lee of a plan to return to a 4% economic growth rate which they argue is necessary to restore america's economic health. president george w. bush who wrote the foreword to the book makes opening remarks. this is about 45 minutes. [applause] >> thank you all for coming. so, when we have an event like

this a year from now, as nice as the operation is, i think we will be in a place that you really like on the campus. thank you for your hospitality. it's a pretty good interim steps i want to thank as well gerald turner of smu, president of one of the finest universities of the united states. we had the bush center -- yeah. as well as the provost and vice president are here with their spouses we are fortunate to be associated. our relationship with smu has exceeded our expectations and i hope we continue your expectations. we are very much involved in action oriented programs, and i want to be known as a think tank, an action oriented place that can make a difference in the world and so i want to thank

you all very much for having faced in us when we convince you to support the bush center on the smu campus. laura and i just got back from cowboy africa which is in zambia. we went over there because of the bush center one of our major initiatives is to honor human life. we believe all life is precious, whether they live in america or the continent of africa and we are disturbed by the fact that many women who've got the hiv virus are getting cervical cancer and not much is being done about it. so, with your help we've put together a collaborative effort to save lives. part of the mission was to kick off what we call the red ribbon in botswana has lost a full 11 in zambia where we kick off into

kimber. but florida and i also wanted to go and refurbish a clinic. i wanted the message to be a matter what your status in life is, you're never too proud to have lead paint brush and was more pain on medium and the wall. [laughter] so we went over to a clinic, and i wish you could have seen the faces of the ladies that showed up at the clinic to be screened for cervical cancer. 158 women have now been screened since we opened it up. 20% of whom had cancer lesions most of whom were treated right there at the clinic. the reason i tell you this story is that the bush center is involved with saving lives, and therefore you are as well and i hope it makes your heart feel good. it makes a difference.

to people you will never know. but know that their lives have been changed immeasurably. secondly, we believe that we can do better in growing our economy surgeon class is going to come up and introduce the panelists here in the second who is the founder -- the founding executive director of the bush institute committee action oriented place on the campus. -- [laughter] and i as well as in the shlaes and others decided we would assemble some of the finest minds in the country who share the sense of optimism that we have that we are a private sector to grow at 4%. if we put the right policies in place. my view is that we will never fix the deficit without growing the private sector. that the balance sheet -- [applause] [cheering] and so, therefore, you shouldn't take my word for it, you ought

to take the word of people who are experts on the economy and here's our product. you are the first to see it. so we published a book "the 4% solution." jim is going to introduce other folks that have written the chapters. and then the very able editor of the book and who works with us at the bush center will be conducting the panel. so if you would please welcome jim glassman, the founding executive to a record of the george w. bush institute and has led us nobly in our first 18 months of existence, and we are glad to have you here. thanks for coming. [applause] >> thank you, president bush. the panelists may come up. president bush talked to you about what we are doing in

africa. one of the ways to sum up the bush institute does is at fencing freedom. you can't be free if you are sick. you can't be free even if you live in a society ruled by dictators as the people of iran or syria or cuba. so with the freedom collection, we are showing dissidents and freedom advocates the way. we are freeing young minds with our education program. we are helping to build the free institutions of the civil society in the middle east without -- with the women's fellowship and soon we will be helping fighters for freedom, wounded warrior and others veterans and their families through our military service initiative. today as the president said it's about economics freedom which is the surest route to growth. as president bush wrote in his foreword to the "the 4% solution," free market capitalism offers the most efficient and just way to order

an economy. such a system allows individuals to decide the course of their own lives. it doesn't exist in a vacuum it's part of the 4% growth project headed by jason amity s. it began at smu in the spring of 2011. i know many of you were there. we hired the top economists and we started a vigorous website. we held a second conference on the tax policy and may and new york and we have an event scheduled in september in chicago that will feature governor mitch daniels. and like the project as a whole, this book seeks to focus americans on growth as a solution to our economic problems as the way to advance opportunities and prosperity. we are currently growing at 2%. that's not good enough. this book offers ways to get to 4%. and if we get 4%, unemployment will plummet and so will the burden of debt.

