insurance reform and other spending in constraint in tax reform with more revenues. that is critically important and if we do with this year for recommendations after the midterm and to act before. the book makes a strong case for creating a commission. it is the kind of commission the issue with you today statutory commission or so forth? >> i have a strong preference for a statutory commissioned the reason is you have buy yen from the congress or the president or in addition can you guarantee a vote to. the fact is, the senate to have a majority vote to for the statutory commission and had 53 votes but under the senate rules you have to

have 60 so it did not pass. while it proposed commission i propose another condition it. >> one of the arguments you make in the book which is particularly interesting to advance the commission is a way to create a consensus in the country for action on fiscal policy. i think the book, to my mind is the most important thing, is stepping back from the details, we have a bigger appetite for public services than a willingness to pay the tax is required. how do we bridge that gap? the issue with national attitudes can the people be made to change their minds? >> of course, i believe there are two critical elements to be president in

addition to have capable incredible people ought to have everything on the table , this commission has to go outside of washington d.c. and have stewing cage representatives with the facts come with the truth, the tough choices and the proof of the adverse consequences and the families if we don't. in addition it needs to receive a vote of the recommendations. only three statutory is that guaranteed but the president has the commitment of the speaker and majority leader they would do everything in their power to make sure there is a vote on the recommendations progress we have to make the best of that. there is a big government appetite and a small government taxation policy. you want to keep taxes as low as possible for a variety of reasons but the math class to work.

the far right and the far left are diversionary. they also would get 10f in math. [laughter] we're not top 25 in the country they are to visionary and they would flunk math. >> let's stay with that. [laughter] >> guest: you would not let me get away with that. [laughter] >> host: i do get the sense there is a political disconnect. the politicians understand the need to express concern you must grapple with the problem. that has to mean that the end of the day either the were public spending or higher taxes. do have the sense politicians worry even ready to think about grasping this metal?

>> purser is no party of fiscal responsibility. there are individuals but there is no party. second, statistically valid public opinion research we conduct show the number two issue americans are concerned about are escalating deficits and debt right after the economy and jobs way ahead of health care way ahead of climate change and other issues. they believe congress and the washington is out of touch and out of control not making this a top priority and 70 percent support some type of commission online. the election of massachusetts was not a victory for republicans but a rise of independence like you and diaper or have been in 46 states the last 42 years. there isn't the center and representatives are on the

polls that is why we not only have partisanship but the ideological divide that creates a stalemate and it means you're going nowhere fast and run things are not going wrong they go with the passage of time. that is a disaster scenario. washington is a lag indicator and the people basically have to put the pressure on for this to happen. and a commission has to set the table for a tough vote. taxes are going up and all lot more than those going up by $250,000 per year. a four-letter word, the math. [laughter] the social insurance contract will be renegotiated to make sure when the government makes a promise, it can deliver. the government has tens of trillions of promises he does not know how he will pay for but wants to make more. we can come back to that on

health care and we have to have stuff attached -- statutory budget proposals we should not washington one die without tough statutory budget controls rounded number one of every prior to setian and tax reform. [applause] >> host: it is a microcosm of the issues why is health care reform in trouble? there are many reasons and wives but some are self contradictory. a lot of people are concerned that this reform will significantly increase the public spending so their word about the deficits come

a long term borrowing, but the other thing is the cuts in medicare. that is actually what we require in order to balance the budget or make the existing health care system affordable and expanding to make a better. where is the opening for the politicians? but if you were advising a politician, how would these guys grapple with this? how good to be fiscally responsible expansion of health care coverage? the book is in favor of expanding health care coverage and you take a liberal line. explain how you think you can make it affordable. >> first. we have to focus on four things on reform. cost. there is one thing that will bankrupt america, it is out of control health care

costs. we already made $38 trillion in promises for medicare that we don't know how to pay for. and in my view, you cannot reduce health care costs with coverage. that is the oxymoron. our current health care system, if it is a house it is structurally unsound, a mortgage for more than what it is worth and headed for foreclosure. you cannot say it is progress by adding a new wing built out of the same applied materials of builds on to the structure headed for foreclosure. that is another example of how government wants to give people desert before we eat spinach. we made tens of trillions of promises we know how we will keep the but if we make more all we have to do is pay for it. the forecast for

responsibility health care reform do not have deficits beyond the 10 have a significant reduction of promises we already have and dropping lower health care costs in the economy after the reform and before. on the other hand, i do believe in some form of universal coverage and we should have basic and essential preventative and boldness and catastrophic. we need to change the payment systems we need a budget, the federal government will spend and tax preferences in reluctant subsidies for medicare because we have subsidies for billionaires in medicare. there is not that many billionaires. my boss is but he does not take it. because of that fact, the voucher. >> that sounds a little bit

