is tragic with economic consequences of people's lives and we're missing leadership that recognizes everyone does have potential or deserve a chance and we save lives with trading. we can solve every problem that we have to recognize the most important resource we have it is human potential. it is limitless. thank you so much. [applause] >> i am going to go out of order for one second. you have written a lot of good stuff on the decline of the americas start a parade that quantitatively which is

the most important form of job creation of start-ups what is going on? >> thanks to the heritage addition i appreciated. i think when high-school students 100 years from now garner about economics there will hear about john maynard keynes and art laugher absent a. and then to go into permanent decline. i read a lot about what is going on. i use google and facebook

did we're doing great. with web applications. looking at the numbers of a steady erosion of the startup the past 30 years. with big box retailing stores that is not so good for mom-and-pop but it is for consumers. they get paid higher wages in than people get less expensive goods. that could explain part of it. to see a decline not only of start-ups with the high-tech start-ups overall which was the fastest growing business consultants call a fast growing firm. that is worrisome because not only do they create a lot of jobs but innovation

whole over the past 20 years the start-ups have the important function with big companies. you can do two things you can try to innovate or weighty there is the third thing you can try to get a tax break or a regulation to get the advantage. but that decline is extraordinarily important.

we don't become like scandinavia but we are a social democracy with the huge wealth first-aid. >> welfare state. and our only edge is an entrepreneurial sector. if not for our innovations looking at the dynamism i hope that the congress looks at all policies. >> is there a single overriding wet blanket to prevent the start up? >> there is a lot of research. for the older countries to be less to economic --

dynamic. as the heritage fund asian regional lot of work on taxes but we also have to remember a regulation. at this point to kill dynamism that anytime congress passes regulation the lens is does it make it harder to grow that business or give the edge to the incumbent? >> 70% of small-business owners described the federal government as hot style to them.

is there one single regulation? not that i am aware of so add that up as a heavy burden. >> i don't see a lot of specifics that the growth of the '80s and '90s with broadbased tax reform what are you thinking? which direction should we be going? >> the other 30 percent are selling to the federal government. [laughter] but we have experience with

the enormous reservoir data. over the last 75 years we have a huge base to look as success and failure but to have success you need a 5.program. o o rate broad based query replace all existing taxes to put them into the aisle will come back to that. spending restraint as milton friedman taught us government spending is taxation and the tooth fairy and a longer works at the treasury every dollar they spent the take from someone else.

, the flat tax and spending restraint nothing can bring in the economy to its knees than the unsound monetary system. when we came into office 1981 and the private interest-rate was 21.5% with double digit -- double digit inflation. there are some things we do better them foreigners some things they do better than us but they would be foolish it is called the gains from trade and i don't care what you call it but free trade is essential to economic growth. we all know we need regulations but to create a

system of regulation. the one should suggest she should wake up to decide which said the road you will drive on today. about if i can with that of a flat tax to mix a little politics and then a government should get the hell out of the way to let the private sector solve the problem. you should not pick winners or losers that is up the government's role. looking at the low rate broadbased flat tax. and he replaced all federal taxes. with two flat rate taxes on

personal and adjusted gross income and 12.8 percent flat tax on business net sales. but the flat rate tax across the board to you would match all revenue. with no laugher curve of fulham point mitt could you imagine what would happen if that is what we had? with a low rate broadbased flat tax? you would not have to pay taxes get rid of the irs. if you go your neighbor's lawn for $10 yes have to send it into 0.8% of that but just with the politics of it the closest we came i told you about jerry brown he came in second and i will

tell you we would have taken clinton out in the democratic primary. hakes said three weeks before the new york primary jerry brown announced he would have jesse jackson as a running mate and then it evaporated moments thereafter but jesse though he had the second most number of delegates in 1982 on the flat tax. the democrats. let me tell you with the '86 tax act. with marginal rates is that a big enough cut? just in case we mistake couple people we cut the corporate rate 46 percent down at 34%. do you follow me? we got rid of lot of deductions and exclusions so

it was revenue neutral we lower the highest corporate rate it replaced 14 tax brackets 15% and 20%. that's it. the bill passed. can you imagine that today? it was 97 / three. three democrats voted and then just leave me give right now. kennedy and bradley and dr. dr. ben and why did they vote? because they know it is right. if you read their press releases it is the pro-growth agenda. it can be done and my motto

