>> privately headquartered in atlanta. >> senior vice president cox business thank you for being on the communicators. >> thank you. >> you have been watching c-span communicators program. every week we look at telecommunications issues and policies. this program airs saturday at 6: 30 and monday, 8 a.m. and 8 p.m. on c-span2. if you want to watch any of the previous programs or any of the key indicators, you can go to c-span.org/communicators and watch them online.

next senate finance committee chairman max baucus talks about the need to change the u.s. tax code. he said the committee would be meeting next week to talk to so-called tax extenders provisions in the code that benefit particular sectors of the economy. his remarks are followed by a

panel with former republican ways and means committee chairman bill thomas and budget director alice rivlin. the bipartisan policy center hosted this one hour event. >> good morning and welcome to the bipartisan policy center. i'm the vice president of public policy. for those of you not familiar with the bipartisan policy center we are a think tank advocacy organization that works with both republicans and democrats to develop solutions to the key problems facing the country. we have some packets of information out front that hopefully you can look at that include our more recent proposals including tax reform proposals and recent reports that we did on the sequestered. we were founded in 2007 by the former senate majority leader's howard baker, tom daschle, bob dole and george mitchell. the bp brings together all five regardless of political affiliation or possession when tackling a problem and certainly our federal debt is one of the most pressing issues facing the

nation today. the past two years our bipartisan debt reduction task force led by senator domenici and dr. alice rivlin have been calling upon congress and the president to come together and enact a comprehensive bipartisan debt reduction plan such as the one developed by the reduction task force that would reduce the debt 50% of gdp by 2020. clearly tax reform is the of the key piece of the debt reduction puzzle in addition to entitlement reform and we're pleased to be joined today by the senate finance committee chairman bachus and this distinguished panel on tax policy. here to introduce senator baucus and senator domenici the former senate budget committee chairman and senior fellow at the bipartisan policy center. [applause] >> i knew it would take a house

member to recognize. [applause] i don't know whether he would applaud for pete domenici or not. no reason he shouldn't. [laughter] i just want to say for a long time now we've been talking about our national debt. it's not getting any better. there are some cynics that continue to think that it's not very serious. we've had this problem before. don't worry. i'm not one of those. i don't think we had this problem before except once when we were in a big war we fixed that rather quickly and spent whatever had to be spent in the second world war regardless of how much because we had to win. it took about three or four years to get it back in balance and we had no such intent. nobody seems to be willing to see that that is done. trying to educate the public as best we can with a president who

doesn't seem to want to educate the public on this issue we try hard. we are making the point, many others are making the point that the debt is too big and maybe it might be in some profound way affecting our life now and in the future. in the promoting of this problem to our people about reforming entitlements no questioning its all-time but today we say that the tax peace of the debt puzzle is going to be discussed. the tax piece of the puzzle is going to be giving equal perales with entitlement reform. anybody that looks at the entitlement package and the tax law the of america knows that

you can't have one without the other and they're both in desperate need of reform we are under the auspices of the bipartisan policy committee to have a number of superb speakers experienced and knowledgeable in this problem which would offer in their own regard an answer to questions their ideas about this enormous problem. our first speaker is a westerner like im, max baucus. max baucus comes from the great state of montana, and believe it or not in his campaigning back home in the west he has walked the longest distance of that state and as part of his campaign. he's never forgotten that you have to get to the us small people to talk with them. so he brings the people to him to talk about the problems and he gets pretty good ideas of how

his constituents feel before he goes to work on problems here in the united states congress and as the chairman of one of the most powerful united states senate committees if not the most powerful and he as the chairman is a quiet determined man and i'm very proud pleased he agreed to come and share a don't think that he's done it in this crisis to come and share his thoughts as as a while ago. so with that, let me thank max for coming and once again introduce him to use so he can address us. thank you very much. [applause] >> thank you very much, pete.

it's an honor to be here first, the colleagues of mine. working to solve the nation's problems they've been true public service. also my good friend joe thomas. let's give a big round of applause to those members. they're still working very hard. >> as well as to the bipartisan policy center for the right reasons bringing us together i've often thought nothing of consequence is ever accomplished by doing something alone he's got to work with people as partnership it's working together in the bipartisan

policy centers. i want to thank them to for getting together helping to advance the ball. winston churchill once said however beautiful the strategy occasionally look at the results. the need to overhaul the tax code seems obvious. today the code is certainly not beautiful. the mythical beast with hundreds of hits. each time you cut one off to more of them grow back like the tax code growing out of control. since 1986, the congress has made 15,000 changes to the code to read everyone agrees we need to get rid of the dead wood and simplify the code, and we should. but tax reform can't be an abstract academic exercise.

we need to heed his advice and start with a clear understanding of results we want to achieve. a 21st century tax code i think must promote the four goals. these are the keys to america's future and securing a lead in the global economy. jobs from broadbased growth, competitiveness, innovation, and opportunity. these goals would be a part of my tax reform plan but there are challenges to overcome. we need to get our fiscal house in order. america's deficit and debt are unsustainable. today the debt to gdp ratio is 73%, the highest that it has been since world war ii. deficits and debt or not just a spending power. revenues as a share of gross product of the past few years

are the lowest that they have been since world war ii. we simply don't raise enough revenue. people disagree about the time line. but the reality is we are on a dangerous battle. if we don't act, it could lead towards fiscal crisis like some european countries. any tax reform plan must be developed with a sound budget mind that reduces the deficit in the debt. the deficit isn't the only hurdle not by a long shot. since the last major tax reform in 1986, the world has changed drastically. our tax code has not kept up. and now it is acting as a brake on the economy. and we need to move at full speed. it's time we had a tax code for the 21st century. after the '86 law i was a member of the committee granted a young

dhaka. it was in many ways a different world. back then self bones were bigger than your head. finding something on-line only meant that he pulled the rainbow out of a blackfoot river. [laughter] but topped the charts. i guess some things don't change. the world has also changed in more profound ways. since 86 the u.s. economy has grown by 88% with a rising tide hasn't lifted all boats. after benefits of taxes, the income of the top 1% of taxpayers has grown almost eight times as faster than the middle over the past 30 years and it's grown to 15 times faster than the poorest 20%. the tax policy can play a role solving this but it can't be alone. we are not educating our children to be competitive in

today's technology and information based economy to read over the past 15 years the percentage of young americans with a college degree increase buy only 15%. meanwhile, among our foreign competitors, that percentage is to be increased by 90%. we are also endangered of no longer being seen as a land of opportunity. and american child's future earnings depend more on the income than they do in other countries. this lack of opportunities underlines the american dream it hurts growth and it means we are not capitalizing on all our citizens challenges. families structured today are also different than they were in '86. there are fewer traditional married couples one breadwinner and more single-parent and working couples. this means more families need to pay for child care as they haven't taken these changes into account. the makeup of the u.s. economy is also different than it was in

86. americans in manufacturing jobs has dropped by one-third. services like information technology make up a bigger part of our economy. our exports as a share of gdp have nearly doubled over exporting different kinds of products. the united states system in the export goods like tv and clothing. today the export national services, software and engineering. the global economy has become more interconnected. america's leading the world has narrowed. our share of world gdp has fallen by nearly a quarter. competition has intensified. other countries of responded by making investments in education and infrastructure and by modernizing their tax codes to be more competitive the of the rates to attract businesses and shifted to the territorial systems to keep their companies from moving overseas and the of

tougher rules could get shifting the profits to the tax havens. these tax games are easier in the world were company's most valuable assets are patents. in contrast the of the highest touch defeat the tax rate in the world. many don't attract and retain investments. it is a waste. we are stuck with a world wide system but in some ways we have weakened the protections against shifting income to tax havens. as a result, the u.s. loses billions of revenue every year to tax havens and we also lose jobs to foreign companies acquiring u.s. firms. in the past two decades a number of u.s.-based companies in the 500 list has declined by 20%. foreign companies increasingly acquire u.s. companies, american jobs are often lost in the

process. they require a u.s. company based in chicago they closed down the illinois production city hundreds of americans lost their jobs. there's many examples of this a foreign country requires the difference in the tax codes. when it comes to the international tax rules, we seem to have the worst of all rules. we haven't kept up and it's time to change. how do we do that? we use tax reform to get the results of our economy needs. jobs, greater competitiveness or innovation and clearly more opportunity. first and foremost we need to create jobs. jobs come from broadbased growth. we can do this in part by trimming in the court. most economists agree the rates are paid for by getting rid of tax expenditures generates

growth. tax breaks have doubled since 1986 and caused just as much in revenue as the entire tax brings in. some are worth while but many fail to create jobs for growth and the uncertainty and he's growth. there were only 14 expiring tax provisions after the '86 act. to date there are 132. that makes it tough for families and businesses to plan or invest in their future. we need to take a hard look at each and every provision and decide which to make permanent and which to eliminate. we need to get out of the way of the market unless there is clear evidence that a tax expenditure spurs growth and creates jobs. every tax provision needs to prove that it is a tangible benefit to the economy society. if not, it doesn't belong in the code. second we need to support

american competitiveness. the tax code must adapt to the changes of the global economy since 1986. we need to update our corporate tax rules to prevent companies from shifting tax havens where they haven't earned any income. we need to reduce u.s. companies incentive to move overseas. many u.s. companies are choosing to keep jobs when we need to encourage. third we must support innovation here at home. microsoft and apple both started as smart ideas in american garages. there's a reason why silicon valley and silicon valley are in america. it's because we are innovators. the tax code needs to bolster this innovation to its economy depends on innovative fields all the intellectual property we can use tax measures to put reseach

into technologies on a more level playing field with existing technologies especially in the energy sector. finally we need to promote opportunity. tax reform can boost share growth and make our society more of a meritocracy. many tax benefits including education, give the most help to those that already have the most opportunities. tax reform should refocus these benefits to help those who started out with fewer opportunities. we should ensure more students get more education not just college but vote many colleges and special training. americans are the most creative the most driven people in the world of education is the key to unlocking the potential. it's one of the best investments we could make as a nation. a college graduate working full-time earns nearly a million dollars more over his lifetime than a high school graduate.