we hope that this book will become the focus of the discussion of the economy during the election campaign and beyond. it's about growth and freedom. so today we are going to have a short discussion among three of the contributors to the book. i want to introduce first leggitt friend and former colleague is the director of economic policy studies at the american enterprise institute, formerly senior economist at the fed. he wrote a great chapter on the path to growth focusing on spending, taxes and certainty. next come on the far end, jason and senior research fellow at the center at george mason university and former chief economist and deputy commissioner during president bush's term of the social security administration. he wrote a separate chapter on how social security should be reformed to encourage growth. finally, as president said verdone editorial director who

edited this book i just want to take the opportunity to thank contributors to the book tour here today. additional contributors who are not on the panel but are here today, peter of the dallas fed. raise your hand. there she is. who wrote about immigration to. richard of smu, and michael cox of smu. are you both here? and as you can both see it's very important in fact maria isn't here today i don't believe also wrote a chapter for the book and smu is very important as president bush said. this is the bush institute's first book the first of many as you will soon see. and it's unusual in that it was published by a major trade publisher and as a result, we will get a broad circulation. many of you here are supporters of the bush center and we think

all of you for making this possible and in the real sense of this book is literally yours and you will get a copy of this book as you need a signed copy by president bush and we will also be taking some questions from the floor, but i want to go to -- are you comfortable here? [laughter] >> i like you better sitting. so, brendan. you did the impossible which was to kind of trinkle as we say in texas 821 authors many of whom i'm not talking about kevin ar jason, the temperamental. tell us a story about getting these people to write. >> this past fall where he noted the book and he said we have the nobel authors in the book and i said to myself i better shut down to make sure they come

through. the first one to reach out to is robert lucas. a brilliant guy and and he says i'm kind of busy. i'm not sure. welcome all right i will go out and get myself an insurance policy. i approached him and wrote another nobel and said vernon would you write a chapter for us and i pitched the chapter to him and he came back and he said no so i'm thinking to myself this isn't very promising. i have to go back to the president and say -- he then comes back to me and says you know, there is a chapter i would like to write, not the one you mentioned. i have been studying the housing crisis and i've been looking at every session since the great depression, and what i am finding is that housing has actually led every recession except for two and out of a freeze of recession it's a better indicator than the

business investment on the severity recession as well as the recovery. in the two exceptions don't disproof his research and after world war ii when a was a very mild recession and the other was in 2001. i said what's interesting. he goes a little further and he says the exception of 2001 helped us understand 2008 a little bit because if he didn't declined dramatically as you expect from 2001 it actually power through the recession and what we saw earlier became a bubble. i thought of as a great addition to the book and then after, robert lucas comes back and says here is my chapter. so i said well this works out pretty well now we get to go

back to the president and say we didn't have the nobels we've got five. >> i think this book is unusual in that it has five nobel prize winners among its 21 authors and that doesn't include kevin who is a future nobel prize winner. so, and by the way to - 12 thank kevin and jason from coming out to washington just for this event. so, kevin, big question. is it possible to get the 4% growth? >> it's absolutely possible and it wasn't going to be possible we wouldn't let you name the book that after all. before i go to that i would just like to thank and acknowledge the president for his vision. you might not be able to tell that i'm not from texas. i'm from washington, d.c. and that is the big difference between me and president bush because if you want to commesso washington, d.c.. go ahead, that's fine. but i've been in washington,

d.c. for a long time and see a lot of policy debates go on and i have never seen a president that was passed down in the weeds secretly as president bush, and i just want to start with a little anecdote that actually i think that 4% solution was visible back then but we want to go in their early years of the president bush had maceration. he calls a bunch of the economists in the white house and it was my very first time ever seeing president bush and i think it was the roosevelt, and i was very nervous and i wonder what am i doing with these great economists and and i wondered what president bush was like to read and write at the beginning of the meeting, he started asking the nobel prize economists questions that had been bugging him about the moral hazard, a very technical economic issue. he plays the rancher down here but when he came to washington he was a policy wonk, too. that's why the bush institute i think had been found because president bush had curiosity about economic policy that

