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CNN MONEY
Driverless Cars Possibly On The Market in 2015; Google Chairman Eric Schmidt Discusses Privacy Protection
Aired October 4, 2014 - 14:30 ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
CHRISTINE ROMANS, CNN HOST: America's public health system facing the ultimate challenge, stopping the spread of Ebola. Does it have enough money to succeed? I'm Christine Romans. This is CNN MONEY.
(BEGIN VIDEO CLIP)
ROMANS: Ebola diagnosed for the first time on American soil.
UNIDENTIFIED MALE: This case is serious.
ROMANS: America's public health machine calling for calm.
UNIDENTIFIED MALE: This is not West Africa. This is a sophisticated city.
UNIDENTIFIED MALE: There is no doubt in my mind that we can stop it in its tracks.
ROMANS: But stopping it won't come cheap. America has already committed $263 million to battling the deadly disease, and the U.S. military effort to contain Ebola in West Africa could cost $1 billion.
BARACK OBAMA, PRESIDENT OF THE UNITED STATES: If we take the proper steps, we can save lives.
ROMANS: On Wall Street, investors are bidding up bio-techs with experimental treatments, but it's the government, not the private sector charged with preventing Ebola's spread. And the budget battles of the last two years may have hurt its ability to respond.
UNIDENTIFIED MALE: The money that you have for initiatives such as the development of vaccines and the development of drugs suffers.
UNIDENTIFIED MALE: If we want more vaccines and more therapeutics, there will have to be more funding.
ROMANS: Ebola is here. Is America ready?
(END VIDEOTAPE)
ROMANS: Dr. Sanjay Gupta, CNN's chief medical correspondent joins me now. And Sanjay, America has the biggest health care system in the world. And 16 percent of the American economy is health care, 16 cents on every dollar is spent on health care. So why does it feel like they were caught flatfooted by a disease we all knew could come here?
DR. SANJAY GUPTA, CNN CHIEF MEDICAL CORRESPONDENT: I think there are two answers to this. One of them is a money questions. When you think about all these dollars that are being spent on health care, how much of that is being spent on things that prevent problems down the road? We are not very good at that part, part of it overall. So for example, the Centers for Disease Control and prevention, $600 million shorter over the last four years than in the time period prior to that. So that is discretionary spending.
But also the specific preparedness and response budget is about $1 billion less now as compared to a decade ago. It's interesting, you just pointed out Christine, they are going to spend about $1 billion on this Ebola outbreak in West Africa and here in the United States. We are down $1 billion over 10 years ago. So that is part of the problem, I think.
But if you look at the issue this past week, Christine, and the not disclosing, for example, the travel history for this patient and as a result he was out and about two days still sick, things like not cleaning up this woman's apartment with all the decontaminating the areas over there, that's not a money issue. Part of that is just a leadership issue. Part of that is human error. So I'm not sure how much money can fix those things. I think it's a combination of both, Christine.
ROMANS: That's a really good point. Let's talk about vaccines. Why is there no Ebola vaccine available right now?
GUPTA: The numbers have been small. Up until this past year, you talk about an infection that really is in central Africa or West Africa, a small number of people roughly. So frankly pharmaceutical companies weren't that interested in creating a vaccine that can be very expensive to create for such a small number of people.
The people that were interested in it, interestingly, were the Defense Department because they worried, could Ebola potentially be a weapon of bioterror? So if you look at the funding and where it was coming from in the past, a lot of it was coming from the military.
But that is changing obviously. It's changing because the numbers are higher and it's changing now because you now have at least one patient here in the United States and there is probably going to be more that have been diagnosed with Ebola in the United States. So I think that's going to change and a lot of that is going to come I think from the private sector.
ROMANS: Dr. Sanjay Gupta, thanks Sanjay. And a great transition to CNN MONEY's Cristina Alesci joins me know. Cristina, forced budget cuts affecting both the National Institutes of Health and the CDC. Do you think that's hampering America's response to Ebola?
CRISTINA ALESCI, CNN MONEY CORRESPONDENT: So often we talk about budget cuts and the sequestration in terms of dollars and cents and politics. This is where the rubber meets the road. We had the NIH, the National Institutes of Health, top researchers say these budget cuts have dramatically reduced our ability to fight this outbreak, right? The CDC's unit for responding to the outbreaks, $13 million less than they had the year before.
So it's really critical that the government thinks about the outcomes and the ripple effects of sequestration. But there also reports that it doesn't matter how much money you throw at the government because they can't get these drugs approved fast enough.
ROMANS: So let's talk about fast-tracking these. The U.S. now directing some money to fast-tracking some of these Ebola drugs. Is that going to help?
ALESCI: That's exactly it. Some of that money is $58 million that the Congress and President Obama authorized to go to this agency underneath the department of Health and Human Services, and they are responsible for ushering drugs through the approval process, and more importantly, helping to produce the experimental drug. A lot of focus of ZMapp.
