-- a bigger discussion. let me say that all democrats and republicans recognize that we are facing pretty seriously -- serious challenges and we should not just punt again for a few months. from the point of view of myself and democrats, we know we have some tough choices to make. we start with a real understanding -- and this is not just rhetoric. but we start with an understanding of what we need to do is strengthen the middle class and create opportunity. and that starts with the middle class and broadening the middle class. it also means spending cuts and new revenues. that is absolutely important. we cannot be revenue neutral, even as we talk more about corporate taxes. we would like to see the corporate rate come down and eliminate some of the special provisions. democrats have already

committed and i have already voted for and are already engaged in $1 trillion in cuts over the next 10 years and another $1.2 trillion in sequester to come off with deficit reduction and grow the economy. we now need our partners in that, the republicans, to agree. it is not possible to get deficit reduction and meet our obligations without it. it is a partnership we have not had yet. our choices do matter. our parties are that we start by recognizing the way to strengthen and grow the middle class, that we have to protect seniors with social and security and medicare, and we have to grow the economy in the long term, and that we should do no harm to the short-term economic

growth as we are still coming out of a very deep, broad, traveling recession. -- trouble in recession. to ensure economic competitiveness, we understand that we have to ensure a school- skilled work force. we have to have infrastructure in terms of roads and bridges and broadband. if we do need access -- we do need access to low-cost, clean, domestic energy sources. we do need to promote entrepreneurship and innovation. and we need to make sure that our business is economically competitive and the tax policy -- in terms of the tax policy and in the global marketplace. and of course, that affects the tax policy. we cannot get into this debate and be successful if we are faced with rigid ideology, no

compromise, no way forward. we have to be willing to look at all the tax proposals, all of the possibilities of revenue and spending cuts to get to both deficit reduction and economic growth. >> to the specific question of areas of commonalities, what are the most fertile areas? >> i think one of them for sure is that we could move forward on some of the things that we agree on. we agree on little to -- a middle-class tax cut. let's get done the things we know we can do. we also agree on something i have worked on quite a bit, that we cannot cut medicare

reimbursements for physicians by 30%, that we should repeal the sgr and we should replace it. i have had these discussions with republicans and democrats and we are close to an understanding of where we ought to get to. that will reduce cut costs and contain the rate of cost. let's do that. those are two places that we can go. if we all do agree that we should examine tax expenditures that are unnecessary, that do not stimulate growth and that are not necessary for innovative industries for the future and our outdated, let's get rid of them and it will slow the tax rate. on the corporate side. the individual side, it is harder. but not impossible to deal with as well. those are good places to start.

it would be quite remarkable if we could make some decisions and create a path to move forward. i would love to see it. it will be tough to get all the details to get this done. >> we will get to that in a second. >> [laughter] i think that we should move forward and we should move forward together. >> congressman, let -- i will give you a chance to talk about the areas of common ground that easy. >> i think those areas are too full. there is a false premise out there that we do not need more revenue somehow, that the argument is among gop circles. i think mitt romney de onta that largely. president obama created part of that.

how you create an agenda, and particularly strong growth, i think there is a commonality there. the other component where there is a great deal of common an ground is there's a high level of dissatisfaction with the current tax code there is nobody -- tax code. there is nobody defending it. you can get the chairman of the committee together for a wide ranging discussion. in those hearings, it was the theme that alison just mentioned

a couple of minutes ago, and that is competitiveness. the united states has the most competitive tax structure in the world -- how do you create? worldwide american companies are in a position to pursue about 85% of the world's consumers who are outside the united states and there's the recognition of the u.s. tax code should be the thing to put them on that platform to compete effectively. number one, you need more revenue. and if the democrats know how the revenue comes about, great. if you can get the money that satisfies these obligations, that is an area of common

ground. let's move forward on that basis. i'm glad to hear that alison is not just saying hardened dogma. people like patty murray are just saying it will need to raise taxes. i'm glad to hear that oleson is not defending that. -- that alison is not defending that. we have an army of people in the united states that have to be hired. we have 1.2 million people in the compliance side. we of 1.4 million people who are underemployed. the need for simplicity is the common ground that we can go

for. >> the fiscal cliff, we have heard that threat from democrats and republicans in some form. how big a risk is this, or is it just the opening gambit? think weally don't will go over the fiscal cliff. i think we will figure this out. again, we need to have some compromise and we need to be able to get some revenues. it is partly true and partly not so true. all of us would be able to say that we could just get avenues threat cannot -- through economic growth. if the plan is to just cut taxes for the wealthiest and hope for the best combat has gotten us into this mess.

we did that for 10 years. i think the real question is, what do they really mean by that? we also believe that we will eventually -- the economic growth is part of how we will raise revenues, but is that enough without any details about how we get there? is this just about lowering taxes for the wealthiest? i think we have done that before. i think we run a risk of knowing how to get to where we need to get to. we need to reduce the deficit for long-term economic growth. the fiscal quick is not talking about lowering taxes for only certain words. the disco foot is about the taxes for the middle class -- the fiscal cliff is about the

taxes for the middle class. if you raise the taxes at the individual level, [indiscernible] that ever recognizes is necessary. -- set everybody recognizes is necessary. [indiscernible] >> let's keep with the theme of the middle class and revenue for a moment. one of the more] interesting things to be merged this month out of the presidential and vice presidential debates was a statement by vice president biden where he used the $1 million income threshold rather than the $250,000 threshold that the white house had been using.

