you will. that's where we are with our policy initiatives as a democratic caucus in the house of representatives. make it in america. by embracing the intellectual capacity of this nation. and holding fast to innovation, entrepreneurs and the manufacturing of today, spun up to a new level. that's america at our greatest moment. mr. garamendi: if i might interrupt you for just a moment, every hour we are here, we are joined by men and women who are working hard on behalf of the american people. the stenographers taking down our words here deserve a praise of thanksgiving, not that our words are so worthwhile to put into the american record but they do it nonetheless and i want to thank them for their good work and the staff behind us as we go through this hour. mr. tonko: if you'll suffer -- suffer an interrupt, yield, please, mr. -- representative

garamendi. i absolutely endorse what you just said. they are devoted, they are an essential part of this body to introduce all of the statements into the anals of history, making -- annals of history, making certain that the progress required by this nation right now, they provide an awesome, awesome task. . mr. garamendi: if i might interrupt you some of the things you were talking about, down through the earliest years of this country, there has been a joining of the government and private sector to accomplish really the building of america and it has been done in many, many ways. i was startled and surprised and very happy when ms. schakowsky brought that document in from the gentlewoman is recognized washington's administration about the establishment of industrial policy that placed

the american government in sync with the new new manufacturing programs in america. you talk about the mill towns, they just didn't happen. it happened because it was a government policy working with them, those entrepreneurs, to create these new businesses, these new jobs. and down through the centuries, we have been able to use this this government working with the government with the private sector and create the american dream that all of us possess or have participated in. today, we are in a discussion, if you will, with the american public about whether to continue that coordination of the public

governments, state, local, federal governments, working to achieve a goal in the private sector. there is a different version out there that says get government away and things will go well, eliminate all regulation and eliminate all of the programs and let the free market do it. it's never worked. and the proof of it is is found in the first decade of this century. that philosophy of push government aside, deregulate, reduce taxes and get government out of the way actually created a situation of the great recession and no jobs. in fact, eight million american jobs lost. we need to go back to the policies that actually created growth in america, the policies of franklin roosevelt, carried out by truman, eisenhower, even

ronald reagan and lyndon johnson carried out the basic policies that working together, we can build a great country. mr. tonko: you are absolutely right, and i believe as you just indicated, our history, our american history is replete with the soundness of government planning and policies that incorporated investments from the public sector. and it made us strong. it retained our strength. it was a sustainable outcome and the way of the world today is other nations are co-investing with the private sector and when you look at the scenario of threats to cut some very valuable programs, you know you are going to place our businesses at risk. and if there's anything i hear from my middle class that is disgruntled with washington, they aren't against people making money, they're not against that. their concern and they are deeply upset by the undue

influence that a growing few, most powerful have on the process. they see it as greed, a rejection of what worked in the past, where people shared the wealth, shared by investing in america's middle class, which is that intellectual capacity, is that innovative spirit, is that potential for the next generation of jobs. and that's where our strength lies. and that's why they're upset, undue influence has caused this greed that produces a drain on the middle class of this country and reduces the number of jobs that we could possibly have in this nation. mr. garamendi: i noticed two of our colleagues vr joined us. if you had this next view while you made this statement about the change in the nature of america's wealth. this chart has become, i think,

become rather famous or infamous. the blue line here is a chart that shows the growth in the wealth -- the income of the top 1% of americans. and down here is what the rest of americans have had over the last 20 years or so. what we have seen is basically flatlining for the middle class and certainly for the poor. no improvement or very, very little improvement in their situation while the very small 1% -- this is the 99% here -- this is the 1%. and this is the anger that you now see in the streets of america and it's exactly what you were talking about, mr. tonko with a few 1% of the american public, geting an increasing share of the american income and wealth, creating a

bifurcating society, a few that are wealthy and the rest that are growing poorer. with that, i would like to turn to a woman from the great midwest, the state of ohio, that is enduring this exact hallowing out of the american middle class. thank you for joining us and thank you for your years of work representing your part of the -- what was once the greatest industrial strength of america. and you want to share some thoughts that you shared with me as you went home and talked to the men and women of cleveland. ms. kaptur: thank you for you are -- for your leadership. you are unrelenting and we thank you for your time tonight and

congressman tonko of new york, your steadfast service here representing a state that has some similar situations to high's in the industrial and agricultural heartland of our country. it's really a special privilege to be here with both of you. this morning, one of my first visits was with a company in ohio, polly one. tch is a company that makes products in america and it is a player and hundreds and hundreds and hundreds of jobs are associated with its plastics products, mate both out of traditional petroleum-based inputs and the hydro economy and it was quite exciting. we know that real wealth is created in our country when we make goods in america, when we

make it in america. and i think the problem over the last several years has been that if you travel to any city in america and you look at the tallest building, what are they? are they the firms making things or are they merely, as i saw in michigan rgsly -- recently, a gigantic bank whose headquarters is on wall street that just got bailed out by the american people. i stopped my car and looked at that building and looked at the devastation of the communities around that particular part of michigan, and i thought, what's wrong with this picture. basically, this institution has sucked up the wealth of neighborhoods after neighborhoods and left rubble in its way. they're not being held accountable. and yet, i see companies like pol one trying to make it in a

global economy with a very unfair set of trade practices, closed markets around the world, currency manipulation, intellectual property theft. you look at what is happening with competitors, competition to u.s. industry, and you have to say to those patriots who are making goods in america, we stand with you. we should be rewarding those companies. we should be making more goods in our country. and i wanted to add a word about the auto industry. there were those in this chamber that voted against the refinancing of the auto industry. without that industry, this country would not have a defense base and we would not be a great industrial power. and now i see in our region of the country, i was just atlanta chrysler-fiat and announced billions of dollars of

investments and 1,000 more people hired at their main production facility in toledo, ohio. chrysler-jeep that makes the wrangler and liberty, the feeling inside that plant of people who have given their lives to keeping america competitive and to manufacturing a label that is known throughout the world, it was a wonderful day to be there. and i was reminded and i said very frankly, there were 170 members of congress who didn't think you should be here and didn't think that this company should be here and the company has paid back the loan that was made and now we're going to have good jobs by making goods in america. so i wanted to share those experiences. and i feel bad that we have a country where certain financial firms that are totally speculative have brought us to

this point. but i stand with those who have weathered the storm and who are now hiring and trying to move this economy back where we know it can be. and i was very proud to be a member as were those that were with us here tonight to vote for that refinancing of the auto industry and whether it's plastics, glass, whether it's fiber, textiles, whatever, is helping to lift this economy to where last week on the day of after thanksgiving, retail sales went up. that's what we should be doing. we should be using our power here to lift those industries that can really make goods in our country and help recreate a strengthened middle class. mr. garamendi: we have eight more minutes here, and i want to -- we talked about the purchasing power of americans.

january 1, unless we act, american workers will lose about $1,500 of purchasing power. we must renew the -- and continue the reduction in the social security tax that american workers are paying and businesses are paying. that puts -- and by the way, it's totally paid for by those superwealthy, 3.5% increase on their taxes over $1 million a year. it is totally paid for and part of the american jobs act. i was just talking to mr. tonko and came about what you said about those men and women working here in america. and i want to end on this between the three of us. we democrats have made a promise to america. it's not a contract. it is a promise.

it's a pledge, and that pledge is to protect social security and medicare, two of the most fundamental american programs, both of which are at risk of being significantly modified or, in the case of medicare, destroyed, by our republican colleagues. and i want to make it very, very clear and get the comments from my two colleagues here about our commitment to these programs, social security is the bedrock foundation for every american's retirement and given the way the stock market gyrates, can't count on your 401k. here's the promise to america from the democrats, you will always be able to count on social security. this, if they want to fight about it, this is the fight we

will have and we will win. and on medicare, millions of seniors are not in poverty today and alive today because they have medicare insurance. fundamental, american program. mr.on tonko. mr. tonko: you highlight some of the major differences and disagreements that have highlighted the debate on the hill here in washington between the two parties, and i would suggest it's probably some of the reasons that the supercommittee could not come to consensus, because we have called upon an outcome that is fair, balanced and bold, that we will not allow for the payment of the price tag on further coventing tax cuts for millionaires and billionaires to be paid for by cuts to medicare. there were those who fought social security at its inception

and fought it for 76 years and want to deny it. and it's about making certain that there's an underpinning of support for our elderly as they grow into what is a longer life span. we have to have measures in place that enable there to be a quality of life that provides economic vitality, economic balance for those who move into their retirement years. and i think that when we look at the mermingts of medicare and -- measurements of 5% of g.d.p. and here is a program that has worked tremendously well. can it be better? absolutely. make it more secure, more sustainable, but do not deny the masses of this country who have

prospered, who have been sthengthend and lifted by programs like medicare and social security. and i'm proud to say we stand for keeping these programs in place, strengthening and not denying them which i think is a major disagreement on the hill. . mr. garamendi: you're right, this is where we stand, this is where we fight. ms. kaptur? ms. kaptur: i just want to say i am proud to stand with my democratic colleagues. social security is an earned benefit and it belongs to the american people. we know its power not just to let seepor, allow them to live a decent life in their retirement years but power to lift the economy because seniors spend, mainly on their grandchildren, and they move those dollars into the economy. you watch with that cost of

living increase, which i'm very happy about next year, and the fact that the medicare offset will not be so great that seniors will have extra buying power and they will watch every penny. i am just so proud to be part of a tradition of the democratic party that has fought for social security and for medicare not just for the few but for all. but for all. and we have made the country a better country as a result. so i think it's fair to say that yes, it is true the republican party has fought social security, you know, can't they find something else? i don't know what the problem is when the vast, vast, vast majority of the american people, i think 99.99% of the american people adepree with this. i don't know what their problem is. maybe they're not living in reality most of the time. but i am just very proud to be part of this tradition along with my colleagues and to say to our senior citizens that next year will be a better year

than this year. and my hat's off to franklin roosevelt and francis perkins and all the people who fought back in the 1930's to make this program part of the american way of life. mr. garamendi: and then carried on in the 1960's with medicare. we have much to be thankful for as americans, don't we? mr. tonko: we do. mr. garamendi: we are thankful for the men and women that served in the house over the years that brought us to where we are, the world's strolingeningest, greatest country with the greatest opportunities. even with all the trouble we have today, we have the greatest opportunity. it's a country in which the american cream lives and we have the obligation to make sure it's there for future generations. mr. tonko, we are going to do a rapid 30 seconds around. mr. tonko: we had a wonderful hour of discussion and i give thanks for the wonderful investments that have made us this strong nation. in conclusion if we invest in

the middle class of this nation, our greatest days lie ahead of us. we have are a -- we have a chance to be continually investing in a way that allows us to make it in america and allow for intellectual capacity to reign supreme. it's been our history, it's our d.n.a., let's make it happen. i'm optimistic about the tomorrows for this country with the appropriate investments. mr. garamendi: ms. kaptur? ms. kaptur: american america has been a country of great hope and great progress, and as i like to say, the last four letters in the word american are i can. it's a time of great hope and promise for the american people and what a great pleasure to join my colleagues here this evening. mr. garamendi: i yield back with great thanks to my

colleagues. the speaker pro tempore: the chair would entertain a motion for adjournment. mr. tonko: i move that the house adjourn. the speaker pro tempore: the question is on the motion to adjourn. those in favor say aye. those opposed, no the ayes have it. the motion is adopted. accordingly, the house stands adjourned until 10:00 a.m. adjourned until 10:00 a.m. tomorrow for morning

they were returning to work with a lot on their plate. what is at the top of the agenda? >> at the very top is what to do with the unresolved, dying appropriations bill. it was not included there. >> what is the plan for getting those remaining spending bills done? >> december 16 is the date the continuing resolution expires. today it was all full steam ahead on trying to get a so- called midi-bus that would wrap

up all of those bills. it might be addressed by the lawmakers when they go home for the holidays. >> the u.s. house as a number of legislative items to address. back to dealing with regulations, what can you tell us about the regulatory bills and? >> republicans are putting on the floor several regulatory bills including [inaudible] to take on what they say are high cost regulations imposed by the administration. this bill would require anything over $100 million have to be approved by congress. if they may pass the house.

they will die on the democratic senate. >> it has been a week since they joined deficit reduction committee said they cannot come to an agreement in the wake of that. what are some of the issues congress will have to address by year's end? >> we have to decide what to do about unemployment insurance. they will have to extend that perio. it needs to be extended. it costs to wonder million dollars. where that money might come from is a discussion right now. they are hoping some of these items can be attached. >> all of the talk in the senate is about the payroll tax cut and adding the 3.25% increase for

wealthy americans. will that come up for a vote? >> it will come up for a vote in the senate. the republicans are protecting it as a tax increase. they are saying that without this the middle class members will get hit with steep increases while millionaires will not. it is what is going on with the super committee for a couple of years about how tax breaks should be cleaned up and who should be doing what sort of blow. it is certain to play out through the very last hours. >> about the super committee. there is a lot of talk about the sequestration requirements in january 2013. will there be a debate on that? >> there will be.

whether it occurs at in december is uncertain. there has been a lot of talk about it. as of now, i do not think the leaders are hitting on anything significant. >> billy house, covering the house for the "national journal." thank you for the update. >> in a few minutes, a look at tax policy and policy reduction. after that, a town hall meeting with steny hoyer of maryland. later, pat toomey on what should be included in new budget negotiations. in a portion of today's white house briefing focusing on president obama's efforts to extend tax cuts. >> within 90 days of my

inauguration, at every american soldier and every american prisoner will be out of the jungle and out of their cell and back home in america where they belong. >> this pledge came nearly a decade after being one of the first senators to speak out publicly against the vietnam war. a signature from [inaudible] his groundbreaking campaign changed american politics and the democratic party. he is featured this week on c- span's "the contenders." it is live friday at 8:00 p.m. eastern. >> and next, a debate on u.s. tax policy and deficit reduction with the head of the group "americans for tax reform." from the american enterprise institute, this is about one hour.

afternoon.d i am a research fellow here at the american enterprise institute and the moderator. we are here for a debate between grover norquist and -- this is a timely event as we hear much discussion in washington about tax and budget policy. i want to be clear about a fact underlying this. we strive not to chase headlines but rather develop ideas to make future headlines. this event is very timely.

i do not want anyone to think that we put this together in haste. this dates back to june -- to july. prior to the debt limit debates, and the construction of the super committee, and prior to senator kerry calling this, this always confused me. this probably would have been a deal. let me briefly just set up the topics in a little bit in terms of budget and economics. then i will introduce our to speakers. then we will be on our way.

just a setting of what the landscape looks like. the deficit last year ran 9% of gdp. under current policy, the deficit is expected to hover near 4% of gdp are the following decade. the things will get worse as time progresses. federal tax revenues in the last fiscal year were 15% of gdp, which is relatively low by historical record. it is scheduled to decline to 21% by the year 2021. the to a tiv deficit could reach $11 trillion. one thing we know is that they

are highly uncertain. phil year to extend the 2001 and 2003 tax cuts would mean tax increases of $4 trillion in next decade. add the other 80 or so expiring provisions and the tax increase would be approximately $760 billion on top. looking at the long term, cbo projects if there remained stable, and spending if not reduce, the debt to gdp ratio will explode near 190% of our economy's annual production by the year 200035. this is about taxes and spending. our discussion is about the tax pledge, not the deficit. let me focus directly on the tax pledge. i will follow up the first one

here, the text of the pledge. income-tax rate for individuals and/or businesses, and oppose any net reduction or elimination of deductions and credits, and less matched dollar for dollar by further reducing tax rates. this was an in 1986. today, 238 members and a majority of the house committee have signed the pledge. only six house republicans have not signed. two house democrats have signed. this is a pledge that has had significant influence in both the political and legislative

process. our quickly tickinturning to speakers, let me introduce grover. he is the well-known tax payer advocate. the collation of taxpayer groups opposed to higher tax rates at state and local levels. he is the organizer of the tax pledge. he is known for having a sense of humor. he placed third in the comedy fund-raiser for comedians last year. last year? >> second. >> that was two years ago. last it was only third. my research indicates that the

next washington's funniest celebrity event is tomorrow. are you participating? >> i will. >> at the empire. there you go. ross joined the "new york times" in april of 2009 and was previously the senior editor of "the atlantic." bookshe author of two purity as a third book under way. he is a film critic for "the national review." he is an excellent writer. we will find out if he can make a funny joke. here are the rules. each of our participants will be alloted five minutes to make an opening statement. after that there will be allotted five minutes to make rebuttals. that will take about 20 minutes.

at which point we will turn to the question and answers. there will be questions from the audience as well as questions from twitter. if you are joining us on c-span and what to participate, i encourage you to submit your questions on twitter hastag ae #aeidebates. that is how you can play along at home. with that, we will start off with grover. there is a bill that will bring. -- bell that will ring. we will take it from there. >> when midgets play miniature golf, do they know?

