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tv   Your Money  CNN  October 30, 2011 3:00pm-4:00pm EDT

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death toll has risen to five. volunteer workers from other states are helping utility crews from maine to maryland clear frozen limbs from power lines. and violent flare-ups and more arrests in the occupy movement. 20 protesters were arrested in these clashes in denver yesterday. police used pepper spray to control protesters after they ignored orders to remove their camping gear from a park. and i'll be back one hour from now for our political power hour. hear from the candidates on the 2012 presidential campaign trail. i'm fredricka whitfield. "your money" starts right now. simple solutions to complicated problems. if you want to know why simplifying the tax code is such a popular idea, take a look at this. this is the federal tax code, all 72,000 pages worth. i'm ali velshi. welcome to "your money." governor rick perry is proposing giving you taxpayers a choice. essentially you can pay your
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current income tax rate under this code or skip the accountants and software and pay a 20% flat tax rate. the bottom line, most americans choose a 20%, and at the least this would amount to a tax cut for the wealthy. candy crowley is the chief police kp correspondent, and anchor of "state of the union" on cnn. no one is sure what romney's proposal is, whether it's economically sound. after herman cain's success for getting attention for the 9-9-9 tax plan i can see why perry seized on the idea of a simple tax. this tax code helps us understand that. i'm not clear on whether they succeed or fail on the economic plans or how sexy or simple the plan sounds or whether it has nothing to do with that and who has the best chance to beat president obama. >> it's somewhere in between there, ali. there are certain things to say in this republican primary that would make him or her a non-starter, and that is i'm going to raise your taxes.
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i will make big cuts in defense spending and there are big things we need to do with federal spending. those would be non-starters, but when you look at these plans, they're much more political productions than they are substantive productions. as we know, there are three branches of government including congress. no one looks at a candidate's plan and thinks this is going to happen on january 21st or 22nd or whenever the date is that this person first takes office, should they become president. we have poll after poll after poll that shows that most republicans want barack obama to be defeated. so in the end this will be by and large in the republican party a calculation on who can beat barack obama. >> for months we've been talking -- longer than months, in some cases for years about something called comprehensive tax reform. taking all these pages of the tax code and getting rid of them and doing something more simple.
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its took herman cain's 9-9-9 to get everybody studying it and seeing whether it made sense and whether it would work. did it surprise you that that got a great deal of attention, and now i think perry is coming up with something. it sounds simple. as opposed to to the complicated proposals put out by romney or huntsman. >> no, it doesn't. it is something -- herman cain picked that and said it over and over again. sim police itty and repetition work on the campaign trail. they don't work when you're making policy. what happens is you go up there, and the homeowners or the home mortgage lenders, you know, come in. they want something different. the cpas want something different. so it is a -- it's something that draws attention politically. it didn't surprise me, because it had some simplicity to it. everyone hates the tax code because everybody has to go and do that every april 15th. you want to tear your hair out. so it's a great catch-all, and it's the way that republicans are saying that they can cut the debt.
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it's a two-fer going against something you hate and trying to deal with the debt. at least that's what the alleged outcomes would be. >> even i want to tear my hair out, so it's extra frustrating for me. steven moore joining us, editorial writer for "the wall street journal". governor perry says his plan will shrink all of this down to the size of a postcard. >> the best representation in my plan is this postcard. this is the size of what we're talking about right here. taxpayers will be able to fill this out and file their taxes on that. >> all right, steven. you're conservative and in favor of lower taxes. we all agree that a 70,000-page tax code is a little much, but is a postcard, a flat tax not a swing too far in the other direction? >> you've written that a flat tax is like a porsche when right now we're driving out a rusted-out pinto.
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you've written it's steroids for the economy. aren't there benefits to certain deductions? aren't there things that my economic behavior should be rewarded for versus penalized? >> well, you could make that case, ali. the problem is the tax code has become just a big swamp. we just keep adding more and more deductions. what about the mortgage deduction? what about the charitable deduction? what about the deduction for state and local governments? it goes on and on. nowadays you can get tax deductions for wind mills and bull sperm and all this stuff. it made this tax code that incomprehensible mess you were talking about, 72,000 pages. >> yep. >> and i do believe, especially, ali, among conservative republican voters voting in the primaries and caucuses starting in a couple of months, this idea of just blowing up the tax system and starting and replacing it with something very simple and clean and pro-growth has a lot of appeal. you're going to find very few republican voters who say, oh, i like the tax code just the way it is.
