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CNN NEWSROOM

Right to Work in Michigan; The Truth About Government Spending; Al Nusra Threatens Assad Regime; Financial Freefall

Aired December 11, 2012 - 11:00   ET

THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.


ASHLEIGH BANFIELD, CNN ANCHOR: Thank you so much, Ted. Hi, everybody. It's nice to have you with us. 11:00 on the East Coast, 8:00 a.m. on the West Coast.

Let's begin here, a threat to the strength of the union. It's playing out moment by moment in Michigan today, one of the most heavily unionized states in America. That state is on the verge of passing something called the right to work law that would make it illegal to force anyone to join a union or a pay union dues if they want to take the job.

You've got live pictures here in front of you from the state capital in Michigan. That's Lansing, thousands of protesters, none too happy with this, challenging this law.

More than 600,000 Michigan workers are part of a union. They belong. And if you do the math with the population, that works out to nearly 18 percent of the state's workforce, much higher than the national percentage, as well.

Our Alison Kosik has been covering this story all morning and the noise level as well as the number of people seems to be growing.

ALISON KOSIK, CNN BUSINESS CORRESPONDENT: That's right. You know, as the day has progressed, you know, there's well over, I'd say, 2,000 people out here. That is short, though, of the 10,000 that was expected.

Inside the capitol, though, there's a lot going on. For one, the vote, the first vote of two expected to happen in the next 10 minutes, at least the process expected to happen.

And if you look at what's going on inside, 400-to-500 protesters are inside, some watching the action on the house floor, others standing around the rotunda, chanting, pounding their fists against this right- to-work bill.

Once again, outside, as you can see, they're holding signs, asking Rick Snyder, the governor of Michigan, to be recalled. Ashleigh?

BANFIELD: And what's the look in terms of timing on all of this? The vote and then what the governor has said he will do, which is sign it as soon as he gets it?

KOSIK: Exactly. So what is going to happen today is once the process begins in the house of voting, there are going to be two bills that are voted on -- one, a vote on public unions; the second vote on private unions.

Both of those bills are expected to pass the house. If they do, the measure will go to Governor Rick Snyder's desk. He is expected to sign it as early as today if all of this transpires as expected. Ashleigh?

BANFIELD: And we've got live pictures beside you, Alison, of the house vote that's going on right now as we speak.

So, what's the reaction? Look, it looks as though this is going to be a fait accompli in many people's eyes. What is the -- well, what are the unions going to do about it if anything?

KOSIK: And that's what I asked -- you know, I basically asked them, this is pretty much a lost cause, isn't it?

And they said, no, it's really not because we want our voices heard, and although we're not going to move these votes today, we're not going to keep this law from going into effect, they say they will have the power, come election-time in two years, to change the landscape.

So they want their voices heard today that, come election-time, they say they will be heard. Ashleigh?

BANFIELD: All right, Alison Kosik for us live outside the state capitol in Lansing, Michigan.

And of course, that state, Michigan, synonymous with the auto industry and union jobs. In fact, it is the birthplace of the influential United Auto Workers or UAW union.

So for Michigan to become the 24th right-to-work state could be considered by a lot of people to be quite a blow, especially to the UAW.

Our Poppy Harlow is live outside, also in the snow, but with the president of the UAW. So take it away, Poppy, and maybe you can get some reaction live for us on the scene.

POPPY HARLOW, CNN CORRESPONDENT: Absolutely, Ashleigh.

Well, this is the birthplace of the United Auto Workers and with me now is Bob King -- he's the president of the United Auto Workers -- to give our viewers some perspective.

When you think union, you think UAW, Michigan and Bob King, so no one better to weigh in on the union perspective for us.

Bottom line, we were just talking. You said, looks like this is going to pass. I know the governor is going to sign it because he told me that on Friday. What does this mean for the workers in the state of Michigan?

BOB KING, UAW PRESIDENT: Well, it demonstrates to workers and really a broad spectrum of the populous that we have to work hard, we have to fight hard to protect our rights.

We want a Michigan that everybody prospers in, not just the bosses, not just the right wing. We want a Michigan for everybody.

And I think you see the turnout today, I think you hear the reaction around the state of Michigan, people don't want the right-wing agenda that's being passed in this lame duck.

HARLOW: Here's my question. The argument that the governor makes and Republicans here in support of this is why not give individual workers a choice to join the union if they want to join the union.

Wouldn't it make you and the leaders of the unions need to present a case to be part of it? Why not give them that choice?

KING: They already have that choice under the UAW constitution. That's -- again, the right wing doesn't put the honest facts out there.

Under U.S. labor law, people have a choice of whether they want to be in a union or not.

HARLOW: That's true, but if you work on the line at Ford or if you work on the line at G.W. -- at G.M., rather -- you have to be -- pay in a large percentage of those union dues. That's the way it works.

