manipulation how you compete them against those economies.
ROMANS: Well they're also all ticked off against China, too. For China's currency too. That's another interesting way to bring it all together. Richard Quest thank you so much. Scott Paul from the Alliance for American Manufacturing, thanks gentleman.
She's one of the biggest superstars in the world of sports. Definitely one of the most successful in business, I'll sit down with Venus Williams next.
ROMANS: Venus Williams went pro at 14, won Wimbledon five times. At age 30 now, she still ranks as one of the top five players in the world. I was very delighted to sit down with Venus this week. We spoke about her new book "Come to Win" which details how some of the top people in their profession credits sports for their success.
And I also learned that while tennis is top in her life right now, being a business woman is a very close second.
ROMANS (voice over): Some of the people in here are luminaries in their field clearly. Jack Welch, for example, he is somebody who is very competitive. You don't have to dig very deeply or scratch very deeply to find the competitive streak in sports in a lot of business leaders.
VENUS WILLIAMS, AUTHOR, "COME TO WIN:" There is something very competitive about these people in the book like Jack Welch, who are on the top of what they're doing. And you kind of scratch and you just keep it to that little serving mate they were athletes. It was pretty interesting how sports really make a difference in your life outside of your field.
ROMANS: You look at Bill Bradley, who is a Senator, but actually a lot like you in a way in that he was a professional athlete, a gold medalist in the Olympics. And then went on to this other really lucrative career afterwards as United States Senator. What did you learn from him?
WILLIAMS: I thought his story was so touching. I just felt like it just shows athletes, you know, in the case of athletes, that there a lot of places you can go after the career is over. But at the same time, I think the things that he said about winning and losing was so important even from my own experiences.
And I think what's so important is not to associate that the losing or the failing with who you are. It's just something that happened. You learn from it, you recover, and you make it better. So I think the worst part about failing is when you don't learn from it. So there are a lot of great things like that in the book.
ROMANS: Let's me ask about how diversified your own outlook is. Here you are in the prime of your career, your 30 years old yet you have fashion design, interior design, you've gone to school for fashion design, you've written a book, you've stayed very diversified here. What are you trying to build for after tennis?
WILLIAMS: Well there's going to be a long life hopefully after tennis. And I've loved tennis for so long and I still do. And I'll love it for a long time after, but I also want to do something that I love after tennis. In the book you'll read that it says how my parents brought us up to be entrepreneurs. So it's really my upbringing of really wanting to have my own businesses and to have something that has an impact.
ROMANS: You know entrepreneurs think for themselves. Entrepreneurs are very fiercely independent and follow their own gut and I was so surprised during the French open when I was watching grown men debate the corset. And a year ago I interviewed your sister Serena and the whole world was talking about her outburst at the U.S. open. Are you surprised that so many people, in pop culture look at you and your sister and have this conversation about what you wear or what you do or how you behave?
WILLIAMS: It is interesting. To be honest, the talk was so intense about the dress and the illusion, I almost retired the illusion. But it's going to make a comeback. Would I ever thought that this would be happening, no, it is, it's crazy? Just enjoy the moment.
ROMANS: You know one of the things in the book that was interesting, Magic Johnson was saying that when he first started taking meetings with investors or with business people, they didn't take him seriously, but he thought maybe they just wanted his autograph. Did you ever have that kind of experience?
WILLIAMS: I have had that experience before. I think people do want to take meetings with you, they do in a way are curious maybe to see what you're about. When you get there, you have to show them that you're serious and that you do know what you're doing and you know what you're talking about.
ROMANS: Let me ask you about sister Serena and Wimbledon. Were you disappointed in your own performance? Where do you go from here?
WILLIAMS: I've had so many great years at Wimbledon and this year was also a very good year but not what I'm used to.
ROMANS: What do you mean? WILLIAMS: I didn't win the match, it is just that simple. And just like in my book, when you don't win, you reevaluate and you go back and you come back better. That's part sport. You always win. It doesn't always happen when you want it to, but I'll be ready for the next match.
ROMANS: Ready for the next match. Make sure you check out the book and you'll read Venus' interview CNN's own Soledad O'Brien in there, as well.
Ever wonder who exactly makes the final call to delay or cancel your flight? We'll show you next.
Plus, why you could be standing up instead of sitting down on a future flight. Standing room only on an airplane. Imagine that.
ROMANS: Ever wonder what it takes to get your flight from ticketing to takeoff to landing? Before Ali took off to the World Cup, he got an inside look at America's third largest airline.
ALI VELSHI, CNN HOST, YOUR MONEY (voice over): So for most of us, traveling by plane means buying a ticket, getting to the airport, getting on board, sitting down, relaxing, and enjoying the flight. But there are actually hundreds of people involved behind the scenes that make sure all of this goes smoothly.
