that specialized thinking alone cannot solve because everything is connected and therefore collaboration to solving these issues is required. the have created a neutral space for transforming come innovation, stakeholder engagement outside of the industry's with a small team of interdisciplinary experts, with competencies' that range from the strictly economic to the more design-based, and when they do is in this neutral state, the have cleverly designed offices that i visited and in particular one room covered in white boards called the brain where they join forces with stakeholders and participants to bring to the solutions, scribble on walls, and really think about creative problem-solving outside the box, but then they come together in the stomach of the office which is really a kitchen to discuss and

experiment with these ideas and how they could be piloted and launched downside of their space. they have done some incredible work on issues like gender equality, various employment, climate change, said its engagement, -- citizen engagement among and they have proved to have a safe space for innovation and creative thinking, but it is this merging of different ways of approaching issues and sustainability that has really proven to be the greatest strength and asset for the success of the policies that are then implemented across the country. >> fantastic. thank you. >> you're both hitting on the idea of the role of civil society and implementing sustainability in a fascinating way. these are not just words, to cope create and have ownership is very different than being told to do something.

executives 1 order5314 which targets -- order 15314 targets greenhouse gases and is incredible. it is essential and needed at the same time. there are creating the examples in state communities and how we can move in this move to one of the more fun to show how both of you are creating value in meaningful and engaging ways that takes a different spin on it. do i would like to start by talking of about how we can harness financial markets to tackle these problems and then move into some of the more personalized problems you spoke

of it in your introduction. how do you see this to use the market mechanisms already in place to enhance sustainability, philippe? >> as i said in the opening comments with respect to innovation, my background and legacy stems from the ocean conservation and exploration with the work of my father and grandfather, but they helped me understand ocean conservation that relates to population issues, climate change, etc. as i have progressed in my career and gotten increasingly interested in how the changes and this is focused on a sustainable exchange traded fund, a mutual fund traded on the exchange that you can buy

intraday trading on the shares and the percentage of the management fee will go into a foundation which will be granting funding for all of these uses and will be the first actively managed exchange traded fund of its kind to do this. it is kind of surprising in 2011, but it is a way that we can thinking differently. from the perspective of the government, i did some research and specifically with a meeting i had with some people last week about energy conservation, and i learned a little bit about the energy savings performance contract going on in the government and the opportunity for the government to help provide financial incentives to be able to make the decision about the best way to implement energy efficiency contracts.easing the potential for the u.s.

government to find these ways to leverage dollars from a market- based perspective and allow the market to drive and find the efficiencies and best technology certainly is no different than what the dod and deal we are doing in respect of investing in renewable energy companies to provide better services for our security and allow them to move on with their innovation. it is something we talk about with the public. how can i take action? what can i do? i do a lot of public education with the nonprofit that i run and i have a series on cnn international that focuses on these issues and we do a lot of work with the design and development in dealing with these expos and have been awarded a contract by the u.s. state department. how do we get engaged? we need to think about financial markets, what we do with the

dollar, not just volunteering, recycling, installing energy- efficient light bulbs. where do our dollars go and where we invest in the market? >> tell me a little bit more about what you think? what can the government learned from these successful private enterprises and how can some of that be implemented it in the work that is being done here? and we will beat -- what will be done after we leave the room today? >> one common theme i drop from the conversation is this notion of shared value, taking a shareholder approach as opposed to just a shareholder approach, but it includes the bottom line where we think about the planet and the social impact of our actions along with the financial. the successful financial sector examples that i have observed and work with, they do have that

business case for maintaining the initiative. there is no bottom line impact where they tend to dissipate as a charitable whim. if you look at ge, this is now a $20 billion revenue driver for the company and is the fastest growing segment of their revenue for environmental projects and environmental lines of business. that is a hopeful example of one of the largest corporations in the world now driving sustainability. the other important thing to consider is making this fun. we have moved past the times of blame, as and they like to say, we need to focus on fun and fame, not guilt and shame. if you look at the organic food

market, it is 3% despite 30 years of advocacy. recycling is at about 30% in the u.s. and our renewable energy consumption is may be 13%. that is not mainstream. in order for us to have a globally significant impact, we needed to make green at the mainstream. i have worked on some great projects. our clients include everything from the fortune 500 to startups and there is really great workout there are around concept of a gamification. it really comes down to one basic thing which is fun and looking at what the human behavioral drivers, that will be gannett to allude to, that motivate us to take action. -- that will had alluded to. you think of high school and someone tried to get you to smoke a cigarette, but today we

are seeing positive peer pressure. there is a company called recycled bank, an online rewards platform that rewards for everyday green actions. there are leader boards, points, challenges, educational websites to teach you about going green. at the end of the day, not only did they create a social community where you are able to showcase the actions were taking and feel good about them, but you also received real world rewards like this counts -- discounts on kashi and more robust incentives. there is another great startup called simple energy. they work with utilities and track household energy consumption. then through facebook and other social platforms, they have leader boards and a means for people to compare themselves to their peers and friends.

it is really using the notion of a social comparison and positive carry pressure. you do not want to be the person that is not thinking about your children's future. you want to be somebody who can proudly say to your friends and neighbors that you are considering the sustainability of the planet. i think about my grandchildren the ability to have a decent life. using those types of mechanisms, people are changing their behavior for the better and that is the way that we try to celebrate our love for the earth and each other as opposed to blame. we are focusing on creating fortune. >> i think that is the perfect end to move into our conclusion about the idea of a celebration, shared vision, participation, and engagement. as you opera your concluding remarks, let us know how we can

embody that today and how everyone can take a bit of that away and work with their organizations to ensure that your generation and generations to come will be able to meet their needs. >> i draw inspiration every day from people like michael panelists here and all of you, and of course my grandfather. it is key for each and everyone of us to find stories that resonate with us and keep our eye on the ball. but there are a lot of challenges as respective with the nude ministration. with all the work that is going on, there is innovation going on in the ground and thinking inside the box, be it leveraging people, that is under focused market. there is an army of young people that want to take action. think about how this affects our health and prolonging the dialogue so it is not just, "i

am right and you are wrong." we are about stronger-safer communities. my two things would be leveraging young people and thinking about how markets work. remember the inspiration, however inspires you come and hold onto that every day. never, ever give up. there are a lot of challenges, but there are a lot of people. just look around you. they are so focused and so passionate. i think it is very exciting to be doing this type of work. >> chiara? >> similar to what felipe just said, do not underestimate the importance that access to inspiration can play at any level from institutions to the very grass roots. it is a capacity and our ability to unlock our own creative potential and our ability to contribute to problem

solving the collaborative lane and arrive at a shared language and understanding of our common values and what we mean by sustainability or what we mean by it livable, inclusive, resilience cities. similar to that enabling those with access to infrastructure, resources, and enabling public service to understand the significance of this is brought from leading, enabling, controlling, influencing, working in isolation, working in collaboration. there is a term that i find particularly significant, porous government. a city and open policy making that is responsive to today's challenges in that it is really on the ground working in partnership with others, not so much just responsive, but able to drive change. i think that is the really

crucial shift that will need to happen in a larger scale but at every level of governance and participation that could really invest in the capacity building and a creation of platforms in bringing democracy to every day. >> ashok? >> we all feel the enthusiasm in the room. i am already hiked up. -- hyped up. we need to recognize the victory is already in motion and we need to a knowledge this administration because i learned about a collaboration and initiative that was started last year which taps into the wisdom of a federal officials in getting recommendations on how every agency could implement more green initiatives. i believe there were something like 5000 suggestions made

across the board and over 100,000 votes. that was again using a game dynamic to engage people to be social. that is the direction we want to be going in. toward that end today, we set up a little challenge for each of you posing the question -- what makes sustainability fund to you? you can answer the question by using either #greengov on twitter. what makes sustainability fund to you? or you can go to a facebook we have set up and answer the question. at the end of the day, but today, tomorrow, and wednesday, we will select randomly three winning responses to receive prizes from the association of climate change officers who have donated several annual memberships, some recycled merchandize, backpacks, and and philippe has donated a signed copy of one of his books.

you can go to our facebook page -- facebook.com/bennuworld or check up on the conference website later on it to find the links. it is about celebrating and making this fun. hopefully we will be collectively inspired by the responses coming in over the next few days. >> tarak? >> i'm trying to think of a prize the defense department could throw in there. [laughter] one of the things as will probably explorer of the next few days is that agencies all come at sustainability for different reasons. for the defense department, the reason we are coming at this is because of our mission, to protect and defend the nation. to that, we see sustainability as key. better energy use means better combat effectiveness, lower

risk, lower costs, which is why we are really interested. to wrap the federal government, we have had great partners -- throughout the government we have had great partners. we are working with their components to leverage their capabilities and match them to our needs which has really been a pleasure. one of the other reasons i was asked to join this panel was i bring a federal government perspective. i joined the government three years ago and i had absolutely no idea what to expect. from my perspective, as a young person in the government and as a young citizen, there is a lot to be proud of in the work that all of your doing. with the president's leadership, the roles and executive orders, the recovery act, of the programs and departments, we have gotten a lot done. for me, i am really proud to be a very small part of that in my corner of the defense department. i tip my hat to all of you guys

and thank you will have some great conversations that will help us get all the work we need to get done. >> thank you. will? >> i talked a little bit about. pier engagement and the power of civil leadership and really moving-- about peer to peer engagement in driving self sustaining markets and that can seem far removed from the work of some people in this room. i wanted to of knowledge that there are ways that the federal government can really push for a new way of thinking about the community as not just a recipient of policy changes and market-based changes, but of markethe driver's transformation. i wanted to recognize one way

that the federal government is already trying to institute that. there was what was called the retrofit ramp up for the government put competitive the funding out for city-based coming in its pulp -- city based and municipal based programs and it actually recommended that all of these projects to run the country, after seeing it worked here and around the country, the federal government prioritized for cities to compete over that there really make community organizations in these six networks on the local level is central part of the engagement process. that is one example of one way the government has succeeded and has been creating a way of engaging. a few other out of the box young

thinking ideas, one is the americorps. there is an opportunity to potentially create and used the powerful grass-roots of that structure to create a curriculum program by which community organizations can be trained to be messengers to shift consumer behavior and move communities and help communities to invest in win-win sustainability projects. one last parting thought is to think more -- i think it is important for people to think in terms of more of an everyday citizen and more in terms of an everyday consumer in thinking about how we focus on the benefits of sustainability or

environmental initiatives that are beyond just environmental. had we present the benefits of these programs when we are around things that every day people really care about like economic opportunity, energy- saving, sabean more proactive about what kind of framing -- so the government can be more proactive about that kind of framing to engage more people across different interests. >> we are out of time, but i want to thank the panel and all of you. we could not do this without you. enjoy the conference. [captioning performed by national captioning institute] [captions copyright national cable satellite corp. 2011] >> here is a look at the prime- time schedule.

at 8:00 p.m. eastern, republican presidential candidate herman cain on his plans for america, should he be elected. "the communicator's"looking at telecommunications issues including support from -- spectrum sales. on c-span3, live coverage of the kentucky gov. debate with the incumbent governor and two challengers in lexington. all these programs tonight at 8:00 p.m. eastern on the c-span television networks. >> the heat is on. this is the first time that i have seen in my long tenure in the politics where there is real heat. if these guys cannot come up with something, they will not want to go home. >> on tuesday, the deficit reduction committee will hear from alan simpson and pete domenici, erskine bowles, and alice rivlin, often have

participated in the talks. you can view these videos any time on line in d.c.'s ban video library. watch what you want, when you want. -- online in the c-span video library. >> herman cain said he was falsely accused of sexual harassment when he was the head of the national restaurant association. politico and he gave financial settlements to two female employees because of his inappropriate behavior. at the american enterprise institute, he focused on the 9- 9-9 tax plan. this is one hour. >> i would like to welcome all of you to the american enterprise institute. mr. cain has done something that we celebrate.