where is that now? >> i have mostly been using the

$250,000 income threshold and that does take care of a lot of american businesses. 97% of small businesses would not see their taxes go up. when he talks about affecting small businesses in our community, 97% of them are here -- are taking care of, unless he's talking about those who make $1 million after taxes. i actually propose a place we can go. we think this matters to our businesses and our workers. we think that it matters for us to be able to meet our obligations as a country and it matters to create predictability in terms of tax policy. those ought to be concerned as well. making sure that taxes do not go upper for 99% of americans, or 97% or 98% of businesses in this country is actually pretty good threshold. if there are particular concerns, let's talk about that. but if we are going to get to where we are going to get to, we have to understand that the rhetoric about hurting small businesses is really not true. if we went to $500,000 or $1

million, we are not talking about small businesses at all. >> just for the sake of the argument that everything alison has said is true, [inaudible] there has historically particulr concerns, let's talk about that. but if we are going to get to where we are going to get to, we have to understand that the rhetoric about been a reluctance on the part of both sides of the aisle to raise taxes. in other words, people say, let's raise taxes as a very last gesture. that should be the last thing that we should do. we have been challenged implicitly on the gop side to say, ok, we do not want to raise rates. what would you do? that is where it is so important to look at the house budget that has been passed, not once, but twice, that was written by paul ryan.

it had detail. it said, this is the remedy. here is the way that you do this without increasing the tax burden. that is the revenue side show. onall it is it democratic orthodoxy that says we need to continue to do this. there is a great deal of ambiguity on the democratic side of the aisle. we have the president saying it should be $250,000. we have senator schumer saying it should be $1 million. and now he is not really in favor of tax reform as we have come to understand it. we have senator durbin who has said, let's extend it for six months, and then use that as a bridge to tax reform. but what you have on the gop quiet -- and gop side is clarity, and a plan that is not

just burst occurs, but articulated with language that has made it to the u.s. senate. >> let's just say that we see that offering flexibility and we are willing to engage in compromise, you could see it as a lack of clarity, which is the way you see it, but i'm surprised. your one of the republicans that i hope to work with on this. we want to make this work. we are willing to have discussion. if your concern is really about small businesses, not families, but small businesses that are at some threshold, then let's have a discussion. that is what tax policy is about. if we're going to have a discussion about reducing

corporate raids and getting rid of all tax deductions, or will we hang onto some that are important to corporate america that will help them be more competitive? i think research and development matters. if it does not, let's have a discussion about that. you are saying it is lack of clarity. we are saying, let's have a serious discussion about how we get to a place. what you see as the reihan budget -- ryan budget and clear policy we say, what do you mean? there's a lack of information there. it is shifting costs to middle- class americans. it ends medicare as we know it. that may or may not matter to you. it may matter to you personally, and to your parents, i would think. but we see that as rigid ideology. but the notion that we will grow the economy by lowering tax

rates, that will bring revenue, but we cannot tell you how. that is a real problem. it will undermine what we do together as a government. the proposal, the way mitt romney is talking about it, the proposal the way the ryan budget interpreted, it really does do dramatic harm, we believe, to what the government has done in terms of meeting obligations. it is certainly true with medicare. it is also true of the kind of cuts we would see in what we do. and again, roads, bridges, highways, of meeting obligation. broadband, the work force being skilled, access to education, bring down health insurance coverage costs, clean energy -- all of those things do not matter at all to corporate america. you can live without government doing anything, and so can

middle-class families. it is really not true. we could go that direction and you may feel it will lower their rates, but do we want this regard? it is too strong to meet our obligations and for economic competitiveness in the future. a compromise has to come from a wide divide, as you have just heard the between pete and myse, and we are both pretty moderates on both sides. and we can both say that we know where we want to go on the tax code. we agree that is complex. will give tax deductions that are no longer necessary. maybe they should go away they should be used to incentivize some different future, economically and competitiveness that we want. if we cannot get there, then we

have to look at the fact that they see revenues as economic growth and -- to see revenues as taxes and we see them as economic growth and cost containment. we do still have some responsibilities to each other and to our economic competitiveness in the future. >> there is a great divide here, but it is not new. we have been talking about it for well over one or two years for -- at this point. but there are up -- dangerous undertones' here. these issues have become defining issues for both parties. tax cuts for the wealthy have become a defining issue for republicans in this campaign. how is that going to affect your ability to work toward a deal by the end of this year?

can you move off of what has been not only a rhetorical platform, but something that has affected the way you negotiate? >> one of the premises of your question, though, is that somehow the gop's argument is not have any new evidence. i made the point old -- earlier that we have set the premise that you need more revenues. we reject the premise that the only way to do so is by raising taxes. i would argue [indiscernible] the democrats would say, look, we are interested in more revenue, too. these tax cuts that the republicans have described, we are willing to learn about growth assumptions in president obama's budget. there is a growth a son -- assumption.