[laughter] taxpayer protection pledge was written in 1986. the purpose was to help us pass the tax reform act. the tax reform be a trojan horse. reagan stood on one side. he said i will detail a tax increase. we have a number of senators to make that commitment. we are going into the 86 election. we elected 100 republicans in in house. they have taken the pledge. in 1988, on the republican president for -- candidates for president signed it. it is a written pledge by candidate or official saying to the american people that i will not raise your taxes, no net incocrease.

bush in 1988 to the pledge along with all the other candidates except for bob doyle. during the new hampshire debate, dupont offered him the pledge and said the rest of us have made this written commitment. will you? lost new hampshire. bush won the primaries. bush was losing 17.2 michael the cactus -- dukakis. this is going well until 1990. the two smartest men in the world [inaudible] he raised taxes and threw away an otherwise quite successful presidency. he lost in 1992. he raised taxes. there were other things going wrong. he managed the collapse of the soviet union.

he pushed iraq out of kuwait. he had a very successful presidency. in 1994, becaues the republicans watched bush win by taking the pledge and lose when he broke the pledge, people realized what the power of the pledge was. what it does is it allows a candidate credibly commit that he or she will not raise taxes. politicians have been lying to people for several thousand years. when senator warren ran for governor he promised to would not raise taxes. he lied. he screwed the people of virginia. interestingly, warner would not sign the pledge. he always planned to raise their taxes. it did not bother him.

he would not sign it. signing it makes a difference. it slows them down. the other thing is the credibility was greatly increased when bush took it, broke it, and lost. american voters say he says he will not raise my taxes. he has put it in writing. the last guy who did that and broke his pledge their away perfectly good and illustration -- threw away a perfectly good administration. i believe they would not take a pledge unless he meant to keep it. what the plant does, because it is one sentence, allows you to credibly commit not to raise taxes. this has had tremendous impact. we got into the republican party. we have it become an individual

commitment to a party wide commitment. the party that will not raise your taxes. the people ran not 1994. we got into the ivory soap percentage. they were running from the primaries. they took the pledge. in '94 we took the pledge. we have held that ever since. this has allowed the republicans to take the house and allows them to take a back in 2010. at republican sat down and cooperated with obama in having only a 70%, the republicans would not have one in 2010. easy for it was

voter to vote. now that we have six guys in the 14 guys, one said i didn't sign it? now 13 haven't. only one has said that he is open to tax increases. everyone else says i've got signed the pledge but it is because of some board to give a reason. they have all committed not to raise taxes. the pledge has helped people communicate directly. it has changed the nature of the republican party. >> that five minutes is brittle. i will speak quickly. i will happily slowed down during the question and answer. thank you so much for having me.

thank you to grover for agreeing to do this. the taxpayer protection pledge fails by its own standard. it has not proven itself an effective means of defending the long-term interest of the american tax people. i do not disagree with this but just some of the details. i think it has contributed to short-term tax breaks being lower than they otherwise would. the american taxpayer is not liable only for his tax bill but the obligations of the government. it is true that the growth can enable us to roll over all deficit from year to year and limit government debt. even the most ardent supply-side there has to agree to defend the tax. for the last three decades, politicians had evaded that

policy. the pledge has a little to do that. the results are visible in some of the dire statistics that were noted at the beginning. i will quote a couple. if you go back to win the pledge became a rite of passage for republicans, federal spending was roughly $2 trillion. by 2008, before the obama spending kick in, it stood at $3 trillion. and the 1980's, it was $1.70 trillion. spending did decline as a percentage of gdp during some of the years that it existed. it suggest that if you're interested in reducing government, you should pledge a republican on one end of the ticket. whenever republicans have had a working majority, spending has

consistently gone up. sometimes this is resisted. the choices of republican politicians whose actions are continent have steadily increase the long-term viability of the american people. the pledge has encouraged this type climate. the public is conditioned to believe that they can have a huge entitlement without paying for its. this has led some observers to suggest that a single-minded focus on tax trades may increase government spending. this allows americans to receive a dollar in services what only

having to pay 60 cents for its. i do not think you have to go there to be skeptical. it has not achieve the goals that grovers set out. we are no closer to a government small enough to drown in the bathtub. taxes are simpler and lower than they are today. lower rates has been achieved at the expense of the broader picture. between 1981-2010, the number of breaks what's increase by 86%. distortions represented 7.4% of gdp. as we saw in the debate, once they are in the code, it is impossible to remove them in an

up or down vote. there are two cases for this conservatism. i have one minute left. all these difficulties are temporary. eventually by holding the line on tax increases and branding xes, it'llof no taces deliver the type of republican necessary to clean up the tax cut without a compromise. the question is when it will arrive. mitt romney and mitch mcdonnell succeeded in defending against the democratic counter [unintelligible] i think that this is relatively unlikely. the second case is even if it never arrives, it is worse. he could never trust any deal

that combined spending cuts and tax increases no matter how favorable it seems. taxes rose in spending did not go down as advertised. that is the stronger argument. i will explain why in my follow up remarks. >> i am used to this argument. the pledges made it difficult to raise taxes. when republicans have power the taxes were not raised. since 1990, and no republicans voted for a tax increase. during republican control, we had one republican pledged taker and one president. we went from 1993 when the democrats raise taxes to 2009

with the democrats raised taxes without a republican vote. the argument that the tax pledge does the solve all the world's problems is interesting. you never have a conversation about spending restrictions. as long as taxes are on the table, the democrats look at the possibility. we saw this again in 1982. it was $3 and spending restraints. at the end of the day, taxes were raised. how could the spending not go down by $3? it went up rather than down. the spending cuts disappeared. all that was left was taxes.

bush was a cheaper date. he was promised $2 of imaginary spending cuts. spending went up, not down. tax increases are what elected officials do. rather than govern and make decisions. it is clear when you look at the state level. the reason the governor of california cannot raise taxes is that we have all the republican, save 2 guys that have stake in the pledge, not raise ta xes. we dropped spending $3 billion. taxes under perry are around $16

billion. the pledge takers at the state level have done an incredibly good job of bringing spending down in a year that should have been a year of tax increases. it was the end of the stimulus spending. it subsidize state and local governments. that ended this last year. we did see tax increases in maryland, connecticut, and illinois. there are not enough pledge takers to do anything. the argument that it does not and a completely is that it gets you into a conversation of spending. i would argue that the republican party begins a then striking distance of getting the control you need. the republican party will run the house for the next decade because of their no tax increase position. they got themselves elected because the tax issue helped us

a lax state legislatures in indiana and wisconsin. it is due to redistricting. barney frank would not walk away from power. we have a republican house. now in the senate, this is of. massachusetts is in fine shape. we will have a republican majority. you are going to look at 60 boys.

now we play for the presidency. they pledge to not raise its. we might raise taxes and we may not. republicans will trust the republican candidates. talking about the non-aligned voters, that is where the credibility of the pledge comes in. what if we made this exception here? but if we had a party that will mostly not raise your taxes? be my began to sell that to somebody who has been voting forever -- you might begin to sell that to someone who has been voting republican forever. they played a useful role. just to finish where i left

off, the points that he raises are clearly cautionary tales. it is also not at all the case that there has never been a successful fiscal consolidation in which they were treated for large spending cuts. it is that template for most of the fiscal consolidations in western world. according to us, the most successful entrenchments that actually took and keep countries out of debt spiral's averaged 85% to tax increases. if it sounds remotely like a victory, european and canadian conservatives can hold their

liberal counterparts in parliament with those bargains, are we really supposed to believe that american conservatives are incapable of making a successful deal? it seems very unlikely. no friendly dill as ever possible. this tends to be biased toward compromise and bargains that advance slowly. as i said, depending on the scenario that he spends out, it is very appealing to a lot of republicans. there is good reason to think

that the republican position in 2013 will be stronger than the position of could 2011. it is possible that that is reason enough to reject out of hand a dealmaking that was given by speaker john boehner and president obama. the idea that the republicans will achieve a level of power and permanence of power that will allow them to achieve a durable 100-0 ratio in dealing with the extraordinary fiscal challenges this country makes is extremely politically unlikely. i came of age politically in mid-1990's. i was a republican in 1996 when i realized i was supporting bob dole. coming of age in that timeframe we all heard similar promises. we heard similar promises from the man sharing the stage with me today.

it is not adr's fault. the collapse of the republican majority was not a because the party had failed to raise taxes in that period. it had other causes and other consequences. you cannot as a policy maker expect to achieve a kind of durable political settlement in which she never have to cut deals with the opposition party. if you take that attitude, you risk being in situation where the opposition party takes power and you get much worse the deals. the risk for opponents of tax increases is that we have all kinds of tax increases at the federal level scheduled to go into at that. it is possible that mitt romney will be president of the united states. it is also possible that barack obama will be president.

this is something that conservatives have to keep in mind. the goal is not merely designing pledges that end of the best chance of republicans. it is achieving the best interests of the american tax papayer in times of crisis as well as economic opportunity. i have more time this time. that is exciting. i think that grover dramatically over estimate the impact of the tax pledge on american elections. if you go back with bush and in 1992 or obama in 2008, then the democrats lost it in 2010. there are a host of factors at work. if you look at what independent voters think, if you look at the polling, there are real political dangers for the

republican party has been perceived as a party that will never compromise. you can see this in the debate over the debt ceiling where barack obama's poll numbers went down by republican poll numbers went down even more. that explains why in the super committee negotiations republicans made an offer to the democrats that violated the taxpayer protection pledge but that improved the republican bargaining position. i suspected improve their political standing. -- suspect it improved t heir political standing. >> thank you both. we have now heard from both sides, eloquently i think. we are ready to turn to the audience participation portion of this evening. >> that sounds terrifying. >> we're going to have written questions that are being handed out. if you want to ask a question,

raise your hand. the cards are coming around. we will collect them. i will read them as well as those of twitter. the hashtag is #aeidebates. let me throw a couple of non- philosophical questions that occurred to me as i was listening. a couple just random things perhaps. grover, knowing now what you know versus where the world was in 1985, would you have changed the wording at all? it strikes me a little bit narrow. income taxes that all taxes?

marginally? >> it was no net tax increase. it is generally accepted by candidates that means no net taxes. it has not been a challenge. i wish trying to get out a concern that rates focus on income tax. he can eitherbroaden the base. in 1982, that is what reagan got sucked into. it broadens the base, eliminated deductions and credits, and made the 1986 tax reform so much worse off. imagine how much better tax reform we could have gotten in 1986 if we had not given away tens of millions of dollars in deductions and credits to the appropriators to spend. the point of the pledges not simply to protect against tax increases. it also makes it possible to have tax reform.

the american people will not vote for tax reform if they think it is a trojan horse for tax increase. and if you give away credits to spend, then when you take away tax reform, you have nothing to do. you cannot take the rates down. the tax pledge is the best defense against spending increases. it is in perfect, but we know that every time we raise taxes, they spend every dollar plus. the idea that we can raise taxes without spending more money is a unicorn. >> as ross noted, he referenced efforts in western europe and other parts of the world, as well as the state and local level. is the pledge going global? >> you've raised a lot of your

remarks as not between conservatives and liberals but between democrats and republicans. >> the democratic party, if that was a party that would not raise your taxes, i would be working with them. one once lower taxes, lower spending. the other wants to go in the other direction. that also gets to the issue of how you to compromise. the government cannot do compromise. the house passed a budget with $6 trillion in cuts over the next decade. the republicans agreed with obama to cut $two 0.5 trillion. we did not get the $6 trillion we wanted. we agreed to less. the previous two times we could tax increases on the table, and no spending restraint at all. we have some examples. this is not theory.

when you put a tax increases on the table, they do not cut spending, the increase spending. when you take tax increases off the table, they reduce spending. this whole idea of the partisan thing. i will use in some cases republican when i maybe should say conservative or free market, but that is because during the lifetime of ronald reagan, we moved away from the situation of being republican being somebody who was born north of the mason-dixon line. in the 1960's and 1970's the liberal republicans and the liberal democrats would fight the conservative republicans and conservative democrats. everything was a compromise. nixon wanted to increase spending a lot and the democrats wanted to increase spending a real lot. we compromise between a lot and a real lot. now we have two parties that reagan helped sort out. if you're for limited

government, you're a republican. if you are not, you are a democrat. the two parties are going in opposite directions, and if somebody wants to go east and somebody wants to go west, what is the compromise? there is no compromise. somebody wins, somebody loses. the fight we are in the middle of, because republicans held to their no tax increase position, we won, they lost. were you paying in 1982 and 1990 when you had your had handed to you? what is the difference? we took tax increases off the table. that is the difference. >> one point i would make is that i think it is important to

remember the historical context in which the pledge was created. i think that historical context made and his -- made a stronger case than the context we are living in today. i think that the transformation of american politics that he described has overall been a victory for conservatism. there is just this nagging problem of the fact that conservatives keep cutting taxes without cutting spending, and that nagging problem has blown up into a world historical challenge facing the united states over the next 15-20 years. i think that it is telling in this regard that kroger started out doing -- grover started out doing battle with real rockefeller republicans, not

moderate republicans, but liberal republicans who would be in the democratic party today. in those fights and in that fiscal context, he was right. he drew a lot of important lines in the sand and the people he worked with true a lot of important lines in the sand. but i think it is telling that he has moved from those fights to fights where he is accusing tom coburn and pat to me -- too mey of being sellouts and rinos. i think that tells you something about the shift in american politics. people are responding to the reality of 25 for 30 years with a tax is first, and spending second republican approach to politics. i think the taxpayer pledge has not caught up. >> i did have hand at here that

i do want to make sure everybody gets because i cannot go through everything. it walks through the coburn drama and how we had to work with the republican leadership and the conservatives in the senate to get him surrounded and get him to not vote for a tax increase. coburn supports the ethanol mandate. the idea that he is a free is not true. he went on the floor and said that he was for the mandate. we had to walk through all of these things that he was trying to get the republicans to vote for a tax increase. the entire republicans in the senate and the guys in the house had to walk him back on that and beat him on the subject. we go through the whole drama

there. it is unfortunate, him not being a conservative from that standpoint. a $2 trillion tax increase. crisis since he is not here to defend himself, -- >> since he is not here to defend himself, we will let you read about it. >> i am quoting him. >> let me pull two together here. these are both to grover, but i do want to give ross a chance to comment. you frequently claimed that the pledge is not between you and legislatures, but between voters and legislators. what is and is not a tax

increase is something that your organization gets to decide. does that not mean that the tax pledge is to you and not to the voters? >> again, the pledges made by an elected official to the voters at the state level. those of you who live in washington, d.c. have seen the ads put out by grocery owners asking to tax online savings. i do not have to step in and have a conversation about that. the advocates of taxing internet sales say it is a $23 billion tax increase. i presume they have done the math. >> i agree. >> he buys stuff on amazon. >> as do i. there are a couple of questions here about the definition of the

pledge. have you ever thought about a no increase in debt pledged? let me just add my own to that question, any more thoughts broadly about the concept of pledges beyond the scope of taxes? >> this is a very interesting question. we started the pledge as a way to get tax reform passed, realized it was a way for candidates to communicate their position credibly with voters, then realized it was a way to brand the republican party as the party who would not raise taxes, which helps you elect legislative bodies across the country. the number of pledged acres keeps growing. the pledge has been -- the takers keepsedge growing.