he has taken public policy and made it one of the main topics of conversation in the united states, something we have always endeavored to do. we are going to have a conversation for about 25 minutes and then we will open it up to the floor for about half an hour. afterwards, mr. cain will have to leave it for another event and we ask everyone to remain seated for security purposes and then we will have a roundtable with a lot of geeky nerd types to talk about the details of 9- 9-9/ great to have you here. >> my pleasure. can you turn this down? i tend to project. i will blow this thing to

smithereens. >> it was actually me. >> we're talking about me, kevin. abitibi here. thank you all for being here. -- happy to be here. >> if you were to go as one of your political opponents as halloween and you wanted to scare people, who would you dress up as? >> one of my political opponents? >> a republican one. president obama would be a layup. >> that is a trick question. i believe i would go as ron paul. [laughter] >> ok. how cain, you talked about business experience is different

than political experience and may be preferable now. i wonder if you can talk about how your business experience as influenced your design of a 9- 9-9. >> in business, you make sure that you identify the problem. you identify the right problem. in business, you figure out a solution to the problem. you do not develop a hops solution. you do not develop a safe solution. you develop a solution to the problem. therein lies the difference between a businessman and politician. that may use the example of godfather's. when i was the ceo, its parent company, tells very, had already decided -- pillsbury, and already cited got father was going to go bankrupt, but i did not get the memo. i did not know that.

i did what i have always done, and what i will also do as president. i went to talk to the people closest to the problem. i talked to customers, people working in the restaurant, managers, franchisees', suppliers, and they all gave me the same message, although using different words which was -- god father's biggest problem was a lack of focus. it was trying to do too much, too fast, with too little. i got it from the people closest to the problem. we put together a strategy based on eliminating three of the four they were trying to sell. that helped us to improve operations day today. -- day to day. it made people in -- it made it easier for people working to consistently provide a product. on that strategy, we

simplified, and maybe that simplification principle is what helped me a lead to 9-9-9. secondly, when we introduced a new problem -- in a product because of sagging sales, we need to give customers and new customers a reason to come back to god father's. they had left us. we developed a new product called big valley. in addition to being a quality alternative in this segment, we knew that we needed a value proposition to attract some of the people, but we did not want to damage our quality image. it worked. we developed a new product, simplified the operation. that was how we solved the problem. i happen to believe that is what is missing in terms of how we go about things. that kind of thinking inspired 9-9-9.

>> were there any moments when you were ceo when it taxes had a big effect on what you were doing? the tax plan is the centerpiece of your campaign which suggests that you have noticed in the real world that taxes are an obstacle. was there a moment where you would hear instead of there because of taxes? >> absolutely. i went to godfather's in 1986. in 1988, i first realized just how government regulations, government-imposed taxes could negatively impact godfather's. we put together a strategy in 1986 that we were implementing and it was working. then, all of a sudden we had to fight an increase in the minimum wage in 1988. it was going to a dramatically impact. i became very vocal on that issue. we had to confront labor laws.

we had to confront what was going on in d.c. in terms of paid leave and that debate. in 1988, i became aware of the impact of government on my business and the restaurant business. our margins are not great. we are not talking about an automobile company or an oil company where they have much greater margins. food-service, restaurant, grocery businesses, we have a very small margin to work with in terms of costs that we can absorber. we did everything we could do internally, then we had to deal with the external forces. i became much more aware of the potential impact of government. >> there was the famous episode where you discussed the clinton plan. there is a story on which a peace which may or may not be true.

-- on wikipedia. did kemp come talk to you? did you guys talk about taxes at that point? you are absolutely right. i was an adviser to jack kemp when he was running for vice president. he was a great friend, i admired him, and that is why i was willing to work with him on his campaign. after the exchange with clinton in 1994, many of you have seen about it now, it has received a few hits on the internet. i said to president clinton with all due respect, your calculations are incorrect. he was basically promoting thorny numbers, and i called him on it. his administration could not prove that i was wrong. that, for the business

community, woke up, and they, too, started to look at the numbers and read the fine print, and so the momentum built in order for people that are calling their congressman, they could not prove that the numbers were right, because the numbers or wrong. and there again, they were trying to minimize the impact on my pnl, and when clinton started arguing with me about the minimal impact, i told him i thought i knew my pnl better than you do. i also got a call from jack kemp, who said he would like to meet with me. he flew to omaha, nebraska. i met him at the airport. it was at an fbo, a chartered plane. we sat in the airport. i said, let me take you to lunch. no. we talked for three hours

getting to know each other. he fit the omaha nebraska with no agenda other than to get to know me, to learn about got pizza, we goter's to know each other and we bought that on that day. >> turning out to 9-9-9, one of the features that is most similar to that type of optimal plan that we talk here at aei, -- ia much smaller crowd do not think there are a lot of people clamoring for me to run for president. the consumption tax angle, there is an academic literature that talks about it. is that part of the original motivation, to move toward taxes and consumption, and what do you think we accomplish when we do that? >> that answer is yes.

we had several objectives in mind. we wanted it to be simple, because if the american people understand it, they will demand it. this is not going to pass based on my ability to persuade congress alone. this is going to pass because of the strength and the voice of the american people, so we wanted it to be simple. secondly, i have been working on tax reform and tax replacement for decades. i was a supporter of the flat tax on income when i thought it had a chance of passage when dick armey was talking about it, steve forbes ran on it. anything to replace the current tax code i was for. i worked on economic growth and tax reform commission that jack had headed up, and out of that commission came six principles a replacement should satisfy.

guess what -- the fair tax, national consumption tax, and the flat tax on income, they both satisfied the six principles we came up with. the 13-person commission was deadlocked on which to recommend because they both had at the beach, they both had negatives, etc., and as a result commission decided to stay the principles and we physically sick and the report, which got put in a drawer, by the way, basically said that either one of those will satisfy those principles. for decades, i looked at both of them. i knew that they both offered some very positive benefits. the people who have supported a flat tax for a long, long time, and they feel strongly about it. the people who support the fair tax for a long time feel strongly about it. one of the objectives was let's get both of these groups to the

table, so therefore, the 9% flat tax on personal income brought the flat tax people to the table. the 9% on retail sales brought the -- fair tax people to the table. we now have built in the support for the concept now, the fairfax people were upset at me at first because it was all all fair tax, but the decision we made strategically was let's get america used to the fact that a national retail sales tax is a good thing, and it is a lot easier selling a 9% rate and a 23% rate. having worked and studied both of those proposals for eight years, contributed to how we put it together. we wanted it to be simple, which it is. we wanted it to be transparent, which is -- 9-9-9.

there are no other 9's. we wanted it to be efficient. we spent $430 billion a year filing and complying. that money does not have to be spent, and we wanted it to be fair, fair according to webster's dictionary, not washington. where everybody gets treated the same. what a novel idea. those are the guiding principles that went into it. >> one of the things that -- and maybe this is your undergraduate math degree -- if you played noth the math, and there is a lot of difference between the value-added tax and a fair tax and a flat tax -- i wonder if it is frustrating -- if someone says i am all for the flat tax, but i hate the value-added tax, it is something of an illiterate

statement, because the flat tax was designed because we needed a value-added tax, but he wanted a way to work it in the u.s.. -- u.s. >> because we expanded the base. the only way we are going to get the lowest possible rate is to expand the base. so rather than just look at income, if the base was just in time, the only way we were going to generate more revenue is raised tax rates, which i do not believe that we need to do. expand the base by bringing in the sales tax component, that is how we were able to arrive at the 9-9-9. it does not matter what you call it. it does not matter what you call

it. the reason my opponents are trying to collect a vat they want to scare people because of what happened in europe. they have both. they have a vat tax, but they have multiple saudi-added taxes. technically, that last retail tax of 9%, called that%vat, but happens one time. today in our current system we have invisible vats built in paid take a look of bread. the farmer has to pay taxes on his property, flour mel has to pay taxes on his property, that is a vat, but it is invisible. the truck driver has to pay taxes on his property. the grocery store with their little margins, they have to pay theirs. who pays the taxes?

we do, as consumers. what 9-9-9 does is we replace that 30replaceto 4% invisible tax -- 30% to 40% tax, we take it out and replace it with a 9% visible tax. >> i wonder if you look at your web site says after we pass 9-9- 9 there is a second stage where you began the conversation to transform the tax system into a fair tax, which suggests you think that varitek is better than 9-9-9 in the long run. could you explain why you think that. >> i do believe in the long run the peer consumption tax, that their tax, will be better for

the following reason -- then you put the consumer in charge of what they pay in taxes based upon their purchase behavior. with 9-9-9, a consumer is in charge on that third 9. you don't spend any money, you did not pay taxes. you are not totally in charge of that in the second 9. i happen to believe with the 100% consumption tax we are going to see a dramatic difference in people's behavior, and that is what is going to supercharge this economy. we believe 9-9-9 is going to significantly boost the economy because we have scored ecstatically and dynamically. it is -- sporadically -- statically and dynamically.

>> in a fair tax, have a prebate, where they forgive the tax for a basic level of consumption, but you prefer an enterprise zone empowerment zone. could we talk a little bit about the technical details, which is you go to a fair tax in the end, will you have the same fairness perch as you have been nine cocoa, but also the government's role. >> we will not start that dialogue early. i want people to stay focused on 9-9-9. in 9-9-9, here is how we approach assisting those that are at the poverty level and assisting those that are making the least amount of money. 9-9-9 telex the same amount of

revenue -- collects the same amount of revenue that we collect from a capital gains tax, income tax, and payroll tax, which is the biggest tax the allow the people pay. we are converting five into three. now, if someone were to read the entire analysis, and let me underscore that it her -- they will have discovered that is more than those five. because of the poverty exemption. the poverty exemption for everybody. those at or below poverty, the middle nine is 0. if you are filling out your taxes and you make that money,

you still the poverty exemption because he could be rich one day and pour the next. that is similar to the prebate in a fair tax. everybody gets treated the same? secondly, we identified opportunity zones. we are working through how you qualify as an opportunity zone, but in an opportunity his own, like a detroit, businesses will be able to take additional to dutchess. we have allocated money in the collection of the tax revenue the poverty piece and opportunity is zones. we treated it slightly differently than going the route of the prebates. >> what role does government have in terms of enacting legislation to create fairness or to spread the wealth around?

