♪

["i am america" by krista branch plays]

mountain high enough"

by marvin gaye and tammy terrell plays]

>> herman cain talking to the supporters gathered in atlanta. he announced he is suspending his campaign" the republican presidential nomination. he spoke for about 20 minutes before saying he was going to suspend the campaign and talked about the recent allegations of a sexual affair having been a

distraction and said it has made it difficult for him to raise support. he played his ball in the polls and the allegations of sexual affair on the media. we have our phone lines open. if you are watching, the phone numbers are at the bottom of your screen. republicans, 202-585-3885. democrats, 202-585-3886. independent voters can call 202- 585-3887. some questioned even among senior aides up until the very last minute as to whether mr. kane would be staying in the race. his poll numbers have slipped since news of the sexual harassment claims came out, and recently, a woman in atlanta said she had had a 13-year affair with the potential republican candidate. in his remarks today, he called the accusations of the affair false and untrue, and he reinforced his bid for the nomination and rally supporters

in atlanta, but again, he is suspending his campaign. our first call comes from ohio on the republican line. what do you think about herman cain's announcement? caller: i am deeply saddened by him suspending the campaign. i did not believe the accusations. i did not believe there is enough proof, and i hope he goes in and does what he was saying on one of the other news shows to find out exactly where this is coming from, since he says that these are false. i have the following herman cain for the past few years and i like his ideas. i'm really sad and i really believe we have lost, as a country, a great opportunity in herman cain, to make a difference. i also believe that the democrat and republican parties do not like herman cain. to me, it is like the media kind of pushes us in the direction of who we should vote for --

caller: -- host: who do you think you will vote for now? caller: i hope he puts his support behind new gingrich because i think he can really change things. i was a democrat all my life. my first vote in 1976 in jakarta. i became a conservative republican, and now, i'm an independent because i think both parties have problems. mitt romney icy as a progressive republican, no different than barack obama or clinton or anything -- mitt romney i see as a progressive republican. people are looking for someone -- i am looking for someone different. someone who is a constitutionalist that will bring our country back to what the founding fathers created the country to be. host: banks. we're going to move to the west coast now, san diego, california. caller: thank you for taking my call. i like to say i'm pleased that herman cain has suspended his presidential campaign.

i think it is time that he actually removed himself from the stage. i think he was hurting the republican party, and i think that there are several other candidates that need to follow his example and also remove themselves from the stage. i think that the american people and the world are embarrassed by some of the things that are occurring in this republican party campaigned, and i think that they would do us all a favor by removing themselves and letting america become that shining city on the hill that they speak so highly up because they are embarrassing us as a country. host: you are calling on the democrats' line. are you supporting president obama in the presidential race? caller: i absolutely am supporting president obama in the 2012 election. i voted for president obama in 2008, and i have been amazed al

how little recognition that he has received from the media and the pundits for everything that he has done for this country since he has taken office. host: thanks. we're going to leave it there and go on to colorado on the independent line. what do you think of the announcement? caller: i'm deeply saddened, of course, that the media treated him that way. i got a chuckle out of your last caller, a democrat calling. i voted democrat most of my life and now an independent because of the situation going on in washington. herman cain had a good business sense. that is what our country needs. we have had 10 years of junk from george bush and obama. host: who will you support now? caller: not newt gingrich. god.

he is a permanent adulterer. probably mitt romney. at least he has not committed any adult tree -- adultery, and neither has herman cain, once he proves -- disproves the allegations. i do not know. i watched on c-span. many of these news outlets are a joke anymore. host: thanks. mr. kane was in the lead among gop presidential candidates, and the latest "des moines"register poll shows him with 8% support, down from 20% when the poll was originally taken. maryland, republican line. go ahead. caller: i'm a little disappointed about herman cain

suspending his campaign. i have been a supporter pretty much since i heard his name and looked at his opinions. i found very little that i did not agree with. i have been a republican all my life. this will be my first presidential election. i am only a college student. host: where will you put your support now that he is out of the race? caller: i am honestly considering ron hall. i do not agree with a lot of his positions, but i understand where he is coming from and can respect his views. host: thanks. if you missed herman cain's announcement today, we will be showing that tonight at 8:00 p.m. eastern time. you can also check it out on the c-span video library. let's go now to build in amarillo, texas, on the independent line. caller: i am ambivalent about all of the candidates, including the president. i would hope that at some point in time, people would realize

that we have to have limited terms. we truly must have limited terms if we are going to get this wild spending under control. people trying to buy votes all of the time. host: what do you think about the current field of republican candidates? anybody getting your support? caller: i guess if i had to pick one, somebody with a brain. newt gingrich, i suppose, somebody that has some sense. still, we need limited terms. throw all of them out and start over. all of them seem to -- everybody -- even local politicians think growth is good. continuous numerical gain of our species is not going to help. everybody wants a bigger this, a bigger city, bigger this -- bigger -- we have limited resources. limited water, limited fuel, limited other things. host: francs. we move on to the democrats' line in maryland. what do you think about the herman cain announcement? caller: he reminds me of george

wallace and his in stain stand against the integration of university of alabama -- his insane stand against the integration of university of alabama. it was not so much about integration as much as self aggrandize net and his need to be elevated. herman cain has no shame. he and newt gingrich have a lot in common. i'm afraid it gingrich might get the nomination and we will be stuck with someone like herman cain for a long time. he might win the election. who knows? host: we want to get in a couple more calls. we go to fill up in new york, new york, on the independent line. caller: i just wanted to say that i am very disappointed that herman cain has pulled out as i will hide miss his repetitive and redundant way of talking and his steady and bombastic tone. host: are you supporting anybody

else now that he is out? caller: yes, i plan on supporting a write-in candidate, who is actually dean moriarty for president. host: thank you. this will be our last call of the session. connecticut on the democrats' line. >> i wanted to say, sitting here watching this and thinking about the women that have come forward who seem to be credible and who have accused him of sexual and appropriateness, improprieties, and also the woman with the 13-year affair with all the documentation, including calls coming in at all hours of the day and night, monday being given to her for years, i wonder where their respect for women is in all this. i cannot believe women calling up and being in favor of this guy, bemoaning the fact that he

is leaving the race. where is the respect for women in this culture among republicans? host: we are going to leave it there in connecticut. thanks to all viewers who called in from around the country today on the news that herman cain is suspended his campaign. we will show you his announcement again tonight in a couple of hours at 8:00 p.m. eastern time. that is going to be here on c- span. you can check in at 5:00 p.m. pacific time. now, we are going to take a look at senator rob portman, a member of the joint deficit reduction committee appeared monday, he said that changes should be made to entitlement programs to get the economy on track. following his remarks, economics dollars and former white house officials discussed the next steps for deficit reduction. this will be about an hour and 45 minutes. >> it is so convenient to listen to c-span any time anywhere,

with the free c-span radio app. free streaming audio of c-span radio as well as all three c- span television networks. you can also listen to our original programs. c-span -- it is available wherever you are. find out more at c-span.org /radioapp. >> now to senator portman. monday, he said changes need to be made to entitlement programs to get the economy on track. following his remarks, economics scholars and former white house officials discussed the next steps for deficit reduction. we will take a look at the panel here. >> ok, now, we will look quickly

to our panel as our panelists move up. we assembled this panel to discuss where next for the super committee, in part because the failure of the super committee has been a very frustrating thing for a lot of people in the think tank community in washington in the sense that there was a moment where folks thought that maybe there was finally a chance that the right thing would happen. and then the super committee failed. yet, it is almost impossible to discern why. alex mentioned there's a lot of finger-pointing, but it is kind of like if you have a buddy who had a break up and you ask why and he says, "we just decided to be friends." there is more to it than that, but we cannot figure out what. both thinking about the politics of how to construct a committee so it can be successful and the economics of how to construct a plant so that everybody who is reasonable is convinced they should vote for it, we decided

to follow mr. portman pose a discussion with a discussion of our own -- mr. portman's discussion with a discussion of our own. we kick it off with the only analyst who knows any jokes. >> i intended to start with a story i have used in this room before but is a story that is even more fitting now, which takes place in medical school. the professor, using the socratic method says, cassette and the question of the day is what human organ, with appropriately stimulated, grows to eight times its normal size?" he calls on ms. simpson, who says she will not answer the question. he looks over to the other side of the question and ask mr. bowles, who says the people of a human eye when it enters a room.

