the fiscal situation as an existential threat to the country. i think all of you would probably agree with that characterization. most of your solutions have focused on medicare and medicaid spending and social security spending as to be parts of the budget that i would say our human security spending, and this is very little about this is very little about spendin@)&%áa)!4n r@ @ @ @ a&@

it will fall a little bit as the war winds down. whereas the entitlement programs are somewhere north of 8% right now and will double in the next 30 years or so. it is not what is contributing to the deficit now, but what is going to contribute to the long- term structural problem that i

described at the beginning. that is why i would focus more on those programs, but everything needs to be on the table. >> there is a tremendous amount of waste in defense and homeland security and many other areas of government. so nothing should be off the table. i think that is important. a lot of our defense spending is based upon past threats. it is not focused on current and future threats. we have huge problems with regard to our acquisition and contrasting systems. the all volunteer force is probably not sustainable from a financial and fiscal standpoint. it is very, very expensive. so yes, it has got to be on the table. >> there is a joke among people who work with entitlements, that with the growth of social security, medicare, and medicaid, present the government will be nothing but a pension plan with an army. if you look at the map, that is

what you end up with. i went to grad school in the uk. my older brother is in the military and serbs in kosovo -- served encodes a vote. -- my older brother served in kosovo. you may not agree with the military actions we have in place now. it seems to me that having a capacity to do those things when we feel they need to be done is a very important thing for the federal government to have. if we are spending 4% of gdp on the military now, how much lower do you want it to be, and how much breathing room will that give us on entitlements? the answer is probably not a lot. >> i would like to say that i

definitely think that defense needs to be on the table to be talked about. when we are talking earlier about how difficult this was going to be, and the first person asked about the bipartisan challenges here, tackling that along with the things we are talking about would probably double, triple, or quadruple the complexity of all this. that does not mean we should not put on the table. >> i have a question and comment. it's not just the numbers issue. is blown up -- is both law and cultural -- it is both bull and cultural. seems to me like if we work for fiscal reform, but the outcome might be something we do not necessarily want, slow economic

growth or world where the u.s. is no longer the dramatic force that it is today. >> my personal view is, our economic growth is going to be slower than historically has been the case, that our savings rates will be somewhat higher, our consumption levels will be somewhat lower, and our assumption of debt from personal standpoint is going to be somewhat less because i think the american people get it. they are already adjusted their behavior. whether or not that will change in the future at some point, only time will tell, but their behavior has changed. we have to look at the leading indicators, which are a matter of concern, not just with regard to fiscal policy and public finances but also with regard to education, basic research, critical infrastructure, and a variety of other things that

ultimately will determine whether or not we will be in a better competitive posture going forward. when you look at all those things, i think yes, america will state a great country, but if we want to continue to be the force that we are today, we are going to have to change course and make tough choices. >> it is not really a matter of choice that we do something. it is either we could do something now in advance, our goal over a cliff eventually and wait to see. they will and have a good, legitimate debate about the size of the debt or the size of the deficit that countries should have. but the course we are on, by any definition, is unsustainable. some choices need to be made. that is unavoidable. >> david walker, you put forward

a rubric of non-partisan solutions that would get bipartisan buy in. could you or others comment. the sea in criminal law hanging fruit for nonpartisan solutions, or trade-offs that speak to some of both sides best ideas in being a coalition to start putting those in place? the two easiest things to focus on would be statutory budget controls that would take effect after the economy is recovered and after unemployment is down significantly, because you don't want to take effect before that. secondly, i think there is a social security deal to be had. there has been since 1998, but is just a matter of the president and congressional leadership wanting to go for it. i think we need to do that, not

because it represents the biggest challenge, but because we get some points on the board and enhance public confidence. we build credibility, and regain momentum to be able to take on tougher stuff. >> i agree with that, if you listen to what bill novelli and i both top track, we did agree 100%, but there were elements that we agreed upon. we understand what we need to do to fix this program. we understand the pros and cons. it is a mature policy issue. health care and medicare is a lot trickier. starting with social security really does make sense. >> i have been following the social security debate closely for a long time, and i was struck with bill and andrew, who have not always been on the same side of the social security

reform debate. they were saying things that were similar and things where you could get a bipartisan agreement if he could do it out of the context of political advertising and people trying for political reasons. they have said there is a deal to be made. one of the things that concerns me about the health care bill is that a lot of the so-called low hanging fruit was taken in that bill as an offset to pay for the new benefits. to me, that is the thing that is most fiscally concerned about that, because even if all the savings are achieved, and all the tax increases actually go into effect, you are still on an unsustainable course, and you would have used a lot of that so-called low hanging fruit. i don't think there is much that is low hanging in this context.