the pledge has been very powerful. i am not opposed to a spending pledge, but remember, congress is set up where everybody touches the ball but nobody touches it last. i voted against most of the spending, and they kind of did, but the bill still past. the way it is designed is to make it impossible to figure out who is responsible for the spending. i think we should terminate membership on the appropriations committee. if you are an appropriate for six years, i do not think it is

thoroughly corrupting. that is my best suggestion on reining in spending with a rules change, others than having a tea party yell at everybody, and that has made some progress. >> could you craft the words for a no spending increase pledge? >> i think that the overall point is true, that it is hard. we have tried to do this with amendments at the state level, and you can come up with ways, but it is absolutely much trickier than the beautiful simplicity of the taxpayers protection pledge. that thatot sure beautiful simplicity has led to real taxpayer protection over the life of the united states fiscal picture in the early 20th-century. the effectiveness of the pledge

overall depends on the political context. at the state level, you have a balanced budget amendment, which tends to place -- it does not place a cap on spending, but it creates a further constrain. in states that are dominated by the republican party, the combination of a balanced budget amendment and taxpayer pledges has been wonderful for the cause of small government. in states where the republican party does not dominate and shows few signs of dominating in the future, like california, you could argue that the taxpayer protection pledge has prevented california from going the way of greece, but i think many people who live and work in california would argue that california is headed that way regardless. i suppose the big difference of opinion here is that i think an enormous enough gap between outlays and revenues becomes

more dangerous in the long run than a modest tax increase. i think based on his view of american politics, i think grover disagrees. i think california today is in a more dire position than the united states was in the clinton era when tax rates were higher than they are today. that is my course skepticism about the effectiveness of the pledge. >> we have time for a couple more questions. this question comes from the audience. the bush tax cuts are scheduled to expire in a year and rates are scheduled to go up. if a pledge synar votes for tax reform by year from now and the -- pledged to sign an -- pledge signer votes for a tax reform a year from now and the

tax rate is higher than is now, is that a violation? >> if they have already expired? >> we have baseline -- in-line >> i hate to get into hypothetical. if they look you in the eye and say, you are raising my taxes, you have a problem. what if the tax lapse and nobody was there to vote, then they would not break up pledge? get into ang to hypothetical. but if you ask the american people and they think it is a tax increase, then you have a problem and i can i get you out of trouble. the need to take a look at what common sense tells people. aside the idea of imaginary spending cuts for a moment, as you're describing

earlier. if there were a real package of spending cuts -- >> are real unicorn? good. this is the 73rd time i have heard this, but i'm listening with bated breath. >> for the audience, i will finish. if there were real spending cuts with tax increases at a ratio of 100-one, isn't that better than nothing? >> i do prefer purple unicorns to gold unicorns. this is the whole toomey thing. the democrats met with him at night. they said that is intriguing. the next morning they laughed at him and said no way. senator kerrey said you need to

help us work on this. i said, what are you interested in? he said, all we need are one trillion dollars in taxes. by the way, the right stuff is going nowhere. when you are off by yourself imagining what unicorns might look like, but the democrats will not let you have a unicorn and obama is sitting in the white house running a campaign of class hatred, envy and greed, the hypothetical is one of the modern democratic party was populated by republicans and they agreed to some deal? that would be cool, but let's come back to planet earth for a moment. >> doesn't that just lead us into a bit of next essential --

existential despair? either the democratic party has to largely disappear from political life or the republicans have to pass sweeping legislation, that i'm moderately skeptical about its popularity commack and then enforce it. if we'll spend -- popularity, and then enforce it. if real spending cuts are a unicorn, i do not mean to sound like ron paul here, but why do think the $2.5 trillion is real? while a -- why did spending cuts happen when there was not a tax increase? >> if you have a 100-1 ratio,

when you look at simpson-polls, they are all three-one, four- one. the tax increases grow and grow, and the spending cuts get further and further away. and by the way, not a single democrat has endorsed simpson- bowles. the idea that the president likes it is counterfactual. if harry reid got together with the democrats in the senate and passed a bill that did all the things that people like to mention the modern democratic party is capable of, then we would have something to look at. bring me a bill.

bring me a bill. pass me something that looks like the ryan budget, meaning, that it is a real budget that can be scored. the democrats have not passed a budget from the senate in the last three years. why? because what they want to do they cannot say in front of the american people and pass the laugh test or win the next election. you have to have elections. this is not easy. this is a lot of work. this has taken many years, in fact, decades. the modern republican party only started in the right direction a couple of years ago. coldwater was against -- barry goldwater was against cutting taxes. it took the tea party to really whacked the party on the side of the head and begin to move the republican party more seriously for spending restraint. this is a lot of work and a lot of elections to be one.

this is not going to be magic. all of the spending we have now, these guys did. they are proud of it. it was on purpose. >> a lot of spending republicans did, too, right? >> bush allowed spending to drift up, and i wish he had not, it was a mistake. but to look at the jump in spending from 2007-now, that is where this huge jump in the spending projections -- >> it has gone on under both parties. >> yes, however, there is a difference in the magnitude of the spending. it is rather dramatic. and what happened was, we lost the election in 2006, 2008 on issues other than the economy, and we have paid the price.

>> that was the last word. a couple of housekeeping matters. one, folks can watch the replay of this debate as well as other debates we have had on this series as well as future debates at www.aei.org. in addition, and e-book is available of the first debate we ever had over the proper scope of government and size. that is available online too. i just want to offer two thank yous. thank you grover norquist ross douthat and for participating this evening, and thank you everyone in the audience tonight. [applause] [captioning performed by

national captioning institute] [captions copyright national cable satellite corp. 2011] cracks in a few moments, a town hall meeting with house might not -- >> in a few moments, a town hall meeting with house minority whip steny hoyer. after that, a portion of today's white house briefing, focusing on president obama's efforts to extend payroll tax cuts. later, barney frank of massachusetts talks with capitol hill reporters about his decision not to run for reelection. a couple of live events to tell you about coming up tomorrow on our companion network c-span-3.

the house committee holds a hearing on the taxation of online shopping. that is at 10:00 a.m. eastern. at 2:30 p.m., the senate commerce committee considers nominations to the federal communications commission. >> let me be very clear. i will neither be a lobbyist nor a historian. there is no way i would be a lobbyist. look, i will miss this job. but i will tell you this. maybe you will laugh. one of the advantages, to me, of not running for office, is that i do not have to even pretend to be nice to people i do not like. some of you may not think i have been good at it, but i have been trying. the notion of being a lobbyist

and trying to be nice to people i do not like would be ridiculous. i will not in any way be a lobbyist. i do not intend to practice law, although i do have a law degree. my intention would be to do some combination of teaching and lecturing. >> after 16 terms in the house of representatives, massachusetts congressman barney frank will step down at the end of next year. watch his retirement announcement as well as more than 1000 other events at c-span on line. it is washington your way. >> house minority whip steny hoyer held a town hall meeting monday night at the university of maryland talking about the economy, federal spending, and foreign policy. this is one hour and 15 minutes.

>> folks, that is the end of our awards ceremony, but next we have our town hall meeting with the congressman. for those of you who do not know what a town hall meeting is, i will give you a little sense of what to expect. first, the congressman will make some remarks, and then he will take questions. one of the key aspects of a town hall meeting is the questions. as a professor, i am here to remind you of what the question is. a question is a short statement of inquiry that ends with the expectation of a response. the key words, short, response. some of you may be tempted to play the role of professor and give a lecture or a speech, but that is not a good idea.

so we will have a few words from the congressman about his outlook for the economy, the state of the nation, and then we will take some questions. we have three or four students who will have the honor of asking the first few questions. bair brilliant freshmen and sophomores at the university of maryland. i would like to say i helped with that. that they are my students. so, the program will begin -- now. the congressman is back. [applause] >> i want to say that i do not know that i had that exact drill before, where i got up and sat back down and then got up again. it does give you the opportunity to leave, however. many of you showed poor judgment and did not.

i am pleased at that. before i begin, i want to thank the senate for american politics and citizenship for the role that they play in ensuring access and transparency in government, and promoting careers in public service. young people, at the end of this beach, i will say something more about careers in public service and america's need for your participation. this first of its kind system resulted in military and overseas voters being 20% more likely to cast their ballot in 2010 than those who received their ballots by mail, 20%. the center's work running the maryland election is an important service to citizens of our state, insuring people know

where to vote on election day and who finance his campaigns. that is a critical issue. we had a supreme court case recently that allows a very large contributions without knowing the source. the problem about not knowing the source is that you do not know why they are telling you something in these ads that you see, too often in my opinion. but they have the right to do that. the court has said they have the right to do that, but you need to consider the source. if you cannot find out the source, that is a problem. that is why transparency is so critically important. our state treasurer is here. one of our elected officials, who, by the way, is one of three votes on the board of public works, managing the money, which is why we are so nice to her all the time and why i always

mention her name. she is a wonderful lady. i know there are certainly a lot of special interests in washington. there is nothing wrong with making contributions. the constitution of the united states guarantees that citizens can address the government for redress of grievances. it is an absolutely critical right in a democracy. spending money exercising that right is an appropriate thing to do, but again, transparency is critical so that you know and i know who is contributing to whom for what reasons, and to they have an underlying motive? many students from the capitol hill internship program have in turn for me.

i call them fellows, of course. that is a-leading -- high falluting word for non paid staffer. steven, stand up. danielle, is danielle here? thank you very much for what you're doing in our office, and thank you very much capsi for providing such talented people. i spoke a few moments ago about political courage during times of division. today we find ourselves living in one of those moments. when it comes to the challenges of our debt, we have just seen what happens when political courage is lacking or nine parties refuse to compromise and come to consensus -- when parties refuse to compromise and

come to consensus. we have come back from the thanksgiving holiday and seen little progress on deficit reduction. in order to avoid the difficult process of sequestration, which is the automatic cuts that will take place without the kind of agreements the subcommittee was supposed to have reached, congress will have to act. sequestration, for those of you who do not know the impact on the federal budget, it is an irrational process. it is an irrational process because it opines that we will cut across the board irrespective of priority. if you and others in your business, your family, your personal lives, need to not spend an extra $10 a week, the probability is you do not spend the $10 on the thing you think

is least needed in your life. however, if you of sequestration and you have a hundred dollars, you would cut $0.20 out of everything you did. across the board, without regard to priority. simpson-bowles and the so-called gang of six, which now has expanded to 45 members of the united states senate, have all suggested a combination of revenue cuts and spending constraints and the raising of additional revenues. the federal budget, and i want the young people particularly, because you have to pay the bill -- in a regular town meeting, one of the things i would say, and i will say it here, my

father and stepfather both fought in world war ii. my father was too old to go into battle, so he was stationed at a pow camp in texas as a finance officer. my step father fought in the pacific theater for the be-25 out of new guinea. he was shot down in the battle of the coral sea. he came back. tom brokaw call them the greatest generation. my fear is that my generation, if we do not act and act quickly, with courage and conviction and wisdom, we will be known as the greediest, most selfish generation. and young people, you ought to be very angry about the position that we are putting your country in and the legacy you are about to inherit of deep, deep debt. it is not only and intellectually bankrupt policy that we have been following, but

it is an immoral policy as well. we need to get a handle on the budget. the simpson-bowles commission was appointed by president obama and by leadership of both houses. they met and came up with a proposal to cut $4 trillion through a combination of efforts. there are essentially five components of our federal budget. one, you cannot do anything with, nor should we, and that is the interest on the debt we have already borrowed. the other four are subject to change. one is non-defense discretionary spending, student loans fallen a category. education assistance falls in that category. much of health spending -- not all of it -- falls in that category. the running of our entire government falls in that category. the second category that we can affect is discretionary spending

that is defense spending. they are about equally divided. it is about 16% for each of those. the fourth category is called tax expenditures. without changing any rates, if we reduced tax expenditures, we would have an additional $1.1 trillion in revenue. that is because we would eliminate so-called loopholes, or more likely, a tax preference items. eliminating those would provide an additional $1.1 trillion. that is more money than we collecting income taxes in the united states of america.

you can see that one of the ways we can get to where we need to be, that $4 trillion, is simply by saying no, whenever you earn, you will pay the rate on the income you earned. there will not be a preference added. there are three major preference items for individuals. one major preference item is the deduction for health care, the second for mortgage, and the third for pension expansions -- expenses. there are a lot of preferences for individuals and corporations, but they amount up to $1.1 trillion of tax expenditures. the $4 trillion objective that the gang of six were trying to get to is because it is at that

figure that economists and fiscal experts tell us that the debt level is sustainable. it is a little less than 70% of your debt-gdp, everything we make in america. we are now 15 trillion dollars in debt. none of us can conceive what a trillion dollars is, i think, but it is a lot of money. it would take an extraordinary amount of dollars out of everybody's pocket in this room, and your children, and their children, and their children, in order to erase the debt. those of you who read the papers know that part of our fiscal problems are caused by the fiscal instability in europe. greece is a particular example to which we look. greece has a debt level of about 120% debt to its gdp.

the good news for america is -- and the bad news for greece, the bad news for greece being that they do not have the resources themselves to solve the problem that they have created. they are going to need help from outside. the good news is, america has the resources to address its debt crisis. if we have the political courage and will to do so, and we can create agreement on how to get that done. the super committee, the so- called super committee, or the deficit reduction and tax force, failed in that effort. i urged them, over the seven days before they concluded their work on a monday and said we cannot get resolution of the

objective that has been given to us, i urge them to extend their life by 90 days, because in my view, failure is not an option for our country. we must get to a fiscally responsible, a sustainable path, or you young people will not have the kind of country that i inherited from my family in my generation. you need to be angry about that, energized about that, and focused about it. it is much harder, of course, to pick which sacred cow to butcher than to spare. you could sit around and say we are going to get that cow or that cow, and you like cows. you do not want to take any of them. in a democracy, in a body like this, if we were all here,

everyone of you wants to spend money on different things, and you think they are very high priorities. if you were a collegial body, a legislative body, a council, commission, city council, the inclination is to add on, not to choose. choosing is tough. choosing an making alternative choices is tough. is tough in our personal lives. it is tough in our corporate lives, and it is tough in our government. at the same time, we must remain relentlessly focused on jobs. we need to bring this deficit down, but we also need to grow our economy. because if you do not grow your economy, you will never get your deficit challenge resolved. why? because your revenues will continue to be substantially

down, and the demands on government will increase, so you have the opposite of what you want, more jobs, less demand. there is no alternative but to succeed. i'm very hopeful, as we go back to congress tomorrow, that i will be able to work with members of both sides of the aisle and say yes, there are sacred cows. yes, we would like to ask nobody to tighten their belts a little bit, no reductions in expenditures and no increases in revenues. that would be a short-term solution, but it would be a long-term catastrophe. so, young people, i am pleased to be here to talk about these issues as we move into the second decade of this millennium, as we move into the

country that you will inherit. i'm hopeful that the congress in which i serve will not leave you a legacy of dead, but will leave you a legacy of the fiscally sustainable path. we will not get their during my service in the congress of the united states. we were at balance. we were at surplus. bill clinton is the only president in my lifetime -- there may be somebody in this audience older than me -- there is at least one i know of -- but neither he nor i were alive at the last time we had four years of budget surplus. the only president in my lifetime to accomplish that was president bill clinton. let me tell you how we as a

country accomplished that. you have a republican majority that established a restraint on spending. you had a democratic president that said we need revenues to pay for social security, defense and domestic security, and we had an information technology explosion in the private sector. it was not democrats, republicans, or the private sector. it was all three acting in concert, not necessarily because they agreed, but because there was a multi-party responsibility. and me suggest you that the reason i believe that now is the time -- let me suggest to you that the reason i believe that now is the time to accomplish these objectives is because it is almost impossible -- i do not

think i mentioned entitlements. that is the fourth. there are millions of people who received payments from the federal government. many rely on that to survive any to be protected. many do not rely on those to survive or even to do well, but they believe strongly that they worked for those entitlements and they ought to get them. i think that is an understandable sentiment, but we are going to have to ask all of us to simply make a contribution towards solving this issue. those of you who see people now demonstrating, occupying wall street and, if you will, in my opinion, that movement reflects an anger and yes, a fear about the future of the country.