like start up again. >> talk about that. there are two systems in this country. we spend double per-capita and get below average results. number one is health care we spend plenty of money. number two, k-12 education. we're not top 251 health care or k-12 education outcomes so it is not amended it -- matter of money. i have a number of ideas how to do that. >> host: we will come back to that but a couple other bases i want to touch before i turn it over. under their broad title reform, medicare is critical we also have social security >> you have a very interesting chapter on what we should do two fix the

social security system and tell about that. >> in the scheme of things, it should be easy and with a basketball analogy is to be laid up. you can miss it but the odds are high you will hit it but with medicare and health care it is a 3.plunge played we have to dribble a little bit. we would of had comprehensive social security reform and 1999. it is not just a matter what the reform ought to me but the process to get it. the reason why george w. bush was not and why obama will not be successful is the process is fundamentally flawed. we saw the results of that and the results from the public.

the people who are retired air close to it, little or no changes because it is not fair and it would not be feasible we might want to think of cost-of-living index of those who were close to the party level bump up the benefits of others lessen the rates we could exceed the expectations without any increases realistically son they say let's raise the gap below what it would happen if we kept the same ratio back when we started indexing and very importantly in addition to having a small benefit program because that is what the security means, we need to have a supplemental add-on automatic payroll deduction that goes into a

real trust fund with real investment with real fiduciary responsibility if you go to jail if you touch it and in a circumstance we can have a death benefit and a post supplemental retirement benefit. all spring need is leadership. >> host: and some courage. one way to characterize the proposal, you know, i did agree with that the that is one way to characterize as private -- partial privatization. >> but that is the base of retirement income security. only 50% of americans have private pension and we have bay abysmal low savings rate on individuals because now they know what a rainy day is.

i think we have to keep in mind so security is the foundation, but we should have a supplemental savings in a defined contribution contribution, because frankly has not worked have the lowest savings rate of any major industrialized nation the people who save are the people who have the ability to save and get the tax benefits. the only way too really get the savings rate up is stoop day supply with the principle is don't let the people touch the money because once they do it will burn a hole in their pocket and they will spend it more than once in america. >> host: let's talk about the tax proposals. >> we touched briefly on entitlement issues but as you said, simple math, in my

vocabulary that is a five letter word. [laughter] that means we have to raise taxes. >> the book looks at this in detail how you think this should be done and made politically palatable? . .

segments of society were active. so for those reasons for the simple logic it says we will do something sooner than later. on taxes on think we are going to need more revenues than historical levels. lovers are not exactly taxes. you can get tax lies, user fees, premiums, more names related

premiums for medicare. there's a number of things you can do that are not necessarily taxes because there's an exchange but i think the taxes are going to have to go up. how you do it matters. when you do it matters. what form it takes matters and we can go further if you want because there's several different approaches you can take some of which are better from the matter of economic theory than others but others are more likely from the feasibility standpoint. >> one of the things i like when you discussed the issue is you cast the defect of the present text and it's so inefficient. the base is so narrow and hollowed out exemptions which are difficult to defend in principle. there was a lot of scope for increasing the amount of revenue without raising marginal rates without a more simple and efficient --

>> first on a certified public accountant and most years i prepare my own tax return by hand without software. not because i'm a masochist. [laughter] but because i want to be able to challenge members of congress to do the same because if they had to with that tax reform quick. [applause] tax the isn't a pleasant day around the walter household. i don't think we are alone in that, and one of the things that really chaps mechem and that is a sophisticated southern term -- [laughter] is that i spend all this time filling out all of these forms and schedules and i was in the public center for 15 years, and just when i think i've done my spot to fill out this amt sheet. i thought i was going to get all these deductions but i don't, so

i pay 15 or 20 per cent surtax on top of the regular tax that is a bait and switch surtax. it is something that has got to go away. i would rather have less deductions come less exemptions and exclusions on the logical basis, get rid of the amt so at least i know when i thought i was going to get a deduction i really did. you have to keep in mind that this country spends 3.5 trillion a year on spending roughly and that it forgoes revenue of about a trillion a year because the deductions except exclusions and credits. that is backdoor spending and that affect the bottom line so just as we need to look tall major spending programs we need to look tall major tax preferences and see whether or not they are working, whether they are properly targeted, whether or not there should be as high priority in the future as they have been in the past and the same thing on spending programs, too because frankly we

have a lot of things that are not working that are wasting a lot of money and adding to the current fiscal problems and constraining our flexibility to do things the will create a better future. >> one of the things i had in my mind as i was reading the book is something i've written about from time to time is this question of how the u.s. social contract is evolving and likely to revolve in a more european direction. you left characters and the obama agenda is there's certain aspects of the european model that democrats want to introduce. don't misunderstand me i'm not accusing the and administration of socialism either overt or covert. nonetheless universal health care is something taken for granted and the administration wants to achieve in the u.s.. now the question is america

