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tv   Real Money With Ali Velshi  Al Jazeera  October 10, 2013 7:00pm-7:31pm EDT

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this is al jazeera america, live from new york city. president obama just rapped up his meeting with house republicans, there was no deal reached on the budget or debt limit. republicans were offering a short-term extension for the debt ceiling. eric cantor said talks will continue tonight. former pakistani president is back in custody. his lawyer says police arrested him on charges related to a 2007 raid on a mosque in the capitol. more than 100 people were killed. on wednesday a court granted him bail in another case, he
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returned to pakistan in march after four years in exile. libya's prime minister is thanking those who helped free him. he was abducted earlier today by a group of armed gunmen. its was reportedly in retaliation for last weekend's special forces raid that captured an al-qaeda suspect in libya. the u.s. is suspending millions of dollars in aid to egypt. they said they must show more progress towards democracy before aid resumes. those are the headlines. i'm tony harris. "real money with ali velshi" is next. david shuster is sitting in for ali. beyond the government shutdown and the debt ceiling, a debate is coming over america's deficit spending. we will explain what it is, and how cutting it could effect the u.s. economy. plus the financial outlook is
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getting better for more american cities, and we will introduce cow to the inventor who is using legos and other toys to make medical devices on the cheap. i'm david shuster in for ali velshi, and this is "real money." ♪ >> this is "real money," and you are the most important part of the show, so join our live conversation for the next hour by using the hashtag a.j. "real money" on twitter. ten days into a government shutdown and one week away from an october 17th debt ceiling meltdown. house republicans now appear ready for a deal of sorts that would exfengd the government's debt limit for six weeks. house leaders met with president obama thursday evening to discuss the proposal. talks will continue. in return for kicking the can down the road to november 22nd,
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republicans want president obama to sit down with gop leaders and negotiate longer-term budget issues. the president has already indicated he is ready to embrace temporary solutions to the crisis in washington, but republicans began this day of deal making without offering to reopen the federal government during these six weeks, and president obama has insisted all along he will not negotiate anything until the debt ceiling is raised and the government is reopened. either way the stock market rallied on the news out of washington with the dow more than 300 points in trading. investors assume the republican offer is open and shut, and democrats will probably warm up to some kind of deal. much focus has been put on the level of debt the government is running. currently running up -up -- current
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$16.7 trillion. the only way to bring this figure down is to start paying it off. something that depends on a budget surplus, and that's not happening any time soon. what both sides can address is how to bring down annual shortfalls. the amount the government takes in and the amount it actually spends. lawmakers can shrink amount by cutting government spending, and raising taxes or a combination of boths. democrats have traditionally favored raising taxes especially on the rich, and republicans prefer to cut social programs. budget deficits and all of that go under running them up are now on the table again. patricia has more. >> reporter: when the united states spends more money than it takes in during the year, the resulting red ink is
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what is known as the federal deficit. in 2011, the government took in $2.3 trillion in taxes and other revenues, but 3.2 trillion. leaving a deficit of about a trillion dollars. medicaid and medicare were the biggest chunk. social security was a close second at $725 billion, defense was the third largest expenditure at $700 billion. when businesses and individuals make more money, they pay more in taxes, giving the government more funds to cover its bills. in 2000, the government took in more than its spent, and posted a budget surplus in excess of $230 billion. as the decade wore on, the economy was doing well, but the wars in iraq and afghanistan inflated defense spending forcing the government to borrow money. with the great recession, the
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economy and the tax base shrank dramatically. spiking the deficit to $1.4 trillion in 2009. >> the deficit went up dramatically because income taxes went down and two elements of our safety net program, unemployment insurance and food stamp expenditures went up. >> reporter: as deficits stack up, the nation's overall debt burden ballooned. but chomping away at the debt is tricky. cut spending too deeply or quickly and it could end up hurting the economy. >> the balancing act that congress has to make is to carefully and almost scalp-like cut programs, but aggressively work to create job. >> as patricia's story made clear, reducing the deficit could involve cutting the biggest parts of the budget like medicare and social security. at this point in our nation's
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fragile economic recovery, would that be such a good idea? joining us now to discuss the implications of that is any chief economist at [ inaudible ] securities. steve is it a wise d you don't think to cut back on deficits when the economy is fragile in the first place? >> i would argue that the fiscal contraction that we have gone through in the last two years through the raise in tax and sequester have actually done damage to the economy, it's one of the reasons we're still stuck in this environment that is not creating jobs that people would like to see. >> if the government spends a dollar on a road or even social security benefits, there's a likelihood that is going to go back into the economy and multiply. >> that's true. people consume, it creates income, people consume more on the back of that generated income, and it expands.