is don't just stand there. un do something. get rid of the damaged. [laughter] and that should be the private agenda to run do stuff to let this wonderful country solve its own problems. >> why can't we get there now? >> we can. we will. we just won the elections and eject jimmy carter to get ronald reagan myth and you cannot imagine is that great president who will follow barack obama. [laughter] >> steve let's pick it up with tax reform. there are other issues. it looks to me judging from

the white house that president obama will come out against against the keystone xl pipeline in now to hear governor cuomo is against fracking on new york state with the recommendation of kennedy, jr. is said yoko ono has been his energy advisors. [laughter] people with long held experience in the energy field. so what will happen when obama finds the way? and what should republicans do about it? >> is the biggest dory but i just want to back up to get to your point of about 4% growth. how to make a bad, that pass? we had that dropped the 80s

and 90s and i would say that one of the contributions is that he is set up this interesting experiment about the two competing models we have been talking about the keynesian model of government spending and the reagan model to a lease the supply-side unisys the important point we have to hammer home it will never be learned by economics that the people are starting to understand. reagan came in with incredible crisis. but obamacare and entering great economic crisis no question. and as you know, they use diametrically opposite approaches he deregulated

the economy and those private businesses with the stimulus plan with the multiplier effect. he has thrown the keynesian playbook at it. but look at the records and this is what drives people on the left crazy. that in the five and a half years of the start of the reagan recovery u.s. economy grew at 4.1% and at exactly 2% under obama.

that may not seem like a big difference but it is enormous because of the compound in fact,. so with that growth deficit is a huge mantra of pro-growth republicans to face the economic growth deficit and that is $2 trillion out. and with the first five and a half years under ronald reagan we had to a trillion dollars more gdp imagine how better of the american people would be. if you took that amount to a program to every family that is $15,000 more. and this came through loud and clear with the midterm elections. the american people are angry and filled with

anxiety with the middle-class increases so here is one other statistic. the average family in america the average middle-class family since the recovery began not the recession but the recovery has lost $1,600 in income. that is devastating. that is why americans don't believe the president when he says how great things are. but if we were sitting here seven years ago he and i told to america will go to the biggest economic boom and by the end of the decade the energy independent to see oil prices down at $52 a very with a guy was crazy but just as recently as a few years ago to say america

is running at of oil and gas. but the growth dividend is so enormous that they peddled the story is craziness. it comes hundreds of billions of stimulus into the economy when energy is cheaper. >> wait. i argue this i am told by the best portfolio managers and hedge fund managers who missed the five-year stock market rally they had a lot

of schwartzman they were covered yesterday as the dow went up 300 points but they tell me but it is bad because first of all, you can make any money. they can make any money. there over the average. the banks made leveraged loans to this is 20081 guy a accused me of not understanding that. to have a systematic baking / energy / junk-bond global default.

>> the good news we will be on tv a lot more. [laughter] >> i asked them if they drive cars do you see a lot of motorists weeping at the gas prices? [laughter] so i just want to ask that the hedge fund guys are not right? >> that is because it hurts the hedge fund like crazy life expectancy because it hurts the people at the role homes. teefor teefor

.. .. by the way they did it in texas. >> just to finish the point very quickly so yeah it's a huge

story. the democrats are concluding on the wrong side of this. here we are in the biggest oil and gas revolution in the history of the world and we are talking about windmills. republicans have to talk about pipelines. they have to talk about something you talked a lot about which is overturning the ban on the export of american oil and gas. one other thing larry they have to take on the radical greens in this country that are anti-growth anti-development and anti-progress. if you do those things this can drive a real expansion. >> i was thinking the guy who is weakened over the decline in oil prices is close to a nervous breakdown right now. it's flat and mayor putin. there are a lot of scholars here so correct me if i'm wrong. i'm not a foreign-policy guy but if vladimir putin goes down with that not be a good thing for

america? >> correct me if i'm wrong. it's very naïve about these things. >> isis gets $5 million a day from petrodollars. we can define their enemies. i know they want market share. nigeria and other places are growing like crazy but i think the saudis gave us one. they don't like putin and they don't like iran and that was part of their decision not to try to meddle with the market. >> i agree with you. i think the saudis understand that oil and oil prices are a strategic weapon and they use it that way. >> i want to ask you again i want to come back to regulation taxes than i want to ask you

hydraulic fracturing and horizontal drilling our technology breakthroughs as you know. i kind of look at this as tech breakthroughs that happened to be in the energy business. aren't these principles going to be applied in other areas of the economy? >> of course and that's why it is so distressing that we are making innovation and entrepreneurship more difficult because it transforms every industry. i mentioned that small-business innovate at seven times the rate of big businesses. there's a reason for that. innovation, i was very proud. a hewlett-packard by the end of my tenure we were generating 11 patents a day. it's a rapid rate of integration but imagine the small-business startups innovate at seven times