>> i believe the government's role to create fairness is zero. level playing field is the my opinion. role the people determine what is fair, not the government, because when the government gets into picking winners and losers stomachs shall we say solyndra? when they get into that business, where does it stop? you add an unnecessary perturbation. you add an unnecessary influence when the government gets into the business of trying to define what is fair, and that is why we have the mess we have today. >> are you surprised a little bit about how your opponents have responded to 9-9-9? >> no. [laughter] when you have the best plan on the table, expect to be attacked. in the last debate, i did not

expect the bull's eye to be that big on my back, but it was pretty big. i was not surprised, but here is why -- we put this plan out early in this whole process. i really expected them to put their own plan on the table a lot earlier. but what this shows is they were scrambling. how the you come back and counter -- how do you come back and countered 9-9-9? and so all the ones that have said they have a plan, what do they do? it pivots off the current tax code. yes, we still keep that flat tax, and yes, we are going to have a much, much -- we are going to to eliminate irs and put in a new agency that is much smaller, but they use the old

tax code, which means they are still going to have the battle ver their -- over people's favored the dutchess. lobbyists are going to be all over them tried to get them, their industry, segment, or their businesses' favorite -- it indicated they were scrambling to come up with something better than 9-9-9, and haven.t they >> one of the interesting features of 9-9-9 is the you live and make the payroll tax and a connection between payroll taxes and what your benefit might be, which means social security would be on budget instead of off budget. is that an intended consequence of 9-9-9 and have you thought about what that would do to social security and whether that would help you accomplish your goals? >> it is and intended

consequence. we're collecting the social security revenue using 9-9-9 structure, but not eliminating social security. seniors will not be negatively affected. the next that is how to restructure the system. we are working on the concept of younger workers having an option as we face off this current system that we cannot sustain. yes, social security is not going to go away. another solution put on the table is hear how we address and better utilize those dollars. one of the things you alluded to with that question, you will see coming from the cain campaign --d herman cain's at a seat, candidacy, individualized

solutions to problems. one of the things that we want to achieve is put ideas on the table that the american people can understand and can get behind, so when we introduce the social security restructuring, it will be about how we restructure social security. we will be presenting our energy independence strategy. we are working on that. people can get their heads around energy independence and how we want to do it. keeping the solution to individual problems as how we are on to do it rather than nasa's of documents that nobody wants to read and nobody will understand. >> so 9-9-9 becomes law in this,

say, february of your first term. what is up in march? [laughter] >> i'm going to ask congress to januaryretroactive to 1, and here is why -- it is estimated that the gdp for this year might, on an annualized basis, hit 1.6%. that is pathetic. what the president is proposing, it is not going to be any better next here. i want ask congress to make it effective january 1, 2013, retroactive. after i am elected, we will again to work with members of congress to keep up that legislation. the mere fact that we would tee up the legislation and say we are going to make it

retroactive, the business community is going to get excited, which is what we need because the business community is the engine of economic growth in this country. for thebe fuell engine. i serve on corporate boards for nearly 20 years throughout my business career. the discussion in the board rooms, prior to last three years, was, how do we grow the business? whenever had a discussion about how we stayed the same -- we've never had a discussion about how we stayed the same, how do we stay this the same. a lot of the discussions became how do we survive? they have done their own assessment that this economy is stopped. it is not going anywhere. it is going to stay stuck because of any effective failed

economic policies. when the business community sees that the unconventional candidate that has gotten elected president with a bold idea, they are going to get excited that he just might get this thing fpassed, and they will put together growth plans and have it ready to go once members of congress say we're ready to go this through. 40 million people without jobs and cannot find jobs, cannot wait. this is our biggest domestic priority, in my opinion. >> thank you, mr. cain. a colleague has pawlenty -- has volunteered to bring internet questions about 9-9-9 to you

before we open to the floor. >> i am the vat, and this is a representative question, clyde linda, he says, it looks like a vat, talks like a vat, is it really a duck? >> it does not matter what you call it. it is a single rate. at the end of a cycle for product, people who want to call it a vat, be my guest. it is a single rate, 9%. they are really trying to scare people away from 9-9-9. secondly, would you rather keep the 82,000-page mess we have today, or argue over what you call it every day, because we

throw out our tax code. >> ryan has a question. why does 9-9-9 double tax wages, but only simple tax capital? shouldn't all income be taxed just wants? , which is going to answer that question later. rich lowrie is the co-architech of 9-9-9. >> in our second panel conversation -- >> they are only going to get harder from here. some people -- let me ask it this way -- neil said, how do you plan on changing or reversing dodd-frank? maybe some people would like to see another 9 on that plan,

which would be another tax on the banks. what he think about an extra tax on banks, when what would he do if we had another financial crisis where multiple banks needed to be bailed out? >> i would not add another 9. i believe we need to repeal dodd-frank start over and put the right controls in. try to take 9-9-9 and solve another problem is not how believe we should solve problems. we are trying to solve one problem, because this economy. he had to do want to punish banks for past sins or for potentially future since, that is not our approach and our philosophy. i believe you allow the free market system to do what it does best, which is weed out winners and losers. >> we will not open up for questions from the floor.

i would like to remind everybody that aie, we have questions from the floor, the questions need to be about the topic at hand. mr. cain is currently at the national press club live there today, where if you have some topic unrelated the fiscal policy, you could probably do that. we open for general questions, and please wait for the microphone and identify yourself. we will start in the back. >> hi. first of all, let me say i know -ow a piece of business is a pizza business in. right now the largest corporations in america are sitting on $1.50 trillion in cash. the reason they are not building

up their capacity is because there's no demand for the products. another word for demand is consumption, and that is what you are taxing. essentially, you are taxing what is going to get the economy growing again, and i do not understand how that is gone to translate into growth. >> code to the first 9. in the first 9% flat tax on business income, you are able to deduct purchases that you had to make to produce your product, you are able to deduct capital expenditures -- in other words, full expensing right away -- had and that exports -- and net exports, allowing businesses to deduct net exports levels the playing field. the other part in terms of cash they are sitting on, and 9%

gives businesses a compelling reason to go ahead and deploy that goversus a 35% top marginal rate. you go from 35% to 9%, i believe smart business people are not going to see that 9% as a barrier. >> the next question. >> you talk about yourself as a problem solver. there are a lot people, not just can out on wall street, who look at the growing income inequality as a real problem for sustaining democratic confidence, participation. how big of a problem is the statement made middle-class wages and the increasing gap in the income in this country, and what does 9 q-9-9 do?

people say it exacerbates the problem. >> people will see that it does not exacerbate the problem. most people in the middle class with 9-9-9 will be better off, and the only thing i can say is people have to do the numbers to see it. people say i ran the numbers. one of our supporters developed a calculator that you can go to, putting in your actual situation and they see how come out a lot better. we're trying to confirm that so we can put on our website, but my answer is do the numbers. we know based on the analysis, the middle class is not fun to be exacerbated. the bigger question -- it is a problem if the middle class is not growing. if those on the lowest economic ladder are not able to move up. the biggest impediment and the

biggest driver of that disparity is a stagnant economy. 14 million people who cannot find jobs. we have heard the middle-class with millions of people being underemployed. these are people in the middle class who cannot find a job commensurate with their education and their experience. that is the problem we must solve, and that is why i believe, we believe that 9-9-9 addresses that. when businesses get excited with a 9% tax, the economy is going to take off. that is a problem, not government trying to mandate closing that gap. no. >> would you like to see that gap closed? >> i would like to see that close, and with a vibrant economy, that gap will close. there have been studies i have

seen in the past that shows that the people at the bottom economically, most of them did not stay there. -- most of them do not stay there if they have an opportunity to move up. when did they move up when we have a vibrant, robust economic growth. >> i will go back to dave back there. he is a regular at our tax conference. >> i want to go back to -- david. i would like to go back to the webster definition of fairness and talk about your empowerment zone. >> opportunity is unknown. >> opportunity zone. we have had empowerment zones in the past. aid have been that

successful. why is this not just a loophole in your 9-9-9 program? why is that any different than somebody else's loophole that they're trying to get in? >> the reason we called it opportunity zone is because that term empowerment zone has too much baggage. secondly, the concept of empowerment zones have failed in the past because you are trying to define it and connect it to a complicated tax code. we have dramatically simplified things. and so with 9-9-9 being the structure, it is easier to create opportunity sons by modifying some of the parameters or some of the deductions in the 9-9-9 structure. the other thing that makes this

more advantageous in terms of cities ory soanzones, communities will have to compete with other cities the classified as an empowerment zone. it is not just going to be here is a set of parameters and if you satisfy these parameters you automatically become an opportunity zone. no, because opportunity zones are going to require the economically depressed areas to do things to help themselves as well. if they had built in impediments and barriers to their growth, we are not going to fund those barriers. that is what makes it different. >> let's bring it back here. hello, mr. cain. two questions.

one of your opponent has put out a flat tax, but has called it an optional flat tax. i wonder what your thinking is on that. similarly, there is a big cloud right now that is affecting her ability to get this out, which is the story in politico. could you clear up for us right now -- >> i think that question is inconsistent with the ground rules that we have. >> to clear up one final statement -- >> [unintelligible] >> what was the other question you asked? first, making it optional, i believe, makes it more complicated. i do not believe anybody wants

to stay with the current code, so basically i called governor plan flat tax lite. it is not the same proposal that steve forbes proposed to because he keeps in the favorite deductions to reduce production -- criticism. i'm not interested in a plan that is going to reduce criticism. i'm interested in a plan that is gone solve the problem. with the way governor perry's proposal is structured, the battle amongst lobbyists is going to be fierce. they're going to want to add some more, and pretty soon you are run to be right back where we are. it does not get far enough away from the current tax code. >> ok back here to the left.

>> good morning. welcome. thank you for being here and taking questions. .'ve worked on energy policy my first job was delivering pizza. i'm glad you're going to be releasing the plans of your energy plant, even though you have pushed back the deadline. could you give us a preview, perhaps, of what is going to be in your energy plan. >> it would begin with recognizing that we have in fact enough natural resources to become energy independent. we want to maximize our ore, our coal, our natural gas, our shale oil.

we maximize the resources, and new resources have been discovered. we can become energy independent, and we will structure it so that all those alternatives will be encouraged to be developed by removing the barriers that are stopping that development right now. the biggest barrier is the regulatory environment, and we are going to attack that had on. the specific changes we're going to have to make in order to be able to export these resources responsibly we do not have all those identified yet. but we note it starts with the epa. and a king administration, the epa will get an attitude adjustment. -- in a cain administration, the epa will get an attitude adjustment. we will encourage all our

natural resources. suddenly, energy independence is not only an economic imperative. it is a national security imperative. this is why we have energy right up there as a critical number one issue that i am going to work on day two after i am sworn in. day one i am going to take a nap. national security -- i'm glad you all got that. glad to know that you are all away. national security, the economy, and energy of the top three critical. people ask, what is the number one critical priority? those three. that does not mean we are not going to work on other stuff,

but it is to maximize the current resources we have, which will lead us to new technology that is not being taken advantage that we will also include in our energy independence strategy. >> thank you, another question. could you wait for the microphone please. >> thanks. d you have any physical recommendations for europe? fiscal ou have any phy recommendations for europe? >> no, i do not, in all honesty. ifhappen to believe that y

europe moves toward free market principles, it will strengthen their economies. as many european countries have gone off the edge in terms of spending -- they were not able to get spending of control -- and that has entered a did the lot of the problems in europe. it is similar to what we are doing in this country. spending is continuing to escalate. all the politicians talk about we need to stop it, but they do not stop it, and i believe that is what is causing a lot of the people to connect with my campaign because in addition to, we must grow the economy, which is why i am not going to back off on 9-9-9. i will defend it declared -- i will defend it to the hilt. the american people get it. based upon assumptions have put

into the dynamic model, the economy will grow 5%. then cutting spending, and the way i am going to approach putting a cap on spending is i'm going to do a 10% across-the- board cut of the fiscal your budget i inherent, across-the- board 10%, and then a deep dive to eliminate duplication, waste and programs, etc. some people say you cannot do that. yes, you can. some people say we could not godfather's. we did. my only advice to europe is get spending under control, follow free-market principles, and you might be able -- he will not catch us, but you might be able to get on the same track.