the middle class of america is shrinking. that is not a policy that we ought to allow to continue. every country i have ever been to has very poor people. every country i have ever been to has very rich people. every country. america's uniqueness and strength came from its broad middle class that was making good wages and was able to buy houses and cars and education for children and groceries and clothes and all of those things that people made here in america. let me and with an agenda item i am pushing very hard. it is called make it in america. it is an agenda which says that america has a dream, and that dream is that all of us will have an opportunity to realize the american dream of success, not just financial success, but

success in accomplishing our objectives and living a quality of life. that was the american dream, and there are a lot of people who do not believe that dream is alive for them or believe it will be alive for all of you. make it in america means you are going to make it. you're going to succeed. you're going to as the test. you're going to get the job. you're going to win the game. you're going to make it. it also means you're going to make "it" in america. you're going to manufacture it in america, grow in america, and sell it here and around the world. why is manufacturing so important? because it creates the middle class and pays on average 22% more than other jobs. it gives working people the opportunity to make sufficient

money, to have sufficient health care so the day and their families are living, not in a comfortable way, but in a satisfying, quality of life way. i want you to remember the make it in america agenda. i want you to believe you're going to make it in america. i want you to believe that america is going to make it. and one of the ways we're going to do it is we are going to spur manufacturing, making things in america. they can be very high-tech things. we obviously saved the automobile industry, something i believe was very important for our country, and it saved hundreds of thousands, indeed, millions of jobs. because manufacturing jobs have the biggest leveraging effect on other jobs of any other kind of enterprise. so, young people, we're going to make it. we're going to make it working together. we're going to make it talking to one another. we're going to make it by doing

what john kennedy asked us to do. not what our country can do for us, but what we can do for our country. and your questions. thank you very much. [applause] >> hello, congressmen. >> high. how are you? >> i am bed. -- good. as a proud supporter of the federal pell grant program, how will you preserve the program that has given up to $6,000 in student aid with the unstable economy and republican house members that mean to shut it down? >> from a partisan standpoint, democrats have been consistently strong supporters of pell grants. pell grants historically replace

70% of the basic costs of college, 70% of tuition costs. they were down as low as 31%, but they are now probably 34%. we raised pell grants in the last congress under democratic leadership's. it was one of our proud accomplishments. there was a proposal to decrease them. they're not going to be decreased. president obama has made it very clear he will veto any bill that decreases pell grants and we have made it very clear we have the votes to sustain his veto. i am the whip. i do not know if you know what a whip is, but a whip counts the votes. in england, they had fox hunts. the horses ran after the dogs. the dogs ran after the fox. they had two writers -- riders

with whips keeping the hounds going after the fox. that is what the whip does, it tries to keep the hounds going after our objective. i am the whip. i count votes, and we have the votes to make sure that at least through january 20th of 2013, that will not be changed. why? so i can say i'm going to give you more money? that is not why we have pell grants. we have pell grants because we know america will not be the great country that we wanted to be, will not be the successful country that we want it to be, if we do not out-educate the rest of the world. we had done that in the last century. we have the greatest institutions of higher learning in the world. but if they are not accessible to average students -- because you find brilliance in the poorest neighborhoods as well as in the richest neighborhoods --

so in america, we have believed that you needed to provide access. when i came to the university of maryland, -- this is really going to hurt you. you are going to win. and when you tell your parents, they will wince even further. i was a commuting students. i worked from 3:30 p.m.-midnight as a file clerk. my first semester at the university of maryland was $86. [laughter] again, that was in 1847. [laughter] 1957. clearly, college costs have escalated substantially. it is in america's interests -- is it in your interest? yes, but that is not why we ask

taxpayers to invest. we ask taxpayers to invest their money in making sure that you and so many brilliant young people have access, so that our society and country will be better. we're going to continue to fight for that. >> thank you. [applause] >> all of those guys who had such great things to say are walking out. they have heard all i have to say before. >> since we are in such a large economic crisis, why doesn't congress introduce a bill allowing people to take out a certain amount of their 401k without penalty? >> we have done that to some degree. some years ago, we allowed, first of all, for you to keep it

in an extra year so that you did not have to take it out and take a penalty. i think that is a good suggestion. we have not recommended that yet. for one thing, frankly, it is a little perverse. americans are saving more now, but we are not a good saving country. we're not a good savings culture. we tend to be spenders. now people are worried. what do you do when you are worried you're not going to get another $10 in your pocket? you have it now, but you're not sure you'll get another $10 tomorrow. you tend to hold onto that $10. the other suggestion being made by the president is to cut the fight attacks, the social security tax -- fica tax, the social security tax, by 50%.

that will cost about $240 billion. frankly, i have supported the proposal, but i will tell you that i have reservations about it. first of all, we do not have any money to give anybody any money, so we would have to borrow that. i'm not so sure that if we are going to borrow that much money, that putting it into infrastructure would not be a better return. we would create jobs, and at the end of the jobs being created, we would have something that needed to be done, whether a safer school, stronger bridge, what have you. but i would look at alternative in terms of allowing people to take money out of their 401k without incurring a penalty early. >> thank you. >> you bet. [applause]

>> good evening. my question is, as 2011 and and we approach 2012, what goals do you plan on accomplishing by this time next year and how you plan on achieving them? >> is a tough atmosphere in the house of representatives and the united states senate. one of the things i urge my colleagues, is not to think in 24-month cycles. do not begrudge the fact that members of the house think in 24-month cycles. they think that way because that is their contract. they have a job for 24 months. therefore, they're very focused on what they can accomplish in 24 months, either defeating things, passing things, or a combination of the two. if you cannot do it in 24 months, you cannot take it home to the constituents and say this

is what i did. to come back and say look, this is what i did. in 2019 or 2020 or 2021, we are going to have the budget deficit down to 80% of gdp. that is great. what a wonderful thing. but if i can come home and say look, i did this. i defeated this or pass this piece of legislation, in my view, what i would like to accomplish, what i think the congress needs to accomplish, what our country needs to accomplish, which would be for our economy, the psychology of our people and the success of the united states around the world, is to get our country on a credible fiscally sustainable path, a path that gets us that $4 trillion reduction over the

next decade in indebtedness. that would be, in my opinion, the single best thing we could do for our country and for all of us. i will be working on that. >> thank you. >> good evening. i had another question about education. there is a bill going through congress talking about re- prioritizing spend a terse -- a spending jurors -- spenditures including cuts to arts and arts education. and when it to us your opinion of that. >> there has been a long standing -- i wanted to ask your opinion on that. >> there has been a long standing push to reduce spending on arts and humanities. we spend relatively little on

that, and in my opinion, we get a good return. we have a $3.7 trillion budget. in my opinion, in that case, the return is an elevating of our culture and our understanding and appreciation of things that in nobles the human spirit. that may sound corny, but every great nation needs to pay attention to its culture, it's art, a performing art, its artists, sculptors, writers, and every great government in history has supported that to a much greater extent than the united states of america. now, the united states of america, one of the things we have is a lot of generous people. and of course, they get a tax

preference for their generosity. many people are giving substantial sums to the arts, to the humanities, to charitable cultural efforts, and they get a tax benefit for that. so, if we eliminated >> and the answer to your question is, we spend a relatively small amount. not a small amount in the sense of any of us in this room or from the sense of the university of maryland, but in the overall expenditures of america, a relatively small amount on the encouragement of the arts. it is, i think, to our country's benefits that we make those investments. let me say something to all of you young people. it is not that i am excluding those that are slightly older than young people. it is that you have a much bigger stake in what is going on.

you will live with that much longer than some of the rest of us. it will impact your lives over the long term. and you need to be sensitive. there is debate in washington about cutting spending. spending is not all alike. if i spend on a telegram, i expect that to pay off for at least three-quarters of the century. if i spend on buying a new car, that may last for 3, 4, 5, 7, 10 years. maybe longer. those investments that we make in education aren't just that. yes, they are spending, but they are investments in which we expect a return. bellini to rein in excess of spending?

yes. states have tough times. we have millions of people unemployed, and not paying taxes. property values are down. when that happens, obviously, you have to either borrow money to keep going or you have to reduce expenditures or go into debt. at the federal level, we have gone deeply into debt. at the stake at local levels, they can't do that. who is back here? oh, you have a microphone back there. >> [inaudible]

[inaudible]

[inaudible] >> if i adopted your premise, the answer would be that i hope that i have the courage to do so. i don't adopt your premise. i think president obama has no intention to go to war either with syria or iran. hold the lid that i believe that iran is a very dangerous entity into de's world. the iranian president has made

it very clear that he wishes the destruction of israel, the destruction of some of his neighbors in the middle east and the destruction of america. and he is seeking nuclear weapons. the entire world is concerned about that. the united nations is concerned about that ever. romania is in charge in iran. in syria, the arab world wants to see the syrian leader removed because he has in the process of slaughtering his own people that simply want to have a voice in their government. i believe that president obama has shown great courage and great leadership in a very polarized environment in which

cooperation with the congress he has vowed to be almost impossible. that is lamentable, but i think it is an accurate reflection of the present political situation that he confronts. if the intent to buy some is simply to defeat president obama, any success that he would have in growing jobs or anything else would be counter intuitive for that objective. furthermore, as it relates to president obama, libya i think is a perfect example where he wanted to, in the most surgical way, and bring to a close a tyrannical dictatorships that was committing extraordinary human rights abuses, was killing his own people, threatens to annihilate those people, and i think he did so in an

extraordinarily successful way, not losing a single american life in the process, but bringing to end one of the real tyrannical figures on the world's stage. the answer to your question is, if i did, i know pilot have the courage to act consistent with my conviction. >> i have a question about wasteful spending and the particular kind that does affect our generation, the nation's drug policies. if we continue to spend the same amount of money and haven't seen much result, the support reformation? >> i am not sure what exactly are referring to. we have changed, to some degree, which think was the riding to do. we had a disparate sentencing structure for cocaine and crack,

crack being mainly of drug use to buy a minority community, cocaine being used by more affluent community whether they were minority or not. one carrying a higher penalty by a factor of five to 10, i thought that was wrong. we addressed that in a bipartisan way, by the way. the republican leadership was critical in getting the job done as was democratic participation. the issue of drugs is a very serious one. a significant plurality of the majority of the prison beds in america, america has one of the highest rates of incarceration. a significant number of those

beds are taken by those that are there for drug-related crimes. not simply for personal use, but for possession with intent to sell, but the commission to get money or the commission of assault, other violent crime while on drugs. it is an extraordinarily difficult question to deal with. we're not doing it successfully. if you're asking if i am for legalizing certain drugs, the answer is no. are you asking me if i think we ought to revisit how we treat offenders who are offenders because of use of drugs as opposed to a commission of crimes while under the influence of drugs, i am certainly opening -- open to reviewing that.

from an economic standpoint, and from a p.r. standpoint, what we're doing is not working. i can't see you. i guess we can't move the microphone over a little bit. have you been standing with the baby for a long time? i hope not. i am sorry. >> i have for generations of my family in your district, including my little one. because of them, there is an issue dear to my heart. that is providing healthy and safe food for them. there is actually a bill in congress that will help with that. what has been happening the last several years, the ftse -- the

fda has been targeting with undercover operations for local -- [baby crying] [unintelligible] [baby crying] there is a bill in congress that would decriminalize that and

realize its for human consumption. i have a three-part question. are you aware of this? du support it? if you're not aware of that, will you discuss it with me so i can fill you in and ask for your support on the legislation? >> i am not familiar with it. i know about it, but i am not familiar with the legislation. are you familiar with that legislation? in an era where we all lived in a small village and we knew former jones or farmer brown, and we were pretty confident that he would not tell us something that was tainted or healthy as you point out. we did not need an fda. we have found that pretty soon as we did it needed fda because we are dealing with people that had no idea who produced the

food, and there is very substantial and adverse health consequences covering the food which is not healthy. it was created for the purpose of making sure that the prescription drugs that we get, or the food that we get is unsafe for human consumption. i think it is a critical function, but i will look at bill to see if i believe, as you seem to think, some discrimination on what would otherwise be very healthy food and milk, what you're referring to specifically. i will look at that and see what i think about it. i believe the food and drug administration performs a critical function for a safe america when you have 315 or 325

million people in america, and probably 1% of them has any real idea where the food they eat comes from. but i will talk to you about it. but the? now that i am not distracting in, maybe the baby will be happier. [laughter] >> my question is, you were talking about the fica tax earlier, solvency for medicare and medicaid, social security. i was wondering cents those agencies are at risk of becoming insolvent, in the near future, to you believe that the retirement age and eligibility age should be raised for social security? >> i gave a speech a couple years ago and which i said everything needed to be on the

table. including ages. this is controversial and my party, and there are some very critical of me saying that. when social security was adopted, the average life expectancy was 65.4 months. who said the aged 65. the life expectancy is into the 80's et least, that is my expectation. [laughter] the fact of the matter, we are living very much longer lives and healthier lives. and more productive lives for much longer periods of time. in that context, it seems irrational to take that off the table. in 1983, before you were born, ronald reagan in republican president and a democratic speaker of the house sat down together and agree that social security was going to go

bankrupt. that means the cash flow, it was never really an investment fund. it was a path through a fund because you start giving benefits immediately. as a result, those working paid into a system and those retiring took it out. for almost all of its years, it had a surplus. he used that surplus to mask the whole death of our debt, frankly. we will increase the age from 65-67. it will be six, seven, eight years. they didn't phase in for 25 years. everybody had an opportunity to get an understanding of what they could expect. if i promise you when you're 65

or 66 you will get something, you manage your finances based upon that. so if we change the age, it has to be done prospectively so that people have an opportunity to plan their lives around what they are going to be giving. it seems to be fair, but that ought to be on the table. i am glad i gave you the right answer. i am always pleased when i hear the right answer -- and give the right answer. if you will be quick, i will be quick. >> i am the the fact of financial adviser for my 89- year-old mother. she gets retirement benefits from the federal government, one

that a social security, and one for survivors annuity from my father. and my younger sister, ida the finances for because she is mentally ill. what should i do as a representative for other people when congress is talking about cutting those programs? >> again, the keeper is perspective. prospectively. your 87-year-old mother, you will have no problem managing her finances. there'll be no change in her finances. there is talk about applying a change to not just social security, but everything where there is a cpi adjustment. one this coming january, it is about 3.5%.

3.5%.be 3.2%, not is set for that, there'd be no present benefit taken away from your mother. i believe that is the case as well for your sister. i believe the case would also be the same case for the sister. assistant its supplemental security income, ssi. one of the things about the age, when social security was created, it was only for the person that turned 65 and only for them. there was no survivor benefit, if they were disabled, there was no disability benefits. if they died prior to 65 and left children under 18, there

was no survivor benefit. we have at a lot of benefits to social security. in your case, there will be little if any change with the one caveat that i indicated, the increase might be a little bit smaller. but let me say something so you get my view on this. i believe that a society that is worth its salt ought to take care of its most vulnerable citizens. that does not mean, in my view, that we have to take care of our best of citizens the same way. there are some of this country that argued that we earned this, we get this, everybody ought to get the same thing. ross perot wanted to do away with social security. why are you sending me $20,000 a

month? not a month, a year. i have a feeling that your mom and your sister are very vulnerable and don't have a lot of cash or stocks or bonds or dividends. we ought to make sure that they are ok. but the folks that have done better, not to penalize them, but to say, you have done well in your country needs help, we're going to reduce you by 0.3%. i think that would be fair and smart and good for all these young people. that wasn't as quick as i intended to be. >> my name is a alexander and i am a senior at the university of maryland. thank you very much for the telegram, and my question, i am very concerned -- >> thank you for taking

advantage of that. >> no problem. i am concerned about the issue of climate change, i think it is the most serious issue facing our country this century. despite our current budget problems at the national debt, should we increase spending on research to help fight climate change? or what you plan to do to address this issue? >> i think alternative energy is the idea of the coming decades. it is becoming an opportunity. alternative energy sources, we see it in electric cars, the utilization of fossil fuels, natural gas. we failed to pass an energy bill, very controversial. we are still making efforts. we invested a lot of money in the american recovery and

reinvestment act and alternative energy sources, and i think we will continue to do so, but it is very controversial. there are people, smart people that believe that global warming is not an issue. that is not as much an issue in our party as it is in the republican party. there are some that believe that global warming is a natural occurring phenomena worry go up and down, and i don't share that view. i think that it is a starkly true that we have seen areas of climate warming and climate cooling, i think there is little doubt that man, in particular the use of fossil fuels to the extent that we are using them today with china and india escalating their use very

rapidly is having a detrimental effect on the warming of our planet and the changing of our environment. we'll continue to invest in alternative energy. quite frankly, it is not only a good thing for us to do from the environment standpoint, but a wonderful thing to do from the economic standpoint and job creation. there'll be a lot of jobs created in the coming decades producing alternative energy. the chinese are very much ahead of us in solar panels. we need to catch up and make sure that we're doing what? what do we want to with solar panels? make it in america. right over here. >> i am a plumber with local 5

here in d.c., and i have helped a lot of the people here keep this university running and the toilets flushing. one of the reasons some of them backed up is because of what is happening on pennsylvania avenue, the lines get full. that is supposed to be a joke. >> you ought to come to my place. >> unfortunately, it happens here at the university. looking at the whole situation, you're talking a lot about economics. congress has pretty much ignored this legislation and none of them talk about this huge infrastructure project, and the

economy, why is it in the state that is? i think the way that you are thinking in the rest of the congressmen are thinking, this type of thinking will permeate the enactment of as british third world war. i think lyndon larouche is absolutely correct and most of congress is wrong. i was wondering if you would rethink this thing about endorsing the impeachment of obama who has a british assets. >> i don't want you to go away confused. i am for obama. i think obama has shown great courage and leadership. i intend to support president obama. [applause]

that is what makes our democracy is so great. >> this is the way the world wars are started. >> i had a question about the making it in america agenda. he talked about investing in high-tech energy. how would you do that when we are concerned about reducing our deficit? gosh i mention these three commissions. all of them agree and i agree on this premise, we must grow the economy in the short term. if you cut spending very significantly in the short term, you will tampa doubt economic growth. you will then be chasing your tail data rathole. unless you grow jobs and grow the economy, you will not get

revenues and no matter what the radar. as a result, i believe that in the short term, we need to make sure that we grow jobs. as i told you, the fica tax would not necessarily be my first choice. if that is the only way we can get a stimulus to the fact, -- is to an elective -- a stimulative effect, then -- i am interested that neither of the larouche questions mentioned glass-steagall. and that is the answer to your question, i think.

