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August 2nd Looming; Oil Prices: Biggest Threats to Economy; Fast Food Slow Economy
Aired July 9, 2011 - 13:00 ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
CHRISTINE ROMANS, GUEST HOST: Less than one month until we reach the August 2nd deadline to raise the debt ceiling. We've been here before, but not quite this close to default.
Welcome to YOUR MONEY. I'm Christine Romans. Ali Velshi is off this week.
So what could change for you in an eventual debt ceiling deal? Three huge issues to watch will be tax increases paired with possible cuts to Social Security and Medicare as part of what could be $4 trillion in proposed debt reduction.
Jeanne Sahadi is a senior writer with CNNMoney. Jeanne, what could these changes look like?
JEANNE SAHADI, SENIOR WRITER, CNNMONEY: Well, Democrats are saying, Look, we can't sign onto a deal unless we raise taxes on the wealthy and close some corporate tax loopholes. Republicans say, No, not going to happen. We're not going to be increasing taxes, especially now in the wake of the jobs report, which was very disappointing.
Democrats say, We're not going to be on board with any cuts to Social Security or Medicare. We want those to be dealt with separately, in the same way that Republicans want to deal with taxes separately --
SAHADI: -- they're happy to do tax reform, it has to be revenue- neutral, Democrats say, yes, we're not cutting Social Security and Medicare. And this week, they got very upset when they heard reports that President Obama may be considering a change in the way inflation is calculated, which would affect the cost of living adjustments for Social Security benefits.
ROMANS: They sure were upset. And even Nancy Pelosi took -- stood up and said, Look, this is -- this needs to be separately -- handled separately.
Mark Preston is CNN political -- senior political editor. Mark, a Pew Research Center poll finds if the debt ceiling is not raised, 42 percent will say it's because of congressional Republicans, 33 percent will say it's because of President Obama. Both sides are supposed to spend the weekend figuring out their bottom line. Mark, if there's no deal, which side has the most to lose and thus the greater motivation to compromise?
MARK PRESTON, CNN SENIOR POLITICAL EDITOR: You know, Christine, in the short term, it's certainly going to be House Republicans who are seen as obstructionists at this point. But in the long term, it's going to be President Obama. The fact of the matter is, when he's running for reelection a lot harder next year, he's going to be running on the fact that we have an unemployment rate right now at 9 percent. And we'll see where the estimates fall, if they fall down to 8 percent by next year.
Now, the good news is, is that they are talking. They are going to meet this weekend. And on Friday, the House leadership -- Republican leadership canceled their week-long recess that was supposed to take place later this month. So at least we know that they're talking right now, Christine. So here in Washington, that's a huge step forward.
ROMANS: Talking -- the rest of us are, like, Talking? Come on! Get some work done! But I get it. The talking -- back room talking is really part of the work.
All right, Harvard professor Ken Rogoff is a former chief economist for the IMF. Ken, Congress has raised the debt ceiling 78 times since 1960. But with a fierce debate over tax cuts versus spending cuts, this time it's feeling pretty ugly and it might be different.
Right now, the national debt totals $14.2 trillion. This is about -- this blue line here is the size of the American economy, 100 percent of the American economy. This is our debt pile, 95 percent the size of the whole economy. We're fast approaching rates we haven't seen since World War II, when it was bigger -- our debt was bigger than the size of the economy and back in the Great Depression.
This is what economists call a debt crisis. Why? Well, we are a borrowing nation. Bottom line, we borrow money. Right now, for every dollar the government spends, 38 cents of it is borrowed. If the debt ceiling isn't raised in time, the U.S. could default on some of its payments, and that's the last thing we need when we're recovering from a recession.
Ken, you are the financial crisis expert. Would failure to raise the debt ceiling trigger another global economic disaster?
KEN ROGOFF, PROF., HARVARD UNIVERSITY: Well, it's playing with fire, there's no question about it. I mean, the foreign investors -- investors are not expecting the United States to default. If they were, we'd be paying way higher interest rates right now. But if we actually did it, it would be a catastrophe.
But Christine, there's a bright side to this, which is that a year ago, nobody was talking about our unsustainable long-term debt trajectory, and at least now they are. And we really need to. So that's at least a good side of this. ROMANS: All right, Mark, moderate conservative voices like David Brooks of "The New York Times" are telling Republicans it's time to make a deal. Brooks wrote this week -- and it really got a lot of attention -- "If the debt ceiling talks fail, independent voters will see that Democrats were willing to compromise but Republicans were not. If responsible Republicans don't take control, independents will conclude that Republican fanaticism caused this default. They will conclude that Republicans are not fit to govern, and they will be right."
It got a lot of attention, and I asked Senator Jim DeMint about it, Mark. And he said, Well, David Brooks, I mean, he doesn't speak for true Republicans. That's what he said.
PRESTON: Well, he doesn't speak for Jim DeMint. I mean, that's for sure. And he certainly doesn't speak for some of the House freshmen that were elected on the whole idea -- this whole Tea Party philosophy that they're going to come to Washington and change things, shake things up, basically be obstructionists.
