>> you mentioned 1986, there are a couple things that were different in 1986 than we have now. one is the 1986 act actually shifted revenue from the individual side to the corporate side. or vice versa there is a big corporate tax increase and an individual tax cut. and then similar there weren't the same kinds of deficits in '86. can can you talk about how '86 is a useful model for which it is now and the ways in which it's not. >> no time is exactly like another. you have to remember the history so in 1981 president reagan enacted a very broad across the board tax cut. then there were three bills that really impinged on this after that in '81, and '82 and '84. two of those were budget deficit reduction packages that may have included some tax increases and

then of course in '82 you had the social security bill which was a huge piece of legislation and the entitlement reform area that we probably got to go back at again. that set the stage for the '86 bill. you've got a very different situation now. you've got a big deficit. we roughly bring in 18% of gdp spending ultimately about that amount. now it's 16, 17% coming in, 24% going out. where yur trying to go in this

that may be a bridge too far. if you can get to an agreement then you can get down to the specifics of both tax reform and reforming entitlements which also has to i think be part of this picture eventually. >> grover? >> we can take this in two steps. the two parties are heading in different directions. this is not the republican-democratic party of the 1940s and 1950s. the two party have sorted themselves out to where republicans won't raise your taxes and there isn't a democratic in congress that hasn't voted to raise your taxes. all the democrats voted for the stimulus and all the republicans voted against it. they have a dramatic different view of spending and tax issues. but what i think would be helpful would be to have a consensus at least within the two parties. that's where the ryan budget proposal, the ryan road map is so helpful because you have a republican party minus two guys

in the house who all have endorsed ryan's approach and in the senate every has signed on as well and romney has. that gives you a very good on spending reform, entitlement reform as well as tax reform corporate and individual. a very good outline of where the republicans are. what would be interesting and helpful if we're going to have negotiation would be to have democrats in the senate a budget and a tax plan. the president's put one out one that every democrat's voted against. they don't think it's serious. if the president would come up with one that his party would consider worth looking at or the senate come up with something, then you could have a senate and house bill that you could compare. instead we have people talk about the simpson boles commission. they had a poem with some numbers in it that has not been scored, not been written down. some people tossed that out as an alternative. until it's written down and somebody votes for it.

it's not real. >> even if you had two proposals, you have americans who have pledged not to raise tax. is there any way to bridge that one party saying heavy knew has to be part of it and the other part is saying no. >> if the democrats would write down their proposals it would help the republicans pick up the five or six senate seats that they need to have real agreement after the november election. it's for the fact they haven't put a budget down that tells you how bad their plans are. if they thought hay had something to to sell to the american people they would put it down. i think we're better off if the two parties would put their plans down. i'd like to see the democrat

plan in writing. >> nancy, do you see a way that a divided government can agree on these issues? does it have to be like health care where one party gets sort of full control and says this is our time to do what we want to do? >> certainly the hope would be that they can come together and reach an agreement. the one thing that we have now that we didn't have in '86 the u.s. has got the top tax rate in the world. we have an economic situation where companies are not generating jobs. you've got a much more globalized economy where companies have more and more choices to go. the realities of that and how the corporate rate plays into where people decide to locate hopefully can have an impact on getting the parties together to try to move something forward that might not be quite as

partisan otherwise. what does it take to get those deals and those red lines if you're in a divided government situation? >> what i found was that it's useful if you can do it to get some broad agreement on the road map. what i have seen is the kind of process where you involve many more members in the decision making. it's one thing to say we're going to cut medicare by x. it's another thing to put down specifically how you're going to achieve those reductions.

when we did this with george bush the first it took six months. it ultimately had 100 members in all the white house staff at andrew's air force base for ten days and nights. wellocked everybody up. we went through with their staff all of the changes that had to be made to get to the bottom line. that's kind of what it takes. having four people walk in the white house and cut a deal doesn't get any votes down here. there's 535 people in this building. and they all have a vote. they're all equal. and unless i'm missing something, nobody tells anybody how to vote anymore. so that day is over. you've got to bring people through a process that can yellow an agreement and it's hard work. it takes time.