i see all the others were intimidated by somebody. >> can i do a quick one? the following question concerns our liberties. what is your stance on the u.s. senate new defense authorization bill sponsored by both fellow democrat carl levine and republican senator mccain which will give the president and future presidents of the authority to indefinitely in prison citizens without charge or trial abroad and inside the u.s.? what would you do to fight this unconstitutional bill? >> during the bush administration, i made it very clear that i thought the suspension of habeus corpus, even for non-citizens under this very difficult scenario, we are really not at war, they are not prisoners of war, they are not

uniform soldiers that you take into custody. my father was a finance officer at a pow camp in camp for -- in texas for ss officers. they were prisoners of war that would be released at the end of the war. a number of them did not want to go back to germany. having said that, i believe that habeas corpus of some type needs to exist in this type of environment and let me explain why. let me explain to you young people why i am explaining this. nowadays, everybody has their phone, a camera, they take down your phrases in the problem is they only take one phrase and don't give the explanation. this is a very complicated scenario that we are confronting with terrorists. terrorists that come out of a

broad whose intent is to kill us. proof may be difficult. i don't think it is tenable for a nation that has the principles of the united states of america to take people with the premise that we can hold them indefinitely without there being some oversight of the person or persons that took those people into custody. there is a debate going on. i have discussed it with the white house counsel and eric holder. and there is a constitutional issue here, why we cannot authorize the title three corps, that if you were arrested, if you're arrested me incorrectly, you get a writ of habeas corpus to take you in front of the court and the court would make a determination about if the arrest and have already had

authority and probable cause that was the earth -- therefore legally justified in holding you. the procedure should be available, even to terrorists. we have domestic terrorists. the building burned down in oklahoma city, killing hundreds of people, children, women, innocent civilians, and he was afforded the constitutional rights. foreign terrorists are not due to foreign -- constitutional rights. they are not citizens and the crime may have been committed overseas. but consideration of our own principles of how we want act, the expectations if our citizens were taken into custody in some other nation, how we would want them to be treated. i believe that we ought to have

a habeas corpus proceeding available, not necessarily exactly the same that we have here, not exactly the same criteria, but we are at a war where the expression that i mentioned, we are not confronting however, theoretically, formally, the state militia. this is individual aggression. terrorist aggression. it is not the same, and therefore, we need to think creatively of how to meet our own principles, our own requirements, of how we think we ought to handle ourselves as americans in this context. >> adjust to clarify the though, i fully said what it was -- basically, the law says for

the first time that our homeland is part of the battlefield, that americans can be detained. if someone is a political dissident, they can be detained without charge a trial. >> i don't accept your interpretation of their language, if you're a dissident like occupy wall street. i don't believe the language you're referring to provides for when you think it does. i think what it is trying to provide for is the very difficult question, and my answer to you was that i am not sure i agree with that language. >> it does clarify that is about that.

but you're running out of time. >> i tell the story, i got into politics because john kennedy came to this campus. and he spoke, i was almost going to miss it. it was almost in damascus rd. experience that turned me around and focused me. what i wanted to close with for the young people is that i use a " all the time that has meant so much to me. it is one of the driving things i hear in my head as i pursue this job of being a congressman which sometimes is pretty difficult. kennedy said in his inaugural address, that the energy, the faith and devotion that we bring to this endeavor will light our country and all who served as. they go from that fire can truly light the world. and people, i hope you believe

that your energy, your faith, and your devotion honed in this university brought the enterprises of importance either private or public and will indeed continue to light the light of this country that has been the light for some of our own people and for people around the world. thank you. [applause] [captioning performed by national captioning institute] [captions copyright national cable satellite corp. 2011]

>> in a few moments, republican senator pat toomey with the budget and spending negotiations. and in 20 minutes, part of the white house briefing focusing on the efforts to expand a payroll tax cuts. after that, barney frank of massachusetts talks with capitol hill reporters about his decision not to run for reelection. and later, a look at tax policy at deficit reduction including the head of the group "americans for tax reform. >> on "washington journal," we will talk about the republican

agenda. in to take questions about a bill in the house regarding about how union elections are held in the workplace. michaelhirsh talks about his or and -- and michael hirsh talks about his writing on unemployment. >> every american soldier and every american prisoner will be out of hand back home in america where they belong. >> and george mcgovern's pledge at the democratic convention came nearly a decade after being one of the first senators to speak out publicly against the vietnam war. he suffered a landslide defeat that year to president nixon, but his groundbreaking campaign changed american politics and the democratic party. he is featured this week on "the

contenders." live, friday at 8:00 p.m. eastern. a member of the joint deficit- reduction committee says that defense spending cuts should not have been an option during recent budget negotiations. the pennsylvania republican also told an audience that any new negotiations must include your corporate and estate taxes. this is a little more than 20 minutes. >> a good afternoon, ladies and a gentleman. i am the president of the heritage foundation. on behalf of my colleagues, is my great pleasure to welcome you here today to the auditorium. it is a particular pleasure for me to welcome back to the heritage foundation a dear friend, a collaborator in many important efforts over the years both in his former service in

the u.s. house of representatives, in his various roles in the private sector, as leader of the club for growth, a private business leader back in pennsylvania and the distinguished junior senator from pennsylvania. i must say, you have some very enthusiastic constituents in terms of my son, daughter-in- law, and granddaughters. we are delighted always to welcome you back to the heritage foundation. your role as a principal conservative leader is well known to everyone. your role on the super committee has been a critical one and will afford to your comments today. >> it is great to be back, and as you know, i continue to be a great fan of heritage.

you really do continue to play an indispensable role in helping to build the intellectual infrastructure for the conservative movement and coming up with the kind of policies that we need for our country. though i am grateful for the work that you do. the topic of the day, i guess, is to reflect a little bit on the super committee experience. i look forward your questions when we finish. when it was finally over, after several intense months, i said to everybody, if anything like this comes up again, i want you to know that you can immediately sign me up. that is not what i said, but it is a tough experience.

it is worth reflecting for a minute on how we got here. what happened that brought about the massive budget deficits and mounting that that caused this committee to come into being was a, fundamentally, a spending spree. that is what has driven us. it has been the sequence of stimulus and bills, bailouts, government takeovers, a huge surge in discretionary spending. i think of it sometimes as the political resurrection of john maynard keynes. the man is dead, canty just rest in peace? invoking his memory, this government has gone on an unprecedented spending spree in the misguided notion that somehow we can borrow and spend our way back to prosperity. by any measure, the spending has gone through the roof.

in 2007, total spending and by the federal government as a percentage of our economy was 19.7%. by 2009, it was 24.7%. i think that says it all. let me say one more thing, that what we are facing is not fundamentally a tax problem. as recently as 2007, the very tax rates that we have today generated revenue that was about the historical average, 18.5% of gdp, and with revenue at 18.5% of gdp in 2007, we had a deficit that was almost trivial. 1.2% of gdp, a size the seems quaint by contemporary standards.

an eminently manageable number. this is not ancient history. another illustration of the fact that taxes are not the problem, consider this. if you could double the individual tax revenue that was collected last year, not that you could without triggering the economy, but imagine if you could, you would run a $400 billion deficit last year. the cbo ran through the exercise of calculating where tax rates would have to be if we're going to solve the entire long-term deficit and debt problem. they said that the top individual and corporate tax rate would be 88%. at all the other rates would have to increase in proportion. clearly, no economy could possibly sustain those kind of rates. it is arithmetically impossible to solve this on the tax side

alone. we find ourselves having gone through this spending spree, find ourselves with a weak economy that has not had the intended effect. unemployment is persistently too high. but we have now a huge debt, about 70% of gdp and growing rapidly. if you what to consider how utterly unsustainable the situation is, here is the statistic that speaks volumes. if you look at just social security and the mandatory health care programs and interest on our debt, just of those three things, those things alone by 2021 inside the current budget window, they are projected to consume 90% of all expected tax revenue. leaving absolutely nothing for

all the other mandatory spending programs, welfare programs, nothing for discretionary defense spending. they would consume 90% of what we would reasonably expect to collect in revenue. it is abundantly obvious to me and probably all of you that we are on a completely unsustainable path. i have to say i am very pleased at the extent to which we are relatively united, not completely unanimous. certainly, there were disagreements, but mostly it was on emphasis and priorities. what we did what to do is fix the problem. president obama was helpful and the fighting the problem quite correctly. the major driver of our long- term viability, everybody here knows, is medicare, medicaid,

and health care spending. nothing comes close. he is absolutely right. what we set out to do was redesigned what the fundamentally flawed architecture is of the big programs, the reason that they are unsustainable and redesign them in a way that will make them work and allow us to get back on a sustainable fiscal path. the budget gave us a way to go forward, when never expected that the democrats would embrace that. we weren't shocked when they didn't, but we were open to a number of other ways to try to change this problem with the architecture of the big programs. we make some can't meaningful reforms on things like eligibility and means testing. that was what we set out to try

to accomplish. sometimes a little more than $1 trillion. the programs that are driving the problem. i maintain that it is a trillion dollar tax increase, it would be a devastating effect to the economy. we were at this impasse. is there a way that we can put some kind of revenue on the table since the democrats are so insistent on this that might be allowed us to break this logjam? it would be consistent with our principles, consistent with a very important priority of having a pro-growth economic

policy? there were facts that i thought we ought to take advantage of it, and away. what is the fact that we are currently facing the biggest tax increase in american history. we're 13 months away from massive tax increases across the board. as much as i hope we are able to prevent that, it is obvious that we won't have the political ability to prevent those from occurring. we're facing a grave threat to our economy and to taxpayers. we currently are continue to be hobbled by an absurdly ridiculous tax code, one that is terribly unfair, incredibly complicated, difficult to comply with. this struck me that maybe it would be worth something if we could avoid the biggest tax increase in american history and do it in a way that would generate a pro-growth tax reform.

that is how i developed this framework, that we proposed to our democratic colleagues. it had a tax component and a spending component. the idea was, how do we maximize economic growth? since i believe that capital formation is one of the biggest drivers of economic growth, let's make sure that we preserve the things that allow for capital formation. that the capital gains dividend rates and a state tax rates that are currently enforced become permanent. secondly, let's insist that we have our revenue neutral corporate tax reform that will lower the top rate to 25%, broaden the base on which taxes are applied and develop a territorial systems that we can encourage huge repatriation of hundreds of billions of dollars overseas. there was bipartisan acknowledgement that we need to

do this kind of corporate tax reform. there was a passionate advocate for this, many of us spent a great deal of time working on the specifics of what this would look like. i thought that this was something that we really should do in this community. what i suggest it is that we lower marginal rates. let's shoot for 20% reduction across the board on all marginal income-tax rates and offset the lost revenue by limiting the value of deductions. i think that we should be flexible about the exact mechanics by which we achieve that. the mechanism that marty feldstein developed for a percentage of adjusted gross income is a very appealing way, but there are other ways. our proposal was that we do it in a way that does not make the tax cut less progressive than it is today with one very important

exception, that we would further restrict the value of reductions such that we would generate $250 billion over 10 years for deficit reduction. in addition to the $250 billion generated, we propose another $250 billion of revenue coming from non-controversial resources like user fees, asset sales, the feedback that comes with higher compliance from the simpler tax cut. the total revenue was $500 billion. we complemented that with $750 billion in spending reduction, and we have long since given up the idea that we live bloc medicaid the state's or that we would adopt a premium support model. at this point, we were looking for what was possible in the

final couple of weeks before the clock ran out, so we suggested that it would comprise items that had been vetted by both sides and had been deemed accessible to both sides, at least in the context of a broader agreement. $1.50 trillion when you add in the savings of the results of lower interest payments. you end up with just under $1.50 trillion. him what we offered, i think, was a very reasonable offer. it was offered to generate revenue, and suggested that we do it to the very mechanism that every bi-partisan group suggested, tax reform, broadens the base and lower the rates. he suggested that we do it in a fashion that would make the tax cut even more progressive which is something that the other side insisted that they have.

we offered a combination in which the spending reduction was more favorable to the democrats than any of the bipartisan commission set suggested, and we offered a plan that would allow us to modestly exceed the goal that was created for the committee in the legislation. nevertheless, the democrats said no. they needed a trillion dollar tax increase, that is what they were interested in. we were not interested in doing that kind of damage to the economy. there are a number of reasons, and over time, additional reasons may occur to me. at the moment, one of the fundamental reasons, i think is that there was an asymmetry of incentive. the republicans had a very powerful incentive. six of us wanted to. it grows from a sense that we all have of the urgency of this

crisis. i don't think we have a great deal of time to hope that the markets will continue to lend money to a government pursuing an unsustainable fiscal policy. i can tell you from republican conference meetings, i've been present for almost a year, virtually every single time we meet, this topic comes up. there is a very strong sense of urgency on the part of republicans and beyond. there is also a very serious concern that the alternative to the super committee's success, the sequestration of funds heads the defense budget way too hard. there are a lot of republicans very concerned about that and created an incentive for us to try to find an agreement. on the other side, there were forces pulling the democrats away from an agreement. we have a presidential campaign on the idea that the president

is running against a do-nothing congress. never mind half of the congress is controlled by democrats. that is the fundamental message of his campaign and of the committee had come to a great bipartisan agreement that could pass both houses, it would rather model the message. in addition, let's face it. many of the democrats have long hoped to cut the defense budget. that is exactly what happens and the sequestration. there is a segment of the caucus that finds the alternative perfectly acceptable. i think we have all seen the mood in the country on the part of the far left, anyway, that productive people need to be punished with a big tax increase. that voice was present. there were some democrats on the committee that i think definitely wanted to accomplish something.

i just think they found it impossible to bring -- in a break from the left wing of their own caucus. it is clear what we need to do, maximizing economic growth. lead to focus on transforming the big drivers of our deficits into a sustainable fashion. i will have to vote soon. >> formats. >> i think the big questions here, the size of government and the role of government, the questions that divided us that some level will await another election cycle for further clarity and guidance from the voters. there are some things that we need to do. we absolutely need to stick to the $1.20 trillion in spending cuts, i think it is important that they be reconfigured so that they don't land

disproportionately on the defense budget. the second thing is that he ought to accept that maybe we can't persuade our democratic friends to reform the tax code, but let's move to a territorial system. let's close some of the egregious loopholes like the ethanol features that we voted successfully on in the senate. on the spending side, if we cannot agree, let's take the individual items for which there really ought to be brought a bipartisan consensus reducing corporate welfare and even asking federal employees to contribute a little bit more for the retirement benefits. these are things that both sides ought to be able to agree on. if there is a silver lining, perhaps it is that we discovered, or for some of us rediscovered a great deal of places where we can have very

substantial savings for taxpayers. let's do what we can. [applause] >> we are all governed by somebody else's schedule. think you for being with us and will afford to welcoming you back to continue this dialogue. gentlemen, we stand adjourned. [captioning performed by

national captioning institute] [captions copyright national cable satellite corp. 2011] >> tuesday's white house briefing focused on president obama's effort to extend the tax cut spir. they joined for about 20 minutes. another 40 seconds. any more stragglers? ok. no, i mean that in the best possible way. >> good afternoon, ladies and gentlemen. thank you for being here. i apologize for the delay this afternoon. i have with me the president's chairman -- or rather the chairman of the president's council of economic advisers alan krueger, recently confirmed by the senate.

