tv Your Money CNN April 22, 2012 3:00pm-4:00pm EDT
tax policy center helped us put this together. these different groups of popcorn represent your income level. the bigger the bag, the bigger the income level of the group we're talking about. i want to use the popcorn to demonstrate how much of the total pie, how much of the total tax revenue is generated by each group. let's start over here with the little one. these are people who earn less than $30,000 a year. that, by the way, is about 44.8% of all households in the united states. they don't pay a lot in income tax. in fact, generally speaking they get back 4.8%. i'm going to put a few kernels into their pot because they are not paying taxes. let's look at another group. this bag represents people who earn between $30 and $100,000 a year. that's about 40% of households in the united states. this group represents a contribution of 18%. 18% of the total personal tax revenues come from here. i'm going to put about two
handfuls of popcorn in the bowl to represent the taxes they pay. this bag represents people who earn between $100,000 and a million dollars a year. $100,000 to a million a year. that's about 15% of u.s. households. guess what? this group contributes more than 60% to the total pie. i'm going to at that in, about six handfuls. you've got three, four, five, six and a few extras. that's how much this group -- people who earn between $100,000 and a million dollars put that much into the total pie. now let's talk about the group president obama is referring to when he talks about the buffett rule. people who earn more than a million dollars a year. right now this group contributes 25% to the total tax revenue. so we'll give it about 2 1/2 scoops.
they, by the way, pay an annual tax rate -- you probably heard this -- of about 20%. so when you look at the amount groups contribute to total personal income tax revenues in the united states, you'll see the lowest income americans don't generally contribute, about 45% of americans pay no income tax and are net recipients of income tax or federal moneys. this group, 30 to $100,000 contributes 18%. people earning between $100,000 and a million contribute 63%. and people earning over a million dollars contribute about 24%. now, let's take this discussion a little further. will cain is a cnn contributor with a bit of a conservative bent. good friend of mine. will, good to see you. will, the rich contribute an awful lot of popcorn. as we just saw. but a new cnn poll finds that seven in ten americans believe the tax system benefits the rich and is unfair to ordinary workers. that certainly seems to be behind president obama's push to
raise taxes on millionaires through this buffett rule. you say that has more to do with envy and less to do with sensible tax policy. >> i do say that. i say that for different reasons. i love the popcorn display. i would build upon that to say, consider this -- the top 1% of income earners in our country, which would encompass your last bowl, the richest among us and some of bowl next to it, pay about 36% of total income taxes while the top 10%, which would be your last bowl, the richest bowl and most of the next bowl, pay 70% of total income taxes. what is fair, ali? for them to pay 100%? this definition of fairness gets really hard to define. >> let's talk about it for a second. there's a real discussion, should we be talking about the tax code as being fair or being efficient? what's your sense of if we're all agreeing we don't love this tax code, what should it represent? should the rich pay more? should everybody pay the amount? what's your thought. >> first of all, i don't think
it's that subjective of an interpretation. what is fair is this -- when you have the poll that shows how many people think the tax code benefits the risk, this statistics fly in the face of that. one thing the tax code does it's so riddled with exceptions and exemptions, it becomes like swiss cheese. who does that benefit? we want to say the rich but really benefits those are connected. those with lobbyists, tax accountants and lawyers. that's where you can make a more fair tax code by simplifying it by making it something that so many of us understand. my complaint is, your reference to buffett rule and president obama that doesn't solve any problems, just makes it more complex for some arbitrary definition of fairness that i think is based on some semblance of envy for playing to the cheap seats. saying we'll get this solved. we'll play to the rich guys. >> let's ask this, one of the reasons the president picked that million dollars and above, people at that level of wealth -- and you don't have to
