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Barack Obama Lays Out Budget Plan

Aired April 13, 2011 - 14:00:00   ET


MAX FOSTER, CNN ANCHOR, QUEST MEANS BUSINESS: President Obama there, with his debt reduction plan. It is a plan to save the American dream and $4 trillion, he says.

You are watching QUEST MEANS BUSINESS now. In the last few minutes President Barack Obama has been delivering his vision for dealing with the huge U.S. national debt. It is called the framework for shared prosperity and shared fiscal responsibility.

"We went to great lengths to say Bush era tax breaks for the rich are unsustainable," he said. That is part of a key theme. Mr. Obama says every American, rich and poor, must play a key part.

Let's break it down for you now. The aim, then, the aim is to cut the deficit by $4 trillion in 12 years or less. It will be phased in over time to protect the recovery and to protect jobs. The idea is debt on a declining path. The goal is to have a deficit of no more than 2.5 percent of GDP, by 2015. These are big ambitions. And the plan includes debt fail-safe triggers, he said. Triggers-uh, triggers which triggers more spending cuts across the board, if the debt is not falling by 2014.

So, how is he going to do this? Well, spending cuts including things like non-security discretionary spending; $780 billion by 2023, security, $400 billion by 2023, health care, $480 billion by 2023. Tax reforms, including closing those loop holes and simplifying things. No extension, crucially, of those Bush era tax cuts for the wealthiest Americans. Here is Obama.


BARACK OBAMA, PRESIDENT OF THE UNITED STATES: Now that our economic recovery is gaining strength, Democrats and Republicans must come together and restore the physical responsibility that served us so well in the 1990s. We have to live within our means. We have to reduce our deficit. And we have to get back on a path that will allow us to pay down our debt. And we have to do it in a way that protects the recovery, protects the investments we need to grow, creates jobs and helps us win the future.


FOSTER: Well, these are very big figures. It is a big economy. It affects the whole world, but behind all of this, as well, some key politics taking place. Can Obama achieve all of this with that Republican pressure behind him? Maggie Lake has been studying this for us.

Maggie, how ambitious would you say it was?

MAGGIE LAKE, CNN FINANCIAL CORRESPONDENT: It is not quite as ambitious, certainly when it comes to the spending cuts. It is, Max, it is not that it is not ambitious, it is where it is targeted. And this is really sort of underscoring a fundamental divide between the Republicans and the Democrats, or at least President Obama. And also the fact that this is going to be a tough sell no matter what. You know, the name of the outline of the speech was, I as you said, "shared prosperity and shared responsibility". Really what they are talking about is shared pain. These are not going to be politically easy decisions.

The American public, although they know something needs to be done, is very scared and ambivalent about a lot of this stuff. So, you heard Obama. This is a very long, methodical speech. Trying to lay out what he says is his vision. And one of the center pieces of that, is trying to make the case for higher taxes on the wealthiest Americans. Americans, in general, as a populace, hate higher taxes. It is always a central feature of the political fight here. But Obama is saying this is a time when we have to step up. Those who have benefited from the system have to pay.

It is diametrically opposed to what Republicans are saying. The plan that they have laid out, that one of their members Paul Ryan has laid out, that they are sort of talking around, is one where they say, hey, we can slash the deficit, not raise taxes. In fact, we can lower taxes a lot of taxes. But we are going to do that by making really big fundamental changes, getting government out of things like health care, moving it more to a private sector. So these are two very, very different ideas. President Obama, today, trying to sell his vision to the American public. The only thing, Max, that they are seems to be agreement on, a growing consensus, is that America has run out of time. This is an issue that they now need to address. One of the Republican opponents earlier, before the speech, saying the world is watching. This is going to determine whether people think America is in decline, or whether we are still rising.

So, the consensus is that something need to be done, but just how to get there, the two sides very far apart on.

FOSTER: Well, we have already heard from Republican congressional leaders saying they just won't accept any tax increases. So, what-where has President Obama got leverage? Looking ahead, how is he going to negotiation with his Republicans?