the professor says that is right. and he has three things to say mr. sent -- you did not do your homework. you have a dirty mind. you are doomed to live a life of unfulfilled expectations. to anyone who deals with these kinds of issues, we are doomed to live lifetimes of unfulfilled expectations. in this case, i was not quite where alex was, but i was cautiously optimistic that we would get somewhere with the super committee. part of the reason was because rob portman was on it. rob has an unparalleled blend of experiences in his professional lifetime that includes starting working as either an intern or a lowly assistant to alan simpson on the immigration issue, but moving forward, of course, to being a member of a house known for his bipartisan efforts, to be in both budget director and trade representative before moving to the senate. he understands as well as

anybody that given the shakiness in europe, the troubles in the global economy, that we are no longer just playing with fire or even playing with live ammunition. we may be playing with atomic weapons in terms of the future. so there be an urgency to act and a recognition that as much as the super committee leaves many of us who believe in the regular order of the legislative process uneasy -- these extra and unusual actions are not really the way you would ideally like to go, but having the ability to take whatever you produce, brought forward for an up or down expedited vote with no filibusters, no delay tactics, and no amendments, was an unparalleled opportunity to get somewhere. i would offer a couple of reasons why. one, which rob alluded to right

at the end. i must admit, i was optimistic in part because the template is there. we know what the bipartisan template is, and i was not looking at $1.20 trillion or $550 billion. i was looking at the $4 trillion, which i believe is much easier to do then a smaller number. you put everything on the table, and we know that it basically is due $4 trillion in debt reduction with somewhere between $1 trillion and $1.50 trillion coming from revenues tied to tax reform that reduces rates and broadens the base and a substantial slice of what is left from reducing the growth of where the real budget increases will be, which is in the big entitlement programs. the template was there, but one reason it did not happen is they are templates. for all the enormous amount of work that the commissioners and

staff did and that the commissioners and that it and the six senators and their staff it, all of those are templates. they offer ideas. it turned out that in the four months, turning that into something concrete was really a heavy airlift then it might have been. i'm disappointed because i do not think they started for very long looking at the before moving beyond it, for the second reason, which is that we do have eight sharper division into tribal politics than i have seen in my 42 years here. that played out in side, much more than it did in these efforts outside. it is baffling, actually, in some ways that we could not move beyond it. but when i looked at the dueling op-ed's in the "washington post" yesterday, what it said to me

is -- and from what i know of the deliberations inside, you really did have democrats willing to go an extra mile or more on the entitlement front. when you look objectively at their proposals, they were somewhat to the right of simpson-bowles in terms of what they were willing to do. you could not get there on the tax front on the republican side. there is an imbalance there. on the part of the republican members of the committee, they said they could not do anything because democrats would not get off the $1 trillion on the tax increase front. it is $1 trillion on the tax increase brought for a $4 trillion overall deficit reduction package, that is just where all the other committees -- even a little bit less than where they would be. that is of the table from the beginning, you are not going to get very far. if you start to move from the $4

trillion, which requires very significant movement, especially on medicare, but you also got to include then social security and medicaid into the package, and you take the tax issue off the table, and then you start to look at what he can do on the $1.20 trillion front, which means most of it will have to come from discretionary spending, which has already taken hits over and over again, including the $900 billion that were part of the deal that led to the creation of the super committee. you are just not going to find it possible to do so. if you start to move down towards $600 billion or $550 billion, which will be seen by the public ratings agencies and others as not much better than a complete failure because you're taking just another tiny baby step, but you are taking off the table now some of the things that you could agree on, eliminating or reducing

significantly the possibility down the road of coming to that grand bargain. i think i would have been resistant to going in that direction as well. once they moved past the notion of going for gold, going for the grand bargain, which in this case, was not $4 trillion in what they would do but $3 trillion because we already had $900 billion done. and which could have been made much easier by using consensus, even if it is somewhat funny, and assumption of some of the savings from troop withdrawals from afghanistan and iraq to grease the skids a little bit more. it seemed to me it was doable, and it is tribal politics that are keeping us from getting there. while we're going to see some movement forward and there are some possibilities here. i'm a little uneasy about the notion that you are going to move forward with corporate tax reform. if you do this in individual pieces, you take away from the table pieces that make it

possible to make all the pieces fit together. it is harder politically than to do an overall deal, but you do have the possibility of broader tax reform and broadening the base and reducing rates if you can make adding revenues a part of that package, and you do have the ability then to reach into the entitlement areas. let me just make one last comment, which portman also alluded to a little bit -- we have a different dynamic as we move towards 2012. on the one hand, the next month will be an affirmation of how awful our politics are because we have not just all of these tax issues on the table right now that have to be dealt with one way or the other without creating more deleterious consequences from the payroll tax cut on forward. you also have the doc fix.

we do not feel once again with payments to doctors under medicare, they will drop by a substantial percentage, which would cause havoc among medicare recipients and across the board. doing that requires offsets, which are going to be very top in this environment, post- failure by the super committee. then, next year, we get to sequesters, which will be very uncomfortable for everybody. and the expiration of the tax cuts. to some degree, the dynamic of the shift and if obama holds to his firm commitment to keep the sequesters in place unless they reach a deal and to eliminate at least a sizable portion of those tax cuts, if you are talking about getting $800 billion in tax increases in 2013, coming from the over $250,000 group, with nothing in return, as compared to reaching a grand bargain where you get tax

reform and entitlement changes for it, i think you are going to see a recalculation on the part of the participants here about whether they want to come to the table and actually do something. >> thank you. before i go to andrew, suppose that the next president or the current president -- the start of the next administration, the president called you up and said, "i really believe -- mike economists have convinced me that i have to move on fiscal consolidation. what are the lessons from the super committee? should i have another super committee? should i not? am quite a political fall as a political scientist to try? -- and my political full as a political scientist to try?" >> the first thing i would say is in fact to move much closer

to operational lysing legislative language some amalgam of the best ideas of simpson- bowles, rinlen- domenici -- i would want to have something ready to go, and i would want to have something ready to go and propose another process. something like the super committee to make it happen. i would remind you that we actually had that when the president created the sense in bowls commission, he did not do it on his own. it was done because congress had a fast track commission process that they had put out there. it came up for a vote in the senate, again reflecting the tribal politics, seven original co-sponsors of the congressionally created committee voted against their own plan because they did not want to give the president what looked like a political victory.