>> there is no low hanging fruit, but hopefully there is a medium hanging fruit. social security is an example of this. everything on the hill is so gridlocked and politicized. but there is a chance. their people up there who both understand the social security situation and they do want to do something. it may be that we have to wait until the november elections, but opportunity is there. >> i am a graduate student. as a representative of the next generation, i was just wondering, what can we do as the next generation besides just writing our congressman, and secondly, how are you engaging our generation, such as like social media and other forums like that? >> our youth outreach coordinator was here and he was

with me at a forum last night. i know he had to leave for another engagement, i guess he is not still here. we have lots of field staff around. we have a specific youth outreach program at the concord program. i am not part -- i am probably not the one to describe it. stephan really is in touch with a lot of other youth groups. don't people are involved in lots of issues. -- young people are involved in lots of issues. some are interested in fiscal issues and some have different views on it. that is what your generation brings to the table that the rest of us do not. really is a very engaged generation. we are trying to raise the

awareness of fiscal issues, so i would encourage you to get in touch with staff and at the concord coalition. he is much more tapped into the youth of our reach than i am. >> for everyone out there thinking about these things, i think the key is, do not punish politicians. don't punish them for telling you things you don't want to hear. when i think back to the presidential primaries, both the democratic and republican side, i remember and then senator obama saying everything has to be on the table on social security. he got punished in the primary and he retreated to a position that was simply not realistic. they don't do this because they

are bad people. they do it because if they continue to tell you the truth, a lot of people out in the public say i am not going to vote for that guy. the same thing happened on the republican side. the problem is not simply members of congress who we all can them and act as if we are better than them. the problem really lies out with the american people who are not willing to have difficult things told to them and they are not willing to take difficult choices. >> there are two things, and especially for young people, but really for everybody. things are being done to you, not for you. your future is being mortgaged at record rates. relative investment in your future are being cut down because so much of the budget is on autopilot, and the country is facing increasing competition in the global marketplace.

so you need to be informed, you need to be involved, young people need to start using social networking in order to let their voice be heard. in addition, you have to recognize that in addition to trying to get elected officials to make tough choices sooner than later, but to allow them to tell you the truth and not punish them when they do the right thing. the government is over promised and under delivered. for your own personal financial planning, you need to understand that. the good news is, if you are young, the power of compound can work for you if you start early enough and make wise choices. at the peterson foundation, we have a special effort with regard to young people as it relates to social media, facebook, twitter, movies, youtube pieces, mtv u, we do

things on college campuses, etc., and stay tuned for i what u.s. aid solutions which comes out in two weeks. -- for iowusa. don't people bear a disproportionate share of the burden. -- young people bear a disproportionate share of the burden. >> i am asking about the value added tax. sales taxes have traditionally been the domain of state and local governments. it was reported that state governments, when you look at their explicit and implicit liability, they are also in a world of hurt right now.

given the situation that states are in, does it really makes sense to ask them to bail out the federal government are raising their tax base? >> i think the value added tax is a form of sales tax. it is self enforcing, so you have fewer problems with evasion. it would not be my choice. my choice would be scaled down programs to try to minimize increases in taxes. at the ended the day, if you are going to have a european size welfare state, you have to start taxing away the tax. you cannot finance all these programs was just tweaking tax rates on people making over 200 bid to thousand dollars. -- over $250,000. we have to finance it as efficiently as we can.

the question is whether people are really willing to swallow it. >> did you say european welfare system? >> european sized welfare system. >> this is part of the problem. there was a column last week that sounded like the coming of socialism. the idea of looking at a vat, i think everybody said it, everything needs to be on the table. we really need to take a serious look at this. it will take a long time to take a look at it and come to grips with it. yes, we should look at it. >> state and local governments have their own problems because of medicaid costs, underfunded pension plans, unfunded retiree

health care, deferred maintenance and other critical infrastructure costs, higher education expenses, etc. they are going to end at hitting the wall before the federal government as they can not print money, and because they have to be more concerned about the credit ratings. the states have to be concerned about it now. the problem is, how are going to deal with this fiscal gap? my personal be is, everything has to be on the table. yes, we are going to have to have more revenues because the government has promised to much and waited too long to solve the problem at historic levels of 18% g d p. i think the problem is primarily going to have to be sought on the spending side more than the revenue side. the debate is, what form of

revenue? some type of consumption tax, but it needs to be coupled with statutory budget controls and other spending constraints or else the american people will not go for it. they will not vote for it unless it is coupled with other things. the vat might have to be earmarked for health care. you need to coordinate it with the states, and this is a year cannot have some revenue sharing or some integration in order to try to solve the problem. >> that was exactly the point and i just want to follow up on that. i think we can think outside the box on that. if you did go to the vat tax, you might think of some sort of sharing on that. it will have to be on the table, for the reasons that everyone is explaining.