LAKE: Well, this is where it is going to get really tricky. And I to point out something that he said in the speech, Max, because he came out swinging on this point. So, certainly if anything it is going to sort of make the two sides sort of dig in their trenches. He said, talking about the Republican plan that is out there. There is nothing serious about a plan that claims to reduce the deficit by spending a $1 trillion on tax cuts for millionaires and billionaires. There is nothing courageous about asking for sacrifice from those who can least afford it. You can believe the Republicans are not going to like the sound of that.

And what Republicans are threatening to do is say, you know, we're not going to vote on a debt ceiling vote that is coming up. It is quite technical, but it is basically saying that we can raise the debt ceiling in order to pay our bills as a country. We're not going to vote for that. Because we want to get some sort of agreement on deeper spending cuts from you before we do it. A lot of economists, a lot of private sector business people are extremely concerned that the lawmakers in Washington are playing chicken with this. This determines whether the U.S. defaults on its obligations or not. They don't like that they are using this. They are afraid that they are sort of playing with fire. And that they are going to upset the markets in such a way that they are not going to be able to sort of, you know, pull things back in. Perhaps the market will get ahead of them.

So, that is the leverage the Republicans are using. Whether Obama, with his speech tonight can sort of offset that or diffuse that isn't clear. Certainly there didn't sound like a lot of bi-partisan reaching out. It sounded like him making his case against theirs, Max.

FOSTER: And away from Washington, where you are, in New York, we saw shares dip, initially, as new started coming out. Defense stocks, obviously, being affected by this. But how is the private sector going to react to this, do you think?

LAKE: You know, right now, the markets have been amazingly calm, especially the bond markets, in watching this and sort of understanding that a lot of this is political posturing. Remember, this is happening against the backdrop of a 2012 presidential election that is already underway. I know that shocking for a lot of people in the world. But it is already beginning to gear up. So there is a lot of political noise in this.

So far the markets have been watching it, sort of giving them the benefit of the doubt. But I know that economists, CEOs that I've spoken to recently, including David Cote from Honeywell, are extremely concerned that if the rhetoric gets too loud, if the two sides do not look like they could come together in a bi-partisan way, get something done, that patience that the market-the benefit of the doubt-is not going to last. And we could see interest rates start to move significantly higher. That would be very unsettling for the markets and not just the U.S. markets. This is a global issue. It would really sort of create uncertainty and unwind things on a global level that we just do not want to see.

So there is a lot of behind the door concern, I think, in the private community, but right now they are hoping that some of this is just rhetoric and they can actually start to get down to some serious negotiations behind closed doors. And it is important to keep in mind that this is against a backdrop of campaigning. So some of it is going to be noise, but I think that they have got to show some progress, Max, otherwise we are going to start seeing a reaction in the markets.

FOSTER: Absolutely. Maggie, thank you very much indeed. And we will be looking at the Dow coming up, to see how it is reacting on this. Much more to come on the program.


FOSTER: Welcome back.

I'm Max Foster.


Let's check the headlines this hour.

An extraordinary situation in Egypt. Former President Hosni Mubarak and his two sons have been detained in an investigation into the killing of protesters in Cairo earlier this year. Many people in the Egyptian capital are celebrating. But in the meantime, there are reports, the 82-year-old's health is deteriorating.

Ivory Coast President Alassane Ouattara is charting his next steps after months of armed conflict with former President Laurent Gbagbo. He says restoring security comes first. He also says he's setting up a truth and reconciliation commission to investigate alleged atrocities on both sides.

The British Foreign Office confirms that the UK is providing some direct support to the Libyan rebels but stresses it's non-lethal in nature. It includes 1,000 sets of body armor. Prime Minister David Cameron is expected to give more details in less than an hour. We'll bring that to you.

U.S. President Barack Obama has unveiled his vision for tackling the nation's mounting debt. His plan aims to reduce budget deficits by $4 trillion over 12 years. Mr. Obama says, in part, the savings can be found in wasteful spending and ending tax cuts for wealthier Americans. Republicans object to any increase in taxes.

U.S. Federal Reserve Chairman Ben Bernanke is urging Republican leaders to, quote, "deal with" the U.S. national debt. He was speaking at a private dinner in Washington on Tuesday. After years of trying to prop up the U.S. economy, Fed leaders are saying it's the turn of Congress to step up.

