tv Ali Velshi on Target Al Jazeera September 18, 2015 5:30am-6:01am EDT
space craft to the space toilet, meaningful moments in humanity's journey into the unknown, lee barker, al jazeera at london's science museum. if you want to get more on the stories we have been telling you about just head over to our website, you can see our front page there with the lead story situation. i'm ali velshi. the tale of two economies, the haves, have not and why the pressure is building on the most powerful bank in america. plus middle class collects. why black americans are hurting more than most. it snoop the federal reserve's decision not to raise interest rates tells you about how lacklustre and meaningless this economic recovery has been for many americans, and the level of debate protest and speculation before today's decision speaks
volumes about why something as dry, dull and arcane as short-term interest rates, and duel mandates has inspired so anticipation. tonight i want to look at the reasons why this country is at a point where janet yellen - what she does or doesn't do is almost as controversial as what donald trump says. the numbers tell part of the story about the mixed picture. the reason there's pressure on janet yellen to raise interest rates, include an economy that is growing steadily, if not amazingly. gross domestic product grew at a 3.7% rate in the three months that ended in june. that was up from the growth of 0.6 of a percent in the first quarter. importantly, it's one part of the duel mandate. the job market looks in better shape.
it has fallen to 5.1%. all the 8.7 million jobs lost during the recession, and created 3 million more in the last year alone. that is the biggest gain since 1999. the reason we are having this conversation at all is because there's virtually no inflation in america, wages are growing at a glacial pace. average earnings rose 2% in the 12 months ending in august. remember the duel mandate. the other part is controlling inflation, it's clearly under control. it's too low. that's a problem. millions of americans who need money to feel that the recovery is real. until it happens, america will remain a country where there are effectively two economies. one in which wealthy people benefitted from low interest rates that fuel a bull market in stocks, one in which millions of americans are not earning enough
to pay the bills, the mortgage, send the kids to college. and it is this disconnect between the two americas that have been behind janet yellen's decision about interest rates, making it more important. mary snow has the story. >> reporter: from home mortgages to credit cards, business loans to investments, all are linked to interest rates. and with benchmark rates near zero in 2008. anxiety over the economy thrust the reserve into a spotlight that some say was on parallel in recent history. >> you are not disgusted about the economy without a group that looks like this. >> reporter: at a federal reserve summit, liberal activists join an economist, urging the reserve not to raise interest rates, saying the economic recovery has not reached everyone. especially the latino
communities that have jobless rates higher than the average. conservative rates said policies was there. some making the case to raise rates. beth said that she's never seen so much attention on the federal reserve on so many groups. >> it's a shock to me. moving from zero to 24 basis points. the response has been enormous. it's the protest. the call to action, everything. it's a shock. even the fed itself is divided. >> reporter: divided as the u.s. economy tries to emerge from the worst financial crisis. the federal reserve stopped raising rates in 2006. low borrowing costs stimulate the economy, there's worry that the rates will pose a risk. think the housing bubble. >> when rates are so low, such
liquidity. back when we have the bubbles down the road that have to be deflated. that can mean chances of default. those are some risks that most people don't take into account. >> another fact tied to interest rates is the risk of inflation. it remains below the 2% targets. the other big indicator for the fed to consider is the jobless rate. in august, it stood at 5.1%, compared to 10% at the height of the recession. job seekers say that number leaves out a big part of the story. i decided to pursue a plan b. this is a club for the long-term unemployed. the founder worked for similar groups, saying the unemployment rate doesn't indicate the people that gave up looking for work, or who took on multiple jobs to make ends meet. >> from the ground, it's a lot better, it's not where it needs to be, and not in a position
where we declare victory. we don't believe raising interest rates will be good for the economy. >> reporter: one economists argues that the focus misses the big pictures. he says the federal reserve are one to many mandates, arguing that it shouldn't be charged with keeping the unemployment wrong. instead it should be in charge of controlling the money. policies linked to the great depression, linked to the '70s, and the housing crisis. out of is are 100 years they caused disaster for a third of the time. i'm unaware of a government institution that record. mary snow joins us, we have seen protests demanding rates not be raised. there's a lot of people worried about what will happen. there's a population of americans who are desperate for higher interest rates. these low rates are good for
spenders, and bad for savers, and retirees living on fixed incomes. if they have their investments, they are not putting their money in riskier investments such as stocks, and with interest rates near zero, since 2008. they are the ones hurt. >> there's a bunch of people that did that. they are into retirement, and turn. >> they are stuck. this is a problem. >> maybe october they'll rise the rates. every candidate at the republican debate. some economists do it to. when they talk about saving
>> "inside story" takes you beyond the headlines, beyond the quick cuts, beyond the soundbites. we're giving you a deeper dive into the stories that are making our world what it is. the federal reserve kept its key benchmark near zero. janet yellen and company say a rate hike is all but in order, hinting it may be in october. joining me it's arthur. he's the architect. he's considered the godfather of so-called supply side economics. that's the theory that lower taxes, especially on top earners
generates prosperity because the benefits trickle down. it's an idea that has been on the left for years. it has the defectors on the right. they argue the middle class needs more than just tax cuts to keep i afloat. you. >> it's a pleasure, lovely to be with you. >> the feds didn't raise rights. the availability through interest rates, that's the way the federal reserve has done things, it leads to higher prices. there's more money people do things with it. it hasn't happened. inflation is below the target of 2% a year. why. you want to eat your words on this one? >> probably i'm wrong on this one. i mean, the fed kept the interest rates low. they expanded the base.