that rate. why does that happen? it's not by accident. innovation requires risk-taking. risk-taking requires flexibility ingenuity creativity. those things are more difficult and big bureaucracies. they are impossible and big government bureaucracies but they are also actually more difficult in big companies with a lot of rules and procedures. you need the dynamism, the flexibility to have entrepreneurship and innovation. absolutely innovation is transforming every industry. one of the things we ought to think about as a nation when we think about giving everyone a chance, when we think about providing jobs and opportunity for everyone, when we think about economic leadership in the 21st century we have to be the innovation leader. we have to continue to be the entrepreneurial leader in the nation that we also have to lead in the industries that will define this century. we know what those industries are.

energy is one. biotech is another. aerospace, yes we need to be landing things on meteorites actually. all of those industries are going and of course information technology social media. those four and there are others but those form particular are going to define this century and we have to lead in those. we are beginning to lead and energy. no thanks to the obama administration. we continue to lead in information technology and we need to lead in aerospace, space technology biotechnology health pack as well and innovation will transform them all and is transforming them all. we are making it far more difficult. one last thing on the keystone xl pipeline if i may i think president obama in a less continued obstructionism with the keystone xl pipeline is an example of their hypocrisy. the facts are clear. if you are truly worried about

greenhouse gas emissions, what we are doing today that is transporting by rail crude, that is worse for the environment, far worse for the environment than the keystone xl pipeline but nevermind they say. nevermind they say. this is the triumph of ideology over economic growth. it is the triumph of liberal saying we are prepared to sacrifice your livelihood, your life at the altar of our ideology and let's not forget these poor coal-mining communities in kentucky and west virginia where drug abuse is now at 40%. the community has been destroyed because liberal ideologues have said we don't like how you make a living and innovation can make coal-mining, is making coal-mining safer and cleaner as well and no matter how many families whose livelihoods we destroy in west virginia the

chinese are going to continue to burn coal. >> harold hamm the leader of the north dakota fracking told me as they went in there and bought up land they made a lot of small dirt farms and created a lot of millions in fracking which i guess in america today is a bad thing. but also he gave a lot of jobs to field hands and roustabouts and people who have to operate these fields. my question to you is if fracking creates 80,000-dollar a year jobs and that the bls says the waitresses in north dakota are making 35,000 a year, pretty good in prior to that they were unemployed.

but there are more millionaires which is creating more income inequality. the way i look at it is a rising tide lifts all boats but i'm an antique. i'm a dinosaur. that was reagan talk. that was jon f. kennedy talk. we are all happier because we are all working but scholars at heaven for bed other left-wing think tanks are telling me that inequality is growing and it's bad and your friend thomas decayed wants to tax everybody 8%. so what is the answer here? >> i think there are two kinds of inequality. there is a kind we should be concerned about and the kind we should be less concerned about i think. if someone is a billionaire and he or she became a billionaire because they thought of a great idea, a new product that is

fantastic. i think we want those billionaire entrepreneurs and the u.s. despite the fact that they badmouth the u.s. immigration dynamism we actually have for big advancing economy more of those as a share of the much bigger population than any economy in the world, more than germany. the other end of the spectrum it would be like france. they don't get a lot of billionaires. so we want policies that create more billionaire entrepreneurs not because i care so much that they have a billion dollars or $50 billion but all the spillover effects like all those jobs where you just spoke about. but if that wealth inequality is because you work in an industry that is protected by government in some way so things can get

very big or somehow you are able to negotiate a great pay package that has no link to the actual performance that kind of inequality i'm a lot more worried about. we talk about innovation and dynamism and i know it's a theme. a lot of people talk about crony capitalism. if the reason we have inequality are one of the reasons is because there's a lot more cronyism in the economy for instance because we have a too big to fail financial system where banks are bigger than they were before the financial crisis and if something happens to one of these big banks are multiple banks despite what some of books we will bail these banks out again. that's the history of banking. the government always blinks when a big bank is about to go under. that is the kind of inequality and cronyism that i'm worried about. >> arthur do you think the 12.8%

