tv Your Bottom Line CNN September 15, 2012 9:30am-10:00am EDT
all of this makes us wonder is the u.s. rome before the fall? good morning, i'm christine romans. movies like "gladiator" depicted rome at height of its supremacy, but the last time i checked the roman empire is ancient history. how does this turn into this? historians tell us the romans, like many civilizations before and after, collapsed under the weight of too much debt, an overextended military, debilitating partisanship and fiscal irresponsibility drove the roman empire into the ground. does any of that sound familiar? the u.s. currently has $16 trillion in debt, up from less than $1 trillion in 1980. driving that debt, tax cuts for the rich, two expensive wars in the middle east and prolific spending to blunt an economic downturn. meanwhile in washington, a congress that goes back to work to do nothing. on top of what we already owe,
there's another $20 trillion to $50 trillion the government will immediate to fulfill its promises on social security and medicare as the baby boomers retire. >> i don't think it's just for the next generation for us to pass on massive debts that we've amassed. >> reporter: and that's not all. at the end of the year automatic spending cuts as part of the fiscal cliff could send the u.s. tumbling back into a recession, a recession that's preventible if our government would act. it begs the question, are we rome before the fall? >> our problems can be solved. our challenges can be met. >> voters will decide in november who they trust to fix what ails america, but let put the election cycle aside for a minute. as u.s. comptroller general david walker spent a decade overseeing how the federal government spends your tax dollars. today he's the ceo of the comeback american initiative. david in, 2007 rather you wrote a piece for the "financial times" warning america that she risks the fate of rome.
it's a piece as widely quoted as it is terrifying. five years later the u.s. is withdrawing out of two expensive wars. is that enough to fix the problems you laid out? >> no, christine. i said three things. one, that we have three similarities to rome, decline in values, decline in political civility, overconfident and overextended military around the world and fiscal irresponsibility. the values in the political problem is worse. we're drawing out of the middle east. we're out of iraq. we're going to be coming out of afghanistan. that's better, but we're still overconfident and overextended, and our fiscal situation is much worse. >> all right. university of california editor peter peopleary joins us. >> christine, i don't see this as rome before the fall but a
lot of neros fiddling. what i see is more of a scenario right after the wall street crash in 1929. if you look at what was happening around the globe then, we basically had a clachts international monetary system as they abandoned the gold standard. now we have europe in chaos and the euro about to implode. we have a budding trade war around the globe, and basically we have a very rapid militarization of a very totalitarian power and in europe germany now is basically the dominant force. once again it's a very unstable equilibrium for our economy. >> what do we do, peter navarro, to make sure that we stay dominant in this new global economy? >> the central fact of our economic life, christine, is prior to 2001 we grew at a rate of 3.5% gdp. since that time we've grown at a rate of 1.6%. the loss of two percentage gdp
points is basically 2 million a jobs a year not created, 20 million over the period. that's what we need right now to put people back to work, and if you look at the drag on the gdp over that period of time it's basically two things related, the trade deficit which costs us much of that and the loss of domestic investment offshore. if we basically balance our trade and we get back to manufacturing things here, get 25% of our workforce working in manufacturing like germany does, we will be a great power again. >> you know, david walker, i don't hear anybody talking about that on the campaign trail. i hear about them restoring manufacturing, but intricacies of how to do that are something that you don't hear because i think you have four-year election cycles for the president. you have every two years you've got people running for something around here. we don't have a long-term strategy, david. >> well, the fact is, christine, monday will be the 225th anniversary of the signing of the constitution, and while we've been in business that long we still don't have a strategic
plan. we don't have a budget, and we don't have performance metrics, outcome-based metrics to understand how we're doing, are we getting better or worse and how do we compare to others? that's fundamental. it's management 101, and, you know, we're living on our past reputation. we need to start taking steps to help create a better future, and we need to hear more from these candidates about substance and solutions on all these issues we're talking about. we're hearing too much sloganeering and mud-slinging. >> it's bumper sticker politics, you know, at a time when we have really, really crushing issues. i mean, just ahead of us, david walker, the fiscal cliff. this fiscal cliff is something that will mean people will lose their jobs. people -- middle class people will get smacked by the amt. people will see smaller paychecks and higher tax bills and you will see a recession. factories will close. that is a certainty if congress doesn't do its job. that's congressional malpractice. >> look, we have a political system today that's dominated by
special interests and career politicians who may or may not have had a real job in their life, but once they get elected they don't, and their primary concern is keeping their job rather than doing their job. >> all right. don't move because we're going to talk with both of you about the thing -- the one thing that we could do right now to make sure we don't go over that cliff, and to make sure that this is america's century again. coming up, if the united states is rome before the fall, which nation stands to be the next roman empire? >> you can't talk about jobs without saying the word china. >> the presidential candidates aren't talking much about china. we will.