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>> however, the postcard idea ultimately in a year or two years, somebody is going to say, we need to reward this kind of behavior, because we need people to spend this way or invest this way. it doesn't stay a postcard necessarily. let me bring in diane swank into the conversation. i think this is one thing that almost every american except those that make money off doing taxes agree, 72,000 pages is rough and we need comprehensive tax reform. what should that look like? who should undertake tax reform? isn't that better done by experts and act ants than my presidential candidates who appeal to as candy points out, fatigue with complexity? >> certainly i agree with that, and i think we are seeing some proposals for fundamental tax reform in the simpson-bowles plan, and in the gang of six. we have seen fundamental proposals for changes in the tax code. i don't agree with the tax code.
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i don't agree with the flat tax. that said, let's get rid of the behavior distorting deductions in the corporate tax codes that allows us to bring money back to the united states from abroad. there's a lot of things we can do with the tax code. at the end of the day when was the last time we had fundamental tax reform in 1986 under president reagan. at that time, it was the largest tax increase in history. eliminating deductions and simplifying the tax code. be careful what you wish for, because i think that's where we're moving. the idea is to raise revenues and not reduce revenues and also reduce all these special interests involved in the tax code right now. >> let's talk about the other side of the equation. president obama, this week he introduced a new mortgage modification plan, an enhancement on the previous nine that they've had designed to help maybe another million, maybe a million and a half troubled homeowners. then he moved up the time line for helping college students cope with the cost of education. listen to what he said. >> college isn't just one of the best investments you can make in your future.
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it's one of the best investments america can make in our future. so we want you in school. we want you in school. but we shouldn't saddle you with debt when you're starting off. >> candy, first of all, is this go it alone on the economy, don't wait for congress strategy likely to work for the president? >> politically absolutely. i think this idea we can't wait is, you know, same song, different verse of, you know, give them hell, harry. this is about being against congress, which democrats interpret as being against the republicans blocking the president's agenda. so this is all a part of it. it's about -- he made changes to student loans, for some homeowners unable to take advantage of some of the lower rates. he's done some executive orders that would ostensibly help veterans, so these are all key voting groups.
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they are key kitchen table groups. this is the sorts of things people talk about when they talk about the economy. how are we going to pay for our kid's education? how is our kid going to pay for the education? how do we keep the home? these are actual issues people talk about. they don't talk about the gdp. i don't care how good the gdp gets, they aren't talking about them. they're talking about those issues. that helps the president reconnect in a way that he has been and many people see him as having disconnected with the voters that he rallied so well four years ago. this is a way for him to reconnect. >> candy, diane and i that people don't talk about gdp thing. >> you guys talk about the gdp. >> that's right. >> steven, here's a good point candy makes. the president has decided he's going to work around congress and do things on the margins and force their hand. congress, particularly the republicans and conservatives in congress have been remarkably effective
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strategists since their election in 2010. this is a change in strategy. the president is working around it. you worried that could steal some thunder from this republican movement of cutting spending and controlling what the president does? >> yeah, it's probably a good strategy. that's what i would do if i were the president. it's interesting in the last couple of weeks president obama and even harry reid and others have talked about, quote, the republican congress. wait a minute. people forget the democrats still control the senate. everybody hates congress, right? i hate congress, you hate congress. it's a populist thing to do. i have to say one thing on this. i have two kids in college. i'm paying almost $80,000 a year. they go to pretty expensive schools. what is going on with college expenses right now is just putting -- it's out of reach of american families, and the problem is just keeping to give money to the schools and tuition and scholarships, all that is doing, ali, in my opinion is
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feeding the increase in the tuitions which have been growing over the last 20 years two to three times of the rate of inflation. when i went to the university of illinois, it was $1,000 a semester and that wasn't long ago. >> there are people in america living with college age students and their retired parents who are consuming health care, which is increasing at that rate. it's crushing them in the middle. we'll be discussing a lot of that. diane, last word to you. sorry about the whole people don't talk about gdp thing. i guess we're isolated about that. this is a valid point that candy makes. people are talking about education and their mortgages and health care and they're talking about their jobs and veterans, but we still have this larger economic issue to solve. it doesn't look like we're solving it in congress. >> the bottom line is that's true. i think the reality is they do talk about gdp, they don't know about it. they talk about all the things that influence economic decisions in their lives, and that's what gps is and we're talking about right now to make us feel good and not enough to make us be able to pay all of our bills on a mass scale that
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we would like. that's where the fundamental problem is. >> the little bit of good news is that the gdp for the third quarter that came out on thursday at 2.5% for once wasn't worse than we thought it was going to be. we had a piece of economic news. whether you like it or not or even know what it means, it wasn't worse. that today in this economy is a win. candy crowley, great to see you. we look forward to seeing you on sunday morning. steven and diane, always a pleasure. we have the tax code here. let's talk about taxes. 9-9-9 or a flat tax? the man behind the republican pledge not to raise taxes is only a fan of one of them. which one would he choose? that's next on "your money." [ junior ] i played professional basketball for 12 years. today i own 165 wendy's restaurants. and i get my financing from ge capital. but i also get stuff that goes way beyond banking.