Our Felicia Taylor visited the Federal Reserve in Dallas, Texas and spoke with the president and CEO there, Richard Fisher.


FELICIA TAYLOR, CNN CORRESPONDENT (voice-over): The Federal Reserve Bank of Dallas is one of 21 U.S. Federal Reserve banks, where billions of dollars pass through each year. The man at the helm in Dallas is the only sitting Fed president to have run an investment fund and work for a Wall Street bank.

Richard Fisher is famously hawkish and known for his desire to end QE2, the Fed's bond buying program, in June, if not sooner.

I went to visit Fisher on his home turf to find out what the end of accommodation might mean for the global economy and U.S. interest rates.

RICHARD FISHER, PRESIDENT & CEO, FEDERAL RESERVE BANK OF DALLAS: If we have sustained price pressures, I will be the first in our brood of the FOMC -- it's my nature -- to advocate for tightening. This has to do with our protecting the purchasing power of the dollar for the American people.

TAYLOR (on camera): One of the missions of the Federal Reserve, because you've got a duo fold role...

FISHER: Right.

TAYLOR: -- is to head off inflation. And you've quoted...

FISHER: To me, it's the most important one of all.

TAYLOR: If the Federal Reserve can't protect the consumer -- and that I mean by inflationary pressures. And you see it in your grocery bills...

FISHER: Right.

TAYLOR: You see it when you fill your gas tank -- then what is the purpose of the Federal Reserve?

Wouldn't you suggest that tightening would be a wise idea, perhaps by the end of the year?

FISHER: It -- it really depends on how much inflationary pressure we see, whether or not these forces that are being driven by commodity prices are tentative or more permanent, more lasting.

However the consumers are being hurt by the price of gasoline, the price of food, the price of clothing, because the prices have gone up and because of the Chinese inflationary influences.

TAYLOR: What's the economy going to look like?

Is it going to be able to sustain itself without QE2?

FISHER: Look, there's a -- there's a danger when people rely on the central bank or government largesse to sustain a workforce, because in the case of central bank accommodation, once you go down the route of quantitative easing, there are a lot of market operators that become dependent upon it.

That's not our job. And our job is to provide the monetary means to assist the achievement of full employment without letting inflation get out of control or, by the way, without letting deflation take grip, which is, I believe, we've successfully fought off.

TAYLOR: Some speculative trades have come back in the marketplace, though. I mean that would be a bit of a negative, wouldn't you say?

FISHER: It's -- to me, it's a sign of the, as I like to say, the ambrosia of quantitative easing, of excess liquidity. You know, it's beginning to have its effects. We -- we see it in certain kinds of activity.

TAYLOR: It's kind of what got us in trouble in the first place, right?

FISHER: It is what got us in trouble in the first place. The amount of leverage that's being used to -- by private equity firms to pay themselves dividends, we've seen that behavior come back. I wouldn't say it's out of control, but it's reoccurring.

To me, these are signs of money burning holes in people's pockets. And that comes from having too much liquidity in the system.

TAYLOR (voice-over): All that money burning through people's pockets, at some point, passes through the Federal Reserve. The Dallas Fed was built around a huge vault that makes it impenetrable.

(on camera): So they won't let us actually go into the vault. We can't see the money. But trust me, it's here. It's down underneath this.

So underneath this entire expanse, this lovely garden...

FISHER: Right.

TAYLOR: -- is how much?

FISHER: Well, five stories of vaults that last year processed a little over $6 billion Federal Reserve Notes. You call them dollars, but they're actually ones and twos and fives, tens, twenties, fifties and hundreds. Roughly two thirds of the currency of the United States is printed in Fort Worth, Texas and it has -- at the Mint. But we order according to the amount the banks tell us they need for circulation purposes.

TAYLOR: Now, I have to tell you, there's kind of an odd feeling knowing that I'm walking on top of a tremendous amount of money.


TAYLOR: It's an interesting feeling.

FISHER: Well, you can almost say you were walking on water, because you're walking above liquidity, how's that?

TAYLOR: That's -- oh, that's great.

FISHER: You're standing above liquidity. There's a lot of liquidity down here.

TAYLOR: Literally.