UNIDENTIFIED MALE: Good morning. Before we get into reviewing yesterday's operation, let's get into safety.
VELSHI: 9:00 a.m. Central Time, senior operational managers in charge of planes, crews and schedules and other critical responsibilities meet in a room near United's own airport Chicago O'Hare.
UNIDENTIFIED MALE: We will have one in Chicago later this afternoon.
VELSHI: It's a quick meeting. Yesterday's performance.
UNIDENTIFIED MALE: Yesterday we did make our shared goals.
VELSHI: Today's potential problems.
UNIDENTIFIED MALE: And parts of western Illinois and into the afternoon that will be our next opportunity to seeing some thunderstorms into Chicago.
VELSHI: Then it's off to work in the heart of United's worldwide operation. This is the other side of the curtain, the side that we mere mortal travelers never get to see. People in this room here at United Operations Control Center outside of Chicago are making decisions about everything to do with your travel, including the crew that's on your plane, making sure there are spare sports if anything goes wrong on that plane. In fact, in this room is where they give final approval for takeoff.
JOE KOLSHAK, SR. VP OF OPERATIONS, UNITED AIRLINES: Dispatch a flight is two people who are legally responsible, the dispatcher and the captain on the flight.
VELSHI: So they both have to sign off.
KOLSHAK: They both have to sign off.
VELSHI: Joe Kolshak is a 20 year veteran of the airlines. Like many here, a former pilot. United's Operations Control Center, or OCC, isn't customer service. It's not the room where your ticket price is set. Nor is it where they track your lost luggage. But it is pretty much everything else.
From this room, senior staff in virtually every department oversee United's is operations at five U.S. hubs. Chicago, Denver, Los Angeles, San Francisco, and Washington Dulles. And thousands of domestic and international flights.
UNIDENTIFIED FEMALE: For the most part, it all comes through this area.
VELSHI: Difficult decisions taken in this room, shifting a plane's root ever so slightly to make up for a late departure. Preparing a flight crew for a possible holding pattern or diversion to another airport because of weather. And things seemingly not so critical, scheduling crew shifts and hotels and making sure passengers aren't bordering sweltering hot planes in the summer.
UNIDENTIFIED MALE: As we pull aircraft over from the hanger, you know with these hot temperatures, make sure that we're pre-cooling them.
VELSHI: Every single flight is assigned a dispatch who determines and signs off on the flight plan and tracks its performance and problems until it lands.
UNIDENTIFIED MALE: It is actually a straight line to go.
KOLSHAK: You see with 1200 flights a day, you know actually a lot of people, a couple hundred dispatchers.
VELSHI: The goal, keeping everyone safe and moving hopefully on schedule.
The fun of traveling is actually traveling, actually going somewhere. There's nothing more frustrating than being stuck on the ground and there are new rules that say if an airplane keeps out tarmac in the plane for more than three hour, they get fined a lot of money. So you can be assured that you don't want to be sitting around and they don't want you sitting around.
KOLSHAK: I understand the customer's frustration. To be out of control because somebody else is basically controlling wherever that airplane goes and when it goes.
VELSHI: So far United hasn't faced the severe fines imposed by the Department of Transportation, but that's meant turning some delayed planes back to the gate and canceling the flight.
KOLSHAK: We're making it work. Doesn't mean that it's not painful to the passengers who don't understand that we're operating under this law that will fine us $27,500 per passenger on a flight, small airplane that is $4 million, large airplanes doubles.
VELSHI: When it comes to delays, there are the uncontrollable causes like weather and the controllable causes like an air traffic control system that needs a serious upgrade.
KOLSHAK: And it does slow us down. It does impact us.
VELSHI: Ali Velshi, CNN, Chicago.
ROMANS: Summer is in full swing. For many people that means vacation time. But flying just about anywhere these days can cost a pretty penny. Rick Seaney is a CEO of Farecompare.com, Rick what are the best deals out there right now for this flying public?
RICK SEANEY, CEO, FARECOMPARE.COM: Yes, you know we've had a really tough summer for deals. We had the cheapest ticket prices in the last decade last year. This year, summer prices are up pretty dramatically. Even yesterday, United announced that their June numbers were up 30 percent or so. So ticket prices are up. But there are some deals starting to roll out now as we get closer to that magic number which is August 22nd.
So if you fly after August 22nd, lots of dealing out there. In between there, we've got a few deals. Things like Orlando from Philadelphia and some international deals that have been really expensive lately are now starting to come down a little bit.