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you know what else is early? medicare open enrollment. now through december 7th. can i stick with my old medicare plan? sure! or find a new plan with better coverage, less cost, or both. medicare plans give you free cancer screenings and wellness visits and 50% off on brand-name prescriptions when you're in the doughnut hole. it's part of the healthcare law. so it's time to look, compare... and choose the right plan for you. learn more at 1-800-medicare or medicare.gov. he's one of the most powerful, influential voices in the country. he's not an elected official. he's grover norquist, presidents of americans for tax reform, a conservative group that secured pledges not to raise taxes from 238 members of the house and 41 senators.
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grover, welcome back to the show. you've warned that those who sign the pledge and break it will pay a political price. so whether they're listening to you because you're respected or feared, your opinion on the tax plans being offered by presidential candidates matters. do you support rick perry's optional flat tax? >> i think it's a really good step in the right direction. it takes the top rate to 20%. it does what we need to do internationally. a lot of people have been talking about taking the corporate rate to 25% because that's the european average. the problem is we have state corporate income taxes of between 4% and 5% on average. you really need to take the american corporate rate to 20% in order to be competitive internationally at a total of 25%. of course, on the individual level same thing. most businesses pay taxes through the individual tax code. >> so, grover, your thinking is that if you make taxes low enough, the money -- i don't
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mean to speak for you, tell me if i'm wrong. the money people don't spend in taxes or businesses don't spend in taxes will be otherwise employed in a way to creates demand and grows the economy? >> certainly let people decide how to spend their money. people will spend it more wisely and effectively than the government would. you also have -- you have to do a lot of other things like remove the regulatory overhang that's threatening every business decision in america, cutting taxes is step one. you have to remove some of the threats of all of obama's regulatory impositions. >> so most people who pay a personal income tax in america pay more than 20%. bottom line if you give them an option of the old system versus a flat tax, which rick perry is suggesting doing, i would guess most people choose doing the flat tax. is that a problem? the government is going to get a whole lot less money. >> over time this would be so good for economic growth you will have more resources coming in. but immediately i like the idea of having an alternative.