KING: Well, yeah, you don't have to be a union member. You do have to pay your fair share.

Just like, well, if you live in a community, you pay for your fair share of the road cleaning, of the police, of the fire. People who benefit by collective bargaining benefit by the grievance procedure. They pay a fair share of the cost of representation.

HARLOW: Bob, is this going to make it harder for the UAW and unions across the state of Michigan to get as many members, get as much money and, therefore, have the same power at the bargaining table?

KING: No, our members are very loyal in places where we have right- to-work. We have some locals that have 100 percent. We've got many that are in the high-90s. People understand the value of the union.

But we're worried about all workers in the state of Michigan. We're worried about the bills that they're trying to pass that impact women's reproductive rights.

This is a very right-wing agenda and we're going to stand up and fight for the rights of workers, the rights of women, the rights of minorities, the rights of everybody in our society.

HARLOW: I want to ask you something. I was looking at the numbers this morning, and when you look at unionization nationwide, it was over 20 percent in 1983 and today it's just turned 12 percent.

I think a lot of people look at Michigan as a symbol of unions in this country. If you have diminished union strength in Michigan, does this mean the beginning of sort of a death of unions in this country? Are you concerned that this is that big, symbolically?

KING: No, I think that unions -- I think that things like this are waking a sleeping giant. I think that workers and working families are tired of losing.

They want a fair share of the prosperity in this state and in this country and I think that's going to help build the union movement.

HARLOW: Ashleigh, any questions that you have for Bob?

BANFIELD: Just one. Mr. King, if you can hear me, I just wanted to ask if there's anything, short of not knowing labor law enough, that the unions can actually do to deprive some of the non-paying members from the rights you're able to put together in the collective bargaining?

Is there anything you can do as an incentive or leverage to get people to pay if this measure goes through?

KING: Well, you know, again, the vast majority of our members in right-to-work states now, a huge majority, do pay their dues. They want to be part of the union.

It's just that this is an attack because we helped elect President Obama, because we stand up for working people.

BANFIELD: No, but the question, Mr. King was, is there ...

KING: We're not going to allow that to happen.

BANFIELD: ... do you have any leverage? Are there any measures that you can actually take against those that decide to opt out of paying to be a part of your union that perhaps they won't receive some of the benefits of the collective bargaining ...

KING: you know, honestly, honestly, I'm not interested in exercising leverage. We do a great job. We think the great job that we do members will continue to -- the vast majority, 98, 99 percent will continue to pay their union dues.

But we have to understand this. This is part of a national framework where the right wing is trying to suppress democracy, suppress collective bargaining, suppress the power of working people.

HARLOW: To jump in on that quickly here, Ashleigh.

Bob, if you think 98-to-99 percent of people that are in a union now are still going to remain in the union, pay their union dues, why are we seeing tens of thousands of people out here? Why are you so concerned?

KING: Because we understand that it's an attack on unions. Right-to- work's about right-to-work-for-less. We don't want union members to have less. We don't -- in states with high unionization, non-union workers make more money. They've got better benefits and better retirement. So, this is about middle-class America. This is about working families in America. To me, really, this is about maintaining democracy in America.

HARLOW: Bob King, thank you very much.

Ashleigh, we're going to continue our conversation and bring you more later.

The house looks like they should have begun voting on these two measures just a few moments ago, so we'll keep you posted live from Lansing.

Ashleigh?

BANFIELD: Yeah, we're watching some of the live pictures, as you talked to Mr. King as well, inside the house chambers in Lansing.

So, Poppy, thank you and, Bob King, thank you as well.

The United Auto Workers union, by the way, a big part of the organization of those people out there today.

As we mentioned earlier, nearly 18 percent of Michigan workers are represented by unions, so if the governor does end up signing any kind of right-to-work bill into law, in Michigan, that state would be by far the most heavily unionized state to do so to date.

(COMMERCIAL BREAK)

BANFIELD: While the standoff continues in Washington on how to avoid that fiscal cliff, there's another really big conversation that's brewing about how each and every one of your hard-earned tax dollars is actually spent.

We got a reality check for you that you may not like to hear. For every one dollar that the government collects, it spends 71 cents of it on the "big four." The big four are Medicare, Medicaid, Social Security and interest -- just interest on the nation's debt.

So, that ain't pretty and I'm sorry to say it's not getting any prettier. In the next four years, those costs will eat up 100 percent of every dollar that the government collects.

These are sad statistics from the government accountability office. No money for defense, nothing for education, food, safety, veterans, the whole shebang. It's basically, in your own personal economy, like spending every cent you earn on your mortgage and nothing else. No food, clothes, no car, you get the picture, right?

The 20-year prediction is even more mind blowing. The big four is set to consume $1.21 for every $1 that you pay in in taxes, which brings us back to the cliff, the fiscal cliff, and how lawmakers can fix this very expensive problem.