But David Brooks is absolutely right. And what we've seen here in Washington is kind of a sad note over the past couple of years. We've seen negotiators and compromisers leave. We've seen the likes of Senator John Warner, Senator Arlen Specter, Senator Pete Domenici, Senator Judd Gregg, even Senator Trent Lott, who used to be the Republican leader here in Washington -- they're no longer on Capitol Hill behind me. They were the ones who would be able to cut the deals.
And that's why I think you're seeing at this point that the deal is a little bit harder to cut. Now, having said that, it's not just the extremists, so to speak, on the Republican side. It's the extremists on the Democratic side. We've already seen fund-raising letters go out in the last 24, 48 yours from these liberal groups who are saying that Social Security cannot be touched, that Medicare cannot be touched.
Well, guess what? It has to be touched. So the question is, how can it be touched? And so really, extremism right now here in Washington is, I hate to say this because we say this all the time -- is at an all-time high.
ROMANS: It really is. Jeanne, you know, you know this more than anybody else. I mean, when you look at the numbers, these kinds of cuts have to be done very carefully so that you don't really change our living standard dramatically, quickly and right away. And Jeanne, Washington politicians doing things carefully and thoughtfully -- does that happen a lot, sometimes, never?
SAHADI: Well, I don't know. It's not happening now. We will see what they come up with in terms of a debt ceiling deal. They could do the right thing. You know, deficit hawks have been saying for a long time, Look, we need to make a decision about how we're going to reduce the debt. We don't necessarily need to implement it lickety-split. We can do it over time. But it will give confidence to the markets if we give them some certainty about the direction we're going in.
But we've got extremes on the left and right saying, No, you know, Republicans saying, We've got to cut everything right now, Democrats, like, We shouldn't cut anything and we should raise the taxes on the rich. And so there's not -- you're not seeing the leadership that everybody says we need that talks about that middle ground.
ROMANS: Ken, can we fix this problem if, as the Republicans want, we put tax reform aside, and as the Democrats -- the progressives and liberals want, we put Social Security -- entitlement reform aside? You put those two things aside, can you fix this problem on its own?
ROGOFF: I think it's easier to cut a meaningful deal by doing everything together, rather than one at a time, because you can make bigger compromises.
Christine, another way to look at this is the president has gained power decade after decade. The executive branch has gotten stronger. And this is in some ways a constitutional clash, where the House of Representatives is saying, No, we have more power, we have this weapon we can use, the debt ceiling. And they're hammering the president over the head. And they're getting a lot of traction. It's an important moment not just about the debt but about the whole way our country is run.
ROMANS: You know, Mark, it's interesting, though. Quickly, if they don't raise the debt ceiling, and global markets are already kind of wondering if this might happen, but they know that the Treasury Department might have some leeway to pay some bills, and they -- global markets, capital markets like that we're getting our debt situation under control -- if nothing terrible happens the first day, will Republicans say, See, we told you so?
PRESTON: They will, but let's talk about two weeks down the road, when things could be -- could totally implode. And again, I'm not the economist here. But let's remember, Congress -- if our viewers don't remember this because, you know, we all have short attention spans -- Congress leaves in August. They won't be here in Washington. This town shuts down.
So by August 2nd, if a deal isn't reached, one of two things are going to happen. One is Congress is going to have to stay here and try to fix it, or they're going to leave and there'll be huge political implications if we get into that situation.
ROMANS: Yes, and we hope not economic considerations, too. All right, Jeanne Sahadi, thank you so much. Ken, Mark, stay where you are.
Two-and-a-half years into President Obama's administration, and the unemployment rate -- it remains sky high. We head to the White House next to ask a key economic adviser why the president's policies are not creating more jobs.
ROMANS: The unemployment rate is a disappointing 9.2 percent. That is worse than economists had been forecasting, and it is the highest since December 2010. That's what the unemployment situation looks like in America right now.
When you look at jobbed created, you can see only 18,000 jobs were created in June. That is much worse than expected. And May was revised downward, had been 54,000, now only 25,000.
Let's take a look at private versus government sector spending because that's a pretty important part of this story. It shows you that state and local governments are slashing jobs, and have been, quite frankly, since about the end of 2008, while you've got the private sector only tentatively hiring, 57,000 jobs created in the private sector.
And it's, of course, policies in place in Washington, in the economy that make business owners confident that allow them to start hiring, and that's something that is still in short supply.
Let's head to the White House now and talk to Austan Goolsbee. He's the chief economist for the president's Economic Recovery Advisory Board. He's also the chairman of the Council of Economic Advisers and a member of the cabinet.
Austan, the unemployment rate for January 2008, when President Obama took office, was 7.8 percent. Today, it is 9.2 percent. Republicans argue that it's because of Obama's policies, not despite them. Why aren't the president's policies creating more jobs?