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there are some people who were told by the government, these are the preferences the irs has buy a big house, live in a state with high taxes, you get these deductions. if you've organized your life around the irs' preferences, it's a little unsetting or unfair to say you change all the rules. instead what rick perry's plan does, here's an alternative system. you want to move into the alternative system? do. stay where you are? that's fine, too. >> here's an interesting thing. perry's plan proposes to attach government spending as a set percentage of gdp. the more we take in, the more we produce, the more we spend. the reverse is true. is there ever a case where you would favor flexibility on that sort of arrangement over a hard and fast rule when it comes to allowing the government to deal with a fiscal crises where some argue they had to spend money where businesses and consumers weren't spending it. >> i reject the idea that the government takes a dollar out of
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the economy and spends the dollar, and makes the economy better, which is the theory under which the government would spend money and help the economy. but i do like the idea and i think it's the third really important thing that governor perry does here. he sets as a goal 18% of gdp as government spending. it's at about 24, 25% right now. this is what bush never did. president bush over eight years never was looking at spending as a percentage of the economy as the metric by which you govern whether you are spending too much or too late. if he said 17% or 19%, i could have lived with that. the idea he's setting that as a goal and everybody who works for rick perry will know, we're trying to get spending as a percentage of the economy down is a huge step forwards. not been focused on in the last ten years. >> herman cain's 9-9-9 plan is based in part on a national sales tax. you said it wouldn't violate the pledge to raise taxes because herman cain has signed that, but
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you don't really like the idea? >> yeah. i do like the idea where he says present code is problematic to redistributionists and rates are too high. he does the fair tax, the retail sales tax but the transition to get there is scary to me. he has three taxes, the income tax, only at 9%, okay, a new 9% retail sales tax. on top of all the state sales taxes that exist. and a 9% japanese-style vat to replace the corporate income tax. those three taxes i think would be likely to grow and become less flat. i don't know why you create three tapeworms hoping that later you have one small one out of the deal. >> i heard that expressed. let me ask you one thing. since the last time we talked there's a lot of criticism about the conservative lawmakers that signed your pledge when it came to making a deal on the debt and on the budget. have you changed your position on how tough you want to be on
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anybody that does anything that might at some point might look, smell or walk like a tax increase? >> the good news there were people in the last year if you didn't give the democrats tax increases we wouldn't get spending restraint. turns out they were wrong and the republican leadership and my position as well was correct, by telling obama the democrats' taxes are off the table, we got 2.5 trillion in committed spending restraint. we're going back to the table to finish the last there. $1.2 trillion there. some democrats want to renegotiate and have tax increases. the republican leadership has made it very clear that's not going to happen. the only way to get spending restraint is to say taxes are off the table. we learned this in '82 when we did it the wrong way and in '90 when we did it the wrong way and we learned in 2011, this year, we did correctly. taxes off the table and real spending cuts. >> good to have you back. thanks for joining us. >> sure. >> grover norquist president for americans for tax reform.
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the housing market has been immune to recovery. president obama says he can help homeowners even if if congress won't help him. we'll find out what is in the plan and what it could mean for your mortgage after the break. in america's most in demand careers. we provide you with instructors who are professionals working in the fields they teach. it's an education designed for today, from a university that holds the same level of institutional accreditation as america's top schools. experience the university of phoenix difference at phoenix.edu.
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i do my best to make it work. i'm back on the road safely. and i saved you money on brakes. that's personal pricing. the obama administration announced its latest effort to help struggling homeowner this week. it centers and allows more people whose homes are worth less than the mortgages to refinance at lower rates as long as they're current on the payments over the last 12 months. mr. secretary, welcome back to the show. good to see. >> great to be back, ali. >> this is the administration's tenth attempt to help struggling homeowners. we're nowhere near the goals that the president laid out two and a half years ago to help several million troubled homeowners. about 3.5 million are in that foreclosure range, three or four months behind on the payments, and the range of families i've seen that this new program is expected to help tops out at about 1.5 million. i'm not sure if that's a fair
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estimate. whether you agree with that. why can't we do something more and bigger to get all the those people out of trouble? >> ali, first of all, let's recognize the progress we have made. since the president came into office, over 5 million families have had their mortgages modifies. -- modified. if you look just over the last year, the number of people getting foreclosed on is down 40%. so we are making real progress. the president's also said, we haven't done enough. we have to keep doing more. so let's be clear. this effort is a targeted effort that was announced this week that there are 4 million families around the country who have fannie maor freddie mac mortgages. they're underwater and paying rates of 6, 7% even though they're doing everything right. they're paying their bills, and they could benefit from about $2500 a year in reduced payments on average. >> right. they just can't do it because they're under water. >> that's like a major tax cut year after year.
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here's the thing. even in the last big program you set up an infrastructure -- when you take about the 5 million who have modified not all of those have been under a government program but it's government influence that's helped the banks to modify people's loans. what else could work? when you sit around with decision-makers or president and you talk about things that work, what are the options? can we take the money homeowners owe and capitalize it into their own mortgages and extend the term of the mortgage? can the government do something with the houses sitting around there in clumps and hold onto them for five or ten years and release them on a controlled basis? help me out with options? what else might be on the table? >> two specific things. this refinancing effort is important not for just for the 4 million underwater fannie mae and freddie mac borrowers. the point is we sat down and attacked five major barriers to people refinancing. many of those could help other families that don't have a fannie and freddie mortgage.