>> announcer: meet tom, a proud dad whose online friends all "like" the photos he's posting. oscar likes tom's photos, but he loves the access to tom's personal information. oscar's an identity thief who used tom's personal info to buy new teeth and a new car, and stuck tom with the $57,000 bill. [tires squeal] now meet carl who works from the coffee shop and uses the free wi-fi. marie works from there too. she's an identity thief who used a small device to grab his wi-fi signal, then stole enough personal information to hijack and drain his bank accounts. every year, millions of americans learn all it may take to devastate your life is a little personal information in the wrong hands.
this is identity theft and no one helps stop it better than lifelock. lifelock offers the most comprehensive identity theft protection, period. ordinary credit monitoring services may take 30 days to alert you. lifelock's 24/7 proactive protection would have alerted tom as soon as they noticed an attack within their network, before it was too late. and lifelock's bank account takeover alerts could have notified carl in time to help him protect his money. lifelock protects your social security number, money, credit, even the equity in your home. while identity theft can't be completely stopped, no one protects you better than lifelock, and lifelock stands behind that with the power of their $1 million service guarantee. you have so much to protect and nothing to lose when you call lifelock right now and try 60 days of identity theft protection risk-free. 60 days risk-free. use promo code: be secure order now and get this document shredder, a $29 value free. [♪...]
on all that stuff you buy, the toys, the phone, the clothes. you'll be bringing that stuff home to a house you bore oerd money to buy. mortgage rates are at a 40-year low partly because china is buying up u.s. debt, and when kids compete for the jobs of the future, consider this. china claims it's graduating more than 500,000 engineering students every single year. that's nearly six times as many as we graduate in the u.s. the next president of the united states will deal with a china confident that this century belongs to the chinese. the clothes on your back, the food you eat, the phone in your pocket all from one place. china is on everyone's lips, except the candidates. >> these are very complicated issues, and they can't be reduced to sound bites. >> mitt romney has this sound bite, raising the ire of the chinese. >> day one i'm going to label china a currency manipulator. >> china pegs its currency to the u.s. dollar, making chinese goods even cheaper and u.s. goods more expensive.
and where does president obama stand? >> president obama doesn't want to talk about this issue because candidate obama starting in 2007 talked about china's currency manipulation and how the bush administration hadn't done anything about it. >> and what has this president done about it? >> he's done nothing about it. >> american officials have a long list of complaints about china. intellectual property theft, human rights violations, subsidizing chinese factories, making friends with nations hostile to the u.s., all the while lending us money so the u.s. can run huge deficits. >> they don't say very much as candidates. if they do something they will be tough on china, they will be tigers, but when they become president they become pussycats. >> both candidates have positioned themselves as taking a more assertive position towards china. >> mr. obama touts success. >> we've brought trade cases against china as nearly twice the rate as the last administration.