earn that much money, you can earn less -- they make their money through investments, dividends, capital gains which people who are at lower income levels generally can't participate in. if you're a working stiff in this country, your money that you earn goes toward consumption, goes toward what you do on a daily basis. there's sense you can't get into the place in life where you can benefit from a lower tax rate. is that fair? >> i think you have to answer this question to find out whether or not that's fair. what's the purpose of the tax code? is the purpose of the tax code to raise revenue for the government to pay for its expenditures? i think most people say yes. is the purpose of the tax code to influence behavior? it certainly has become that. a child tax credit. >> do you disagree with that? >> to some degree, ali. when you talk about capital gains we have to have a debate do you want to incentivize investment? has investment in things like venture capital and start-up businesses been a good thing for this country? i have to be honest, i say yes,
and therefore capital gains should be lower, then you open yourself up to logical consistency. should we incentivize home ownership, having children? >> we do. we do incentivize home ownership. we spend a lot of money encouraging home ownership by saying if you get a mortgage you can deduct the interest that you pay from your taxes. what that does is create a home ownership culture that says it's better to own a home than rent a home. guess what, the united states doesn't have a higher rate of home ownership than canada or germany, countries that don't offer that sort of thing. at the same time we want, need certain industries to be here. should we not use the tax code to say if you invest into this industry, put money into this industry, we'll encourage that by allowing you a bit of a tax break? >> i don't like that. because i don't think the tax code should be a tool of social engineering. it's an honest debate to have. when you talk about capital
gains, you can talk about incentivizing investment. when you ask about the capital gains, it unfairly benefits the rich. the capital gains isn't about that, not playing favoritism. if you start seeing tax code overall as this tool for morality, evening the playing field, this tool for creating what you think might be fair, then you're having a conversation that has no real end. that's a rabbit hole you go down. fair is simple. if you want to have a debate about what you do and do not incentivize, that's a fair conversation. capital gains is the beginning of that conversation. >> let me ask this to you one different way. >> okay. >> if you are a wage earner, you pay a certain rate of tax. if your money, your wealth, the money you derive comes from the fact you have more money, and, hence, you can invest it and you get capital gains and dividends from your stocks, something that the lower wage earners can't do, you pay less money on that income. tell me why the average person watching this should think that's equitable.
or are you saying equitable has nothing to do with it? >> i would say this. the reason that would be equitable, the reason i would defend capital gains as equitable is this. you've already paid taxes on your income that you've earned through a wage at some point. now you're talking about the amount of money you've taken and placed into an investment, some productive use of society. then it gets taxed again at some corporate rate. finally it creates a hopeful profit you would pay another tax on. we as a society said let's treat that differently than income. i'd say, i'd take some exception to say it's unequitable. you've paid taxes on it numerous times and we're trying to incentivize investment. now, i've been honest with you in this conversation. i realize that opens you up to using the tax code for all sorts of social engineering. i don't think the capital gains tax rate is just some symptom of rich guys getting in an equitable benefit that poorer people don't get. >> square this up for my politically, the fact is you saw the numbers.
you you saw the number of people who approve of the idea that the rich, people earning more than a million dollars a year, should pay higher taxes. an overwhelming number of democrats support that. a very large majority of independents and even a majority of republicans support that idea. this is a winning idea for president obama and a losing idea for mitt romney. >> well, great. so politics plays to cheap seats, it plays to popularity. if you think soaking the rich wasn't popular, ask the french revolutionaries, it worked out for them. soaking the rich has always been popular, but it doesn't mean it's right. i'm not telling you the best thing to do politically i'm telling you the best thing to do that is right. >> will cain is a cnn commentator. grover norquist, whether you love him or fear him, you can't deny his influences on your taxes. what does he think about president obama's focus on fairness? >> they can't play to economic
growth, they can't play to job creation, they can't speak to stable dollar, so they say let's distract you with shiny things, which is fairness, which is an unending conversation. like sex, everybody can have their own opinion on the subject. >> did he just say sex? more with that man who has republicans including mitt romney, pledging to never raise taxes. ♪ i've discovered gold. [ female announcer ] roc® retinol... the gold standard in anti-aging. clinically proven to give 10 years back to the look of skin. nothing's better than gold. [ female announcer ] roc® retinol correxion deep wrinkle night cream.