ROMANS: They don't have any for the patients right now.
ALESCI: They are completely out. That's what the National Institutes of Health are saying. But it takes a lot of time, right. The antibodies are grown into tobacco plants which take a couple of weeks. Bottom line, you can throw all the money you want at it. It's not going to make the tobacco plant grow any faster.
ROMANS: And we still don't even know if ZMapp is -- if it works. That's the other problem.
ALESCI: No phase one or two clinical trials on this.
ROMANS: Cristina Alesci, great stuff. Thank you.
Coming up, just how hard is it to refinance your mortgage? Ask Ben Bernanke. The former head of the Federal Reserve said the bank turned him down. Have lending standards -- this is ridiculous. Have they become too tough? That's next.
(COMMERCIAL BREAK)
ROMANS: The unemployment rate back below six percent for the first time in six years. That leads our CNN MONEY top five this week. Our CNN MONEY panelists here, Brian Stelter, Zain Asher, and Samuel Burke. And the job market is improving, folks, 248,000 jobs added last month. Look at the trend, a solid trend with an unemployment rate now at 5.9 percent.
But on the local level, Americans still say these jobs don't pay enough. Wages in fact are flat. This week the mayor Bill de Blasio in New York expanded New York's living wage law. What is that? Employers and buildings to get city subsidies now have to pay workers $13.13 an hour. The fight to raise the minimum wage has moved from the federal level to the cities and states, and I think it's really interesting even when you have a strong jobs report, Brian Stelter, it just brings up this idea of an economy that is not working for everyone. Here it is strong and for the people who recently unemployed or in the labor market. For all those other people who are screaming for a higher minimum wage, it's still the same old --
BRIAN STELTER, CNN SENIOR MEDIA CORRESPONDENT: The conversation about income inequality has been so pervasive for so long now that it's as if the two debates have been decoupled.
ROMANS: I would agree.
SAMUEL BURKE, TECH BUSINESS CORRESPONDENT: And the conventional wisdom has really shifted in the country even among academics. For so long people were teaching in econ 101 raising the minimum wage is bad. Text books are being rewritten.
ROMANS: I think this conversation has shifted to who is going to raise it. It's Seattle, it's Los Angeles, it's certain industries or places like New York and subsections. At the national level feels like the debate is dead, except there's a lot of action happening with it.
ZAIN ASHER, CNN BUSINESS CORRESPONDENT: Even though you had solid number of 248,000, a lot of people are wondering, when is the Fed going to raise rates? The bottom line is they cannot raise rates in this country until wage growth outpaces inflation. Plus you have labor participation falling dramatically, and you want to see people not being demoralized and actually go out there and find at job.
ROMANS: That's why it's so difficult for people it say the job market is getting better because we all know someone for whom it is not getting better, and that is real messaging problem that the White House I'm sure tries to be careful about crowing about these number too much because it makes them look out of touch.
In this country we have seen fast food workers hit the streets to protest low wages, but in Hong Kong a very different fight. Thousands gathering this week to demonstrate for democracy as China threatens to chisel away at the region's autonomy. Protesters have remained peaceful, remarkably peaceful despite tear gas and pepper spray early on. The United States has been pretty quiet, really quiet on this. China is a huge trading partner. It's so interesting because Hong Kong is this sort of hub, this major financial hub. Do you think this is something that will have a lasting effect?
ASHER: It's interesting. You mentioned Hong Kong has a huge, prominent role in terms of the global financial system. China relies on it heavily for its banking sector. Then you have these protests hurting the retail sector you're seeing on Canton Road and all these luxury stores being shut temporarily at least. And then the tourism sector is affected as well because seven percent less tourists are now visiting Hong Kong.
BURKE: I was most intrigued this week by Instagram being blocked not in Hong Kong but in mainland China so people there couldn't see the picture. But this is actually part of a bigger story. There's BlocksinChina.net. You can go on there and see where in China different sites are blocked, like Instagram you see got blocked there. Part of the bigger story that's happening to multinational companies in China, the tools that they depend on like Google, Google Calendar, Google Docs so that we can call work together form office to office, there's a noose going around Google there and people aren't able to use that in mainland China.
ROMANS: And look at this protest. And people are helping each other, cleaning up the trash. The graffiti has to be in chalk so that they don't get in trouble. It's remarkable. It's the politest protest I've ever seen.
BURKE: Which helps them in the press coverage of their movement.
ROMANS: Absolutely it does. You're right.
