countries are now. i think france is 23%. a lot of them e that combined with an income tax is a killer. that's one reason europe is in the mess it is. there's only so much blood you can get out of the people. greece is taxed out. they keep saying we've got to increase tax rates on the greeks. they're not paying the taxes now. why are they going to pay it at a higher tethat makes no sense. in these cultures, the italians, yeah, okay, make it 120%. so what. i don't pay it now, not going to pay it then. there's plenty of ways to get one of my specials, we don't have time to go in today, is money launderring. i work with the international financial centers and i can give a lecture here on how to launder money. it's very easy to do. we have loads of regulations about it. we're killing much of the world economy because these anti-money laundering laws. those of you who have friends in europe are now finding they can't open bank accounts. one reason i was in switan

citizens abroad because they can no longer open bank accounts because the things out of dodd-frank make the liability so horrific for foreign banks, they won't take american clients. this is madness. we are doing all these kinds of things thinking we are going to get more tax revenue. we're not. dan is absolutely right. we are taxed out. we're not going to get more than 18% of gdp in tax revenue. we never do over long periods of time. i don't care what the rates are. that's why we had the rates go up and down and the amount of revenue stay just about flat. you can just take a look at this, go on the cbo baseline and you can see 50 years of tax revenue as percentage of gdp, it was never higher than 1% or 2% or lower than 1% or 2% over or above 18%. even though tax rates fluctuated all over the board. it's just people who say let's have the higher tax rates like

obama, they have no understanding of economic history and how the world economy works and people aren't going to pay these rates. they will stop working, they will move their money elsewhere, they will find other ways to get it. sorry for such a long answer. but it was an important question particularly on the tax side. >> microphone's not on. >> run over to this one here. >> my name is steve bailey. couple of points. one is do you care to make a prediction [ inaudible ]? perhaps you want to talk about iceland which is the only country that actually said we're not going to bail out our banks. >> well, the iceland situation was an oddity because the bank liabilities were hundreds of percentages of gdp so they

couldn't bail it out. so it's very, you can be very courageous and say you're not going to do something when you can't. it's like saying i'm not going to run a 3 1/2 minute mile. what was the other part of your question? >> do you care to make a prediction on when the debt bomb is actually going to blow up? >> because i'm an economist people always want predictions. the last time i formally had in my job description having to make a prediction, when i was chief economist in the u.s. chamber, i was expected to come up with a monthly economic foreforecafor forecast. i hated that part of the job because it was about the future. you're taught in economic forecasting school to give a number or date but never in the same question -- in the same sentence. i don't know. because these triggering events are always a surprise to people. i mean, let's say tomorrow

there's an incident in the persian gulf with iranian boats and runs into one of our aircraft carriers or into a tanker or something. suddenly the price of oil would spike, could go up $5, $6, $7 a barrel. that could be the triggering event. there's lots of things that can be the triggers. people forget, the first world war which was a huge war about nothing, and tens of millions of people were killed, was triggered by the assassination of an arch duke in sarajevo. i went to see the place he was assassinated and this trigger caused a global disaster we're still suffering because of today. these triggers come along. they tend not to go in a real slow sort of predictable thing. we see this debt bomb building up and building up and we know we can't pay it back, but when

suddenly the bond holders go on strike and say i'm not going to buy any more government debt, i don't know that. people buy u.s. debt or debts of governments now, when someone buys a 30 year bond, usually unless you're a total fool, expecting to hold it for 30 years because it will be worth a fraction of what it is now in 30 years. but the idea it may go up or down the next few months and you may be able to make some money at it in a short period of time, that's the bet people are making. i can't tell you exactly when the trigger will be. but if it happened a week from now, it wouldn't surprise me. if it happen a year from now it wouldn't surprise me. i'm willing to predict within three years there will be a trigger. i don't know, i can't tell you the date or the hour. >> steve eurash, fort collins. our trade deficit with china is over $50 billion a month so clearly to me, our demand for