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when you open a new account or roll over an old 401(k). so who's in control now, mayans? all right. today when we talk about taxes, the debate in washington has started to center around what is fair. it's also important to remember the real point of taxes, the way they started income taxes was to pay for things. fairness wasn't central to the discussion when taxes were invented. christine romans has a look at what you get for your tax dollars. >> reporter: the government took $2.3 trillion of your money in fiscal year 2011. so what are you getting for all that tax money? for starters, it's not enough. the federal government spent
$3.6 trillion meaning they had to borrow $1.3 trillion. don't worry. if you pay taxes, you'll be paying the interest. again, where did that money go? let's start with medicare, medicaid and children's health insurance program. that's the biggest slice of the pie, the blue right here. social security claimed one-fifth of the total budget, that's yellow. the wars in afghanistan and iraq cost $159 billion last year, a fifth of the total spent on defense. now, spending on safety net programs designed to keep americans out of poverty dropped last year. the interest on our debt amounted to about 6%. that's the purple wedge there, six cents of every dollar. the remaining 19% was split between infrastructure, science education, benefits for retired federal employees and veterans. that's how your tax dollars are spent. ali. >> thanks, christine. if you're waiting for tax reform don't hold your breath? why? lots of reasons, of course.
but it might be because one of the most powerful fiscal conservative voices in this country won't allow room for compromise. and he's not an elected official. his name is grover norquist, president of americans for tax reform. that's a group which has secured pledges to never raise taxes from likely republican presidential candidate mitt romney as well as almost all the republicans elected in congress. he warns those who break the pledge will pay a political price. grover and i sat down to discuss his new book "debacle, obama's war on jobs and growth." what we can do now for our future. first i wanted to know where grover norquist stands on all this talk on tax fairness. >> a lot of impetus to impose the income tax, the personal income tax in the united states, was imposed on people whose income was in today's dollars over $10 million a year. it was going to hit just a few. i would argue the reason why left of center politicians who want the government bigger play
to fairness. they can't play to economic growth, they can't play to job creation. they can't speak to a stable dollar. so they say let's distract you with shiny things, which is fairness, which is an unending conversation. like sex, everybody can have their own opinion on the subject. there's no right and wrong on fairness. >> brand-new poll taken april 13th to 15th favoring a 30% tax for the very wealthy, millionaires, the buffett rule. 90% of democrats support the idea. 69% of independents. even a majority of republican registered voters who were polled -- and as you know, these polls tend to be very accurate -- more than half of registered republicans actually support the idea. why? >> polls look like that in washington state at the beginning of the campaign to impose an income tax on the rich. as they had a conversation the numbers flipped from two to one for it to two to one against it.
you take other polls, rasmussen has done an entire book on polling on taxes. as first glance some of the questions he asked looked like that. you go oh, that's disappointing. then you ask the second question, if they raise the taxes on rich people, are they coming after you next? >> that's a little bit of fear mongering. why is that the logic it would be the case? >> minimal tax, personal income tax. >> there are people that point to you as the man behind the inability of elected officials to soften their positions and negotiate and compromise in order to get deals done because they are worried about what will happen because they signed your pledge. frequently a few say they no longer feel bound by your pledge because it doesn't let them get work done. if we're back in the mixed scenario after november, are you going to loosen the reins and let stuff get done? >> that was the question people were asking a year ago. all of 2011 we had that discussion. some said we can't get spending reduced unless we give democrats tax increases. some of us were old enough to
remember 1982 and 1990, you put tax increases on the table promises of spending reduction evaporate, disappear. '82, taxes went up, spending didn't go down $3. it went up $2 for every tax increase. '90 it didn't go down, it went up. in both cases you not only didn't get as much spending restraint as promised, you got none. you got negative spending restraint. what happened in 2011, $2.5 trillion in spending restraint over the next decade. you have to police that but you would any agreement and not a single dollar in tax increase. >> in 2008 governor mitt romney said if you bail out the auto industry, you can kiss it good-bye. i spoke with the man behind the bailout this week and found out what he thinks more than three years later. >> they were fundamentally wrong. mitt romney in saying there was some private sector alternative was fundamentally wrong. >> will romney's words cost him a key battle ground state in november?