governed his life fighting. in terms of growth with its possible, yes it is possible and basically what we have to do is stop doing the wrong thing. there are three things in my chapter that i talk about that we could do that would really turn the country around. the first is to get tax policy right. it's very simple to get the tax policy right but we are not doing it. right now we're the highest corporate tax country in the developed world, the third highest there are two countries that a less friendly right now for less business than the u.s. and that is the congo but after those two, you know, we are the least friendly place and i summarized in the chaudry image of research that shows if we could just fix the stupid things we're doing a good at it by the percentage growth, gdp growth for the next decade and we will probably start around two decades to three, and the second thing is right now we owe a huge amount to the foreigners and running massive deficits if you

to think about how big the deficit is, then you probably have in your mind some idea about what the government does. the government is the part that spends and the people staffing is an office and so on. so think of everything you think the government does. if we were to set that as you know right now we would still have a deficit right now. that's how much the government is sucking out of the economy. what we need is a spending for for them because that is harming growth and the literature that i site in my tractor that shows contrary if you are in a situation like we are we have unsustainably high government spending if you. back you can get a lot of growth sometimes relatively quickly and i think there is another half% 2% if we could have for the economists call fiscal consolidation. there are a lot of countries throughout the course of history that have been as fast as we are and we've seen a lot of them fix

it. the first thing we need to do is stop having a thing expire in december. we've got the tax armageddon. imagine if you are a business person and there are a lot of business people in the room you have to decide what are you going to do next year? should you add in a factory? should you hire a bunch of new workers? you don't know the rules are going to be and if you just fix those rules and fix them kind of permanently so that people can look at them and say that is what the rules are going to be then we know that would unleash a lot of activity. steve davis, professor of the university of chicago last year by his estimate economic uncertainty was the highest it has ever been in the u.s.. came up with a clever measure like technical google to measure of uncertainty and so on. but last year was the highest it had ever been and according to their estimates last year's gdp growth was ascent and per percentage higher because all the things going on in the fiscal and the debt limit and so

on so that as a percentage and a half, so you have a percent of taxes, half of percent 2% out of the fiscal consolidation and percentage and a half out of certainty. there's and the introduction they won't get the high end number from fixing all those things but i asked president bush and very optimistic if we could get ahead of the curve on these problems we would remember once again. thank you. >> thank you. >> and to turn to jason. he rode a fabulous chapter we all know that in a financial sense, social security and medicare are in trouble. but when we ask jason and his co-author to do how do you reform the social security system so that we get loans so that it's not just fixing it in terms of making a balanced, but what do you do to get growth? what is the answer to that question?

>> i have two hours to get an answer? >> two minutes. >> the boesh institute and all of those projects. >> why don't you sit here. >> is this better? >> thank you mr. president for the remarks and i apologize i didn't get the memo today. but that's all right. >> once it's on it doesn't come off. one of the things - the deputy commissioner of social security that was a passion of mine was retirement security. and retirement security literally means for some those of our young, going to be old and those of old today. and a lot of times people think social security and that is to a savings plan. and that is actually a false assumption. the money went to the trust fund is being used for government spending is not being used for productive capital purpose, so it gives the impression that we can use it for growth and people

think they have a man and an account with their name on it and they actually own account and that is not true. one of the initiatives president bush tried to put forward as the accounts and we need to put that on the table for discussion because one of the things we're looking at now is the low savings the courts cannot yesterday about the consumption has gone down a little bit and the savings rate picked up somewhere in the mid three. but still horrible. we are not putting money to good use we are borrowing too much money and the social security system has perverse incentives that in four discourage work. you are never going to grow the economy 2% a year, 3% a year not even 4% a year if we do things that discourage work among our economy. for example and to the entire 62 we penalize them and continue to tax them past 62 years additional payroll tax contribution and the negative returns on investment in social security systems. we have a system right now that basically penalizes the second earners in the social security system so we need to figure out