promoting education and opportunity will pay dividends. we can accomplish all of this and get results jobs through broad based growth that puts america and businesses in the best position to compete in the global economy. more homegrown innovation and opportunity to all of our citizens have a chance to the american dream much of the talk these days is focused on the so-called fiscal cliff. we need to address the most crucial spending by the end of this year. but it must reach agreement on a long-term budget plan and as the bipartisan policy center plan recognizes everyone needs to contribute trade deficit reduction must include both spending and revenue and needs to ramp up over time to avoid slowing down economic recovery.

as we address the deficit we must look a couple steps ahead to the next great challenge on the horizon and that is tax reform. tax reform is a once in a generation opportunity. we can cement america's pre-eminence. the work has begun last week the committee began a comprehensive review which held numerous roundtable discussions and reach of businesses, labor groups, tax experts and others with all the hearings to study the specifics yet we have a veto the tax reform proposal that will attract bipartisan support. we know tax reform won't be easy. we need the favorite tax rates disappear someone will always be unhappy but that's the wrong way to look at it. the right way is to remember that tax reform should focus on the result that we want. it can create jobs.

it can spark innovation and expand opportunities. it can guarantee our competitiveness and put america back on top. thank you very much. [applause] two or three questions from the media. the senator has to get back to work. >> [inaudible] >> i'm from the national journal. i wonder what you are proposing in terms of an international tax system differs from what a chairman can propose. >> i'm not sure what he proposed quite frankly. none of us know precisely.

the main thing is this. i believe too often in this town we are focusing on the mechanics that is broadening the base on the rates. what is the reason for tax reform. why are we doing this? jury symbol. you know that. but i don't know that we shouldn't think the changes simply for the sake of simplicity for the sake of broadening the reduction which i agree with it would be certain benefits but while doing so for what we want for our country. but that i think is a slightly different from the german. if i were to sit down and talk about all of these points i think that he would agree. but my main point is let's focus

on the results. the world has changed so much. there is so much at stake. it's partly the fiscal cliff that has to be addressed. no debate there but here is an opportunity to sort of refocus our direction so our kids and grandkids are much more likely to be better off than we are. we all have a moral obligation we leave this place in as good of shape as we come and here's an opportunity since there hasn't been a major change in the code since 86. >> what is the most likely scenario dealing with the fiscal cliff sequester some people think some kind of trigger fast track to get tax reform going and so forth to provide the tax

cuts in terms of the wealthy and into political for the vote on earth with a million or more income do you think that is the way to go or stick with the metrics. >> with all respect to all of those specific suggestions i think the better approach at this point in june to do what many of us are doing mainly engaged in a lot of discussions attended many such meetings in the last several weeks. they tend to be rough starting point the people would tend to agree with. to be candid i don't think many members of congress filled on the details of this and that of

the exercise your i'm going to hold a hearing on each one a on balsams and rivlin domenici. that is an opportunity for the senators to better understand what is included in each the trade-offs needed to reach debate 3g solution. people talk about entitlement reforms or what was meant by that in the state of medicare. senators in the country friendly to what the trade-offs are and each change actually costs or what the consequences are. the same thing under the revenue side. i firmly believe where there are facts people tend to focus more on fact and less on the rhetoric. i'm trying to get their rhetoric to think about the fact and these hearings we work together

to get tax reform and deficit and tax reduction. my view is everything is on the table. that is a psychology which i think is very important to keep people talking and keep people working. i'm going to be having a meeting of the finance committee next week with members of the finance committee, so that's probably the first step of members only. but we are going to talk about the traditional extenders only. is there a way to get the traditional extenders' down the road extending some and retailing and others without any games? by that i mean democrats don't offer the buffet tax and republicans will offer the state tax to stick within the confines of the traditional extenders. that is a chunk that we can deal with it develops more trust to

figure out what to deal with the cliff but the precise questions you ask a thing or questions which we have to put off. we are going to get this solved one way or another. a better way is if there is more agreement is what it should be. it's also my view we should create boesh prior to the election because i don't want members to lock in to make it difficult for the lame-duck to do quote what is correct we all know what's the right thing to do it's just a matter of politically getting their. >> that should certainly be on the table. i know the chairman talks about that and it is an idea that has to be fully explored because

otherwise you are begging another big issue and once extended one should expire. the german talks about extending them all. they won't address the deficit and i think that is a big danger his answer to that is clear. we look at the triggers in the super devotee. we will see. >> can you address the issue -- "washington post," can you address the issue of how flat the code should be? there should be just a few grades and basically all kinds of tax incentives and tax

expenditures should be eliminated. can you accomplish the kind of goals that you are talking about with that kind of flat code? >> all things being equal, the flatter the better but all things are never equal. there are so many other considerations. let me just put it this way. remember some time ago when he ran for president advocated the flat tax and it was supposed to be revenue neutral, and as i recall that would be about 18, 19% of the flat tax but i may be wrong on that precise rate but it's close to that. ..

also would suggest major tax expenditure eliminations to get there. i think some of that is a little unrealistic politically. how much of that can happen. another factor is revenue and if we are going to solve our debt and deficit we have to look at revenue. we have to look at revenue. arithmetically there is no escape. we have to, and but my major point is my remarks mainly. that is the goal. let's see what we do to get growth. let's see what we do to make our country more competitive.

let's see how we make our country even more innovative. one major advantage we have in america is our creativity. u.s. wages worldwide fall and china's are not falling and have come up a little bit. most is not come back to the u.s. but goes elsewhere. the major advantage we have is our creativity. there's a reason why google, microsoft and apple and facebook were american companies. we have to maintain that. you hear it constantly when you travel around the world, you constantly hear that. is the one advantage we have today is a country and we have got to really make sure we maintain that and keep it. and that is growth. rising tide does raise all boats. we have to find a way to -- the code cannot dispute income. we can do it although we can certainly, the code is a useful tool and a terrific opportunity

to address both innovation and try to in some way deal with wealth distribution. >> thank you very much. appreciate it very much. [applause] >> thank you for all you do here. [applause] >> as i said earlier i am the senior director of policy here. our moderator for the next portion of this is going to be kristin roberts, the "national journal"'s managing editor for budget and economy. before she joined the "national journal," she worked as reuters washington-based news editor. she joined writers in 1998, and she has had the opportunity in 2006 to spend a lot of time doing pentagon coverage including her trips with robert gates, donald rumsfeld, and for

policy visits herself so it's with great pleasure i introduce kristin roberts. >> thank you very much. i have got an excellent panel here that truly deserves no introduction but i'm going to give you an introduction anyway. alex rivlin cochair of the by policy center, former white house budget director and widely recognized as one of the foremost experts on the issue we are talking about here today. senator bob packwood, the chairman of the senate finance committee and one of the architects in 1980 perform. congressman bill -- chairman of the winston means committee. one of the smartest and toughest guys who ever walked the halls of congress. one of the main components of the last decade. and we have robert greenstein founder and president of the center on budget and policy priorities, an expert on the wide-ranging policy issues including tax and social safety net programs. let's start dr. rivlin on

mr. bob hess' speech. lacking in some detail from specifics that i know some of my colleagues in the press wanted. did it change or shift debate at all? did it move the needle? >> i was very glad to hear him say several things that he said. one, clearly we are going to need more revenue as we address the long term deficit problem, and he stuck with progressive rates, didn't go for the flat tax. he is a cautious man. i am i am more of a radical, i'm a centrist but i'm a radical centrist. i would go for a more dramatic kind of reform, but i thought he laid out many of the reasons that we need tax reform, and laid them out well. >> did you gain any insight from his comments about where the two

parties might find areas of consensus? i'm sorry, mr. greenstein. it's true, there really is. >> i was referring to -- [laughter] there were several questions asked by journalists to try to hone in on specifics, and i thought chairman baucus' answers were, i want to avoid laying out any specifics around which there would be partisan division before the election. i thought there was a consistent theme there that there needed to be behind-the-scenes discussions now to lay a framework for more intensive discussions when the election was behind us. so while on the one hand, we don't think there were necessarily specifics that suggested further bipartisan progress as a result of the speech, i actually thought the

more significant was that there was nothing in what he said that impedes bipartisan cooperation and frankly lots of statements get me these days do have things that impedes bipartisan cooperation so i would raise it as a plus on that point. >> but is it the right strategy? >> i am like alice rivlin. i will tell you where i come from and that is diamond pragmatist. you need to get a majority of people saying yes and the atmosphere has been such that you are not able to at this time. senator baucus is a creature of the senate. the senate deals and concepts. i am a creature of the house. the house deals and specifics that have to be written off ahead of time and scored before we vote. i think one of the important things that we need to stress is people shouldn't sit around making lists of what they will not do.