let's go in and explore those. but somehow the notion that the only way to get more revenue for the federal government is by raising taxes and that is a choice that we do not think is robust. an historically we think people have come to it only reluctantly. we both think there's a reluctance to take -- to raise taxes, then let's explore every other opportunity. we think there is an opportunity to look at this model. here it is. the bottom line, the election on november 6 will not have any huge affect on this question. my hope is that we can get rid of the drama are run on the fiscal cliff. -- are around the fiscal cliff. that we can extend this bridge

for another year and move this taxte -- this debate over t reform [indiscernible] >> i want to stick with this for a moment. ii understand the argument is fr revenue growth, but how strong will the "no new tax" revenue [indiscernible] >> i want toposition be within e republican caucus? >> very strong. if the president is reelected to a second term, that will have an effect. if he is not reelected, then january 21 will the operation day. he has demonstrated, shall we say, a great deal of flexibility when the time has come down to it.

republican caucus? there are clear signals coming from both sides the idea that president obama would side -- would sign an extension of the current rate for another year in my opinion is no more likely true that untrue. >> we do not want to raise taxes. but as pete pointed out, the issue is to extend a tax cut or not. for some americans. in order to meet our obligations and make sure we can reduce the deficit. that is something we want to do. we do believe that, in fact, raising taxes on millionaires -- start care if you want -- -- start their if you want -- would

increase in comes and not hurt the economy at all. and going from 39% to 35% -- from 35% to 39% will not hurt the economy. that is what the president has proposed. it seems a reasonable way to go. it did not work under the bush years. let's do what we have already agreed upon, which is to extend the middle-class tax cut. we do not believe in the trickle-down economics. it has not worked. we do believe in making money, though. we are perfectly happy with the fact that we want to encourage more americans to be successful and the prosperous, and then pay taxes into what we do jointly. that is the difference. we are not raising anyone's taxes. we are just not extending tax cut on a small group of americans who have additional money to potentially give us a

few extra percentage points because we need the money. if the deficit was not an issue -- and republicans really do not care about the deficit, that is not real to them -- we will still be able to do what we believe has to happen for economic growth. and that is, to put more money into americans' pockets so they can buy more products. and then companies will meet that demand. unless you actually have consumer demand, then it does not matter what kind of gives we give you. it just makes you richer, not want to make more products. we think that under the bush years, if you noticed, we ended up with a very troubled economy and deep recession. if their principal work, then the f.m. growth that pete is talking about, that paul ryan is talking about, then we would not be in the mess that we were in four years ago. i think you believe that. if you want to be serious about

competitiveness for the future, you have all talked about the fact they want to be more competitive. you need cheaper energy and a skilled work force. you need airports and rail that work. and you cannot do it without just those things on your own. the notion that this concept that we have actually lived through several decades now, that if you just reduce the taxes more so on the wealthiest americans, leave middle-income americans on their own with fewer dollars in their pocket, if you hold them hostage again by not extending the tax cuts,

if you hold corporate america hostage by not actually reaching an agreement on taxes for the future, it puts you in a much more difficult position to do the kind of planning and growth that you would like both here in the u.s., which is what we would like, and the work that you do in selling products across the world. i think the rhetoric is just that. unless you are willing to decimate all of the advantages that we are trying -- that americans have come to expect. >> i think there is a flaw in the argument you're on the one hand, that argument says if you raise taxes, then that money is somehow going to be the remedy to increase infrastructure and broadband. the money will go to bridge the

gap. but on the other hand, balancing against that is the ernst and young a study that says it will cost 700,000 jobs. the state of illinois is an example of how not to govern. our neighbors in wisconsin and indiana and iowa and ohio and michigan are doing much better for us -- of that house. we have more courage -- more per capita debt than any state in the union.

what we are saying is, don't try to with this. it doesn't close the budget gap. it gives you are about two weeks of revenue under the obama current spending trajectory don't fall into that. when originally asked if he wanted to raise taxes, he said no for about seven hours. even president obama in indiana said he would raise -- and he was basically making the argument are we not in a recession right now? technically, we are not.

i just do not think people with a straight face can make the argument that you can grow the economy and get people to invest more by somehow raising taxes. >> we do not think that is the end all, be all, but we do think it should be on the table and it will not hurt the economy. we have been the ones saying, i think we agree on this. the economic recovery, we have seen economic growth in the past 32 months that is not as strong as we would like, but it is better than where we were four years ago. we were losing up to 700,000 jobs per month. would we like to be growing jobs faster? of course we would. it is a slow recovery. and i think there has been a lot of open as on the parts of democrats and the white house that what we do next year, we need to be very careful. but what we are looking at long-

term is a discussion. how do we have a tax policy? how do we get to the serious discussion that you want us to have? a long-term discussion is something that we would like to get to. and it is part of getting past the bush tax cuts. let's extend those for the middle class. let's not extend those for the wealthiest americans. it will not hurt the economy. it will bring in some dollars. and let's have a serious conversation about corporate taxes for the future. >> we need to talk about entitlement spending. we're going to go to questions and then come back and talk about the kinds of entitlements that democrats would give, assuming all, were reelected, that were not on the table two years ago. -- assuming that obama were reelected, that are not on the table two years ago. >> you signed the norquist pledge.