>> some republicans say you should have a spending cap and others say you should have a balanced budget amendment. are you a spending cap or a balanced budget amendment died? >> balanced budget amendment sky. one of the things that i want to do very quickly is havfe an annual budget -- have an annual budget where revenues equal expenses. what a novel idea. what a novel idea. guess what happens -- i happen to believe it is possible. remember, when i'm sworn in i will inherit that fiscal year's budget. the first one i will help to create will be the fiscal year budget of 2014.

we are -- we have set an objective. since we have not done the analysis yet, the objective is for that budget, the first full fiscal year, is for it to be balanced. he cannot do it with just cutting. you have got to have the economy growing. having 9-9-9 passed attractive to january 1, the economy is on ticket -- the economy is going to be on a projection. we have a good shot of having a balance that fairst full fiscal year. >> way in the back. >> it is just not on.

>> it does not look like one of our mikes. >> ok, here we go. mr. cain, you're doing very well in the opinion polls of the money, partly because of the attractive simplicity of your 9- 9-9 plan, and i love your accent, by the way. [laughter] fantastic. here's my question -- what makes you thinking any party that has shown itself to be promiscuous in its favors on the campaign trail that your candidacy will not the way other candidacies have gone, which is to -- the party will not fall of love any time with you singh? >> one simple reason -- the

people. not the party. the people have propelled my candidacy. the party may resist, and i am not saying that they are. i am not a party favorite by some members of the party. i understand that. but the momentum is coming from the grassroots and the people. that is why this flavor of the week is the flavor of the month and it still tastes good. [laughter] [applause] it is that people. >> we have time for one more question. right here in the front. i had it over here. sorry. i apologize. >> i was wondering if he could speak about what you feel like

you accomplished in your time at the kansas city fed why you think that qualifies you to be -- >> that alone did not qualify me to be president. if i had never served on the kansas city fed, i believe i will have been qualified to be president because i'm a businessman that knows how to solve problem, i have been accused of having strong leadership skills, and if you look at my record you get that idea. but the experience of the kansas city fed did allow me to get a better understanding of macro economics and to appreciate the value of sound of money. the kansas city fed is totally different than the federal reserve of today. i do not claim any approval of some of the actions of this current fed, because conditions

are very different. in the 1990's, we did not have a $14 trillion debt with a stagnant economy. we had a an economy that was growing and the debt was down in the single digits. as a result, we focused like a laser on controlling inflation. controlling inflation. sound money is critical to our future, and so it gave me an opportunity to better appreciate the value of sound money. just like "60 minutes -- 60 minutes is in an hour when you wake up in a morning, $1 is $1 is $1. in 1988, it took $1.20 in exchange for $1 u.s. trade today, it is just the reverse. that is how damaged our currency

has become. one of the things that i'd want through whatever means necessary, is to get the fed to refocus on just that one thing, controlling inflation. >> thank you very much, mr. cain. it is a pleasure talking to you. i would ask everybody to remain seated for security purposes while mr. kaine leaves. -- mr cain leaves. >> thank you. thank you very much. by the way, folks, i am an unconventional candidate, and yes, i do have a sense of humor, and some people have a problem with that, but to quote might chief of staff, and all the people i have talked to our around the country, herman, be

herman. and herman is going to stay herman. >> thank you very much. if i could ask the panelists to come forward now, and we are about to begin a panel -- >> following were these remarks, scholars and a representative discuss the specifics of the 9-9-9 tax plan. this part is about 40 minutes. [captions copyright national cable satellite corp. 2011] [captioning performed by national captioning institute] >> we are now about to begin a panel discussion on 9-9-9. we're pleased that an expert panel. batting cleanup, we have rich

lowrie, the accountant from ohio. he is the representative from the cain campaign who is here to answer some of the detailed questions that might come op. we are going to begin with about a five-minute presentation by bill gale, from four things, followed by growth in requests , -- grover norquist, and then followed by stephen moore. bill? >> thank you for inviting me here. i want thank aei hosting the event and having mr. cain come in and talk. the very entertaining discussion. it is appropriate that we talk about 9-9-9 on halloween.

i did not mean backup it is haunted. i mean the premise of the plan is based on a trick and a treat. the tricks -- and i really was this trip were true -- is that tax reform will unleash massive economic expansion. the tree is what many high- income households will get under 9-9-9. i say this as someone who has long talked about tax reform and would like to see the tax reform. i think herman cain and i agree on a number of issues. i believe we should change the income tax to reduce, curtail, or eliminate many of the current deductions, exclusions, special subsidies, etc. i have been writing about this for 15 years. some people say ad nauseam. like herman cain, i believe the u.s. should set up the value- added tax, joining the 150 other countries around the world who

use that tax. i want to be clear. the part of cain's part that is a value-added tax, the business tax, is a subtraction method that were close to of subtraction method that subtractionvat the real world is exactly like that. as far as i understand it, the second component is a vat. i believe all three components are consumption taxes, and i agree that what is interesting is the creation of the consumption tax not so much what you call them. i agree with mr. cain that the u.s. has finally set up a vat. i would like to see tax reform happen. unlike herman cain, i do not believe that tax reform needs be either regressive or money- losing to make sense, and in fact i believe the opposite. it should be raising revenue to help solve the fiscal problem, and it should not be regressive.

it should be progressive for a variety of reasons. you could describe my statement as i agree with mr. cain that we need a broader tax base and we can use some of that revenue for more rates. we have only two minor disagreements -- how high taxes should be and who should pay those taxes. let me explain this in the context of what i see as 3 inches. one is a long-term situation. the second is the short-term performance of the economy. the third is the increasingly concentrated distribution of income over the last 30 years away from low-income households and toward high-income households. i do not think 9-9-9 resolve any of these issues and makes two of them worse. in the long term debts of the sets, tax reform is a great thing to discuss, but now we need to discuss the school reform as well. tax and spending are obviously two sides of the same coin.

the plant loses money relative to current law analyst of the current policy baseline, loses a lot of revenue, treen of dollars of the next decade. cutting revenue is not want to solve the fiscal situation. it will make it worse. we have tried to starve the beast several times over the last 30 years. it cannot work in the 1980's. it did not work in the last decade, and both those times we cut taxes and raise spending. we're not want to solve the long-term fiscal situation by cutting taxes. where got to solve it with some balanced package of tax increases and spending cuts. on the income distribution side, we have witnessed enormous changes in the distribution of resources of the last 30 years. they're all sorts of reasons why, and i'm not suggesting that it is the job of tax policy to

undo this shift. i think talks policy does not need to exacerbate or extend this shift, which the cain would do. the implied reduction in spending -- you will have to cut spending dramatically to balance the budget, and that will come out of social security, medicare, and medicaid, which help low- and moderate-income households. the third issue is getting the economy going again, and mr. cain talked about this a fair amount. i would love that if tax reform were the magic budget -- on the with the push to get the economy going again. just like when tim pawlenty said we're going to raise the growth rate to 5%, and we all sat around and thought, well, why did we not think about that? i had the same reaction here. i wish that tax reform with salt the growth issue in the short

and long run, the the top you through a couple of episodes in history where that has not happened. in 2001, expense and was a big part of the reason for 2001 tax cuts. i do not think anyone is pushing that argument anymore. monetary policy generated low interest rates, which posted housing values, and that drove the and my growth over the last decade, not anything to do with tax cuts. the clinton administration we raised taxes. we raise the top rate by 8.6%. at the not destroyed the economy. the economy went on to enjoy very strong growth. in 1986 we cut rates of lot. the top rate came down from 20%. there was no discernible impact on the rate of economic

expansion after that. in 1981, the poster child that is used for the notion we had a steep recession and a steep recovery. when you look at it in retrospect, when you do analysis like martin feldstein did, who was chair of the -- under president reagan and doug elm and doors -- they attribute almost all of the economic expansion to monetary policy, which also changed sharply from for the recession to after the recession and there is little left to explain why tax policy. lastly i would like to highlight on this issue, you hear huge wonderful stories about how great the economy will do with tax reform and you hear horror stories about how badly the economy will do if taxes are raised. i would want to remind you that before world war ii to after

we raised taxes by 10 percentage points. taxes should more than covered as a share of gdp. they went to the fifth seniti -- they went to the vicinity of 18%. rates went up in the payroll tax. if you plug that kind of performance, a policy change into these models that predict dramatic economic expansion from tax reform, you will find that those models would say that that tax increase drove the economy into the ground. in fact, nothing like that happened historically. we then proceeded to have a 25- year period of strong economic expansion. i'm not saying that taxes have no effect. we can raise taxes with impunity. but i wish tax policy word an elixir for economic expansion,

but i do not see that to be the case. that cutting taxes is want to solve the fiscal situation, if you think that a regressive tax is the right response to the widening income distribution, and if you think tax reform will expand the economy, inconsistent with all historical experience, then the 9-9-9 plant is the plan that he wants. if you do not think those things like i don't think, then 9-9-9 is not the option >> our format will be that we'll let each person have their say and then we'll open up for a general conversation and now we'll hand it off to grover norquist. >> excuse me, kevin, you're going to make me wait before i respond? the reason is, that's not the first blow you're going to take and we'll let them pile up and you'll get the final time to speak.

>> there are several debates going on right now. one is whether we want to raise taxes to pay for the level of government, 25% of g.d.p., that obama, reid and pelosi put together or do we bring spending back down to 20 and go further down by that by reducing spending. do we want to bring taxes up to the spending level set by obama or spending down to the previous 30, 40 years of spending and i would argue going below that. the other is the tax reform issue that's been put forward and there's some conversation. those of us on the center right who don't want to raise taxes to pay for obama's government, we want to bring obama's government down to american levels and down to better levels than we've had, there's a consensus. people are all talking about moving to a single rate tax, a tax is consumed income, one time. that's actually tremendous progress. we've been there shortly around

