economy. now is the time for action. so i want to send a clear message for congress. do not slow down the recovery that we're on. don't muck it up. keep it moving in the right direction. >> steven moore is an editorial writer with the "wall street journal." steven, the president's message don't muck it up. your message is to the voters and you're saying the worst thing they could do for the economy is four more years of president obama. why do you see president obama as a particular threat to this recovery? >> well, first of all, i agree with you the economy is picking up. we're just getting week after week signs of a stronger economy. manufacturing has picked up. we got some good unemployment insurance claims this week which suggests we might get another bump down in the unemployment rate so i agree with you. we're seeing some really nice signs of recovery right now. what i question whether it's durable, whether it's sustainable. and i keep looking at what could happen on january 1st, 2013, with the big tax increase that is going to go up. i do think as we get closer to the end of the year and investors and businesses start to look at that tax time bomb, all bets are off on how well the economy will do. look, the economy is definitely picking up. but we're still five million jobs short of where we were in 2007 and this has still been by far the weakest recovery. >> but we may well be, by election day or shortly before that, where we were when barack obama took office. so it does weaken the argument that he's been bad for job creation. we have to think more broad low about that, which you're doing. no one wants to get in the way of this recovery, but fed chairman ben bernanke reminded us this week of all of the tough decisions lying ahead. >> i've often said i'm in favor of the law of arithmetic. if you want a low tax economy, which has benefits from an efficiency perspective, you've got to make the tough decisions on the spending side. vice versa, if you want to spend more, you have to figure out how to raise taxes and raise the revenues. so i mainly try to urge congress to make sure they're looking at both sides so that there's a balance between the two. >> christopher is the editor of thompson reuters digital. this is the point where you're working out, trying to lose weight, nothing is happening and a few weeks in all of a sudden it starts to kick in and you're saying how do we not mess this up. what is the way in which we don't mess this up. >> actually, and stephen is going to be shocked, but i agree with him. i think that you don't want to increase taxes too quickly. i think in the medium term you are going to have to increase taxes but i don't think you want to do it until the recovery is really in place. the other thing that i don't think you want to do is cut government spending. what's opinion very interesting about the jobs picture is it's been this fine balance of private sector jobs growing, but the reason the numbers aren't looking more robust is public sector jobs have been falling. so i think what you really don't want to do is repeat the mistake that was made in the 1930s, where as the economy was coming out of the great depression, people celebrated too early and decided, okay, now is the moment to balance the budget. that is not the main issue for 2012. this should be the year of focusing on growth and jobs. >> richard quest is the host of cnn international's quest means difference. because he speaks with a british accent, i like to hold him responsible for the europe economy. at the end of the week we saw a threat to any optimism that built up and as usual it centered around greece's inability to make tough cuts and satisfy the conditions that country needs to satisfy to receive a bailout that it desperately needs. everyone in the u.s. and in fact around the world, richard, is desperately worried that it's going to mess up this recovery we've got here. any reason we shouldn't be worried? >> absolutely none. the situation in greece is serious. at the end of last week, the euro zone told greece to go back and redo its numbers and stick to its pledges. greece now feels it's been humiliated so the situation is worrying. the only difference i would say perhaps is maybe greece isn't quite as relevant that it was because people have got used to the idea that it would default or leave the euro zone and familiarity will breed contentment of the situation. to your point, ali, that you've just been discussing about the u.s. recovery, i read a fascinating report this week from hsbc which basically suggests that the recovery we're seeing in the first part of this year is similar to that which we saw last year and could falter and fade and disappear. >> but we've got some real things that are happening. stephen, go ahead. >> okay. i agree with that point. you know, i do think the economy is picking up, but let's not forget, ali, in 2010 and 2011, we saw pickups with the economy and then it drifts back down to very slow growth. so i don't think we're -- i think it's too early to uncork the champagne and for the president to take a victory lap here. >> and i think that's the key point here. we're not looking to uncork champagne but i like my weight loss analogy the best because clearly i'm obsessed with that. the idea that i'm starting to feel something happen from all my hard work, how do i make sure i don't fall off the wagon. richard, the european situation is part of that falling off the wagon because it could derail things. >> it's not just a european situation. you've also got a rising oil price and strains and tensions in the middle east. >> sure. >> you've also got a preoccupation that will take place this year in the united states with the deficit. you've got a crisis of consumer confidence that will come on board when people start to look and see and the election campaign really gets into full throttle later in this year. the unemployment situation is improving, but it is nowhere near perfect. so it's way too soon, ali, for you to be shucking off the clothes, putting on the gym shorts and running round. >> i'll keep the jacket on so you don't see the tank top i've got underneath showing you my six-pack. >> please, ali! we need to see it now. >> well, we need to see the economy's six-pack. where is it most likely to grow? what can happen now, notwithstanding the things we've been discussing, the things that can mess up this slight momentum that we've got, what's the best way to underpin it and keep it going? >> i guess i'll be the optimist today. and the two optimistic things i would say is once a recovery does set