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give you an example. we figured out a way to automatically resubordinate second mortgages. what does that mean to a homeowner? many folks who have an underwater first mortgage have a second mortgage, and they're blocked from refinancing. that automatic resubordination can help them refinance. another example is we've eliminated the need for an appraisal for many of these mortgages. that lowers fees, and it will allow other folks. if we can take these innovations and spread them more broadly to other parts of the market, we could have a bigger impact. the second thing i would say, the president was in las vegas monday to announce this. he said, look, this is an important step. we need congress to do their job. we need them to pass the americans jobs act. why? part of the jobs act is a project rebuild that would create 200,000 jobs, putting construction workers back to work, renovating and rehabilitating vacant and foreclosed homes. what would that do? that helps to lift everybody's
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property values. if you live next door to a home foreclosed on, even if you're paying your bills and doing everything right, your own home drops in value. we need to take this step as well, and we need congress to act. >> we hope this works. when do you think -- we're getting a lot of e-mails and tweets about this. for people affected by the new change the president made, when will they be able to start that process of getting their loans modified? >> they should certainly get ready and start working with their lenders, but we think december 1st we'll start to see loans refinance under this. for those people who are most deeply underwater, it may take a little longer, around the 1st of the year. we're moving as quickly as we can to get this in place to help homeowners. we're going to do other things to make sure that we help this market. we've stabilized it, but we're going to keep doing thing to make sure we have a true recovery going on. >> is there another announcement, another initiative
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under way? >> i would say two things. clearly getting the american jobs act passed would help a lot. the other thing is we are pushing the banks to make right for all of the robo signing and other practices that have led many people into foreclosure. so we're negotiating with the 50 state attorneys general to get real principal write-down on loans as well. that's an important step that we're working on, and i hope we'll get there soon. >> all right, secretary donovan, always good to talk to you. thanks for being with us. >> you too, thanks. >> housing and urban development secretary shean donovan. over the past 30 years, incomes have tripled for the top americans. how did the rest of us do? i'll tell you on the other side. luck? i don't trade on luck. i trade on fundamentals. analysis. information. i trade on tradearchitect. this is web-based trading, re-visualized. streaming, real-time quotes. earnings analysis. probability analysis: that's what opportunity looks like. it's all visual. intuitive.
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welcome back to "your money." joined by two of my favorite cnn contributors, will cain and pete dominic, pete host of serious stand jump and will is a noted conservative commentator. we've heard about the we are the 99% and they're the top 1% in this country. it has tripled its income since 1979, up 279%. that's according to the congressional budget office. for people in the middle of the
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economic scale, after tax income grew by just 40% in that same period, and those at the bottom experienced an 18% increase over the same time. will, how does this disparity play into the political discussion? we've seen it play into the "occupy wall street" movements across the country. there's a realization and frustration. about something going on for a long time, but it's affecting people more now. >> first of all, inequality has come down over the last two years ago. it peaked at about 24% two years ago, it's down to 18% now. as that happens in economic recessionary environments. >> sure. >> second point, so? that stat out of context means nothing to you. >> give me context. >> inequality has grown in the last 30 years. if you tell me it's attributable to corruption, we have a conversation that takes place. >> but there are people gathering in cities across this country who are not saying what it's attributable to, but it's happening. what's the cause? something has to be causing it to happen? >> this is the cause right here. this tax code is the cause. for 30 years there's an army of
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lobbyists hired by that top 1% to lobby for a tax policy that benefits them. the tax system is rigged for the top. it's rigged. it's not illegal. it's rigged. the middle class average americans don't have someone lobbying on their behalf. they have unions. they've been decimated. >> pete and i don't disagree on this. the point i want to make, inequality in and of itself out of context is not necessarily a problem. it's a bug in any system. in response to that i would have say we've gone 1500 years where the average income was $500 in this world. >> right. >> over the last 100 years it's peaked to 6,000. >> the biggest problem is not the inequality but we have eroded the middle class that carries most of the burden of paying taxes in this country historically now is not in as strong a position to continue to do so. >> the people at the top realize that can't be sustained. it can't be sustained the way its happening. the question, let me be specific here.