TAYLOR: We're walking on water because of all the liquidity that the Federal Reserve Bank provides to the open market.


FOSTER: Felicia above a -- a lot of money.

Trevor Manuel is South Africa's former finance minister and current national planning minister.

He's currently in Washington, where he's been speaking at a World Bank conference on how to manage crises in a rapidly changing world.

He joins me now from CNN Washington.

Thank you so much for joining us.

All the talk there, obviously, is not about the global economy, but about the U.S. economy, how on earth they're going to deal with this debt mountain.

How threatening is that to the U.S. and the world, do you think?


I think that the big issue is the perspective that we take on the crisis. If we see it as a present crisis, then we're likely to be able to take decisions that are clear and forward-looking. If we see the crisis as behind us, then I think there would be a greater temptation to short- termism.

I be -- belong to the school that sees the current -- or the crisis as current. And therefore, it's very important that we take stock of all of its elements. It's an economic issue, not just financial. We have to look beyond stock market indices and understand exactly what the structural problems are that face economies around the world right now.

And this includes issues like employment and output, but it also includes issues such as food production and -- and the incessantly high fuel prices.

FOSTER: Yes, oil prices, of course, on their way up. The IMF recently telling us that if forecasts play out, it's actually going to be OK. But, actually, you can't actually rely on forecasts, can you?

If oil prices do shoot up, it's going to be very, very painful for everyone in the world.

MANUEL: Yes. Right now, of course, it's a consequence of events in the Middle East and North Africa. But the futures prices are still way over $100 a barrel for Brent. And so it's going to remain steadily high and it's going to be felt by all people across the world, especially working families.

FOSTER: We were hearing there from Felicia speaking to someone from the Federal Reserve, suggesting that politicians need to take over in dealing with this economic crisis around the world, because monetary and fiscal policy isn't working anymore. It's been stretched to the limit.

Do you -- do you agree with that?

MANUEL: I have a very strong sense of supporting that view. We need decisions. And I think it's very important that in dealing with transitions from deep deficits to sustainable futures, we don't cut the sinew. We need the economy to be able to rise again.

And so the way in which decisions are taken, not just here in Washington, but around the world, are actually important. We must understand the link between what caused the crisis -- and it was largely regulatory and supervisory failure in a number of different parts of government. And we must be able to construct a different future.

Part of that future is -- is focused on employment, youth employment, but, very importantly, also, people who find themselves in part-time employment and would like full-time jobs, we -- the economy must be able to accommodate these, failing which, I think, it's going to put people under sustained pressure.

We can't go back to the high family leverage that brought on the crisis. There needs to be a different kind of future.

FOSTER: We keep hearing that jobs are very important, but when you've got a massive deficit, you know, like the one in the U.S., like many in Europe, you have to make cuts. And the only way you can make cuts is on spending. That reduces jobs and that has a -- an impact.

How can you address the job situation and the debt crisis?

MANUEL: Clearly, the equity principle is important. Taxation of the wealthy is a fundamentally important issue. But, also, in the way in which cuts are made, it's important to understand that you can't cut in a way that will deny the country and the economy its future.

So deep cuts in areas like research and climate change, etc. Are likely to have a very serious set of consequences on the medium-term. And that's what must be avoided.

FOSTER: I want to ask you about...

MANUEL: But back to this question, you know, I think...


MANUEL: -- I think that -- that if positions are too entrenched too early, then the -- the proper discussion doesn't happen.

FOSTER: I just want to ask you about the BRIC summit, as well, a key one for South Africa, of course, now part of the club, effectively.

How do you think South Africa is going to change that increasingly important economic and now political grouping, really?

MANUEL: South Africa is, of course, a small player. But I think that given the fact that the BRICS is -- is having a summit at the head of state level at the moment, there is a very significant shift. So it's shifted from an informal club, the design of Sundiat (ph), an investment bank, to something that has actually assumed a very important place on the political stage, in fact, at center stage, because the -- the shift in the center of gravity has been from the old G-7 club to this new club.

And so the invitation to South Africa is very important. I think that parts of what the -- the BRICS will have to look like, look at our new financial arrangements. And trying to understand what its place will be as a collective without assuming the arrogance that we had seen in the past, which was an exclusive club that tended to patronize the rest of the world.