in, once you get on that path, the good news is you have a lot of pent-up demand. >> right. >> and the places where i think you could see pent-up demand, once we all really believe in the recovery and it really starts to be real is actually, believe it or not, housing. there is a lot of pent-up demand for housing in the united states. so that is one source of optimism that i have medium term. another one actually is cars. >> we started to see that happen. >> people put off the big buying decisions during the recession. and as the jobs numbers improve, as people -- as confidence improves, you will at some point, i'm not saying it's going to be now, but we will have a moment when there's a real takeoff and suddenly we're going to be optimistic. >> we started to see that in december a little bit. >> yeah, but you're all forgetting that four-letter word that i always bring up on this show and that is debt. when we talk about $5 trillion of debt over the last four years, my worry is that we've built this economy on sand and that the debt is so enormous that very much like what we saw in 2007 when everybody said, oh, everything is going so wonder. everybody is buying homes, but it was an economy not built on a firm foundation. now, i'd ask this, when should we -- i've been in washington 25 years and everybody says don't cut spending now. when? when are we ever going to get the debt down? >> hold that thought. >> i want to answer richard. >> i want stephen to know i know the word he was going to say. after saying it week after week after week it does have an effect. all of you stay there. i've got a personal question for all of our viewers. do you earn enough money now? and do you expect to earn enough in the future? tweet me your answer @ali velshi or stick around and i'll show you which group of americans shocked me with their response next on "your money." americans are always ready to work hard for a better future. since ameriprise financial was founded back in 1894, they've been committed to putting clients first. helping generations through tough times. good times. never taking a bailout. there when you need them. helping millions of americans over the centuries. the strength of a global financial leader. the heart of a one-to-one relationship. together for your future. ♪ let's talk about what young people think about their situation in this economy. it may surprise you to find that 88% of 18 to 34-year-olds say that they either earn enough money right now to live the kind of life they want to lead or they are confident they will earn enough money in the future. this is according to the pew research center. less than one in ten ronespondes claimed that they either don't or won't earn enough. wow. all we think is everybody thinks they hate their situation but believe it or not, some of these young people don't. so chrystia, tell me because you have said you're concerned the world is headed for a few haves and a whole lot of have notes. some of those occupy people will agree with you. is this optimism on the part of these 18 to 34-year-olds that pew talked to justified? >> i'm delighted that they're optimistic but i worry that the world is a slightly harder place than the young people think. two thoughts. one is once you start having a family, that's when things become really difficult. so i think a lot of what we're seeing is people are having families later in life. charles murray has been writing about this really quite eloquently. and that's when it really starts to bite. it's not that bad to be making 15, 20 bucks an hour, crashing on the couch of your friend, maybe even having a good time. but once you start having kids, that is more difficult to do. the other thing which i think will be a big social issue and anyone who employs them knows, they have been raised in this bubble of everyone is above average. they have really grown up at a time when every kid is constantly told you're brilliant, you're a genius, find your delight, the world will be great. and that's a lovely lesson to be taught in kindergarten. i think coming into this job market right now, it's a lot harder to make that work. >> it's american exceptionalism small. >> exactly. >> it's this whole idea we don't have to reinvent ourselves, richard, because we're america and it's great and europe is learning the same lesson, just being who you are no matter how good it was may not be enough to compete with india, china and growing economies. give me your thoughts. >> look, the milleneals are a breed unto themselves. their optimism is unbridled. they are love annual aable and t the same time. they have an ambition to put us all out of our jobs because they believe they can do it better than we can. and they look at those of us over 40 with a contempt that says you guys screwed it up. so are they optimistic? yes. but they will also learn it's not that easy in the world. >> and, stephen, we do have this problem where you mentioned it, still lost a lot of jobs, we continue to. whether it's government custodianship or recessions, the fact is our world is moving towards one where it's globalizing some jobs, high-paying jobs are leaving the united states, have been for a lot of years. we need fewer people to do things and we have many, many unemployed right now. what is our best solution to making a world where those kids' optimism is justified? >> right. well, first of all, let me just assure chrystia i never tell my kids they're brilliant, far from it. i don't think they're above average. look, i'm actually optimistic long term, believe it or not. i do think that there is american exceptionalism and i do believe where we lead the world, ali, is in the area of innovation. we are innovators. we are the steve jobs and the michael dells and the bill gates of the world. we need to create more innovators and entrepreneurs, because in my opinion that's where we beat china, india and japan. we have to be the world's creative class, both in terms of manufactured goods and services and financial products. and look, that's been the whole history of america. so i'm optimistic long term, but i just think we put ourselves in a little bit of a rut right now. i couldn't be happier that these young people are optimistic because that's what america is all about, thinking the future is going to be better than it has been in the past. >> we can all agree on that one, stephen, good to see you. chrystia, always a pleasure. richard, i'm glad you were able to bring your own tie to today's show. richard quest in london. the housing crisis continues to hold back the economic recovery and now the banks are