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that's the word i'm looking for, thank you. 60,000 is what you pay a year. you pay less in your percentage of income if you may millions. everybody knows about that. how is that okay, will? how is it okay to make a million bucks and pay less of a percentage than someone who makes $60,000 in a steel company or gold mine. >> it's overrated. >> it's not accurated. >> it's off warren buffett's statement that he doesn't pay less in his taxes as his secretary. >> he he pays less of a percentage on his income. >> on his capital gains. >> people at that level make the majority of their money on capital gains. >> the percentage of rich people that make the majority of income off capital gains and pay at the 15% rate is low. that being said, we're arguing about that statistic. we agree. this is a problem. the reason that rich people have any way of avoiding the highest tax bracketser that assigned because in every one of these books, there is a hole and loophole and expenditure created by politicians to socially engineer
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a better world they envision. thus make it easy -- >> we can agree on that point. this has to change. there's nothing better than illustrating this tax code to make people understand. if you ask people say how many pages are normally in a tax code, there's 72,000 words in here. guys, a month after bank of america got pummeled by consumers and politicians for introducing plans for new debit card fees most other fees in the united states including jp morgan chase citigroup have decided not to follow suit. now, on one hand, i'll tell you, companies like this including citibank have not charged those fees, but i wonder whether the banks don't want to get netflixed. >> listen, they're saying that this has -- this b of a decision hasn't reflected on why they're not doing it. b.s. come on. what they do is make money. >> if b and a did it and hadn't gotten netflixed for doing it, you would have seen other banks follow suit? >> b of a says dodd/frank will
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make them lose $2.2 billion. the $5 fee they will make $3 billion. these other banks that say they're not going to do it, they'll find a way to make that money back. they might be gambling saying, bank with us. they're charging 5 bucks. >> i bank at a bank that doesn't charge me that kind of fee. when i was on tv when this first happened, people were like is this right? they can charge you, yuts just a right but you won't do it to leave your bank. 40% of banks in this country don't charge fees whatsoever. if you don't go into overdraft. >> i'm suckered into the idea this is a free market -- an example. free market working. all the other banks see a practice that isn't going to work and we'll do something different. let's not forget the bank of america free in response to the dodd/frank reg lution, the durbin thaemts puts extra fees on banks. had the government would not have, do you think bank of america would have charged those fees? >> it costs under 10 cents
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apiece to conduct the transactions. >> who do you side with? >> i side with my wallet. i go to a bank that doesn't do that. lots of americans are free to do the same thing. >> i'm with you. >> pleasure to see you. wil and pete. europe has a debt crisis deal. will it be enough to avoid a global recession. we'll talk about that on the other side. you say you can beat any advertised price on tires? correct. anywhere? yes. like this price? yes. riously? yes what about this one? i'll beat it. this one? s we will. right, i only have one more question for you...this one? (laughing) yeah. get $100 rebate when you buy four tires. 100 bucks! only at your ford dealer. 3 million tires. 11 major brands, fiona's kind-of-nice. i don't know why you're not here. and who ordered the yummy cereal? yummy. [ woman ] lower cholesterol. [ man 2 ] yummy. i got that wrong didn't i? [ male announcer ] want great taste and whole grain oats that can help lower cholesterol? honey nut cheerios.