flat tax and i'm going to stay with this inequality but i want to move it back into the framework of her forms you were talking about. 12.8% flat tax for everybody can be a substantial tax cut for the rich quote unquote. that's the argument. there are people on the left and most of the people on the left oppose that and there are even some conservatives that oppose cutting the tax rate. what is your feeling about that? the argument of taxing the rich and redistributing income income and wealth inequality and how does that tie into the flat tax? >> let me if i can just say we have tons of data. the irs is extraordinarily confident in finding out where anyone who has any money exist. in fact the first publication in the english language, not in the english language but the great

britain was the doomsday book which was a collection of taxes and great britain for the king so we could find what everyone had what. i will see right now that when we went from a zero tax on the rich to a 7% tax on the rich revenues went up down those people who are rich, i will concede that. just joking. we have records there. by 1919 the highest marginal income tax rate had a wit risen to 77%. the rate in 1920 was lower between cox and roosevelt and harding and coolidge. we cut the rate from 77% to 25%. the share of income taxes paid by the top 1% as is a share of gdp went through the roof during the 1920s. we have a beautiful economy and in the great depression we went for my 25% tax rate to an 82%

tax rate. tax revenues for the top 1% decline during this. math. it was along the steepest recession in u.s. history in my view because of higher tax rates. then you have the period of kennedy which you are right about there a cutting from 90% to 77% plus the investment tax credit and accelerated depreciation. he was a taxcutting supply sided crazy guy. tax revenues for the top 1% went up during the 60s and then we had the four stooges johnson nixon ford and carter. the largest assemblage of bipartisan -- ever put on her. you remember all those taxes. tax revenues from the top% went down 1%. we had a depression a terrible 16 years and then of course we came to the period, does anyone

have any water? i'm just joking. the skies opened in and the sunshine down and ronald reagan was nominated and elected. oh be still my heart. we cut taxes all over the place. if you look at revenues from the top 1% they went from 1.5% of gdp in 1978 before steiger hansen to 3.7% of gdp. the top 1% paid back with massive tax rate reductions. it's just incredible and the boom of all booms occurred. that is what i want to see larry. let me if i can say this and let me emphasize here it's not republican or democrat. it's not left-wing or right-wing. it's not liberal or conservative. it's economics. this stuff is independent of your ideology. economics is all about

incentives. if you tax people who work and you pay people who don't work do i need to say the next sentence to you? you are going to get a lot of people not working. if you tax rich people and give money to poor people you are going to get lots of poor people and no rich people. if you have two locations a and b at the raise taxes in b and lower them in a a it produces manufactures and people will move from to. it's economics. raising tax rates on the rich kostas revenues. that's the one area everyone agrees to. it does. lowering tax rates on the rich provides a lot more revenues and that is exactly what we need larry. we need a low rate flat tax to bring the system into providing the most revenues we need in the least damaging fashion to the economy.

>> jim pethokoukis you have a different view. you want republicans to avoid tax cuts on the top and rich and you want to focus them on the middle class directly and other so-called conservative performers do. it's a legitimate disagreement. how do you respond to art laffer and fleischer program more efficient? >> for folks on the right we have had a tremendous victory on taxes over the past 30 years. we have gone from a 70% top tax rate and tax code that was not indexed for inflation to one that is indexed for inflation and even now it's at 40%. so i am all for dropping the top tax rate but if you look at

where taxes were then and where they are now and the fact that 45% of americans don't pay personal income taxes and the fact that we are not at 70% anymore and the growth gains that we get by dropping it from 402 where some house republicans want to put a 25 or 28 where was in the 1920s. the fact is you have to take in account or one most americans are going to get a tax cut. americans got tax cuts and a good chunk of americans are going to get a tax cut. this is going to be a revenue loser in which i wouldn't care so much if we were at gdp of 25% as opposed to 75%. you are going to lose revenue. you are not going to get a good chunk of the american people a tax cut and if i was going to come out of the box with a growth plan the number one thing

i would come out of the box with would be cutting taxes high in taxes for wealthy americans who have been doing very well. a fascinating poll which i dug up while you guys were talking a poll came out over the summer. they asked folks what do you prefer, economic growth or increasing income inequality and hear some good news. 16% of the people preferred candidates who want economic growth versus less income inequality which i think is a great statistic. likewise by 62% to 33% they prefer candidates focused on economic growth to provide more opportunities versus a candidate who is leveling the playing field. i think it's very encouraging but then i asked the same people are right you want economic growth the one opportunity, what policies do you think will get you opportunity? the number one policy, that's