AUSTAN GOOLSBEE, CHAIRMAN, COUNCIL OF ECONOMIC ADVISERS: Well, hold on. I mean, to start with, the unemployment rate -- as you know, we were in the middle of the worst recession since 1929. So we have a deep downturn. And then previous to the last two months, we add more than 2 million jobs in the private sector.
I think the number today reiterates what we have known, and that is that because of a series of factors, the growth rate of the economy at the beginning of this year slowed down. When the growth rate slows down, so we're not growing as fast, we're not going to generate as many jobs.
Now, I view this number as a call to action, that we should in Washington be doing everything we can on a bipartisan basis to get the growth rate back and to help facilitate the private sector standing up and leading the recovery. That's what has to happen. And there are a number of things that we can do right now that are teed up on the table in a bipartisan way. But I really view it as that call to action.
ROMANS: Well, like what? What can you do right now to get the private sector hiring more? GOOLSBEE: OK, so first, we can pass the -- we can extend the payroll tax cut. Second, we could pass the pending free trade agreements that are sitting there unpassed, to increase exports in the U.S. and jobs in the manufacturing sector.
Third, we could create the infrastructure bank so that we can start putting back to work the one million construction workers that are unemployed in the country. And fourth, we could pass in a bipartisan way a balanced deficit reduction package that would remove the uncertainty which is now sitting on top of the entire private sector over whether the U.S. government is going to be willing to pay its bills. That's a very dangerous argument. We shouldn't be having it. We should pass a balanced plan and be done with that.
ROMANS: You mentioned an infrastructure bank. You know, infrastructure is something that we thought the stimulus, this biggest expenditure of money so quickly in American history, was going to really get started. And you're talking about a million people out of work in the infrastructure sector.
Your opponents, your ideological opponents and Republicans will say stimulus didn't work. They'll even say straight-out stimulus hurt jobs because it was the government -- government overspending getting in the way of the private sector. What do you say to that?
GOOLSBEE: Well, as I observe, in the 15 months previous to this slowdown in the growth rate, we added more than 2 million jobs in the private sector. And on top of that, the private sector forecasters, as well as the nonpartisan Congressional Budget Office and many others, have observed that the economy was on path to do substantially worse if we had not tried to intervene and take action.
Now, through tax cuts, through infrastructure, through a whole series of things, we can argue about the past. But I think it's more productive to look at the numbers. If we're going to have a slowdown in the economy like we had in the first part of this year, what do we do now to get the growth rate back up?
ROMANS: All right --
GOOLSBEE: Now, partly, most forecasters think it's going to rebound in the second half of the year. But there are a lot of bipartisan actions that we could take to help it.
ROMANS: So you said looking forward, and I'm glad you said that because as recently as three years ago, full employment in this country was considered something like 5 percent. Looking forward, is the new normal for unemployment 9 percent? Do you expect significant improvement by, say -- let's pick a random date -- November 2012?
GOOLSBEE: Well, look, we have an official forecast. The official forecast says that the unemployment rate by the fourth quarter of 2012 would be 8.2 percent. So I'm not going to make any predictions other than what's in our official forecast.
To your second question, though, of, Do you think that the new normal is 9 percent, or that in some sense, we should just get used to disappointment and the potential of the American economy is just below what it was before -- that I don't agree with. And I think a lot of people do not agree with that.
In our long-run forecast, as well as the long-run forecast of people outside the government, the long-term unemployment rate goes back to something like what it was before, 5.3 percent or 5.2 percent. And I think we have the innovation, we have the capacity to go back to where we were. We've just have to grow our way out of this.
GOOLSBEE: It's the deepest downturn since 1929. President's the first to say we got a long way to go.
ROMANS: All right, Austan Goolsbee from the White House, thank you, sir.
GOOLSBEE: Great to see you.
ROMANS: Ken Rogoff joins me back again now. Ken, you know, a couple of really good metaphors I heard today. This is like a big, cold bucket of water. Another one said that this is like we're waiting for job growth to take off, and instead, we are sitting grounded in the terminal month after month, waiting for our flight.
What's your reaction to this disappointing jobs report?
ROGOFF: The terminal one's a depressing thought. It's an awful jobs report. It's just awful. I was certainly expecting at least to get enough jobs to sort of keep us moving a little bit.
And unfortunately, this is what happens after a deep financial crisis. This is par for the course. You know, the average after a deep financial crisis post-war (ph) is four years or more of bad job numbers before things really start getting better. We thought maybe we could beat things with our stimulus, aggressive monetary policy, but it looks like we won't.
ROMANS: You know, it's interesting because a lot of my colleagues have been asking me, Christine, why are the -- why are the estimates so wildly disparate and why are they so off? And I keep trying to say, We've come from such a dramatic move in the economy that people really are trying to get -- experts are trying to get a handle on where we go from here. Am I right?
ROGOFF: Absolutely. I mean, if you look at past financial crises and not past recessions, it's a pretty good guide. We're really right on track with the estimates Carmen Reinhardt (ph) and I gave a few years ago, looking at other countries that had similar experiences. So that's a good spin in the sense they do end eventually.