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stocks in the u.s. and globally soared as european leaders approved a deal to deal with the debt and banking crisis this week. the deal addresses three major problems. first, it contains, we hope, the greek debt crisis. banks and investors, private investors, who hold greek debt will only get half of the money back under the terms of the plan. that is hoping to ease substantially the greek debt load. number two, it shores up european banks in general. banks in europe are going to be required to sharply increase their capital reserves to create a buffer against potential losses. the goal here is to foster more confidence in the european banking sector, avoiding a run on the banks from investors and those who keep their money in the banks. finally the deal aims to boost europe's bailout fund for future crises. it creates new ways for others
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to invest in the european union. watch china carefully. they could actually end up as a major investor here. will all this be enough? despite the rally in stock markets after the news. nina dell santos joins us now, covering this closely, covering those meetings in brussels. she's back in london. nina, is this going to be a sufficient deal to stop us worrying about whether europe is going to take the world into another recession? >> the consensus ali the devil is in the detail and so far we haven't had all that many details. it has been a huge shot in the arm for europe if you like. they have managed to come to some kind of consensus. we saw the two strong men of europe, germany and france, at odds clashing on various issues of this complicated plan. the real challenge for them is to see eye to eye in the future to try to implement all of this. they're going to have to think about how they're going to be doing that before the g-20 gets
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under way in about a week or so's time. otherwise they're going to have to do tough talking with their larger economic partners. >> that was my next question. as we get into the new week i'm going to be at the g-20 in france and that's what that next big question is going to be. you've come to a framework, come to a deal, how fast can they get down to the details and start implementing? >> yeah, that is the trillion dollar question, isn't it? what they said is they're going to be boosting their european bailout fund, the euro zone, sort of rescue fund if you like, which has been dubbed the esff, european financial stability facility to the tune of $1 trillion euros, about $1.4 trillion. if that sounds a lot to you, think about where they're starting from. they're starting from about $600 billion, and here's the catch -- they're not going to be putting more money into it themselves. they have to try to convince other people from outside the european union to put their cash into it. to do so they have to offer
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pretty solid guarantees? >> some interest the chinese may be interested if those guarantees are in place. great coverage of it all week. thanks for joining us. nina dell santos in london. so much of the immigration debate here in the united states centers on protecting our boarders. what happens when in doing that, the best and the brightest of highly skilled workers are no longer able to beat down the door to get into the united states? then, we have a different kind of immigration debate. we're going to talk about it after this break. stay with us. ♪ and the flowers and the trees ♪ ♪ all laugh when you walk by ♪ and the neighbors' kids run and hide ♪ deep inside you, there's a person who refuses to be kept deep inside you. ♪ but you're not
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when you're responsible for this much of the team, you need a car you can count on. science, technology, engineering and math they're known as s.t.e.m. these are the staples to competing in the 21st century globally. the education debate focuses on our need to train our american students for these fields, but a particular focus of the immigration debate is now centered on making sure that the best and the brightest foreign born are able to fill shortages, labor shortages here in the united states. some people want to make it
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easier for nonamericans to study and work in the united states, if they can do things that not enough americans are trained to do. literally some think we should staple a green guard card to people with degrees in science and technology and engineering and math. ron is an associate professor of public professor. research commercialization. ron, let's start with you. welcome to both of you gentlemen. you're both very studied in this area. ron, you say america's companies are lobbying for more foreign born highly skilled workers, not really because there's a shortage, but because foreign born skilled workers are cheaper than american counterparts and we constantly hear from companies and universities and engineers themselves that the u.s. needs to be more attractive to engineers from other countries. why don't you believe that? >> many american companies are using these programs to bring in lower wage foreign workers, particularly on the temporary visa programs, but they're using it to basically jettison older
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workers and bring in younger foreign workers through these programs. so, is that fair to american workers? i think it isn't fair. and i think that that's what needs to be put be put into pla. in fact, we have a programs in place now where american companies are forcing their american workers to train foreign replacements. we have that in place right now. that needs to be fixed. >> we keep hearing the same rhetoric over and over again. he takes one or two examples of some stupid company that did something. you meet real world companies and deal with the googles and microsofts and great silicon valley companies. you feel their pain. we have a couple of academics who keep on haranguing foreigners. now look at the irony over here. all three of us are foreign born over here. if we had this sort of, you know, policy, if we had ron here from the past, he would have never been here. we need to have the world's best