chooses to move in the direction it also has to move in the direction of the european levels of taxation. now, we're in your mind, david porter as it were the country to end up? is there a process of convergence? and do the end up with the european-like benefits, european-like economics a critic of european-like distribution and taxes as america wants to stop short of that? >> they are not going to stop short of that and one of the things i talk about in the book is the country hits street from the principles and values which we were founded that made us great and we need to come back to those principles and values. that's the first part of the comeback america. the second part of come back america is we need to make choices with regards to the sustainability challenges so we can have to come back in the future can be better than the past and as you talk about this

issue, it's one thing to have a social safety net but this country to go much beyond that. it's one thing to have a sound secure safety net and it's another to have middle and upper class welfare and that is what we have done in many cases whether it is through the tax system or through medicare or whatever else. and so i think over time what is went in that happening is we are going to have to have a sound and secure social steve the net but it has to be better targeted to societal needs that are affordable and sustainable over time rather than on a limited wants which aren't. and i think americans won't stand for european tax levels. plus for economic growth reasons and personal choice reasons it isn't desirable. but they are going to be higher. our tax levels are going to be higher than they have been historically because in addition to the federal government having a major fiscal challenge which is going to be solved primarily

through spending constraints and should be and the reprioritization there will have to be more revenue. the state and local government have big problems, too. problems with medicaid, underfunded retirement health plans, underfunded pension plans, deferred maintenance and critical infrastructure and education cost. and they have huge legacy costs' that they have to come to grips with. and so ultimately we are going to have to restructure the federal government, state and local has to do the same thing. so the national fiscal challenges greater than our federal fiscal challenge. but the federal is the biggest. >> let me invite some questions or comments from the audience. we have a roving microphone. let me say some comments as opposed to questions we welcome comments. that's fine but just keep them and brief so we can get plenty so we will start with you.

maybe you could identify yourself and say who you are. >> hi wimberly rosenberg. i work with a small macroeconomic consulting firm. traditionally in a wonderful country the only way we have gotten the type of changes that you are addressing is when our back is against the wall. if you look back to world war ii there was a huge growing consensus of what needed to be done but on till we were attacked we couldn't move the populace. what do you see as the spark that squint force this transition to happen before the pain is too late? >> trusten think it's important to note we can't wait for a crisis because it would be a crisis the would be much worse than the recession. and the other thing i talk about in the book is before factors that contributed to the mortgage related subprimal crisis exists for the federal government finances. there's two big differences. one, the size, scale, risk and adverse consequences are much greater for the super supreme

crisis which would be lost to get their act together in a second nobody is going to bail us out. i think we are making progress with the american people. those public opinion polls, what is happening at the ballot box. we are making progress with the american people. the indicator is here. and i think that frankly the bubble bursting of the last 18 months served to make americans up that the too big to fail concept is a fallacy. you've seen financial institutions, automobile manufacturers who were once viewed as being too big to fail and either failed or require a bailout so the last thing i would say is what is on mai -- my tie. we the people. we are working out and we won't wait for a crisis because we

don't want to see the crisis would look like. >> of the pressure on this. to be frank with is your prediction here? you think we can solve this problem without crisis? if you ask me that question i would say on violence, no. as the press of the question it takes a crisis to get the problems fixed. sure, david even the your turf a spokesman for solutions -- speed let me tell you what the greatest risk is. okay? and then we can talk about things that may give evidence. our greatest risk is the members of confidence to put the house in order and when the economy turns around we start having to pay higher interest rate to finance debt. what's important to know is even without increase in interest rates the single largest line-item of the budget within 12 years according to the gao is bring to the interest on federal debt and that is not increased

interest rate, more than defense, more than social security more than medicare more than a decade and we get nothing for that. interest rates are going up. the question is how much and how fast. once we turn the corner. and so i think that's the greatest risk. and i think we can see maybe -- and we look at at least one of the current rating agencies, maybe more than one have downgraded the aaa status for the u.k.. look at the ratios versus theirs. we benefit from the home team ys. and from the fact we have 64% of the global world reserve currency which gives more rope but not on limited road. look at the chinese are already doing. diversifying into commodities. diversifying into corporate instruments. ago when shorter on the maturity and duration. pushing for more inflation

indexed treasury instruments so there are things happening that are leading indicators right now. a look at how much the fed bought of our debt last year which to me is self dealing. we have had self dealing gwen on for a long time with a so-called trust fund, trust the government funds. now we have the fed doing this belfield. you can believe the market forces. you can't eliminate market forces. it is a timing difference. >> but we have to get more scared than we are putting the fact i think that is -- >> you want to make people scared but also want to give them hope. what is happening right now is people are frustrated and some are getting angry but you want that anger to be put to a constructive purpose rather than destructive purpose. >> next question. let me move to the back of the room.