ROMANS: Philly to Orlando including taxes and fees $189 round trip.
SEANEY: That ticket price was $300 a few weeks ago.
ROMANS: Philly to Oslo, $384 each way. But additional taxes and fees not included.
ROMANS: Let me switch gears quickly. U.P.S. they are saying this week that they have a solution to lost luggage. Ship it ahead of time with them, the shipping giant now has a luggage shaped boxes so you can avoid traveling with the bags and the fees that go along with those bags.
Department of Transportation reports that the ten largest airlines in the U.S. as you know Rick collected $770 million in check bag fees in just the first three months of 2010, so does it make sense to avoid those fees by shipping it ahead of time?
SEANEY: It certainly does. Especially on domestic, international, typically you get free checked bags. United for example has an all you can eat plan for the year for just over $200, can pay for all your check bag fees for a year. For you and all your family members so there's all kinds of ways to get around bag fees. Some airlines have credit cards that waive the fees. You can save up to $300 to $400 for a family just by getting those fees waived.
ROMANS: They also have a thing where you can -- a lot of business travelers ship your bag ahead of time with FedEx. They had a spring special $79 is still pretty rich, but business travelers like that.
SEANEY: It's something that everybody should be looking into because checked bag fees aren't going to go down. They're just going go up over time.
ROMANS: All right. How about this, think your last flight was cramped? Think about this. Discounts Irish Airline Ryan Air wants passengers to stand on its flights so they can passenger more bodies on to a plane. Can this really happen? Wouldn't they have to design new kinds of plane, they'd have to have some kind of a bar stool type situation that would be safe so on takeoff and landing, but you could get a lot more bodies in there I guess if you took out leg room all together.
SEANEY: Absolutely. Actually this is something that was done a Chinese airline actually was the first one to come out with this design where they actually had standing room only in the planes and then of course Ryan Air took that to the next level by making it more public. But there are designs out there. It can be done. I think it's a lot of it for short haul flights, less than two hours. But nothing surprises me. I get surprised every week now, nothing surprises me anymore.
ROMANS: It would solve a big problem if my traveling family which is my 2-year-old kicking the seat of the person this front of us. We wouldn't have that problem anymore.
ROMANS: You'd just have my toddlers running wild on an airplane.
SEANEY: It makes the car seat a little more complicated, though.
ROMANS: All right. Rick Seaney, Farecompare.com, thanks so much Rich.
SEANEY: Thank you. ROMANS: Next, why one of the biggest companies on the Internet and the one you likely use everyday is running in to a little bit of trouble.
ROMANS: Time now for the ticker. My favorite part of the show where we break down some of the biggest headlines of the week. Back again Richard Quest of CNNI "Quest means Business" from London. And comedian Hal Spark in Dallas.
OK gentlemen. Google still may be the king when it comes to online search, but the internet giant has certainly taken a hit this year. Persistent troubles over its relationship in China, criticism over privacy concerns on Google buzz, and also failures to revolutionize the cell phone industry lost the company tens of billions of dollars and stock down about 25 percent this year.
But there's still hope China renewed its license with the Chinese government on Friday. A major coup for the internet company which could have actually gone dark in China without it. But will its searches be uncensored? Richard, what do you make of all this? It doesn't sound to me like they solved the censorship issue. They just backed away from the brink, the Chinese government and Google.
QUEST: There's no question Google backed away from the brink. Its original fix, the patch which was disapproved by the Chinese authorities. And then the way Google came up with the landing page idea, all of which showed just how much was at stake for Google. The company has grown exceptionally fast and what we are witnessing are the pains of when basically growth overtakes the ability to keep up with this.
Now, look, this sounds very pompous from me sitting here in London pontificating about Google, but the truth of the matter is, if you look at the variety of stuff that Google is involved with, from Google map to the search engine to the calendars to the phones, it is inevitable that you're going to end up with these hiccups. The question of course is how you handle something as mammoth as China when both parties seem to want to back down.
ROMANS: And I think Hal that is an incredible point. To me, they were both standing on the great firewall of China each on a different edge. Now, they have taken a step back from the brink. These are two companies, well; I guess China Inc and Google Inc who decided they needed each other for now. Right?
HAL SPARKS, COMEDIAN: The element you have here with Google I think and why they have actually seen that drop is not entirely based on their relationship with China. Google has a search engine. A software company is their primary point of access as a business. The problem really is coming from their shift in business model and public perception, I think.
From this kind of jolly, friendly, creative company that they were three years ago. Where you heard stories of like employees standing in a room full of balloons just to think of a better way to do mapping. Now, they are behind the android ads. Is it the iphone killer? If you look at all the companies that have come out to attack Apple, for privacy at any particular market, look at Microsoft. Microsoft started doing that that was their primary business model. Now, they basically make excel and video games.