manufactured goods in the united states exceeds the supply we're generating so that although the companies in the united states which do manufacture are doing well, we're not satisfying our demand so presidential candidate mitt romney has been endorsed by donald trump and discussed tariffs. i would like you to comment on possible implications of tariffs in order to boost our manufacturing employment. >> well, firstly, the chinese -- the deficit, trade deficit of china is coming down rapidly. the chinese, the reason it's coming down is because the chinese are investing less and less in our government securities. they actually peaked off of their ownership of u.s. government bonds in september 2010. they have been diminishing since. but i think there's a lot of

misunderstanding about trade and manufacturing. we bring a lot of stuff in from china. that's true. i noticed when i got up here this morning it was rather cold. i grew up in florida. i think colorado has a huge trade deficit with florida in terms of oranges. why aren't you making your own oranges? now, you could build big greenhouses. i have seen them around the world. you could grow orange trees. it's just not economic. the whole thing, i don't have time to get into the whole economic argument, but basically, don't worry about this. china -- [ applause ] the chinese currency is basically the u.s. dollar. all these people say oh, tell the chinese to revalue their currency way up. i was in china two months ago. china is booming but they also have and they cannot greatly increase the value of the yuan because

the way it operates is you go into your walmart and you buy a pair of khaki pants. those pants are made out of cotton. the chances are the cotton was grown in texas or mississippi. the u.s. is the world's largest exporter of cotton. china is the world's largest importer of cotton and the two almost totally balance off in this. the cotton was probably put on a train in southern pacific, texas to the port of long beach, put on maybe a danish ship, maersk line, taken to china, fabricated into cloth, into pants, put back on the ship, back to the port of long beach, put in walmart trucks distribution system and

the whole thing is sold for $15 here in the u.s. to me, that is the miracle of global trade. the value added by the chinese was small on that, probably not more than $4 out of that whole thing, but all the way along, the chinese made a profit, the texas cotton farmer made a profit, the u.s. railroad made a profit, the danish shipping line made a profit, walmart made a profit and they sold it to you for $15. amazing. now, the $4 the chinese actually netted out of the thing, the chinese government requires their manufacturers to take that $4 they get in u.s. currency, put it in the bank and get local chinese currency in exchange. the banks then turn around and buy u.s. government securities which reduces the cost of our debt and one reason you can borrow so cheaply is because the chinese do that. this is not -- this is not the chinese ripping us off. in many ways, i can argue we're

ripping off the chinese but as long as everything was done freely around the world, there's no problem any more than there's a problem with florida growing the oranges and you're providing ski resort vacations for people from florida. that's the way the world works. the more we have, the better for everybody. [ applause ] >> yes, sir. >> i believe she was next. >> yes, ma'am. >> my name is ellen hilliard. i'm running for colorado house in boulder, and i'm an lpr grad from 2011. i listened to simpson and bowles when they were here in denver and wondered what you thought of the plan, specifically the spending cut part of it, and then the second part is, what are the qualifications that you would have for the head of the federal reserve if you were to pick? if you can't think of one person, what would be the qualifications?

>> the simpson-bowles plan is a big improvement over what we now ha would disagree with and i would have done more on spending but it was a step forward. it was a responsible document. in terms of the qualifications of the head of the fed, i would like somebody of course who is technically competent. bernanke is that. but for change, i would like an honest, open person, man or woman, to be head of the fed. and say congress has given us multiple targets, i cannot hit multiple targets. i'm not even sure i can hit one target. but which target would you like me to focus on. and for the head of the fed to say i cannot solve the unemployment problem through monetary policy, it can't be done. the reason we have big unemployment is because we are so overregulated and if any of you have businesses, you know

how that is. i mean, it gets crazier and crazier. i mentioned the european banks cutting off american customers. there was a provision in a thing called the heyer act passed two years ago called faca, foreign accounts transactions compliance act. all banks, domestic and foreign, are supposed to comply with it. the thing is impossible. let me give you an example of just impossible regulation. we could spend four hours on regulation but you're head of a bank in luxembourg or austria or switzerland or sweden, i don't care where. somebody walks in and say bob walks in, he says my name is bob, i'm greek, here's my greek passport and i have a furniture business in athens. there's no reason to believe