that would have been much more effective. then a plan like simpson-bowles would have been brought up on the floor. i would want a package in operational terms ready to go and then a fast track process to make it happen. >> again, thinking about advice for the current administration if it repeats, or the next, is it not historical true that the president can take a leadership position on this because he has a large staff, all these guys that know how to score things and can do so in a way that is roughly consistent with what you would get out of joint tax and zero in the and has the administrative staff in more or less, you know, out of the game completely in the last couple of years? isn't that may be part of the problem? >> i do think -- the area where i fault obama the most here is a failure, especially at the state

of the union message a year ago, year-and-a-half ago, to embrace simpson-bowles at least in concept and move it forward to a legislative vote the use of resources to start to operationalize that. part of the reason i had cautious optimism about the super committee was you had the joint tax staff ready to roll and i think you can do tax reform fairly quickly if what you are doing is adopting some version of feldstein's putting a cap on reductions instead of going in and doing a lot of piecemeal efforts. all you need to do is look at combinations of rates and where you put that cash in terms of adjusted gross income with the revenue you need to raise. you can do that. the congressional budget office was ready to go if they had been able to come up with something fairly quickly, but we have operated with it not a whole hand behind our backs, at least several fingers of one hand in

terms of pushing a lot of this forward. a lot of that also represents what we have now in a toxic political environment. sadly, i do not think that the next election is going to somehow cause all of that to go away. i think it becomes harder. i would much rather see something done in 2012 because i think it becomes harder to do in 2013. >> thanks. now, i turn it over to enter, the resident scholar here. >> thanks. i share the disappointment in terms of how the super committee turned out because i thought it was a structure -- i thought for a long time i thought it was the structure most likely to lead to success. failure of it and the failure of other efforts over the past year or so have kind of made me reassess some of the things in my way of thinking about all of this. if you look back over the last several decades, you had -- liberals and conservatives,

democrats and republicans, had a means of living together because they could deficit spend. in effect, liberals could have big government and conservatives could pretend they did not have the government simply by virtue of the fact that they were not paying for it. the ability to borrow help you smooth over the ideological differences between the two parties. now, we are coming to a day of reckoning were you cannot do that anymore. the money is running out, so they are having to start to face reality and with each other in the eye and ask where we are. the reality is that the two political parties for the parties as represented in congress, have very different views about the proper role of the federal government and the size and scope and the activity of the federal government in terms of the economy and in terms of people's lives. there's always the perception this is just a failure to communicate and people need to get down in a room together. i think in part, people just disagree. i was on the staff of president bush's social security

commissioner in 2001 and at that point, there was a real effort to reach out to aarp and ask if we could cut a deal on these things. what i said to other folks there -- "you know that they disagree with you on this? it is not a question of ronald ron, this simply do things differently than you do and that will be really difficult to get around -- it is not a question of right or wrong." congressional democrat wants a more active role for government. lots of people around the world feel that way. there's nothing illegitimate about it. republicans look at the history of the united states and the size of government in the united states and say they want something more less consistent with that and that is their right as well and i think it explains a little bit the failure, the difficulty to come to agreement on this. conventional wisdom is we just split the difference, go to the/50 down the middle and that is how we should do it, but if you are somebody who is a democrat who really believes in the title with programs and

things these are really important contributions to society, even splitting it down the middle means a significant rating back of these programs or rating back of the vision you have the proper role of government. likewise, if you are a typical republican, you think the government is already spending too much. you what the size of government well below 18% of gdp. if you agree to a 50/50 reform, essentially, you are locking yourself into a government that is significantly larger and is likely to grow. it obviously was not likely the super committee was going to address the entire fiscal gap that we face. there's sort of a readjusting of bass lines that i think would be a little bit tricky to do. on a substantive basis, one of the reasons why i worry about the conventional splitting the difference approach is i'm not really sure it would work that well. kevin and in one of our colleagues did some work over the past year or so were we look

at different countries around the world and their efforts to balance their budgets and reduce their debt and asked which countries succeeded and which countries failed and what was the difference? what we found was the typical successful attempt to get on top of your budget problem was not 50% spending cuts, 50% tax increases. it was more like 85% spending cuts and 15% tax increases. the spending share of those successful physical consolidations rose, the bigger the does go back you had to solve -- the bigger the fiscal gap you had to solve. the question is whether there was any conceivable approach on the super committee that would fit into what we think would be good policies. it into something where we could say it is likely to succeed and lead to good outcomes down the road that would be likely to get support from a majority of the committee, and i'm not sure that that really existed.

you what your government to be able to walk and chew gum at the same time, to be able to do good politics in the sense of coming to agreement, but also good policy in the sense of something that will be actually successful in addressing the problems we face in terms of the budget and something that will not be of a deleterious affect -- effect on the economy, and i'm not sure that your been diagram of politics and policy really had an intersection on this case -- venn diagram of politics and policy. the of the things we need an election to decide this. an election would decide it, i think that would be great. as long as it decided it in the way i like, obviously. but the way our political structures work is that even if president obama is defeated and republicans retake the senate, which seems possible, then you shipped. democrats in the senate are now

in the mr.-making role republicans have been in and they will enjoy that role because they can stymie that progress, but we are more or less back where we started -- democrats are now in the mr. -- mischief-making role that republicans have been in. it is easy to sit down in congress is that and we need to get better people to run for office. people react to structures and incentives peer the structures we have with people learn to exploit more fully now, make it hard to get anything done. i took a quick look at data of other countries of the size of their fiscal gaps, the size of the long-term budget deficits base, countries with source a low political culture is -- with sort of similar political cultures to us, but the other anglo countries of canada, australia, and new zealand have much smaller fiscal gaps.

is this because they are better people than us? probably not. it is because they have structures that enable them to get on top of things. i think part of the problem we have of the increased division in congress between the parties, which becomes how the congressional districts are set up or you have increased use of the filibuster is making it harder to pass things -- those sorts of things make it really hard to get on top of these problems. i think it is -- an example i would give is when i started working over 10 years ago on social security, you go back 20 years ago, we knew that was a problem that needed to be fixed. it is a relatively straightforward problem from a technical point of view. we know and admit the longer you wait, the harder it gets. here we are 20 years later and it goes back to the same point that we were before except we have lost 20 years of a chance to make progress on things. there is something uniquely dysfunctional about how the

process is working that makes this very hard to get on top. i think lacking structural changes that make it easier for a majority to get policies through, we are going to kind of meander along on the things. part of what we need to do is to focus discussion and focused ideas and say that we have the choices to make going forward. it is not just a collection of we will do everything we were doing up until today, with all the retirement programs, but a little bit less of it. we will tax the same way we were doing before, which is raise rates a little bit. i think we need to make bigger and more fundamental questions about the sorts of things that the government is going to do, the sorts of benefits it is going to give, who it is going to give them to, how it is going to collect revenue and from home, and we need to start focusing on this bigger question is going forward. the downside is that politicians, much like teenagers, do not focus on a task until the night before it is due.