he is here to discuss with you the economic importance of the payroll tax cut, extending and expanding it into next year, as well as the importance it has had to our economy and to 160 million americans this year. so what i would like to do is have him go at the top, for you to address whatever questions you have on the policy issues to him. you may have some political questions, which are more appropriately directed towards me, i will remain here to take them for you -- from you, rather. and then i will let alan go back to his important and difficult work, and then i will remain to take questions on other subjects. with that, i give you alan krueger. >> thanks, jay. i thought i'd say a few words about how the economy is doing and the importance of extending and expanding the payroll tax cut. this is a critical time for the economy, and i think it's a time where the economy can use

more medicine to strengthen and sustain the recovery. as you know, a year ago the congress passed and the president signed a 2- percentage-point reduction in the payroll tax. that tax cut has provided important support for the economy, especially at a time when the economy was hit with some shocks such as rising gasoline prices and supply-side shocks from the earthquake in japan, problems in europe. the president has proposed expanding the payroll tax cut to 3.1 percent on the employee side, as well as cutting payroll taxes for employers, focusing the payroll tax cut for employers on small businesses and businesses that are expanding. i think the economic argument for these proposals is quite compelling. i think across the spectrum of

economists you would find support for applying this type of medicine to the economy now. the economy has been recovering, we've had nine quarters of growth. but the pace of growth has been moderate. we still have a great many underutilized resources. unemployment rate is still 9 percent. we still have underutilized factories and resources. fundamentally, the economy is facing weak aggregate demand. that's economist-speak for not enough spending in the economy. and i think you can trace the reasons for the weak demand directly to the problems that caused the economic crisis, families borrowed too much in the run-up to the crisis -- they're now paying down debt, we had a severe bubble in the housing market, and residential construction has been quite flat in the recovery -- really

unprecedented to have a recovery where residential construction has not been increasing. and then on top of that, state and local governments, which retained employees when they were getting support from the recovery act, have been laying off workers. so i think those are the reasons why the recovery has not been stronger, and at the same time, i think it's important to provide insurance for the economy against further shocks, possible shocks down the road. if the payroll tax is not extended, then the typical family with $50,000 in earnings would face a $1,000 tax increase starting in january. what the president has proposed is extending that tax cut and expanding it so the typical family would have about a $1,500 tax cut, and as i mentioned, other components in the jobs act, the employer side,

tax cuts, as well as extending unemployment benefits. so, with that, i'm happy to take some questions. >> ben feller. >> thank you very much. are you asserting that the extension of the cut would actually make the economy better, or are you just saying that allowing it to expire would make the economy worse? >> i think both are true. the president proposed extending and expanding the tax cut, so the beneficial effect that we saw from the last round would be larger. i also think that the tax cuts on the employer side are particularly well designed. the cbo has concluded that the type of incremental payroll tax that the president has proposed has pretty high bang for the buck, compared to other things that could be done to strengthen the economy. and if the tax cut expires, as i said, that will be a $1,000 increase in taxes for the typical family, which would be a drag on economic growth going forward.

and you can see economists from across the spectrum who have noted that this could pose a severe drag for growth going forward if it's allowed to expire. >> but if it's extended at the same level, which is something that the hill has talked about, 2 percent, that wouldn't actually do anything to increase demand, increase spending. i mean, people are already getting that cut. >> well, compared to letting it expire, it certainly would support the economy. >> in terms of unemployment insurance, the extension that we just -- because that's the other part the president seems to be talking about -- failure to extend that, would that have a similar effect on aggregate demand?

>> if you look at cbo's list -- i think they looked at 11 different policies that are currently being considered -- extending unemployment benefits, they concluded, had the biggest effect on the economy per dollar spent. and the unemployed tend to have a very high propensity to spend their benefits, because they pay bills and little income coming in, running down savings. so i think extending unemployment benefits as well would help to support the recovery going forward. >> matt. >> senate majority leader reid has said -- has warned that the failure to extend the tax -- the payroll tax cuts could push the u.s. economy into recession, some independent economists say the same. do you agree or disagree with that? >> i think what's clear is that extending the payroll tax cut will strengthen the recovery. without it, it will be a drag on economic growth. the forecasts, if you look at private sector forecasts, are for fairly moderate growth, perhaps not strong enough to bring down unemployment without the extension of the payroll tax cut, which is why the president proposed extending it and expanding it. >> enough to cause a recession or not? >> what i can say, from looking at the evidence, is that this is

the medicine that we can use in the near term to help strengthen the recovery and to help to provide insurance against shocks that might be coming. >> and you mentioned the problems in europe, obviously the eurozone debt problems. how much of a drag on the u.s.economy and on gdp growth do you expect for the rest of this year as well as for next year? >> a number of economists have pointed out that the problems in the eurozone are a potential threat to the u.s.economy and economies worldwide through both financial channels and through our exports -- about 20 percent of our exports go to europe. i think if one looks at the potential problems for economic growth coming from europe, it even strengthens the argument for strengthening our own demand here at home. the payroll tax cut is i think an extremely sensible way of doing that. so, looking around at the developments in the world i

think helps to strengthen the argument for the president's proposal. >> jake. >> given that the payroll tax goes to the social security trust fund, are you not concerned at all, a, that this will have an effect possibly on the solvency of the social security trust fund? and also, b, why do this every year? what you're calling for -- what the president is calling for, the tax increase will just be delayed until january 2013. why not just do a whole structural change so that we don't have to have this same conversation every year? >> well, on your first question, i don't think this jeopardizes the social security trust fund or the solvency of social security. the trust fund is made whole by general revenues. the social security chief actuary has stated that this does not affect the solvency of social security. moreover, the president proposed a way to pay for the extension and expansion of the payroll tax cut as well as the other components of the american

jobs act, so over the 10-year period, the budget would be held neutral with respect to these cuts. on the second question, looking at the pace of recovery, looking at the threats that we face today, i think it's critical that we extend the payroll tax cut and expand it. down the road, we expect that the economy will be stronger and that the natural process of recovery takes over -- >> in 2013, do you expect? >> let me just say that recovery has been more sluggish than one might expect coming out of a recession because of the nature of the problems that created the crisis -- because consumers built up so much debt that they're working their way down, because of problems in the housing market. we're seeing the economy heal, it's just not healing fast enough.

so these measures would help to sustain the recovery and, down the road, such measures won't be necessary. >> can i just do a quick follow- up? i'm sorry. it seems the language that many in the white house and the administration are using about whether or not the payroll tax cut extension would be paid for is shifting a little bit in terms of how important it is that the pay-for is actually passed in combination with the extension. would the president sign legislation that extended the payroll tax cut if it weren't paid for? >> the president proposed a way to do this and a way to pay for it. the senate democrats came up with an alternative way to pay for it, which the president has said that he could support. i think both of those approaches are sensible approaches. and i think what we need to do is look for a way to extend the

proposal -- extend the tax cut, which makes economic sense. >> norah, and then mara. >> it appears the joint tax committee has said that about a third of small businesses would be taxed additionally if you have the pay-for -- the so- called "millionaires tax." wouldn't that be hurtful to the economy, that pay-for, in terms of it hurting small businesses in that way by taxing them additionally to pay for this? >> the tax on incomes above a million dollars a year i think would hit very few small businesses. the vast majority -- one figure i saw was 99 percent of individuals with small business income would not be affected by this. so the vast majority of employers would be unaffected by what was proposed to pay for the payroll tax extension. >> mara. >> mitch mcconnell has said that you're proposing to put a permanent tax on millionaires in exchange for this temporary tax cut. what would be the effect of the

surtax on millionaires, the economic effect? >> well, the way to analyze economic effect is to say, when does the tax cut take effect? when does the tax increase to pay for it take effect? those are not at the same time. the tax cut would be immediate. it would be for virtually all working families, focused on families with moderate incomes. so then look at what's the marginal propensity to spend out of income for the different groups that are affected by the tax cut and the way that it's paid for. the families that would be affected by the tax cut tend to have a higher marginal propensity to spend, which would provide more support for the economy right away. those in upper-income groups with incomes above a million dollars a year tend to have a lower marginal propensity to consume. so i think if you're thinking about how is this going to

affect the economy in the short run and the long run, this is the right fiscal path for strengthening the economy now and ensuring that it's done in a fiscally responsible way. >> and can you just clarify something? you said it would be a $1,000 tax increase if this isn't passed, but it would be a $1,500 tax cut if it is. how can that be? >> the question is what baselines you use. so if you compare the status quo, if the payroll tax cut is not extended, that would mean starting in january an increase in payroll taxes for virtually all workers of 2 percent. for a family earning $1,000 -- earning $50,000, that equates to a $1,000 tax increase. what the president has proposed is extending and expanding the payroll tax cut, so the 3. 1 percent compared to if it's allowed to expire. >> let's do ed, then laura. >> can i just ask -- the president wants to extend unemployment benefits. you did a study a few months ago suggesting the longer people are out of work the less time they end up spending looking for work.

so how does that square with trying to give people more benefits and stay unemployed longer? >> and i hope you've read the study. >> not the entire -- >> that's all right. >> it was written about extensively. >> so there's a lot of research on the effect of extended unemployment benefits, unemployment benefits more generally. i think there's a fair amount of consensus in the economics profession that there are tradeoffs involved, that particularly if you look at normal times when we're close to full employment, that higher benefits or extended benefits do have some effect on search activity. that effect is greatly reduced now when we have over four job seekers for every vacancy. the effect of any individual

perhaps taking more time to find a job that's suitable for him or her is going to have less effect when there are other job seekers available for those positions. that's on the one hand. on the other hand, another effect of unemployment benefits is that it provides critical income support for families when they're going through a very difficult time. i mentioned earlier that the unemployed tend to have a high marginal propensity to spend out of benefits that they receive to pay for their mortgages, and that helps to prevent foreclosures, and pay for food and so on, which supports the economy more generally. the cbo, when it looked at this and weighed these different factors, came to the conclusion, which i think is a sensible conclusion, that extending unemployment benefits provides the biggest bang for the buck in terms of strengthening consumption in the economy and creating jobs, taking all of those factors into account. >> laura. >> thank you.

i want to follow up on jake's question, which was whether the white house would accept a payroll tax cut or the ui extension without it being paid for. you mentioned that the president had a proposal and the senate democrats have a proposal and that they both make sense, but i think what i'd like to know is whether it would be okay to do it without either one of those and just -- would that be one acceptable outcome, given the economics involved? >> i don't want to go into what might happen when the senate still hasn't voted on the bill that senator casey has proposed, they're going to vote on that later this week. i can tell you that from my perspective, and i believe from the administration's perspective, doing this in a way that makes economic sense is the way to proceed. and i'm sure that the president would consider whether it's a sensible economic strategy going forward. but i think it's first important that the senate consider the legislation that's before it, which does pay for this with a way that the senate democrats have proposed. >> and some would say that it makes economic sense to -- in a recession to have some upfront spending, even if it does increase the deficit long term.

would you agree with that? >> you know, i would need to look at what the proposals are and wait until that point. but hopefully jay can have me back. >> i'll definitely have you back. >> that was what -- so you don't have -- >> well we're not going to -- >> in a perfect world, you don't -- i mean, does it make sense in this economy to actually find a pay-for for this? >> i don't want to go into specifics about what kind of -- finding a pay-for. some pay-fors make sense, some don't. all i can tell you is, i think at this point the right fiscal path for the country is to try to support the economy in the

short run, and to do it in a fiscally responsible way, which is over a period of, say, a 10- year window -- which is common -- to have it be paid for. that's what the president has proposed. >> but you're open to not -- >> let's just do -- >> you're open to not paying for it? >> let me just take it. i think i've gotten this, alan's now gotten it three times. we're not going to speculate about what might happen if senate republicans do not hear the call of the vast majority of the american people to vote in favor of extending and expanding the payroll tax cut, and paying for it in a way that is entirely economically responsible and broadly supported by the american people, americans of all political persuasion. so that vote hasn't happened yet. we certainly hope that enough senators vote for it, that it will then move to the house, pass there, and be signed into law by the president. it would certainly be nice if a simple majority of senators were allowed to vote on this, pass it and send it to the president -- send it to the house and the president's desk. we certainly know that a vast

majority of the american people support it. so we're not going to speculate about endgames if certain things do or don't happen in the senate. i got a couple more for alan because i have a hard out for me. >> knew there was a reason you wanted me. >> mark. yes. >> can i ask you about the national debt? it topped $15 trillion a couple of weeks ago, and it's now bearing down on 100 percent of gdp. does that worry you? >> i think it's very important that we get on a sustainable fiscal path. i think it's also important we measure the debt in the right way, looking at net debt held by the public. but hold that aside. the president has proposed -- in september gave a proposal to the super committee or joint committee of congress to help put us on a fiscally sustainable path. and i think that as we strengthen the economy in the short run, we need to do two things at once, we need to strengthen the economy in the short run, and we need to return to a fiscally sustainable path. >> if congress just extends it at the 2 percent, would that lower the unemployment rate next year? >> i think if you look at independent estimates from across the spectrum, they would predict that extending the

payroll tax cut or expanding it would lead to stronger economic growth and more employment than would otherwise be the case. >> but just the extension, just the 2 percent, that would lower the unemployment rate? >> i think that that would create more jobs compared to the situation if it's not extended. >> what would that do to the actual rate? i'm sorry. >> if you compare it to what the unemployment rate would be if it were not extended, i think because we would have more job growth by extending it, all else equal, it would lead to a lower unemployment rate. but the important thing is to compare it to how does it affect economic growth, how does it affect job growth, compared to extending it versus not extending it. >> let me do one more. >> to follow on that then, would the white house consider, regardless of the pay-for, simply extending the payroll tax cut without an expansion? i haven't heard that. >> i'm going to rewind what jay said.

>> yes. >> the senate is considering a bill later this week, which has a way to pay for it. the president proposed a way to pay for it. and we're open to economically sensible ways of trying to strengthen the economy and do it in a fiscally responsible way. president obama is expected to urge congress to extend the payroll tax cuts. afterward, he travels to new york city. in a few moments, barney frank of massachusetts talks with reporters about his decision not to run for reelection. and less than an hour, and look at tax policy and deficit reduction in a debate that includes grover norquist.

>> the newly designed web site has 11 video choices. it has new features like a three network layouts seeking quickly skirled they're all the programs scheduled on the program and receive an e-mail alert. there is a section access our most serious programs. a handy channel finder seek and find out where to watch our networks and cable or satellite systems. >> barney frank says he will not seek reelection. he spoke with reporters tuesday afternoon for a little less than an hour.

>> this is the topic of my retirement. i have decided tentatively but i will make this my last term. a couple of reasons. i spent 40 years in office. i have been doing my political work since october 1967.

as i mentioned yesterday, probably it is time for the longest trailing unwritten ph.d. thesis. we have trials and other issues. we lucked out. at the part huambo's the house, i change my mind.

my commitment to a couple of issues ran in there. one is to try to protect financial reform. the other is to make sure that it is a military spending come upon them. i have a personal preference of retiring and going on to do different things. i do not look forward to a life -- i look forward to a life of less stress and probably more

money. writing, etc. when the redistricting came out, it would be very time consuming. i decided to run again to maximize my ability to work on the deficit reduction and defending financial reform. these are complicated. i confronted a situation where people would be moved to the district i was representing. that is a lot of people. it would mean campaigning pretty much full time in this new district. if they are new people. i do not have automatic votes.

i have become one of the great fund-raisers in congress. only have of it was for me. i decided to run because that was important for me. it would not make a difference of five is running again. i have the situation where i would be running again instead giving me credibility for these issues.

i was running despite my personal preference. i decided not to run. i decided i will volunteer. papers.uck by today's this is not the equivalent to being great. he did not appear to have a broad political base. it was before he moved to pennsylvania. it is announced his thinking about moving back from

pennsylvania to run. it is easier for them. my problem was i was alone again cited work on these issues. there is no way i could campaign. i clearly will be running for one more term. i will not be here when i am 75. two months before my 75th birthday. that means i'll be running for one more term. peoplere talking about you represented, i remembered you work required to go to 325,000 people. some i have never been involved with. why don't you lme? -- like me?

at the end of 2014 i will dump them. problems are not often solve their. i would of had a hard time asking people to give it to me for one short term. i decided there was one factor that was there. i do not intend to leave the advocacy of public policy. i thought i was pretty good at the inside. unfortunately, four-letter reasons, this is not work as well as they used to. being good does not mean as much in terms of policy. i will be spending an increasing

amount of my time on the outside. given the values i have, i will try to change the nature of the structure. it to be more productive. that is where we are. now i will take questions. >> many people call you a pioneer. is that how you describe yourself? >> i was the shortest person to volunteer. in number of members of congress had been caught in sexual activity that would have led people to infer they were gay. all of them were too drunk to remember what they were doing. that is an unusual description.

i was the first of knowledge being gay. i was not the daring young men on a flying trip. we did a number of things together. >> he said he did not intend to leave the public policy. do you find yourself to be advocating a ta? >> yes but i intend to spend my time writing and lecturing. i would maybe be doing some college teaching.