that automatically limits your ability to move. secondly, this panel is described as the tax part of the debt trouble in. coming from the ways & means committee, the tax part is the debt trouble in. because social security is a tax. the medicare part a is a tax. medicare part b is a general fund which goes back to theme number one, the income in corporate tax, so addressing that broad tax question, not splitting it up into entitlements and social network. if you want to make sure, and i agree with alice, the system needs to be progressive. why? because you can't vote, you won't get enough people to vote yes if it isn't. but if you are looking to take someone's income or wealth and use it smartly as senator baucus said, you can talk about making

changes in social security, bringing tax money from the wealthy into the social security system and by the way solve the social security problem. you can deal with the tax portion that goes to medicare and do do it in a way that you take care of people's medical and social needs, but allow people who have wealth to spend their own money on what they want beyond what medicare would provide. so i am a strong believer that the taxes need to be addressed in a much broader and smarter way. and secondly i firmly believe you can talk about goals all you want, but we have put up stop signs. we have put up stoplights, and none of it ever changes congress's behavior. i believe going is the goal. what can we accomplish? we don't have too many moving

parts. address the fundamentals but don't talk about the what the world is going to look like in 2025 or 2030 with what we are doing today. make sure you don't make it harder to solve our problems, but get people to agree on a simple plan that encompasses a very creative approach to dealing with the problems. >> chairman packwood. >> you separate separate entitlements and social security. anybody who does a study knows the spending part of that is a problem but the tax reform part, remember what a miracle was in 1986. if you don't believe in miracles you are not a realist. this whole tax reform bill in the senate was put together in six days. but the time that i had lost total control of the committee and went out for two pitchers of beer with my chief of staff and came back and give us a tax rate

of 25% tops. okay, we have to give a mortgage deduction. i said what about 26? [laughter] he came back. he came back on tuesday and he's got 25, 26, 27% and here's what you have to do to get there. the outlines of it are given to the financial committee, and you see those low rates and you can get a lot if you can get those kinds of low rates. i left and encouraged so that weekend i said i'm going to put together a group to work with on the democratic side, moynihan, mitchell and bradley. on the republican side, cheney, danforth and wallace and starting on tuesday morning that group would meet in my office tuesday, wednesday, thursday

friday. the formal finance committee comes later secretly at night that we were doing this work in the morning and by saturday night we had reached the seven of us a conclusion. it was the outlines of the bill and the only thing i had to change was that the last moment they wanted an exception on passive losses we had have taken away from everybody else. i could've eaten them 13-7 in the committee but i thought i'm going to need them on the floor on iris because i could see that problem coming. we dramatically cut the iris so i gave them what they wanted in exchange for a promise to support everything else in the bill. they did and it passed through the committee 20-0, literally 10 days after the committee even first knew anything about it. but it was done in secret and it was done quickly and it was done at lease with the intellectual leader for both craddick members of the committee. >> lets talk about the lame-duck session. is there any bet -- not benefit

to attempting to do tax reform and lame-duck or do we need to do, asked congress to force the next congress to deal with this issue? >> in what sense? a statute? >> yeah, something is part of the fiscal agreement. >> i don't think this will happen but i think a possible approach is something like what the gang of six proposed last summer where basically no one thinks you're going to rewrite the whole tax for tax or tax code is very complicated and frankly it will be even more complicated than an 86 six because abe said in a neutral and in fact there was production on the individual side offset by an increase in revenue spain nobody realized how much. 230 are sent in this tenet,

raises $140 billion in taxes on business even though we cut the rate and we use that to offset a lot of the cuts in the individual him and hundred and $40 billion. >> the difference here is you brought up a tax cut him efficient than the opposite of teachers suggest the economic is a relatively modest greatly outweighed why the economic gains or losses by dealing or failing to deal with their serious long-term fiscal problems with a much bigger risk to the economy. as chairman baucus said there is no real solution if there isn't a substantial contribution from both spending with tax reform is

unlike 86, is going to have to raise revenue. none of that is going to happen and lame-duck so i think a possibility which i hope will happen would be a framework agreement like the gang of six, where you lay out a target for a rabbit solution that does this, and you tie them all together for down the road. the revenue, the entitlement cuts don't take effect unless the revenue increases in the to watch something you can make happen in 2013. >> i think it's not just a stoplight. we can make light of these things, but the fiscal cliff is a real cliff. it would need very bad for the

economy and very bad for a lot of things people care about if we let all of the tax cuts expire all at once, and the alternative minimum tax and all the things that are in the cliff as well as this big sequester, so that making a framework agreement for say six months to come back with a head of, a real tax reform,, and if you don't do that first phoning or giving the congress more time like six months seems to be reasonable. after all we did it in six days. >> we rested on the seventh day.

[laughter] >> it seems to be quite a reasonable thing to do. it's called kicking the can down the road of history. it is moving the fiscal cliff for a few months but it's still there. >> i am not making light of this one i used the term stop sign and stoplight. that was a statute that was passed that was designed not to have what occurs occur. bob packwood did a terrific bill on the 86 bill, lowered the rates, took away at a lot of the things that senator baucus was talking about in terms of tax expenditures but guess what happened the day after the bill passed? they started working on putting those right back in the code and you look five or six years later and the problems came back. okay? so, let's be pragmatic. i'm sorry. i can tell you what's going to happen in the lame-duck unless

you tell me who controls the senate following the november election i can't tell you what's going to happen in the lame-duck unless you tell me who wins the presidential race. because those two factors more than anything else, will shape in my opinion, what happens in the lame-duck. probably nothing. but when the senator says, i'm going to put everything on the table, did he mean social security? did he mean medicare? i know he means defense spending. it's just like the flat tax. there's always add roamed in it somewhere. i really think that you have got to look at the situation we are in and the problem these congresses have, not the congress and 86 and not the congress in 96 or 2006. this congress cannot have too

many moving parts. it will be very hard to keep it together. you can't just deal in concepts. you were going to have to deal in specifics so there are going to have to be stakes in the ground on the major issues to see if you can begin to address them. i think the more you pressure them to come up with a down payment, with a structure that is going to follow after everyone raises their hand and get sworn in, at least in the legislature on the third of january in 2013 and january 20 at the white house, you are going to run into problems. i think everybody knows what the options are. we have seen it at the commissions. we have seen it in the domenici -- you are going to see it another plants being presented. presidential candidate romney has one. you can pick and choose. the question is, is very well to

fix it? that is what has been lacking. not substance, not the specifics. it's the will to make it happen and adding artificial deadline imposed on creating the will to make it happen is just that. >> i want to clarify certainly what i think. i pursue my agree with this about it. i think it would be a huge mistake, what are the biggest we could make to just kick everything down the road even six months. a framework agreement that sets up time to do things like tax reform, health changes and and and so forth. there is no reason it can't and it should have some provisions up front. namely, we should and extending its not expend those above 250 and in return for that there should be some specific

entitlement changes that are made up front. if you do certain things up front, there is a process. do i think that will happen bite january 21? probably not. i think we should also understand that there really isn't despite you using the term there really isn't a fiscal cliff. there is an incline. in other words cbo says all things and things happen, sequestration and all but tax cuts expire etc. etc.. we will probably go into a mild recession. we don't go into the recession on january 2. you don't pull the aggregate command out of economy in the first day, the first week or the first month. the reason i mention that as i've been thinking lately of the government shutdown in 1995 were either side, there was a shutdown in the pressure was so intense on both sides that in three weeks we had a deal. i think there is a potential that we go over the side on january 1, the pressure is intense and in january there is potentially some kind of a

framework with some upfront stuff that is retroactive to january 1 and with everything agree to and then pass the framework for the rest. one final point. there is broad agreement among both parties that you can't rewrite the tax code in the lame-duck or a few weeks. unita period of time to do that. what some members of the supercommittee came to understand that i hope more members on the hill will as they get into this is changes in health care are almost as complicated as changes in taxes and just as you need a number of months to get that right, you really need a number of months to figure out the changes in health care as well so there can be a parallel time for both tax reform and health reform. >> you mentioned the home interest, the mortgage interest deduction. this congress and this president have been almost completely and willing to talk about tax expenditures in any detail at all. what expenditures absolutely need to be on the table for consideration for killing