1986 on, i think there's been consensus in the center right, and that we briefly -- then the question is, i was looking through, why didn't we get to this conversation earlier? when you have a democratic congress, you can't pass legislation. you can have the conversation. we had the conversation, we had a debate between the fair tax people who want to leave you alone and then if they see you buy something, the government steals some or the flat tax people who, if they catch you earning money, they want to steal some but they focus on one thing you do in life, smash and grab, and go away, as opposed to the present system where they watch you earn it, save it, invest it, get a capital gain and if you're stupid enough to die, they take half. moving to tax being in one time, consumed income one time at one rate is now a consensus position on the center right. our friends on the left trying to figure out how to grab enough

money to pay for obama's government are not part of this conversation, never will be. flat tax, fair tax, any meaningful tax reform will not pass in a democrat house, senate or president. so what we're waiting for is a republican house, senate and president, then you can move on this. to make it permanent, you need 60 seats. luckily, we can get to 60 by 2014 and we're on track to do that. so we want to go to one rate. why? because then even has the same relationship with the government. i'm originally from tosachusetts prior emigrating from the country and in massachusetts we have by constitution a single rate tax. that's liberal, democrat, ted kennedy, massachusetts. five times our friends on the left who want to bring taxes up to pay for the size of government that they imagine they would like to divvy up and share with their friends, five times the voters of massachusetts have voted that

down with a very sophisticated argument. divide us into 10 groups, five groups will mug us one at a time. the most important thing about a single rate tax is that it doesn't allow the clinton campaign, i'm only going to tax 2%, gets elected, gas tax on everybody of the or obama, i'm not going to raise taxes on anyone who earns less than $250,000 a year. 16 days into his presidency, first tax on corporate jets, first tax on billionaires? no, first tax on people who smoke cigarettes. there's only one person in the country who smokes cigarettes and makes more than $250,000 and he lives in the white house. so, obama's first tax office low income people. to get to the office, he does the, hey, look at the shiny thing over here while he reaches for your wallet so having a single rate tax makes it tougher to raise taxes, easier to reduce taxes and clearer what everybody's paying and that's why the good people of massachusetts won't get away from it given five opportunities

to get away from it, they keep saying, we want to stick with that. 9-9-9, here's my concern. i applaud herman cain for saying the present system is too redistributionist and complicated, needs to be radically changed. he wants to go to retail sales tax and fair tax. we can discuss that later. it's the transition period which i always worried about but when he lays out a japanese style vaccine, sales tax, next tax, three different taxes, 9%, it's like saying i have one bush that's overgrown, why not prune it back? no i'm going to plant two more and then we'll come back and prune it. i'm in not sure we want additiol needles in the arm draining out more blood. three needles can take three

times as much money as one. i'm more comfortable taking the present system and pruning it back rather than setting up something else. that's strictly political. if you were a czar and you were able to set up a code and no one could change anything, you could have a conversation about that but that's not the way we work. if you're going to have a policy shift, you invite the other team to win election noose between each of your periods of transition and you have the possibility that these things will grow and the history of v.a.ts and other taxes in europe is not encouraging but you don't have to go to europe to find those examples. people in new jersey in the 1970's had high property taxes. we must do something about that. governor says here is our fix to the high property taxes, we'll have a tiny income tax and property tax will go down so low, you'll hardly notice it. fast forward, we have high property taxes and very high income taxes in new jersey. people of connecticut are slightly more dim witted and

after watching that they said, right decade and a half later, oh, my goodness, we have high property taxes, we should do something, boom, they have income tax and property tax and both are extremely painful. introducing new taxes to fix old taxes doesn't work and i think it's extremely dangerous. if he'd said let's go to a sales tax from the present system, my concern would have been the transition period where you would end up with both and look like france or greece or one of those cheerful countries overseas and that i would like to avoid because i'm not up for dragging enough cash out of the people of america to pay for obama's government. how do you get enough money to pay for the size of government you want is another fight and i think we have consensus on the center right both, we're not raising taxes, end of

conversation. obama hopes that the present moderate republican party would like to relive lucy and the football for a third time. they're not going to see he's not going to get his tax increase, spending will have to come down. and on the tax side, let's not put ourselves in the position where we create additional taxes that can grow. >> thank you very much, grover. now we hand it off to steve moore, senior economics writer for the "wall street journal." steve? >> i'm sorry that mark black -- will you tell mark, thank him for making smoking sexy again. ok, i just have four or five quick points. my opinions today are my own, not the editorial board. if you want to know our position on the 9-9-9 plan, we wrote an editorial called two weeks ago called "cain's tax mutiny."

four or five quick points. one is, there is nothing, nothing, nothing, nothing more regressive than our current income tax system. we have 14 million unemployed people. we have 20 million that can't find a full-time job. the economic policies of the last four years have been a catastrophe and i would make the case that the income tax system we have right now is an albatross around the neck of the economy and those that suffer the most from the current tax system are those without jobs and that's a point, rich, that i wish herman cain and neut newt gingrich and rick perry would make all the time. nothing could be worse and more harmful than what we have right now. second of all, this plan that -- let me put this in the context -- i believe all these plans, rick perry's plan, newt gingrich's plan, the 9-9-9 plan, they're all pretty much the same in terms of taxing consumption,

not double and triple taxing saving and investment. that's one of the common themes and other common theme is getting rates down as low as possible and as grover said, i think we generally all agree as conservatives, those who are conservatives in this am radio, that that's a very good goal to have. there was a question earlier, kevin, about, doesn't consumption drive the economy and this drives me crazy, this keynesian notion that what drives the economy is and it is 100% wrong. what drives our economy is entrepreneurship, investment, savings. those are the building blocks. until you have a business, until you have a job, until you have people being innovative, you don't have consumption. you can't consume if you don't have a job seit's investment and savings that drive growth and prosperity and that's what's attractive about this plan and the flat tax plan so i think when, for example, bill says, well, tax policy doesn't really matter, just to put this into

context, a wrote a piece a few weeks in the journal and i called it obama noppics versus reagan nomics and you had two presidents that inherited incredible economic crises. no question obama inherited a great economic crisis and ronald reagan inherited a greater economic crisis. all i did in this piece, drove liberals crazy, is say, ok, reagan and obama used entirely diameterriccally opposed models to deal with these crises. reagan deregulated the economy. we got some control over domestic spending and inflation down. obama came in with trillions of dollars of new spending and the keynesian model and i looked at what worked and what didn't work and two amazing statistics. if you look at the fall of 1983, the exact same juncture of where

the economy was, you know, the same juncture of the obama presidency versus where we are today versus where reagan was in 1983, the fall. in september of 1983, after the final leg of the tax cut, you don't think tax cuts matter? the economy created 1.1 million jobs in one month. that was the most jobs the u.s. economy has ever created in american history. the economic growth rate. you saw that we had 2.5% growth this third quarter, bringing our annualized rate of growth to 1.5% this year. the third quarter economic growth rate for the u.s. in the fall of 1983 was not 2.5%. it was closer to 8%. so policy does matter and i think tax policy matters and that's a point i think herman cain and rest are going to have to make. all of these plans, i want to restress this point -- all of these plans are very similar in terms of talking about getting

rates down and stopping and triple taxing of saving and investment and that's critical because i believe that one of the things holding back the economy, when somebody said there's a trillion and a half dollars on the sideline, that's exactly right, and partly is because there aren't customers but also look at what businesses are looking at. they're looking at incredibly anti-growth regulatory the presidentd saying if i'm re-elected, i'm raising all the taxes. who wants to invest in that climate. business men and women across the country are hunkered down. one of the great things herman said this morning, he was exactly right, what businesses are talking about is not growing but surviving and that is true and i think there's a real anti-growth element. i do believe as an economist that if we put in place the herman cain plan or the rick perry plan or newt gingrich plan, all talking about getting

rates down to 20% or lower, we being create a million jobs a month and you want to talk about getting the budget deficit down, you put a million people back to work each month, you'll have incredible revenue growth. final point, i think the good news about what's happening on the republican side of the aisle right now is the republicans are having incredibly healthy and stimulating debate about what to do about our tax policy and this is great. i applaud you. i don't agree with everything in the 9-9-9 plan. i've been critical of the sales tax, as grover is. but this is a great degit have and where are the democrats on this? obama's running around the country saying, soak the rich, that's the tax reform plan, raise taxes on the rich? it's amazing, i'm just disappointed. in the q& a for bill to respond to this, but the democratic party once was intellectually curious about tax reform. in the 1980's, that bill that cut the top tax rate to 28% and

cleared out a lot of the pollution in the tax system bill in the united states senate, remember this, kevin, passed 97-3, 97-3. there was a bipartisan consensus back then. you got to get rates down and broaden the base. i don't think you could get two democrats in the whole house and senate today to vote for a 28% rate. it's sad to me that democrats seem to just not be interested in creating a more positive tax reform, tax policy. the last thing i'll say is it's amazing to me that barack obama when he run for president, he ran on a theme of hope and change. now what it is the party talking about hope and change? it's the republicans, hope and change with respect to changing the tax system and obama is running around the country on a campaign theme of fear and envy and i hope fear and envy is not vote for in 2012.

>> now, rich lowrie. rich is senior economic adviser to herman cain and has been officially since june 2011 but i know he's known mr. cain for many years more than that. he's managing director for investments at a group of wells fargo advisers and he's on the advisory board of the american conservative union. he was previously senior vice president at mcdonald investments. rich, welcome. >> thank you, thank you, kevin and thank you to a.e.i. for putting this on and allowing us to address some legitimate and some not so legitimate concerns. i'm not sure where to begin but let me go through and respond to a number of these, as i have been able to take notes. first thing that mr. cain did by being bold is made is taif -

safe for politicians to follow. now that we've steered the debate towards pro growth tax reform, pro growth, pro job, pro export tax reform, we can get away from this debate over austerity economics. the next discussion we're going to have is over the difference between the incidents of attacks and the burden of that tax. and let me explain. if you think that the incidents of a tax is the same as the burden of that tax, all you look at is your paycheck to understand how much taxes are being withheld. but if you understand that the burden and the incidence are different, then you see how the farmer marks up their product to cover all their costs including all their taxes, passes that to the food processor who marks up the same product to cover all their costs, including all their taxes, and then that continues to the distributor off finally the grocery store so by the time

you buy anything, all of these taxes are already baked into the price. what we're doing with the sales tax is removing them where you can't see them, you are paying them, but you can't see them, and we're making them visible and we think by making them visible we'll make more people aware of exactly how much it costs for you to fund the government and whether you aim tax at the business or not, it's going to land in your wallet whether or not you like it or not. you're going to pay out of your income and you're going to pay out of your purchasing and the more we make that transparent and the more people see what government really costs, the more people are going to want less government. that is our number one defense against rates going up. the argument that, you know, 9-9-9 will turn into 10-10-10 and before you know it, something higher, just doesn't -- first of all, it's a legitimate concern. i don't want to dismiss it.

it was a top concern of ours as we designed the plan. but when you examine the logic behind it, it somehow assumes as its underlying premise that the current counterproductive convoluted tax code is somehow acting as a constraint on the size of government and that by moving to a more efficient, more productive tax code, that that will somehow unconstrain the size of government so the underlying premise it's built on i don't agree with. a bigger component that drives the size of government is when washington is in the middle picking winners and losers. any time they divide two people and two groups and get a politician and lobbyist to step in the middle and charge a toll on both sides, that drives the growth of government. we have progressive rates which mr. gale and others think are actually accomplishing something positive but let me address that. a progressive rate structure

simply guarantees mathematically in periods of economic expansion, the tax burden on the american people will automatically ratchet higher and it means that revenues to the federal government will grow faster than personal income which is not a good thing at all. conversely, it means that in periods of economic decline, revenues to the treasury dry up faster than personal north incoo now you've created a boom-bust cycle of revenues and the boom-bust thing is the other thing that contributes to the size of government. first upturn we have, they'll try to spend that moan, and first downturn we have will raise the argument behind raising taxes. what 9-9-9 is going to do, among other things, is level the relationship between revenues and economic growth and eliminate the boom-bust cycle.