More than 80 million of you who are J.P. Morgan customers, your accounts were hacked. Contact information for 76 million households, seven small businesses. The bank says its customers are safe. The bank telling us "Your money is safe." Hackers didn't get any financial information, there's not many signs of fraud yet. But customers should be on guard. There is still cash in selling email addresses and other personal information to scammers. Another huge security breech here. Are we overreacting? When you look at the numbers, basically half of American households, their information is out there on the black market.
BURKE: You can't overreact to this. Even though people have the fatigue, those e-mail addresses can be used to send you phishing attacks, used to guess your password. Don't forget, that's how that whole Apple iCloud naked celebrity photo thing happened was people use those little bits of information to guess your password. It's a huge problem.
ROMANS: You said fatigue.
STELTER: You are starting to make me care because I felt so desensitized by the series of revelations. Even though the numbers are so big, the stories start to all blur together unfortunately.
ROMANS: It feels like every week there is a major hack, a major retail hack this year, and so I do see how we're getting kind of -- I don't know. All of our information is out there. Why should we worry?
ASHER: And J.P. Morgan, just compared to how Target handle it last year, J.P. Morgan has really come out ahead of the problem. Target last year, they could have hid information. It was 40 million people affected, and the next it was 110 million. Then we didn't know where the pin data was impacted at all. You had the CEO resigning. J.P. Morgan really handling this much better.
ROMANS: Let's talk about the spectrum of good actors and bad actors in terms of cyber security. The banks I think spend a lot of money on cyber security because so much is at risk.
BURKE: J.P. Morgan says they are going to spend $250 million next year trying to defend themselves from these cyber criminals. So if you think it doesn't affect you, eventually all of us are going to absorb that cost.
ROMANS: That's right. We all have to pay for it, that's absolutely right.
From hacking to streaming, Netflix is doing its best to shake it up the media landscape. In a first for Hollywood, Netflix users will be able to watch the sequel to "Crouching Tiger, Hidden Dragon" at the same time the movie appears in I-Max. The streaming service also says comedian Adam Sandler will star in four films exclusively for Netflix. Brian, what's going on? There's some change in movie industry, not just television.
STELTER: Once again Netflix says they are acting on behalf of the consumers who want movies to be accessible at home and not just in the movie theater. They are also of course helping to promote Netflix by doing this. To announce Adam Sandler is going to be in four movies is a great promotional moment for Netflix.
ROMANS: Has he had a hit recently?
STELTER: Well, no.
ASHER: That's the thing. I think Adam Sandler is an interesting choice. His "Wedding Singer" days are over.
ROMANS: That was a great movie.
ASHER: It was a great movie, but it was 10 or 15 years ago. Recently he's got, "Blended," "Jack and Jill," "Spanglish," they haven't done so well in the box office.
STELTER: Maybe that's why he was willing to do this deal with Netflix. But it will encourage --
ROMANS: Netflix says some of their most downloaded movies are Adam Sandler movies. People do like Adam Sandler.
STELTER: They can use the data they have from their service to figure out which movies to pick up.
BURKE: All I have to say is watch out, Netflix, because this week I watched the "Transparent" series on Amazon Prime. It is the best series I have ever seen. Jeffrey Tambor, the actor from "Arrested Development" plays the transgender character coming out to his kids at 70 years old. He came into the building this week. I think his favorite moment of my interview with him, though, was getting to meet Christiane Amanpour in the hallway.
(LAUGHTER)
BURKE: It could be a game changer for Amazon. The series is on Prime.
ROMANS: I love it. How tough is it to get a mortgage, to make a hard turn here? The former head of the Federal Reserve, Ben Bernanke, we all know Ben Bernanke right. He says the bank wouldn't let him refinance his loan. He revealed that in a conference in Chicago this week. We all know that lending standards were tightened after the housing meltdown, but, my God, we have gone too far. If the former Fed chief can't refinance his loan. He gets $200,000 a speech or something.
ASHER: It's especially hard for first time buyers. You have one in four people who apply for a mortgage end up getting rejected. Even if you can afford the 20 percent down, even if you have near perfect credit, that doesn't necessarily guarantee you anything.
BURKE: This is why so many people in our 20s are choosing to rent even though maybe we could afford to buy because if Ben Bernanke can't do it?
STELTER: Then we wonder why millennials seem skeptical about capitalism than other demographics. Maybe it's these stories and the environment they live in.
ROMANS: Some of these millennials have great jobs, they are good savers. But I don't want to turn anybody off on the housing market because that's a long term investment and it's really good for you. But Ben Bernanke? Come on, that's ridiculous.
STELTER: That would be a scandal.
ROMANS: That might be a scandal, you're right. Coming up, self- driving cars, could they be coming sooner than we think? A mysterious Tweet from Tesla's Elon Musk is next.
(COMMERCIAL BREAK)
ROMANS: You might not be driving at all in the future. Tesla Founder Elon Musk sent a mysterious tweet this week about time to unveil the D and something else. Could the "D" refer to driverless? It's no secret Musk has his sights set on building a self-driving car. Rival Google and Volvo have jumped into that race, but will Musk be the first to succeed? Here's what he told CNN's Rachel Crane.