it would be nice to think your elected officials were more responsible in getting on top of these problems that a bunch of high schoolers, but eventually, they will have to focus on these things. they will have to say we did not have the opportunity to push it back any longer and to the decisions have to be made. the job for people in think tanks like we are is to talk to the public and tell them the choices they face a thing about where we are not just today but what kind of government and what role of government you want going forward. i think certainly over the next year or so, that is the challenge that people face, but it may extend longer than that. thank you. >> thanks. putting on my next president had again -- i'm not running, so do not worry, suppose i made the following argument to you. president obama tried to do it and it did not work out well for him. one thing he passed was the health care bill, and that was a political disaster. we have the $1.50 trillion

deficit, and we seem to be muddling along. why should i bother even trying? i have a three-year horizon? three years from now, i'm going to start running for reelection, and a think i can put it off for three years without causing a calamity. why should i do it now? what would you say? >> that is a rational consideration. there will always be some president or congress where you cannot put it off, but the reason why these things do not get address is because you can. if you want to get on top of it -- one, i was not a big fan of the health care reform, but i will certainly give the congressional democrats who backed it the credit that you have people who are willing to go on a bit of a kamikaze mission and say we are going to pass whatever you think will make things sustainable over the long term and recognize that you're going to take a political hit for it. you may lose your job or

whatever. i really do give democrats credit. a lot of them were willing to bite the bullet and just do it. partly, that is the way things were structured, but lacking people who have that sort of political death wish, it is very hard to get people focused on what needs to be done today rather than putting it off until tomorrow. >> democrats, presumably -- they had some things that they could put in their mind that they believed they could accomplish that were worth the risk. maybe it was getting uninsured people injured and so on that you could list some things. what would you tell -- if you wanted to convince the president to do it, what would you tell him he gets? what is the benefit he should be willing to bank his career on? >> both in the house and senate, republicans have largely gone on record, saying they support the right road map towards taxes -- the ryan road map. my guess is if that were passed

-- and i do not know the mechanics of congress well enough to say how easy it would be to do it through reconciliation or whatever, but my guess is if it were passed, you would have some blow back. some people will lose their seats, but a big majority of it will probably remain in place over the long term for the reason that it will be difficult to change, but people will also recognize that a lot of the things that were in there needed to be done, but were politically difficult to do. i suspect that the incentive is do you want to have a lasting political legacy over the next not four years but 10 or 20 years? and say just go for it. if yours later, you can go back to the private sector. >> thanks. now i turn it over to our friend bill from the brookings institution. >> thank you very much for having me. it is a pleasure to follow norm and andrew. this whole conversation reminds

me of the description of an optimist and pessimists as an optimist things that we live in the best of all worlds and a pessimist fears this is the case. i keep oscillate back and forth between optimism and pessimism as i hear people talk. i tried to organize my comments into six super commons. first is i seem to be the only person in the room that seems to be surprised that the super committee did not reach an agreement. i thought it was sort of general consensus when it was formed that they had a tough, uphill effort. i was not surprised at all that they did not reach an agreement, for several reasons. first, they did not have to. as andrew said, teenagers do not start their homework the night before -- until the night before it is due. nothing is too. the world did not change. therefore, they did not have to reach an agreement, so they did not. second of all, there were cuts that were already supposed to happen, even in the absence of

an agreement. i never understood why they would greet -- agreed to $1.20 trillion in specific cuts that they would then have to take heat for when there was already $1.20 trillion in general sequester cuts about to happen when they could say, cassette and we are sorry, but we did not specifically vote for that. third, the sequesters were not the right competition, at least to get republicans to the table. i said this in august when the debt deal was struck. the triggers have had tax increases in the, you would have got republicans to the table, and it would have talked, but the administration caved on what the sequesters should have looked like, just like it caved on the overall package in august. there was no real bargaining power to get republicans to talk about tax increases, and you heard that in portland -- portman's comments.

my second comment is nonetheless remarkable that they did not reach an agreement and one reason is the issue that norm mentioned. they had a direct line to an up or down vote with no points of order, no amendments, no funny business. i would have expected them to have attempted to retain the option somehow, even if they could not agree on something right now. the fact that they just let that go down the drain i think is kind of remarkable. but the other thing is, and it has not been commented on a, is, yes, they needed to cut $1.20 trillion, but they got to choose their baseline. they could do whatever they wanted to in terms of baseline. the could have had a base line that basically had no tax revenues in it or 50% of gdp in

tax revenues and cut that by $1.20 trillion, and they could have succeeded. the fact that they could choose their own baseline was remarkable. the differences in current policy and current law, for example, are about $5 trillion. $1 trillion on the defense drawdown and $4 trillion on tax cuts. i kind of felt like if you let me choose the baseline, i will give you whatever $1.20 trillion in cuts from the baseline. even being able to choose their own base line, $5 trillion they could not come up with $1.20 trillion in cuts. i do not want i will take my share of the blame. the fourth comment is a lot of questions about what happened.

i am an economist. there is a lot of stuff i do not understand. why did they set up the committee if they were not going to work hard to find a solution? why did they pass the opportunity for this vote with no amendments? why did they give up so publicly and easily? even in the nba, they filed a lawsuit and then they all come back to the table and reach an agreement. there was no dog and pony show about how they are working very hard. they just shut that is a little baffling to me. fifth, what does this mean for the gang of six? are they back in the leadership

position? if they are not, who is? maybe this is what progress looks like. in some ways, the discussion has come a long way. they did not reach an agreement. this is a hard issue. maybe this is what success looks like. it is an ugly and messy for a long time but maybe it is necessary to eventually reach a solution. the fifth point about the economics of all of this and the economic picture. as far as i can tell, not at all. there was a headline this week that said "with the deficit reduction committee's failure, fiscal policy is drifting in a

dangerous direction." i thought that headline was about 10 years too late. we have been drifting in a dangerous direction easily since 2001 in terms of cutting taxes and raising spending and before that in terms of the liabilities we have been setting up. we have been drifting in a dangerous way for a long time. this really does not change any of that. the real issue right now has to do with getting the economy going. as long as the economy is sticking around a trillion dollar output gap, it is going to be very, very difficult to balance the budget or come close to balancing the budget. what do we do going forward? if we do another committee,

other people have suggested this. maybe we should let each party takes some or all of the other party's delegates to the committee rather than having each party pick their own. the idea would be that that might get more people from the metal on both sides. some people are more difficult to work with than others. the second thing is the deficit issue is not like buying a new pc or an ipad. if you are not sure you want to buy a pc or and ipad, you just wait and it becomes technically better and less expensive. the quality of the solutions out there are not going to get any better over time. all of the real, big, major

ideas are out there. they have been tossed around. even something like the 9-9-9 plan is absolutely just a value- added tax and a sales tax put together. the menu is not going to get more attractive and waiting is not going to help us. the longer we wait, the harder the options become because we have a larger issue to solve in a shorter period of time. what is going to happen is people's feelings about the solutions will change. we will have to reach some agreement. i have lots more to say but i think being the last speaker i will stop. >> do you think that in some sense of the leadership at the

think tank's has felt a little bit because they could have done a better job to put stuff in legislative language and have really hard scores like what they were going to go over there? or is that beyond our means? i am not pointing any fingers, but do you think that is something that think tanks should invest in, going from the idea to handing people of the legislative language? >> you know, there -- i do not think that the lack of think tanks writing legislative language is holding back the process on th ehill. if we had unlimited resources, we could devote some stuff to that. i find alleges that the language is difficult to read.

you have to be a lawyer to understand a lot of the language or a longtime staffer. i do not know if that is at think tanks comparative advantage. i think they have been out there a lot putting out ideas and suggesting reforms. >> it seemed like both mr. portman and norm said that a hurdle this time around was they could not get everything scored in time and written up in time to act. >> kevin, i am not suggesting that think tanks -- the problem with each of these reports is there are ideas that have not been operational lies down to a specific level that you could turn into legislative language and score. thing they could take some of the best of those reports and flush them out to a point where

it then legislative council could turn them into language and the cbo could score them. just bring simpson-bowles to the floor and vote on it. you cannot do that because there is no bill, and there is no bill because a lot is if there is a paragraph idea of how you do something or guidelines that somebody is going to have to turn into specifics and that is too bad that a year later we have not moved in that direction. >> i want to emphasize -- to follow up what was said, to emphasize how big an issue that is. simpson-bowles does not really have a tax plan. if you eliminated all tax expenditures, you could do these rates. if it does not propose any of those. it has some other things in

there like government productivity rises every year. i do not know how you legislate that. it is simply not in legislative language. nonetheless, it was an accomplishment when they got that far then. there is a long way to go from that to legislative language. at some point, the legislators have to take responsibility. >> i think there may be a tax issue. if you are not allowed to weigh in on legislation, if you are writing the legislation -- if you are not involved in the social security end where a turnover scorer is very, very quickly. if it is still very labor- intensive to do.