how can you come to any kind of congress -- compromise without being the one kind of congressman that would have to break the pledge to compromise with the democrats? >> if you have been listening, i am not contemplating breaking the pledge. what i'm saying is that we need to pursue revenues. revenues are abundant. mitt romney spoke directly to president obama about this. listening, i am notthe president said, you 't want revenues. romney said i do, but the way to that is through growth. that is the conversation that we have been hiding in the last 20 minutes. i think there is consistency there. i do not plan on raising taxes on anybody. >> not extending the tax cuts, would that be breaking the pledge? >> there are so many double negatives going on in my head

right now. [laughter] >> i give you some flexibility. >> congressman, is in your pledge to the citizens of illinois, and not to one person? that is what a lot of people who are not in favor of the pledge cannot understand. you should be serving your constituents, and not one man. >> i appreciate the admonition. and i appreciate the encouragement. i have been reelected three times to congress. the voters>> congressman, of tht to illinois will make that determination. >> let's go to this question of entitlements. let's assume that obama wins reelection. how much flexibility to deal on entitlements will the democratic caucus allow him? >> it starts with our commitment

to medicare and medicaid and social security. we will not accept turning medicare into a voucher, pretty and support, what ever you want to call it. that is a nonstarter for us. we feel the beginning premise is that we will not shift, essentially completely, spirited -- completely, almost. i think we need to have a discussion. we also need to begin the discussion with the fact that what has been said the sixth dit by both mitt romney and paul reihan and all of the republicans, that the affordable care act hurt medicare is also a nonstarter for us. they know the reality. they used the same $700 billion to provide cuts to insurance companies in their budget. we have put ourselves on a path

to stability to reform. if we can start with the discussion of how to best reduce the cost in medicare, which is through delivery system reforms, that could have an affect on the private sector and reduce costs for health coverage for all americans. but it has got to start with a different premise. we are really far apart in the premise. and of course, republicans originally walked away from the original vote for the paul ryan budget. but then they voted again. and many of them have embraced bad what we should do -- the notion that what we should do is end medicare as we know it and save the dollars from the government and leave seniors and their families on their own. $6,000 for the first you're too, and then go up from there. medicare is important to our

seniors and their families. it can work. we can have the dollars to make it work. are there ways to ensure that we actually make sure it is solvent for years and years? of course, i think there is some such -- some discussion we can have, but not yet. >> congressman, where would you like to see democrats move on medicare? "if" is that she wants to know whether republicans care about medicare and it be insolvent. the good news, we do. there was testimony before the ways and means committee about how to reach solvency. there was serious effort over several made initiatives to bring clarity to this issue. we saw the fiscal commission,

the super committee, negotiations between the speaker and the president are on the so- called grand bargain. what has to happen is president obama needs to step into the breach if he is reelected. there was a recognition about not embracing the house gop approach, but in recognizing that the program, a 10,000 seniors retiring every 24 hours, health-care inflation is up over regular inflation significantly. and even more significantly with the passage of the new health care law. president obama needs to step in in a way that he has not done in the past. if we want to have a

transformational moment as a country, if we want to come in together, that we need to address these questions that tend to drown out other things. the president needs to play a leadership role. it is not the leadership role that has been coming from president obama for the past four years. i served for four years with president obama when he was a state senator. what i found there is an attribute in barack obama as a senator, he was able to park -- to cross party lines in a very sincere way. he and i work together in a very effective way on reform legislation that we were able to pass out of the state senate and the state house unanimously, and it was signed by the governor. i use that as a touch. -- i used that as a touch point

when president obama came to a retreat in a couple of years ago in baltimore. i know he has got it in him. we have just not seeing it. >> you are absolutely right. president obama has to be willing to talk to both sides of the aisle. the number -- a number of times he has invited republicans to the white house a number of times he has said, this is our goal, let's talk about this. you say it is not leadership because he did not dictate to congress how to do things, but then you praised him for being open to find a common ground. i think that is an important acknowledgment that you just made, which is great. we do recognize that there are serious cost under medicare,

10,000 seniors today. there are probably some of you in the audience who are baby boomers. but when paul ryan says to be there for him, he is not correct. they will not last forever. although, they will try. this is a demographic and a per capita problem. medicarethe demographics are dg for the next 20, 25 years. but then we go away at some point. it is hard for me to acknowledge that. for those who are 35 or 40 now, that will not be the same problem. let's look at the reality of medicare actually being a lower cost in a lot of ways than private health insurance. we have seen the rate of growth in health care not grow as quickly as it did. we have seen double-digit growth in premiums for companies for health benefits, and of course, the government's costs. we need to re that in and be aggressive about that -- need to

rein-in and be aggressive about that. the conditions are that medicare has worked, and social security has worked for seniors in this country. it is something that whether you are over 65 or 55 or 45, you do actually anticipate it, and it would be enormously disruptive in this country to have it go away and to shift those costs to these families. we need to recognize that do work together to pay for it? the prescription drug coverage that was unpaid for under george bush -- many of us were glad for the prescription drug coverage. how do we feel -- fill that gap? all of the drug prescription costs go back onto seniors and individual families. we have not closed the gap. there is a huge divide.