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so fiscal policy is important. but what is going on right now in washington i think is very, very pivotal, because we are at a level of borrowing that is extraordinarily high and something has to be done to slow it down especially if we have these entitlement programs be viable. >> but the social security trust fund is funded through 2033 -- that's 20 years from now, and even if we did absolutely nothing, it could still pay out $0.75 on the dollar. >> well, again, that's not necessarily the right amount of payout that you should be getting for the social security system. the population is now living longer, well longer than the program was ever expected for people to live. awls the cost of living adjustments that have been factored into the program for many, many years inflated the amount of benefits that people were receiving. and those are two areas that could be adjusted very, very quickly, as long as they are phased in over time.
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>> but fazing them in -- if the idea is we want to keep the economy going, therefore, you don't want to cut the benefits, or raise the retirement age, doesn't that involve, then, raising the social security tax? in other words you pay taxes on your first $113,000 of income, raising that higher so there's more money in the system? >> you can do that but that will drag the economy down. i'm talking about changing the way we escalate inflation going forward, and reducing the amount of future liabilities by making people in their 40s not retire until they are 70. the reality is you live longer, and that's port of the problem. if you live longer the amount of time you are going to be retiring and how much should be on social security -- social security was never went to be
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the be all and end all of rerequirement, it was meant to be a subsidy. >> but it is the entire reenvironment for one-third of all seniors. it's 90% of their income. >> you do it for people who are young enough in the pipeline so they know they have to adjust their spending and current savings so they can retire at the right point given what social security will provide them. we can no longer provide what we're providing for people on an ongoing basis. because the population of people paying for the baby boom generation is so small that the amount of tax you'll have to levy is on them is extraordinarily unfair. >> president obama has addressed some of these changes and talked about the chain cpi, which is to slow the rate of growth. >> correct. >> there, several studies saying even doing that you are pushing 130,000 seniors into po
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poff -- poverty. >> again, those numbers are all based on expectations as to how the economy will perform, and if you can structurally lower the level of interest rates, so the peaks are lower and the drops are greater, you can get an environment where you can create increased investment expenditures that will change that number. >> growing the economy faster, that would solve a lot of these problems. steve thanks for being on the program. >> my pleasure, david. today on twitter and facebook we have been asking you how are you adjusting your spending based on the uncertainty in washington. cindy says . . . and holly tweets . . . tell us what you think by
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tweeting us @ali velshi. or leave us a comment on facebook. believe it or not a story about government that has nothing to do with the debt ceiling and is good news if you live in many cities. a story and more as "real money" continues. ♪
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while you were watching the trials and tribulations of the federal government budget drama, you may have missed the fact that cities in the united states are saying their financial health is getting better. stacey has the details. >> reporter: perhaps lawmakers in washington should look in their own backyards for tips. cities across the united states are seeing improvement in their local budgets for the first time since 2006. this according to a new report released by the national league of cities. >> we are the backbone of america's economy, and in spite of what is going on here in
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washington, mayors, council members, cities, continue to lead. >> reporter: hewn, st. paul and pittsburgh are among the 72% of cities reporting they are better able to meet the financial needs of their community than they were in 2012. while cities are optimistic that the revenue rebound will continue next year, there is uncertainty over how much support they are expect from washington. nearly half of the survey participates reported decrease over the last year. >> and that's where cities are. we are stuck between the white house and congress. >> reporter: city officials also expressed concern over health care, pension costs and revenue from property taxes as the housing market struggles to find its footing. but for the first time since the recession began, cities have started rebuilding their reserve funds and expressing a relief
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that there is a cash buffer. joining us now with a closer look at the report is the interim director of the national league of cities. she coauthored the report. if the overall economy is doing better, that's the single greatest factor that can help cities? >> yeah, absolutely. we're seeing by and large cities who -- who are reporting that they are seeing -- seeing these improvements. it's generally a result in increases in the national economy for sure. >> as a result therefore there is sort of a limit as far as what cities can do as far as raising money for charging for bar gauge pickup and other services. >> absolutely. cities are limited. the tax they have from their states is limited in many cases. >> talk about the role that the property taxes play, because i
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know in a lot of places property taxes remain low because housing values are down. >> property tax plays a huge role. so although we're seeing some positive outlook on the part of city finance officers, we know there is still some uncertainty going forward as property taxes continue to catch up with the real estate market. there is a lag between property tax collections and assessments with the real estate markets for about 18 months to two years. >> there are any particular city policies, municipal policies that you have seen in the cities that are doing well, that could be a lesson for the other cities that are not? >> sure, absolutely. i know -- the general policies that we're seeing in terms of fiscal actions when it comes to -- you know, fees for services -- we're seeing that clearly across the board, cities are also looking for expenditure cuts when it comes to their work force, but looking more