you can get generalities on a variety of things. i think really nailing it down is pretty tough to do. >> we have a few minutes left from questions on the floor. we will start over here. try to make your statement in the form of a question if you can. >> rick. i think this whole debt deal was ridiculous, and most people agree. originally, boehner -- his main talking point was one for one. $1 of debt increase come up $1 of spending cuts. he said in a few times. over a few days, we learned that the $1 of cuts was over 10 years so what he really meant -- maybe he realized it was not

intentional, but it turned into a dollar of debt increase to 10 cents of spending cuts. anyone with common sense to have the time to watch what was going on knew this was going to go way off the rails and it did. they should have just parted with if you have a trillion dollar deficit for 2012, you should offer at least $300 billion worth of cuts. or 250. the american people would have supported that. instead of $1 trillion, but at least you get 250 of cuts rather than 25 billion. on the effective tax rates, the top 2% -- the conservative

messaging on tv is, to me, apathetic. fox news is not doing its job. >> can we move to a question? >> effective rates are 40% combined for the top 2%. they are 28% to approximately four federal and about 12% for state and local. never mentioned on tv. it is at least 12% for the top 2%. in addition, you have it in direct costs for the tax system and the legal system which is another 22% according to the cost of government data. the top 2% progressively incurring those costs as well. they are actually paying like 27%. you have a 67% cost out of

income for the top 2%. >> let's get a final sentence. >> what do you guys think of the conservative messaging on tv? do you think that the main information gets to the voters that they need to go to a voting booth to make an intelligent decision? >> i think i touched on this and little in my comments. they have to come to terms with what their ideologicals implay. republicans have gone through a in something like a ryan plan which still leaves some significant things out. if you want to address the fiscal gap and do it without

raising taxes, these are the sorts of things you have to do. medicaid and medicare are not going to look the way they are now in the future. i think folks on the left have to get to that stage as well. i think there is a lot that we still think you can have a european-size welfare state financed by an american- progressive-style income tax system. the idea there if you are going to have all of these very generous programs, if it is not just your top 1%, but the average guy in the street is going to have to pay more bang bang president obama says we have to raise taxes on millionaires and billionaires. in reality, he wants to raise taxes on households making more

than $250,000. from millionaires to billionaires, that is the hurdle they have to get over. i think both sides need to come to some reality. >> i cannot get past fox news is not doing its job. what is fox news' job? evidently we have heard what their job is here. like almost asked the question. the balanced budget amendment that every senate republican actually caps spending as a share of gdp not 18% but 18% of the previous year's gdp. it is actually 16.7% of gdp.

if you put that level down there and look at where we are heading in terms of demographics, and what portman was saying about taxes at an historical level, the fundamental reality is whatever we do with magic, with ryan's budget or not, we are not going to have a spending at 80% of gdp. in an ideal world, liberals and conservatives would agree that we would not want it to go to 40%, that maybe it should -- maybe we should try to stabilize it 24% of gdp but that is probably the best we are going to be able to do in the absence of some major change in immigration that president newt gingrich would be able to enforce and that is not likely to happen. if that is where we are, we need a very different kind of

conversation. not one that focuses on balanced budget amendment or artificial caps but on how you come to a better match that reduces the rate of growth of where real spending is. what rob said also is in reference to the discretionary spending since he was the budget director. almost all of which is a consequence of an economic collapse. if you look at discretionary domestic spending over the last 10 or 15 years, it is not rising at any considerable degree. we are now. back to a point where we should say we should be worrying about public safety, f, food safety, the centers for disease control, and the like. that is a conversation that we ought to be having whether that is conservative or liberal messaging. we are not in the round now

where wgovernment is going to go and how to develop a match that works, a match of revenues that you can lend with a much better tax system and fundamental changes in the rate of growth of untied and the programs that take into account the changes and demographics but that also understand that you are going to have to change the growth pattern. >> did you want to add something? >> thanks. andrew, i want to come back to two things that you said i think. the first is that there is this fundamental difference, a philosophical difference, between republicans and democrats on what the role of government ought to be.

i am struck by the fact that it seems to me that if there is anything that recent history tells us is that the real issue is not between republicans and democrats. the incumbplicans gave us two unfunded wars. ronald reagan talked a lot about reducing the size of government and never gave it another thought during his administration. fair game. the second thing that you talk about is -- i think you said we need new structures in order to be able to get on top of these key strategic issues. i am wondering if you could articulate a little bit what kind of structures are you talking about that might allow that to happen? >> you have a point.

there is a self-selection problem where anybody who runs for congress or goes into government often thinks -- implicitly thinks there are good things that the government can do so you get a little bit of that: on. in terms of structures, -- i am not a political scientist. i personally think the filibuster in the senate should be gotten rid of. this is my personal view which is informed of very little other than what i have said here. i tend to think at the state level, redistricting done for members of congress. i just do not think that is a particularly healthy thing because it tends to make -- it pushes out the center to either side. i am sure there are others i

have thought about. i tend to think in parliament. governments, the party that can generate a majority as a lot of power for a certain period of time. at the end of that time, they have done what they think they can do and they are responsible for. the division between different branches of government, people with veto power, it is hard to accomplish something. so the voter is not clear about what people want to end who is responsible. i think it leads to difficult -- the founding fathers were fed up with this thing. i tend to think it is more power for majorities in congress to get done what they need to do. the fact that we had this

commission at all is a tacit admission that congress cannot handle these things. congress cannot do what congress does because these entitlement programs are going to be the majority of what the government does now and pass it off to someone else. the commission has a lot of members of congress involved where you have the ability to get an up or down vote on the floor. you have some sort of a ticking clock that gives them some sense to do something, and still it did not work. the sort of thing that i would have proposed and did not work. that is where i am. >> not defense discretionary spending dropped in the first few years in the reagan administration. after that, it started to grow from the lowercase. i just did a retrospective on

the bush legacy for a national review and looked back at stuff that i was writing back in the early 2000's for the magazine and bush's first three budget years where the three biggest spending increases in u.s. history. the other two were during world war ii. they had the farm bill from haiti, a big increase in defense spending, and medicare part d. maybe this is a disagreement. part of the problem is the first half of the bush administration, he did what he was accused of doing with the tax issue. he talked like a republican but covered like a democrat. texas, of all places, 10% by year under gov. bush. i think part of the problem that we have gotten here is there is

almost like a denial about how much spending has gone up. if we stuck to a clinton baseline, we would probably be in a surplus right now. any more questions? thank you very much, everybody. >> i want to recognize bill in the audience who is a great american hero. unfortunately, out of congress now. >> thank you cannot bill, for your service. thank you all for coming. [captioning performed by national captioning institute] [captions copyright national cable satellite corp. 2011] >> ohio republican senator robert portman said on monday that changes must be made to end