it takes patience. and it takes respect. on everybody's part for everybody else at the table. >> reverend? >> for those people listening or watching who are interested in making investment decisions nothing's going to move until next january. nothing's going to move between now and the election. when i was talking about the democrats in the senate not wanting to put a budget forward. they're not going to have many votes on the budget either. that isn't going to happen between now and november. after november, one team or the other will see themselves in an advantage over where they are in january versus november so that team will wait until january. in terms of making plans, something moves until january dending on how you see the election. i think republicans will hold the house given redistricting and the way things are are going. because of 23 democrat seats up in the senate and only ten

republican seats up. two of the republican seats are as a result national. it's more likely than not that the republicans net the four to get control. that leaves the presidency as the interesting jump question. if romney's elected, the ryan plan on taxes as well as spending will be enacted within the context of reconciliation. that's one avenue. if obama's present and we have a democratic house and senate the next four years look a lot like the last year, which i thought was okay in the sense that they didn't raise taxes and actually cut spending. the people who objected to that were the ones who wanted to raise taxes in order to spend more money and they just lost. that wasn't a failed negotiation that was when they lost, which i thought was a moderate success. >> i want to go back to something you said about the u.s. ranking around the world. we have the highest statutory corporate rate if you look at effective rate we're closer to other countries.

all those other countries have value added taxes and the majority of them have revenue as a share of gdp that's higher than what we have in the u.s. should the u.s. look at -- if we're going to look at what other countries do, should we look at the consumption taxes and look at the overall revenue and size of government that other countries have? >> well, like it or not, companies themselves don't make the decisions based on where some of the individual taxes are. and so again, if your goal is to try to make the u.s. have a competitive system in place to generate the most economic activity, then -- i get your point. but i think that looking at the statutory rate a little bit of a vacuum is important if your goal is come pet i haveness. i know when i talk to a lot of our companies you gave the effective rate number because

there are so many continuing expires provisions because the irs often hijacks certain parts of the tax code and audits them heavily, my companies for a large part can't count on anything other than that the stamp choir rate. when they run the business models they throw the statutory rate into the business models to crank out whether an investment makes sense. i heard a lot of people talking about effectively people don't pay as much oz the statutory rate. the tax exemption expiring with the irs auditing the proposal. that provision doesn't get as much value as it otherwise could because it's not permanent. that statutory rate turns out is actually more important sometimes when people are looking at the stability of our tax system and the competitiveness of it. >> do you want to jump in on that and whether we should look at other taxes beyond the income tax? >> i think in a perfect world

you will want to do that. and i also want to agree with what the other two have said before. one of the real draw backs to doing all this stuff is the way frankly the congressional budget office and the joint tax committee comes out on some of these issues. i really do think there's got to be some latitude in the congress on using their estimates as gospel in all of these questions. i just -- we're never going to get to where we need to go on a lot of both the spending and the tax questions if we take a very strict view of what's going to happen in the budget. let me give you an example. in the mid '90s when bill clinton was president we did major changes in medicare. and as i remember cbo gave us a number that we all thought was

too low. we went ahead and passed the bill in a bipartisan way. and if i'm not mistaken the outcome was more like what we thought it was going to be than what the congressional budget office thought it was going to be. and you know, at some point, i know it's hard to analyze it, i think congress has got to start looking back on some of the estimates that come from these bodies and you know, use their judgment a little bit to try to make some of these very tough changes. >> how do you do it without that independe independent ar bitter? >> to the point congressman gephardt was making, right now joint tax and cbo do their projections in a black box. and you say well what about this and they come back and give you a number. they say how did you get the number? secret. won't tell you.

some people argue you should have a dynamic model. you can corrupt a dynamic model just as you can corrupt a static model. i'm a little bit weary of saying do dynamic instead of static. one suggestion congressman johnson of pennsylvania put forward would have the assumptions and all of the equations that go into these models transparent. put them on line to everybody can see them. that doesn't mean you can't do it. that doesn't mean the guys that think your model is wrong get to veto your model. if you know everybody else is looking and people can crunch numbers inside your model and see whether it makes sense or not, it makes you think more carefully about your modelling and over time the models will get more accurate. i think while we're debating the other big pictures a transparency in the modelling would improve the forecast in the future. >> do you think you need to have some independent whether it's

cbo and joint tax doing the way they do it now or some other independent referee? that's saturday of why that model developed tran pirnsy aside is someone decides and both sides adhere to it. at the end of the day the congress is charged by the voters to make a decision and they have to decide. i think what's being suggested makes some sense. will the them look at all the facts. let it be transparent. then they have to reach a comp rise. again there's 535 people over there. they have to come to a consensus on what they want to do. it just -- it seems to me that our problems are so monumental and difficult that we've got to give people some help in making these decisions. i think that would help a good deal. >> the i understand pent of cbo and the others, they were off by the expected cost of obama care by a factor of two.