if republicans are serious about working with the president and working with democrats to preserve medicare, truly preserve medicare, not to just say that we are for medicare, but then we will turn it over to individual seniors, i think there's a way to have a discussion about how to contain the costs per capita, and to deal with the serious problem with the budget next 25 years. >> congressman, you will get the last word. >> there are so many issues in the situation with medicare that i do not agree with. let me talk about what i do agree with. there is an opportunity for president obama to be willing to reevaluate how he set himself kupka in his first term. the barack obama i worked with as a senator, it was very much

in negotiation. able to go to various organizations and push and say, we need your help. obama was able to do that as well. together, we were able to do something that was good. barack obama has redefined by partisanship. now the definition of bipartisanship is, you vote for my son. there has been a lot of chatter, but when it comes down to it, you vote for my son he was disappointed that there were no republican votes in the plan. it turns out that was a good move. the stimulus is largely underperforming.

what i am saying is, i think we need attributes in president obama that are clear. that recognizes john boehner as a willing partner to sit down and negotiate. i hope that he is able to say, look, we are not going to do that again. i recognize boehner, i can bring john boehner along instead of just voting for my son. that is not very persuasive. that is where we are where we are. >> got close to the president and the conference couldn't get there. we have work to do, pete, we really do in moving beyond the rhetoric. hopefully the election will make absolutely clear what the american people are hoping for us to do in the way we fiscal the fiscal cliff at the end of

the year and the future tax reform. >> thank you both for joining us. >> thank you. [applause] >> let's talk about what can be done. >> sure, there is a lot that can be done. it's time to get it done. we in march of this year, the c.e.o.s of the business roundtable put our plan for action of america, a c.e.o. plan for jobs and economic growth. the plan is still good. the taking action part, well, we're still waiting. what can be done in the short term and we looked at the lame duck history. it's pretty dismal going back to the 1930's, not much gets done in that period. i think in the short term, you can certainly get the fiscal cliff, i have described the fiscal cliff as sort of pikes peek in front of us, we didn't get the tax rates dealt with. we had 60 tax codes expired at

the end of 2011. there are 40 or more scheduled to go next year. we don't really have a tax code in the country to speak of. it's all in pieces and expiring. you need some certainty. you're trying to file a 2012 tax return, you don't know if the provisions that expired in 2011 are going to be there. do you file and file amended returns? the congress has got to do its job there. the sequestration isn't going to work. you have to give the 2012-2013 budget some clarity. the secretary of defense has made it very clear that you can't have the defense department sequestration without having a negative impact on national security. i would throw in the deal with the dent ceiling, although some have suggested even that's too much for a lame duck effort, but i would say those are minimal. i don't think they can do big

comprehensive tax reform by the end of the year. i certainly don't think you can do a simpleon bowles plus. but the fix the debt campaign which many of the c.e.o.s are a part of is to set the table so in 2013, we have the most desisive, most productive legislative session in history because the nation needs it. >> the campaign is interesting. there is a lot of people in washington right now talking about one-year bridge to try to provide enough time for both tax and spending reform. the motivating mechanism, the forcing mechanism last time around was the sequester. what is the forcing mechanism this time? >> i hope it's public pressure and that gets reflected in a lot of ways. the congresswoman said she is waiting for the election to clarify things. i think the election is going to clarify a lot, actually. i think beyond that, david walker was on, he has been relentless around the country,

but he was making the point, they have been doing in-depth surveys. they find overwhelming support among the american people to get something done. i realize they don't all agree on what it is. one thing they do agree on is it will take compromise to get there. i think what is instructive today in america, look around the country, you see governors of both parties and sometimes the legislatures of the pop sit party, something it's the same, they're getting things done at the same level. except for the illinois, it's a basket case. california being an example of the future that none of us want for our country. we don't have to look at greece or spain, just look at california. so we know what lies ahead if we don't get our act together. i think there is a subsequent ensi and i think -- constituency, and i think i think it's all about the former

governor. here are my ideas, legislators, i hope you can give me something that work. leadership starts at the top in the organization. the chief executive has to lead. >> we saw this in the conversation here, the unwillingness for both sides to move off of their points. we have seen over the past few weeks, a lot of talk about going over the cliff. we saw schumer last week start to throw some cold water on avenues that had been viewed as fertile for potential compromise around the issues. are these just argued opening positions, or are you reading this as an inability to advance the ball? >> i certainly home senator schumer was one off for purposes of the fall campaign and that isn't actually what he thinks. that was very unhelpful coming from a leader in the senate. maybe the person who will be the leader in the senate. i think that it starts and senator schumer is in a poor