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specifically towards infrastructure investments, and that has always been a key driver of growth in communities. the stalemate in the federal government right now can have implications for cities. >> so building the new bridge or highway or tunnel, that is essentially a key development for a city that is trying to get back on its economic feet? >> absolutely. in order to keep the population that contributes to the tax base you have to have a strong fuckture, infrastructure. >> what role has is taxes played? >> it does make a difference. we see that cities who are reliant primarily on one form of property tax, which is not as responsive to -- to economic conditions are is seeing a little bit of a harder time right now, the property tax has still not caught up with some of the economic recovery that we're
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seeing in the housing market. the sales and income tax respond much more quickly. when people have money in their pockets, they are spending. when people have jobs we're seeing a quicker response in the income tax. so cities that have a more diverse tax base are in a better fiscal position than cities who don't. >> thanks for coming on the program. we appreciate it. >> thanks for having me. coming up want to cut health care costs? we'll introduce you to a guy at mit who is using legos to create cheaper medical devices. that story and more as "real money" continues. ♪
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ten days after obamacare new health care exchange rolled out most people are not impressed. only about 7% of americans think the launch has gone very well. no doubt that's because the new system has glitches galore. but there is room for hope. 7% of people say at least one person in their home has tried to sign up for coverage. that could be 20 million people. officials want just 7 million to buy insurance before the march deadline. if they fall short premiums for insurance may rise. cutting the rising cost of health care in america is the mind boggling challenge facing many. one guy at mit is doing his part
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by reinventing expensive medical devices by using cheaper parts. this is a man who is part mad scientist, part medical ma gooifer. >> reporter: you have a tiny little brain. >> reporter: right now he is working on a prototype of a spoon that can track how fast a person is eating. a mass produced version would cost $100. jose found out how to make it for 25. >> how do we pub accomplish a recipe so everybody can go to radio shack and make it happen. >> reporter: he is head of the little devices lab at mit in cambridge. it doesn't look like a typical lab, it is filled with leg os,
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toy parts, and 3-d printers. >> when we started to tear down toys alongside with medical devices we realized that they had a lot in common. small very precise widely manufactured parts. >> reporter: his initial goal was to find new ways to collaborate with doctors and nurses in developing countries to build inexpensive medical devices. >> we explain taking a toy gun, harvesting the electronics from that toy gun, and adopting it on to an iv poll to make an alarm. >> reporter: but last year he discovered just as great of need right here in america. >> we recognize affordability is now interesting in america in terms of health care. >> reporter: as the u.s. health care system changes, there is a big push to reduce costs and
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empower patients. >> we face a crisis in our health care system. a crisis of costs, health care costs that are rising at an sun sustainable rate, we face a crisis in terms of the quality and safety of our health care. and we need those tinkers, and tweakers, those invet fors and mad scientists, we need them to turn their passion and their creativity to health care. >> one practical application is through maker nurse, a new program funded by the robert wood johnson foundation. he is teaching nurses to find cheap safe quick ways to treat their patients using his prototypes. one is device is the nebulizer. >> in a pinch you can make one
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with a bicycle pump and tubing for $7. >> during sandy's blackout, where we had no power, to deliver a nebraska -- nebulizer treatment would be so important. >> when we look underneath the curtain we realize there is no reason why we should be over paying and be beholden to what somebody else designs. >> reporter: he also help doctors and nurses create their own fixes for federal problems like making sure people take their pills. >> this is a small scale that you can attach to a pill bottle that can monitor how much
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medication has been used. >> reporter: some major players in the health care industry are starting to pay close attention to his work. >> health care and pharmaceutical companies are talking to us and engaging us in a way that they haven't been before. >> reporter: he says they are interested in their own bottom lines, but his inventions can also help millions of americans in need of health care. >> reporter: otherwise we'll end up with digital health care for the haves, and maybe sort of digital health care for the have nots, and that would be fortunate. he wants people to be able to test for infection, nutrition, and even disease. don't forget our question for today, how are you adjusting your spending based on the uncertainty in washington. tweet us or follow out, or leave a comment on our facebook page.
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if you want to see more about tonight's stories log on to our website, there is every indication that republicans and democrats are soon going to try to reach a grand plan over spending and budgets. they disagree as to how to do that. and one very crucial disagreement involves social insurance programs including social security and medicare. it is true that social security for example needs some attention in the next 20 years as baby boomers age and the percentage of retirees go up, adjustments would help keep the program fully funded. republicans believe the solution is to cut benefits and raise the retirement age, but that would put millions of the elderly into
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poverty. democrats suggest raising the cap on income subject to social security taxes, because as it stands only the first $113,000 of your income is taxed no matter how much you make, whether you make $100,000 or a million. but raising the cap could initially add a drag to an economy that is already fragile. the point in all of this is that grand bargain negotiations that may be coming will not be easy, and if you think getting congress to reopen the government and avoid a default has been difficult, just wait. that's our show for today, friday, how the government shutdown is make it harder for americans to get a mortgage and buy a home. i'm david shuster in for ali velshi. thanks for joining us. ♪
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my i'm lisa fletcher, and you are in the stream. aztec knowledge advances it is time to rewrite the play book when it comes to using performance enhancers in sports? >> when does looking for an edge over the competition cross the line and become cheating? allegations of steroid use have plagued professional sports for decades. sport governing bodies are cracking down on the use of