>> thank you. risch yet the comment. just a bit of background -- >> forgive me to get can you say to you are? >> mark silverman -- >> and you are with? >> a law firm in town. >> that's fine. there's no need to be embarrassed. [laughter] >> at ravee one jakarta and happy to give it to you. [laughter] talk about tax reform as you know, president reagan and bradley gephardt got together in 1986 and reduced the deduction's etc. and you see where we are right now, that has changed rather dramatically and always will. as a result we have discussed through the government agency's switching systems from an income tax to consumption tax. that, we determined you couldn't do that cold turkey. too much disruption.

professor michael crafts at columbia has written a book about doing if you will and incremental income tax rate as the rates come down. i'm curious as to your view of doing vat consumption tight system as a way to raise more revenue and integrate slowly to bring down the tax. >> thanks. >> first i believe from the intellectual standpoint that a progressive consumption tax which gives appropriate consideration to the less well-off is vastly preferable to the current tax system than you have to ask yourself how politically feasible is it to go from what we currently have now to a fair tax which is what it is, the fair taxes to eliminate corporate income tax, eliminates the personal income tax and the

payroll taxes and go to a progressive consumption tax. my view is the most likely approach we are going to take this to streamline, simplify, broaden the base, keep the rates as low as possible income-tax, some type of supplemental value added tax probably earmarks to health care again must have statutory budget controls before you in that with a lot of something like that because there's a risk people keep on raising and i think it is worth -- it does have intellectual merit to consider the approach to move more toward a consumption tax approach as a means to proficiency, enhance compliance and achieve a number of other objectives so i think it is something that should be given the risk to cause serious consideration. >> in my business they call that very little lead. you want a vat as well as existing income tax.

>> i think that is where we are headed. okay. understand this about taxes. it is a large burden for taxes especially income tax. but here's one of the concerns i have that a lot of people think about. today over 40% of americans don't pay any income taxes. and some get rebates they what income tax credit, that is headed to 50% plus under the career dedicated policies of the administration. what does that mean? they do pay payroll taxes but the payroll taxes aren't adequate to defend the programs and those programs provide greater benefits for the less well-off. income tax refund all or substantially all of all the constitutional roles in the federal government. national defence, homeland security, federal judicial system, foreign policy,

congress, so 40 to 50% of americans get a free ride on the constitutional role of the field government. i've got a problem. i think that creates a tree big disconnect that could have serious adverse consequences over time so i think we need dramatic reform but we are going to have to -- this country doesn't do dramatically for all at once. we have too many checks and balances in our system to get that done. it's not just the 60 votes in the senate, that is one of them. >> that any kind of national vat even if it can in one percentage point, that would be reform right there wouldn't it? >> i believe we are going to get it but we are not willing to get standing alone. it has to be part of a quote on quote bargain which will include stuff statutory controls come around one of social reform,

around one of the spending reprioritization and tax. >> you can imagine this coming out of the commission, this is the kind of thing that what -- >> yes. >> next question. >> okay, you are next. sorry. >> charles clark, i am an entrepreneur. following on the pearl harbor thing we passed the draft by one vote a few weeks before pearl harbor. what is your thought about the budget -- if there was an argument about the physical condition being subject to reconciliation on 51 boats can that happen? could that happen? >> the fiscal commission or health care reform? >> either one. i am more focused on the fiscal -- >> you raise an interesting point. i think you could end up doing the fiscal commission as part of budget reform with a straight face and that's a very interesting concept because it would be, the purpose of it would be to provide more fiscal discipline.

on the other hand to try to do health care reform the budget reconciliation process would be a tactical nuclear weapon. >> [inaudible] >> it is a very intriguing idea. i knew you were a bright guy. [laughter] >> what about a bit of both? some people edge -- it seems unlikely now but some people have been urging the house to pass a senate bill to make the same time, the so-called reconciliation sidecar that would budget that we expect to go back to the senate for the majority vote. >> i.t. we need to explore our options. but i think the key is if you are going to use budget reconciliation is supposed to be to try to make our fiscal situation -- it's about fiscal discipline, fiscal responsibility. remember the harry and louisianans? we are headed for the fossella and laws. [laughter] so we need to make sure that we

changed course. >> that's good. we are over here now >> i'm sorry i'm not identifying myself because it's not all about me, it's about you, david walker. thank you for coming today. i was just wondering -- >> she's not related just -- >> auroa of mystery is irresistible. [laughter] >> i was wondering if you could let osnos be 652 quick questions. this toward reform deserve a free look, and also, since we are cheaply bound by the decisions of our elected leaders and you are unfortunately not one of them, i wish you were, can you get an idea of who you would be willing to support as a paray zandt -- horizon meter? i love your advice. [laughter] >> he's a great guy but [inaudible] [laughter]

know, a case study american dream come true and model statesman. no question about that the answer to your question is first port reform yes we need tort reform but we need something more fundamental. we need alternative ports for health care i believe like we have for bankruptcy and in addition to that we need national practice standards that would help physicians decide how to allocate what they would make the decision on how to allocate limited resources under a federal budget that will also serve as a safe harbor against malpractice claims which the biggest cost of malpractice is not awards, it is defensive medicine so we need to recognize that reality. on the second i mentioned in the book about a dozen people on both sides of the all who i believe carsons' year and are trying to champion pulling out