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when president obama took office in 2009, the american auto industry was losing billions of dollars a year. gm alone lost almost $31 billion in 2008. now, this week i spoke with steven ratner. he was the man the president picked to be the czar that would save the auto industry. >> when i took the job, i wasn't at all sure we had a solution to it, but i finally convinced myself i couldn't make it any worse and therefore i'd give it a try. i did satisfy myself pretty early on it was an important role for the domestic u.s. auto industry. >> pretty incredible when you see where it is today, obviously ford leading that pack to be in better shape but they were in better shape then anyway. but to see what american carmakers have managed to come up with in the last few years with the government's help. kind of impressive. >> it's sad but it's true it took a crisis. the changes that were instituted partly at the government's
behest, partly by the companies themselves were only possible because there was a crisis and the president was able to say to every constituency, you all have to sacrifice. the uaw sacrificed, the creditors, the spa suppliers. it took this kind of crisis to work. >> with the benefit of time, what would have done differently in those deals? >> i don't think there's a lot we would have done differently. i have said publicly that even a little more sacrifice by the stakeholders might have been a good thing. i wish we had a quicker, clearer management plan for general motors than having several different ceos. but by and large, i would say modestly this worked out as good as we can imagine. >> ratner said it took a crisis to turn this industry around. i want to show you how bad it was and remarkably how good it is now with all the big three profitable. start with bottom line. general motors lost $31 billion in 2008. look at 2011, they're up $7.6
billi billion. ford in 2008 down $14.7 billion, 2011 up $20.2 billion. look at chrysler, the 2006 numbers, down $660 million. we don't have 2008 numbers because chrysler paid a private equity firm to take the debt off its hands. but look at 2011, up $183 million. not anywhere close to their competitors but in the right direction. let's look at the number of employees. that was part of the president's calculus, too. look how many jobs would have been lost. in 2008, 243,000 people were employed by general motors. ford employed 213,000 people. chrysler, again, we don't have numbers for 2008, but in 2006 they employed nearly 81,000 people. in choosing to bail out the auto industry, the president had half a million jobs at stake. that's only the automakers. doesn't include suppliers or dealerships or all those businesses that exist to supply
those towns that make cars. there were plenty of critics about auto bailout including governor mitt romney who argued that a structured bankruptcy could have achieved the same result without the massive cost to the u.s. government. i asked steven ratner about that. >> they were fundamentally wrong. and mitt romney in saying that there were some private sector alternatives was wrong. there were only really two choices for the company. one was some version of what we did. it didn't have to be exactly like this. the other was letting the companies liquidate. there was no private capital. they would have closed doors, fired their workers and gone out of business. >> nowhere in america is car manufacturing more important than in michigan, a battleground state that could decide the next president. let's bring in jim acosta, cnn's national political correspondent. the president bailed out the auto industry. it's very popular in michigan. he's not afraid to take a jab at
his likely gop rival governor mitt romney who was against the bailout very clearly but still has deep roots in michigan. his father, george, was governor of the state. he was born there. how is this playing out in michigan? >> ali, it was surprising to see the president go to michigan this early on. if the president loses michigan which you said is a battleground state, but it is a sort of leading democrat state. then things don't look too well for the president come this november. it was not surprising in reaching out to voters in michigan that the president would highlight the fact he supported the bailout and his likely opponent mitt romney did not. as a matter of fact, back in november of 2008, the former massachusetts governor wrote an op-ed in the "new york times" titled "let detroit go bankrupt" in which he voiced his opposition to the bailout saying it would basically wipe out the american automotive industry. while the president didn't mention mitt romney by name in dearborn this week, it was no secret who he was talking about. >> jim acosta, good to see you,
thank you for reporting for us. next economists blame president obama at high gas prices. the president pointed his finger at wall street. i'll tell you why his argument doesn't hold up. and congressman dennis kucinich joins us. >> it's time to get serious about the rising price of gasoline. and it's time to get serious about investing the future energy needs of this nation. >> i'm going to guess congressman kucinich is going to try to prove me wrong between oil and speculation and gas prices. [ leanne ] appliance park has been here since the early 50s.