>> most recently the administration, with the europeans and japan, complained to the wto that china is restricting the sale of rare earth minerals. china controls 98% of this market. used to make technology for our missile defense systems, wind turbines and your smartphone. no question china's rise led to cheap goods for u.s. consumers, but there was a cost. according to the left-leaning economic policy institute, between 2001 and 2010, the swelling trade gap with china eliminated or displaced 2.8 million american jobs. what you're not hearing on the campaign trail will be the first item on the president's desk. >> you've got to figure out how to make the relationship work. in the old days it was less difficult because china was just another one of our relationships out there. today it is the relationship. >> let's bring peter navarro and david walker back in. let's assume china's rise has been very good for the american consumer, but what about the
american worker? can these two candidates talk about restoring american jobs without talking about china? >> no, they can't, and christine, that's why i'm here, in ohio. i'm going to be here for the whole month of september with "the death by china" film doing town hall events and the message simply is the best jobs program is trade reform with china. it's not more government stimulus, and my goal, christine, is to get both candidates to make very specific promises about how to crack down on china's unfair trade practices. i was in mansfield this week. it's a microcosm of our problem. i went to a steel mill. half of that steel mill a few years ago was shut down and shipped off to china, and that's the problem we have in cities like mansfield. i was at wright state university, a couple hundred students trying to find jobs when they graduate, and a gentleman in the front row during the town hall event says he works for a semiconductor company here in ohio, same damn
thing. they took the whole basically company and shipped it off to china. we need our presidential candidates to stand up on this. >> it's not just the factory floor for sort of unskilled manufacturing. you've seen the semiconductor equipment market move over there. >> not at all. >> and i've profiled people and managers of those plants with college degrees still in this country who can't find work so that's very clear. david, i want to ask you this. china has high speed rail lines all over the country. it has seven of the world's ten longest bridges. it has a massive smart grid buildout and more broadband uses of the u.s., canada and mexico combined. they are using, david, the piles of cash we send them to buy their stuff. they are using it to build out their economy, to stimulate their economy. america doesn't have that cash, david, but we do have the rock bottom interest rates. doesn't it make sense for the u.s. to borrow money at low rates to build out our infrastructure and invest so our economy can grow and we can dig ourselves out of debt eventually? >> christine, there's no
question that we ought to be investing more in infrastructure, alternative energy, et cetera, but we need to have a plan to be able to do so. we need to do it in an intelligent fashion. the stimulus program was poorly designed, ineffectively implemented. the u.s. doesn't have a critical infrastructure plan. it doesn't have an energy plan. it doesn't have an environmental plan. we're flying blind. look, china's a problem, but let's face it. the world trade organization has not been effective. it is a lag indicator. we need free trade, but we need fair trade, and while china might be the most acute example, it's not the only example. last thing. you're right that china is buying a lot of our debt, but what's happening and why we have low interest rates right now is because the federal reserve is buying two-thirds or move of our debt. we are self-dealing in our own debt. it is a ponzi scheme, and it is not sustainable over time. >> oh, geez, that's a terrifying thought. i think there are those who would argue us saying the fed is keeping us in the game until we can get the economy growing
enough, david, so that we can get back on our own feet, but point taken. >> short-term gain, i agree. short-term gain, increased risk of long-term pain. the real problem is not the fed. it's that the congress and the executive branch are not doing their job. >> peter navarro, last word to you. last thing either this government, the president or both could do today, to make sure that the u.s. stays on top. >> brand china a currency manipulator. obama has the ability to do that. whoever gets in the white house in january needs to do that. it's the gordion knot that needs to be cut in order to deal with the structural imbalances and get our manufacturing base back at 25% of our women and men making things again, not 9%. >> peter navarro, thank you so. david walker, nice to see boast you. have a great weekend. >> good to see you. coming up. >> what do we want? >> a fair contract? >> when do we want it? >> now. >>. ♪ the union marches on >> teachers on strike in a town run by democrats what.
it means for real education reform. to one's military oath. the same set of values that drive our nation's military are the ones we used to build usaa bank. with our award winning apps that allow you to transfer funds, pay bills or manage your finances anywhere, anytime. so that wherever your duty takes you, usaa bank goes with you. visit us online to learn what makes our bank so different.
when you lost the thing you can't believe you lost.. when what you just bought, just broke. or when you have a little trouble a long way from home... as an american express cardmember you can expect some help. but what you might not expect, is you can get all this with a prepaid card. spends like cash. feels like membership. [ children laughing ] ♪ ...is the smell of salt in the air. ♪ it's the sound a seashell makes. [ seagulls calling ] away...is a place that's beyond your imagination, yet well within your means. find your away. for a dealer and the rv that's right for you, visit gorving.com.