Terry Savage is the nationally syndicated financial columnist for "The Chicago Sun-Times." Terry, it's good of you to join us today.

I think my first question is, with most households, we think, spend less, try to earn more and we'll fix our problem and that's essentially what the fiscal cliff is, but it's just too much of these solutions that the fiscal cliff presents. How am I going to word that?

It's too much austerity and it is too much tax increases, at least, for the budget, or for the economy to manage.

So, my question is -- that was very wordy -- how much is too much, how much is too late to try to just stabilize the problem we're in?

TERRY SAVAGE, NATIONALLY SYNDICATED FINANCIAL COLUMNIST, "THE CHICAGO SUN-TIMES": Well, Ashleigh, you've described the problem. Really, it's not just the immediate fiscal cliff, it's this big thing overhanging us.

In my book, "The Savage Truth on Money," I've had that graphic, a few years back now, about how we really are coming to an impasse and, you know, the only way out is economic growth.

That's only way the individual family -- you know, if you have a budget problem, if you could only get a better-paying job. If someone else in your family could work, then you'd solve your problems right away.

The same thing for the United States economy. We need to grow. We won't grow until we have confidence, confidence for business to expand, for banks to lend, for consumers to go out and buy that new house, and we won't have that until we get Congress to act. And that's the critical nature of this.

Sure, there's a debt ceiling coming up and sure there are tax increases and spending cut if we go over the cliff, but the bigger issue is, we're stopping ourselves from finding the solution, which is growing the economy.

BANFIELD: Right, well, if the deficits continue to become a problem and slowing the deficits is a great solution, it's the speed at which we slow these deficits and the manner in which we slow these deficits that I think a lot of people are trying to hammer out.

How do we know the formula for what's a healthy speed and how do we know the formula for what's a dangerous speed?

SAVAGE: All right, look, here's the immediate issue. We had emergency spending of an extra $1 trillion four years ago, that pretty much everybody agreed was needed to keep the economy from going down the drain.

But that emergency spending has become part of our normal spending now and, every year for the last three years, we've spent $1 trillion more than we've taken in in taxes.

Now, there's a big philosophical divide here between those who think the only way for this economy to grow is to get government out of the way and those who think the only way the economy to grow and bring in revenues is for government to help. And that's why you're not getting a compromise here. There's just too great a divide over this big issue.

If they do compromise, which we all hope they will, so we won't go over the cliff, it has to be fair. And if you look at the proposals so far, it's an awful lot about, we'll do the -- we'll make sure that we do the tax increases now and we will cut spending later, which is something we have seen for the last four or five years, only spending keeps growing.

So, there's a lot of mistrust in Washington and it's not helping the economy and that confidence factor.

BANFIELD: Why do we keep hearing some people describe it as a cliff that we're essentially going to go off and die, and others say it's a gently rolling slope, a foothill, so to speak?

Why are there varying degrees on how people see the effects of January 1?

SAVAGE: It depends on whose wallet you're looking at.

Let's just say we go -- you know, do that Thelma-and-Louise thing and they grab hands and go over the cliff, then immediately a lot of people are going to see some very severe impacts.

First of all, if you're working and you get a paycheck, tax rates will go back to the pre-Bush tax cut era, so you get a tax increase. That means higher withholding, less money in your paycheck.

And the two percent social security tax holiday goes away, so at that point you still have less in your paycheck. So, right away, you're going to see that.

You're going to see people, 2.1 million people, with unemployment benefits. Absent a deal, those benefits will stop on December 29th. Another million people will find their benefits ending over the next three months.

Your tax refund? They'll be going back to the old alternative minimum tax, which was designed to make sure that rich people don't get away with too many deductions. Only it will go back and hit the middle class and, instead of getting a tax refund, you may find that you're going to get a tax bill in April.

So, less money in your pocket, less of a refund, more people not getting benefits, that's a recipe for an economic slowdown and so not good for the economy.

And one more thing. We hit the debt ceiling later this week. It's $16.34 trillion. Now, the treasury secretary has said, oh, we can finagle things. We'll borrow money from the trust fund. We can postpone it until February when we might have to stop paying our bills and stop paying government employees. But the fact is, if a corporation did that, they'd be thrown in jail for finagling the books. We've been doing that for a long time. This is very serious.

BANFIELD: If any one of us tried to borrow money behaving the way the federal government has behaved, we would get a big rubber-stamp no on every one of our loan applications.

Terry Savage, it's nice to have you. Thank you ...

SAVAGE: The government can print.

BANFIELD: ... for your analysis.

There's that.

SAVAGE: Thank you.

BANFIELD: Thanks so much.

And just, by the way, as a reminder, the fiscal cliff countdown continues with just 21 days left until we essentially hit it.