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who may be manipulating prices. the president is proposing a plan that would boost oversight of trading and oil futures, increase fines on people found guilty of manipulating the price of oil and raise the margin requirement for trading oil. in other words, traders would have to put more money down to make a trade so they have got more skin in the game. that might discourage people from speculating as much as they do. the president is right to want to rein in the oil markets. he's wrong to suggest that somehow doing so is going to lower the price of gasoline. to be fair the president isn't claiming that prices would drop overnight if these changes were made, but i'd be surprised if these proposals have any impact at all on gas prices. congressman dennis kucinich of ohio disagrees with me and he agrees with the president on this. he joins me now. congressman, always a pleasure to talk with you. one never suspects a political motive behind the things you say. so i'm happy to have you here
challenging me. but draw me a line, please, between cutting speculation, manipulative speculation out of the oil market and lowering gas prices in america. >> we know, ali, there is a speculative premium. a few days ago i listened to your report, you said as much as $10 to $20 of a $100 base for a barrel of oil could be connected to speculation. i had senator coburn in front of a committee i'm on. he said it could be between 15 and $18. let's use your numbers. there is a speculative premium. no one denieses that. the question is what impact does it have on a gallon of gas? >> right. >> $72% of the price of a barrel of oil is related to cost of crude. if you take the 20% as the top amount that might be subject to speculation, that could easily
be translated into saying as much as 14% of the cost of oil could be directly connected to oil speculation and that translates to a higher price at the pump. there is a connection between speculation and the cost of gasoline. >> you come from a state heavily, heavily hit by housing crisis. >> right. >> can't you make the same argument for a house? there's an amount of the house that's connected to the land and the building material in that house and some of it's speculation. there's a speculative premium in oil. >> it's not the same thing. >> there's always going to be one. >> it's not the same thing. as a matter of fact, though, i will take your argument about how the lack of discipline in markets with respect to credit default swaps actually ended up damaging the housing market in the united states because there was no regulation. now, the question the president raises is we'll increase
regulation of the oil companies lessen their speculative fervor. that's certainly the hope. but the futures trading commission this week, ali, put a new rule down that effectively gave the oil companies the ability to retain their -- well, to retain their ability to deal in derivatives without having to comply with derivative deal er there is a little bit of a contradiction here which needs rules. to be explored a little more with those that have a little more knowledge about this than i do. if we want to get the commodity futures trading commission back in the game for consumers, we should be zeroing in on what market mechanisms enable speculators to be able to profit. >> so congressman, look, there's always been speculation. there's no question about this. we have in this country for 15 or 20 or 25 years whittled away at important regulation. we have no disagreement on this and no disagreement with the
president about the fact these rules he wants to impose are probably good. they are necessary and probably good. let me ask you this. how do you -- i think the word speculation is misused in this whole discussion. because we have speculation anywhere that there's a market. we're looking at manipulative speculators, right? people big enough and nefarious enough to affect the market for their own gain in a way that's damaging to others. how do we find these people? who are we targeting? who is this boogie man? >> you come up with an interesting assessment. and that is there's manipulation, which is one category of trying to affect the laws of supply and demand and the other is speculation which capitalizes on some actions by government. for example, the government hints it's going to attack iran, prices go up. speculators then say we're going to guess that the price down the road of oil is going to go up. they help drive the price of oil up now. it's not related to what it's
going to be in the future. we're really paying a premium on it now so the government does have a role in tempering speculation by being a little more cautious in its prediction about when it's going to take military action that might in some way interfere with the law of supply and demand. i'll grant you that. with respect to manipulation, there is manipulation going on where we see the current trading environment being able to jack up the price without regard to the laws of supply and demand. that's what happened right now. you have lower demand as you pointed out a couple days ago but we do have higher prices. so in that particular mathematical equation between low -- between low demand and high prices, that's where you have the room for manipulation. >> let me ask you this, congressman. by the way, i always appreciate somebody who takes on my
argument by watching my own reports and holding them against me. i respect you for that. when we look at housing, we look at everything that went wrong, valuations were done incorrectly, disclosures were wrong, people mislead clients, clients able to get mortgages without disclosures. a whole lot of things were wrong and we realize we needed to regulate the better. but we never wanted those regulations -- we never designed them to make the price of houses go up or down. isn't there something wrong with the president working on better regulating the oil trading industry with an actual aim of trying to make the price go down? isn't that just an interference with markets? >> well, prices should somehow conform to the laws of supply and demand. if the laws of supply and demand are being adversely affected by speculation or manipulation, it's the appropriate role for government look at that. when we're talking about housing, we saw the fed look the other way while speculation was
going on with credit defaults and other instruments. the fact of the matter is, the price of housing was being bet to go higher and higher, yet the american people weren't really seeing any direct benefit unless they happen to sell the home at the moment, which many could not. so what happened is when the price of housing collapsed, people lost their highest investme investment. everyone has to have a roof over their head. not everyone is using a particular type of car. we have to do something about stopping the speculation in the markets and we also have to look at the role of the federal reserve here because the feds look the other way. they were cops on the beat who looked the other way while prices in housing were going up. frankly their dollar policies have not really contributed to price stability in oil markets. this is another issue that really hasn't been getting much discussion. >> we'll discuss that. you're absolutely right about that. it has to do with it. a dollar premium in oil. representative kucinich, thank you very much for having a good
hearty conversation with me about speculation on oil. dennis kucinich, representative from ohio. china's economic growth is slowing down. should americans applaud or panic? what does it mean for the global economy, u.s. markets and your money? [ man ] may ford. hi, yeah. do you guys have any crossovers that offer better highway fuel economy than the chevy equinox? no, sorry, sir. we don't. oh, well, that's too bad. [ man ] kyle, is that you? [ laughs ] [ man ] still here, kyle. [ male announcer ] visit your local chevy dealer today. right now, very well qualified lessees can get a 2012 equinox ls for around $229 a month.