regarding the issue between consumption, does that drive the economy, or production, we have a tie on the panel so let me break the tie. the first economic guiding principle is that production drives the economy. and if any of you are unsure whether that's true, consider the fact that all of you have to produce first. that's the only way you can get paid, and that's the only way you can consume. so there's no chicken and egg problem. you have to fine out how to solve somebody else's need first and do so at a price that's accepted by the market, and if you don't do that, you can't get and you can't consume so some people will look at the fact that production and move at the same rate, but the production of society pulls along consumption the same way the engine of a train pulls the caboose and the

problem we have now is that we have a president that thinks the caboose pushes the train down the tracks and has been feeding it with valuable fuel and he wonders why the train has stalled. the first thing we need to do is feed the engine which is all of our roles as producers, as suppliers. and that's what is going to get the economy going. the second economic guiding principle and this is going to govern not only 9-9-9 but energy policy and everything else, is that risk-taking drives growth, in order to expand output by one unit, somebody somewhere has to take a risk. and if you're going to bear down on the risk takers and make it unattractive, prohibitively expensive, to take risks, you're not going to get risks. and i'll give you one example. the part of the argument that the tax policy center made is that the higher income or the

wealthy. they blend the two terms together and high income doesn't mean wealthy and vice versa but to try to support a regressivity issue, they point out the fact that higher income people realize more capital gains. well, the capital gains tax is double taxation on production and if production drives the economy, taxing it once ought to be enough, you don't want to double tax it. and secondly, the capital gains tax is voluntary. if the government wants to do anything important, why would you fund it with a voluntary tax. makes absolutely no sense at all and we look at that as a wall that separates people with ideas from people with money and what good does it do for us to wall off people with ideas. those are the people that create new businesses. those are the people that create jobs and those are the people that innovate so to borrow a phrase from my favorite president, tear down the wall, you know, get rid of the capital gains tax. that's going to reward risk

takers, that's going to increase capital formation and if, at the end of the day what you really want is higher wages, you need to improve the capital-to-labor ratio and the way you improve the capital-to-labor ratio is to end the double taxation on capital. the more capital invested per worker is what's going to drive productivity and that's going to drive wage growth. we've had the plan independently scored by gary robins, one of the most respected economists, ran the econmetrics function for the department of treasury under president reagan and his independent assessment is this will expand the economy by $2 create six million jobs, increase private business investment by a third and ultimately push up wages across the board by 10%. on the issue of whether this is a v.a.t. or not, it doesn't matter what you call it. it matters how it is structured

and it matters what it does. and let me walk you through the first nine, the business nine. whether you call it a flat tax, whether you call it a business transactions tax, whether you call it a subtraction method v.a.t., pick your poison. what matters is that we're getting rid of five taxes on production that all corporate income taxes, all personal income taxes, all payroll taxes, capital gains tax and the death tax. so we don't have one bush, as mr. norquist says, we have five ugly ones and we're going to pull them all out by the roots and put in three nice and neat ones and then we're going to count on spending restraint and the fact that these taxes are visible to draw the line on the growth from there. when we talk about whether this helps or hurts, you know, the

poor, first thing the tax policy center did when they issued the hit piece on the 9-9-9 and released it two hours before the debate, you had to read to the second to last paragraph to find it but they said we totally excluded the poverty exemption so we can conclude that you hurt the poor. let me walk you through what they ignored. before we determine the 9% rates, we carved out a substantial poverty exemption dealing with those at the bottom of the economic pyramid. it was so important to do it right that we broke it into two different initiatives. you can't legitimately help those at the bottom which tend to be concentrated in geographic areas, major cities, unless you get the whole country going first. so was that the 9-9-9 plan. but you can't have a genuine

prosperity for the whole country if you leave the more distressed areas behind so our solution was to have two separate initiatives, designed from the beginning so that they were integrated and compatible, so step one was the 9-9-9 plan. if you go back to the very first brochure that we passed out in south carolina when we rolled out the 9-9-9 plan, in every step thereafter, it said, we're to do -- we called them initially empowerment zones so if there are any confusion over the issue, it had nothing to do with how much we carved out for a poverty exemption, it had to do that we changed the name because we wanted to distance ourselves from what president clinton did. jack kemp came up with enterprise zones or empowerment zones. president clinton borrowed the terminology, heaped praise on congressman kemp but managed to turn the whole thing upside down where it had nothing to do with

positive incentives and everything to do with a one-size-fits-all, top-down micromanagement with strings attached and mandates which haven't produced the positive outcome one would expect of the so we're going to go back to the original design of congressman kemp which, by the way, in researching empowerment zones, you may want to check out stewart butler at heritage. he pointed out to me that kemp's original bill had a majority of a democrat house all sign on as co-sponsors and somehow the bill was never called to a vote. that shows you the bipartisan support for the concept. and essentially what we did is carve out an exemption that the announcement in detroit of opportunity zones made the statement first and foremost

that 9-9-9 just made the entire country one giant opportunity zone. kemp's design was to say, let's get rid of the capital gains tax. let's allow immediate expensing of business investment. those are now factory installed across the country which makes that one giant opportunity zone so the whole country is going to have an exemption to the poverty level that corresponds with your family size and that only uses up 1/3 of the total amount we have for poverty exemptions. we fully plan to use the remaining 2/3, a good portion of that is going to be directed to the business side to incentivize hiring, particularly at the lower ends of the labor pool and the remaining portion is going to be used as essentially a challenge grant for the inner cities and if they're serious about reducing and removing many of their own self imposed

barriers, they will get awarded with opportunity zone designation. as far as revenue neutral, i'm not going to address it. it's revenue neutral, period. our numbers back it up and if anybody claims otherwise, they should come out with a fully scored report showing their full assumptions. as far as the income mobility, whether this hurts those at the top or the bottom, over a period of time, people at the bottom of the -- the bottom fifth of the income distribution, have just -- they have a greater chance of moving into the top 20% of income earners and the people at the top have a greater chance in falling from the top to the bottom. that was work that steve moore and others others have produced, getting better all the time, the right title, that has a lot of research that addressed the fact

that you can't create policy that's going to cover real life that's more like by taking a single snapshot in time that assumes the underlying premise that we are locked into that snapshot. [captioning performed by national captioning institute] [captions copyright national cable satellite corp. 2011] > watched more with c-span's website campaign 2012. it helps you followed the campaign with biographies, the latest polling data, links to media partners, all at c- span.org/campaign2012. >> here is a look at our prime- time schedule. starting in an hour at 8:00 eastern herman cain on his plans

for america should he be elected. on c-span 2, it is the communicators, looking at telecommunications issues including spectrum sales. on c-span 3, the kentucky governor's debate with the incumbent and two challengers facing off in lexington. all these programs in about an hour on the c-span networks. last week, former president bill clinton challenged lawmakers to come together to get the economy working again. he said the current level of inequality is unsustainable. mr. clinton spoke at georgetown university friday in an event hosted by the clinton foundation. this is about an hour.

>> i met bill clinton in 1991. i was given the honor of leading the motorcade. i was excited about this prospect. the reality, a little less glamorous. it consisted of standing in the parking lot in a cold november rainstorm in boston with the wind blowing, waiting for the cars to arrive. then i got to waive the cars, show them where to park, and that was the end. i was greeted in the medicaid, not the governor. hearing him speak for the first time, his energy, his hope for the future, his optimism, they came through. he inspired me. he inspired me to cut some classes, not go to school, and to go and work on his campaign. up there, i got a great job. i got to go door to door, knocking on doors, looking for people who might vote for him

and distributing a revolutionary new technology, a vhs tape with his bio on it. it looked something like this. it was the first time it had ever been done. bill clinton understood innovation. on election night in new hampshire, i had another job. i was stationed in the phone room where we had wired up lines and with getting calls from every courthouse around new hampshire about the results. when they did come in, it was my job to take a piece of paper and run. physically run from their to this week with the governor was thing. why would you run that information? at this point, we did not have iphones, cell phones, all we had with tennis shoes. when i got to the suite i

handed the paper to a man i have not seen in 20 years. it is what we are going on today. that night, when bill clinton came back in the first primary. when those men went on to serve in our government, we began the motion towards the global economy. they were leading us to that economy where we saw global production and global innovation. they pushed open the borders with the wto and nafta. this drove innovation so much faster than it could have come if we decided to go it alone we saw samsung developing cell phones. we saw nokia developing cell phone. we saw the blackberry come down from canada. this is now the way we communicate. what did we see as a result of that? what happened today? the two most advanced makers of

those devices that we would call cell phones, now they have nowhere names from our american companies. no one in the country would have imagined they would be making phones. apple and google, they are driving that forward. that is because of the decisions they made to drive that global innovation. it would not have come today without that leadership that drove us into that global competition. we won. we of the one with the leaders as a result of that decision. [applause] as much as i'd love my job as a runner, i decided after i graduated, which i did manage to do, i decided i needed a new job. partially, as a result of the hope and optimism bill clinton inspired in may, i became an

internet on a canoe were. -- internet entrepreneurs. . i started my first company. we took the advantage of the new technologies bill clinton unleashed. i learned something that bill clinton already knew. america's economic success is built on innovation. great innovation is not an accident. it comes when the public and private sectors work together. when we leapt forward during world war ii with sonar and radar and penicillin it was not an accident. when we went to the moon and cackled thousands of problems we never thought of, solving that was not an accident. for the last 50 years when we have watched medical devices and drugs and innovations in our health-care system take us forward, that was not an accident. over the last 20 years, while we watched what the defense

department started, move into the internet and world wide web and all that has come behind it, that was not an accident. the government was funding the primary research and the development and getting us through the overwhelmingly expensive, risky, and daunting for steps that allows the private enterprise to build on that. that is what bill clinton knew about taking us into the global economy. that is what he knew about driving the internet forward. the decisions mattered. he knew that to have this driving economy you had to invest. we heard about it all day long. i am going to talk about two investment he made. one, in the public sector. he went forward and put money out so we could hire 100,000 new police officers and put them on the beat in our cities. many of the students to do not remember the 70's and the 80's,

people were fleeing and cry was of - and crime -- and crime was out of control. we are living in an urban renaissance. agreed of clauses are flocking to the cities. -- our creative classes are flocking to the cities. he knew that that investment had to come in the private sector. that is where the jobs and wealth are greeted in our company that allows us to do the things we want to do. he passed the telecom act of 1996 to open up competition. it saw the biggest boom in history in investments in the infrastructure we need it. as a result, we have high-speed internet almost all over the country. that investment was made in response to his policies. that is what his leadership did that drove that economy forward. he made these investments while balancing the budget. it is hard to imagine today, the

congress i was in two years ago, the environment we live in was just 10 years ago. many people in the audience were 10 years old. we had these surpluses. we had a path to the future. that was the result of the hard work of all the people you saw on the stage today. there is one more thing i want to mention that got left out of much of the panel. that is the renewed sense of hope and optimism that president clinton brought to our entire nation. it inspired me to go start businesses. it inspired a whole generation of new entrepreneurs to go out and take that leap of faith to meet to quit their jobs. to innovate. to create the new industries that drive our economy. every president faces a different set of circumstances and challenges. there is no solution to drive in an economy as complex as ours. in 1992, bill clinton may be

twisted to embrace innovation, to lead the world -- bill clinton made the choice is to embrace innovation. to lead the world forward. to balance our budget. to do it all with hope and optimism about where we were going. the results speak for themselves. 22.9 million new jobs. reductions of people living in poverty. 4% unemployment. real wage growth for all americans across every income bracket. a more connected, a global world. it is my great honor to introduce the 42nd president of the united states, william jefferson clinton. [applause] >> thank you very much. thank you.

thank you very much. thank you. thank you. please, thank you. thank you very much. thank you for bringing me back to georgetown. i want to thank scott murphy, i wanted all of you to hear him. i thought the students could identify with him. he gets the of with the 20 years ago. two years ago, less than that, a year ago, the monday before the election, i was with him in his congressional district in upstate new york. we had 1200 people for a breakfast at 7:30 in the morning. i thought he would escape the tide of 2010. he did not.

