zones. this is based on the chinese law that did the same thing. my question is related to that. we have not heard the term " exchange rates." are 04 says that there should not be an unfair competitive the bandage. this is the direct way to keep your exchange rates below the market base rates. we have had nothing like it. particularly in the manufacturing sector. nothing like it in the last 10 years. i just mentioned a couple of facts and ask if this should be

considered? . .

it's been made and increasingly understood is the amount of negative investment is going to hurt china. our problems are not with china per se. if china revalued the r&d this afternoon. china is losing manufacturing competitiveness to others like vietnam. the first order of question to

the u.s. is we need to stop doing the bad things that we do to our own manufacturing. that list to me would include the corporate tax that people have talked about, but also the tort system, also regulatory burdens. there's much we can do ourselves before turning to china. but you are absolutely right. china's policy is a merkantilist policy. the question is more when china wakes up and decides they are making a mistake and i think that will be soon. >> could i get my slides back up -- is that possible? if i hit the -- i had data on the rest of the world. i'm hitting it, but -- there, we are. the dark blue line is the rest of the world.

just as you said, the rest of the world is below. that's the world average. individuals that are down -- yeah. that's right. >> just to press on that a little bit. china, you must do this because it's in the u.s. interest, not likely to get very far. to say, you should do because it's in your own interest. it is hard to convince someone that it's in their own best interest. more importantly and maybe this is a politics question, it doesn't appear that way to people in terms of well, what you're doing is not working. what you are suggesting is that eventually it is going to be a big problem but it doesn't seem that way now. close to 10% unemployment and relatively flat growth and china has resumed its boom again.

we can talk about the numbers being a little funny, but certainly the perception isn't there. if you are a manufacturing company this the united states, it just sounds like we aren't going to do anything. >> i don't think so. the quick answer would be the word japan. if we were having this discussion a generation ago, we would be talking about japan doing everything right. many economists and myself at the time made the comment that you can't have a financial system that broken that is sustainable. you are making negative-value -added investments. the chinese officials are not object liveous. it's that there is a tradeoff between trying to bring 10 million people a year into the productive urban sectors versus the costs that they well understand of potential negative-value-added investments. we just had a trade deficit in china. china is working hard at

expanding domestic demand and the ship is going to turn. there is little we can do beyond stating it's in their interest to turn it. >> we have other questions here. they will person down here. >> two questions, one with regard to the corporate tax. while i empathize with large corporations what are your thoughts about small businesses both domestically and their ability to move abroad. about education, you talked about getting the business schools, higher education, what are we going to retrain and uptrain those that have been displaced and those going through the educational program and english seems to be the factor holding people back? >> on the small business point, most small businesses in the u.s. pay taxes at the individual rate. so the right tax system to be talking about is really the

individual tax system. we have a progressive individual tax that top rate will be going up. the present administration tells us that. so that is clearly an anti-jobs-creating move and has little do with the corporate tax. for small businesses, there is also the issue that the slowness to pursue financial reform has really slowed down lending to small businesses while corporate balance sheets are very flush and corporate lending has returned. spreads have fallen more to regular levels and small businesses find it hard to get credit in the united states and the slow pace of financial return has made it worse. it's really about the big difference between the competitive situation of our big universities versus what we do in primary and secondary

education. in the major universities, it is a competitive market. i compete all day for students, for faculty, for money, the same can't be said of the public schools educating our children. this is a very different industrial system. or on the education front, we can talk about this all day, but the first is that we have a lot of elementary and secondary schools that are doing very well and doing a great job of educating students. we know what works, if you will, now it's a matter of doing what works in many of the other schools that are not doing well. the second observation i would make is that in many -- we haven't adapted education to the changing nature of our students. so that students today probably aren't going to be attracted to the black board and chalk method of teaching because they live in a world that is so different.

we have the ability to teach them in the way they now absorb information through all of the video and other tools that are online. verizon has put, just citing our own company, has created an online set of -- online education system using state standards where we have k-12 curriculum. lesson plans have been put in place by a variety of nationally known organizations, from the kennedy center to the smithsonian where we have lesson plans with supporting material online and schools are using that and the results are very good. so you have tools that can be made available for students. last point i'd make is this in the special education arena, we have done a remarkable job of creating -- first of all,

identifying how students, special education students can learn, and then creating a climate which allows them to learn given the skills that they do have. but with our mainstream students, we treat them all the same. we are in a world where we treat them all the same. using the technology that is available too, we can figure if a student learns better visually or by hearing. we know whether they learn better at 8:00 in the morning or 3:00 in the afternoon. we can create the climate which actually is most favorable to that student if we use technology and we do that for a small segment of our population, but not for most of our students. those are three observations i'd make about changes that changes should be made in the education arena, but my underlying point is this, we know how to do this. we have schools that do it, we have technology that is doing it today and we should take