position to talking in the majority today because where is their budget? where is their program? they have been three years without passing one. i know the excuse is well, it's hard. yeah, it is hard. governing is hard and compromising is hard. it's one thing, i think it's very clear from the two members of the congress, the house, the house acts whether one party or the other party is in charge. they actually do things. the senate has to cooperate and they have been unable. how do you break that knot? i think it starts -- and we had an example in the first two years of the obama administration where with control in the house, the senate, and the white house consolidated in one party, they did things where you can look back and say, boy, there are some flaws and weaknesses in the affordable care act or in dodd frank, but they muscled

them through. once the house was lost, that effort to begin to muscle things through went awry and you didn't have the same effort being made in the senate as you did before. i just think you have got to get -- we got to get the election behind us, that is inevitable, there is no session until that happens. once it does, what is really important to understand is that there is a lot of weakness economically around the world today. i think the c.e.o.s of some of the largest american companies look at this and say this is an opportunity for america, but not an opportunity that's to be taken for granted, not one that is assured. it's an opportunity and you have to act and you have to seize it and that means you do have to deal with, i think, the long-term fiscal problems. you certainly have a tax structure in the nation that is not competitive globally any longer. again, in the commission speech yes, i was in detroit,

literally across the river is canada with a 15% corporate tax rate. they're a nation that has had in place for some time very robust incentives for research and development and they fixed their immigration laws so the talent access globally is there for them. boy, what a competitive advantage they have, plus i think they're right much more than we have been on energy strategy. it is an opportunity for us and the first half of this century could still be very much an american century, but i think the decisions we'll make in the early parts of 2013 are going to be the determining and decisive factor. >> this is a state study made in detroit. in that state, you talked about uncertainty. last week in washington uncertainty was talked about. there is very little empirical evidence that uncertainty about washington policy is what's really holding businesses back from spending and investing. help me understand what you're

seeing. >> what you're seeing, i think, and there is evidence, there is this. the very tepid recovery that we're in, very low g.d.p. growth rate, i would say slow, nonexistent hiring in some sectors. we do a survey every quarter of our c.e.o.s and about three weeks ago, we reported on this quarter and we have done it for 10 years. we have the third sharpest decline in the 10-year history. our index only measures so many things. we asked the c.e.o.s, looking ahead, do you think, what are your expectations for sales, for hiring, and for capital expenditures? the sales had the biggest drop. and so they're worried about revenues. this is where i would, the congressman made the point

about consumer demand, i'll tell you what creates consumer demand is consumers with income, jobs. when you have got high employment and you have got -- and the low participation in the workforce is a factor here. that gets glossed over all the time. if people aren't in the workforce, that means they don't have income. they're without income. the people who are trying to work have a high unemployment rate, so they're without income. that does have an impact on jobs and i think the uncertainty shows up in projects that get deferred, it shows up in -- i think frankly, you can look at the balance sheets and say, there is a lot of cash on hand. why wouldn't people be spending it? it's certainly no great bargain to go buy treasuries with it. there is no return there. why not put that money to work? the other question is where? i talked to a fellow that runs

a company. they're doing a $10 billion mine up in alaska, it's copper and gold. it's a project that is supported by democrat and republican senators from alaska. it has a lot to offer in terms of potential punch and impact. the e.p.a. in this case actually, it's an army corp position to admit it. there is a model of the mine and model the compliance and found that the model failed and took the position that it shouldn't be permitted by the army corp. we don't need that kind of help. we understand in america today, any big project is going to allow a lot of permitting. we're taking a lot longer than the rest of the world and virtually everywhere else in the world to try to figure out how to get to yes and not try to figure out of a scenario it that would fail before we get out of the gate. that is uncertainty also.

>> there is a lot of uncertainty. why do you see cash on a balance sheet a reflection of uncertainty about washington policy making, about tax policy and about regulations and not an uncertainty about a slowdown in china -- >> that is all part of it, no question. everybody in the room could look at it and say if i had some money to invest, where would i put it? think what factors would go into your mind. you would want to know, first of all, am i going to be able to keep my principal. and i not going to lose my money? where could i put it to get a little return on it? well, europe, boy, that looks nervous. china? yeah, they're growing still pretty fast. they're still having 7%, 8% growth, but that's slowing down and it may actually be less than that because the data over there is opaque. ok, the u.s.

ok, where here? well, let's see and then you start to wonder, just go to the market. that's been actually not bad, but then you say, boy, there is a lot of debt. i wonder how that gets paid back some day? are going to tax the company that i have invested in. are they going to tax this kind of activity? oh, i know, maybe they're going to triple the dividends tax. i bought the stocks. what do i do? i can't even as an individual investor perhaps answer those questions. imagine a company who says, well, is my corporate rate going to go from, it's already higher than anybody else in the world, is that going up more? we know it's going up a little bit because the affordable care act has increases that are unavoidable. we're the number one in the world in that, positive balance of trade for exports, best technology. what do we do in the industry