frankly? before what? before killing, eliminating. >> said earlier and he is right, think about the results. let's say you wanted a top rate of 25% and you wanted to keep as much progressivity as you could which means you'd have to have i'm guessing free rates, but a 19% to 22%, 22 -- 25% or progressivity would not be that but to get there you would have to tax all fringe benefits and eliminates charitable deductions, and eliminate the mortgage interest deduction and all these state and local taxes. if you add them all together, you can get a top rate of 25% in reasonable progressivity and the reason i say reasonable progressivity is the man or woman that is ready working at a wage does at 1040 and they don't have a lot of deductions. the people you're going to hit with deductions are the rich

people that give paintings to the metropolitan museum in contributions to the symphony. you can keep your progressivity reasonably with a few rates but you, i mean a few modest changes in the rates at the bottom but you are going to have to decide on the rate first and then say, what do we have to do to get to that and keep the progressivity and will that the attractive enough to put together the coalition to do it? the low rates are an amazing attraction. >> with all due respect to senator packwood, you cannot come close to maintaining reasonable progressivity at a rate like 25 unless you also do what he did in 86. you must eliminate the differential for capital gains. you did, you did but if you maintain it, it turns out when you analyze tax expenditures, once you move gains and dividends to the side, the remaining tax expenditures are proportional. they do not disproportionately

help people at the top because of things like the exclusion from employer health insurance and if you set a low rate than you maintain a capital gains differential and you have a huge increase in regressivity. >> under your conceptual framework because you are looking at it and protecting entitlements and other areas. the reason the government shut down -- the reason the government shutdown and 95 and 96 and came back together so quickly because it was a temper tantrum and it was over a relatively modest argument. the reason we haven't been able to come to agreement is we have a potential for a fundamental decision and the system. reversing some of the things that have been done, both in terms of what the republicans want and what the democrats want. that is the reason it's difficult, and i don't think you can solve it by separating income and corporate taxes from the fica tax or the h.r. and

medicare trust funds tax. there are ways to deal with it in a broader based tax structure >> the reason though the thing fell apart and then we open the government again was because, in sally and the kids could not get into the washington monument and they run television every night and congress couldn't stand that kind of pressure. >> exactly. >> can i turn back to progressivity? you use the word eliminate the home mortgage seduction for example. we don't have to do that. we could make the advantages to homeowners much more progressive and the domenici rivlin tax reform. what we did was to convert the home mortgage deduction to a tax credit at our lower ratesrate, which was 15%.

and if you do that, you give a lot more benefits to people who don't now take the deduction because they don't itemize. those are moderate income people who own houses. it is hard on the high income people with very expensive houses. you have to grandfather the existing ones, but we just build too many expensive houses. see what you did is not unlike what gephardt did in the fair tax retake your deductions at the lowest rate, not the highest rate in that obviously are somebody who was in the 40% tax bracket taking deductions of 40%, it was a big difference. >> that's right and i credit -- >> there are ways you can get to where we are all talking about. >> and about credit of acidity,

my friends the liberals, and this does not include bob because he understands this. lower rates make it easier on rich people. not so because so many of these provisions like home mortgage advantage the upper income people so you could have a more progressive system with lower rates and raise more revenue into the market. be there something behind the curtain and everything is behind the curtain now in terms of tax credits and exemptions. >> that is right but he did i and i put it out front. >> a few points here. there are issues of concepts that there are also some issues of some basic math. if you do an across-the-board rate cut, if by itself the path is clear as it has a regressive effect. it has a much bigger reduction in percentage reduction and after-tax income for hire low income than lower-income people. the main roads and progressivity

they tax exchanges have to be highly progressive and i'm strongly in favor of the very thing alice is talking about on credit. senator baucus made a really important point with regard to education. for example tax expenditures now for higher education or for retirement saving for that matter or for homeownership, and the people who could afford it would do those things anyway and the smallest for the people with whom it would have the biggest effects so from an economic efficiency standpoint upside down but the mathematical difficulty is that the larger the rate of reduction, the bigger the tax expenditure changes must be and the more severely progressive they must be in the political difficulty. my earlier point was that when you do the math, it is virtually impossible to get rates down even to 29 let's say and maintain progressivity without eliminating the capital gains dividend differential which is part of the political

difficulty. my own view is that i worry that if the first thing said is the rate, that if there is a revenue target, then when the tax reform is done and people see what they have to do, members of both parties to mortgage and employer health exclusion, that they will blink in the revenue target will give way. i think the profitable way to go is to agree up front on the revenue targeted to say to members you want to lower rates? grades. how low do you get the rates depends on how far you were willing to do in closing the tax expenditures and if the revenue target, which then gets accompanied by his spending reduction target to help get us to a deficit reduction goal. >> i see know you are itching to respond. while he is responding can we get the mics out and ready because we'll probably only time -- have time for one to questions. >> will be a fairly short response but this is what i meant by getting out of the box

we currently operate under. progressivity, progressivity, batman's in the tax code is that the rich pay more. but you shouldn't just look at it in terms of the income tax on progressivity. why not look at it in terms of medicare? right now, the biggest cost of medicare is becoming part e which is the general fund, which causes problems with the tax code that everybody else is talking about. if we could create -- my ideal world with the democrats would create a program that creates an okay medicare structure, and everybody gets the okay medicare structure, but above that, people who have wealth, if you want to be progressive, ought to be able to spend what they want to spend up what the structure is. if you want to put progressivity

on the, you put it on the table in terms of fica. the amount that people pay as their income goes up is not appropriate. it doesn't reflect what was originally proposed. that will pull some wealth out of the upper -- when you put it into the fica tax and it makes the social security of whole lot polar. you can do it in medicare. i know it destroys the concept of entitlement. entitlement is killing us. what you want is the ability to get a good socially supported health benefit for everyone say people who have the wealth can't spend it. no, let's tax progressivity. let government play with it and then provide you with a better benefit. if you want to get the wealthy, capped the entitlement.

don't give it to everybody open-ended based upon the dynamics in society. duet people spend their own money above and beyond an adequate and. both for senior living and for health. that is what the debate ought to be about. that is why i included social security and medicare under the tax setting. can you tell us your affiliation? >> brian johnson america is going to rely on politics. we know that. chairman camp put out a very good tax reform territorial, over one, very technical discussion draft event. is it at all telling or

discerning that when asked early at the chairman the senate finance committee said he didn't know what chairman can put out and doesn't think anyone does? >> i don't think he referenced it just to chairman camps program. he talked about the commission that was created by president obama. he talked to a certain extent about domenici rivlin and what he said basically that members want knowledgeable -- weren't knowledgeable of the details. i didn't think that was shocking. >> i would just say i'm not ready to come forward with my details yet. >> i thought of this because you mentioned the american petroleum institute but a chart my thinking. here is a longshot that i know is that going to happen but i think this would be the right thing to do. if we can get agreement that we need a significant amount of

revenue as part of deficit reduction, it would be a subsequent process could find a way to get some kind of tax on carbon into this mix. you could use part of the results for deficit reduction. you could use part of it to offset the events of higher -- on high-end middle income. but i am one who is increasingly nervous about what's going to happen worldwide by our inability to deal with climate change which is even more serious than our inability to deal with various fiscal issues and the fact that we do need some revenue here maybe there could be an opening for some kind of bipartisan agreement to also make drivers on that. >> one last question.

>> lloyd from spaulding. thank you all of you. there have been several references to sequestration which everybody knows was included not as irrational method for reducing the debt and deficit but as a draconian measure to force the supercommittee to arrive at that solution which it failed to do. as you know, under that provision, there is a requirement under the warren asked to provide 60 to 90 days notice if you are going to have a significant or massive layoff. that happens to occurred two days before the election. my question, do you think one is appropriate or it's necessary and secondly do you think it's possible to get some bipartisan agreement if nothing else, to

waive that warren at revision because i understand the bipartisan policy centers conclusion is that it's going to result in the loss of about 1 million jobs and that would be unnecessary if some framework issues are agreed on in the lame-duck. i agree there's not going to be enough to debate and to vote in the lame-duck removing the egregious consequences of sequestration? >> if there's a possibility that her job loss of 1 million could happen the election, it would be changed. [inaudible] >> i understand what you are saying. even the dread not after the election is not anything anybody wants going into election to talk about. >> if it has the potential for changing what people believe to

be the ocelot, the election it will affect behavior. i think, just quickly on the territorial question, everybody's talking about it now. you've got to remember, the 50s in the 60's, seventies, as we moved later into the century, the u.s. didn't go through devastating wars, didn't have to rebuild its entire economy. that's why we fell behind in steel production and other native japan to bring into the u.s.. where the cheapest country of cars changing to be more like the rest of the world, value-added under there another name and certain possibilities in the question of territorial forces worldwide, those are all

arcade. it takes energy to get someone to vote yes on something. i will just say this again. there are only so many guesses out of members. you are going to have to prioritize what you ask them to vote yes on. it's easier to ignore something that is supposed to happen than to force people to vote yes to stop something that wasn't going to happen anyway and everybody knows it. that is why they voted to put it in. >> he final thoughts? >> despite a bit of skepticism here, i think this is a huge opportunity for genuine tax reform. however we want the mechanics of the lame-duck. this is a chance that shouldn't be missed to make our tax code a lot fair, at least as progressives and more pro-growth and we shouldn't mess it up.