our fiscal house in order. page 32. [laughter] >> hit any of them interest your do you stand by this? >> let's just say this. [laughter] you have to understand members where to acts. day where a hat with regards to their committee assignments, and in some cases they can be leadership and then a hat to represent their state. basically what happens is that there macrohat is their committee hat four leadership hat and for that on the fiscal standpoint they should be helping to assure that the policy is reasonable and responsible from the fiscal standpoint. however, with regard to the state, they want as much of the pie as they can get. and so, that is how sometimes you can look at this and look like there's a dichotomy or contradiction. they wear two hats and have jobs

to do. >> okay. please? >> [inaudible] if, in your opinion, it is the party of fiscal responsibility, who would you suggest would be on this statutory budget commission? do i just look on page 32? >> david, you yourself would volunteer. >> here is the key. mauney of view is ideally the commission should be comprised of three kinds of people. elect officials from both sides of the aisle and both capital. second, administration representatives probably a couple and a third, several

capable, credible people who are not government officials who would bear a disproportionate share of the burden to state the facts and speak the truth to the american people outside the beltway because quite frankly if you have a hard r or d on your sleeve or are an offical a large percentage of the population will discount you no matter what you have to say. i think as far as the individuals that are appointed, which ever one of those three places to come from they should be capable, credible and committed to try to come up with a package of reforms that can achieve broad agreement and that achieves certain specific objectives from the fiscal standpoint for example still lies and the debt to the gdp not just over the ten years but over time, achieving an express' reduction in the amount of on a

fund obligations that we have. some specific quantifiable things and frankly i think it is okay to allow amendments to the proposals as long as they are bottomline natural. in other words if you don't want to restructure benefits as much or you don't want to raise taxes as much, then you've got to pay for it. on the bottom line is natural because in the end we've got to get the bottom line in shape and we've got to get debt to gdp at a level we can sustain over time. >> another point of information something we touched on earlier but i would love to clarify for me. a commission created by executive order which it looks as though it is what we will get because the senate just voted down the intent to create this touch for a commission. could the commission created by executive order to have the property you just mentioned that it would buy and the congress in

certain ways that would be that extra expedited legislative process. is that something of the congress itself would separately have to find itself to? >> it is something a bit of to separately bind themselves to. right now what president obama has done is secure the commitment from speaker pelosi and majority leader reid that they would do everything within their power to help ensure commission's recommendations would get a vote. that's easier for speaker pelosi to make the commitment because the speaker controls what goes to the house floor and therefore it's easier for her to do that. it is more difficult leader reid to do it because he doesn't control 60 votes. now bob mentioned an interesting concept of reconciliation and is there a way to do something to the reconciliation whether it is the commission with a guaranteed

that it gets the vote. you've got to keep in mind guaranteeing something is going to get a vote you have to be comfortable with a composition of the commission and to have to be comfortable with what is on the table. so it is hard to imagine the congress would in that guaranteeing the vote unless they directly were involved in deciding who was on the commission and what was going to consider. my concern is people might try to politics this and i think would be a huge mistake for the republicans to try to politic this and would be a huge mistake for elected members to cave to the fringes on the left and right. by the way we have profiles and culbert miss the past week of sponsors of the bill that they didn't vote for. we ought to ask a few questions about that. that was caving in to the extremes and that is what is

wrong. the country is in the sensible cents. that is where the solutions are. >> i'm trying to get a sense of where i should go next. >> stefan with the global magazine. david, all of these issues make a complex and industrial society the united states probably is the most complexity society. other countries made a packed 100 years ago to introduce a parliamentary democracy so that something called the finance ministry is in charge of sorting these things out because what you say about week the people is absolutely correct but we had the people are very busy is over the pay grade that would be the next phrase. washington has never died because they are not enough good ideas but even this conversation among the bright people on this issue focus is very much on people and process.

in the end it comes on to decision making. do you ever wonder what all these commissions we've had 20 years, 25 years and some of them have worked, at the end of today whether we even have the right constitutional set up to make decisions in america and i know it is a hermetic question but need i remind you of the french these days have the same union structure as the united states and debris invented several republics. at the end of today is that something you worry about? ..

but it wouldn't eliminate the possibility a number of years from now, but i wouldn't put out on the table yet. >> okay. please. >> you have some experience with that. you mustn't let me diverged. >> hi, susan levine q. for the question about the voting process because i know washington was done on a deal thanks to alexander hamilton and the location. so that's nothing new. i have trouble with 300, 500,