they double counted $500 million once. this is not secret sauce stuff. this is problematic. they rewrote the numbers when the white house complained about them. your independent source is perhaps not as independent as it should be. it certainly wasn't as accurate as it needs to be. i'd rather have not just 535 congressmen and senators looking at it. all the smart people in the world looking at it online and people looking at modelling saying does this make sense? peer reviewed stuff means you get four friends to lie for you. i'd rather have this online. it's like the guys that do blurbs at the back of books. they never read them. >> even yours? >> mine they read it. i make them read it. debacle the most recent book. i do think that transparency would allow congressmen senators to look at this stuff. >> inside the corporate system as the rate comes down, are

there breaks there are worthwhile that should replain even in a simpler system? >> well, i mentioned the r and d tax credit before. i think that's a provision that a lot of people within the business community certainly support feel that they use a lot of it. often if it's permanent and may, you know, secure into the future, i think it's going to have a bigger impact than if it just continues to expire. but i think that the emphasis should be on lowering the rate and when i talked to ceos of my companies they really seemed to be okay with -- they just want some certainty. right now companies are making decisions based on a hope and a prayer, which is not necessarily strategy. one of my companies michelin just invested $7 a million in south carolina partly because they have good strong hope that the u.s. is going to lower its tax rate. and you can argue with the

wisdom of that. but it's a strong investment. they believe that the u.s. is going to do the right thing. it's you know, to some extent can help create some jobs. that i think the ceos overall the ones that i speak to lowering that rate they can figure things out and navigate it, but until they know the direction, they're sort of holding back. >> people always talk about investors and business uncertainty. people on death row have certainty. they don't want certainty. they want to know the direction. as opposed -- they want to hear it's going to move in the right direction not the wrong direction. they're not wedded to staying in one place. there is a big difference between moving in the wrong correction and the right direction. certainty is worse than improving things. >> from my experience in '86, i learned a lot. so when we started with the bradley gephardt bill we had an

individual rate of 15 -- 10, 15 and 25. and we took out everything. so we immediately ran into the charitable groups that didn't want that to go away into the real estate groups that didn't want the home mortgage deduction to go away. and we quickly had to repair to taking out corporate tax breaks in order to help pay for the individual tax break we got the top rate down to 28%. so, you know, if i had -- in a perfect world i would want the bill like we had it which is 10, 15, 25 and not have these various things. once you give one than the argument is you've got to give them all. on the corporate side, i can make you a very powerful argument for the r and d credit and for depreciation, obviously. that's the big one. that said,

tax reform, we can get rates down. we can simplify the code without taking out every tax break. >> ryan's plan actually looks like the gephardt bradley plan. >> do we have audience questions. >> we have one i think you touched on. can 1986 be a road map for what's to come. this other, corporate taxes, paid $287 billion of taxes, isn't the corporate tax simply too small to feed very many mouths? >> well, you know, i understand the argument. i don't think politically you can get that done. i do think the '86 bill is something that should be looked at. and perhaps it will be looked at as they go through this process.

i thought it was an improvement. we got rid of a lot of underbrush in the code that had been built up over a period of years. a lot of it's come back and maybe can be taken out again. we seem to do this every 20 years or so. we clean out the attic. so maybe that could be a good model. >> '86 is a model in a couple ways. it focused on reducing rates. second, there was agreement ahead of time it wasn't going to be a trojan horse for tax increase. there was one in agreement and two reagan's veto. enough house members no net tax increase you could do revenue neutral or tax reducing tax reform and feel comfortable one branch wasn't going to allow to the turn into a tax increase. i would stress i think that expensing rather than long depreciation schedules is the way to move it. i would view that as part of tax reform, additional lower rates

moving toward expensing. >> setting aside what is politically possible now in terms of the corporate side of things, i think that there's wide agreement from economists and others that lowering the corporate rate is important to generate the job growth that we need right now. so, despite the statistics that you put out between what corporations are paying and individuals are paying i think the focus on job creation, economic growth demands that we focus on lowering the corporate tax rate for those very reasons. which doesn't necessarily as we talked about lower the revenue but encourages companies to operate and set up shop here. >> i have one more from our audience here. what is the realistic timing to get tax reform, will extension get past year-end to buy time. you touched on this. maybe your prediction will we get some deal even to extend the bush tax rates into next year for whoever is the next president, will it happen this year, will it be done in the