>> thank you to the panel for joining us. [applause] for spending the riches money and changing medicare and changing social security as well. [inaudible conversations] [inaudible conversations] up next on c-span2, google vice president history and future of the internet.

next arianna huffington and googles vinton cerf discuss the future of internet. the institute posted this to our event which is moderated by frank sesno. applaud. >> good evening ladies and gentlemen. welcome to the monterey conference center for the final event of the 15th anniversary season of the tonetta institute series, 15 years. as you know, this year we have been discussing the revolutionary changes that have

affected our nation this new century and have been reflecting on what the transportation -- transformation means for democracy and for the future. we discussed the arab spring in the middle east and the hope for peace and democratic reform in the wake of so much turmoil. we heard from alan simpson and robert reisch on economic changes that impact our future. and we look for inspiration from our founders and past presidents as we witness the changes and the role of the presidency of the -- is the electorate prepares to decide again who should lead our nation. throughout each of these discussions, there has been a common element from the uprising in the middle east to the crisis in the opal economy to the ability of the president to

communicate. the way we live our lives has been transformed because of new technology called the internet. when we last did this series 15 years ago would we have imagined that people could watch archived versions of our program on their phone or that a firm would launch a multibillion dollar ipo based on electronic friendship and photographs? would we have to foresee that this technology would become the primary means for young revolutionaries to communicate on the outside world? the internet drives the hottest stocks on wall street, shapes technological immigration and grabs the hottest -- it will have tremendous impact on society and tremendous impact on government and it has had tremendous impact on commerce and it has tremendous compact on

other institute and has changed the way we live, way we work, the way we learn, the way we have governed and the way we communicate. ..

communications and culture. our first guest is vice president and chief internet evangelist of google and is widely known as one of the fathers of the internet. he is the code designer of the ppp ip protocols architecture of the internet and was awarded the national medal of technology as well as the president's presidential medal of freedom and recognition of his achievement. please welcome dr. vincent peery [applause] our second guest is editor-in-chief aol huffingtonpost.com eager and founder of one of the most widely lead linked to and frequently cited media brands on the internet, the

huffingtonpost.com. an internationally syndicated columnist and the author of 13 books she has recently written extensively on the development of the internet and the need to include engagement, to include trust and to include authenticity and new forms of the media. please welcome arianna huffington. [applause] our third guest is a journalist and internet safety advocate who has been following the development of the internet since its early inception from 2010 to 2011 he served on the president's online safety group where he chaired the education subcommittee and wrote the

education section of the group report to congress. he reports daily as the technology analyst of cbs news kcbs. please welcome dr. larry magid. [applause] incidentally before i forget remember as we told you in the notice that our program this evening runs until 9 p.m.. usually is at 8:30 but we have two hours of these wonderful speakers. leading the discussion is an experienced journalist and moderator who has been at the forefront of the study of new media and its impact on journalism. he's the founder of the public affairs for innovative media with the project called face the facts usa.

a former anchor white house correspondent and interview host with cnn he now serves as director of the school of media and public affairs at the george washington university. please welcome back frank sesno. [applause] >> thank you very much. i am delighted to be back here including this year's wonderful series focusing on revolutions of the 21st century. the internet and social media represents the most remarkable and transform the technology we can imagine certainly since the creation of the automobile, the telephone, newspaper, anything we could imagine. just a few short years it's impossible to think of life without these technologies that

have become utilities in our lives. what lies ahead, where is this taking us? where might we end up when the mind races. i am here with three guests who have studied this topic and permitted this topic from just about every angle of communications, journalism, diplomacy and the security, safety, commerce, innovation and on and on it goes, so we will get started and it's great to see you all. i thought maybe we would start with our audience. it's a good place to start with a conversation like that and for those in the television audience or falling as online, and you can play this game at home, too. how many of you in the audience own and use a smart phone, raise your hand. how many own and use a smart tablet of some sort.

how many did your weather and stock online? just about everybody. how many have done everything online that you subscribe to newspapers and that's how you live? [laughter] >> i want to start the conversation that the subject of the revolution of the 21st century. is this a where evolution or evolution? it's both. any revolution that you know anything about starts in the way that might be small getting the first airplane off the ground like the wright brothers is in the same as flying a jet at 50,000 feet. the internet is a revolution. it took a technology packet switching at the time by the traditional people and made it work for computers. there couldn't have been a better choice. but it has evolved over the past 40 years since the first idea

was put. i see a revolution that has to be false. that means it starts as a revolution and then it becomes an evolution. but make it evolution? the previous communication technologies wouldn't necessarily allow computers to create an act with each other at the scale and the speed that they view today on the internet. arianna? >> first of all, it has given voice to millions and soon will be billions of people and that has revolutionary implications for the way that we live our lives for good in that it saying we have all these amazing -

potentially who otherwise would not sit at the table and now we think of the people that are going to have smart phones and connections like that between now and 2020. all of these billions of people are going to have a seat at the table potentially as a contributor and want to contribute about life. >> maybe it's revolutionary before i came out of here i tweeted this event and i don't even need to conjugate a verb anymore. but i think is revolutionary about it is the bible. but gutenberg accomplished if he made it possible for the person to read the priests and the pundits have to say what the internet makes possible is for

everyone to contribute to that conversation more or less what arianna had been saying. so finally after the 20th century we really if you look at the television newspaper magazines they were all pretty much the same model that gutenberg started but today we have the model where you don't have to be a priest to have a voice and that is a revolutionary change and the whole history of humanity. >> some might say that's true but when i asked about evolution it's just we are moving everything faster. there was the printing press, the telegraph, television -- benet you are reading that wrong. with the system does is facilitate interaction and discover people who you don't know that have common interest. you don't even have to know who they are in order to interact with them on line. this is a different kind of a collaborative environment that we couldn't have at any other mass media.

>> anything arianna? [laughter] >> it is in human history as often the garden of eden -- [laughter] >> i think we can say that again. balance while living in the transition and while living in the movement the internet has made it impossible but they are identified sneaks in the internet and garden of eden and i think it is before they grow

so the i would say the first snake is the danger to housing pepper connectivity. practically together one of them graduated from college and was quick to be a junior in college. it's very hard for me to convince them not to sleep with their iphone triet [laughter] >> how about people across the street slow? they're going to be giving people tickets for testing while walking. >> number two is what i call

reality. something going viral or something trending on trotter. if something is trending on herger utter the plan that can we stop for a minute and ask why, whether it should be going viral and going on a twitter? it is an extension of what tv has been going doing. >> i have no idea what you said. [laughter] >> i watched tv on mute while line in my office and the other day i remember i looked up obama is going to endorse mitt romney. really, is that breaking news? >> there's something really

delicious about analogy that you are using. i think the engineers are adam and along comes this woman with an apple and there's this company -- no, we won't go there. but it's when they get in the internet we go through something else because the general public is the full range of everything else in society. >> i want to ask for a minute if i can. talking about the sort of fetishizing of going this whole faeroe thing you've got to go finally and we asked later whether there is any value to it. it's a fascinating idea. there is a trend to follow this and follow that. we all watch paris hilton and

lindsey lehane become major celebrities for god knows what and now we can all be major celebrities and create a youtube video or post something. it probably won't happen that there's the possibility that millions of people may see it and i agree we have determined in the computer its garbage in and garbage out and is going to be published in this environment and the key thing is for individuals to have the critical thinking to know what's important and what isn't and to only pay attention to what is likely to be important and relevant. so that is the kind of balance that we play. i want to know what's important that i don't want to know just about the echo chamber that i live in but i do think that the internet makes it possible for lots of people and there are far more than two snakes. there are criminals that go on

the internet whether it is crime or to harass people were injured in to the relationships all sorts of stuff on the internet. >> you worry about our safety and security. >> i don't worry about it right to run a nonprofit, paris that understand internet safety but there is the fundamental issue that we see the glass as most playful when it's a little bit empty and we worry about bullying and find out the vast majority of kids don't believe and we worry about creditors but the point out that it's a very small percentage of people that are affected by that. so it isn't as much worrying as when we walked on the streets with a certain amount of street smarts in order to protect yourself. >> arianna coming you raise a proposition of sort of what is this about? and i think of those that polis osama bin laden most killed, and i think of the blog that

revealed dan rather is expos say on president bush was wrong and floyd, and i think of the access that people have had the gave rise to the square that toppled the government. this is a kind of empowerment that we have not had in the history before. >> yeah, and i would say that at the very moment when our political group has become so dysfunctional, when we are paralyzed in a way what is coming in terms of self expression and participation is the one power that we have. when they can influence elections and we have this incredible power to drive an entire economy and country what is the only way that we can counter that would affect millions of people are engaged

and purpose of hitting and actually have the ability now which belongs to people who are principled and can contribute to whatever. >> do you think that pipa and sofa example is -- >> absolutely. we -- i shouldn't say we but the internet community that was involved was enough to turn congress around and even got the sponsor. these were the privacy or the sopa, all online privacy act. that would have criminalize and allowed them to shut down the web sites of copyright material. the people who were against that actually come out of the bill enormous millions of people find

in on-line petition and were flabbergasted by the reasons that campaign. >> let me ask you this. could you ever in your wildest imagination have imagined that we would end up here with instant communication and around the world and someone in new zealand instantly -- unfolding the way that we planned it. >> first of all it's wrong to say just know because we did appreciate how powerful this could be coming and we made a couple decisions in the engineering design intended to give future proof life.