he's not greek. he could pass as greek, right? anyway, and he shows he's got this business. so they think he's greek, they open an account. on the other hand, he also has an american green card or american citizenship and lives here in colorado. how's the bank supposed to know this? in a world where millions and millions of people have dual citizenships, multiple green cards and things, it's impossible because it's not just the citizenship, it's whether you're a u.s. tax person. you can't know these things. and we're putting regulatory burdens on financial institutions, just one example, of things they can't possibly know in terms of know your customer and all this other thing. so this one little provision, the regulation which they still haven't finalized, has now grown to 390 pages just for this one regulation. one little item. and it's not done yet. by the time they're done there's going to be 2,000 pages with it.

think if you're a small bank. everybody is concerned about banks getting bigger and bigger, too big to fail. you got a small bank out here in colorado, say 25 people in the bank. serves the local community just fine, writes home loans, auto loans, the other kind of stuff. you come in with these federal regulations, dodd-frank, starts off a 2,000 page bill. by the time you get all the regulations, you're in thousands and thousands of pages of regulations. nobody in your bank has time to read this, understand it, let alone set up compliance programs. it can't be done. and so everybody there is a felon. john stossel, another senior fellow along with dan mitchell and myself at cato, got a great program he did last night, i didn't see it but he sent me a note it will be broadcast twice this weekend, about how we have all these felonies and i just taped a show with john at the beginning of the week on cayman and 4,000 felonies, federal, not talking about state and local, but federal felonies.

now, how many of you can remember the ten commandments? if you can remember all ten put up your hand. there's a few of you out there. okay. the irs expects you to know 77,000 pages of regulations. how many can do that? you know, 4,000 felonies. i'm willing to bet that everyone of you out there has committed a felony at some time and you don't know it. because things which you would never consider felonies, you see these things that somebody puts a load of dirt in their backyard pond. my place in great falls, i actually put a pond in years ago, then i was informed that i can't get rid of the pond that i put in if i ever wanted to get rid of the pond. i mean, it just gets in this kind of endless ludicrous stuff and things that you can actually go to jail for. this is not the country that our founding fathers set up. [ applause ]

and i've been thinking of a thing, if we had to start over which we may have to if we come to the financial collapse, how would we do it and improve to make sure we don't get ourselves in this kind of mess 200 years from now. anyway, somehow, we will prevail. it's good to see all of you here in this room, because i know you're all fighters, as all of us at cato and washington, the other think tanks are, and ultimately, i think on the basic good sense of the american people, and actually, the common mind -- man, despite winston churchill's comment about the average voter, and i'll just leave one encouraging thought. when margaret thatcher was running for office for her first time re-election, first re-election, i happened to be in england and i was taking a taxicab out to heathrow airport and i started talking with the cab driver about margaret thatcher. and i said what do you think of your prime minister, margaret thatcher. he said i don't like her, i come from a laboring family, we have

always voted labor, i'm part of the working class, i don't like her. i said i guess you'll be voting against her. he says no, i'll vote for her. i said i thought you told me you didn't like her. he says i don't, but britain needs her. we may be at that point in america. thank you all very much. [ applause ] >> president obama unveils a plan for mortgage relief for members of the military and homeowners with fha loans during a news conference today. the president will detail an agreement with major lenders to compensate service members and veterans who were wrongly foreclosed upon or denied lower interest rates. c-span 2 will have live coverage at 1:15 eastern. tomorrow, defense secretary leon panetta and joint chief of staffs chairman general martin dempsey will be on capitol hill to testify about the situation in syria. they are going before the senate armed services committee. we'll have live coverage here on

c-span 3 at 9:00 in the morning. today is super tuesday, when voters in ten states go to the polls to choose a republican presidential candidate. 419 delegates are at stake today. we'll have live coverage of the election results tonight on the c-span networks. c-span.org and c-span radio. >> this crazy world of ours, we have atom bombs. the question is not how to use them. the question is how do you restrain yourself from using them. that's particularly when you're commander in chief. any fool can get this country into trouble. it takes a wise man to get it out. >> as candidates campaign for president this year we look back at 14 men who ran for the office and lost. go to our website, c-span.org/thecontenders to see those who had a lasting impact. >> shouldn't the president have the highest moral and ethical standards and be an example to