a moving about in the book how to change those incentives so that they at least are neutral and they also encourage right now we are discouraging work and that is holding this economy back from actually growing. one of the things we can do is raise the retirement age and change the formula from the benefit structure which could change the tax structure so people will start working on their past 62 and they don't pay payroll taxes into the system. we have not called retirement earnings test so when people want to work past 62 weech tax them. people don't work. so you need to change those formulas. we looked at fertility will said the front and i don't have any kids i'm not looking for a child tax credit that one of the disease in the country as those who don't produce enough children and a stagnating in the dying and if we go back to the post world war ii steady growth for the fertility we actually wouldn't have a social security trust fund program we would be

balanced. we are looking at the tractor how do we change the tax system on the payroll tax fight to maybe incentivize a lower tax rate for those that have children under 18 that in the long run they would get a break when the children are in the house but they still pay the same lifetime for the tax benefit and the burden over time that they're paying today. but to meet the burden smaller and raise children. so it is a pro-family per social security work reform and these are all things we have to consider going forward. and the last thing is looking again that the private accounts. in some ways we need to return back to this idea that people need to save and put that money to capital use that is good for the economy to grow. without capital and investment and personal savings and personal responsibility for savings we are not going to hit the 4% growth so we need to look at how we would actually do that today. >> thank you. >> let me just open the floor to questions. you have a great opportunity. we have a bunch of people appear. they did a great job of explaining stuff.

>> yes, sir. wait for the microphone. >> i love action. >> it's a little too close i think. >> is this better? >> yes. >> dr. john and i love action. what is one thing that the people here tonight tomorrow night to move this words president bush streams which were talked about. if you didn't hear the question what is the one thing to in this room before you go to bed tonight to advance us towards president bush's treen, our dream of 4% growth. >> one of the things in this

country is a concerted real dialogue discourse about the problems we have. we really need to have a discussion you are not getting out of washington. you are going back and forth and we need to share information that is trust and honest to start of the kitchen table conversations again. >> that is one small step you can do. >> that's fabulous and i love that but i want to ask for an amendment also because 90% of the books that are what are never read. can you give a three page e-mail we can send to our friends to give a summary of the book. >> let me just ask all of you because i know that we are having microphone problems. can people in the back -- all

right. not very well. we are going to bring everybody up here and get really cozy. maybe it's his microphone. >> kunar, i think that it's correct. the reason why the book is so effective is that this stuff makes sense. when you've read the chapters we are talking about the economists we put a lot of work in that is understandable. a lot of work. but it to the dhaka what happens when you both for the truckers you understand why we are in the mess we are and and what we need to do to fix this and it makes perfect sense. part of it is what jason was saying. one of the things i learned in this project is if i don't eat something or why a new car this year, then next year put money in the bank and then i got money

in the bank. if i am sort of careful about what i consume every year than i've got lots of money in the bank and if i start using that interest to finance i have a higher level of consumption than i would have if i had been consumed and so by accumulating assets of two years down the road than i have the wherewithal to buy more stuff. the same is true for the united states of america and we've not been doing that. we've been borrowing and spreading of the wealth around and feeding the consumption binge, and we haven't accumulated the assets that me to see the future consumption and create growth. so what we need to do, and this is something that was evident in the speech early in 2000 when he to create an environment that is friendly to capital as of the business and capital come here and then we will have more work in the future and then we can grow our consumption and our well-being and half 4% growth. the reason why you need to read the book is that it makes sense and we all need to become advocates for giving the sensible thing because the

sensible thing is the last thing that people in washington are talking about right now >> and i think there are four chapters in the book that kind of sum it up. president bush's foreword, my introduction, brandon -- chapuran y growth and kevin's chapter on chapter six which presents three or four has he just outlined quite ways to grow so maybe that is the best answer to your question. other questions. >> to follow on that. one of the goals that we have in this book is to change the conversation to grow and not just the the date between austerity and growth. growth really matters. if you are growing but the economists are growing it makes solving these other problems a lot easier to do. you ask what we can do. we have the effect that growth matters and to start thinking about growing versus just austerity and it's important and it helps us get towards growth and i point out in my chapter.