pretty good, or reduce regulation on business. next increase the minimum wage. that's at 58%. guarantee all workers a living wage 57%. cut taxes and a high-end income and job creators 40%. cut tax rates on high income workers. i'm more interested in the policy than the politics and the messaging. i think given the fact that middle income taxpayers have not had a raise in years to think the corporate tax code is in worse shape than the personal income tax code. is there anybody else who wants to bring up the idea come out of a box with a set of policies to address the everyday concerns of the middle-class voters which includes getting a good job and includes take-home pay and also includes whether they can send their kids to college without

saddling them with enormous debt. again having your lead idea cutting the top personal tax rate i'm not sure that would be number one on my list. >> no let me follow up and i want everybody to react. you also propose a significant 2500-dollar increase in the child tax. is that the middle-class tax cut that you think will work and i want to put the politics aside. >> it's indisputable that if you let people keep and this is a tax credit which would be applied against your income and your payrolls taxes. it's not fundable. you have to make some money. it's indisputable that if you allow people to keep more money they will have more money.

if you let people keep more money they will have more money and i think that's a good thing that they can spend on childcare or they can spend on getting their kid tutoring if one of them has trouble in math or for a college education. as part of a broader portfolio of a pro-middle-class agenda when combined with a source of deregulation i think business tax reform is a very powerful thing not just for economic growth but also for politics to middle-class america. we basically think republicans have nothing to offer them but mitt romney didn't care and show no empathy for them. if voters go to the voting booth and they think this is the man or woman who their big priority

is cutting taxes on the job creators and high-end wealthy people helping -- hoping they will work more and invest more think it's a political loser and on economic grounds is not a top priority. >> i will take you back to jerry brown. also lefties in the democratic raising rates in the lowest in having a flat tax. people understand the flat tax is fair and correct it if you make 10 times as much as i do you should take 10 times as much in taxes as i do. when you get into this fuzzy land you don't have a standard. that's a good standard. gets rid of all the bureaucracy but i do want to go further. >> why didn't people flock to the romney tax-cut? >> if you read the whole planet was terrible. romney wanted to do tax cuts for

people other than wealthy people i need separate provisions in there. they wanted to increase the progressivity of the tax code. i voted for romney not because i thought he was any good but because i thought obama was worse. we haven't had a progrowth agenda since bill clinton and bill clinton was one of the best presidents we have had in one of the most disgusting people we have ever had but a great president i voted for him twice. >> do you think that top rate where it is currently at calvin coolidge levels would raise revenue? >> would raise levels. >> do you think we are on the wrong side? >> clearly we are. work -- look at warren buffett he pays 61 hundredths in taxes because he has gives to his family foundations. he doesn't pay taxes. you go to the top 500 people they all have their income in unrealized capital gains and

they all have their all 501(c)(3)'s. forgive me but what you do is get rid of all that stuff and have a low rate so it doesn't matter. we all make choices based upon what we think is right not because of our tax dollars. it's really wrong to tell people if you spend 40% of your money in taxes you will spend 40% of your time trying to avoid them. get that rate down so people lose interest in taxes and don't look for deferred income specials and let them try to make money and grow the economy. >> keeping telling a voter that i'm going to cut the top tax rate for people who have been doing very well and by the way i'm not cutting taxes for you and to some people on the right would do for those 45% who aren't paying taxes you have to contribute. i'm going to raise your taxes.

that's a wonderful strategy. >> we are missing something this argument. we can argue about their rates but at least half the problem with our tax code is its complexity allows people to game the system. the tax code is used to -- to further certain people's interest. it just is so we have to fundamentally reform the tax code not just in terms of its rates. absolutely in terms of its rates but in terms of its complexity and i also think that we get it wrong when we say that as a requirement for tax reform, my view of tax reform is fundamental simplification of the tax code as well as a

discussion of what the rates should be. but i think we missed something when we say you know whatever we put forward should be revenue-neutral. let me just say this government takes in too much money. the only way to begin fundamental reform of governme government, fundamental simplification of government, fundamental focus on performance in government instead of just out-of-control growth year after year after year regardless of who is in charge is to actually start sending less money to washington. how many people, i mean you all know this but i started my career in washington d.c.'s working for at&t after i got an mba after becoming a secretary and i sold to the federal government trade anyone who has done business with the federal government knows that in the