our children and young people in this country. ask yourself that question, please. shouldn't his life make him a role model for your future children? shouldn't anyone you elect to this office always keep his promises? >> c-span.org/thecontenders. >> a look now at the importance of super tuesday. ten states and 419 delegates are up for grabs. c-span's washington classroom, a partnership with the washington center and george mason university, talks with michael steele, former republican national committee chairman. he talks about the stakes for the remaining candidateses and assesses the republican party strategy going into the general election. this is about an hour and 20 minutes. >> in c-span's washington classroom we're joined by students from george mason university in fairfax, virginia, and the washington center here in washington, d.c. and joining us here in our studios, michael steele, former chairman of the republican national committee,

former lieutenant governor of maryland. appreciate you being with us. >> great to be with you, steve. >> there could be a couple story lines coming out of tomorrow's super tuesday vote. what are they? >> well, there are actually more than a couple when you really break it it down. you've got the whole obvious, the mitt romney line which is winning big in places like ohio, for example. and winning at least one of the southern states to really kind of solidify for himself the argument that he is the relevant player to go forward who can take on the from the prt, number one. number two, that the base has now begun to gel around him. winning in the south, tennessee, for example. so he has a great opportunity to really bring to closure the process. for someone like rick santorum, his argument or his story line is going to be how well did i stop that process from ending? how well did i, you know, continue the story line,

certainly by winning a state like ohio, which if he does, that resets the entire shape of this thing because then the base, again it will have an opportunity to say, hmm, yeah, maybe we should look a little bit closer at someone like santorum going forward and begin to realign with him. then you have georgia and the newt gingrich story line which is holding the line there, making his stand. he's out in front on this whole point about you have to win your home state. so he's got to win georgia. if he loses georgia, i really think the lights begin to dim if they don't go completely out for him. so there are a number of story lines. of course you think i forgot ron paul. of course not because ron paul is the threat. he is the common thread throughout this narrative who will be there in tampa this august, regardless of how he does and where he does it. but for him, he still would like to win. he's the only one who has not won at least one state.

so for him, winning something tomorrow night doesn't matter where, would be good. >> including idaho? >> including idaho, yes. >> so let's take a step back and explain how we reached this point in the process. because the primaries were supposed to start in early february. >> yep. >> you are responsible in large part for the rules that are in place for proportional dell gots across the country. it jump-started, obviously, into january with iowa, new hampshire and florida. so explain how we had the earlier start than expected. how the rules changed and how that allowed us to get to this point? >> very quickly, the old rules under 2008 primary rules allowed for a process that virtually ended in february. you had the nominee at that time john mccain chosen early and the gop was sidelined and really out of the narrative. the political narrative for about seven months. as you saw this whole thing unfold between hillary and barack obama. it ginned up their base, created

media excitement. the party kind of went through the old school versus new school kind of discussion. so in looking at that, the 2008 delegates said, look, for 2012 we will suspend our rules for one time. it's never happened before. unlike the democrats. they can change their rules in between conventions. the rnc, you cannot. the only time the rules change is at convention every four years. they allowed the next chairman, tah-dah, to come in and rewrite or at least look at a new design for the rules. what we took into consideration was what happened in 2008 and for 2012, wanted to expand the field. create a bigger table for more candidates to have an opportunity to get their message before the base. this was less about establishment washington. this was less about the old school, well, you're next in line so, therefore, you get the nomination. and more about atloig base to have a greater say in who the nominee would be. you are kentucky, georgia, mississippi, washington state, why should you wait and have

your vote not really count if the process ends in february because iowa, new hampshire, south carolina and maybe florida have decided who the nominee is going to be. so this was a chance for every state to play. and every state looks like they're going to get that chance to play. and i think it's great. >> so regardless of what happens on super tuesday, this is still going to be a two or three or four-person race? >> because of the points you raise about proportionality. remember, tomorrow night, everyone is talking about this being a big night and it's going to be decided one way or the other. new york it's not. why? because only two states are winner take all tomorrow. virginia. and the only person on the ballot -- only two people are romney and ron paul. and vermont. the only two states. every other state is proportional. so everyone will get a bite at the apple. everyone will be able to take some of that apple with them from the relative state and move on to the next round. when you get into april, which is april 1st was the -- when