(BEGIN VIDEOTAPE)
RACHEL CRANE, CNN CORRESPONDENT: Is the future of the auto industry autonomous? Are these things really going to be a reality?
ELON MUSK, FOUNDER, TESLA: Autonomous cars will definitely be a reality. In terms of the car next year, it will probably be 90 percent capability of autopilot, so 90 percent of your miles could be on auto, for sure highway travel.
CRANE: How is that going to happen?
MUSK: With the combination of various sensors. You combine cameras with image recognition with radar and long range ultra-sonics. That will do it. Other car companies will follow.
CRANE: You guys will be the leader?
MUSK: Of course. I mean, it's our company. If we're not the leader than shame on us.
(END VIDEOTAPE)
ROMANS: Cadillac says it will have one by 2015. Research firm HIS predicts driverless cars will really starting hitting the road by 2025. It has 54 million cars to introduce globally by the year 2035. We will be watching whether Musk's mysterious announcement next week moves that timeline up.
Coming up, a privacy fight between tech titans. Both Apple and Google insist it does a better job of protecting your information. More on that tech tiff next.
(COMMERCIAL BREAK)
ROMANS: Protecting your privacy on your phone and online, companies like Apple and Google are at the epicenter of that. This week the FBI told both companies they may be doing privacy too well. The FBI is worried about the way they encrypted their phones that it could hinder criminal investigations. Both Apple and Google want your trust, and that means sometimes throwing barbs at each other too. No surprise Google Executive Chairman Eric Schmidt tells me his company is the real leader in security.
(BEGIN VIDEOTAPE)
ROMANS: Is Apple doing privacy better than Google, do you think? Tim Cook has made some comments about selling search history to make money.
ERIC SCHMIDT, EXECUTIVE CHAIRMAN, GOOGLE: Someone didn't brief him correctly on Google's policies. It's unfortunate for him. And in the first place, in Google's case, we have always been the leader in security and encryption. Ours systems are far more secure an encrypted than anyone else, including Apple. They're catching up, which is great. And aside from the fact that we show as in Gmail, which we have done for a decade and used the information for nothing, all the other things he implied we're doing we don't do.
ROMANS: And what about Julian Assange who just recently said that your business model is the same as the NSA.
SCHMIDT: I think Julian needs to do a little bit more research from the safety of the embassy. In the first place, the NSA does not have a business model. They are funded by the U.S. government. And second, the NSA does not collaborate with Google in any way, and Google has not talked to the NSA and we organized our system to protect ourselves from unwarranted attacks.
ROMANS: All of these conversations show how privacy is still front and center.
JONATHAN ROSENBERG: Computers said software can get better and better at helping you, helping you make better decisions so you can live a better. And the more we know about you and the more you are willing to share, the more we are able to help you make those decisions and also help you figure out what to do next and alert you to problems that you wouldn't otherwise be aware of.
SCHMIDT: I also think people are concerned. The average person I know had so much of their lives tied up in computers and the Internet and the services that they are worried that information would be misused either by other companies or by the government or by some leaker. We work incredibly hard to keep the information that you give Google private. And we also give you controls to take it away. Notice there has been no significant databases form Google.
HANNITY: There has been a lot of scrutiny on Silicon Valley for being largely white and largely male, especially leadership.
ROSENBERG: There's no question that historically tech has been largely dominated by white males. But Google is doing all sorts of investments to get more women, to try to get more minorities to major in computer sciences and the sciences.
SCHMIDT: Two of the most successful businesswomen in America today work for Google.
ROMANS: That's right.
SCHMIDT: And they are now running their own operations. I knew here, and I remember taking her to the hiring committee, and everyone said we don't need her. And I said, but we will.
ROSENBERG: When the world is changing as quickly as it is today, you need somebody like Cheryl who can come in and say, my goodness, we need to create a different support operation to help us scale, and you get that from a brilliant a generalist who can adapt.
SCHMIDT: The company is about hiring incredible talent and then fitting them into the job later. Our engineers are mostly hired without knowing what engineering project they are going to work on.
ROMANS: What is the goal?
SCHMIDT: We are trying to work on the most important problems in the world, and we are asking people rather than a factor of 10 percent better, make it ten times better. The kind of person who is attracted to work at Google loves that. They want to work at a company where their finest ambitions are at least understood as being possible. We encourage them to try. And if we fail, we say try again.
(END VIDEOTAPE)
ROMANS: Check out CNN MONEY for more interviews with America's top business leaders, plus all the money news that matters most, including stock, jobs and tech. You can find us on Twitter and Facebook. Have a great weekend, everybody.