ROMANS: All right, Ken Rogoff, thank you so much. Ken, stick with us. Stay right where you are because Speaker of the House John Boehner chose, what else, Twitter to confront President Obama with the question we are all asking, Where are the jobs? The president's answer next.
ROMANS: President Obama hosted a Twitter town hall this week, and among the tweets he responded to included one from Speaker of the House John Boehner. The Republican pointed to spending and debt and wondered, Where are the jobs?
(BEGIN VIDEO CLIP)
BARACK OBAMA, PRESIDENT OF THE UNITED STATES: I mean, we lost, as I said, four million jobs before I took office, before I was sworn in. About four million jobs were lost in the few months right after I took office, before our economic policies had a chance to take any effect. And over the last 15 months, we've actually seen two million jobs created in the private sector.
(END VIDEO CLIP)
ROMANS: Mark Preston joins us again. I mean, fact checking the president, he's right on both of those counts. But can the president win with a strategy that says, It was bad before I got here and I need more time?
PRESTON: Well, you know, they've been saying that since day one, Christine, and at some point, they're going to have to start taking responsibility for what their own policies have led to. You know, I was in Las Vegas this past week, and I've got to tell you, what a devastating place to be right now when you're talking about the economy and you're talking about jobs, and potentially devastating politically for President Obama.
You know, I was talking to casino executives out there. Even cab drivers, Christine -- they're telling you that people are hurting out there. Politically, what the problem is for President Obama when it comes to a state like Nevada, it's a battleground state. He needs to win that state. And you're seeing double-digit unemployment out in that state alone.
You know, the Sahara Hotel and Casino, you know, which was well known for being the place where the Rat Pack would hang out -- that just closed its doors, just to show you how bad things are out there.
So President Obama and his advisers -- we saw Austan Goolsbee just say it earlier -- are trying to lay the blame back on the Bush administration in earlier years. But the fact of the matter is, they're going to be the ones who are on the ballot come November 2012, and they're going to have to answer some questions.
ROMANS: You know, Ken, politically, Republicans are hammering the president on jobs. Let's forget the politics, though. As an economist, tell me, did the president's policies create the job crisis, or have the president's policies just not been able to fully blunt or reverse the jobs crisis? Which is it?
ROGOFF: Oh, definitely the second. I think a bad jobs situation for years and years was baked in the cake when President Obama took office. But that's not to say that the policies we're taking now, you know, aren't setting the course, a question of business uncertainty, consumer uncertainty. So you know, certainly, his policies matter.
But I don't think it would have made a big difference trying to follow a different path. I think we were in for a rough ride, no matter what.
ROMANS: Can I ask you about the stimulus, Ken? Because I'm hearing from a lot of candidates on the trail -- I've talked to some -- I talked to Rick Santorum this week, who said point-blank, he said, The president's stimulus was a failure and it caused a loss of jobs. We know that it -- we know that that's not true. We know that it wasn't as positive in terms of saving or creating jobs as many had hoped. And then also other Republicans who are saying, you know, look, the president's stimulus -- stimulus -- you know, his stimulus and his overregulation have actually scared off businesses. Is that true?
GOOLSBEE: Well, I think the health care plan definitely is an overhang, especially over small businesses. But I want to get back to something Mark said. I mean, he's absolutely right that President Obama's going to own this recession when he runs for reelection.
But You know, if you go back to the Great Depression, Franklin Roosevelt didn't do any better in his first four years. It really did not go well. And somehow, he was really popular. He somehow created empathy and people were willing to be patient with him. And President Obama has to try to go that way because I don't think it's going to be great.
ROMANS: You know, it's interesting, Mark, because earlier this week, David Frum, who was a former speech writer for President Bush -- he said that he thought this whole debt debate and this debt showdown, debt ceiling showdown was actually a way to kind of step back from the whole jobs debate.
When did we move away from how we're going to create jobs, creating jobs is issue number one, and suddenly, it's the debt ceiling crisis? Do you see what I mean about how -- it was all about jobs before. And now suddenly, it's all about the debt ceiling.
PRESTON: It's all about the debt because we're facing this deadline of August 2nd. And certainly, the politicians behind me want to talk about the future and, Can we leave our grandchildren with this huge problem?
But the fact of the matter is, we're Americans, right? And we live in the now and we only want to talk about what's really going to affect us. So it's going to swing back once a deal is struck. And bottom line, we all know a deal is going to be struck. The question is, what is the final number going to be?
It's going to swing back to the economy in the now and it's going to swing back to jobs because that's how you win elections. And unfortunately, that's the best thing about America right now, right? If you don't like what someone is doing, you can vote them out of office.
But having said that, every two years, you have members of Congress who are up for reelection. Many times, they can't take principled stands, they have to take political stands if they want to win reelection. And that's what we see.