one of them is to make sure that it wasn't designed to be anything in particular. it was designed to move little bags from point a to point b with some accountability greater than zero. that's all we ask and all the rest of the recovery and everything else is another later on the pravachol stuff, so that is one thing we did and since it doesn't do everything in particular it does everything. not everything but the second thing we said is they didn't need to know how they were being transported whether it is optical fiber or radio channel that met every new communications technology that was invented from 1973 when we did the design could be swept into and of sword fights and used by the internet over those two things were not the top of our head trying to make this as active as possible, and i would say we thought we would publish this back and anyone that wanted to build peace in the internet and find somebody to connect to

the the system will grow organically and i would say that is exactly what's happened. >> arianna come i know that you draw the distinction between information, knowledge, wisdom and how the systems connect or not. >> there is a far greater distinction. knowledge has three stages, science, opinion and the elimination. we have information about everything instantaneously and we are also serving in opinion on everything in real time, and elimination as lacking wisdom and everybody has to agree on

that. they don't care about politics just look around. we see the leaders in every field who are very smart but high iq making terrible decisions. you look around at lehman brothers and think is anybody home? people were not stupid, and sometimes i think it insists but my point is why are we making so many decisions at a critical time in history when we need the leaders more than ever and people were disconnected from their own and the connectivity the fact that we are always on means that we don't have any time to really connect with

ourselves so if you read the story in putting all her eyes in some's book on jobs talking about the times when he came up with the most innovative ideas it's not in the middle of a crowd that you ultimately create and we now have a generation growing up in capable of solitude. ischemic but it's not just a generation growing up. i watched you. you are taxing constantly. >> but have we learned years ago that [inaudible] it started me on this journey as a recovering addict. [laughter] >> i think we have a tendency to sell short our young people.

it is true that they are tweeting and blogging and creating and building content, but everybody that i know that teaches at a university will acknowledge that kids are smarter than they used to be and they are doing quite well and we are seeing amazing innovation. those are changing. people may not be reading books the way the use to read books they are acquiring knowledge, and a certain amount of people are of sorting it read we are always going to have people that are going to miss use things and fail to be analytical and reactive and watch whether it is msnbc or fox and get a knee-jerk reaction to whatever was said but we are also raising a generation of what i think is the generation that i came from and it's probably going to leave the world in better hands -- >> you don't worry about -- >> of course i worry. secure don't worry about the ability to distinguish good information from bad information? >> i worry of the fact there's bad information out there but it's been out there for a long

time. it's not as if journalists suddenly are the first ones to come out with an active information. we saw that rot history in my lifetime i've seen it many times in the financial crisis where it was run by people a lot older than today's kids come a lot. so sure, i worry about it but also see the potential. and i see the fact that kids are put on their feet and they are thinking and responding and they are doing well. >> i can't do the accent he does, so i won't do that, but i had lunch with him a year or two ago and the subject of the internet was on the table and he was unhappy with it and the reason he was unhappy is because he thought people, especially young people were satisfied too quickly with small amounts of information. understand this is a man that crites 700 page books, it's interesting having people pay attention to all 700 pages, but there is an issue that the

instance -- the instant gratification when doing the google research or something may actually work against this notion of critical thinking and willingness to go and find competing -- >> do you worry that the critical thinking maybe an endangered species? >> i worry that we will not few young people and the rest of us with the consciousness of the meeting to think critically if we are confronted with of misinformation and we ourselves are the only ones that can filter -- >> we needed more than ever because of the diversity of inflation data we have so much coming at us we have to have criminal thinking. that is the most important that the elementary schools and parents can be teaching young people any one person's word for it for the things that frank and i have been trained to journalists and beyond that to realize that just because it is on the internet, not only doesn't mean that it's true what that we have to go deeper. >> let me go back to the audience for a minute and ask a

couple questions and if you are applying this game from home you can do it, too. for those in the audience, how many of you go to google at least once a day? thank you. [laughter] >> how many of you go to google at least five times a day? how many of you do goal something more than five times a day? >> okay. if you have friends left whatever and you check that out. so there was a famous piece i think it was in the of atlantic monthly that said is a google making us stupid. the issue was more we become reliant on this tool and does it affect our memory, is this our first wreckage? >> i don't think that is the problem, the problem is that we go to school and became a master. google when the internet or not

a problem of their own if you read me to learn to disconnect. it may be extremely important and that's key to the co sleep. it is affected that they go to bed with their device, they keep them charging by their bed and in effect the greatest thing that happened to me is i was invited to join the school of medicine sleep division. talking about it so much i see the event for the cause but there is medical evidence that you cannot have a truly recharging sleep if your device is charging beside you and you wake up and the middle of the night and you get your data if you wake up in the middle of the light? even if you go back to sleep it isn't as recharging and how many

people cannot go to sleep? knott occasionally but every night. my point is we need to learn to be able to go on. we talked about this earlier but is using technology. we are calling it gps. we are bringing it out in two months. you would be able to download it on any smart phone and it has a stress censored. it would give you a volubility. and then you would be able to program the application with a thing that has a particular kind when your children were young and on problematic. [laughter] [applause]

>> what ever it is i have two minutes or five minutes or ten minutes -- >> should i turn off my other apps? >> [inaudible] when you are stressed and out of balance and is back to you. they have things for you to choose from. young people learn to go do that and begins to identify at any age but particularly young people and i think it is the key

to learn the disconnect. >> mauney fear is that it's great to be programmed to call my wife so she can yell at me for being too stressed. >> let me tell you the subject now. [laughter] >> this sounds very buddhist to me. it makes me think of robin williams when he goes to new york to buy a hot dog and says make me one with everything. >> robin williams wouldn't be stress anybody. but let's go into the particulars of this thing we call the internet and how it is transforming what we see and learn and participate. it is said that barack obama arguably wouldn't be president of the united states without the internet. he was able to mobilize so many people to do so much for the first run in his office to give their money and time and

commitment. has this changed our politics? >> i think were it not for the internet there is no question that he galvanized young people and used the internet and organized around. they were masterful at that and i remember going to chicago when we arranged at the hotel and i arrived and looked around and looked around and i didn't believe the people what that table were running the most revolutionary campaign and i thought that has to be quite clear but that was something we

were not going to do now because first of all the terrible mistake of abandoning. he has been taking young people to use as a fund-raising tool and the one thing they can't do on - two basically treat people in order to get somewhere to the engage relationship otherwise it doesn't work. >> a covered politics and the internet for a long time. has this means of conditions changed the way people run for office and the way that we are governed? >> first of all, the gotcha. if you make any kind of mistake at any point of your life except maybe possibly in the privacy of your home is going to be on youtube. >> i don't think the privacy of your home has anything to do with it. >> we have this kind of world

we're you are always on call and accountable for everything to do when it is done right and when he did that in 2008 and as local politicians are doing every day around the country, when it is done right you can actually have a conversation with the voter and build of that community and go back to that comment that we had during the founding year of the country and democracy and we still have some small towns where people are actually involved in the campaign. >> do you think this improves our democracy and the capability to connect and to participate? >> i think it improves when you have a discussion come back-and-forth discussion when someone can blog and comment and there's a thoughtful discussions. fortunately just we have people who will trash anything you say and we have people both on television and on the internet who care more about their

ideology than the truth so it can be misused. but i also feel like it is being used effectively, and politicians can benefit from it, but also politicians can use it to strengthen -- >> i don't hear people walking around on the sidewalk were outsourcing. politics have done better and i think it is because of that. i don't hear anybody saying that it's for any reason. >> i think first of all the press the president wouldn't have been elected without the president is interesting because if the internet hadn't been there is a good possibility he would have been elected anyway using other methods for campaigning so i don't think we can come to a definite conclusion. i'm not sure that we would argue one way or another. every tool has uses and abuses and we are still learning i think what was the use and abuse and how to deal with them so it is not going to make politics

better or worse it is simply yet another medium in which the debate can happen. i know when they dealt with of the presidency how do you think, arianna huffington, a lot of emotion, the office, the execution of the presidency has been changed by the communication to call the press conference anymore he held the town hall meeting, had to have a conversation directly with the american people what are they really listening and participate >> i think one of the great things about the internet authentication it's not as easy to manipulate communication. beckham indication is almost always with a few exceptions in

the history manipulated. there's always some other reason they want to talk to you. they want to pretend they care. there have been great moments when there have been, but when it's not authentic it is not going to work on line in the same way it's not going to create this incredible movement that is going our way. >> also to the public pronouncements of the candidate on the internet or television an extension of television and the private communication of people for example on the trigger and facebook, as we have facebook friends that express their political opinion. a bit of an echo chamber with

this same attitude that i have and there's a little bit of a problem but nonetheless there is a debate that goes on among people who are a part of this community and all of the world and the same thing on twitter and the candidates don't manipulate that. they may try but at the end of the they don't have any control of what people tweet and put on facebook. >> the thing that has the most impact on you, the voter on you, the consumer, is where your information comes from. if it is a trusted source, so if it is a friend text in you, tweeting, facebook and saying checkout so and so has said, that has a different impact. that is a big change. >> i don't know whether the rest of the people in the audience have the same experience that i do but i am finding myself drawn to pay attention to things the people point me at. i have an e-mail saying read this or that.