last six weeks of each fiscal year every government agency spends every time they are entitled to whether they need to or not. and they do so because they want to make sure that the appropriations process is focused on the rate of increase for the following year. not what have you actually spent or what do you need to spend so if we are going to reform the tax code lets start with the principle that we must fundamentally simplify and get it as simple as possible and that's actually have a debate about whether it needs to be revenue-neutral at all or whether we actually should start down a process of having government spend less. >> we have done some polling at heritage on the subject of tax reform. it's the number one issue for economic growth and i think you are onto something here. when we do these polls what we are finding is when you asked

people about tax reform the one word that comes shining through and we may not like this but the word people want from the tax system is fairness. that means what we have to do is define what fairness means. >> sorry to interrupt you but what most people know in their bones is it that so complicated that i can understand it it's not fair. most people know that. if i can understand it i can figure out whether it's fair or not. if i can't understand it unless i have 100 accountants on my payroll it ain't fair. >> they also think somebody else is getting something. these rich people are getting off with not paying enough and i've come to the conclusion if you are going to do a big change in the tax system precisely because the way you talk about in this discussion you have to do the big bang. you have to blow up the system

and start over. what's interesting about the last presidential election the one thing that people remember about, republicans got a pretty lousy deal last time but what was the one thing people remember? 999. remember that and i think you might've had a hand in that one. there's just a variation that people want something that's understandable. they think everybody is going to pay their fair share. there is pro-growth and i will add one thing given the scandals we have had over the last are dramatically reduces the role of the irs in our lives. >> by the way i have an e-mail coming about the fair tax. the earned income tax credit which i generally favor along with the child tax credit are two of the highest fraud tax parts of the iris system. i was reading and a surprise me. i didn't know that much about it.

the child tax credit has definitional particularly when it comes to things like adoption or abandonment for example and we will get into the breakup of families in a little while. so those are issues. steve i know in your distant dark past you have flirted with the fair tax national sales tax. i think you have overcome that but i want to get some specificity because we have an e-mail. dave camp has introduced the tax reform act of 2014. he says it's a band-aid for tax reform. this person wants us to push the fair tax act h.r. 25 which would be a 135 page bill that has been buried under the table and the irs needs to be abolished and the fair tax accomplishes this. i always thought the fair tax

was -- but putting that aside if we had fair tax would we abolish the irs? i don't think so. you would have so many complications with the fair tax and you would have give up some carveouts. are you still on this fair tax thing? >> i think, like the idea of a national consumption tax and i do think and every time you don't have to fill out a 1040 form. you just pay your tax with the cash register. whether that's achievable right now probably not. i like our idea of some kind of flat tax system and by the way arthur some point that may be the stepping stone to moving to a consumption tax. as you know larry arthur and i have done a lot of research in the states and we have a nice little experiment. a lot of states like new york and connecticut and new jersey my home state of illinois and

the state you rants for senate and in california have high income tax rates. we find conclusively larry that states that tax consumption and don't have these high taxes and by the way when we talk about that one or two or 3% with all due respect let's remember who those people are. they are the employers in this country. they're the people that create the jobs. that's a really important thing. you can't have one without the other. because i view the problem that you identified jimmy as a pre-tax income problem not opposed tax income problem. the middle texas problem is that they are paying so much income income tax. it's that their wages and salaries aren't right. >> the tax plans i have heard it

doesn't cut their taxes so what you are telling them is that by instituting a tax plan which by the way requires blowing up the current system so first we will blow up the current system and then i'm going to put in a new plan. it's a very difficult plan but a new plan that will increase economic growth and down the line you will get a better job and have more income. the economics of that i think a better tax code will do exactly what you said. a consumption tax they're all different flavors will create more economic growth and get more people better lives. i think that's absolutely true but as a political matter i think it's going to be extraordinarily difficult to do that. i think there is a whole spectrum of issues. we have talked a lot about taxes here so while republicans are talking about tax plans and i do

a lot of blogging and every commenter on my blog has a tax plan. every conservative american has a tax plan. so we are talking about tax plans and democrats are talking about -- while we are talking about finding this perfect tax plan democrats have been working on health care plans, college plans regulating the internet financial reform and i think it is big international oxygen from the right. we are very focused on taxes and again i think frankly business tax reform is probably more pressing. >> i want to stand up for that point. the work coming out of aei and elsewhere shows the real beneficiaries of business tax

cuts is the middle class, the workers. it's the working wages and the thing should be sold frankly as an income booster for the middle class. it's not butter should be sold that way. it's also going to enhance competitiveness for businesses but as long as you stick the pastors in their jimmy you have got yourself a hell of a middle-class tax cut and that is what ryan wants, to put the pastors into that so they can drop back to the lower rate. i think it's terrific politics. >> and i had one thing? one thing is what you end up with any piece of legislation is how you going. i don't think we should negotiate with ourselves beforehand can compromise the plan. you go with what you think is the right plan but of course you are willing to negotiate and compromise to get a good plan and i think you are right on that stuff. you should never let the best baby and me of the good. when i look the fair tax i think