ROMANS: You know, I'll tell you what business owners have been telling me, guys. They've been telling me that the economy is stabilizing for them and they had a pretty good first six months of the year. But it's not good enough and not enough clarity for them to hire more, and that's just the bottom line. Politics aside, that's the bottom line for them. Mark Preston, thank you so much. Ken Rogoff, really nice to see you. Have a great weekend, guys.
Why the biggest threat to our economic recovery could be completely out of our control next.
ROMANS: What are the biggest threats to our economic recovery? CNN money asked that money to 27 economists and their top two concerns were -- a debt default by a European country like Greece and another oil price shock, potentially driven by further turmoil in the Middle East and North Africa.
Stephen Moore is Editorial Writer at "The Wall Street Journal." this is a recovery that might be out of our hands.
STEPHEN MOORE, EDITORIAL WRITER, WALL STREET JOURNAL: Well, that's right. We can't control what's happening in Greece right now or Spain or some of these other countries that are in trouble and I agree with you and the economists that that's certainly a big overhang over the U.S. economy. Because you know what Christine, you know you were talking in your previous segment about the debt crisis here in the United States. But the more Europe gets into trouble, it sort of sends signals to people in the United States, maybe I should worry about the condition of the U.S. debt right now.
So, I think that's a big one. I think obviously what's happening with commodity prices, oil prices. I'm a big believer that one of the things that really have hurt this recovery has been the increase in gasoline and oil prices.
ROMANS: Oil prices moving back toward $100 a barrel not too long after they tapped the strategic petroleum reserve.
Diane Swank is a Chief Economist of "Mesirow Financial".
Nice to see you, Dianne.
The economists that CNN money surveyed said a default by a country like Greece or the oil shock, do you agree with their concerns?
DIANNE SWANK, CHIEF ECONOMIST, MESIROW FINANCIAL: Absolutely. Because we don't know exactly what would happen with another financial crisis if actually Greece defaulted. Would it cause contagion?
And there are several ways it could cause contagion. Remember a lot of big European banks actually land in the U.S. Remember, the first time we had the beginning of this crisis in August of 2007 had problems.
The Federal Reserve all of a sudden found it had to open swap lines to make sure they had dollars to continue lending into the U.S. as well. So, these are really critical issues. I think on the other side of it, it also heightens as we already heard the focus on our own debt situation and what should we be paying for our debt?
And the reality is we know that higher energy prices - I mean the payroll tax has blunted some of the blow to higher energy price but certainly not helped to stimulate the economy elsewhere. You know we're trying to --
MOORE: Christine, could I say one thing.
ROMANS: Sure, jump in.
MOORE: One thing about this you know about Greece. I've always felt like what's happening in Greece is like God sending a signal to the United States. This is what happens if you don't get your debt under control. So we should pay attention. That's why -
ROMANS: Is God a Greek god? I'm wondering which Greek God is God?
SWANK: Yes. We can go back to the whole mythological issues. But you know you're right you know Zue(ph) has got his ball and he's shooting that. This is a warning shot over the bough of our own debt situation and I think that's important.
And also, It's really hard given the backdrop of the unemployment situation in the U.S. the austerity measures, how do you know we've got this political situation where we all want austerity, we know we need to get there. How quickly we got there makes the difference because you know we don't want the riots in the street. We want to make a choice on this, not be forced to do it like we see in Greece. But on the other hand, how many politicians want to go back in August with blood of austerity on their hands.
ROMANS: OK. Let's bring in Jim Ellis here, the assistant managing editor of Bloomberg Businessweek.
Former Federal Reserve Allen Greenspan expressing his fear on what a default in Greece would mean for our economy.
Jim, how vulnerable are you if companies at Greece can't pay its bills? I mean Greenspan and others say, it could mean another recession.
JIM ELLIS, ASSISTANT MANAGING EDITOR, BLOOMBERG BUSINESSWEEK: It could another recession but it wouldn't be in a direct way. I think unlike a Lehman which sort of toppled the whole world into a financial crisis that was here. You know a lot of U.S. banks were involved, a lot of counterparty activity there.
With the Greek situation, you have a lot of big European banks particularly big German banks. And what will happen there then you know they'll take a hit at first. But it does ripple over into us. The other thing, as Diane said, it has a big, big chance of contagion. What happens in Greece could trigger then Portugal. It could trigger something in Ireland. Maybe even something in Italy. And that then has a real impact on U.S. banks.
There's a lot of counterparty activity there. There's also a lot of confidence impact. What happens when people suddenly see other people can't pay their debts is that they stop lending. The financial system starts to seize. It seizes up. That's exactly what happened two years ago. We don't want to see that happen again.
ROMANS: Well you know Diane, since the president talking about the debt ceiling recently. Not to get into the debt ceiling. I want to stay with Greece for a minute. He said you know we can't afford to have unpredictable things going on in the global economy right now. We just can't. And that's what this is about. We don't need anything unpredictable.
SWANK: Well, we have frankly far too much unpredictable. We have a lot of uncertainty in the global economy. Anything we can do to reduce that uncertainty at this stage of the game will help.