ROMANS: Stick with me. Because I got that I want to talk to you about in ticker right after this break to pay the bills.
The oil still flowing in the Gulf. What exactly does Bp have planned to win back shareholder trust? Is it going to work and can they plug the hole? That is right after the break.
ROMANS: Back with us, Hal Sparks in Dallas and Richard Quest in London. Gentlemen, energy giant Bp set a new date now for fixing the oil leak in the Gulf. If all goes perfectly well with no glitches, good weather and everything, July 27th is what an executive of the company told the "Wall Street Journal" this week. That is well ahead of its original target of mid August. The new target date is also the day the company will report second quarter earnings and speak to investors.
President Obama will meet with the British prime minister on U.S. soil. Is all of this enough to regain shareholders trust? I know Richard it's interesting because the British papers even two weeks ago were saying oh that deadline of the middle of August, forget it they are going to try to deliver something earlier, if they possibly can because they have to restore confidence in the company.
QUEST: Oh I don't think that's what they are going to try to do. No. If you read what they said, it basically said worse case scenario we are still looking at the middle of August to late August. Best case scenario, they are terrified of damaging further the original core of the well, the well bore.
That is what this is all about. As they intersect it and drill, they want to make sure they are going to do it right. So he's giving a best and a worst. And of course being journalist, we have chosen to focus on the extremities of the good.
ROMANS: But Hal says curious timing. In this country, Richard and you were here last week, you know, there's not a lot. People don't give Bp a lot of slack around here.
SPARKS: You understand that oil companies, Bp included run on a drug dealer business model and literally, they are based entirely on need and the mercenary nature of the market. Most of the people worked at Bp would work someplace else if there was some level of job equal to what they would do. You are not looking to this company 100 years from now.
The issue is they drilled this down; they left gaps in the tube that they can find and that is what they are going to be looking for. They are hoping the 27th is the 25th or the 24th so they can pop champagne on the 27th. This is a pr move.
QUEST: That is simply I just think cynical beyond belief because if they have learned ...
SPARKS: Incredibly cynical, but it is cynical based on evidence.
QUEST: No, then because it's more than cynical, it's stupid of the company.
SPARKS: I meant me.
QUEST: Of top hat and of top kill, if they have learned nothing from the inabilities to stop this leak so far, you take the worst possible prognosis, not the best.
SPARKS: I was saying cynical based on me, not cynical on their move.
ROMANS: Hal Sparks is cynical? News flash. One thing that's pretty interesting about it too is that Bp CEO is basically crisscrossing the globe, talking to investors, talking to Middle Eastern investors to Richard you know, I mean trying to convince them, we are a viable company that can pay our bills and we are going to be able to handle all this, right?
SPARKS: Well they are.
QUEST: What is looking -- go ahead. Sorry.
SPARKS: I was just saying they are. The cost of this clean up to them, to some degree, so far even as nightmarish as the numbers sound, they gather up profits that this is a minor percentage of. If they are running on a margin where 20 billion dollars affect them after a $60 to $100 billion profit year, that's bad business beyond this crisis.
ROMANS: Richard, you get to close it out for me. Bp.
QUEST: It's simple. They are in a hole. They dug a lot of it themselves. It's going to get more messy before it gets better. They have to ensure the long term viability of the company.
ROMANS: All right. Thanks. Richard Quest, Hal Sparks thanks guys. Have a great weekend. That wraps it up for this show.
QUEST: Wait a second. No it doesn't.
ROMANS: It doesn't?
QUEST: There's some economic news that I need to bring to you. There has been, in the Christine Romans index, there's been serious growth of rate. In fact, expansion would do well to be cheered. If we look around, the inflation is quite extraordinary but we do know that at this current rate of growth, she and her partner, husband, will soon have their own soccer team with a third boy on the way. Good luck. God bless.
ROMANS: Thank you, gentlemen.
SPARKS: God bless.
ROMANS: I used to have two cost centers. I will have three after this week. When they will start to provide revenue I have no idea. But I'm imagining they will be a drain on the bottom line in cash flow for the foreseeable future.
Gentlemen, thank you. Thank you Richard for that.
That wraps it up for this show. You can join our running conversation on facebook and twitter, I will be, yes, on maternity leave. Please, keep me up with part of the story about YOUR MONEY, at alivelshi and at christineromans. I'll be back before you know it. Make sure you join us every week for YOUR MONEY, Saturdays at 1:00 p.m. Eastern and Sundays at 3:00. You can log on 24/7 at CNNMONEY.com. Have a great weekend everybody.