it's a great plan. i don't think it's as good as mine but it's good. i would vote for it every day that week and twice on sunday. tax reform what i don't want us to do i don't want us to pre-negotiate with ourselves and put in all the things and then get in there and find that we have absolutely nothing. >> there's a certain level of possibility and coming up with a tax plan and we have the cbo and places like the tax policy center. for any republican to come out of tax plan which any of these private models is going to say this thing is going to lose $4 billion a year or i think most voters that is not going to pass the smell test. whether or not those novels are right. >> with jerry brown we had a huge increase which was plastered all over the world. that is why jerry brown did very well. >> by the way steve moore i just want to note i lived in new york

and connecticut and on the way to work i pass new jersey. each of those states has a very high income tax treaty to the states has a very high sales tax and each of those states has a high corporate tax so each of those states is declining and shrinking. that is kind of a problem i have with 999. when i heard 999 i heard connecticut new york and new jersey because you don't start with nine. you could start with nine but nine is just the beginning and hence that is why worry about that. i don't want to commit the sin that my friend jimmy p is worth that amount we do is focus on taxes. i think there are other issues to focus on in the remaining period of time, read going to noon? how far are we going on this? i want to raise a point to carly

fiorina of the issue that i've read about a lot is the issue of marriage versus family breakup. i do worry that we are creating a permanent underclass. i do worry that the bottom quintile has lost its social mobility. on these points i am certainly reading with the left liberals have to say because they are looking at the same data that we are looking at. so some great work is that brad wilcox from aei? this guy is doing some great work and has worked for heritage that i read in the daily signal every day which i love. married families make a whole lot, not a little bit, a whole lot more income and wealth than unmarried. and number two got the issue of family breakup seems to be the key to poverty, to inequality

and to the closed door the upward path of america. maybe i should throw education in there too but i'm looking at family breakups. this is a big thing. part of it is economics. part of this culture. it's got to be addressed. anyone running for president has got to address this. >> let me just segued that by saying on this debate about tax reform or any of our debates about policies. i think sometimes conservatives start with the policy and try and relate it to someone's life and i think we need to do the opposite. i think we need to start with people's lives and talk about our principles and our policies in relation to their lives taken

and politics matters because it impacts people's lives in real ways and policies matter because the impact people's lives in real ways. i think sometimes we get very abstract and we talk about big models and big numbers and what people are thinking about is the microeconomic reality of their life. they need to understand how is what you are proposing going to make my life better? which leads me to your point. i think the data is becoming unmistakable. i'm unmistakable. i'm a businessperson so data matters to me. results matter to me. it matters to economists. as nice matter to politicians by the way but to your point art the data is crystal clear about the impact of certain policies on economic growth.

we also now see in the united states we have empirical evidence that supports the data. we have 30 out of 50 states run basically under republican policies and economic growth is better. we are starting to see a real differential between a state like texas and the state like california. that's hard to deny and people feel in their lives very now we come to the question of poverty and i think the data is pretty clear. the data is pretty clear. getting a high school education is an incredible determinant to someone's future earning power. so if someone doesn't have an opportunity to get a decent high school education because they have no choices really to get a good education where they have no chance to have a real teacher in front of a classroom that cares about them than they are going to be stuck in a life

where they cannot fulfill their potential and earn as much as they are able to. we know that. the data is clear and i think conservatives on that point need to be crystal clear that liberals and democrats are on the wrong side of this issue. look at what happened when now mayor bill de blasio said in his campaigning that he wanted to limit the choices of schools in new york city. who is it who walked across the brooklyn bridge in protest of those policies? it wasn't high income families. it was low-income families. hispanics and african-americans who thought you were going to take away the only chance my child has. so we know education matters. yes we know marriage matters. we know that if you have a stable family unit everyone in the family does better. we know as well that we have almost 40% of children now are

being raised in single-family households. we also know so i think we need to be careful with this. we also know that too many women live in a situation of violence and abuse in their homes. it's kind of hard to tell a woman who has perhaps escaped from domestic violence the answers for you to get married. that may not go over so well but i think the point is we have to be focused on what are the things that make someone's life better and we know what they are. yes a stable family environment. so when we look at our entitlement programs and those entitlement programs make it more difficult to get a job because of all the things you have got to give up when our entitlement programs make it difficult to get married because of all the things you are going

to give up and the liberals defend those programs they are the ones destroying people's livelihoods. >> tax policy is the marriage penalty. >> they are the ones destroying people's livelihood so i think think we had to position our policies from a position of empathy and compassion and belief in everyone's potential to live a life of dignity and purpose and meaning. it is why i am conservative because i know our policies work better to lift people up. we can't talk about it in the abstract. we have to talk about it in personal terms. >> by the way remarriage is it okay? >> yes absolutely. >> remarriages where you marry the same person several times.