advantage of what we know and get that into our educational system. >> on the competitiveness aspect of it, are there countries that any of you look to on the education front, look at what they are adopting. and maybe we aren't doing as much as we should. but are there countries that are in the elementary and secondary ed areas? this is for kevin, too. >> i don't know that i can cite a country that is doing it particularly well. i just look within our own country and seeing a lot of people doing it very well so i don't think we have to look overseas. i will make a small observation, other countries, they spend more time and some of our schools are thinking of going to four-day weeks and i don't know what we're thinking.

>> this gentleman right here. i'm, sorry, yes. >> i was going back to tax policy. i worry about the political feasibility of actually getting a broader reform passed. is congress either unwilling to do reform. and maybe i'm underestimating the public that they are going to react. i fear that this won't happen or will have to be very incremental and slow. do you think it could actually happen? what's the real -- >> it's an important question and i think especially when i speak to my friends that are politicians and one question they'll have is, how is this

going to play with people who are mad and blame on what we just went through on big corporations, so how can we make life easier on them. there are a couple of observations. one is charlie rangel's bill had a reduction in the corporate rate. the gregg bill had a reduction. maybe i'm wrong, but i doubt there is a person in the room who wants to say it's a good thing we are higher than anybody else on the earth. the other thing is that john mccain in the last presidential election, i know this wasn't the key variable in that election, proposed a 10% reduction in the corporate rate. when he went around and talked about that in town halls, people were receptive. my impression not on senator mccain but politicians germly is

that they stop talking about things when they propose things and get a cold reception and the continued conversation about the corporate rate throughout the campaign was kind of a metric of how well it played in town halls as the people in this room are nodding their heads saying we ought to do something about that, americans are savvy as well. is it possible to do anything bipartisan anymore. we agree that this is something we ought to do and maybe we ought to agree that nobody should get credit for it and then just do it. >> the american people are pretty smart. we always tend to think that they'll go for the slogan rather than understand what's going on. they generally understand what's going on. the bottom line line here is the lower corporate rate will help

the federal government. that's why you can get bipartisan support. that's why people like charlie rangel supported it. >> this gentleman right here. ok. >> george mason university. first let me just say this has been a total meat and no potatoes session so far. thank you very much. i want to raise two points, namely, the almost total stigma on non-green manufacturing industry in the united states and may apply to infrastructure to some extent. i'm well familiar with the european scene and i see a thorough going -- thorough growing support of domestic industry in all of the leading countries in europe whereas in

the u.s., people don't care where the stuff they buy comes from. at the educational level, the situation is the same and of course at the political level, we have seen almost a total campaign on green energy as though that would lift all boats. and i won't go into this, but i made a study of that and that subsidy area that is not vitalization and the germans know that very well and they are willing to pay for their green with their conventional industry. and that brings me to the second point. i have to kind of challenge, let's say -- not challenge the whole point about basic research. but america competes act is coming up for re-authorization and there are huge amounts of money that have gone into basic research, although and my

studies show that the quote linear theory, basic research by some magical method leads to vitalization in the country, was already disproved by project hindsight in the 1960's and many academics know that, but it is extremely sensitive. in short, the -- you are attracting the best talent into the i'very tower where they publish papers and circulate within disciplinary feels. -- fields. i see this different in every advanced nation in europe and asia. please comment if you will. >> maybe you can talk about that. >> obviously the government's role is basic research, not picking industries or particular

applications. we wouldn't have an intellectual basis for doing. the true innovation is very nonlinear, what we know about contemporary innovation is not a professor with an idea but shopful use and scruke of that idea, which is if you take life sciences, academic health centers just don't have smart professors in biology or chemistry, they have hospitals where a lot of the practical innovation forms basic research. i agree with you on that. i don't think anybody feels otherwise. for the u.s. to decide to support application would be a mistake because we don't know which applications would do it. what the u.s. needs to continue to do is support basic research. >> time for maybe one more question.