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the international monetary fund said this week the outlook for the global economy has improved but warned there are still major risks that policymakers have to address. good news for the u.s., imf raised its growth outlook. for europe things still remain bleak. even emerging economies, the largest, of course, being china have cooled. cnn's eunice un takes is inside. >> weaving through the crowds at an employment fair in beijing, she's looking to land a job, not just any job. "i'm considering the company if
the job is relevant to my major and the hours. i cherish my personal time. gone are to days of the docile worker. they're demanding more even as the economy slows down. china's economy slowed down. the slowdown has yet to worry candidates at the job market. it's spooking investors concerned about a possible hard landing here after year of double digit growth. the government has been on the campaign to cool the world's second largest economy, tightening lending to rein in rises prices. everyone is watching housing price in china. everyone is worried that it's a bubble and could come crashing down. china's real estate is a driver of global growth. accounting for a fifth of the economy. helping to lift prices of the world's steel, cement and other materials. lending restrictions and other measures are having an effect in more than half the cities
tracked by the government like this city where prices are down 9% from a year ago. and property agents resorted to giving away beemers to get customers to buy new apartments. "people are excited and coming because of our giveaway." after all, it is a bmw. their fears the real estate market could burden with bad debt and limit the ability to stimulate its economy at a time when manufacturers are seeing fewer orders from europe and struggling global growth. however factory workers remain optimistic. "we already have a house" she says. "i'm thinking of buying a car." one of the many chinese joining the country's consumer class. eunice yoon, cnn. for more on china i'm joined by peter navarro, professor of economics and public policy at
uc irvine. he's also the author of "death by china." >> good to see you in my home turf. >> great to be here. let's talk about this for a second. when china's economic growth slows down, markets here react badly. investors don't like that. they feel that with slower growth in other parts of the world, we depend on india, we depend on china to keep on chugging faster. do we gain or lose from china slowing down a little bit? >> ali, we lose. what it tells us when china is slowing down is that china continues to have the structural problem that is killing our own economy. that structural problem is that it's heavily export dependent. in order for china to grow it basically over the last ten years has flooded the united states and europe with illegally subsidized exports. >> when you say illegally subsidized exports, what do you mean? >> run them down. china manipulates its currency
which acts as a tariff on our exports. >> keaches it lower than it should. >> right. >> doesn't let it float freely. >> stops cheap at walmart. they engage in illegal export subsidies. when they send something here, they give the producer an extra amount of money. so if a company in akron, ohio, is trying to compete with something in chungdu they can't do that. so we lose jobs there. they steal our intellectual property, which lowers their cost. a pharmaceutical or automotive firm here can't compete fairly. >> you're conveniently missing one point. >> sure. >> and that is that there is one other beneficiary to everything else that china is doing. >> the consumer. >> the consumer. >> our stuff is cheap because of all those things you talk about. >> here's what every consumer needs to understand when they walk into a walmart. the stuff is cheap at walmart but there are consequences. when people go in walmart, pick up a good and says, made in china, they have to think i'm going to lose my job or my
friend's going to lose their job if i keep buying this cheap artificially subsidized goods. if i buy that good, that money is going to go to fund what is essentially a very rapid military buildup. if i basically keep buying that cheap stuff, we won't have anything in our community -- >> what can you do to convince people? because they aren't making those decisions. particularly in a tough economic environment they are buying the least expensive things they can buy. >> we have elections. i hope 2012 will define the issues. we tried everything else in terms of getting going with keynesian stuff, monetary policy, fiscal, i think the best jobs program in america is trade reform with china. >> always a pleasure to see you. >> good to see you. >> peter navarro a professor at uc irvine and the author of "death by china." did you know doctors in china are using 3-g smart phones to