at a man programs to get the economy on track. following his remarks, economic scholars and former officials discuss the next steps for deficit reduction. this is an hour and 45 minutes. >> welcome to the american car enterprise institute. today i have the pleasure of kicking off a two-sport event, consisting of a keynote it reviewed address, falling by a panel discussion -- consisting of a keynote address. let me just make a brief remark and set the stage in the wake of the super committee s termination. when i think about the super committee, i think on one hand, it was much like any congressional conference committee, a limited number of members appointed by the their leadership from the house and senate to forge a compromise between chambers and report back to both chambers of product

that is neither amendable in the house or on the senate for. on the other hand, the super committee was a truly unique structure. unlike simpson-bowles, it was constructed in an even in a bipartisan manner and required only a simple majority to act. the expedited procedures for the floor consideration and the sequestration mechanism further facilitate the process and further encourage the committee to work. from the start, i was both a proponent of the super committee and a believer that it would succeed. my best guess was $600 billion in deficit reductions in the first decade. i believe that i was right to believe in the mechanism, but clearly i was wrong in my hopes for positive outcome. since the announcement by the cochairs last week that the super committee would not make any recommendations, the air and washington has been filled with the degree of finger- pointing. that is neither an unexpected

nor inappropriate, in my view. the super committee had a great opportunity to steer the federal government towards a sustainable fiscal path, and its failure brings consequences. taxpayers deserve an explanation. we also need to look forward, to continue to examine the evidence and the options and debate what political considerations, what does let the mechanisms, and what type of leadership is necessary to address our fiscal challenge. a trust will hear about all this this afternoon. i first met senator portman in january 2002. at the time, i was the newest hire to the house ways and means committee, and he was a six-term member of congress and a member of the budget committee. at the time, his most recent accomplishment had been a series of critical reforms to the tax code to encourage retirement savings. those provisions were a key component of the 2001 tax cuts, and the only portion of that

act that was later made a permanent law. in those 10 years, i have had two jobs, that one in this one. rob portman has bounced around a bit more. after serving in the house, he was the u.s. trade representative in 2005, 2006, director of office of management and budget in 2006 and 2007. now the serbs the citizens ohio in the united states senate. his concerns and interests are for the whole country. i can tell you from personal experience, he constantly seeks out the latest economic research in pursuit of any policy that will reduce our unemployment rate, accelerate our rate of growth, and improve the standard of living for all americans. i have always appreciated the opportunity to work with senator portman and glad to welcome him here to aei today. he will speak for about 30 minutes and take questions for about 10 minutes after that. then we will immediately transition to a panel discussion that will include kevin hassett, andrew biggs, and norman ornstein.

[applause] >> alex will made the mistake of showing me years ago that he knew his way around, not only on policy but also on politics, which is a dangerous and rare combination. alex, i will tell you today that i expect you to continue to give me guidance and advice. i also want to thank other friends at aei. kevin, norm, and arthur brooks, i continue to want to seek your help and guidance. mark has provided me a lot of guidance. he has had a lot of late nights

over the last several months. alex mentioned by four months on the so-called super committee, which in fact, i found to be not so super much of the time. but it was incredibly important experience to have, because through it, we learned a lot about how we can move forward, even though the super committee was not successful. one positive aspect was i got an avalanche of good ideas. at the start of the process, i set up on my website a forum for zero violins to give us ideas on deficit-reduction. -- a forum for ohioans to give us ideas on deficit reduction. a lot of good, common sense ideas, including changing unemployment in a bid to incentivize hiring, reforming fannie mae and freddie mac, a

tax credit for seniors to continue working and choose to forgo medicare and social security. as you can see, these were good, substantial ideas, some of which we were able to work into the process. my favorite idea may have been from john in cincinnati. his idea was that the united states should merge with canada. it is interesting, because i told john when i responded to him that we better do it quickly, because prime minister harbor is about to cut canada's already low corporate tax rate to 15%. we may be losing some business their unless we do that. what i would like to do today is talk a little about some of these ideas and enter into a dialogue of what comes next after the super committee. first, i think it is helpful to remind ourselves why the committee was formed in the first place. as alex talked-about, there is a a divide in washington that

is reflective of the divide in the country. the super committee was born of a recognition of that divided government and different philosophies, but also by the fact that our fiscal and economic challenges are too urgent not to address. the committee was set up with special expedited procedures where we could provide to the house and senate on a majority vote basis rather than the normal super majority in the senate, a product that was voted on without amendment. i was asked to join the committee by our leadership, not something that i saw, but when asked, i accepted, and i did so knowing it would be very tough to come to consensus. thought it would be like having

a root canal, but to critical not to try. we just cannot wait for someone else. we cannot wait for the next president or the next congress. we needed act and we need to act now. the urgency is particularly profound because of what has happened over the last few years. policies this administration has followed, it has made the problem even more urgent because they have accelerated the potential for an economic and fiscal train wreck. our current tax burden cannot generate the revenues needed. only four years ago, back in 2007, we had almost a balanced budget.

when i left the office of management and budget in 2007, that fiscal year, the budget deficit was hundred -- 1 under $61 billion, about one eighth of today's deficit, representing about 1.2% of the economy. a major difference was that discretionary spending and non- emergency, aniline corporate spending of congress was 17% lower than it is clear 2007 that it is today. there has been a big spike in terms of spending. the subsequent recession has led to reduced revenue, no question about it. and president is spending expanded the size and scope of government. in a few short years, this administration has now presided

over a 21% increase in the growth of government and has taken some spending to levels we have not seen since world war two. the president seems intent on doubling down on his policies. ignoring the recommendations of is on debt reduction commission, the president proposed $1.60 trillion in new taxes and no serious structural reform to bring saw institute are troubled entitlement programs. instead, he asked the super committee to handle even more spending. he proposed a four hundred $47 billion new stimulus bill, his so-called jobs plan, and ask the super committee to handle an additional four hundred -- $400 billion reduction.

despite the absence of presidential leadership on trying to make our job easier, and counter to what you met her from others, i do believe that my democratic and republican colleagues on the committee worked with seriousness of purpose and in good faith. i think members tried to come up with a sensible solution. in the end, the samples of all differences that have paralyzed congress also prevented the committee of 12 from coming to an agreement. the failure of this process is profoundly disappointing, as i said earlier. it also left the even more determined to forge ahead on the twin challenges of our time, building the economic and fiscal policies necessary to unleash the job creation potential of the american economy, and to restore our nation's long-term fiscal health. these challenges are not going away. even though the committee is gone, the challenges remain.

in my view, only with a growing economy and a larger tax base, are we going to turn back the tide of record deficits and huge cut deficits we face. at the same time, failing to address our national fiscal crisis makes it tough to get that economy moving. it only weakens our economy and erodes our competitiveness in the world. saying we can tackle either our financial crisis, which is borne out by the $15 trillion debt that we had reported just two weeks ago, or we can address the economic slump will find ourselves in, to me, it is a false choice. we have to do both. the mounting debt is a drag on job creation. one have probably heard about is a 2008 study.