>> we have done a lot of work on this issue at heritage and i am sure all of us have experienced this. let's say we have your friends on wall street or the country club republicans. we don't want to talk about the social issues. just focus on the economics in one of the things i think came through what you said carly is the social issues are economic issues. you said it very well marriage is one of the great economic plans out there. a job is the ultimate stimulus plan and what i think we have to do is conserve this i'm socially conservative myself has come about these issues in that way. that's not the point. that is about behavior virtues that lead to success in life. it's not complicated. it's the old formula. if you want to get out of

poverty don't have kids out of wedlock. you get married, you don't do drugs. you graduate from high school and if you do those things where you have a small chance of being in poverty. my point is we have to talk about those social issues in economic terms because these are what lead to success in life. >> i think it would be a good idea. as carly noted the data is there and the data is really compelling, indeed overwhelming. but i think to a great extent leadership and have political people talk about our culture. it's not an inconsequential. you just have to do it. the other thing you mentioned, de blasio my favorite mayor. the guy now doesn't want choice in schools and charter schools. he doesn't think we need a police force in new york city.

that is one of his newer ideas that he routinely throws that under the bus and refuses to defend it. i think all these issues are related and they are social issues. democratic party three years has been socially very conservative not unfortunately in the last couple of decades but the democrats are on this. they used to have white working males and females but males particularly manufactures co-workers and miners left the democratic party because there's no cultural discussion of values anymore. i fret that the gop doesn't talk enough about this either. >> social issues are economic issues and the democratic party doesn't talk about those issues anymore. i am pro-life but if you want to

talk about economics you will find there are a lot of people in the african-american community who understand that community has been devastated by abortion. if you want to talk about the worry in some states about demographics working against us because we have an aging declining population and then you think about the number of lives that have ended in this country for abortion that's an economic issue. we are not going to all agreed on all aspects of abortion in this country but even on that issue that people tend to shy away from there is clearly common ground. on this social issue that is the democratic party that clearly has become incredibly extreme. i get asked all the time how can you support the republican party platform on abortion? i sable how can you support the democratic party platform on abortion? would have basically says is any

abortion at any time for any reason at any point in a woman's pregnancy including now in new york, the legislature wanted to pass a nondoctor to perform an abortion up to nine months. that is extreme. it is inhumane and it's also really bad economic policy. >> latinos and african-america african-americans, asian, you are absolutely right. by the way we have a population decline. the population is slowing down substantially. that's an issue for growth with older countries with declining population tend to be less unabated. it is you are going to talk to people who think the pro-life message and marriage message while at the same time you were

saying i would like to cut the minimum wage and cut medicaid and cut the itc without having something to supplant that with going to be an ineffective message. >> i have not set any of that. >> not you personally. republicans want to cut the itc. they think medicaid is an effective but they don't have an idea on what to do to replace it. >> i think you're absolutely right that conservatives must offer solutions. i happen to believe we have a lot of solutions. my point is i think we have to communicate those solutions in the context of people's lives not in big abstract terms but in the context of people's lives. >> can i just say one of my other beefs about the current environment is there's too much pessimism. there is a psychology of pessimism in this country that

drives me crazy. i am a reagan guy about both the value in the truth of optimism. from my own life, i have had my ups and downs. i think if you believe in a higher power you have to be an optimist and i think we need more of that in this country. my final thought is we need positive agendas, positive. we talk about pro-growth. we need positive agendas. i don't care if the democrats want to positive growth agenda. i'm fine with that. the last democrat who did was jon f. kennedy but my point is positive optimism, lifting up rather than tearing down. i still believe america is the greatest country in the world and i will tell you this there's no reason why a candidate for president either party cannot say your other problems but here are the solutions.

we can do this. we can actually do it in a fairly short period of time. i learned that from reagan and i will never forget it. steve moore jim pethokoukis art