scott is my 2010 version of what happened to margerie in 1994. the people got a fever. they only let democrats when things are screwed up. [laughter] they want to feel fixed. they did not feel fixed. in this anti-government fever, sometimes people are swept from office who should not be. i hope i live long enough to see him go back to congress. he really understands the economy and the country. i am delighted he is here. honored by his introduction. he was asked because mice that heard me say, that that introduced me to speak at his rally ended three minutes he showed he understood more about the economic strategy we pursued than 90% of the people i talk to. thank you.

i want to thank all the members of my administration. thank you for speaking. thank you for moderating. all of you who participated, i feel so proud all over again. basically, i could have had a lobotomy. they were so good. you saw that. i am very grateful to them for being here. for all of you who are part of the administration who are here, were not on the program, i would like to thank georgetown for letting me come back to where we all began this 20 years ago with the three speeches i gave outlining the philosophy that was driving the campaign. one of those beaches is reprinted in the program you all have. i think you have this page which

summarizes most but not all of the things we did to drive the economy. i would like to especially say i am grateful that my international economics professor in 1967 is here. [applause] 1967. i am really proud of him for many reasons. he is an egyptian. all of those young egyptians ought to be modeling him. 40 years after i was his student, i saw him at the georgetown contribution to the multi-university complex in qatar. it was great. we have been friends a long

time. thank you for being here. i want to say, one other thing, at the end, gene was telling you about the run up to the government shutdown which led to the corporation. he mentioned we had a fight over medicaid because the republicans basically wanted to end the guarantee of health care to poor people and cut a check to the state. i would not do it. i did say to dick armey, he and newt gingrich were in the oval office with the democrats, bob dole and tom-watching. i did say, when he was the camacho, -- was getting macho,

i said, you have to understand, i do not care if i go to 5% in the polls. it will have to get somebody else to sit behind that desk if we get this done. all the democrats were thrilled. our liberal base things the president is going to cave. just like the conservatives are always afraid the republicans are going to cave. we had this meeting. they left. the meeting was adjourned. the democrats hung around afterward they were also happy. al gore just looked and me ed said, that was really great -- just looked at me and said, that was really great. i think you should have told them you would hold out even if you went to 0%. why did you stop at 5%?

[laughter] i said, if we get to 4%, i'm going to cave. [laughter] i say that because one lesson of all of this is you have to keep your sense of humor. i was aided in that because in 1999, the very end of my term, we celebrated the 30th anniversary of america's bought on the moon. we had an astronaut on the moon. the surviving participants came back to the white house. we had a wonderful event. nasa brought me a vacuum packed moonrock. it was carbon dated at 3.6 billion years old. and so, every time you see the

president in detaining a foreign leader they are there in those two chairs and there is that roundtable. when you meet with the other people, you are meeting in the cabinet room or you are in the oval office. the president is not behind the desk. use it in those chairs. there is a table in the middle. at the moon rock on the table. every time the temperature started to rise as said, look at that brought -- to rise, i said, look at that rock. we are just passing through here. everybody take a deep breath. let's figure out what we are going to do. [applause] that moonrock did more to lower people's blood pressure than any medicine devised by any farmers

to cull -- any pharmaceutical company anywhere on earth. i would like to close by saying a few things. i am deeply grateful for what has been said and the contributions that have been made. when i came here in december of 1991, and in november, we started, the country had at that time manifestations of many of the underlying economic realities that are gripping us today. it was obvious that we were undergoing a big increase in income and the quality. -- and equality. it is easy for me to make speeches because i get to say the same things i have been saying for 20 years. it is not healthy for a country

that depends upon the idea of opportunity, the idea of social mobility, the idea that having a job or starting a business is way more than just earning income and staying busy all day. it is fundamental to human dignity. when we have 9% unemployment and you know it is really 15% if the labor force participation rate of the same today as they were in 2000. there are so many people who are not in the numbers because they have part-time jobs. it is about more than the economics. i think it is important to say that. if, like me, you were born around the end of world war ii, the next 15 or 20 years, you were halfway intelligent and

have with diligent and you showed up and went to school, the one thing you never had to worry about was whether you could stay employed. the first job i ever had was cutting lawns when i was 12. i talked my way into a job with a guy that owned a gorge restore across the street from my house when i was 13. -- owned a grocery store across the street from my house when i was 13. i talked him into letting me set up a used comic books banned. i made $300. it was the single dumbest decision i ever made in my life. if i had saved as, they would be worth a quarter of a million dollars today. [laughter] i did it. the time i got up of college, i

had done seven more things for a living. by the time i get a of law school, i had done seven more things i have done my -- nine more things. i never had to worry about whether i could make a living. i think it is very important that we ignore list today this -- that we knowledge -- acknowledge today what it does to a country if people who are intelligent and can be productive and willing to get up every day go months without jobs, weighed down by debt and even more by doubt. what that does is it keeps you from playing the game. did you watch that world series

game last night? by the time it got to the end, i did not want either one of them to lose. why? they decided they would play the game to the end. most people would have been broken by doubt if they got banged up around the way st. louis did. they just kept playing the game. so, i wanted americans to feel good about our country again. i wanted people to get up and feel like they could play the game. have their dreams and pursue their dreams and that their kids would have a chance to chase their dreams. we designed this economic plan for the realities of that time. the values behind it, the idea that we need a society where there was opportunity for all.

another way of saying, we should be shooting for shared prosperity. that there was responsibility for all, another way of saying, we all have to carry some load. that there was opportunity for all, another way of saying, we cannot be divided, we have to create an environment that widens the circle of opportunity. that includes more people and has a totally different attitude towards immigration than a lot of people do today. i do not think americans are being kept out of work because there are illegal immigrants and the country. [applause] i think that is a big mistake. [applause] it is very important to recognize that as you heard from these two panels, our economic strategy began but did not end

with trying to get a hold and turn around the deficit. it belies the chances in life by passing the earned income tax credit. most everything that was set up here is consistent with my memory. i checked one thing with bob. the reason the senators were saying they wanted a $500 billion reduction in the debt is that is because that is what we were being told by the bond market people. i used to give them sang, why should a 30-year-old bond trader force me to raise the gas tax? why should they say we cannot take this seriously until we see a middle-class that has been pummeled for 12 years suffered just a little more so wall street can save face. we had all the talking heads on respectable networks, they were

saying, bill clinton is not a series president unless he sticks it to the middle class. that is how you prove you are a reputable person. they had their income going down 12 years. show them you are a real man and punish those people. you are left in, but i am telling you, if you could go back and look -- you are laughing, but i am telling you, if you could go back and look to the commentary, it was revolting. i was living with those people. we were one of only eight states that remini eccrine jobs. i knew what would happen to the people's live. why did people say you are not a real man unless you stick it to the middle class? are they not in the middle class anymore? it was a weird time. -- i have to a

knowledge of the lack of presence of the man who was handling our congressional lobbying. he passed away after a great battle with brain cancer. he was a very funny guy. he would say, how am i going to get the votes? i would say, the bond market says we have to bring the deficit down $500 billion. he would tell me, how many boats -- votes as the bond market have? we had all this conversation. the btu tax was a travesty the senate would not vote for it. it was a carbon tax. it was not concentrated on gas. it was spread broadly throughout all energy use. it would have been much easier to pay. the gas tax did not amount to

much because oil prices were so low. so, margerie had to walk the plank. some of these congressmen said -- i will not vote for a gas tax. i will not do it. even if it keeps the economy out of recession. i will not do it. there was a lot of crazy stuff. it is important to see the big picture. the big picture is this, we had a growing middle class and a booming economy, although we had a summer sessions, from the end of world war ii to the end of 1981. at the end of 1981 we began the era of anti-government. president reagan's inaugural

address said the government is the problem. that is a code word for most of these years, except 1995 and 2011. it was code for saying taxes are the problem. regulations are the problem. that is always the problem. the answer is always less of it. then, there was a sudden discovery of being concerned about spending levels when a democrat got in the white house. it happened in 1995, 20011. if you look at it, beginning in 1981, we did something our country had never done, we had never consistently run big deficits in peace time before. no ever.

-- not ever. and in the beginning it work because we only had $1 trillion the cumulative debt in 1981, and it was all held by americans. so we could take on some extra debt. from 1981 through 1992, we took on debt. we went from $1 trillion national debt to a $4.50 trillion national debt because they wanted to keep on spending. it was great. that was like going to the candy store and eating all the candy you want and never have to go to the dentist. the problem is -- and if i were totally cynical, i would be happy about this, because that is what elected the president -- because it amounted to a decade- long stimulus program, not like

president obama's much defamed stimulus program, which worked better than anybody thought it did. it worked fine for the first eight or nine years, because we had never done that before. but then the competition for money but when the private and public sector got sufficiently vigorous that interest rates went up and the value of the dollar had to be kept high so we could attract foreign investors to buy our debt, and it was a killer for american manufacturing jobs. and the first president bush had to bear the burden of what he had read the first called the new economics. i felt bad about it at that time, and we had become -- have

become very good friends since we are out of office, but i like him at the time. it was a coral historical irony that he had to bear the brunt of a theory that he knew was wrong in 1980 and said so. because it violated the laws of economics. people ask me, what great new ideas and you and rubin and your team bring to washington, and i say arithmetic. [laughter] me and einstein, we've really broke new ground. i. 2 and 2 was 4, and it is very different now. the underlying goals of building a society of shared prosperity and a sponsor of the and a community where everybody plays a role, that is still the same, and it is more important than ever because the world is growing ever more

interdependent. the first part of our effort was -- we took a gamble if week -- even though the economy was weak, that if we cut spending and raise revenue, that it would lower interest rates enough that there would be an investment boom and the private sector-led growth. 90 percent of those jobs were private sector jobs. it was a high percentage in 50 years. because there was more growth than we thought, the budget was 90% balance by the time we had a balanced budget bill. that is one of the reason why erskin could get from the republicans the children's interest bill and we could give them a reduction in the capital gains rate and we could both agree on a child tax credit and more credit for adopting children and special needs children because the work that

was done. -- because the work was done. i saw a hilarious article in the press out lot of the conservative out what, trying to show that nothing we did have anything to do with balancing the budget, and they pointed to the congressional budget office study starting in -- fromme -- looking at 1997 through 2001, saying why the net effect of that, just on the numbers, was that at $10 billion to debt, which is like 3.5 cents. all they did was prove how important the vote in 1993 was. that was the work that balance the budget, 90 percent of it, as all those people -- the point is by then we had different growth estimates and we had a very good balanced budget plan and it produced four passes in a row. the american people, i do not

think, and this is probably my fault, although i did my best, and maybe our -- really was a difference between invest and grow and trickle-down economics. in 2001, in the face of all the evidence of what worked better, we went back to trickle down economics. phfft so the question replaced today is, what is the day's version of getting back to shared prosperity and responsibility? and i would like to say just a couple of things. first of all, i wish i had been able to make our economic plan permanent, especially after

marjorie's sacrifice democrats -- sacrifice. but it didn't, and it did not because there is a persistent appeal to this anti-government philosophy. you know, who said the government would mess up a two- car funeral? it is still alive and well, and it is the core of our history. we were after all organized in reaction to an unaccountable, overreaching british empire. we did after all have found a father should thought the most important thing they could do is to both limit and divide the government. so the decided to give us a bill