>> t think it is well on the way piecemeal? >> the most significant is this. they try to dismantle its. it is an interesting conflict. there are worrying about the republican primary election. -- they are worrying about the republican primary election. they have to take issue with the. they will catch you filling this out. they looked dead issues.

they said which one should do concentrate on? there are 13 issues. that reform was not one of them. the republicans have not advanced any major appeal. the danger is that they will interfere with this. they are announcing this. secondly, the failure. it is outrageous. you are criticizing them for not doing more.

i intend to keep this up. the biggest danger right now is the failure to do it. countries. knowing that now, what kind of collateral are you using? -- it has't been paid been paid back. the money has been paid back. the fed has been unfairly demonized. we did amend it.

he is being accused of not ending too big to fail. there are articles that we have to pry. we put into law that any transaction between the federal reserve will have to be made public. we do not want to affect the market. at some point it will be made public. >> un not do do anything differently -- you would not do anything differently in the course of the program?

>> i am sorry to disappoint you. i am in favor of what we did. at the time, but i believe the saidal reserve' disinflationary will be does proven. >> you said newt gingrich tended to use a reward. >> it would be a reward. >> can you expand on why you think it would be unlikely and why it would be a reward?

>> i do not think i would get what i wanted. to be skeptical, i get what i really want. i am not an expert in the process. i channeled my grandmother. it just seemed to me given the narrow difficulties and the other issues, he was fined by the house of representatives. i guess. i'm not an expert. mitt romney is being so strong, and that is part of newt gingrich's problem.

>> would you expand a little bit on the systemic issues? what would you do if you had the power to reshape? >> several years i hope that obama would get elected and we would have for years under zero obama's presidency. we would establish the programs. that would be my idea, that we would be able to establish its. it did not work out. rental housing has been my major goal.

we cannot do that. we would administer programs that would not exist. separately, having thought about it more, up to the systemic changes, there needs to be a source on the filibuster. if you read the constitution, not only is the filibuster not in it, the constitution in seven places say you need two votes to do something. it is the existence of the exception. if this is a shopping on

sunday, it shows this. you need 2/3 votes. it means they're supposed to be the majority. it used to be the filibuster. it was when the biggest changes spirit it is political. -- it is one of the biggest changes. it is political. fheyid are in england, the boa they vote for the house of commons, they are leader on thursday. that is all.

in america, you have three elections. this was a deliberate choice not to let anyone there. it is really functional. what you have is maybe you have to go back to the civil war. you have people who are really at odds with each other. >> do you tend to endorse anany candidate? >> a lot of friends are in support of running in primaries. if it turned out that there was

a democratic runner that i greatly disagreed with and a republican and one i really agree with, that is a. >> i was referring to the house democratic services. >> that comes after me. i am not a butcher in the democratic caucus -- voter in the democratic caucus. >> is ranting about the banking issue that you did not know going in -- is there anything about the banking industry that you did not going in that surprised you? >> the extent to which there is activity unrelated to the real economy. the intermediaries between people with lot of money in the people who want to use it.

i was struck by the extent of this activity. it is not essential or helpful to the economy. >> you will be on the pieces of legislation that you have been fighting for. can you talked about why this is the case stacks? >> the only way to undo a based on gender identity [unintelligible] people don't realize how rarely we have had that. we have this for the perce two years under bill clinton. -- first two years under bill

clinton. we had a couple of things done in in 1993. this is very important. we got a recommendation the get asylum for your sexual orientation. the next chance that was during the past two years. we have several things on the agenda. we got to appeal the do not ask cannot tell bill. there was a crowded agenda. the education and labor committee was already focused on health care. there is this issue of inclusion. i am pleased to say i did not show a way to break through

that. there were friends here concerned with the dimensions of that. the legislature pushed a bill that there they had one based on gender identity. it does not include public and identification. that model was in massachusetts. if you have trouble passing a bill in massachusetts, why do think it is easier if you throw in the south carolina and wyoming? i am hopeful that the next time we have a democratic president you have that, too. given the polarization on that issue, it was overwhelming.

it to be the next time you get a democratic house and senate. >> there is a chance depending on what happens in the elections that they could be as few as 01 openly lgbt member of congress. what is your view of the importance of this? >> it is the most personal form of governance. we are all dealing with each other. there is no hierarchy. they're not blind to fire anybody. personal factors mean a lot. voting in the abstract is one thing.

i think if you believe that we should be finishing the fight against sexual discrimination, it is important to have people who are transgendered or lesbian. >> he said that one of your main goals is to protect it. willoughby harder for democrats to protected? >> not necessarily. the easiest chance you get to strangle something is there. once it was fully implemented, two things will be relative. some say the problem is uncertainty. you do not want to see changes

they will repeal and change it. i believe the fears about a dozen people have are exaggerated. adobe and another year. it to be much harder for people to get rid of it. >> how much to as seniority matter when it comes to chairmanship and things like that? seniority is a very rebuttable presumption. legislating is so personal. i would say you start with

seniority and it should not take an enormous amount for people to say no. >> [inaudible] >> i am not aware of any other chairman that have retired. >> a couple of retired before they got beat. >> it is a constant thing. if you look at it, it is continuity. eight is a factor. what could you possibly do? i was interviewing to be 60 minutes per center something.

these are different networks. i think it is constant. i do not think there's any qualitative change going on. i know this was nonsense. henry waxman did not have any problem. there is no great generational change going on. there has been some renewed talk about whether or not it remains inside this and whether you look for new laws guiding personal investments. do you think the current laws

are adequate? >> it was overwhelmingly in massachusetts municipal bonds. the agency is unfairly braid them as if they would fail sometimes. i check them out. there is no harm doing it. i came out to spencer and ask that we have immense -- movement. inside the trading, they came

inside the trading session. much fault of the basis of it is for this choice. i think would have to be rejected. in 2008, there were investments that could've been made. told everyone to go to, you go to your atm. i was surprised anybody was doing it. we ought to make it illegal. >> you have worked on legislation to make it legal to gamble over the internet. how important is that to you in the tiny have left? i think it is one to win. i'm willing to write an article. i have friends to engage in this censorship of gambling.

they do not like it. wey'll be disappointed if did get casino gambling. i do not understand it. this is why i am for it. it is an important issue to me. that indicated that it is interesting getting up to nevada. the co-sponsors are joe biden -- joe barton. i think there's a good chance of something will happen. >> [inaudible] what is your stance on chairman max baucus's stance? >> i would not want to detracted

of from the republicans. it is sort of a self the filling arguments. give them enough money. i think it should be largely public. at one point, the committee adopted it. everyone said that is not a good idea. i'm not in favor of this. i would not detract from a public regulatory responsibility. >> do you have any response on the handling of the global collapse? do think congress should get involved? >> it shows the importance of fully funding its. people who voted not to fund

its who then criticizing it are really being terribly hypocritical. remember the global stuff was going on contemporaneously while adopting the rules. two years and now if they're given the ability to function in the legislation is implemented, it would be much less likely [inaudible] [no audio] i am interested in looking at the extent to which the legislation would be relative. >> can you discuss why you decided to co-sponsor the independent panama adviser? >> i think we should not cut back on medical payments for a couple of reasons.

i know how to make medical care more efficient. i think pain for decent medical care is an important thing to do. these arbitrary cuts i am skeptical of. i was and how tragic it is that republicans [inaudible] he is a very smart and dedicated guy. it is the way to make things more efficient. people show me this. i worry about the setbacks. these are a great sense of employment for the people. the east are cutting back, you have people at 2:00 in the morning will be affected.

i am very skeptical about spending more money on medical care. a lot of people say when i am healthy i will economize. that is the same reason. we are paying. we are going to be less quick to say it has gone into inflation. >> what if any changes would you make to dodd-frank nellum? >> a couple of changes been, not

very many significant ones. we overdid the exemption to the sec. the trust account. affiliateing at the issue is one. it was possible, the new powers should not have had to wait. people did not anticipate that. >> what is your theory given the are in virtual lockstep opposition -- some with health care. >> it is popular. there were three big issues. of the three reform as popular.

i do not see a bumper sticker that said regulate derivatives. and health care and the environment. the answer is financial reform. there is too much regulation. it is not popular. >> is there anything at democrats can do? >> the democrats in the senate did their best. it will do better. the republican subcommittee is better than the republican subcommittee on the cftc. yes. it is about -- this is the

issue. i have not met an audience anywhere that felt it was a good idea. we have to keep talking about it. there is a platform to talk about that. there is way too much cynicism. there is a great inconsistency between the way i react to a redistricting.

can you explain that i act different now? i would have thought that the fact i was under explains my career choice. it is -- here is one of the problems we have. there is a problem of excessive- ism. this is not good news and it is news and people tend to look. . the situation is this. i'm told there are people who were frustrated we do not

compromise more and want us to compromise. their large numbers there. i wish the had telephones and e- mail. they're holding themselves incommunicado. when you get the specific issues you hear from people on either side. the most active people, people who communicate with members of congress live in parallel universes. the right is on fox news and some of these talk show people. it is not that had different opinions. we had this old saying. you are entitled to your opinion. activists have their own facts. they do not have a common source of information. when you compromise the thought you had given too much. you could have been a bartender.

everyone they talk to is for it. >> what advice would you give to congress? >> prodi depends on who gets elected. there is a lot of the people back there. they do not want to be effective in the sense of improving lorton and government. i would say to people, do not take all the activists at their word. when they tell you how do you

compromise, you have to call their bluff on some issues. that i think is a major thing to do. not to be as influenced by that. and recognize there are people out there who are not sending in those e-mails and appealed to them. >> republicans are calling your retirement as you conceding you would not get your 20-year chairmanship back. i confident you would have? >> that the democrats would win the house? >> i do not know. i have said to some of you. in all would give you a straight answer. it depends.

if we're settling differences then it is ready for that. the answer is not yet out there. i think it is wide open. i will be honest with you. in personal terms, i am almost -- i would have a hard time taking on the chairmanship a year from now. because of this. i think we may get the majority back. i do not think we will have the unusual circumstances we had of having enough senators to almost break the filibuster. i do not think in either house you have workable majorities. it is possible we will get a democratic majority but i do not think you get a workable majority for the next two years

in the house and senate. >> being there were redistricting issues are you confident the democrats will hold onto your seat? >> i am confident they will take it. i did notice they are announcing their thinking about running because i am out of there. which is a concession. i have run for office 20 times. five of them were times when i was the underdog or there was uncertainty. i did not think i was going to win. i think -- it goes back to what i was saying. in massachusetts, there was one candidate who i think in massachusetts was as unpopular

as newt gingrich. he went out of massachusetts very unpopular. he was especially unpopular because of the things he did. the democrats were good to hold the seat. >> are you endorsing someone to be the ranking member? >> anything is possible. >> what is your view of the european situation? how dangerous are we now? >> the situation -- we were doing very well. and then a greek crisis hit. that knocked america back.

we have been suffering. we did a better job and the european crisis has held us back. if there was a disaster in europe. we believe there will prepared to do with this unless everything falls apart. [inaudible] a form of collateral collapses. if there is a terrible cataclysms it will have an effect. praxis and -- anything that the u.s. can be doing? >> they are doing everything possible. >> what else do you think i

could have done? the answer is no. i do not know what i could have done. you given the situation. the mortgage crisis was caused by the subprime mortgage crisis. >> when did that happen? i did not become chairman until 2007. the bad subprime loans were made around the turn of the century. i was in the minority. i was not in charge of anything until 2007. in 2004 with regard to subprime loans, i was slow to see the crisis. in 2000 far and five -- 2004 and 2005 -- we try to get legislation to stop the bad

subprime loans. [inaudible] in 2007 is when i became chairman. the first thing was to begin the process of adopting the bill. could i have done more? no. a became chairman in january 2007. the first order of business of the committee was to pass the regulations for fannie and freddie which the bush administration like and what wound up -- i do not regret not been able to do something when i was in the minority. i did not have anybody to do it. to my surprise, michael steele

said, frank was wrong. he forgot the democrats took over in 1996 and had a majority in 2002 which is of course delusional. he was wrong. the answer is no. i did not become chairman in 2007 and as soon as i did, -- what could i have done? [inaudible] tom delay gave an order. that ended it. there was in 2005. george bush gave the one figure sloot and that was the end of it. so that is where we're at. we did pass the bill.

to block the subprime loans. we were denounced by the "wall street journal." and interfering with these loans which were good for poor people. the blockage of bad subprime loans was part of financial reform. the kind of loans cannot be made any more legally. thank you. >> a look at tax policy and

deficit reduction in a debate that includes our request, the head of the group americans for tax reform. in an hour, a town hall meeting with steny hoyer of maryland. later, republican senator pat toomey, a member of the joint of as a redemption committee. part of today's white house briefing focusing on president obama's efforts to extend payroll tax cuts. >> a couple of live events to tell you about coming up tomorrow on c-span3. a hearing on state taxation of online shopping. in 1992 the supreme court ruled retailers would -- with no physical presence in the state did not have to collect sales taxes. at 2:30 p.m., the senate commerce committee considers to nominations.

>> when i look at why a country does well or does not, it is the values thing. it is not natural resources. these are crucial value is. do you believe the future can be different than the present and do you believe you can control your future? these are not universal. some places they have it and some places they do not. we have an exaggerated sense of how much control we have but it is good for us. >> your questions for david brooks. he will take your calls, e- mails, and tweets on a variety of topics including his porsche, bohemians. his -- his bourgeois bohemians. on "book tv" on cspan2. >> a debate on deficit reduction with or request.

and ross douthat. this is about an hour. we're here for a debate. i think tonight's event is a timely event as we hear much discussion in washington about tax policy and budget policy. i want to be clear about the

fact underlying the american enterprise institute. we strive not to chase headlines but to develop policy ideas, to make feature headlines. this event is timely. i do not want anyone to think that we put this together in haste after all the headlines that have been surrounding this topic. the discussions date back to june -- july. >> august. >> no. jul indeed. prior to the debt limit debate, and the construction of the super khomeni, the failure of the super khomeni and prior to senator kerry calling grover norquist the 13th member. that always confused me because if there were 13 members, there probably would have been a deal. let me brief played just set up the topic in terms of budget and

economic perspective. i will introduce our speakers and we will be on our way after i review the rules. just the city of what the landscape looked like. the deficit last year ran 9% of u.s. gdp or $1.30 trillion in a single year. under a continuation of current policy, the deficit is expected to hover near 4% of gdp over the following decade as it trends downward and things will get worse as that time progresses. federal tax revenues in the last fiscal year were 15% of gdp which is relatively low by historical record. it is scheduled to climb under current law to 21% of gdp by the year 2021. under a plausible alternative baseline proposal described by the cbo, the deficit could

reach $11 trillion. one thing we know from budget projections is they are highly uncertain. failure to extend the 2001 and 2003 tax cuts along with an amt patch would mean tax increases of $4 trillion in the next decade. at the other 80 or so expiring tax provisions and the tax increase would be approximately $760 billion on top. looking at the long term, the cbo projects if tax revenues remain stable new 18%, and spending is now reduced, the debt to gdp ratio would explode to near 190% of our economy's kendle production by 2035. this is about the budget.

taxes and spending. even now our discussion is about the tax pledge. not the deficit pledge. let me focus on the taxpayer pledge and i will call up the first slide here which is the text of the pledge. pares ied to the tax player will oppose any and all efforts to increase the marginal income- tax rates for individuals and our businesses and oppose any net reduction or elimination of deductions and credits unless matched dollar for dollar by further reducing tax rates. this pledge was created in 1986 and today, 238 members of the house, 41 senators and a majority of the ways and means committee have signed. only six house republicans have not signed and to correct house

democrats have signed. clearly this is a pledge that has had significant influence in the political and legislative process since it was first established in 1986. turning to the speakers we have, let me introduce them. grover is the head of a well known taxpayer group. atr is the organizing of the taxpayer protection pledge. in addition his not having a sense of humor. he placed third in the, the fund-raiser's washington's finest celebrity last year. last year?

second? that was two years ago. our research indicates the next washington's funniest celebrity event is tomorrow. are you in participating? ross joined "the mere *" and was the senior editor at "the atlantic's." is the author of two books and he has a third book under way. as well as being the film critic for the national review. i think he is an excellent writer and perhaps we will find out if he can make a funny joke. here are the rules. it's of our produce events will

be allotted five minutes to make an opening statement. after that there will be allotted five minutes to make rebuttals. that will take us about 20 minutes into the game. we will turn to the q&a. there will be questions from the audience as well as questions from twitter. if you are joining us and want to participate to submit your questions. you need a hash tag and that is here. i think we have a slide. . grover norquist it's the first five minutes. there is a bill that will bring which means stop talking. thank you very much.