(COMMERCIAL BREAK)

BANFIELD: In Syria, one rebel group above all of the others is beginning to emerge as the most effective force that's fighting to overthrow the president there, Bashar al-Assad.

The group is called al Nusra Front. Yes, we did speak of them yesterday.

The analysts are saying these fighters have succeeded where others have failed because of their tactics -- suicide attacks, car bombs, and just their real grittiness and their organization.

But the United States says this group is a direct offshoot of al Qaeda in Iraq and that some of its fighters may have killed Americans in the Iraq war

(BEGIN VIDEO CLIP)

VICTORIA NULAND, STATE DEPARTMENT SPOKESWOMAN: We've had concerns that al Nusra is little more than a front for al Qaeda in Iraq, who has moved some of its operations into Syria.

(END VIDEO CLIP)

BANFIELD: The U.S. administration's main concern is that al Nusra could end up as the dominant rebel group fighting in Syria and maybe the dominant leadership if and when -- if and when -- President Assad is defeated.

And, apparently, as a result, the State Department has now decided to designate al Nusra as officially a terror organization and that makes it illegal for Americans to give that group money or training or weapons.

It's a very odd position to be in, given that we are helping the opposition, at least so far, with some of the training.

Tempers boiling hot, tanks in the streets of Cairo and dueling protesters for and against the president there, Mohamed Morsi. They're facing off yet again this hour. These are the scenes that they're seeing on a daily basis now.

The issue is a referendum on a draft constitution that has been ordered by President Morsi and scheduled for Saturday. This coming Saturday.

Morsi has deployed the army to maintain order and has given them sweeping powers to arrest civilians in the streets.

Reza Sayah is in Cairo outside of the presidential palace. Give me an update on how things are today and if anything is changing or if it's getting any worse.

REZA SAYAH, CNN INTERNATIONAL CORRESPONDENT: Well, for now, Ashleigh, we're happy to report that things are peaceful and calm, but we're going to keep a close eye on the comes hours, because there's certainly there's the possibility of things getting ugly and more violence.

And that's because both sides in this conflict have once again called for mass demonstrations. The opposition factions -- these are critics of the president -- have called for marches that have started and they're going to culminate and end up where we are at the presidential palace in the coming hours.

And in about 15 minutes away from here, that's where you have the pro- Morsi, the Muslim Brotherhood, supporters of the president. They've called for their own mass demonstrations.

Many people relieved these demonstrations are taking place in separate areas because we all know what happened last week when they met here. They came to blows, nearly 700 people injured, several people killed.

Nobody wants a repeat performance, but certainly the possibility, Ashleigh, of some of these protesters crossing paths in the coming hours. And that's why we're here, watching things closely.

BANFIELD: So, Reza, with the vote on the referendum scheduled for Saturday, some of the opposition members have decided to perhaps just boycott it al together, but that ensures that they won't get what they want.

Why not get more people out to the ballot box and actually try to defeat this, if they don't like it so much?

SAYAH: That's what the president says. That's what the Muslim Brotherhood is saying. If you don't like the constitution, go out and vote no. But the opposition's position -- these are the moderates and the liberals -- they reject the entire process. They believe that they were squeezed out of the process by which this draft constitution was written and they want the whole thing annulled and the national referendum on Saturday delayed.

So far, the president is not backing down from his position and that's why these opposition factions back here demonstrating again, Ashleigh.

BANFIELD: Reza Sayah, keeping an eye for us in Cairo. Thank you for that. Back in a moment.

(COMMERCIAL BREAK)

BANFIELD: Seven-point-seven percent. That's where unemployment stands right now in the United States. That's the lowest it's been since December of 2008.

That's progress, for sure, but there are still 12 million Americans who aren't going to work today, or tomorrow, more than likely.

Four-point-eight million of them are considered long-term unemployed and the long-term jobless receive unemployment benefits from the federal government.

But those benefits are set to go away at the end of the year for a lot of those people if we end up going over -- yes, I'm going to say it again -- if we go over the fiscal cliff.

CNN's Kyung Lah brings us the story.

(BEGIN VIDEOTAPE)

KYUNG LAH, CNN INTERNATIONAL CORRESPONDENT: Lis De Bats doesn't call it a fiscal cliff. What she could be facing at year's end is a financial freefall.

LIS DE BATS, UNEMPLOYED WORKER: I don't know. I just wish I wasn't in this situation, but it is what it is. And I could just do what I can.

LAH: Lis De Bats lost her job as a new home sales manager last January.

On an old laptop with a broken cord, she applies for job after job, keeping tracked in a packed notebook.

Averaging 15 applications a day, at age 54, this is the first time she's ever been on unemployment.

She's emptied out her 401(k), her savings and now the last resort. The emergency federal jobless program has kept De Bats in her townhome, giving her $450 a week.

But on December 29th, unless Congress and the White House act, the money stops.