$600 million for votes. >> the american people do, too. especially when it's their money. >> right. so i'm curious how there's voting is a part of how all that is political in this town, what do you say about that likes how does that affect our budget? b. mike yeah, well first i definitely think we need more transparency in a number of areas, especially international air ranks as an example. i think one of the reasons that americans are really out riche recently was because of the special deals that were done on health care for nebraska and louisiana and frankly the special deal that was done. and so, one of the things i do talk about in the book is in areas that we need more reforms that additional transparency, if you will. but it's got to be meaningful

transparency. like right now we've got enough on the web that we can see every contract that the government issues. but it's like a file dump. it's like which you give the irs. last night in the in camera you could have information overload okay. we need meaningful and timely transparency so it can make a difference. and i think we need to employ name and chain a lot more. part of the problem with that is it's hard to shoot people nowadays. [laughter] you ever notice that? the bar has gotten so low. people have got to do the limbo to get under the thing. [laughter] be like get the microphone over here and then you next. thanks. >> wall street and the banks in the real direct question is do

you think the president's notion of attacks on the big banks is simply a politically popular figure or not? be right while it's totally populist. it clearly doesn't go to the source of the problem i think. you know, by view is toward a system to work a banking system, complications a start, health care system, whatever. you've got to have three thanks. innovative ascendance to encourage people to do the right thing, adequate transparency, nature and timeliness and more to write reasonable assurance they will because of the variety of parties located. and thirdly, appropriate accountability. we were zero for three and that's called a strike out. by the way, we were zero for three for health care, too. and we're zero for three with a number of other areas that i talk about in the book where we're dysfunctional and we need transformational reform.

i'd rather go direct and indirect. that's an indirect way to deal with something rather than the direct way. i would think the direct is better. >> okay. please. >> thank you. my name is amy baker and i'm here with organization called lift. we train hundreds of college students to provide services to low-income people. part of it is personal budgeting. i'm also here is a young person who's a future bearer of a lot of this way. what is my role in all of this and what can i do to organize some of my age coworker? the >> well, a couple things. first, young people should be very, very, very involved in this debate. because they will pay the price and they will bear the burden

disproportionately if others fail to act. there are three things that are happening in the fed government. their futures are being mortgaged. relative investments in their futures because of mandatory spending growing like discretionary basic research are being squeezed at a time when will face increasing competition. in the south we call that a triple whammy. and that's not okay. and the sad thing is young people have not been a feast in this. the other thing i think is going on right now is with massive taxation without representation going on right now. now there's two kinds of taxes. current taxes in deferred taxes. and large deficits, absent structural reform represent different deficits, deferred taxes with interest. and it's easy to tax -- it's

easy to spend somebody else's money. it's even easier to spend a little money when they're too difficult and do a great extent that's what's going on. young people to have reform and become involved and make sure that they're part of the solution. i think they need to encourage action sooner than later and of an individual that got to plan, save, invest and preserve their savings for retirement, especially if they want to retire at a reasonably early age. government is going to do less. government has over promised and under delivering. it's going to want to target its efforts more enough to get more revenues. that's a reality. it's going to primarily due spending constraint, but it's going to get more revenues, too. >> okay, we have another question. is there in the back. >> cfids. excluding the trillion dollar wars you mention, we are still

spending more than the rest of the world put together. i want to do talk a little bit about defense in the book. >> there's a chapter dedicated to defense. and let me just give a few stats. the percentage of the federal budget dedicated to defense is about 20%. it was 43% 40 years ago, 1969, about 43%. but you are correct in saying that we spend about as much as the rest of the world combined on defense. now, there's a couple footnotes on that. or at least three footnotes. one, the dollar doesn't go as far as your other does elsewhere. labor cost, especially in china goes a lot further. secondly, we're a lot more transparent about what we spend on defense than certain other countries. and thirdly, we are bearing a

disproportionate share of the burden for global security. we're doing too much. others aren't doing enough. there's a lot of waste in defense, including how we go about planning and executing our weapon systems development, budget strategy. there's also a lot of weight through acquisition and practices and in addition to that i question the sustainability of the all volunteer force model. and i get into that. it is very, very, very expensive. much more expensive than frankly even members of congress knew. >> interesting. >> sera, my name is steve hayes. you mentioned earlier that there is no fiscally responsible and i think that is overwhelming that is the case. my question is, do you think that they could get either one

of the major parties or third-party? >> well, there's always hope. you know, and let's just say that i've been very disappointed in both parties. and i think that the only way that something is going to change is if, you know, the people forced to change. i don't want to say that one of the current major parties could do that because that's showing favoritism and i don't want to do that. i think that if they don't, if they don't, if they don't then i'm picking. i'm a political independent. when they reinforce that, okay. i think if they don't, i think there is a chance of forming something else going forward. but i think right now, independence have a tremendous amount of influence. and i think the other thing you have to keep in mind is