lame duck or before? >> it depends on who wins. nothing happens till the election, nothing happens between the election and the inauguration and the new house and senate. if you have a republican house, senate and president you get something very much like the ryan plan. if you have a democratic president, republican house and senate, you have guys at loggerheads. >> don't be mistaken that even though nothing's going to happen, i agree with grover until after the election, and then maybe between the election and inauguration depending on who wins there is a lot work being done now. the tax writing commit es and others are holding hearings, we've gone in there many times so there is a lot happening now with the hopes i guess of having it move once the political situation stabilizes. >> you get last word. >> i think whoever wins it's going to be very hard to do these big things in a short period of time. my prediction would be they kick

the can down the alley until maybe even the middle of 2013 until they have the time to put the whole thing together. >> great. thank you. good discussion. [ applause ] >> saturdays this month c-span radio is airing more of the nixon tapes from the collection of secretly recorded phone conversations from 1971 to 1973. this saturday at 6:00 p.m. eastern hear conversations with deputy national security adviser alexander haig. >> nothing else of interest in the world? >> very significant this new york times expo say of the highly classified documents of the war. >> oh, that. i see. i didn't read the story but you mean that was leaked out of the pentagon? >> sir, a whole study that was done for mcnamara and carried on

after mcnamara left by clifford and the peace nicks over there. this is a devastating security breach. >> in washington, d.c., listen at 90.1 fm, on xm 119 and c-span radio.org. >> this is c-span3 with politics and public affairs programming throughout the week and every weekend, 48 hours of people and events telling the american story on american history tv. get our schedules, and see past programs at our websites. and you can join in the conversation on social media sites. >> congress gavels in at 2:00 p.m. eastern after a week-long break. the house will consider a number of bills today allowing the capital grounds to be used for several upcoming events and also a measure to clear the way for development of the washington, d.c. waterfront. on the other side of the capitol the senate considers a bill to keep student loan rates from

doubling in july. a couple of judicial nominations. you can see the house on c-span and the senate on c-span2. we're live in the canon building on capitol hill for a meeting of the house budget committee. members are considering the legislation written by budget committee chairman paul ryan. that would cut $300 billion from social programs over ten years. we see there a couple members of the press waiting for committee members to enter the room. as part of last year's debt ceiling agreement the pentagon faces about $600 billion of budget cuts starting next year. today's bill that the budget committee is considering would prevent those cuts from taking effect. as we watch for committee members to enter here's more on the bill from a capitol hill reporter.

>> we want to turn to the hill newspaper today, russell bermen wrote a story that house lawmakers are returning to the familiar debate over the deficit. and that he writes republican leaders are planning to bring up a $260 billion measure to stlash the budget gap and replace across the board spending cuts to take effect in 2013. and russell bermen actually joins us now on the phone from the hill newspapers. mr. bermen, good morning to you. >> hi, thank you for having me. >> thanks for coming on. tell us about what's going on with the sequester in this committee hearing today and what the plans are for this week. >> well, the house budget committee led by paul vine going to be marking up today this large bill from house republicans, a total of $260 billion which is the product of

six house committees and the budget committee is going to eventually combine that into one bill. to bring to the floor or one or two bills, and that includes $78 billion in replacements for the sequester street take effect in 2013. the sequester which results from the failure of last year's super committee is of course $1.2 trillion over ten years but the republicans are taking the first bite out of that this year by replacing most of the defense cuts which both republicans and the pentagon have come out against, and replacing that with cuts to things like food stamps and other programs, to the poor and from the health care law, and from the financial regulatory law. and they are also adding on additional $180 billion in cuts

aimed at reducing the deficit. and of course democrats are expected to oppose this bill pretty aggressively. >> we have stats up now about what this proposal does. it would replace $78 billion in sequestered cuts and reduce in a number of areas. tell us again why republicans want to push for these changes in the sequester cut, this agreement that they came to back when the budget control act was being put together as sort of a -- to hang over congress to make sure they did their jobs. >> well, you're right they called it a sort of damaclyes. they said that everybody said this was intended to force action and democrats have said that, too, and that there was nobody wanted these cuts to actually take effect. they wanted, because these cuts were across the board and not