I think the BRICS has a very important place to play, but it's going to require leadership that is actually premised on sound policy and -- and firm conviction.

FOSTER: OK, Trevor Manuel, thank you very much, indeed, for joining us on the program today.

Now, let's make a deal -- cash-strapped businesses like the look of M&A again. But hurdles remain. You'll hear from a veteran of the acquisition trail, coming up.


FOSTER: They've come back for deal making two-and-a-half years after the global financial crisis, cash-strapped companies are looking for M&A action. Ernst & Young says one third of global businesses are seeking new acquisition over the next -- acquisitions over the next six months. Just don't ignore the mixed M&A messages. That's a message the consultancy company says if you take the long view, the appetite for deals declines as companies look within for growth.

Back in October, the biggest obstacle to completing an M&A transaction was investor caution. Ernst & Young says that's eased off a bit.

Now, the big hurdle is geopolitical uncertainty, such as the unrest across the Arab world. Last year, we saw some false starts to the M&A recovery.

So what's different about this year?

I'm joined by Ernst & Young's global head of transaction, Pip McCrostie.

Thank you very much, indeed, for joining us.

What is different?

What has changed?

PIP MCCROSTIE, GLOBAL HEAD OF TRANSACTION, ERNST & YOUNG: Well, Max, we've seen a real surge in confidence with the corporates over the last six months. So we've actually seen a doubling in confidence from last survey we did in October of the Ernst & Young 1000, which is quite dramatic in such a short period.

And what's underpinning this is local economy confidence. So you've got, obviously, some emerging markets like China, Brazil, etc. Very good confidence there, very good growth.

But even in developed markets, you know, Germany, France, Netherlands, Sweden, etc. And the U.S., really coming into play. And then you've got sectors -- certain sectors are really hot at the moment. And they differ between developed markets and emerging markets that's underpinning it.

And another thing that the survey showed, which was, I thought, very interesting, is that 80 percent of all the respondents in this global survey are saying -- 80 percent are saying we have new completed our refinancing. So that's a big uptick in sentencing balance sheets.

So with the strength of the capital market position, we're starting to see that come into short-term appetite again for M&A.

FOSTER: So they've got the money to buy more companies, but why the need to grow?

MCCROSTIE: Well, I think what we've seen in the last two-and-a-half years is a lot of defensive measures. You know, we've got some very leading companies, strong boards, strong management teams going, gosh, we've got to really protect and preserve our capital here, we've got to take defensive measures.

I think what the surge in confidence around the global economy is saying, actually, we can now look forward and start thinking about growth.

Short-term, they're revealing, actually, we look at M&A, inorganic growth. But longer-term, there is actually a decline in the appetites. I'm talking, say, one to two years.

And they're saying, OK, instead of M&A, what might we look at?

And they're saying we will look at things -- we'll continue to do cost cutting. We'll continue to do cash flow improvement. But as well as that, we're going to do things like customer segmentation, really focus on that, focus on portfolio management.

So we should caution (ph) lessons learned some really good common sense coming in from the boardroom.

FOSTER: So what we're going to see is a load of mergers and acquisitions over the next few years. Then you're going to see it -- see it tail off a bit.

So the market is going to be a bit crazy for a while?

MCCROSTIE: Well, you could see that. But I think what's keeping the caution in play is in the last six months, we've seen sort of three external shock factors. We've obviously seen a rise in commodity prices and the impact on the oil prices. And we've seen the political instability in the Middle East. We've seen the inflation growing in the natural disasters and the impact on supply chain.

So I think that is creating the longer-term caution for M&A.

If some of those external factors were to diminish, I think we would see a resurgence of M&A, probably not to the levels of pre-crisis, but I think we would see the lid come off M&A and a lot more focus longer-term. We're seeing that come through short-term, but longer-term, organic growth at this stage (INAUDIBLE).

FOSTER: You'll be really busy then?

MCCROSTIE: I hope so.


Thank you very much for joining us.

Now, stormy weather in parts of Europe and in Kazakhstan. A storm in the Middle East causing travel problems.

Let's cross over to Pedram, our meteorologist at the Weather Center, of course -- hi, Pedram.