proportionality -- fixed proportional states. you had to be proportional to play between january and april 1. everyone else then, winner take all pror all, proportional comes into play. all the big guys come in which tend to be winner take all states. by that point, everyone will have some number of delegates they can go into the final stretch with. i think that's a good thing for the party. everyone is talking about the fact that oh, this is going on too long and the romney people are like, oh, there's -- whoever thought of this system should have been, you know, silly. well, yeah, you say that because you haven't been able to close the deal. but if you are rick santorum or newt gingrich or ron paul you don't have to have romney money to stay in this game as long as you have a message that resonates and you have the opportunity to get, you know, keep your numbers up enough to be in a national debate. this is good for the party. >> let's get to some student questions. anna grover is our first student question from the washington center. anna, it's all yours. >> hi. so my question was dealing with

the republican nomination process has been described as explosive and it's a roller coaster ride already before super tuesday was even close. do you think that the polls are televised almost every week that come out every week on the news stations, do you think they have played a negative role in that they make a lot out of nothing, or do you think that they are a positive part of this campaign and that they show the true thoughts of the people? >> well, you know, that's a good question. i really think it's, you know, not to sound political about it, but it really is a combination of the two. there are some polls that are driven by campaigns that are, you know, they there are to describe or tell a narrative that furthers the opportunity for a particular candidate. but then there are other broader national polls that aren't really fixed on one candidate or the other. not heavily weighted democrat or republican but really does find the right complement or mix based on population and

demographics to get a sense of where the american people are. and i think those polls, whether it's run by a gop firm or democratic firm have been fairly consistent in telling the story of this primary process. one in which you hear and see the base of the republican party asserting itself in a way that it has not done so before. some of that, yeah, may come off a little bit negative by some. in other words, we haven't made up our mind. we want to see more from candidate x or y. but that's all a part of this new mix that i think has made this process, yeah, a roller coaster but a fun roller coaster. if you are certainly an underdog, you have a chance to fight. you have a chance to compete at a level and a way that gets you and keeps you in the game for as long as you can sustain that. you don't need to have the big bank roll in order to make it to the next round. what you need is the ability to stay on message and we've seen with all of these candidates, an inability to do that which is

why we're in the super end right now on women's health issues. but regardless of that, these candidates have found a way to strike a chord with the voters, to be able to stay for the next level of battle. and we'll see after tomorrow whether or not anyone has a mind to fold up their tent and go home. i suspect not, unless you are just completely blown out of the water if you are newt gingrich and lose georgia by, you know, seven, eight, ten points. you are going to be there. because there's no incentive,s a said to the pawlenty people back in august of 2011, there's no reason for you to get out of this thing. stay in it. and -- >> did he get out too soon? >> oh, absolutely he did. absolutely. absolutely got out too soon. i mean, how do you quit the race after the iowa straw poll? i mean, this is a big, you know, kind of like barn-burner festival. people coming around and, it's like the fair. and do you big poll at the end of it. it's not indicative of what voters are thinking at the end

of august when the primary is not until, you know, the iowa caucus wasn't until january. so, yeah, i think he got out too soon. and i think, you know if it was a matter of money, i think the other candidates in this race have proved you don't need a lot of cash. at least to initially begin to compete. if it's about organization, i think the candidates have shown there that you don't need to have top flight organization in order to turn out a vote. >> let me put a hypothetical on the table. the republicans lose in 2012. will the same rules we have today be in place in 2016? >> the way the rules were set up, the way the 2008 convention put this in place and really kind of created a guide post for me and temporary delegate selection committee, the commission that oversaw the changes is whatever changes are accepted or adopted at the 2012 convention are -- will stay in place. otherwise we go back to the old rules from 2008. so this was a one-time shot to see if we could