depending upon which poll you go by or survey you go by, a rally of americans are not independent events going on. now, part of the problem with that is in the house of representatives, there's only about 60 competitive seats. absence of major national referendum issue. which means that the independence really don't play a major force except in those 60 seats. which means that the democrats didn't do more liberal in the country than the republicans or conservatives because everything is decided in the primary. and that's where you get the ideological divide, the stalemate and that's why we need reform. >> tom donlon from bears biting. yesterday secretary geiger and former treasury secretary paulson boasts a pity it was necessary to bail out aig at

that moment in 2008 in order to avert a great depression and 25% unemployment respectively. my question is, first question is do you believe that yourself? my second question is assuming for the sake of argument that it's true, would not a great depression be one of the signaled results of putting our house in order? and if that's true, would you say that it's better to do it now than to do it in 25 years? >> well first i don't know what their basis of great depression and 25% unemployment was. i'd love to see, you know, they're modeling to be able to do that. i know that it's out of the left side of the keister. [laughter] that's another sophisticated southern term. [laughter] but the fact of the matter is you can't prove a negative. all rights.

and where there good reasons to do it? i'm sure there were. i wasn't there. you know, the question is what are we doing to try to make sure it doesn't happen again and when we didn't did we do it the right way? and i think we have is they had failures in the private sector and government that calls these positions to exist and then when the crisis occurred, we didn't have clearly defined objectives, conditions that we raised a lot of money. we need to learn from that. i would not want to great depression and they do not recommend one in my book. at the same point in time, i will tell you that if we don't start addressing our structural imbalance, we may well get a great depression. and i think it's important that we recognize that a super

subprime crisis, which would be what would happen if there was a loss of conference and the federal government's ability to put its own financial house in order, a dramatic increase in interest rates. that would be a global depression. we don't want that. we don't have to have it in the key is, what do we need to do to avoid it? and that's what the book is about, solutions. in solutions not just from the standpoint of policy operation and political but the kind of processes that will take to make those solutions of reality. because one of the things i learned a long time, including transforming gao comments are just what you want to do but how you have to go about it to get it done. you have to have solid proposals and processes that have integrity because if you don't, you will fail because you have to fight a two front war. and it's very hard to read you

two front war. >> i couldn't ask for a better summing up. we've come to the end of our time. this was a splendid note on which the win. thank you all for coming. thank you for asking good questions. [applause] >> well, on your screen now is carol beck to his administrator with the seed school in maryland and with her for students from the seed school. carol beck, explain what the seed school is. >> the seed cause maryland as a college prep public word in school. it's in baltimore city, but it serves to dance from throughout

maryland. the school is only two years old and the unique thing about the school is that it is a boarding school. so our students are living with us in college like dormitories during the week and go home on the weekends. and the idea is to have a 24 hours and use it as well as we can so that all of our students will be prepared for college. that is our goal. so the students here tonight are seventh graders and they are already and have been talking about college for over a year. so when they came to seed as sixth-graders last year. >> explain the philosophy behind seed. >> the idea behind seed is there a students who could truly benefit and have life-changing experiences if they are given 24 hours a day to focus on their studies and all kind of development is going to help them be successful, not only in college but beyond. and that's really our almost singular goal is to make sure all of our students are prepared. >> how are you funded?

>> were largely funded publicly appeared as a partnership to the state of maryland has made a unique commitment to the long-term operating to the funds for the school, but the private sector of individual donors have made it possible for the campus to be built and they are helping us, you know, with startup costs as we get to scale. >> and why are you at the national press club's author night? >> were thrilled to be at the national press club soccer night. at the invitation of the club, which has taken an interest in both the seed school of maryland and her sister school, the seed school at d.c. so the idea is that our school is brand-new and we have hardly any books in a library. the patrons here the book fair are making their own purchases for themselves and they're also buying dictionaries and novels for our library. and the students are here to thank them and to also share with some of the patrons a very small booklet of their own writing, poems, and essays they are prepared. >> let's meet the students. does your name and what your

favorite topic -- subject is peer >> animist ethnic yaakov i'm in the seventh grade and i really don't have a favorite subject because i'm good at all. but i really like math and i'm doing algebra one right now. and ms. murphy is a really cool teacher. >> why did she decide to go or why are you going to the seed school? >> well, when i first got the author from the seed school it was like whew, i would say. and i'm responsible for my actions. the seed school really makes it open that you can be whoever you want to be but at the same time you know your goal is to go to college. so that's why i'm not the seed school. >> what are you reading right now? >> right now we just finished the joy luck club and now we're starting to read anne frank. and it's about a german girl who was segregated and had to go to

these recreation camps and stuff. and we just really want to share her opinion of what she was going through. >> stephanie, thank you very much. and so more students here. this looks like davin. devin, i'm holding here in my hand a booklet, what is in here? >> in this book will be of those written by the students of the seed school and also our work from the our classes we have in our school. >> and are you published here? >> yes, one of my artworks is the bishop that i created. in the book, i also have texture. >> go ahead and show it to us. >> in the book, we have different things in here. we also poetry created by madison. here are some of the artworks. this is lucas' chest piece. here's my chest piece by year. ipo wings and other textures on my chest piece which was the bishop. they also did the rogue, the