You know we're two years into recovery and you know I have to admit I just got back from a broad meeting with economists all over the world representing 40 countries and the uncertainty this year is higher this year than it was last year. Risks of recession are higher than it was last year.
A lot of Europeans were involved on those meetings but it stretches the Globe. It may even developing economies which are now facing dome over-heating. There's a lot of concerns around the globe and that uncertainty. There's a sense of we're walking on pins and needles out there.
ROMANS: Steven, let me ask you about oil prices because you mentioned it earlier. And the president a couple of weeks ago announced they were going to tap into our emergency oil supplies to try to drive down gasoline prices because of some supply disruptions from Libya.
Economists still concerned about the Middle East, North Africa, disruptions. Was that the right decision -- do you think two weeks later when we're back toward $100, what does that mean about the decision from the White House to touch that oil?
MOORE: Let me go back to Greece for one second.
ROMANS: OK. Can you go from oil to Greece and then to oil?
MOORE: This is important and I agree with what Diane and Jim were saying. But one other component of this, you know even if we don't have a crisis, what happened in Greece was the interest rates on their debt went up and up and up. I think Dianne It's like 16 percent now. So imagine that we have a mini crisis with our debt. If we see a bump-up in our interest rates, that's not only going to make the debt situation worse but getting a mortgage and things like that problematic.
Now, on oil, I was skeptical at the time that tapping the strategic petroleum reserves would make much of a difference. I don't think so far it really has. You might see a nickel to a dime change in the price you pay at the gasoline pump.
But this is really about global supply and demand. It is about disruptions that are happening in the Middle East. We could be doing a lot more in the United States. We just had an article in "The Wall Street Journal" about you know this pipeline that we're trying to build from Canada that would bring a lot of new oil to the United States that's being held up by the EPA. It's an example of we're not getting on our own natural resources that could bring prices down.
ROMANS: Yes. Environmentalists are pointing to the pipeline that burst in I think in the Yellow Stone River. But let's not go there. Don't move everybody.
We're going to be right back. Don't move.
What would president Obama change if he had the chance? The president reveals his do-over list next.
ROMANS: President Obama was asked what mistakes he thinks he's made, this during his twitter town hall meeting this week at the top of the list, housing.
(BEGIN VIDEO CLIP)
BARRACK OBAMA, PRESIDENT , UNITED STATES: We had to revamp our housing program several times to try to help people stay in their homes and try to start lifting home values up. But of all the things we've done that's probably been the area that's been most stubborn to us trying to solve the problem.
(END VIDEO CLIP)
ROMANS: He's sitting there with Jack Dorsey, a founder of twitter. The president also said he would have explained to the public more clearly that the recovery would take a long time.
Steven, I'm sure you have plenty you could add to the list of the president's mistakes. What do you think should the president have done differently in his first two and half years?
MOORE: Well, I actually I agree with him on the housing. I think that all of these mortgage foreclosure plans haven't worked. And you know the reason I think that it's taken so long to hit the bottom of the housing prices is we've prevented the market from working.
We paid people to pay their mortgages and then six months later they default. So I think that's been a mistake.
The other thing, I think the president really should have concentrated on fixing our tax system, our corporate and business tax system isn't competitive in this global economy and it's pretty easy to fix.
ROMANS: But wait, you know Jim Ellis, that's something they want to put aside when they're talking about this big tax reform you know and the liberals want to put - they want to put entitlement reform aside, the conservatives want to put tax increases aside. So you know I don't know. Do you think Jim we're going to have any kind of meaningful tax reform any time soon?
ELLIS: I don't think so. I think we're a little too close to the election for that. That's one big problem. The problem is it's very difficult to get people to think about long-term ort of policy when you've got an election this close.
Instead, what's going to happen is there's going to be a lot more emphasis put on the things that voters are going to care most about. And one of those is obviously going to be employment. We're seeing terrible employment numbers now. That's really the sort of dinner table issue that's going to make or break this president.
ROMANS: So Jim, according to a CNN opinion search poll, 55 percent of Americans still say President Bush is more responsible for our current economic problems. Just 30 percent blame Obama. But nearly 60 percent of Americans do not approve of how president Obama is handling the economy.
So even if Americans don't blame this president for getting us into this mess, they also don't seem to be confident he's the right person to get us out.
ELLIS: I think one reason is all people have to do is look at their own job situation. They feel uncertainty. They have to look at the fact that you know the American dream seems to have having in two very distinct ways you know it's not working.
Number one, the housing sort you know thing that they depended on forever as a store of wealth has gone away. And more importantly, the ability to sort have a job and move up has sort gone away.
We've now gotten about 14 million people out of work. That's a huge number of people. And almost 7 million of those have been out of work for more than half a year. We haven't had numbers like that for a long time. We've had a recession that is lingered on. Even though officially it's over but the recovery that we would normally be seeing now with 150,000, 160,000 jobs come in every month, we're down to what 18,000 new jobs in June? You know new jobs are coming in. We have a period where people are saying, things aren't working. I don't know why but certainly they want to blame somebody. ROMANS: In more than 15 years of covering the jobs report, I'm going to tell you I have never seen a time when it's been so political. Minutes after it was out, you had Republicans blaming the president. I tell you this the two different - the two different points of view I heard, where are the jobs, Mr. President? And the liberal perspective was, Mr. Boehner, those tax cuts for the rich aren't doing much work, are they?