it's not been this time. >> i like challenging them, because it makes me feel smart. you're a smart guys, and you have written a lot of books. >> when i make a i'm teasing you. >> i got you on that one, tell me why you think as a guy that nose so much about this, i agree with you, that no interest rates have lots of money, lots of demand that should cause inflation. is it oil prices that are low, what's done it? >> i don't really know to be honest. i thought this was the right answer. surely it was not the right answer. we have not had the inflation, i it. >> the hear rate group. wealth has increased for those americans who own assets and have good credit.
prosperity. if you are one of those people with access to credits or stocks, this has been about the best six years in many. there's low wage growth for the half of americans, a third that don't own homes. as mary snow said, it's been devastating. let me say. while the unemployment rate is dropping. wages, while they have not increased. if you look at employment, a lot of people who left. who left the unemployment ranks, just got out of the labour market, and are no longer looking for the job. unemployment rates have fallen. these people are not looking for jobs. if you look at employment, the share of adult population, 64 and 59.3, we are losing 14 million employed people because the huge drop.
that's a lot for the economy. that's really bad. it. >> that's the labour force participation rate. that's declined for many, many years. >> only since clinton left office. the last month in clinton's office was its peak. >> the bottom line is there may be structural reasons for this. >> i don't think so. this drop is precipitous. it's not because of changing drop. the one group you talked about, is so desperate. inner city youth. the employment, it has dropped dramatically since clinton left the office, it is a tragedy waiting to happen. you look at almost any other sub category, and this economy is not doing a good job. let me go full circle back to who you are the oshing tects of. it trickles down.
kansas governor followed your advice. it didn't stimulate growth. creating a revenue hold. same thing happened in louisiana, the aeth state running for president given the disastrous job in louisiana. what went wrong in those cases? >> i don't think anything went wrong to be honest with you. if you look at the states with no income tax. and those where the highest income states, the nine, the bejeebers. they are growing faster. kansas tried to cut tax rates. it did. there were holes in the budget. not so much because of that as because of a misforecast of income tax. i don't want to get into details with you. he has a school thing requiring 200 or 300 more. there's a lot more people
responding to the tax cuts than ever enjoyed would. it lead to better prosperity in kansas. i don't think it's a problem. >> what are you saying, in the early innings of seeing what happens in kansas, louisiana. >> of course, these things take time. like anything, it takes a lot of time to take prosperity and destroy it. look at detroit. when romney put in the income fax in michigan. they were a prosperous state. look at them. it took four or five, 50 years to destroy it. >> they did it. if you watched for the migration from california, and the slow down of growth. california is no longer the grown state. it's having a lot of problems. >> last night in the debate we heard a lot of people talking about - a few people talking equality. conservatives are saying it's
time for a change, bringing relief to the middle class. what do you think about that. >> i think there's a lot more than just tax cuts. obviously tax cuts are 50%, 14" of income. it's a big issue. if you tax people who work, and pay people who don't, don't be surprised if a lot of people do not work. what you see as a huge, huge increase in welfare spending in the last 7-8 years that has not helped the poor, it has jobs. >> let me ask you about this. i interrupted you. it came up why not tax people on consumption versus income. let's use a basic example. average wage in this country is $50,000, you need most to live. if you earn $50,000. you don't need it to live.
income. >> you change the taxes on income, that's for sure. you don't change the prices on consumption. the people believe savings better than consumption. they like not taxing and taxing consumption. it's the fair tax. it's a heck of a lot better. if you have the choice of voting or not. i vote for huckabee every day of the week. >> you said a couple of early innings, what's the defense. disaster. >> i haven't looked at louisiana carefully. i don't know how to respond. by the way, look at north carolina. why don't you mention that one. look at their prosperity. the plan in north carolina was the plan, the one in kansas was not.