they have met with us to talk about their research and how they came up with their conclusions. they have shown that once the country's debt burden reaches 90% of the economy, you have a significant downturn in economic growth. they say is 1%-2% reduction in gdp. as i calculated, and two decades, that would leave one fit that -- our economy one- fifth smaller than it would otherwise be. if we don't get our public debt to gdp ratio, which is now at 100%, we will continue to create about a million fewer jobs annually. the pressure of the annual deficit condemn it does have an impact that has to be knowledge, as well as the longer-term generational tissues

that represents -- that it represents. but let's be clear. we have primarily a long-term spending problem. that is our number one issue. this cannot revenue problem. even if we kept the current tax rates in place, meaning that taxes will not go up a year and a month from now, as they are scheduled to do, revenues are still expected to rebound above the historical average of 18%, based on the nonpartisan congressional budget analysis. even if you assume that all the so-called bush tax cuts which are scheduled to expire at the end of next year continue, we still have revenue as a percent of gdp just above the historical average. if the tax cuts are allowed to expire as scheduled, then revenues by 2014 would top 20% of gdp. the deficit is rising in large

part because of tough economic times, but also because of federal spending. historically, it has jumped to 24% of the economy this year. without changes, based on cbo projections, it will rise to 30, 40, and 50% of the economy over the coming decades. you have heard those pushing for higher taxes appeal to the need for balanced approach. the basic philosophy is 0 give you a dollar in spending cuts if you give me a dollar in new taxes. i think this misses the big picture. it would upset a far more fundamental balance in our country. that is the balance between the federal government and a free and our economy. more space for government means less space for individual americans to enjoy the rewards of hard work, industry, and innovation. a massive tax increase would

lead to less growth, diminished wages, and fewer jobs. even large tax increases just cannot keep up with are dangerous levels of spending. some of you know glenn hubbard. he recently calculated that accommodating the president's spending plan would require across-the-board tax increases of 20% over the next decade and 60% over the next 25 years. that would probably make my most aggressive democratic counterparts in the super committee blush. it does not mean we should leave our tax system along. it is broken. what sticks, it can help put together our economy and raise more revenue for growth. second, we need to be sure we are modernizing our entitlement programs. we need modernization of these

important programs that otherwise are unsustainable. third, we need savings through government-wide spending reforms. on the tax front, as an alternative to proposals from committee democrats for one trillion dollars and more in new revenue over the next 10 years, you could produce a more tax -- efficient tax system while yielding new revenues. this money would be brazed by scaling back exemptions and itemized deductions for the top two brackets, while at the same time lowering marginal tax breaks. the work of prof. marty feldstein help includes this proposal. the outcome would be to reinvest all of the savings from reducing preferences into broadening the base, lowering rates in order to create jobs and economic analysis on that is clear. we are willing to can see that

some static tax revenue for the sake of entitlement savings will avoid the risk of call largest tax increase in american history year from now. we've saw tax certainty. rogers and small business owners are well aware that a year and a month -- on to printers and small-business owners are aware that car. our aim is to provide certainty with regard to -- to lower marginal rates to create jobs. we were not successful in that effort, because most democrats were not prepared to work in that framework. i believe it provides a way forward. all is not lost all on the pro- growth front to a i am a strong advocate of tax reform, including individual tax reform.

there is an accepted consensus that lower rates are critical to our competitiveness. during our deliberations, the new york times quoted an anonymous republican staffer saying portman is the most gung- ho for tax reform. he is the chihuahua in the room, constantly yapping about it. i don't know if that was a compliment. as part of our committee deliberations, my colleagues and i from both sides of the auto collaborated to put together a conceptual corporate tax reform proposal. cohen pleased to announce today that i will soon introduce pro- growth corporate tax reform that is revenue neutral, that lowers the rate to 25%, and that moves us to a territorial tax system. i hope we will have co-sponsors from both sides of the aisle.

as you know, with the exception of japan, the u.s. now has the highest corporate tax rate in the developed world. on average, 39.2% combined a federal and state rate. over the last 20 years, every one of the major foreign competitors we have has moved to cut rates. 20 years ago, the average among the developed countries was 39%. today it is 0.5%. the united states alone has fail to act to make its corporate tax system more competitive, and we are paying for it. paradoxically, despite our higher corporate tax rate, could weaken that -- collect less tax part of gdp than other countries. we have a hard time attracting new investment. this translates into fewer jobs created. some have criticized our current system as allowing a big

u.s. companies to pay little or no taxes. this base broadening reform we are talking about wants to ensure that all guns -- companies pay taxes through more efficient tax code that will create more jobs. american workers are paying the price in more ways than one. economic studies have shown that the burden of high corporate rate falls mostly on labor. cbo has reported that 7% of corporate tax freshen is borne by workers in the form of lower wages. it's no wonder that policy makers across the spectrum, the obama administration, chairman max baucus of the finance committee, the bowles-simpson committee, have also cited the need for us to overhaul our corporate tax code. chairman camp has begun a series process to do that in the ways and means committee. our proposal brings the rate down from 30% to 25% some, reducing inefficiencies, preferences, and exemptions. we have an estimate from the

joint tax committee showing you can do it on a deficit neutral basis. the current tax code penalizes companies are reinvesting province that earn overseas back here at home. our tax code gives firms a towards between keeping those -- keeping it abroad are paying a steep tax bill if they choose to bring money home. our proposal would fix this by moving to a territorial tax system. this means it would tax income where it is generated, as the vast majority of our competitors do. we will empower u.s. corporations to compete and win customers in foreign markets across the world. it was incredibly important to get the united states back to

breaking down barriers. it is time to eliminate this tax driven, competitive disadvantage of our own making. corporate tax reform a central core of economic growth and job creation. 2005, the joint committee on taxation, which is known to be skeptical of dynamic scoring, reported reductions in corporate marginal rates have the greatest effect on long-term growth. by lowering rates and giving to territorial system, we can do something big and something permanent at a critical time we need to strengthen our economy and create more jobs. at a time when we also need help to reduce the deficit for growth revenues. entitlement modernization -- you have to address social security, medicare, and

medicaid. long-term policy in common, along with interest on the debt, is projected to squeeze out the cost of every other federal program within a couple of decades, leaving little or nothing for other government properties. take medicare. it is projected to spend over six trillion dollars during the next decade. there is a perception that all medicare benefits or refunded for payroll taxes, and therefore should not be reformed. an example of a typical two- income couple retiring today, coupled with income of $50,000 or more. they will have paid about $119,000 in lifetime medicare taxes, yet will receive $357,000 in medicare benefits. or $3 in benefits for every dollar collected. the of structural reforms and a transition to a consumer driven system, medicare as we know it is simply not sustainable.

some democrats including the white house press secretary a couple of days ago, and senator chuck schumer, have noted that i gave democrats within the super committee credit for putting in, reforms on the table. i did. and i think it is good that they put entitlements on the table, because america's future depends on both republicans and democrats coming together to address the issue. what senator schumer and the white house press secretary failed to mention conveniently was that i also said that only did so in the context of huge new tax increases of over a trillion dollars over the next decade. but it is critical for us to come together to address the entitlement crisis. part of the reason we have a crisis is that congress long ago chose to put these programs on autopilot. in other words, the united states chose, and it is the only country in the world i can

find not to have a budget for these entitlement programs. so when you look around the world, other countries, even countries that have very generous programs, have a bucket for health care, for instance. the united states does not. we set eligibility and benefits guidelines and then write a check. social security is budgeted similarly. so we should not be surprised when the autopilot comes through automatically. there is a debate, a spirited discussion as to what our priorities are. at the end of the day, there are boats, and along with that comes accountability. with regard -- at the end of the day, there are votes. there is no mechanism to budget for the cost to make those trade-offs among competing priorities.

a bipartisan coalition has endorsed putting social security, medicare, and medicaid on a long-term budget, and then having congress keep those programs on the budget or to face the consequences, which would be certain reforms built into the system. this would provide much-needed oversight and accountability for these rapidly expanding programs. i intend to introduce legislation along those lines. in an era of trillion dollar deficits, the american people cannot afford more blank check without accountability. the third point of deficit- reduction consists of non entitlement federal spending. i continue to support the cap, tax, and balance legislation. in my time as omb director, i became more convinced it was necessary for washington have been due to have the discipline of a balanced budget, just as the vast majority of our states.