Yes, the stormy weather across Europe that you're speaking of here certainly a stark contrast from just a couple of days ago. We were talking about unseasonably warm weather parked in place, temperatures in London at 20 degrees and folks across inland headed -- England headed out to the beaches out there.

But big changes there. A storm system pushes in. Some showers in your forecast, down to seasonal temperatures, which is closer to, say, 12, 13 degrees or so.

And in Germany, yes, spring certainly has parted ways for at least a couple of days, as we have the umbrellas out and the showers abound.

But again, at least it brings the pollen count a little lower for a few days out there.

But you can see, if you like warmth, certainly around Portugal, Spain, work your way to the south, hanging onto that warmth as the features begin sliding in one after another.

And the winds also a little breezy at times. But travel difficulties right now for Europe, at least, look to be minimal there. Well, the temperatures in London down to about nine. Paris sitting at 11, when they were sitting at around 25 degrees just a couple days ago.

But take a look at this. Right across the Arabian Peninsula, that's a stationary front working its way out of areas, say, around Egypt, down toward Sudan and also around the peninsula there near the UAE and Qatar, some very, very strong winds will pass in about 24 or so hours. So (INAUDIBLE) thunderstorms that have set up in an are where wind gusts have been observed up to 50 plus kilometers per hour. I think on Thursday, right around Abu Dhabi and Dubai, you're going to see strong winds once again.

And around Kuwait City, take a look at this.

Travel difficulties certainly going to be a concern out there. This is what it looked like this morning on the way to the airport. So around Doha, Dubai, Kuwait, you're going to have problems in the next 24 hours, as the sand has kicked up out there and work your way a little farther to the eats.

Take a look at the observations right now out of Tehran. Forty-one kilometer per hour winds. Visibility down to about three to four kilometers.

And interestingly enough, look at the photograph coming in of Tehran. Of course, a desert landscape directly next to Kuwait, where they've had the red sand kicked up. Industry in downtown Tehran, this is Milad Tower, the tallest building in the city of Tehran there. A sandstorm coming in in this photograph, actually. My cousin just sent this in from Iran there and this coming in, showing you the perspective just a few hours ago, where the hazy conditions have kicked in for at least another day there -- Max.

FOSTER: OK, Pedram, thank you very much, indeed, for that.

Now, they are a match made in haven, but have William and Kate inspired the film from hell?

The royal wedding gets the TV movie treatment, after the break.


FOSTER: In just over two weeks time, the Middletons will become part of the most famous family in the world. Once Katherine marries William, their name will become woven into the British royal lineage.

The Middletons origins are naturally slightly more humble than those of the Windsors. But the family business could well turn out to be useful, as Emily Reuben reports.


EMILY REUBEN, CNN CORRESPONDENT (voice-over): For 24 years, her family has built their fortune making parties for princesses. Now their daughter is about to become one.

It's a long way from this shed where Kate's mom Carol started the party paraphernalia company. Today, it operates from converted barns in this picturesque corner of South England.

(on camera): It's a story that you couldn't make up -- a family business built on creating the perfect party. Now, the daughter of that family is planning her perfect wedding, but not just any wedding, the wedding of the decade, if not of the century.

(voice-over): And it's already been a boost to party pieces. Research for CNN by Experian Hit Wide showed that in the week the engagement was announced, visits to the Web site increased 163 percent compared to the previous week.

MARK SAUNDERS, ROYAL COMMENTATOR: In some ways, are slightly damned we whichever way they decide to do it. If they play up Katherine's role, they will be condemned for trading on the royal name. If they play it down, then people will say, well, what's wrong the you, shouldn't you be letting people know that your daughter is one day going to be queen of England?

So knowing, I would say that they're going to be somewhere in the middle.

REUBEN: There are no rules governing what can and can't do. After the wedding, they'll remain private individuals with no royal role. But many in the industry say their company will get a boost. This party planner in London said she's already seeing a bounce from the wedding.

FRANCESCA OLDFIELD, PARTY PLANNER, BEDAZZLED EVENTS: We've got four street parties coming up that have been booked in because of the royal wedding. We've seen a massive increase in themed prince and princess parties.