So, it's - they're not helping very much, are they, Mr. Boehner? Right away, both camps are just going at it.
Diane, we like to strip away the politics and get the economist point of view without all that silliness from Washington. I want to ask you this. Does a seemingly constant election cycle allow politicians to level with the American people that some short-term pain will be necessary to solve all of our long-term economic problems?
SWANK: I don't know if it's the election cycle, per se. People are much smarter who watch this every day blame the joy mandarin of congressional districts that have taken the competition out of the election process for the house.
You've got ideology being elected over pragmatism and moderate. And that means you're not getting a lot of compromise, a lot of discussion going on. And that really does divide things. That's where the people who I know watch the politics really blame the problem. And that's not going to stop. It is in both sides having been very guilty of this. Whoever is governor decides which district dos what. And then you know you look at these districts, they look like snakes. You can't even figure out what a district is anymore. I think on the other side - then you get snakes elected, too.
But I think on the other side of it, I have been impressed. I have been to Washington a lot recently dealing and trying to get buy efforts to do long term deficit and there is talk of tax reform. And I think they're starting to integrate with Obama stepping in finally and bringing you know everybody into the White House saying, let's talk about this long-term deficit reduction, ten-year plan is what they're talking about.
They're talking about tax reform. The gang of six, sometimes gang of five. They are actually really serious about these ideological extremes. They get along with each other. They seem to eat a lot of popcorn when they're talking. So in my view is that we take a really big building, take everyone in congress, take the administration, all their staffers, throw them in one building and throw popcorn in the windows and not let them come out until they come out with something long term.
ROMANS: We could put their blackberries into humongous like I don't know like tree shredder and just make them go in there.
SWANK: I'd like to do that with my blackberry every once in a while too.
ROMANS: Me, too.
All right, Dianne Swank, Stephen Moore and Jim Ellis.
Thanks to you all for joining us. Really appreciate it.
Coming up, he may be off this week but you can always trust that my friend Ali Velshi is working his sources. Staying on top of the news: unique ways to use your money but just how could you benefit?
From Ali Velshi's "Love of Fast Food? That's next.
ROMANS: Restaurant chain chipotle hit 52-week highs in the stock this week following an announcement the company plans to open outlets in Paris and Munich. The stock is up more than 130 percent in the last year. And it's just one fast-food companies investors can't seem get enough of.
Ryan Mack, the President of Optimum Capital Management. What's going right with chipotle?
RYAN MACK, PRESIDENT, OPTIMUM CAPITAL MANAGEMENT: Well, Fast- food restaurants as a whole have done a fabulous job at changing to the preferences and the palate of the American people. In the sense what they done is I mean you can take your laptop and put it into an average fast-food restaurant, you can sit down. You can enjoy the wireless connection. You can sit down and have some gourmet style coffee and have it expounded menu selection of improved quality type foods they're offering for less than $10 for breakfast, lunch and dinner, you can enjoy a nice, healthy lunch as supposed to 20 plus dollars at your traditional restaurant - sit-down restaurants and doing aggressive job of companies like McDonald's and young brands by expanding overseas and having foreign expansions. So they are really on that pretty well.
ROMANS: And now Chipotle is doing the same thing. And Chipotle is seems its new kind of version of the fast food restaurant. Some of the items are a little more expensive. There is also more flavorful items and more choice, I think.
MACK: Exactly this is what the fast food restaurants have understood. At the end of the day, they don't want the fast food or the unhealthy type foods and don't want the same traditional type of fried foods we normally had but they started to adapted and the pattern of the American people have changed dramatically. And the fast food restaurant has traditionally been a very stubborn type industry, they're going to force upon what they think consumers should like. But now consumers are starting to respond a whole lot more then.
ROMANS: There has probably been more change in fast food restaurants in the industry in the past five to seven years than in 30 years before that, quite frankly.
MACK: I mean you can find individuals just like myself in the fancy restaurant with my laptop and have a nice, chic decorative interior and now they're starting to do sort of things like even offering snacks they can capitalize on those times so individuals might not have much traffic, so they're doing a fabulous job.
ROMANS: Ali and I have been fast food connoisseurs drawling around whatever fast food is around the bureau for about ten years.
And let's talk about Panera Bread Company, PNRA. This one is about 78.8 percent over the past year. What do you like about this one?
MACK: I like the stock because again they have done a great job of adapting to the American pallet. I mean there's a tri effect: great food, great price and great experience. Outside of a strong franchising they have, 50 percent of their revenue comes from franchises but they also have a pristine balance sheet.