until the balanced budget can be enacted, my view is that congress has to prove its mettle as a responsible steward of taxpayer dollars, including attacking waste, duplication, and obsolete spending on the discretionary budget, to earn the trust of the american people in our to reform those important entitlement programs we talked about. no federal spending should go and examine. clearly, washington is not working. the nation's mounting debt and deficits are holding back on job creation, keeping millions of americans out of work. the economy needs on to brewers to come off the sidelines, to hire and invest. the way to do that is through pro-growth policies, including deficit neutral tax reform that brings hundreds of billions back to the shores, and budget reform that forces washington to strengthen the entitlement programs.

while final resolution elude us, the super committee's work can benefit the work of deficit reduction. republican and democrats alike gain a better understanding of each other viewpoints and frameworks and reproduced proposals on spending and revenue that can provide a basis for an eventual solutions. we generated serious proposals to reform major entitlement programs and areas like federal pay and benefits, governmentese, agriculture programs. the committee may have disbanded, but the profound physical and -- economic issues we face have not gone away, that only become more pressing. we have always come together as americans to solve tough problems. we can solve this problem, too. but only if we work together as republicans, democrats, an independents, to meet the challenges of our times.

thanks for letting me be with you today, and i looked forward to your questions. [applause] >> we live about 10 minutes for questions and answers. -- we will have about 10 minutes for questions and answers. >> thank you very much. >> i would like to ask you think there is any validity in some of the criticisms that have been promoted by the occupy wall street movement with respect to tax reform. >> i addressed that briefly, because one of the things i have heard not just from the occupy wall street folks but from a lot of critics of our current tax system is that there are big corporations that don't pay any taxes.

they have criticized other elements of the individual side. as i said earlier, part of the answer to that is to have fundamental reform of our tax code, broaden the base. the reason some corporations don't pay taxes if they take full advantage of the complexity and our current tax code. in order to lower the rate to 25%, and do it on a revenue neutral basis, you end up getting rid of almost all those complexities. companies that currently pay little or no taxes would be paying a higher effective rate. take companies that don't advantage of all those preferences and tax breaks in the code would be paying lower taxes. everybody would be paying taxes. it also leads to more efficient tax code resources are allocated in a way that helps create economic growth and jobs. it is a classic example of what

we can do across party lines, addressing some of those concerns. again, the super committee process was frustrating. we did not achieve what i hoped we would, but we did achieve some results. one was coming together as republicans and democrats alike and putting together at least a framework for dealing with this issue of corporate taxes. so i am hopeful that one of the products of the committee is that congress will now have the ability to move forward on this. there has not been a joint tax committee scored revenue neutral proposal at 25% in territorial ever in the history of the u.s. congress. this is something that i think will be able to help move the discussion for, not just on deficit reduction but on economic growth.

>> we are very lucky to have you in the senate and on the super committee. that is what i wanted to ask. i know you were desirous of getting into next opportunities to address these issues. if he could tell us -- and you also said, we cannot wait until elections. what do you see as the possibility of moving some of these issues along into a final package that can pass? >> as i said earlier, it would have been a great opportunity because of the special expedited procedures, particularly in the united states senate. it is very difficult to have a controversy issue addressed in the senate because it requires 60 both, with some rare exceptions like reconciliation. also being subject to amendments, sometimes it is

difficult to move something through the process. this was an opportunity that was missed, in my view. having said that, i still think there is the opportunity over the next year to make significant progress. i think the committee has put forward a lot of good ideas that can be picked up by members on both sides of the aisle and both houses. i mentioned corporate tax reform and entitlement ideas and some of the non entitlement, mandatory spending ideas that we spent an enormous amount of time on, as did the beau biden group before us and the simpson- bowles committee. a lot of you in this room have been involved in some of this efforts. second, we have to address a lot of tough issues in the next year. immediately, the issue of unemployment insurance

extension, the payroll tax extension, and other extenders at year end. there are about 87 of them at my last count. in the next year, at the end of next year, 13 months from now, we will once again be dealing with this issue of the 2001 and 2003 tax issues, and also the alternative minimum tax. without addressing them, we are talking about a three trillion dollar tax increase on the 2001 and 2003 tax rates. this will force a conversation, and that conversation ought to be about both economic growth and deficit reduction, not just about how you deal with the specific issue that is expiring in has to be addressed. third comic-con although as i said earlier, i think the committee represented a lot of

work congress is and where the american people are. i do think that folks are looking for some answers here on the spending side. when i am at home, lot of people talk to me as they always do about the direction our country is headed and what we need to do. people are more and more informed and educated on what the choices are and willing to make some tough choices. the internment is actually did the environment is actually conducive to making some of these tough decisions. going bid would be something i -- big would be something i would support with the right balance. i supported two budget proposals that do go big, one being the ryan budget that passed the house but did not pass the senate. it reduces the deficit by about $6 trillion over the next 10 years. the environment is there. there are more proposals now to

build a foundation and for some specific legislative action because of the inevitable decisions congress is going to have to make, and because of the environment. over the next year, there is a good possibility for reform. that is what i am going to continue to work on. i am disappointed with what happened with regard to the super committee, but more determined than ever to address these issues. >> good to see you again. senator, on the individual income tax side, do you envision there would be any further limitation on the home mortgage interest deduction? >> the framework that some of us supported in the committee process has promised. that framework would require big changes in the way the

individual tax code treats not just mortgage deduction but also other tax preferences. i mentioned marty feldstein, who gave a speech at the aei annual dinner. his view is that much of it should be considered more like spending than tax policy. i think there is some truth to that. there seems to be consensus building around a broadening the base by either eliminating or limiting some of the tax preferences, tax breaks, tax

loopholes, depending what you want to call them. there are a lot of promising ideas out there. the presidential candidates on the republican side each seem to have their own idea. i am not going to get into9-9- 9, but all of the current expenditures in the code are going to be subject to close examination. at the end of the day, i do believe lower rates will create more economic growth, and i believe that is part of the solution to not just our economic problems, but also our deficit problems. more growth will lead to more revenues through more economic activities. >> some in the senate have called for a vote on the simpson-bowles plan. senator durbin has said that in recent days.

it does not seem like there are any other efforts under way to restart negotiations for this. is that something you would support, or is there another way to have a big shot at a deficit reduction plan? >> i think it is an interesting idea. the issue is that there is a -- no legislative proposal, and as we found out in getting scores from the congressional budget office and the joint committee on taxation on the tax side, the discipline of that sometimes alters the way your proposal looks. i would be supportive of any proposal like that coming to the floor and having a vote, but i think there is a challenge, honestly, in taking some great ideas and reducing them to legislative language that is vetted and scored. we had a number of ideas that were sent to us as committee

members. i listed some of them earlier, some of them serious and some not as serious. many of them are good ideas, but frankly, we cannot get a score on them. one example would be selling federal property. there is excess or underutilized federal property. the congressional budget office has a hard time giving us a score on that we tried to set up various mechanisms to do it, including a sequester of agency budgets unless they sold a certain amount of property, but that is one of the ideas in a gang of six and simpson-bowles, but frankly, it is easier said than done. part of the challenges coming up with legislative language and literally scoring it to make sure it can meet the congressional budget office and in the case of revenue proposals, the joint tax committee estimates of deficit