the growth is ultimately the target. we have to grow the economy. so, are there other questions? i see another question -- yes, sir. >> okay. [inaudible] [laughter] [inaudible] >> president bush has been really had a monopoly non-partisan, and i think that he's focusing -- i agree and i should say he focuses very much of substance and the one thing i can say is if you focus enough on substance you can convince anybody because the argument is sensible and our objective what ever we are going to call ourselves is to make a convincing argument because

there's been times when the basic argument has won regardless of the white house and i think that the fact is unemployment is so high right now that we are really desperate for good ideas, and i've got to say that if you look "the new york times" gave this the kind of rave review. i know "the new york times" is famous for being in the tank for president bush. [laughter] but i think that they probably did that because they recognize the gravity of the current circumstances and they as well are hungry for ideas because they see things we don't and i can't imagine them not having that attitude regardless. >> [inaudible] >> yes, sir. >> if obama is reelected, what are the chances [inaudible] >> if i could just answer that, i'm an optimist on america.

i believe in america. if america was a publicly traded company, i would buy the stock every day. this country in this economy is tremendously resilient. one of the great things i think about the book is it's got ideas that require action in washington and at the state level and the individual level, and the business and corporate level.

dilemma that on the one and if you cut taxes or cutting jobs. if you cut taxes or cutting -- i'm saying it wrong. >> the cut the spending.

>> you cut the spending. that means you're cutting jobs. if you keep on spending it means you have the problem. so we need something concrete to say about that rather than, you know, we need to grow with things like that. >> okay. question. i will repeat back the question. he said, how do you resolve the paradox or the conflict between people who say that if you cut spending, if you cut government spending you will cut jobs, but if you don't cut a government spending you're going to increase deficits and debt. now, i hate to have kevin dominate this, is chapter goes into this and a very interesting way. see you want to answer the question? >> there are two answers. cutting spending is not always bad for the economy. if you eliminate a government job is not necessarily bad. an example, does anyone know and the last three years the federal government has added 305,000

regulators? if hired 35,000 new regulators, more than they had when president obama took office. i don't think as regulators are necessarily give for the economy . but the real answer is just that you have test change the long-term growth of entitlement. that is the big problem. you know, jason has a big chapter i have to do that, and if you do that then you're not necessarily causing a big radical reduction in government spending this year but making it sucks in years from now it is with, lower than we currently expect. we are introducing certainty and reducing future benefits and away the people can see. with something like mort believe and extraterrestrials that there would get their social security check. and so if these changes, they don't actually think they're worse off. right now we're promising a benefit in the can i get. if the promise teeseven state --

as we promised and a benefit they think they might get date book think they're better off. >> a great part of the buck. seifert did hoover did, but it is about the u.s. engineer who went to china and saw them building a dam. interested in having jobs and job creation. sees them building a dam. the engineer, are they using shovels? we will pull we're trying to create jobs. the engineer says, give them spends. all jobs are not the same. and i'm not saying that it of need direct, with the idea that if we reduce the growth of government spending which would be an important first up is not mean we would have growth. a government job in the private

sector, productive capitol investment which will grow the economy. so as he said with the entitlement reform, roughly three and a hatchery in dollars last year. the federal government cannot even the state, three and half trillion. one half the social security, medicare, and medicaid. government expenditure programs to, 45 percent of government is managers. into dozens and medicare and medicaid combined to spend more than social security. $700 billion program. it has grown. health care, medicare, medicaid, it's growing. if we don't do something to rein those programs back in and change the incentive structure we are going, not at the end of this year. we are looking right now that interest rates are so low. we have the ugliest person at the beauty pageant. were you going to put your money?