so i did that particular fact is important because there are things that happen in the world that get the attention of policy making faster because they pop up on the internet. they have a powerful impact on decision making and policy-making and recognition and awareness, so there's this ability to communicate come this horizontal communication as opposed to hierarchical and the fact you can react when i read things like "the new york times" online you get in of bed or column some sort and the commentary. but an awful lot of this is thought provoking and it's stuff that you wouldn't normally never have seen because it wouldn't have made it through. >> it's amazing how your voice can be amplified. i was on a plane recently the airline made a mistake of having wi-fi and the reason they made

thus did is i have been mistreated in my opinion at the airport and something happened i wasn't happy with, so why tweeted and i'll be honest was dealt a. someone said it should be #delta. by the time we landed there was a guy in a red coat to take care of me that offered me a ride home. $50 certificates. now admittedly i had more to her fall was that the average person that might have had some consideration the fact that it was retweeted and implied tens of thousand of people were party and the delta wasn't about -- >> don't make larry anne gurley. [laughter] [applause] >> be very nice to him. >> but that's very interesting because that is -- that suggests that someone was following you. delta or someone -- >> they were following the #delta even if i was an unknown

person it still would have gotten their attention. >> they are now recognizing they can no longer live behind the glass and disappear because they need to enter the arena, and that's why it is going to continue growing because they have landed that conversation and the first time we of the generated blogs the first one is a big hotel change and there are moderator's. no one can appear.

the reason for that is we want to maintain a social environment and has really paid off. we've had 150 million. it's easy to get a story many of which would want release. the first comment [inaudible] it was light and the example of how they had been mistreated at the hotel with cetera, et cetera. the head of marketing wanted to withdraw the campaign.

stay in the arena even if you remove your marketing campaign then they will go to facebook and tweet. few others can average of positive experiences this is what is happening. you can no longer a withdraw. it's better to stay there. >> i think one of the big changes as you are on the line 24/7. >> eight hours of sleep. >> i want to come back to this mix of the garden and thinking about politics and how this has changed our lives imagine what life would have been like if in

the middle of the constitutional convention in this country alex theatre hamilton, john jay, madison, they are working on the federalist papers and thomas jefferson is in the back of the room tweeting. this is an incredible exercise. i went back and thought about this, what about john and abigail adams, incredible letters they wrote to one another in the lived through history. on march 51st, 1776, abigail adams wrote remember all the men would be tyrants if they could if particular care and attention isn't paid to the ladies that are determined to format a rebellion and with model ourselves bound by any malkoff in which we have no voice or representation. [applause]

the kind of communication is enshrined and is held up forever under this library and seen shakespeare's original work. i worry about communication that is temple and gone. >> it was then 85 or so what ever is a relatively small number and they would have been a lot shorter the radical conversation that didn't get people the elite, the average person of the colony at a time would have at least had an opportunity to weigh in. i don't know what would have happened. we might still be sitting on tea and worshiping. but the bottom line is that

whole period and most american history and today still the elite are the ones that are part of the conversations of that is to be the big question is how can we change that policy structure so that the average person is a part of the conversation. >> looking to get news and information. newspaper ad revenue is down in 2011 more than 10% and that kunar recently announced it isn't going to publish five days a week only three days a week and the rest find online. you have an army of bloggers that do not pay to read the we were real careful information becoming yet another endangered species? >> i'm very sad about the paper. in "the new york times" today

sitting around that's sad. i think there are the new technologies but journalism is of a casualty. having won a pulitzer has demonstrated that great journalism can be brought anywhere and we have the reporters and editors and journalists that a full-time salary and this is what we need to understand, two things come and a journalistic enterprise that honors the best in journalism and a platform that provides distribution to the tens of thousands of people who otherwise would not have. they can write or not right, they can to get the job or not to get advantage of it, but many of them to defend it because it

has amplified their voices in the platform it is just amazing how many of the young bloggers can be side by side with well-known people that get paid attention to and it's to become known. it's been a are you as optimistic? >> i think the huffingtonpost.com is a great global platform but it bothers me that the times picayune is having trouble and the reason it bothers me is not that it's published three or five times a week that if there is local reporters at city hall the don't get the economy to scale on the national international i don't know who is going to pay for that. we still of local television and radio but local television video has traditionally leaned on the local newspaper and i worry about local newspaper. somebody has to pay these people. it's not the printing press that costs money is the time and the talent it has to be a way to do

it and i'm not sure what is going to take its place. >> it is incredibly important. one of the great things that aol has the initiative where you have local journalists and the community involved in what is happening. >> arianna in newspaper after newspaper and the city after city, reporters jobs have been cut, editors jobs, circulation is down and is the correction of who was calling to report the supermarket is bad or the mayor is making off with your tax dollars. the thing that made the newspapers attractive is the cheapest way to get a large amount of information to a large number of people on a regular periodic basis everybody wanted to know what was new and because they wanted to know what was new

they subscribed to the newspaper that also meant that advertisers could be persuaded to pay for ads because the new people would see them along with the article, a nice combination of the economics worked out well. along comes an online environment and suddenly more people are speaking and it's faster. you don't have to wait for the paper to be printed, the article goes out but as soon as the editor says it is ready to go out. >> on top of all of that the ads in the newspapers were fixed and the environment can change on when they are reading it so this is a different model we've succeeded well and others have done well with advertising. the question is whether we can find business models will support high-quality journalism which i think is essential. >> are you making more money coming enough money for the

advertising 200 journalists to spend three or six months on a project to hire the others around the world to tell us what is happening? >> first of all there will be many different models. in our case, beyond the battlefield spent eight months on the lives they're facing when they get back home and had a great photography and invite to the reader into their lives and communities which is again what is so unique about the internet. the people that are leaving at these are things people could do

to help and it doesn't just and and people [inaudible] it also provides us to actually do something about it and -- >> i was very pleased and proud to see that huffingtonpost.com won a pulitzer. i remember when usa today first started publishing. the joke was that the world these short bits on how to win a pulitzer the one the best investigative sentence but was more than that. >> that is what is unique about the internet. in a sense if you think of traditional journalism, mainstream media and they often suffer from add, attention deficit disorder. the start a story on the front page and then move on and

abandon that story. [inaudible] we take the story and stay with it and develop it and invite their readers and we of photography, etc., etc. because a story is ongoing. with the story at the time unemployment and for closure paray >> i want to move on to the last question on this we talk about the revolution and the revolution really is in the old days the newspaper came to you. the gatekeeper said you need to know this and this. that was on the front page. now you go to it but the question is do you go to that which makes you uncomfortable or do you predominately go to your own.

>> one issue is as 18 years in the syndicated newspaper columnist and print with a different model i would write a column based on what i and my editor i don't know whether it got 100 possible 1 million or 20 readers but we knew we were doing something important. today there's been an incentive and there are books that pays each freelance journalist by the viewing so i have an incentive to get the labels, not an incentive toward the most important story in the world but i actually fight that enamelware would you are right there is a big danger of people doing what they used to do in print opening the paper in the sports section or business section and skip the front page. there's a reason there's important stories on the front page with this technology somebody is making that decision

online it's possible to skip right past that and easy and to get an echo chamber in the interest. on the care but the democrats or republicans and the larger discussion to respond again to the digital garden of eden there is another snake we haven't talked about and we will call it the cyber securities snake that could disrupt a lot of our commerce and open floodgates and disrupt electricity. how much time do you worry about that? >> how vulnerable are we? >> less vulnerable than many people say but more than we should be. there are things happening right now to deal with that problem that we can do or we are doing

to build a much more resilient kind of attack that can be made and i am very pleased about that. we also have to pay attention to the fact of the things you and i do that create a vulnerability. we probably shouldn't put up and people used for identity theft and steal money from the bank's etc to get into your own account and they do bad things. that is apparently our fault. we use passwords that are too easy to guess and there are some people that use the word pass word for their password because it is easy to remember. there are techniques called one time passwords that are generated for you and to have a piece of software in your mobile to generate these things so even if somebody sees it they can't reuse it. there are things like that and other things that can make the system more resilient and that is a process that is ongoing.