>> when midgets play miniature golf, and do they now? taxpayer protection pledge was founded, written in 1986 and the purpose of it was to help us pass the tax reform that because people worry the tax reform would be a trojan horse for a tax increase. reagan was on one side and said i will veto a tax increase. we have quite a number of centers to make that commitment and going into the 1986 election, we elected 100 republicans in the house. in 1988, all republican candidates signed the taxpayer protection pledge which this is a written pledge that by a cabinet or elected official

saying to the american people that i will not raise your taxes. no net tax increase. they do a number of foolish things but they will not raise your taxes. bush took a pledge along with the other candidates except for dole. bill was expected to win in new hampshire. pete dupont offered him the pledge and said the rest of us have made this commitment not to raise taxes. he reacted as though he was a vampire and someone tossed across into is a lamp -- his lap and it did not work well and he lost new hampshire. bush was losing 17 points to michael dukakis until he said read my lips, no new taxes and he won by almost 10 points. that was going well until the 1990's. it would be ok to raise taxes and he believed them. he raised taxes and through where another successful

presidency, losing in 1992 because he raised taxes. there were other things going wrong. he had managed the collapse of the soviet union. pushing iraq at of eight -- kuwait. he had a successful presidency. then in 1994, because the republicans watch bush won by taking the pledge and lose, when he broke the pledge, people realized what the power of the pledge was and what the pledge does, it allows an elected official to credibly commit. he or she will not raise your taxes. politicians have been lying to people. if you let me take over your comments from the other berk, i will raise short taxes. or senator warner promised he would not raise taxes except he lied.

interestingly, warner would not sign the pledge. he always planned to lie and always planned to read the -- raise their taxes. it did not bother him. he would not sign it. asking people to sign it makes a difference. it slows them down. the other piece is the credibility was greatly increased. when bush took it, broken, and lost. because the american voter looks and says this congresswoman or searchers says he will not raise my taxes and he has put it in writing. the last guy who did that throughway approval of good demonstration, a good presidency. i think congress are senate would not take the pledge unless he meant to keep it. what the plans does, it allows you to credibly threaten not to

raise taxes and this has had tremendous impact. starting with 94, we got within the republican party and this is where we went from having it be an individual commitment to a party wide command. we will not raise your taxes and the people ran in 1904. they got up to the ivory soap percentages. they took the pledge and in 1994 we elected a majority who signed the pledge and we help -- have held ever since. this is allowed republicans to take the house and allows them to take the senate and allows them to take that house back. have republicans corporate with obama in having some need for some signs socialism on

government run health care. the republicans would not have one eye and tiny tim. it makes it easy for voters to vote for an individual candidate who makes a career of it but because we have all but six guys in the house, the hill this triggered did an interview where they asked the 14 men -- one of them said i need not sign trade and a generous stimuli -- everybody else said i will sign the pledge. it is because of some reason they have committed not to raise taxes. the pledge has helped people communicate accurately where they are on taxes and has changed the nature of the republican party and the success of the modern american party.

>> that five minutes is brutal. i will speak quickly. i will slow down during the q&a. thank you for having me. the case i hope to make today is the taxpayer pledge failed by its own standards. but but it has not proven itself an effective means of defending the long-term interests of the american taxpayer. i disagree with some of the details but grover makes an excellent case for its effectiveness and it has contributed to tax rates being somewhat lower. the american taxpayer is not liable but for the obligations of this government incurred yesterday and today and tomorrow. it is true that the growth that low tax rates and courage can enable us to roll over small deficits and live with a certain

amount of debt. even the most ardent supply center agrees that to spend is to tax. republican politicians have evaded that reality and the taxpayer protection pledge has done little or nothing to punish them for that. the result is visible in the statistics that were quoted. i will quote a couple. if you go back to the time when the pledge became a rite of passage for republican politicians, at that point, federal spending was $2 trillion. by 2008 before the obama spending kicked in it stood at three trillion. the debt held by the public was $1.70 trillion. $5 trillion. it did so during the gridlock years. if you are interested in reducing the government's claim

on the taxpayer you should vote for a pledge taking republican and a democrat on the other end. whenever republicans have had a working majority, spending has gone up. sometimes these increases are resisted but overall, the traces of republican politicians whose actions are fully consonant with a standard of taxpayer protections have steadily increased the long-term viability of the american people. by making lower taxes alone rather than smaller government in general but defining -- the litmus test, they created the problem that exists today. a government which cannot afford and a public that is conditioned that they can have entitlements. that combination has led some observers including the reagan biographer and a scholar to suggest a single-minded focus on

tax rates may increase garments spending. below taxes first approach allows americans to receive a dollar in government services were not paying 60 cents for it which is a great deal. you do not have to go all the way to that conclusion to be skeptical. you just have to recognize and has achieved the goals that grover has set out for us. we're no closer to his much cited " of a government small enough to drown in the bathtub. this is a system in which taxes are simpler, flatter, more visible and lower. in one goal, laurates has been achieved at the expense of the broader picture. the era of the pledge, the number of tax breaks and loopholes has increased by 86%. the assertions didn't feel like -- up from 4.2% in 1976.

as we saw last year, once those distortions are in it is impossible to move them. that is scored as a tax increase. there are two cases for a pledge and i have one minute left. one of them is all these difficulties are temporary. by holding the line on tax increases and branding the republicans as the party of no taxes, the pledge will deliver the kind of majority capable of cutting spending and cleaning up the tax cut without messy compromises.

even at that never runs the alternative is worse. you can never trust any deal the combined spending cuts and tax increases no matter how favorable it seems. the pledge is necessary to avoid the kind of failures in which taxes rose but spending did not go down as advertised. that is a stronger argument and i will explain later. >> i am used to this argument. the pledge has made it difficult to raise taxes and 1 republicans have had power taxes have not been raised. no republican has voted for an income-tax increase which is a good 20 years. we had one pledge taker and one

president, we went from 1993 when the democrats raised taxes to 2009, 16 years when the democrats raise taxes without a republican vote for the clinton and obama tax increases. 16 years without a tax increase happening. the idea that the tax pledge does not solve all the world's problems and does not solve the spending problem. without the pledge, without the commitment not to raise taxes, you never have a conversation about spending. as long as taxes are on the table, democrats will get a tax possibility and you saw this again in 1982. taxes are raised and not only

does spending not go down by $3, it went up rather than down, adjusting for inflation. the spending cuts disappeared and all that was left was taxes. bush was promised to dollars of spending cuts for every dollar of tax increases and it went out. tax increases are what elected officials do. rather than govern. rather than make decisions. it is clear we look at the state level. the pledge in california and the reason the governor cannot raise taxes is we have the republicans who have taken the pledge. but the reason they are closing a problem in pennsylvania, he took the pledge.

we dropped by an ohio. michigan wisconsiwas constant. the pledge takers at the state level have done a good job of taking the pledge and bringing spending down in a year there should have been the year of tax increases because of the end of the stimulus spending. subsidizing state and local government unionized employment. that ended last year. you did see tax increases in maryland, connecticut, and illinois. states run by d's. it put the the giant party within striking distance of getting the kind of control

unit. the republican party will run the house because of their no tax increase position and they got themselves elected. the pledge tickers and the tax issue helped elect state legislatures. i recommend barney frank. he would not walk away from power. he is walking around -- walking away from 10 years in the minority. we have a republican house. and now in the senate, 23 democrats are out. the 10 republicans are in fine shape for getting reelected. 23 are in republican trending states.

they are in safe districts. you aren't getting close to 60 votes in the senate as well as republican house. we play for the presidency. a president who commits not to raise taxes has a shot. a party that says we might or might not has no way to communicate to the independent non-aligned voters. republicans will trust their republican. talking about speaking to the voters, that is where the credibility of the pledge comes in and why in the effort to water it down, what if we had the party that was mostly not about raising your taxes? you might be able to sell that to someone from kansas. you cannot sell that to the independent voters. both in terms of building a republican party to a position where it can govern and making

it capable, the pledge has played a useful role. >> just to finish where i left off. the points that are raised about past deals are cautionary tales for conservatives. but it is not at all the case there has never been a successful fiscal consolidation in which small tax increases were traded for large spending cuts. exactly that template has been the model for most of the successful consolidations in the western world over 20 or 30 years. that is according to andrew biggs. the most successful retrenchment, one that took and tended to keep countries out of that spirals and so on, averaging 85% spending cuts to. that sounds like a victory.

if it sounds like a victory to you, it is worth considering that if you're -- european and canadian conservatives can hold their libeler -- liberal counterparts to those bargains, are we supposed to believe that america -- american conservatives are incapable of making a successful deal? it seemed not likely and saying that no conservative friendly deal is ever possible, is a council of despair given the nature of america's constitutional system. this tends to be biased toward compromises and conciliation and bargains that advancing slowly rather than achieving things sweepingly all once. i think as i said, the pentagon,

the scenario that he spends nights of oat. and there is good reason to think the position i and 2013 will be stronger than their republican side. there was reason enough to reject some of the dealmaking that was floated by the super committee and by speaker baier and obama. that republicans will achieve a letter of -- to achieve a durable 100% to 0 ratio. in dealing with the fiscal challenges. it is extremely politically unlikely. i came of age politically in the mid-1990's. i was supporting bob dole and if i could support him i must have

to bite the bullet. we hears similar promises. fault.ot art'tr's the collapse was not because the party failed to raise taxkes. -- takes. you cannot expect to achieve a kind of durable political settlement in which she never have to cut deals with the opposition party. if you take that attitude, you risk ending up the situation where the opposition party takes power and you get worse deals than you otherwise would have achieved and the risk for opponents of tax increases is that we have all kinds of tax increases that the federal level

scheduled to go into effect. it is possible mitt romney will be president but it is possible that barack obama will be president. this is something in every election cycle that conservatives have to keep in mind and the goal of conservative public policy is not merely designing pledges that stand the best chance of helping republicans win the next election. it is at achieving the best interests of the american taxpayer in times when democrats are in power as well as republicans. i would also -- grover overestimates the single issue impact of the tax pledge. if you go back because, there

are a host of factors at work. if you look at what independent voters think, if you look at the polling on these issues, there are political dangers in being perceived as a party that will never compromise on any tax increase and can see that in the debate over the debt ceiling limit. obama's poll numbers went down but republican members went down more. that knowledge explains why in the super committee negotiations republicans made an offer to the democrats that violated the taxpayer protection pledge. it improved the bargaining position and improve their standing. there you have it. >> thank you both. we have heard from both sides. turn to theto

audience participation portion. we will have written questions, cards are being handed out. if you want to ask, raise your hand. we have lots of hands up. the cards are coming around and we will collect them and i will read them as well. on twitter and again the hashtags is aei debates. well we do that let me throw out a couple of short, not so comfortable questions. it occurred to me while i was listening. a couple of random things. one is knowing now you know against where the world was in 1985 and how this process has evolved, would you have changed the wording?

it strikes me a little bit narrow. hah any changes you wish? >> the good news it is accepted by canada its. and has not been a challenge. you could raise taxes by broadening the base. that was the tax increase. it was damaging to the economy and made the '86 tax reform so much worse off. imagine how much better tax reform could have gotten in 1986 if we had not given away tens of billions in deductions and credits to the appropriators to spend.

the point of the pledges not simply to protect against tax increases. it protects, makes it possible for tax reform. whif you give away deductions ad credits to spend, when you get back to tax reform, you have nothing to do. the tax reform package is the best defense. they spend every dollar. the idea of what's raise taxes and we will not spend the money is a unicorn. >> he rassa dauphin -- referenced efforts in other parts of the world. is the pledge going global?

>> you have raised a lot of your remarks not between conservatives and liberals but between democrats and republicans and does that affect the ability to utilize more broadly? >> i put the pledge forward for anybody to use and i am happy when democrats make the commitment. it is not partisan accept one of the parties wants less taxes and the other wants to go in the other direction. it cannot have compromises. we passed the republicans -- the republicans passed the budget. republicans agreed to cut 2.5 trillion dollars. we did not get the six. we got a $2.50 trillion. we had taken tax increases off the table.

the previous two times we put tax increases on the table, no spending restraint. we have some examples. they do not cut spending, the increase. you take it off the table, we wrestled a powerful president to the ground. this idea of a partisan thing, i will use republican when i should say conservative or free market. during the lifetime of ronald reagan we moved away from the situation where the republican told you it was someone born north of the mason-dixon line and every fight was bipartisan. the liberal republicans and democrats would fight the conservatives. everything was bipartisan. everything was a compromise. nixon won a two increase spending and the compromise

between a lot and a real lot. we have two parties the reagan helped sort out where if you are for a limited government you are republican. there are no democrats that voted against tax increases. there are almost no republicans that voted against a tax increase. the parties are going in opposite directions and if someone wants to go east and west, there is a compromise. there is no compromise. what is a compromise? somebody wins, somebody loses. we won and lost. should we do this again? were you paying attention? the low tax the vaunted spending people had one. we took tax increases off the table.

>> i think, one point i would make. it is important to remember the historical context in which the blood was created. that made a stronger case for the pledge in the context we're living in. i agree with grover. and the transformation of american politics he describes has been a victory for conservatism. conservatives keep cutting taxes without cutting spending. the problem has blown up into a world historical challenge facing the u.s. over the next 15 or 20 years. is telling that grover started out doing battle with real

rockefeller republicans. now moderate republicans but liberal republicans. people who would be in the democratic party today. in that context, he was right. he drew important lines in the sand. it is telling he has moved to having fights where he is accusing tom coburn and pat toomey who are not liberals or moderates by any reasonable definition of being sellouts and rinos. the fact that people like coburn are responding to the reality of 25 or 30 years with a

republican approach to politics. the taxpayer pledge has not caught up. >> i did have handouts here and i want to make sure everyone gets them. it walks through the coburn, and how we had to work with the republican leadership and conservatives to get him surrounded and defeat his effort to get us to vote for a tax increase we could have had a boat to get rid of the ethanol mandate that coburn supports the ethanol mandate. the idea he is a free market dry, a critic of the mandate is not true. he said i am for the mandate. my bill will do nothing to stop the mandate. we had to walk through all this because he is trying to get the republicans to vote for a tax increase because his agenda was a $2 trillion tax increase which is what the simpson bowls people put forth.

the republicans in the senate and the guys in the house had to walk him back and feed him on the subject. it is unfortunate but he is not being a conservative. he was for government regulation and a tax increase. >> the landeta has been distributed. i have -- handout has been distributed. you can write and twitter. let me pull these together here. this is to grover. you claim the pledge is not between you and the legislators but between the voters and

legislators. you said that earlier. on issues like sales taxes to online retailers, you get to decide what is and is not a tax increase. does that not mean the pledge is to you and not to our routers? >> no. this is not usually a challenge. i wonder if this changes as the tax increases. those of you who live in washington, d.c. have seen the ads pulled out -- put out by the shopping center. pass the bill to tax online savings. people argue it is a tax increase, i do not have to step in and have a conversation. the advocates say it is a $23 billion tax increase. i presume they have done the math. >> i agree. >> i agree.