they're putting it here. interest rates are so low. that is out trying to last forever. a long-term average of six or 8 percent. one percentage point we add on. chilean dollars in debt. federal expenditures. paying china for their military. we cannot allow that to happen. we really are putting regardless of who's president, they're going to face the sack same problems we have today. part of what this action oriented is doing is putting more out there so they can have a discussion about the important things. aside from the history. when the countries of the tipping point.

the retardation and growth. right now we're at 100 percent. the chin chin dollars. pressing a reduction in growth potential. and one thing, those chapters, but we did not see them. there is a uniform sort of concept. reduce the debt. we need to have more savings in is country that's the uniform they drop the entire book. more difficult problems going forward. >> one more question. somebody here. >> i think you hit the nail on the head. we are spending roughly a chilean and a half more every

year that we bring in. my question is, let's say that by some miracle romney was the election. we will there be a political will be to reduce spending and raise taxes to the point we can effectively reduce that? and that is in light of historical low interest rates, you know, that at some point are going to go up. i'm interested in each of the panelists comment. >> the political will. >> i think the answer is to yes. what is good for the goose is good for the gander. right now we have the highest corporate tax rate, up 35%. president obama and governor mitt romney have both come up advocating. president obama says 28, and romney says 25. lower marginal tax combined

ticket for individuals? so we start having that by and large because of the commonality in the corporate rate. you might see something happen in 2015 regardless. the corporate tax reform. the day's session on tax reform in general. you mentioned the one at trillion dollars. for those new york times columnists he think that it was up enough, one half trillion dollars extra spending the year. >> you know, in any discussion about economics we didn't treat any of you to the wonderful charts tonight. i will mention the political will question. he had a very fascinating chart. he put on a line. you could run this pack.

it's about 3%. sometimes less, sometimes more. usually much more, seeking catch up to an average around 3%. something very interesting. you look at the recession. and it has taken a step down. started to grow at a lower trajectory. so we never had that ketchup growth. we never come back up to where we should have been. we are on a lower trajectory. over time when we get further and further from where we should be and where we could be. another one of our chapters, get that and say, you know, this is not too dissimilar from where europe was in the early 1970's. moving about our rate. we were pretty much in line. and so the mid-70s. of a sudden demise significance step down. there were on a lower growth trajectory. taken a step down and run. so year after year after year that falls between us.

is now about 40 percent of gdp. that is a pretty significant gap . we are looking at, just to get back to the chart, the beginning of that. if we don't get back to that we could look at europe and say, that is our future. and since we have the benefits elected europe, like if greece, look at what is happening around the world and say, that is not the future we want. nothing concentrates the mind. come on people being unemployed. on a plant is a crisis in this country. and i think what you will see in washington after the politics is done in november is that it will be a consensus on getting back to growth and the policies that we know will put americans back to work. >> i think that you have to understand that the way that we got into this mess is sort of the second mass, not the first

mass. it is that a number of policy people, including congress and the new york times and advisers of the president really wants is to try to fix the country said that we need to do is take a chapter and borrow a lot of money and spend a lot of money and if we do that it will be great. and there were those of us at the time he said that is that's going to work. the reason we said back then that it is not going to work is that if you put in this year a big surge in government spending, even if that makes gdp go up, when you take it away next year it goes down. we're going to do the policy that you recommend in not only have to know it is bad this year, which is certainly do, what you have to know it would be great next year and we could afford to lose the growth. and says that does not seem possible, while we argue, we need to pursue policies that are somewhat reminiscent of what we see in the corporate growth chapter. the senate budget committee, and

talking about what the next step should be. the democratic senator in that hearing it was willing to defend the stimulus. and i was being pretty combative in my testimony. nobody argued with me. the point is that the economy is terrible. actually what we're doing right now. and everybody wants to do something to fix it, and that is a great opportunity that allows to try something new. >> think you. and i just want to emphasize, we have been talking a lot about fiscal policy year, spending and taxing. and an entitlement policy, but this book also gets deeply into the energy, emigration, entrepreneurship, and a lot of other areas where we think policies, if they changed american promote growth. so thank you all for coming. thanks you, mr. president. pleaic