of rights, the executive, legislative, and judicial branch, and state and national government. so they were worried about abuse of power, and everyone of us, number one, believes that criticizing the government is part of our birthright as citizens, and we can all think of a tax we thought was too high, a regulation, we thought was too dumb, an official we thought would overboard in the exercise of authority. every one of us can. so we americans are always of a divided mind about how much government is enough and how much government is too much, and the dividing line between enough and too much has traditionally, at least in the modern era, the find the parameters of the debate between liberals and

conservatives or republicans and democrats. but this dominant under current since the 1980 election, that government is the problem, has been an irresistible paradigm for people discussing this and reporting on it. i still read the papers and i see a conservative is defined as someone who takes the anti- government position, what ever that is. the matter how radical it is, no matter how i'm conventionally conservative it is, and there for anybody who disagrees with that comes a liberal. it is a distortion of the traditional political philosophies, and it is what i was trying to bring an end to with those three speeches here and with the way we govern, tried to break out of the government is the solution, the government is the problem. so as you look at the problems that the president faces today,

the dilemmas members of congress face today, what i would like the first state the obvious. that particular solution we pursued is not appropriate to this particular moment, because the problem is different. we had high interest rates, slow great, buying manufacturing said. here the manufacturing sector is just about kill, but the interest rate is 0 and there's no demand. do i think that is a problem? i do. do i think we need dramatic action to respond to it? i do. i believe erskine bowles and senator alan simpson did a good job with the report, but remember what they recommended. do this with vigor once you get growth back to the point where you know you are not going to throw us into a recession. thank you, erskine, for doing

that. it was a great thing. [applause] there are some things that are relevant. went back and read some of the things i said when i was trying to raise taxes on upper-income americans. and when we raise the corporate tax, i bragged on business. i bragged on people making money. i said the on the people i am upset about, people who are taking advantage of the tax code, shutting jobs down here and getting rid of them, but i'd brag on the idea. we should never be against success. one of america's greatest characteristics as we do not resent people who do well. i was raised in that culture. when i was a kid, if i ever looked like i resent somebody who did something better than me, my mother was likely to spank me. i mean, as a kid. we were taught it was a character defect if he resented

somebody else for their own success. you should applaud their successes. and pull for them, and expect it. lincoln said it fostered creativity and independence and the rest of us. on the other hand, we know as an economic matter, if we all do what we can, and those of us who have gotten all the gains of this decade, just as i did as all the people who got the gains of the decades in the 1980's, should make our contribution, the contribution we should make. and what of the things that everyreid said, debate that the president and the congress are having now, one of the reasons that i asked marjorie to cast the vote and say the economic plan, one of

the reasons i put a lot of our members on the hot seat and they lost their seats by voting for the assault weapons bill, its bill, and the brady bill, is that in every well-developed political system, the present and the past are always better represented than the future. the future does not have as many votes, the future does not have as much money, the future does not have as many lobbyists, and no one can be elected to represent the future who has more freedom of movement than the president. no one else can speak for the

future if the president refuses to. but i do not want to kid you. i caused a lot of people in my party to get beat for voting for the economic plan or voting for the assault weapons ban or the brady bill, principally. and i lost a lot of sleepless nights, and i still think about it. and i wanted scott murphy to be here because i wanted him to be one of the ones who makes a comeback because he is to get it to be in a momentary fever of anti-government fever that gripped us in 2010. we have big things to do, and i appreciate the fact that the president is still trying to reach out, but also now strike

in his own course. i like the jobs planned. i think it would help. i like the student loan program, which is a national system of what we made optional, the direct loan program. you see all these kids dropping out of school and student loan defaults and a record rate. that is because college costs went up 75% after inflation and everything i did in my second the biggest increase in student aid since the gi bill, and another increase and it was blown away by condition of the economy. so the preston support and the congress passed and he signed a national direct loan plan which was supposed to be put in in 2014, and now there are to try to put as much across in by 2012, which says to every college student in the country,

you never have to drop out college again, because of how much money you have to borrow, because you can pay it back for up to 20 years at no more than 10%, which means that it will not include your basic living costs. so you are looking at 5% or 6%. this is a huge deal, because of a plymouth, college graduates today is half the national average, and for people with postgraduate degrees id is 2%. this is important. i support the president on that. i support what he is trying to do the jobs plan. i think that we should try to figure out a way to repatriate some of its corporate cash and

use it to fund the infrastructure, and it can use some bipartisan support in the senate and maybe we can get it through. we should be taking private capital, into an infrastructure bank and putting people back to work. i think we should retrofit every school, college, every hospital, every auditorium, every museum, every relatively unencumbered commercial building in the entire united states over the next few years. i am proud of my governor who just signed a bill allowing the cost of retrofitting to be put on the electric bill of every new york home owner in a way that allows you ever to pay more for your utility bill to pay for the retrofit than you were paying before. you just pay it through the savings. i think we ought to do that. the last thing i will say is i am encouraged by the fact fannie mae and freddie mac have apparently agreed to let some people refinance their

mortgages down to the 4% level, a million or so, but there are 20 million americans who have not defaulted, who have relatively small amount of mortgage money out, $150,000, at an average interest rate of five put six%. the mortgages are a guide by the government. if we let the all refinance at 4%, it would put $40 billion a year back to the american economy as a stimulus with no deficit spending and no tax increase, and it would help -- help to stabilize this. for whatever it is worth, to get back to a full employment economy, we're going to have to clean the mortgage debt. until we the leveraged quicker, i do not think it can be done. that means somebody will have to come up with more money. the government still has $50 billion and tarp money. it is politically controversial

because some people believe we should not be helping people who should have taken as mortgages out the first place. everybody has a better read this out. -- everybody has been hurt by this now. i support everything that has been done. if we got our job growth, and by excel rating information technology and trying to is spread it into every other aspect of american life as deeply as possible, here the president outlined a strategy of doing that with green tech, which no matter what you read among the skeptics, those jobs are growing at twice the rate of overall employment and account for $54 billion in positive

trade balance for us. in bringing back manufacturing jobs, which we can now do, as long as they are high-end jobs, it doubly exports and in infrastructure. weis support this plan, and it is -- so i support this plan, and it is not inconsistent with bringing down the deficit. the only thing i want to say about it is this -- and the only -- real problem that the congress will have in dealing with the projected rise in health-care cost is the difference between what is good policy and what is scorable. the best health care policies would help the private health care system just as much as they would help the budget of

medicare and medicaid. i will just give you one example. a health care system in eastern pennsylvania has more than 800 doctors. if you enroll, they promise you among other things that if any medical procedure is performed on you and if there's any problem with it, that requires should go back to the hospital within 90 days, you can go back and they will pay for it all. and your premiums will not go well, copays will not allow, deductibles will not allow. how can they afford to make such a promise? since returns are such an event part of american health care, because they operate on a best- practices manual which is continuously updated which all 700 doctors have sort of hold, and they implement it. guess what -- their error rate dropped to zero, their rates of

hospital commissions have gone down, and their health care costs have gone way down. that is just one example. pennsylvania was the first day in america to require all major hospital providers to report both the results of their procedures and the cost, and 43 years running, there is no what correlation -- the biggest correlation, besides the weather they have uniform sterilization procedures -- is how many of these procedures are done, and the better they do, that the results you get. so i would say that i would like to see both parties in congress nd at least -- and erskine's report writes about this, how we should accelerate the authority

of the secretary of health and human services to implement these money-saving changes, and i would not to see them not hogtie themselves and do something dumb on health care, which be unfair to a fixed income people, before we see whether or not we can bring our cost closer to our competitors because we have the levers to do it now. i have already said more about this than i meant to, but i do not think it is healthy just to live in the past. these things i have said are consistent with taking the philosophy we had then, shared prosperity, shared responsibility, a committee we are all part of, and going forward. i was thrilled to see that congress to pass the trade bills with korea and colombia and panama, and i know a lot of people in my party think it was a mistake, but i think it is wrong. look at where our trade deficit is. it is 50% in the energy imports

and 50% with countries we do not have truly comprehensive all- encompassing trade agreements with. when you negotiate these things and you enforce them, and the thing i loved about -- mickie and others vitiated more than 300 trade agreements, but they also enforce them. then we got back into the business of being in debt, and so we were borrowing money from the countries that have the biggest trade surpluses with us, and it became more difficult to enforce our trade agreements. nobody gets to slug their banker. you would not do that, either. i wanted to talk about these things because i think i believe in essence that what the president is trying to do is to apply these principles of sharing the future, to put us back in the future business, and

to make it a shared future on but prosperity and responsibility side of the ledger, to the current situation. and i believe that there is evidence that some members really would like to see this happen. we can still have an election next year, argue about who can be elected, who has the best ideas, but we are in a tight here, we cannot just stop playing the game. we need to up our game, and again, it to call me see all those commentators on baseball saying that was maybe the greatest world series game played last night. it certainly was not the prettiest. st. louis made too many errors and texas pitched

too many walks. the reason they thought was a great game is they play all the way to the end. so if you ask me, do we make some mistakes we should have talked about if we were being honest today? yes, we made some mistakes. could other things haven't done better? probably. but the end, we came out right if you keep score about the future being advanced. he once offered an article for me called "clinton's still anti-poverty program," where he was the enforcer of our anti- party policy. you look at the results that we did to lift people from policy to the middle class, the number

that i am proudest most of all. and poverty increased in all the other years on both sides of it. all that matters when you finish this, all that matters is whether people are better off when you quit than when you started, whether kids have a brighter future, and whether things are coming together are being torn apart. the rest of these things will be sitting like a passing year and, and i know i am old enough now canal that the intelligent people in congress in both parties have to know that. so i would just ask them all to go back and remember, number one, you've got to share the future. the birds and the benefits. until we get back to that -- the burdens and benefits. until we back to that, we cannot sustain this level of inequality. there is not a single solitary

example on the planet's of a truly successful economy that is pursuing its militant anti- government theory. you can be of little to the right and a little to the left, but all the successful countries have both a vibrant private sector and any effective government. i was thinking about that today because i knew we would bring up the btu tax. in 1991, two years before the btu passed, conservative government in sweden passed the most unique of all carbon taxes. it was 100% refundable. the government said we are conservative, we trust people if they actually knew what carlyn was doing to our economy and what the bird was on the climate. we trust them to make a good decision. and i am sure my counterparts in

sweden said, argue out of your are you out of your mind? the trust was well placed. they grew their economy 50% with no increase in greece that -- greenhouse gas emissions with 100% refundable carbon tax by simply showing what the burden on the environment and economy and health care of the country was. by putting a price on it, showing the people, and giving their money back. lo and behold, they made intelligent decisions. that is the sort of conservative-liberal base we ought to be having in america, not as anti-government they. -- thing. i was proud of many things, but when i left office i was proud that confidence in the federal government had gone up again, that people saw it as a positive

force in our life, not answer, but a partner. i was proud that we've moved a hundred times from poverty to the middle class, but more than that, i thought people could have their dreams again and think about tomorrow again. again to askou yourself, is a better that a partnership or an anti- government's strategy is it better to believe and invest in growth or a trickle down? is it better to believe in shared prosperity or are you on your own? i do not think it is a close call. we are so nervous about whether we got too much government that once in a while we just slip the casket and then we have to deal with the aftermath for a while. everybody needs to calm down and do what we know is best for the future. thank you very much. thank you very much.