the best guarantee or the of a vibrant middle class is an educated populace. in america, students in the third largest school district couldn't even go to school last week. politics in the way of education. >> this was audio strike of choice. and it's wrong choice for the children. >> he came in and disrespected the teachers in this city. we had a contract from the previous mayor which he aggregated, he basically said you're not going to get the
raise that we were actually contractually given. >> essentially a bunch of educated people can't fix a problem and 350,000 students trying to get an education pay the price. whitney tollson is the founder of democrats education reform. you're known as a value investor, so let's talk about where there's value in the public school system. you got a situation where s.a.t. scores have not budged in the united states since the 1970s and the national test scores have really stagnated as well. where do we find what's going right in education? >> even worse is not only have we stagnated but we're spending twice as much money per pupil as we did about 40 years ago when we had the best system of education. >> so we're not getting more for the investment. >> exactly. we're spending twice as much. it's not that the system has gotten worse. they're getting very slightly better despite a massive increase in spending that is bankrupting many states and cities. and finally, even democrats, who
traditionally are beholden to the teachers unions, are saying stop, the status quo isn't working from a budgetary perspective, but most importantly for the kids and for our nation, sand we have to do things differently. >> you look at chicago. this is the president's hometown, essentially. it is arnie duncan's old school district. he's now the secretary of education. rahm emanuel former chief of staff. these are their friends and the people they support. does that mean there could be a breakthrough in education in your view? >> i think so. i think the fact that it is now democrats that are really taking the lead and trying to shake up the existing status quo -- this is no longer scott walker in wisconsin trying to break unions. these are democrats who believe in unionization, as i do. >> you believe in unionization? >> absolutely. but i don't believe in unions that become so powerful and so arrogant, frankly, and that they take over the system, run it for the benefit of their members and
millions of kids aren't getting education. they need to have any chance in life. >> i'll tell you what they say about you. they say you are among the millionaires and billionaires, dilettantes, trying to talk about education reform, looking at a private sector mindset on the public sector teaching. it's just different results for teachers. why do you disagree with that? >> i would say it's a very self-serving argument. they want all reformers to go away and say hey, this system is working great for us. if you look at what are the trends, more jobs, higher pay, better benefits, greater job security. the inefficiency that's at work here is the adults are very well organized. they vote, and they, in many places, co-opt the other people on the other side of the bargaining table. the school boards and the school systems that ultimately run the system. so there's not a real debate like there should be on both sides of the table, and so the people who normally would be on the other side of the table, people with money and power, have effectively opted out of
the is. they send their kids to private school, so you have a horrible market inefficiency, where the most vulnerable people in our society are the ones who are served worst by a school system and they don't really have the power to take on the most powerful interest group in the united states, the teachers union. >> one thing i think about the teachers is a lot of teachers hear this debate and become defensive. you can be critical of the public school system and not all teachers. 3.2 million teachers, not everyone is the same. >> not at all. their talking point to their teachers is that this is an attack on teachers, and it's not. it's an attack on the behavior of the unions that seem to have job number one for the unions is protecting all teachers, even the ones who aren't getting the job done. talk to any good teacher and they'll tell you the worst thing for them is having colleagues who aren't getting the job done, who aren't even showing up for work somedays, the previous year's teacher doesn't prepare the students to do the next
year's work. so we reformers celebrate teaching, we celebrate teachers, and we think teachers should be treated like professionals, and unfortunately, the teachers unions have in many ways sort of become like the longshoremens union, where they say everything should be driven by seniority and that's crazy. >> it's interesting, because arnie duncan was here last week and he was saying that the unions have been helpful. he's been working with them a lot. very nice to meet you. thanks for coming on again. coming up, it was bread and circuses for ancient rome's upper class. why the decline of the middle class is another warning sign. paperless discount... paid in full discount... [yawning] homeowner's discount... safe driver discount... unicorn discount.
unicorn wearing a sombrero. olé... countless discounts -- now, that's progressive. call or click today. there's natural gas under my town. it's a game changer. ♪ it means cleaner, cheaper american-made energy. but we've got to be careful how we get it. design the wells to be safe. thousands of jobs. use the most advanced technology to protect our water. billions in the economy.
at chevron, if we can't do it right, we won't do it at all. we've got to think long term. we've got to think long term. ♪ that bringing you better technology helps make you a better investor. with our revolutionary e-trade 360 dashboard you see exactly where your money is and what it's doing live. our e-trade pro platform offers powerful functionality that's still so usable you'll actually use it. and our mobile apps are the ultimate in wherever whenever investing. no matter what kind of investor you are, you'll find the technology to help you become a better one at e-trade.
i've been asking whether the u.s. is rome before the fall. i do smell faint whiffs of smoex. 46 million americans on food stamps. 46 million people in poverty. median household income down two years in a row. the wealthy are 288 times richer than the middle. this economy is not working for everyone. we don't have to follow in rome's path, but avoiding the fate of fallen empires requires leadership. congress came back to work last week after five weeksf