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and brightest coming here and competing. if it makes americans work harder, be smarter, it be that way. it's competition from abroad. wave after wave of immigrants coming here making people think smarter, work harder. america is the greatest country in the world, we have immigration and the best and brightest coming here. >> is it your concern companies are not deliberately hiring americans or trying to import younger engineering students or the fact they're looking for cheaper wages? is it widespread? or a few key companies that can be fixed? >> i think it's quite widespread right now. you have companies like ibm, bank of america, pfizer, wachovia that all have these policies in place. and, you know, the question isn't whether we should -- >> that's nonsense. >> i'm making a statement that have been in the press. >> you're saying, ron, there are companies and you name them, bank of america, ibm, pfizer, that have policies that somehow do this. they have policies. >> that's correct. >> policies to hire younger
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workers and displace older workers. i'd like you to show me one policy like that. this would be a national scandal if this was true. >> they have this in practice. if you want to look at the newspaper reports -- >> no, no, no, don't look at newspapers. show sme a policy. you're a professor on national tv making huge allegations over here. prove allegations. proof there's a policy at bank of america or any of these companies have. >> do they have policies that do this or you're saying it's practice? >> they have it in practice. i'll put it that way. >> no, they do not. >> what is it they're doing in practice? >> dishonest statement. >> you're saying there are people who are deliberately not hiring american engineers or american students or they're displacing american workers -- >> both. >> -- in favor of foreign born -- >> both. that's correct. >> is that legal? >> that is legal right now under the h1b program, that's correct and the l1 program. there have been many case, cases of engineers who have testified
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before congress that they've trained their foreign replacement. >> there are some here, there are some bad companies and -- >> like a.c. nielsen. >> there may be some, you know -- did something stupid. when we say all these big companies have policies, do not hire americans, displace them, this is complete nonsense. this is the rhetoric that's hurting american competitiveness. we have this zenophobia and stupidity and scaring the best and brightest away. >> engineers trained in other places in the world or trained in the united states do not feel like this is a logical place for them to stay? is that a danger? >> there's really no evidence of this. foreign student enrollments are going up quite significantly from those source countries. the question is, how do you create enough demand in the u.s. to hire and absorb folks? the reason people are returning -- the reason --
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>> startups. >> the reason people are returning is because the labor markets abroad are very, very good in their home countries. so i mean, it's not a question of us kicking them out. it's a question of there are better opportunities abroad. what we need to do is create more opportunities in the u.s. in terms of labor demand for these types of workers then you'll keep them. >> guys, thanks for joining us. a heated conversation. a vibrant conversation. we'll hopefully have it again and get to the bottom of this. one thing we need to simplify is the tax code. is a flat tax really the answer? my xyz is next. [♪...] >> announcer: now get a $250 airfare credit, plus save up to 65%. call 1-800-sandals. certain restrictions apply.
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protect it. what's healthier than that? mine can. td ameritrade can. they've got trading specialists i can call for help. and paper trading. free practice trading that helps me hone my technique. complex options. and free tutorials online or in person. can a trading site really make a difference? if it can't, why are you trading there? number one in online equity trades. td ameritrade. [ male announcer ] trade commission-free for 60 days. plus get up to $600 when you open an account. it is time now for the x, y, z. it's flat tax fever. gop presidential candidates feeding off a long standing and understandable frustration with this. the u.s. tax code.
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they're trotting out proposals to fix it, make it easier, make it smaller, list complex. the perennial idea of a flat tax is once again presented as a solution, but is it? the image of a simple postcard replacing endless forms, complicated software and accountants is appealing. is it really the solution? let's consider with the flat tax is in use. there are about two dozen countries with a flat tax. the vast majority of which are small relatively uncomplicated economies. think iceland. many were former communist countries that didn't use their tax code to steer on super behavior because they were economies that didn't depend on consumer spending. not one of the countries adopted a flat tax off tossing out a 100-year-old progressing tax system, the sort we have in the united states. no major industrialized nation has ever made the swap for a flat tax system. why not? because as much as we'd all like to think in there is a simple solution to a complex problem
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like this one, sometimes it's not that simple. i am not making the case all of this is necessary and that much of it is not the product of lobbyists securing preferential treatment for their clients. some of what is in here are legitimate and beneficial deductions that serve a purpose. the deduction for charitable giving helps fund soup kitchens and other social programs the government might have to pay for if individuals and businesses were not incentivized to direct some of their own money in that direction. and a nod to rick perry, he understands that. he said he'd leave the charitable donations alone. tax reform should be a real priority. it needs to be done sensibly, with consideration of the long-term implications of each and every deduction that is removed. albe albert einstein said, everything should be made as simple as possible but not one bit simpler. good advice for people looking to overhaul the u.s. tax system. that's it for me. thanks for joining the conversation this week on

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