billions of dollars of taxes on them. we keep them subjected to the mcfadden that is two years slower than the rest of the world. we want the industry to grow and feel good in america. meanwhile, britain is saying, hey, come over here. we can speed up the approval process and the tax rates are less. >> the business community and the individual investor are quite good at and has been quite good at judging risk, at calculating the potential cost of possible changes to a regulatory or policy framework. let's just look at this election. we're waiting for results from the presidential. we have a 40% chance of romney now winning the election. >> probably more than 50. >> it may be over 50. >> yeah. >> ok. >> are you now seeing your businesses calculate that improved odds and start to make investments in this quarter? >> someone suggested that has been a response of the uptick in the stock market, people are

saying, it's going to get better with the romney administration. no, it hasn't happened yet. yes, you can create a risk model, but there are so many variables in that model today. i mean, look what we did to confidence, i mean, the united states was always a triple-a credit nation. we got downgraded the last little while. some of that we set up for ourselves with the behavior on the fiscal cliff, the debt ceiling, that was its own i guess mini fiscal cliff. but when we first came up against that and we daudled. that is money we have already spent. there is no option. if you're a conservative or a liberty, the debt ceiling has to be able to accommodate the spending we have already incurred. so to scare creditors the way we did was outrageous and hopefully we can avoid that in

the future. all we need is a credible path. the trustees on the medicare system, i mean there is knowing really asailing their credibility. they're people that have looked at this thing over the years and they say the current system is unsustainable. it has to be changed. again, whether you have one type of view or another type of view, there is no dispute, it has to change. >> you are raising the core issue here which is political will. we are into a fresh round of warnings from credit ratings agencies that the united states will face another down grade if they don't show at least a political will to get the country back on track. from your conversations with congress, are they taking this more seriously this time than they did a summer ago? >> yes, i think they are. i think there is endless rounds of conversation occurring among members of congress. stharts are going all over town looking for rooms to meet in.

they're going to mount vernon. they tell us they're working hard and some senators say they only need a couple hours in the book room. we have a backroom for them anytime they need it, you know. i think this business of imagining somehow we're going to have a bottom-up consensus and bottom-up is from nonleadership members of a legislative bio as esteemed as the united states senate or the house is probably a lot of wishful thinking. i do believe that there is a fertile ground to be worked, but i'm hard-pressed when i look at our own nation's history and the great debates in the congress, almost all of them had leadership involved at the top. the president wanted to change the civil rights laws. i guess, maybe you would say that the fight to end the vietnam war may have started

from the outside and worked in and eventually it toppled the president. most of the major debates, the new deal, the reagan revolution, whatever time, i mean even going back to lincoln's time. there were great debates in the congress, but ultimately the president had to act. i think that's what's been just absent here, where are the proposals and will they come? i think that the debates have been, i don't mean just the denver debate or tonight's debate, but i think that the debate in the campaign in the political arena this year have been moving us closer. i think whoever is elected has the solemn obligation to lead. we will see. people are making i think some judgment on the basis of what the candidates and the parties

are saying as to who best to do that. >> thanks for joining us. >> you're very welcome. thank you. [applause] [captioning performed by national captioning institute] [captions copyright national cable satellite corp. 2012] >> he told folks he was the ideal candidate for the tea party. now suddenly he is saying what, who me? he is forgetting what his own positions are and he is betting that you will, too. i mean, he is changing up so much and backtracking and sidestepping, we have got to name this condition that he is going through. i think it's called romnesia. >> and so this election is going to come down to being a choice between two different americas, an america where government makes the rules, where government is a larger and larger where it takes more and more from the american people, where it runs more of

our businesses and increasingly runs or lives instead an america where restore the principals that made the nation the nation that it is, that we bring back the principals of the declaration of independence, recognize that god gave us our rights and they include life and liberty and the pursuit of happiness, the right to pursue happiness as we choose. >> watch and engage monday as president obama and mitt romney meet in their final debate moderated by cbs's bob schieffer from lynn university in boca raton, florida, our debate preview starts at 7:00 p.m. eastern followed by the debate at 9:00 and your reaction at 10:30 all live on espn, espn radio, and online at c-span.org. >> in his weekly address, president obama called on republicans in the house of representatives to cooperate in passing a bill to help homeowners. congressman jeff flake from arizona gave the republican response.

he criticized the obama administration for the current budget deficit. this, he claims, has affected home values, the unemployment rate and the economy. >> hi, everybody. in recent weeks you might have noticed something or maybe even heard the sound of it if you look close enough. new homes are going up. in fact, construction workers are breaking ground on new homes in america at the fastest pace in more than four years. at the same time more homes are being sold. home values are back on the rise and foreclosure filings are at their lowest point in the five years since the housing bubble burst and left millions of responsible families holding the bag. now, we're not where we need to be yet. too many homes are still underwater. too many families are still having a hard time making the mortgage on their piece of the american dream, but one of the heavyiest drags on our recovery is getting lighter. now we have to build on progress that we have made and keep moving forward. i never believed that the best

way to deal with the housing market was to just sit back and do nothing and simply wait for things to hit bottom that would have been a disaster for all of the responsible families who through no fault of their own are struggling to make ends meet. instead, i have made helping those homeowners a priority. since i took office, my administration has taken action to help millions of families stay in their homes. we teamed up with attorneys general in almost every state to investigate and crack down on the practices that caused this mess. in the end, we secured a $25 billion settlement from the biggest banks. one of the biggest settlements in history, and used it to provide relief to families all across america. we have taken action to help responsible homeowners refinance their mortgages. as a result just this year, hundreds of thousands of americans who were stuck in high interest loans have been able to take advantage of historically low rates and are saving thousands of dollars every year. and now, i want every homeowner in america to have that chance.