queen and the king. >> so you're a chess player? >> yes, i'm also in the chess club at the school. we have different clubs at the school such as basketball, football, soccer and other things. >> now, devin, you are here at the press club's author night. what kind of books you want for your library? >> we have a dictionary which i would really like to help us with the school day because it also gives you tips about some of the word that can be used against school. >> also, we have a thesaurus here which is very interesting from the cover that i've looked at. this is the dictionary for high school. i can show you some of the rules. >> let's hold it up so everyone can see it at home. is this a dictionary you will use in school? >> don't have this dictionary which is why people are buying books for a library. we have things that many people buy these and were hoping to see them in our library at school.

>> all right, thank you so much. we have two more students. is that my up? >> yes. >> how are you? what are you reading right now? >> i'm reading a book called the mystery of the blue gown ghost. and i've been reading the book with various stories in it called chicken soup for the teenage soul and it's about how teenagers deal with problems at school and with their life and stuff and how to over come those problems. and it's really nice because we are all in middle-school, becoming teenagers and stuff. so that's why pick that book to be. >> what do you enjoy most about the seed school? how did you get an? >> my friend told me about the seed school and so i really wanted to apply because i've always wanted to go to a boarding school and i thought it would be really fun experience.

and my, my favorite part about the seed school is like learning on a higher level and learning new things that i didn't know before like algebra one. i never thought that i would learn so many things that i'm learning now. all those things would be so hard that i have to wait till 10th grade to learn, but i'm already in seventh grade, already learning those things and it's very exciting. >> so your library and school. if people are watching this and they want to donate something to the seed school, what would be the best kind of books or resources to donate? >> i think the best kind of books would be like something that would catch our eye, like something very interesting, like it doesn't have to be always fun books. it could be like real world writing, like books like biographies and stuff and dictionaries, too. because like you could always learn new words and stuff, like it's very cool to learn new ways that you never knew before.

>> such as this dictionary here. so people can buy this dictionary and donate it to the school appeared is that what you're saying? >> yes. my thank you so much. we'll buy more students and this is not a family. hi, not a sin. what are you reading right now? tonight i'm reading the diary of anne frank. i'm thinking that it's very good and empower life was and how difficult it was to be in that situation. >> she was about in seventh grade, too. that's kind of weird to think about her and her life in your life. >> yes, it is. >> are you a poet? >> yes, i am. i actually have a couple poems in the book right there. >> in this book here? >> yes, sir. >> would you like about poetry? >> i like poetry because i can express my feelings and empower what my life is going through and how the school in maryland is. and it also helps me learn something different, like i can

put different words into my poetry. >> madison, are you in seventh grade also? >> yes, sir. >> thank you for spending a few minutes with us. we appreciate it. and carol beck, one more question people are interested in donating to the seed school books or whatever, what's the best way to contact you? >> well, will provide our address and phone number. >> you have a website? >> it is the seed school m.d..org. >> carol beck of the seed school of american.

>> paul johnson, in your book "modern times" you kick it off this way, the modern world again on 29 may 1919 when photographs of a solar eclipse conferred the church of a new theory of the universe. two questions. why that date and why that event as the beginning of the modern world? >> guest: well, the world had always been governed for 250 years by new tone in physics.

and professor einstein introduced an important modification of that. this was his general theory of relativity, which he produced in 1916. but he also said there are three types by which this theory can be tested. if it fails any one of them, then we must scrap it and look again. he laid down the three tats and the first and most important of them had to be made by observation during a solar eclipse and that had to wait until the end of the war. and it wasn't until 1927 expedition was sent out to watch the eclipse and take measurements, which could demonstrate whether the einstein theory of relativity met the test. well, it did so.

and not introduced a new era in physics, which incidentally was to lead to the creation of nuclear energy. so i thought that was a good way to begin my book, my history of modern times. because ultimately, scientific theories and theories of knowledge have more importance than kings and queens and battles than presidents and so forth. in the beginning of the era of relativity was an important punctuation dates in human history. >> host: so, how cataclysmic was that event in the teen 19? >> guest: sorry? >> how cataclysmic, how big of an event was that in 1919? >> guest: it was a very big event for scientists, less for ordinary people. though gradually, the idea

spread that space wasn't in straight lines. it tended to be curved and that of relativity was a very important concept. unfortunately, a lot of people misunderstood the significance of the term relativity and they tended to translate it into world terms. so we got the age of moral relativism, in which people begin to move away from absolute standards of right and wrong and accept relative standards. the communist theory was announced in the twenties of what mattered was the morality of the party. rather than absolute standards. and hitler adopted the same sort of attitude when he came to part in 1933. so there was a gradual spread of moral relativism, which was