>> i want to thank all of you for joining this conversation. the vision for this forum was to create opportunities for members of the university and academic community to engage with policy experts to have the conversations we have had to try to find ways of advancing solutions to the important and critical problems facing the country. that is just what we have had here today. we are grateful for the vision. from all of us here, thank you so much for joining us. they get so much to the members of our panel. good afternoon. -- thank you so much to the members of our panel. [applause] [captioning performed by national captioning institute] [captions copyright national cable satellite corp. 2010]

>> of the $787 billion economic stimulus, 300 tricky $5 billion has committed to states by the government. an increase of $2 billion from last week. over 205 billion has been spent so far. you can follow the economic stimulus news and events at c- spac-span.org/stimulus. >> john dean is the guest on "book tv" "in depth". will take your phone calls and e-mails and tweets sunday live at noon eastern. c-span is student cam

competition as middle and high school students to create a five-28-minute video dealing with one of our country's greatest strength or challenges. >> there is a lot of misunderstanding about what for markets are, how they work, what rules are needed and what are not necessary. we have the system but people do not understand how the system works. a disaster came along in summer 2007 and so we had to focus on the fact that the idea of free markets and capitalism have taken a hit. >> in colonial times, people travel to seek their fortune. from the industrial revolution to the great depression, the united states has had its share of ups and downs. america remains the land where

opportunity is abundant and entrepreneurs drive. >> we stumbled into it. when i was in high school, my business partner, we were in a band and we wanted to make our own band did not want to pay for. we made our own frame and screen out of wood and stretched the mesh over it and did everything really primitive. a piece of glass held in place. we started getting into printing for other bands and for schools just for fun. we could do a business out of this, we realize. we asked my dad for a many-loan and he gave it to us. we went from there. >> i decided to open a gourmet pasta company. it is something i have done and it has been in my family for

three generations. we're the third generation to make pasta. we wanted to carry on the tradition. >> it is personal in a way reason. i felt -- at the same time, [unintelligible] so i found something to retire to. i had this done that experience -- dunuonut experience. it was a natural reason, a choice for me to choose a small business. >> i started my business by doing some side work for someone who needed some work done. i had a full-time job but this

was more fun. i had two customers. i got laid off which was fortunate, in hindsight. i got laid off from my electoral engineering job. the company's share the same account. she invited me to a meeting. i could make a living. >> only in america would be possible for these four men to stop their business. by starting their business in the u.s., they have capitalized on our country's greatest strength. the american free market economy. >> i think the free market economy is the only way to go in america. i do not know if we have a true free-market economy in this country. there is a lot of crony capitalism going on as far as who gets to fail or succeed. on the small business scale, which is where i think the free market economy is the most true, it is the only economic system i could imagine, however orders

could thrive and grow. -- how entrepreneurs could thrive and grow. you need to be able to stand up. it is important to have a free- market economy. is the only way that entrepreneurs can survive. >> wethe government does not spd [inaudible] when they have taken someone else, they spend 80% of it in a productive way. individuals are better served. absolutely free market. if you look at the economies that choke off redevelopment, they stagnate. china is the exception. free-market is the only way to get out of there. >> in a free-market economy, anyone has the ability to open a

business. over 600,000 businesses are opened each year in the united states alone. due to the nature of capitalism, one-third of these businesses will fail within two years and half will close within four. can anyone start a business? >> i think that anyone can start a business. you have to have drive and it has to be something that you are motivated to do. you have to try to find the resources. it is a little difficult to find the resources. if you start small, like when we first started, all we had was [unintelligible] and we graduated and at the -- added a line of sauces and cheese. if you start small enough and you have something people want, we have a niche because no one else does what we do. the machine has been in our family since 1926. it is a handmade products, so it

will be something that is not a quantity item but it is a quality item. that is what we try to do. if you do that on any kind of business, it could be successful. >> not everyone can start a business. it takes an incredible amount of dedication. you have to live and breathe. i have been working on a project for 12 days straight. i woke up this morning working on it. it cannot see many people willing to do that. -- you do not see many people willing to do that. >> starting a business is no small task. there are factors and limitations beyond the owner's control. starting a business would be nearly impossible without the free market economy. and the american dream would be unattainable. >> is not that easy over there. -- it is not easynot that easy. you have to have

[unintelligible] some business people. not just your initiatives and your funds. they need the family support over there. not just from your savings and making loans from banks on your credit and things like that. it is very tough. grex the american dream does exist. not only is america at the land where anyone can be successful, but where everyone has the opportunity to participate in a system that has proven itself and again and again. it is the nation's greatest strength. the american free market economy. >> i believe the american dream exists, absolutely. it does. it is difficult to attain. it takes brains,