REUBEN: But it could be a fine balancing act for Kate's family, even those within the royal family have had business trouble in the past. Prince Edward apologized to his brother, Prince Charles, after his now closed company, Arvent Productions (ph), secretly filmed Prince William at university in Scotland.

The royals, we're told, have no problem with family business. And once the wedding fever dies down, it will be back to business as usual.

Emily Reuben, CNN, London.


FOSTER: So that's how the Middleton family does business.

But how about the royals?

Well, there's the fame, there's the red carpet, and, of course, the dreaded paparazzi.

Get ready for this.


FOSTER: Go out there.

Get out. Get out. Get out. Get out. (INAUDIBLE) follow me everywhere. I can't even get in the studio.

Oh, it happens to me all the time.

A big part of Kate's new life will be royal engagements. We're going to carry on seamlessly here. That's anything from opening ceremonies to state visits and garden parties at Buckingham Palace. According to the UK Press Association, Kate's fiance had 73 of those last year, but there will be more of those to come. The queen had 387 royal engagements last year. William's father, Prince Charles, had even more -- almost 500.

At this point, I need to point something out -- a red carpet last used by no less than Prince Charles and Camilla Parker Bowles. I'm pretty much royal myself.

William, of course, has a job already. He's a pilot in the British Royal Air Force, which pays around $56,500 a year. As a future Prince of Wales, though, most of his money will come from the Duchy of Cornwall, one of the UK's oldest and largest estates. Well, if he becomes king, he'll receive millions of dollars every year from Britain's parliament, the UK taxpayer.

So what does all that mean for the UK taxpayer?

Well, the cost has fallen over the past decade, actually. Taxpayers spent just over $62 million on the royal family last year. That works out at almost exactly $1 per person. The red carpet now goes back to the royal family.

If you don't think that's value for money, though, chances are you won't be rushing to the stores for the latest royal wedding tie-in. It was always going to happen.

Get ready for Kate and William -- actually, William and Kate, to get it right, the movie.


FOSTER (voice-over): They met by chance.




UNIDENTIFIED FEMALE: Yes, I know who you are.


FOSTER: And came from different worlds.


UNIDENTIFIED MALE: Miss. Middleton, I hear you'll be joining us for the sheep tour (ph).

UNIDENTIFIED FEMALE: Yes, I'm looking forward to it.


FOSTER: But against the odds...


UNIDENTIFIED MALE: Nothing will come between us, I promise.


FOSTER: -- live their own fairy tale.





FOSTER: This is surely the movie a royal film expert has been holding out for.

RICHARD FITZ-WILLIAMS, FILM CRITIC: I've seen almost every film depicting British royalty, but I've never seen anything as silly looking at this. This is the small screen equivalent of pond life.

FOSTER: I guess I got that wrong then.

So what's so bad about this movie?

UNIDENTIFIED FEMALE: It's that they're taking a -- like a story about two people and they've just turned it into some cheesy Hollywood spin.

UNIDENTIFIED FEMALE: I really hope it wasn't like that.

UNIDENTIFIED FEMALE: It just looks really cheesy.


UNIDENTIFIED FEMALE: It's really cheesy, really cheesy.

FOSTER: But does there come a point where something is so badly reviewed, it actually becomes good?


UNIDENTIFIED FEMALE: Can I see the ring?





FOSTER: The movie has been sold to TV networks around the world, desperate for anything wedding-related in the run-up to the big day. So is there any advice for viewers?

FITZ-WILLIAMS: I would suggest that the royal wedding sick bag, which you can buy for three pounds, would be a good thing to have if you're actually going to settle down and watch this entire film.

FOSTER: Other film critics haven't gone quite so far. Still, the reviews haven't been kind.

So don't expect "William and Kate," the movie, to be the award magnet of, say, "The King's Speech".


FOSTER: In fact, don't expect anything like "The King's Speech".

UNIDENTIFIED FEMALE: It is the cheesiest thing I've ever seen in my life.


FOSTER: We mentioned royal sick bags, royal wedding sick bags. They do exist. We have them here. I did pay three pounds for them, though. I can reveal that.


"PIERS MORGAN TONIGHT" is after the headlines.