>> what do you worry about most? >> i think i worry the most about violence and trojan horses that we in jest into our computers through our browser because when you go to a web page what happens is you are downloading a file which is going to be interpreted by the browser when the world wide web was first created the only thing that you were downloading was text, in a tree lay out like the magazine page but in 2013 in addition to that, you are downloading programs were going to be executed on your machine through the browser whether they are - or something else and the problem is some of those are what we call now where. those are programs that when executed by the browser they store the trojan horses and things. >> what can this do to us? >> once the machine is compromised, it becomes what is

called a zombie and there is a herger that has control of the machines kind of like leaving your car in the drive with your keys. you don't know that your machine has been infected. it doesn't be hit any differently but someone can use it to launch attacks to generate spam and to see what bank accounts you are using. those are the things we need to defend against the most. >> this is all greek to me. >> have many understood -- pretty good. that's about half to respect you go on-line thinking innocently bad stuff comes to the computer do lose your computer someone

can do something. >> when we do in index of the world wide web i happen to not lose control here which isn't easy because it's time to start taking some of the audience questions and i want to take a moment to recognize our question review team because this is a moderated conversation after all. the people responsible for selecting the questions that i am going to present to the speakers. please, hold your applause if you would until we introduce the entire group. dear julie copeland, the editor of the santa cruz sentinel, an attorney with leach and walker, doug mcknight, a supporter for kaz radio, the writer for the salinas californian, kate is the reporter for them monterey county herald. thanks to all of you for helping. [applause]

now what i want to do is go to the audience questions. but you think of newspaper new sites will they serve to save journalism? >> what worries me about them as a free newspaper has its own pay wall we are going to be making payments after payment for is in the case in program where i pay a reasonable fee if i have to pay a fee that covers all of the various publications. personally, i wish i didn't have to pay for the new york time. it's very valuable until i'm going to do it. but at the end of the day. >> can you keep getting this stuff away? >> a very different business model. if they find that having this works for them, they are making the decisions to this going to have a more certain revenue line

coming and we have made a different decision to growth traffic and have overtaken the new york times. if "the new york times" didn't have the pay will it wouldn't have been able to overtake them. at the same time, the revenue line is going to be to act. people pay for the ipad applications and if we have a new magazine out that it's coming out june 14th, which is absolutely designed to take 16 under the stories a day. >> even if you are the editor-in-chief. >> we take the best of the stories every week and we put them in a setting that is

different. you want to have everything in a beautifully application once a week you can take to bed and read over the weekend. >> she told me not to take my device to bed. [laughter] >> you can make an exception. [laughter] so connect can we just observe that the newspaper business originally was largely funded and the subscription fees for the smaller part of the revenue stream and that has evaporated in many ways clacks it seems to me that the alternative model is subscriptions and another one this sponsorship which is something that arianna is pursuing. but it's important to recognize that the subscription isn't necessarily the only way of

defraying some of the cost. >> here's a question to this of you get people to click on the online ads? >> google is successful but it isn't a secret for the global advertising revenue. >> yes it is. unless somebody clicks on the data we don't get any revenue. >> but they are not randomly placed. the point is we try to present the had the would be informational late useful to someone the will care about it. they say they never click on add this interesting because they generate $40 billion a year in advertising revenue. >> my wife wants to know why she keeps getting all these ads for wrinkle cream. she's very upset about it. she swears that she isn't going anyplace is. [laughter] one of the interesting things with abs is personalized ads

that you will start showing up in the ads that come to your computer. i know somebody that recently had this very thing. his picture was in the ad the to and from a soccer game that he had attended. is this the future? >> i think there will be hundreds of different advertising features. there's a huge list of advertising and we are used to having real results when it comes to advertising because remember for years they had no clue whether they were buying the very extensive "vanity fair" full-page ad the was went to work for them or not but it might be good for them and what they spent in advertising is raising the there would be no interest on that.

but now for me with the most exciting after closing revenue models is right to be putting a lot of our resources behind. first let's take these sections that involve a big part of our dna and cause them to make a difference. we will have dedicated to sections that profile people if they're doing something good. so we at the same time have benefited sections which i give an example, johnson & johnson first is wellbeing around the world. so we have a section that is sponsored by johnson & johnson

and it has a new combination of everything on this issue. it can be a section on water, but at the same time a lot of the grants want to have a way to distribute their content. >> play the media critic here for just a minute and tell us if there is anything in this equation, big corporations sponsoring the causes on big things like huffingtonpost.com. >> it is beholden to have a very clean wall between advertising and editorial and i trust you will it is something that concerns me on the sponsored editorial because it does create this chilling effect that i think the writer someone wanted

to write a damning critique of johnson & johnson they might think twice about contributing at to that section even if he would publish it, so i do worry about the idea of a corporation sponsoring an entire page. at the same time, the companies have to figure out a way to stay in business. the notion of journalistic ethics whether it is changing for the better is an interesting question but it has to at that so i will look at this with an open mind but i would also look at it with a bit of concern to make sure that you and/or advertisers don't abuse this new model. >> there is no way you can abuse this model because the key is to make it clear and to also make it clear that we have 66 sections and people can write about anything and there is no way that anything would be

censored. i think that is the key and they would have an opportunity in advertising provided the transparency and it is absolutely clear who is writing what. >> as a journalist i enjoy having no clue who is going to advertise. if i know that there is going to be the same become if i knew adel was going to be the company to advertise of retired a technology article i would have to look hard to make sure that i didn't. it is a pressure that i think journalists could do without. >> next question and then someone in the audience. >> this is an interesting one. can the internet ever fail and go down? the answer is yes but not the whole thing all at once not since returned, and january.

benet has never failed but because we launched the egyptian revolution of the internet shut down in egypt the way it was done is to shut off all of the underlying transmission capabilities for several days and my prediction is it that had gone on much longer a lot of people would have figured out using the transmissions and satellite links and everything else to generate at least some amount of connectivity to recover from that. so it is an extremely discreet and resilient system and has never totally stopped since and was turned on. >> how about you in china how were you doing in a place where the government is working to create the great fire wall in many cases to restrict access of their citizens to the internet? >> there are 40 countries right now including the united states that have interfered with the various abilities to reach.

>> what's the problem with youtube? >> we haven't done anything. as you were saying people can get around in many ways. there is a founding internationally. in canada and cut back and france and spain june 6 and going on to brazil, libya, japan, etc., and this is definitely a big issue. >> you might be interested to know the state department has sponsored technology to help people break their way through or tunnell the censorship. there's a section that allows you to do that and others, so there are ways to get out of this just not all the people on

line no about it. >> they're using old-fashioned dial-up modems internationally to get on the internet as a people to find a way around. >> how can the consumer evo you read the information that is on the net? >> i think the consumer's need to have critical thinking skills and we should be teaching that from kindergarten up. when you see something online i don't care where it comes from even if it had my guideline on it you should look at it with a certain degree of skepticism because you should look at everything that way, a multiple forces, the credibility for example is that an organization who is normally trusted that even if it is an organization one normally trusts, "the new york times" which is reputable a lot of people don't trust and those that do have a specific situation where they've been let down so critical thinking. any time something seems too good to be true we have a recent

case with cony 2012. a wonderful well-meaning campaign about a day man killing people in ugonda, but the way in which that was presented turned out to be a bit misleading perhaps not deliberately and a lot of people had to rethink what appeared to be an apple pie type of story so everything you look at needs to be looked at with a certain degree of skepticism but hopefully not too much cynicism. i don't want a generation of cynics but i want a generation of people that say go out and look for the multiple truth. >> that's easy to see what hard for the average citizen to do unless you are going to spend a lot of time. how is someone here checking on their device as they are dashing for a play in what have you supposed to check the sources? >> how many times have you gotten any e-mail from someone that says don't click on this because your machine will blow up or the post office is going

to start charging for e-mail? there is a website called snopes and it's well worth spending a moment to go, type in what ever the headline was of the e-mail and by and large as it is one of these crazy things they will tell you this is nonsense, it isn't true and every once in awhile it is but most of the time it is not. so it doesn't take very long thinks to the good search engines to figure out whether you've got a piece of bogus information. stat here's one, arianna. in your opinion, should there be any expectation of privacy on the internet? >> so again this is a combination of two things. first of all claiming ourselves and our children about what to put on line or facebook or what to tweet about.

i know if my daughters it took awhile for them to realize what they put on facebook is not private. but it's private, mom, it's not just for my friends. no, it's not private. >> the next time they apply for a job their employer will be looking at that. >> exactly. but beyond that, as we know, there are many ways for information to be used and sold. so we are entering a new world which is you don't know where it is we do end. >> i would like to turn to the audience and ask a question. on the issue of privacy on the internet how many of you are naturally worried about your privacy somehow being compromised on line? okay. that is profound stuff. >> one observation to make is we are living in a world where

we've never lived before. people can put information on the net that you didn't have anything to do with. what can they do to protect themselves? >> they can't. you live in an environment where it is easy for a new audi to take your picture and put it on the net and you won't even know that it's happened until somebody tax you on the shoulder. i had it happen to me. i was going from the airport in san paulo to the airport and the securities and don't go on the road, take the helicopter. wind on the front of the hotel and 20 minutes later i did it have on the shoulder and someone says you're on youtube. i said was that all about? it turned out somebody's of the helicopter landing, felt this was cool, videotaped it and then as i am getting out you hear him saying that's vinton cerf. now we know how the name gets around to be a it wasn't a black