>> i see. now i see what's happened. >> no, i did like it. >> two little fast games. the goingly one is mine. >> that's right. >> next time we have you on, and we love having you on. we'll talk about the decline. let's have that discussion. always a pleasure. former economic advisor, president to ronald reagan. he's been advisor to a lot of people. he's written a lot of books. look them up. read them. >> thank you. >> not everyone in america feels the economic recovery. the first-hand look of a family >> we're in the "prairie state" yet we have such little of it left. >> now old-school methods meet cutting-edge science... >> we've returned this iconic mammal to illinois. >> with a much bigger long-term benefit. >> grasslands have a critical role in climate change. >> it's exciting. >> techknow's team of experts show you how the miracles of
black americans are not benefitting as much as whites from this economic recovering. black families that work painstakingly climb into the middle class. they are losing the homes as financial foundations collapse at a higher rate than whites. example. we have been tracking their ups and downs since early o 2014. despite a combined until of 103,000, they were barely mayinging it. over the past year the fortunes are taking a slide. here is a look at how their experience mirrors that of
african-americans throughout the country. >> the union of this couple in a legal marriage to be recognised by our government. >> after six years together, in a ceremony outside chicago, in june 2014, stephanie williams were able to marry. >> i can't wait to spend my life with stephanie. >> definitely exciting to know that it is legal, is recognised. and we are here. we are happy. >> on the day of great celebration, cara and stephanie would have no idea how the vows are for better or worse, would test them in the year ahead. >> we have a tumultuous half a year, very tumultuous. things started to go boom, boom, boom in a row. >> definitely. >> when we met the williams family in february 2014, they
were already struggling. the blended family of six felt squeezed financially and physically in a 3-bedroom, one-bathroom home 30 miles south of chicago. >> did you see the others? room. when stephy brought the house in 2007. there was ample room for her and her son. that was before her and cara moved in. the house was worth less than the balance of the moortage. it's my american nightmare. it would take more to get out than it was to get in. between 2006 and 2014. 9.3 million u.s. home owners suffered a foreclosure. minorities were hit the hardest. it's estimated 8% of african-americans and latinos lost their homes, compared to 4.5% of whites. foreclosure. >> let it go. >> yes.
>> it's hard for me to do that. >> stephanie was a maths specialist. together they earnt more than 100,000 a year, enough to put them in the middle class. that is not how they felt. >> i consider myself lower class through. >> the williams couldn't afford to by a home close to the city. the 2-hour commute included gas and parking, setting them back. other bills included 1,100 for food. 1029 in housing. home backburner. >> the mortgage is due. hey, the gas bill - we are at the point where you are at the cut off point. >> we should be good, we are so not good. >> in july 2014, a month after their
wedding, carra was laid off. >> i was ready to flip a burger. that's how worried i was. the day the job ended was the day i interviewed for the job i have now. >> a few weeks later steph landed a higher paid job coaching teachers in the chicago school district. there was a complicating caveat. the condition required the city. >> that was a down fall of the job, having to move to chicago. and figuring out what to do with the house. >> movie reel: delaware valley. >> owning a house has been the cornerstone of the american middle class dream. african-americans are 45% more likely than whites to switch from owning homes to renting them. foreclosure and the need to move pushed the family to join them. soon after they rented the
duplex they had disturbing news. the owner of the apart. was in foreclosure. >> i was in total disbelief and shock at the moment. here i am thinking that i found my perfect home, and the next thing i know, was a gut punch. >> the williams family had to stay through the year. they were looking for a new place to live when another devastating blow hit. >> the chicago public schools went through budget issues and basically our whole office, except for a few people was wiped out. >> for the first time in her jobless. >> i was physically ill. i cried. i cried for some days, make a week, you know, very depress the ared. didn't want to get out of bed. i moved to chicago for this job. i'm struggling to find a place
to live. all the stress. going back to the fact i had a college degree. >> a college degree, an advanced one is a stepping stone for minorities to bridge the wealth gap. a study shows from 1992 to 2013, the media net worth of black college grads actually dropped by 566%. the medium net worth of whites rose about period. wall. >> with the home enclosure, the williams family had serious problem. already investigating the south as a cheaper place to live. carla discovered texas landlords offered second-chance leases. >> they give leases to people with challenge on their credit. to their relief, the application
for a 4 bed room, two bathroom apartment in texas was accepted. in august the family packed up and headed south. >> email is coming up. we are working on it. >> cara kept her it job, working from home. stephanie is ascertaining for an education position. >> in the meantime you haul is hiring. >> their percentage in the middle class is class seems more precarious. >> we basically had to take handouts. we are proud women. that's hard to do. standing in for school suppliers, we used to be the one one to donate. despite the setbacks, the williams feel optimistic about their future. >> very optimistic. >> positive outlook. something. >> for starters, the cost of living is lower.
gas is cheaper, so is the rent. $1300 verses 1800. they believe the schools are better. >> that's the key. >> they loved their schools. >> they come back bubbling and exciting. carla and stephanie mirror another trend. despite the challenges they face, according to a poll, african-americans are more likely to be optimistic than whites are. 18" of whites had faith in the blacks. >> i don't want anything to destroy my happiness, i want to keep the momentum going. >> that is our show for today, i'm >> millions at stake. shady investments. limited oversight. >> super pacs are part of the wild wild west of campaign finance. >> could actor daniel craig be
the latest super pac scam victim? an ali velshi, on target, special investigation. ♪ >> announcer: this is al jazeera. welcome to another news hour in do what and i'm adrian and top stories, at least 30 people are dead on an attack on a former airforce base in pakistan. croatia warns it will close all border crossings if the refugee crisis worsens. thousands of israeli personal deployed in the mosque compound in jerusalem ahead of friday prayers. lawmakers prepare to vote