I mean over $200 million, a whole lot of capital and cash on hand and zero long-term debt. And this company is a great place in order to capitalize off the depressed real estate market. They are going to start making strategic acquisitions over the next year in the future.
ROMANS: When you're an investor, these things are not just about what's on the Menu, it is about what is on the books and what management decisions are happening. Is there a fund offering investors a mix may be on these fast foods?
MACK: Well, I like PBJ and the power dynamic is in. This is a great way to have a diversified cost effective way to get great exposure to a very strong industry again five percent holdings with McDonald's, five percent holdings in young brands and then Pepsi and Starbucks. Again it is a great way -- PBJ is not just the name of my favorite sandwich, but it is also a great way to get good cost effective diversified exposure.
ROMANS: We got to try up there right now. You know they've done pretty well. This one is up 32 percent over the past year. We told you that Panera which up 70 percent, we told you about Chipotle up 107 percent. You buy them here, wait for a pullback, signs of strength they will continue or maybe the move already happened?
MACK: For these individual stocks --
ROMANS: Buy and hold stocks?
MACK: These are definitely buying of stocks. Over the next year or so, for short term investors I wouldn't expect a whole lot of good movement for a year or less. But for four and five plus years, I mean I would definitely think I mean that in my estimation, I think they'll have a stock split in the next year or next five years with all that cash on hand, probably offering a dividend.
ROMANS: Yes. And you get paid just to own a stock. OK.
Ryan Mack, really nice to see you. Have a great weekend Ryan.
MACK: Thanks for having me.
ROMANS: All right, next.
Does all this talk of fast food make you hungry for more money? Chick-fill-A's founder is sharing the secrets about wealth and maybe the waffle fries too.
ROMANS: Chick-fil-A's founder and CEO Truett Cathy grew up in the nation's first federally funded housing project in Atlanta. Now at age 99, the fast food mogul is asking himself if wealth is really worth it.
CNN's Martin Savidge has the story.
(BEGIN VIDEO TAPE)
TRUETT CATHY, FOUNDER, CHICK-FIL-A: You'll never realize your potential until you start performing at your best.
MARTIN SAVIDGE, CNN CORRESPONDENT: 90-year-old Truett Cathy has imparted some useful advice over the years and he's not finished yet.
In his new book, the founder of the fast food restaurant Chick- fil-A asks the question, wealth, is it worth it?
If I asked you that very question, is wealth worth it, what would you say?
CATHY: Well, I've come to the conclusion, if you make money, honestly, and spend it wisely and remember that the teaching of the bible is better to give than to receive.
SAVIDGE: Cathy started his first restaurant in 1946 in Atlanta. With only ten stools and four tables, he called the diner the dwarf grill. The restaurant, bigger today, is where Cathy is credited with developing the fast food chicken sandwich and eventually the Chick- fil-A chain.
His son Dan, now president of the company, says his father's business philosophy is still the driving force of the operation.
DAN CATHY, PRESIDENT, CHICK-FIL-A: Even though we're privately held family business, we still want to be a good steward of the resources entrusted to us. And the bible says if we'll acknowledge the Lord acknowledge the lord in all the ways he'll direct our path. That's what I've seen in my dad's life over these years.
SAVIDGE: Your son was telling me that on your early growing up, you were very poor. And I'm wondering how did that impact the rest of your life?
CATHY: Well, it didn't matter. Everybody is in the same situation I was in. I was born 21. SAVIDGE: Those days his family struggled to put food on the table. He keeps this wagon of coca-cola as a reminder of the first business he started, at the age of 8.
CATHY: I could buy six cokes and sell them to neighbors at a nickel a piece and working on a profit.
SAVIDGE: At an early age, he learned the importance of customer service. That's still very much part of Chick-fil-A.
CATHY: Customer service is going to keep us alive.
SAVIDGE: Religion drives everything the chain does. And that's partly why the company remains closed on Sundays.
CATHY: First of all, it honors the lord by being closed. Secondly, it helps attract a couple of people that appreciate the Sunday off.
SAVIDGE: Cathy and his wife still live in the home they purchased in 1956. He has a passion for collecting cars and dabbles in real estate. His family owned company has sales close to $4 billion a year.
By any definition, that makes Cathy a wealthy man. But his definition is not the one you would think. How would you define wealth? I mean what is a wealthy man?
CATHY: Well, have various definitions. I think wealth, for myself, is a blessing because it is a good living and has enabled me to help a lot of other people. And that's where the joy comes in.
SAVIDGE: The secret to making wealth worth it according to Cathy? Sharing it.
Martin Savidge, CNN, Atlanta. (END VIDEO TAPE)
ROMANS: Make your money honestly and spend it wisely, Truett Cathy.
All right, thanks for joining us for this conversation this weekend, YOUR MONEY.
Ali Velshi is here every Saturday at one pm eastern, Sunday at three. You can catch me on your bottom line Saturday mornings at 9:30 eastern. And Stay connected with Ali 24/7 on Facebook and twitter. His handle is @alivelshi.
Have a great weekend.