paying up, but is it enough and who gets the help? what is the solution to fixing the housing market long term? stay with us and i'll tell you. yoo-hoo. hello. it's water from the drinking fountain at the mall. [ male announcer ] great tasting tap water can come from any faucet anywhere. the brita bottle with the filter inside. it is the biggest payout to date over america's housing crisis. five of the largest banks will fork over $26 billion to help homeowners who lost their homes due to improper foreclosures. christine romans is the host of cnn's "your bottom line." you've sifted through this, looked at it, talked to people, what does this mean? >> first, people who are very underwater on their loan and are late on their mortgage. so they are in arears, they are definitely in default. those people will be qualified for up to $20,000 in principal writedowns. again, these are nonfanny and freddie loans that are owned pie the servicer. if you're underwater and late, you're going to get principal writedowns. if you're underwater and current on your mortgage, you could qualify for refinancing at these record low mortgage rates. that's pretty important because a lot of people have not been able to do this, they were too underwater. there's a third group of people who will be helped. these are people improperly foreclosed on sometime between september, 2008, and december, 2011. those people will get a check. $1500 to $2000. the big question everyone is asking me, how do i know if this is me? remember, these are nonfannie and freddie loans. you need to go to the website that's been set up by the government for this. get the phone number of your servicer and start working right now. they want to get this money out within three years. >> i've had tweets and questions about what happens to fannie and freddie mortgages. we've already had a couple of programs and this one is specifically tied to some of these improper practices where people have been foreclosed. stay where you are, i want to get back to this in just a moment. first opt to bring in sean donovan, the secretary of housing and urban development. thank you for being on the show. the show, as you know, is about solutions. we know what the problems are. and i don't want to diminish this settlement at all, but it is, as we know, a small slice of the intractable and huge housing problem we continue to have in this country. how will this push the needle closer to getting us out of the housing crisis? >> ali, it's great to be back with you again. look, you raise an important point and i think it's very important to see this in context. look, this is the largest, as you just said, the largest payout by these servicers, the largest single act of real accountability for them of this housing crisis. it's the biggest federal, state settlement in the history of the country. but recognize that the servicing practices that we investigated, the recklessness of the banks, was really egregious was only a part of the problem. the crisis was created by the owe ridge nation and securitization of these mortgages. you have to see this in the context of the broader problems. so it will help to solve it but it's not the only thing. that's why over the last couple of weeks, as you know, the president has announced a range of other steps that we're taking. he wants to get to universal refinancing. he talked about it in the state of the union. >> let me ask you this. we've covered those well, mr. secretary. here's the issue. as christine said, as you know, as we know, they all do make sense, but they have success rates, hit rates that are much lower than the government usually expects they're going to have. and part of that is the banks' lack of participation, lack of enthusiasm for these programs. how do we really get them to do the right thing? there are some people here that are mad that this isn't stronger than they would have liked it to be and maybe it was impractical to make it stronger. but there's people that think the banks are cheats and five banks are paying $26 billion which feels like a drop in the bucket. how do we get them to participate and get them involved. >> first of all, if we'd taken every one of these cases we could have brought to court and won every one of them, we think we maybe could have got 30, $35 billion, so this really is justice in terms of that. but on the other side, what we need to remember, this is done as an enforcement action and there is real teeth in this agreement that we haven't had where there are voluntary programs or we're using incentives. so, first of all, this is not that the banks have to make offers or mail letters. if they don't actually deliver the principal reduction and the family isn't successfully able to stay in their home for at least 90 days, they get no credit. second, if they haven't completed their responsibilities within the three years, not only do they have to convert all of this into kcash, they have a 25 or 40% penalty they have to pay. third, there's a court-appointed monitor who's going to be able to fine them for any violations they find, and be able to go back into court and hold them accountable. so there's real teeth here that will make sure that this actually happens. >> and we've evolved into this, because we were really hoping starting three years ago that the banks would have been a little bit more cooperative in trying to keep those houses off of the market. they didn't and now we're in this pickle that we're in. what is the next step from your perspective as the housing secretary, what's the next step that the government can be involved in to getting out of the housing crisis? >> i would say two things, ali. one is that we settled the servicing practices, but their egregious practices in origination and securitization. we set up a joint federal/state investigation to go after exactly those practices, so we're not going to keep going on this, we're not stopping here. we talked about it, fannie mae and freddie mac, they are critical. they represent about two-thirds of the mortgages. they weren't part of this settlement. they have a separate process they follow. we have just announced not only a set of steps to expand refinancing for fannie mae and freddie mac becauorrowers. those should many millions more families. but we also need to get principal reduction happening. it's the one area we haven't made real progress. this settlement is the first step but we also announced just a few weeks ago for the first time tripling our incentives for principal reduction and making them available for fannie mae and freddie mac mortgages. that