>> dana marshall. one subject that -- i'm surprised that hasn't come up and it is a large and controversial subject which is a way -- at least proponents suggest a way to enhance competitiveness and also to generate income that we clearly need to be able to cut the deficit. i wonder if the speakers could speak a little bit about their own impressions to which that would be favorable or not favorable step in terms of competitiveness. >> one that is economic and the other is where we are in the political cycle of tax policy. it has come up several times that it's best not to tax cap and if we were starting from scratch a broad-based consumption tax would be good

tax policy. that is more likely eating your wheaties. i think we will hear more about the v.a.t. because we have seen large increases in the higher income tax. the u.s. income tax base is narrow. in going forward, the president, the president left us with a simple but powerful choice, we are either going to confront spending or have to have a v.a.t. there is no other political choice. >> we have done a lot of work on tax policy over the last couple of years internally within the business and our conclusion is if we could restructure the tax code and have a v.a.t. that wasn't an add-on, this would be a good step. the challenge is how do you get that without it having been an

add-on. one of the things i was going to say, one of the real problems we confront and the climate that's being created in this country is the huge deficits we are facing sm the congressional budget office analysis of the president's budget which said $9.8 trillion in additional debt over the next 10 years. 90% of g. d. p. by 2020, this is staggering and very disconcerting and certainly creates lots of pressures on the tax front and a variety of other places that will have impact on the environment that we have in this country for competitive enterprises. >> i would like to see if you could address one of the chief objections to the v.a.t. and how it can be applied at various levels of production so it's not really seen. so the effects, while real --

the fact that it is troubling to people because you want visibility so there is political accountability to it. do you see that at all as a problem? >> it's an argument that is often made, but a lot of people who presently aren't in the income tax, which is about half of all americans, shouldn't think that he are not disturbed by the burdens of that tax because a lot of the inefficiencies of that tax affect their jobs and wages. that is a hidden tax. the nice thing about consumption taxes, it's easy to educate people that everybody's paying this tax. >> i think it's a legitimate argument. i think you can take steps to try to make it transparent to people what is the tax that they are paying on a purchase, product or service. you could try to do something to address that issue. but the bigger issue is do you

tax capital or tax consumption. in this world today, it isn't very smart to be taxing capital. >> that's all the time we have. thank you for joining us today and join me in thanking our panelists. [applause] [captions copyright national cable satellite corp. 2010] [captioning performed by national captioning institute] >> this week on "america and the

courts," a moot court on a hypothetical court challenging the rights of non-u.s. citizens to receive life-saving vaccines. "america and the courts," saturday at 7:00 p.m. eastern on c-span. >> this weekend on book tv, from the virginia festival of the book, rebecca skloot. on "after words," ambassador jack matlock. and princeton university professor on invinting the idea of a white race in the history of white people. find the weekend schedule at booktv dorgan follow us on

twitter. >> the minute that the wall street firms were in the business of harvesting middle-class americans for their home equity value and making loans to them against it, there was a natural risk of abuse. >> sunday, michael lewis on the subprime mortgage crisis, his latest "the big shore." michael lewis at 8:00 p.m. eastern and pacific on c-span. >> here's a discussion on the federal budget with house majority leader steny hoyer, david walker and others. we'll hear about how the new health care law may impact the deficit, from the university of maryland in college park. this is an hour and 45 minutes.

>> could afternoon. >> good afternoon, on behalf of the maryland school of public well, steny hoyer is a man of his word. he is here.

his passion and determination were key to making this event happened as they were key to a number of his programs on public policy issues of the day. it was his deep civic engagement and this event is now a tribute to saul stern. i ask that we share a short moment of silence in memory of his good and rich life. it is now my honor to pass the baton to my friend and colleague. [applause] >> thank you. i and the dean of the school of public policy here at the university of maryland. i want to welcome all of you to this discussion about something

that kids and poured into the american teacher as anything we can imagine. this is part of a dramatic change in the debate about the deficit and national debt. we are now talking about what the problems are which are increasingly clear but beginning to devise the road map for the future and the solutions. there is nothing that would have pleased him more than to see this enormous crowd together to think about not only what it is that we have as we face problems but also the kind of solutions we can imagine to be able to engage individual citizens but with some of the best experts in the country and to establish the kind of dialogue that creates that a link between those of us here at the university and the broader policy world, as well. we are in a situation unlike any that we faced before. not only with a deficit that is rising but also with a new health care reform bill that passed that begins to imagine the future but leaves so many

questions unanswered. a new deficit-reduction panel has been created where everybody agrees on the problems but the solutions are anything but clear. our goal now is to begin plotting the road map for the future. that is our enterprise today and we are excited that all of you are a part of it. we will have a question and answer session at the end so as our speakers speak, we invite you to think about what you want to ask them and how we can create the best kind of engagement on these issues. . . he brings experts here on campus and inspire our students to imagine their own futures. with the capital just minutes away from us here on our campus, it's easy for students to translate their ideas,he