i just wish it didn't require an act of congress, but it does. so back in february, i sent congress a plan to give every responsible homeowner the chance to save about $3,000 a year on their mortgage by refinancing at historically low rates. that's the equivalent of a $3,000 tax cut. it's a plan we know will work. it has the support of independent nonpartisan economists and leaders across the housing industry. it's a no-brainer that should have passed easily. but republicans in congress banded together and kept this plan from even coming to a vote. they banded together and prevented millions of americans, including many of you listening today from saving $3,000 a year. that's money that could have back into the value of your home or your kids' college savings account. that's money that could have gone into your local businesses so they could hire and create more jobs in your town. but republicans in congress still won't let that happen. that's only held back the economy when we should be doing everything we can to accelerate

our economic engine. let's be honest. republicans in congress won't act on this plan before the election, but maybe they'll come to their senses afterward if you give them a push. so contact your representative, especially if this plan will help you or somebody you know. tell him or her that american homeowners have waited long enough. tell them that it's time for congress to stop standing in the way of our recovery and start standing up for you. thanks and have a great weekend. >> hello, i'm jeff flake, congressman from arizona's sixth district. last week the obama administration confirmed that the budget deficit for fiscal year 2012 will be $1.1 trillion. this will mark the fourth year in a row that the federal government has spent more than it has taken in to the tune of over $1 trillion. with the school year underway across the country, it's not comforting to think that the class of 2012 who were freshman along with this president,

graduated without knowing what it was like to be in high school without the term "trillion dollar deficit" ever being present in the news. what do we have to show for this prolonged and record-setting federal spending? the u.s. unemployment rate was 7.8% the month president obama took office, the same as it was this month. home values have gone down by over 10% and gas prices have more than doubled. the obama administration added over $5 trillion to the national debt for this? president obama undoubtedly inherited a fragile economy, but he has done little to improve it. in fact, rather than take a lesson, his answer to persistently weak jobs numbers is pressure to spend a half a trillion dollars on legislation that would fail to take the steps to deal with the economic slowdown. republicans have passed a

budget to fight it head on, the democrats have not passed a budget in over 1,200 days. the private sector is strange under the financial uncertainty facing the economy, perhaps worse yesterday is a regulatory certainty this administration appears bent on guaranteeing. if arizona is in any way a microcosm for regulatory overreaches and i think it is, then it is no wonder the economy is struggling. whether it's locking up prime mining lands in northern arizona to responsible mining, considering expensive and unnecessary requirements on power plants that could threaten water deliveries across the state forcing state and local governments to shell out precious dollars to just get off the regulatory hook for the dust storms they can't prevent or control, threatening hotels and resorts with requirements to install permit lifts in every pool and spa, there seems to be no end to the regulatory appetite of this administration. my wife cheryl and i celebrated

some great news this week. we became grandparents for the first time. adrianne jeffrey flake was lucky enough to be born in the greatest country in the world, while it will be years before he is ready to start school, his share of the national debt is already over $50,000. if we continue along our current budget trajectory, our grandson is simply not going to have the same opportunities that my grandparents created for me. i know that i'm joined by many when i say i will simply not let that happen. it is my hope that the recess from fiscal sanity that the last four years has represented is over. as bad as our fiscal challenges are, it's not too late. the bell has running and it's time for -- rung and it's time for us to get to work. >> on "washington journal" tomorrow morning we'll focus on the presidential cam wayne with amy walter, then look at how the campaign is playing out in key battleground states.

we'll hear from talk show host joe thomas from charlottesville, virginia. at 9:00 a.m. eastern, we'll be joined by mark simpson, news director from orlando, florida and we'll hear about the campaign in ohio from michael alwood in columbus. "washington journal" is live on espn every day at 7:00 a.m. eastern. on newsmakers this week, the top democrat on the house budget committee, maryland representative chris van hollen talks about the fiscal cliff, taxes and the campaign. he'll speak with david wes sell, economics editor of the "wall street journal" and bob confusiak, managing he had -- kusak, managing editor of the hill. >> the enemy understands a free iraq will be a major defeat in

their idealology of hatred. that's why they're fighting so vociferously. they showed up in afghanistan when they were there and tried to beat us and they didn't it. they did the same thing in iraq if we lose our will, we'll lose. if we main strong and resolute we will defeat this enemy. >> 09-second response, senator kerry. >> i believe in being strong and resolute and determined. i will hunt down and kill the terrorists wherever we are. we also have to be smart, jim. smart means not diverting your attention from the real war on terror in afghanistan against osama bin laden and taking it off to iraq where the 9/11 commission confirms there was no connection to 9/11 itself with saddam hussein and the reason to go to war was the weapons of mass destruction, not the removal of saddam hussein. this president has made, i this president has made, i regret to say,