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you own a phone, pretty much everybody does, it's probably got a qualcomm chip in it. they'll bring the 4 chip to the market. it will drive just about any high-tech mobile device that comes out in the future. in china, two-thirds of all internet users access the web via their mobile phone. that's about as many people as live in the united states. i spoke with qualcomm's ceo paul jacobs who says the biggest growth is in the emerging markets. >> people are talking about 1 billion smartphones shipped by
2014. we're focused on both the high end and low end of the market. we're seeing the countries like china and india grow very rapidly. demand smartphones. we're building chips for those. >> qualcomm reported record results for this quarter, but said filling new orders is presenting a challenge because of shortages of machinery to build those chips in taiwan. i asked him if the slowdown we're seeing in europe, and china, the economic slowdown is having an impact on sales. >> people don't see phones anymore as a luxury, they really see it as a staple, and therefore it's a little less sensitive to economic downturns or slowdowns. we are seeing very strong growth in both china and india. and india, it's been a little later in getting its 3-g, now 4-g networks online. but these are now happening. so we are seeing strong growth. and what happened for qualcomm in india in particular is we
used to sell at the very low end of the market. now we're able to sell across the entire tier. so higher end and lower-end devices. so it's really opened up a lot of the market to us. and china also has been very strong. what's happened there is the operators are really competing with each other to get people on to mobile broadband. and as we know in many of these markets, the phone is the only way people are getting onto the internet besides having to go to an internet cafe. it's really changing people's lives dramatically. >> changing the world for good is a big part of the qualcomm foundation. that's part of qualcomm. and why it's part of the 10 million x prize competition. the x prize seeks to challenge the world's grand challenges by innocent vizing innovation. i asked jacobs about his vision to bring health care to the palm of your hand. >> there's a lot of companies out there building these different kinds of sensors that can monitor different things about your body. what we're doing with the x prize foundation is to get them
to pull this all together, so that teams come together from around the world, and compete to build a little box that you can hold, and might talk to different kinds of devices, sensors that you might have on you, or take samples of blood, or spit or things like that, and diagnose diseases. and do it so that somebody, say a lightly trained health professional in the emerging market can diagnose people, or even a consumer in a developed market might be able to diagnose themselves. >> paul jacobs is just one of those people participating in the engineering conference for the next x prize. it's a fascinating gathering of entrepreneurs and big idea people. all assembled to identify the next big grand challenge that can and should be tackled. it's also why i'm in los angeles. i'm excited to be a part of it. next week i'll tell you more about a new era in private space travel that's already under way, thanks in part to the folks at the x prize foundation. you'll know that in 2004 they
awarded $10 million to the makers of spaceship 1. the first privately manned aircraft. coming up next on "your money," my close call, and those i have to thank for it. thank you so much, i appreciate it, i'll be right back. they didn't take a dime. how much in fees does your bank take to watch your money ? if your bank takes more money than a stranger, you need an ally. ally bank. no nonsense. just people sense.
part of my job as the chief business correspondent at cnn is keeping the airlines honest about fees and fares and customer service. sometimes we forget that what they do is to get us from place to place safely. i fly more than most people i know, and on thursday i had my second emergency landing. it was a tough one, it was a flight delta 1063 from jfk to l.a.x. within moments of that flight taking off, it looked like we
had a bird strike and the pilot had to turn around and bring that plane safely in. i want to give a shout out to the crew on delta 1063, the pilot and co-pilot and those flight attendants who kept everybody on that flight safe, and comfortable, and i want to give a shout out to air crews that do that every single day. every time they take up one of those planes and land it, they're doing us a service. so while we sill have complaints about them losing our baggage and charging us extra money and delayed flights. they keep us safe. and they move a lot of us around. so thanks for that. and thank you for joining the conversation this week on "your money." you can watch us every saturday at 1:00 p.m. eastern and sunday at 3:00 p.m. stay connected with us 24/7 on twitter. you know i read every single one of your tweets, and even respond to some of them. have yourselves a great weekend. -- captions by vitac -- www.vitac.com you're in the cnn newsroom. i'm